<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 APRIL 29, 2000
[_] 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 68845-4915
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (308) 236-8491
-----------------------------------------------------------
(Former name, former address and former fiscal year if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares issued of the Registrant's Common Stock, outstanding as of
June 2, 2000 was 20,630,095 shares of Common Stock.
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THE BUCKLE, INC.
FORM 10-Q
INDEX
Pages
-----
Part I. Financial Information (unaudited)
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 11
Part II. Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
(a) 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 April 29, 2000
Signatures 13
2
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THE BUCKLE, INC.
BALANCE SHEETS
(Columnar amounts in thousands)
(Unaudited)
ASSETS April 29, January 29,
CURRENT ASSETS 2000 2000
--------- ----------
Cash and cash equivalents $ 29,698 $ 37,205
Short-term investments:
Held-to-maturity 35,640 40,357
Available-for-sale 4,334 4,002
Accounts receivable, net of
allowance of $175,000 and $225,000, respectively 1,660 3,430
Inventory 66,110 55,045
Prepaid expenses and other assets 3,412 2,387
--------- ---------
Total current assets 140,854 142,426
PROPERTY AND EQUIPMENT 96,021 91,735
Less accumulated depreciation 40,309 38,168
--------- ---------
55,712 53,567
OTHER ASSETS 2,735 2,553
--------- ---------
$ 199,301 $ 198,546
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 17,948 $ 15,773
Accrued employee compensation 6,216 12,587
Accrued store operating expenses 2,924 3,491
Gift certificates redeemable 1,527 1,925
Income taxes payable 3,476 1,068
--------- ---------
Total current liabilities 32,091 34,844
DEFERRED COMPENSATION 801 442
--------- ---------
Total liabilities 32,892 35,286
STOCKHOLDERS' EQUITY
Common stock, authorized 100,000,000 shares
of $.01 par value; issued 20,614,695 and
20,726,149 shares, respectively 206 207
Additional paid-in capital 15,592 17,131
Retained earnings 151,516 146,920
Unearned compensation - restricted stock (725) (791)
Accumulated other comprehensive income (loss) (180) (207)
--------- ---------
Total stockholders' equity 166,409 163,260
--------- ---------
$ 199,301 $ 198,546
========= =========
See notes to financial statements.
3
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THE BUCKLE, INC.
STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Thirteen Weeks Ended
---------------------
April 29, May 1,
2000 1999
--------- --------
SALES, net of returns and allowances $ 78,501 $ 79,688
COST OF SALES (including buying,
distribution and occupancy costs) 54,570 52,587
-------- --------
Gross profit 23,931 27,101
OPERATING EXPENSES
Selling 14,466 14,813
General and administrative 2,314 2,495
-------- --------
16,780 17,308
-------- --------
Income from operations 7,151 9,793
OTHER INCOME 660 574
-------- --------
Income before income taxes 7,811 10,367
Income tax expense 2,945 3,898
-------- --------
Income before cumulative effect of
change in accounting 4,866 6,469
Cumulative effect of change in accounting,
net of taxes of $162 and $0, respectively 270 --
-------- --------
NET INCOME $ 4,596 $ 6,469
======== ========
Per share amounts:
Basic income per share:
Income before cumulative effect of a change
in accounting $ 0.24 $ 0.29
Cumulative effect of change in accounting, net of
taxes (0.02) --
-------- --------
Net income $ 0.22 $ 0.29
Diluted income per share:
Income before cumulative effect of change
in accounting $ 0.23 $ 0.28
Cumulative effect of change in accounting, net of
taxes (0.02) --
-------- --------
Net income $ 0.21 $ 0.28
See notes to financial statements.
4
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THE BUCKLE, INC.
STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
April 29, 2000 May 1, 1999
-------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,596 $ 6,469
Adjustments to reconcile net income to net cash
flows from operating activities
Depreciation 2,611 1,993
Loss on disposal of assets 92 135
Amortization of unearned compensation-restricted stock 66 66
Cumulative effect of change in accounting method 270 --
Changes in operating assets and liabilities
Accounts receivable 170 1,351
Inventory (10,025) (12,583)
Prepaid expenses and other assets (335) (424)
Accounts payable 1,775 6,311
Accrued employee compensation (6,371) (8,028)
Accrued store operating expenses (567) (754)
Gift certificates redeemable (398) (292)
Income taxes payable 2,408 2,473
Deferred compensation 359 --
-------- --------
Net cash flows from operating activities (5,349) (3,283)
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments 4,412 88
Purchase of property and equipment (4,848) (7,962)
Change in other assets (182) 814
-------- --------
Net cash flows from investing activities (618) (7,060)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchases of common stock (1,588) (305)
Proceeds from the exercise of stock options 48 77
-------- --------
Net cash flows from financing activities (1,540) (228)
-------- --------
Net decrease in cash and cash equivalents (7,507) (10,571)
Cash and cash equivalents, Beginning of period 37,205 61,705
-------- --------
Cash and cash equivalents, End of period $ 29,698 $ 51,134
======== ========
</TABLE>
See notes to financial statements.
5
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THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN WEEKS ENDED APRIL 29, 2000 AND MAY 1, 1999
(Unaudited)
1. Management Representation - The accompanying unaudited financial statements
have been prepared in accordance with auditing standards generally accepted
in the United States of America for interim financial information.
Accordingly, they do not include all of the information and footnotes
required by auditing standards generally accepted in the United States of
America for complete financial statements. In the opinion of management,
all adjustments necessary for a fair presentation of the results of
operations for the interim periods have been included. 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 29, 2000, included in The Buckle, Inc.'s 1999
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 operates their business as one reportable industry
segment. The Company had 261 stores located in 35 states throughout the
central, northwestern and southern areas of the United States as of April
29, 2000, and 231 stores in 31 states as of May 1, 1999. During the first
quarter of fiscal 2000, the Company opened thirteen new stores and
substantially renovated three stores. During the first quarter of fiscal
1999, the Company opened nine new stores and substantially renovated one
store.
The following is information regarding the Company's major product lines,
stated as a percentage of the Company's net sales:
Percentage of Net Sales
Thirteen Weeks Ended
-----------------------------
Merchandise Group April 29, 2000 May 1, 1999
-------------- -----------
Denims 24.9% 20.1%
Slacks/Casual Bottoms 4.2% 4.5%
Tops (including sweaters) 31.8% 31.9%
Sportswear/Fashion clothes 12.3% 14.7%
Outerwear 1.1% .9%
Accessories 6.6% 5.3%
Shoes 16.5% 20.8%
Little Guys/Gals 2.3% 1.6%
Other 0.3% 0.2%
------- -------
100.0% 100.0%
======= =======
3. Net Income Per Share - Basic earnings per share data are based on the
weighted average outstanding common shares during the period. Diluted
earnings per share data are based on the weighted average outstanding
common shares and the effect of all dilutive potential common shares,
including stock options and warrants. During the quarter ended April 29,
2000, the Company repurchased and retired 142,700 shares of its common
stock pursuant to authorized buy-back programs.
6
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THE BUCKLE, INC.
NOTES TO FINANCIAL STATEMENTS
THIRTEEN WEEKS ENDED APRIL 29, 2000 AND MAY 1, 1999
(Unaudited)
4. Accounting Pronouncements - In June 1998, the FASB issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities" which
would have been effective January 30, 2000. In June 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133,
postponing the effective date for implementing SFAS No. 133 to fiscal years
beginning after June 15, 2000. The Company will adopt this Statement
effective February 4, 2001. At this time, the Company believes the impact
of adopting this Statement should not be significant to the results of
operations or financial position.
5. 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.
The Company recorded a cumulative effect adjustment for the change in this
accounting principle in accordance with APB Opinion No. 20, Accounting
Changes. If SAB No. 101 would have been adopted prior to fiscal 1999, there
would be no change to basic or diluted income per share on a pro-forma
basis. Additionally, pro-forma net income for first quarter fiscal 1999
would have been $6,418,000.
6. Comprehensive Income - Unrealized gains and losses on the Company's
available-for-sale securities are included in other comprehensive income,
net of related taxes.
