Nebraska
|
47-0366193
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
Title
of class
|
Name
of Each Exchange on Which Registered
|
|
Common
Stock, $.01 par value
|
New
York Stock Exchange
|
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
|
18
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
27
|
Item
4.
|
Controls
and Procedures
|
27
|
Part
II. Other Information
|
||
Item
1.
|
Legal
Proceedings
|
28
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
28
|
Item
3.
|
Defaults
Upon Senior Securities
|
28
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
28
|
Item
5.
|
Other
Information
|
29
|
Item
6.
|
Exhibits
|
29
|
30
|
|
August
2,
2008
|
February
2,
2008
|
|||||
ASSETS
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
and cash equivalents
|
$
|
184,144
|
$
|
64,293
|
|||
Short-term
investments
|
22,760
|
102,910
|
|||||
Accounts
receivable, net of allowance of $24 and $62, respectively
|
5,012
|
2,800
|
|||||
Inventory
|
103,432
|
77,639
|
|||||
Prepaid
expenses and other assets
|
16,486
|
13,979
|
|||||
Total
current assets
|
331,834
|
261,621
|
|||||
PROPERTY
AND EQUIPMENT:
|
239,639
|
240,237
|
|||||
Less
accumulated depreciation and amortization
|
(141,840
|
)
|
(137,903
|
)
|
|||
97,799
|
102,334
|
||||||
LONG-TERM
INVESTMENTS
|
71,880
|
81,201
|
|||||
OTHER
ASSETS
|
4,930
|
5,501
|
|||||
$
|
506,443
|
$
|
450,657
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable
|
$
|
48,218
|
$
|
25,155
|
|||
Accrued
employee compensation
|
16,501
|
27,836
|
|||||
Accrued
store operating expenses
|
7,004
|
5,704
|
|||||
Gift
certificates redeemable
|
5,814
|
8,511
|
|||||
Income
taxes payable
|
7,097
|
10,020
|
|||||
Total
current liabilities
|
84,634
|
77,226
|
|||||
DEFERRED
COMPENSATION
|
4,830
|
4,127
|
|||||
DEFERRED
RENT LIABILITY
|
34,607
|
30,984
|
|||||
Total
liabilities
|
124,071
|
112,337
|
|||||
COMMITMENTS
|
|||||||
STOCKHOLDERS’
EQUITY:
|
|||||||
Common
stock, authorized 100,000,000 shares of $.01 par value; 30,651,343
and
29,841,668 shares issued and outstanding at August 2, 2008 and
February 2,
2008, respectively
|
307
|
298
|
|||||
Additional
paid-in capital
|
66,272
|
46,977
|
|||||
Retained
earnings
|
316,769
|
291,045
|
|||||
Accumulated
other comprehensive loss
|
(976
|
)
|
-
|
||||
Total
stockholders’ equity
|
382,372
|
338,320
|
|||||
$
|
506,443
|
$
|
450,657
|
Thirteen
Weeks Ended
|
Twenty-six
Weeks Ended
|
||||||||||||
August
2,
|
August
4,
|
August
2,
|
August
4,
|
||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
SALES,
Net of returns and allowances
|
$
|
169,765
|
$
|
124,257
|
$
|
330,065
|
$
|
245,368
|
|||||
COST
OF SALES (Including buying, distribution, and occupancy
costs)
|
99,497
|
77,844
|
194,175
|
153,452
|
|||||||||
Gross
profit
|
70,268
|
46,413
|
135,890
|
91,916
|
|||||||||
OPERATING
EXPENSES:
|
|||||||||||||
Selling
|
33,480
|
25,065
|
65,039
|
48,489
|
|||||||||
General
and administrative
|
3,477
|
4,891
|
10,172
|
9,871
|
|||||||||
36,957
|
29,956
|
75,211
|
58,360
|
||||||||||
INCOME
FROM OPERATIONS
|
33,311
|
16,457
|
60,679
|
33,556
|
|||||||||
OTHER
INCOME, Net
|
2,049
|
2,260
|
4,369
|
4,383
|
|||||||||
INCOME
BEFORE INCOME TAXES
|
35,360
|
18,717
|
65,048
|
37,939
|
|||||||||
PROVISION
FOR INCOME TAXES
|
13,084
|
6,925
|
24,055
|
13,954
|
|||||||||
NET
INCOME
|
$
|
22,276
|
$
|
11,792
|
$
|
40,993
|
$
|
23,985
|
|||||
EARNINGS
PER SHARE:
|
|||||||||||||
Basic
|
$
|
0.74
|
$
|
0.40
|
$
|
1.36
|
$
|
0.81
|
|||||
Diluted
|
$
|
0.72
|
$
|
0.38
|
$
|
1.32
|
$
|
0.78
|
|||||
Basic
weighted average shares
|
30,231
|
29,776
|
30,051
|
29,622
|
|||||||||
Diluted
weighted average shares
|
31,058
|
30,924
|
30,946
|
30,806
|
Accumulated
|
|||||||||||||||||||
Additional
|
Other
|
||||||||||||||||||
Number
|
Common
|
Paid-in
|
Retained
|
Comprehensive
|
|||||||||||||||
of
Shares
|
Stock
|
Capital
|
Earnings
|
Loss
|
Total
|
||||||||||||||
FISCAL
2008
|
|||||||||||||||||||
BALANCE,
February 3, 2008
|
29,841,668
|
$
|
298
|
$
|
46,977
|
$
|
291,045
|
$
|
-
|
$
|
338,320
|
||||||||
Net
income
|
-
|
-
|
-
|
40,993
|
-
|
40,993
|
|||||||||||||
Dividends
paid on common stock, ($0.25 per share)
|
-
|
-
|
-
|
(15,269
|
)
|
-
|
(15,269
|
)
|
|||||||||||
Common
stock issued on exercise of stock options
|
669,725
|
8
|
8,868
|
-
|
-
|
8,876
|
|||||||||||||
Issuance
of non-vested stock, net of forfeitures
|
139,950
|
1
|
(1
|
)
|
-
|
-
|
-
|
||||||||||||
Amortization
of non-vested stock grants
|
-
|
-
|
2,599
|
-
|
-
|
2,599
|
|||||||||||||
Stock
option compensation expense
|
-
|
-
|
199
|
-
|
-
|
199
|
|||||||||||||
Income
tax benefit related to exercise of stock options
|
-
|
-
|
7,630
|
-
|
-
|
7,630
|
|||||||||||||
Unrealized
loss on investment securities, net of tax
|
-
|
-
|
-
|
-
|
(976
|
)
|
(976
|
)
|
|||||||||||
BALANCE,
August 2, 2008
|
30,651,343
|
$
|
307
|
$
|
66,272
|
$
|
316,769
|
$
|
(976
|
)
|
$
|
382,372
|
|||||||
FISCAL
2007
|
|||||||||||||||||||
BALANCE,
February 4, 2007
|
29,408,576
|
$
|
294
|
$
|
43,493
|
$
|
242,800
|
$
|
-
|
$
|
286,587
|
||||||||
Net
income
|
-
|
-
|
-
|
23,985
|
-
|
23,985
|
|||||||||||||
Dividends
paid on common stock, ($0.20 per share)
|
-
|
-
|
-
|
(12,013
|
)
|
-
|
(12,013
|
)
|
|||||||||||
Common
stock issued on exercise of stock options
|
645,832
|
7
|
8,495
|
-
|
-
|
8,502
|
|||||||||||||
Issuance
of non-vested stock, net of forfeitures
|
138,345
|
1
|
(1
|
)
|
-
|
-
|
-
|
||||||||||||
Amortization
of non-vested stock grants
|
-
|
-
|
1,941
|
-
|
-
|
1,941
|
|||||||||||||
Stock
option compensation expense
|
-
|
-
|
202
|
-
|
-
|
202
|
|||||||||||||
Income
tax benefit related to exercise of stock options
|
-
|
-
|
5,693
|
-
|
-
|
5,693
|
|||||||||||||
BALANCE,
August 4, 2007
|
30,192,753
|
$
|
302
|
$
|
59,823
|
$
|
254,772
|
$
|
-
|
$
|
314,897
|
Twenty-six
Weeks Ended
|
|||||||
August
2,
|
August
4,
|
||||||
2008
|
2007
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income
|
$
|
40,993
|
$
|
23,985
|
|||
Adjustments
to reconcile net income to net cash flows from operating
activities:
|
|||||||
Depreciation
and amortization
|
10,383
|
9,485
|
|||||
Amortization
of non-vested stock grants
|
2,599
|
1,941
|
|||||
Stock
option compensation expense
|
199
|
202
|
|||||
Gain
on involuntary conversion of corporate aircraft to monetary
asset
|
(2,963
|
)
|
-
|
||||
Other
|
50
|
67
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(1,874
|
)
|
205
|
||||
Inventory
|
(25,793
|
)
|
(25,715
|
)
|
|||
Prepaid
expenses and other assets
|
(1,196
|
)
|
(2,181
|
)
|
|||
Accounts
payable
|
23,247
|
19,723
|
|||||
Accrued
employee compensation
|
(11,335
|
)
|
(8,095
|
)
|
|||
Accrued
store operating expenses
|
1,300
|
993
|
|||||
Gift
certificates redeemable
|
(2,697
|
)
|
(2,398
|
)
|
|||
Income
taxes payable
|
(1,712
|
)
|
(3,451
|
)
|
|||
Long-term
liabilities and deferred compensation
|
4,326
|
2,100
|
|||||
Net
cash flows from operating activities
|
35,527
|
16,861
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchase
of property and equipment
|
(15,044
|
)
|
(14,938
|
)
|
|||
Proceeds
from sale of property and equipment
|
11,587
|
18
|
|||||
Change
in other assets
|
(167
|
)
|
151
|
||||
Purchases
of investments
|
(16,581
|
)
|
(39,366
|
)
|
|||
Proceeds
from sales/maturities of investments
|
104,503
|
25,563
|
|||||
Net
cash flows from investing activities
|
84,298
|
(28,572
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Proceeds
from the exercise of stock options
|
8,876
|
8,502
|
|||||
Excess
tax benefit from stock option exercises
|
6,419
|
5,048
|
|||||
Payment
of dividends
|
(15,269
|
)
|
(12,013
|
)
|
|||
Net
cash flows from financing activities
|
26
|
1,537
|
|||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
119,851
|
(10,174
|
)
|
||||
CASH
AND CASH EQUIVALENTS, Beginning of period
|
64,293
|
35,752
|
|||||
CASH
AND CASH EQUIVALENTS, End of period
|
$
|
184,144
|
$
|
25,578
|
1.