Thirteen Weeks Ended
---------------------------
April 29, 2000 May 1, 1999
-------------- -----------
Net Income 4,596 6,469
Unrealized gain on available for sale securities
net of taxes of $16,000 and $0, respectively 27 -
------------- -----------
Total Comprehensive Income $ 4,623 $ 6,469
============= ===========
7
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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 April 29, 2000, and May 1, 1999:
THE BUCKLE, INC.
RESULTS OF OPERATIONS
Percentage of Net Sales
-----------------------
Thirteen weeks ended Percentage
April 29, May 1, Increase
2000 1999 (decrease)
--------------------------------------------
Net Sales 100.0% 100.0% (1.5)%
Cost of sales (including
buying, distribution and
occupancy costs) 69.5% 66.0% 3.8%
--------------------------------------------
Gross profit 30.5% 34.0% (11.7)%
Selling expenses 18.4% 18.6% (2.3)%
General and
administrative expenses 3.0% 3.1% (7.2)%
--------------------------------------------
Income from operations 9.1% 12.3% (27.0)%
Other income .8% .7% 14.9%
--------------------------------------------
Income before provision
for income taxes 9.9% 13.0% (24.7)%
Provision for income taxes 3.7% 4.9% (24.5)%
--------------------------------------------
Income before cumulative effect of
change in accounting 6.2% 8.1% (24.8)%
============================================
Net sales decreased from $79.7 million in the first quarter of fiscal 1999 to
$78.5 million in the first quarter of fiscal 2000, a 1.5% decrease. Comparable
store sales decreased from the first quarter of fiscal 1999 to the first quarter
of fiscal 2000 by $7.8 million or 10.0%. The comparable store sales decrease
resulted partially from a 7.8% decrease in the average price per piece of
merchandise sold compared with the fiscal 1999 first quarter. Comparable store
sales decreased 0.2% due to the change in the method of revenue recognition for
layaways sales in accordance with the guidance and interpretations provided by
the SEC's SAB No. 101-Revenue Recognition. Sales growth of 8.5% for this
thirteen week period was attributable to the inclusion of a full three months of
operating results for the nine stores opened in 1999 and the opening of thirteen
new stores in the first thirteen weeks of fiscal 2000. Average sales per square
foot decreased 13.9% from $73.82 to $63.58.
8
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THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Gross profit after buying, occupancy, and distribution expenses decreased $3.2
million in the first quarter of fiscal 2000 to $23.9 million, an 11.7% decrease.
As a percentage of net sales, gross profit decreased from 34.0% in the first
quarter of fiscal 1999 to 30.5% in the first quarter of fiscal 2000. This
decrease was attributable primarily to higher occupancy costs as well as a 0.6%
reduction in the actual merchandise margins.
Selling expenses decreased from $14.8 million for the first quarter of fiscal
1999 to $14.5 million for the first quarter of fiscal 2000, a 2.3% decrease.
Selling expenses as a percentage of net sales for the first quarter of fiscal
2000 decreased to 18.4% compared to 18.6% for the first quarter of fiscal 1999.
The primary reason for the improvement in selling expenses as a percentage of
net sales is leverage provided by the restructuring of the company's executive
compensation plan as well as leverage in advertising expenses.
General and administrative expenses decreased from $2.5 million in the first
quarter of fiscal 1999 to $2.3 million in the first quarter of fiscal 2000, a
7.2% decrease. As a percentage of net sales, general and administrative expenses
for the first quarter of fiscal 2000 decreased from 3.1% in fiscal 1999 to 3.0%
in fiscal 2000. The decrease in general and administrative expense, as a
percentage of net sales, resulted primarily from leverage provided by
restructuring of the company's executive compensation plan.
As a result of the above changes, the Company's income from operations decreased
$2.6 million to $7.2 million for the first quarter of fiscal 2000 compared to
$9.8 million for the first quarter of fiscal 1999, a 27.0% decrease. Income from
operations was 9.1% of net sales in the first quarter of fiscal 2000 compared to
12.3% in the first quarter of fiscal 1999.
For the quarter ended April 29, 2000, other income increased 14.9% from the
first quarter of fiscal 1999. Income tax expense as a percentage of pre-tax
income was 37.7% in the first quarter of fiscal 2000 compared to 37.6% in the
first quarter of fiscal 1999.
Effective for the first quarter of fiscal 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 change resulted in a cumulative effect of
$270,000, net of related taxes, which was reported on the income statement for
the quarter ended April 29, 2000.
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 2000 and 1999, the Company's cash flow used by operating activities
was $5.3 and $3.3 million, respectively.
9
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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 a lower use of cash this year versus last year
are a lesser build up of inventory, a lower level of capital expenditures and a
lower 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. On May 25,
2000, the Company signed new lending agreements with First National Bank and
Trust Company of Kearney increasing the unsecured line of credit to $7.5 million
and the letter of credit facility to $7.5 million. 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 April
29, 2000, the Company had working capital of $108.8 million, including $29.7
million of cash and cash equivalents and short-term investments of $40.0
million. There were no bank borrowings during the first quarter of fiscal 2000
and 1999.
During the first quarter of fiscal 2000 and 1999 the Company invested $4.6
million and $6.8 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 $0.2 million and
$1.2 million in the first quarter of fiscal 2000 and 1999, respectively, in
capital expenditures for the corporate headquarters. During fiscal 1998, the
Company completed its expansion to the corporate headquarters and distribution
facility. The addition is approximately 124,000 square feet, added to the
existing 55,000 square foot building. The majority of the space is used for the
distribution center, with approximately 7,800 square feet of new office space.
The distribution center was completed in June 1998 and the new office space was
completed in December 1998. The former distribution area was remodeled for use
as store supply warehousing and offices, merchandising and advertising offices
as well as new workroom, showroom and conference room space. The remodel of this
phase was completed in March 1999. The next remodeling phase included remodeling
and reorganization of the existing office space and was completed during the
third quarter of fiscal 1999. The final phase of the remodel project was
completed during the fourth quarter of fiscal 1999.
During the remainder of fiscal 2000, the Company anticipates completing
approximately 19 additional store construction projects, including approximately
14 new stores and approximately five stores to be remodeled and/or relocated. As
of April 29, 2000, six additional lease contracts have been signed, and
additional leases are in various stages of negotiation. Management now estimates
that total capital expenditures during fiscal 2000 will be approximately $22.9
million before any landlord allowances estimated to be $3.0 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.
10
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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 1997, 1998, and 1999, 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 April 29, 2000, and May 1, 1999.
FORWARD LOOKING STATEMENTS
Information in this report, other than historical information, may be considered
to be forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "1995 Act"). Such statements are made in good
faith by the Company pursuant to the safe-harbor provisions of the 1995 Act. In
connection with these safe-harbor provisions, this management's discussion and
analysis contains certain forward-looking statements, which reflect management's
current views and estimates of future economic conditions, company performance
and financial results. The statements are based on many assumptions and factors
that could cause future results to differ materially. Such factors include, but
are not limited to, changes in product mix, changes in fashion trends,
competitive factors and general economic conditions, economic conditions in the
retail apparel industry, as well as other risks and uncertainties inherent in
the Company's business and the retail industry in general. Any changes in these
factors could result in significantly different results for the Company. The
Company further cautions that the forward-looking information contained herein
is not exhaustive or exclusive. The Company does not undertake to update any
forward-looking statements, which may be made from time to time by or on behalf
of the Company.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has evaluated the disclosure requirements of Item 305 of S-K
"Quantitative and Qualitative Disclosures about Market Risk," and has concluded
that the Company has no market risk sensitive instruments for which these
additional disclosures are required.
11
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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 April 29, 2000.
12
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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: June 13, 2000 /s/ DENNIS H. NELSON
-------------------- -----------------------------------
DENNIS H. NELSON, President and CEO
Dated: June 13, 2000 /s/ KAREN B. RHOADS
-------------------- -----------------------------------
KAREN B. RHOADS, Vice President of
Finance and CFO
13