|
Management
Representation
|
2.
|
Description
of the Business
|
Percentage
of Net Sales
|
Percentage
of Net Sales
|
||||||||||||
Thirteen
Weeks Ended
|
Twenty-six
Weeks Ended
|
||||||||||||
Merchandise
Group
|
August 2, 2008
|
August 4, 2007
|
August 2, 2008
|
August 4, 2007
|
|||||||||
Denims
|
34.9
|
%
|
37.4
|
%
|
38.4
|
%
|
39.8
|
%
|
|||||
Tops
(including sweaters)
|
40.9
|
36.5
|
38.5
|
33.8
|
|||||||||
Sportswear/Fashions
|
10.2
|
9.8
|
9.3
|
9.4
|
|||||||||
Accessories
|
7.8
|
8.1
|
7.5
|
7.8
|
|||||||||
Footwear
|
5.0
|
6.4
|
5.0
|
7.0
|
|||||||||
Casual
bottoms
|
0.9
|
1.4
|
0.9
|
1.6
|
|||||||||
Outerwear
|
0.2
|
0.3
|
0.3
|
0.5
|
|||||||||
Other
|
0.1
|
0.1
|
0.1
|
0.1
|
|||||||||
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
3.
|
Net
Earnings Per Share
|
Thirteen
Weeks Ended
|
Thirteen
Weeks Ended
|
||||||||||||||||||
August
2, 2008
|
August
4, 2007
|
||||||||||||||||||
Weighted
|
Weighted
|
||||||||||||||||||
Average
|
Per
Share
|
Average
|
Per
Share
|
||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
||||||||||||||
Basic
EPS
|
$
|
22,276
|
30,231
|
$
|
0.74
|
$
|
11,792
|
29,776
|
$
|
0.40
|
|||||||||
Effect
of dilutive securities
Stock
options and non-vested shares
|
-
|
827
|
(0.02
|
)
|
-
|
1,148
|
(0.02
|
)
|
|||||||||||
Diluted
EPS
|
$
|
22,276
|
31,058
|
$
|
0.72
|
$
|
11,792
|
30,924
|
$
|
0.38
|
Twenty-six
Weeks Ended
|
|
Twenty-six
Weeks Ended
|
|
||||||||||||||||
|
|
August
2, 2008
|
|
August
4, 2007
|
|||||||||||||||
Weighted
|
Weighted
|
||||||||||||||||||
Average
|
Per
Share
|
Average
|
Per
Share
|
||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
||||||||||||||
Basic
EPS
|
$
|
40,993
|
30,051
|
$
|
1.36
|
$
|
23,985
|
29,622
|
$
|
0.81
|
|||||||||
Effect
of dilutive securities
Stock
options and non-vested shares
|
-
|
895
|
(0.04
|
)
|
-
|
1,184
|
(0.03
|
)
|
|||||||||||
Diluted
EPS
|
$
|
40,993
|
30,946
|
$
|
1.32
|
$
|
23,985
|
30,806
|
$
|
0.78
|
4.
|
Investments
|
Gross
|
Gross
|
Estimated
|
|||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
||||||||||
Cost
|
Gains
|
Losses
|
Value
|
||||||||||
Available-for-Sale
Securities:
|
|||||||||||||
Auction-rate
securities
|
$
|
55,795
|
$
|
-
|
$
|
(1,549
|
)
|
$
|
54,246
|
||||
Held-to-Maturity
Securities:
|
|||||||||||||
State
and municipal bonds
|
$
|
32,064
|
$
|
258
|
$
|
(85
|
)
|
$
|
32,237
|
||||
Fixed
maturities
|
500
|
-
|
-
|
500
|
|||||||||
U.S.
treasuries
|
3,000
|
13
|
-
|
3,013
|
|||||||||
$
|
35,564
|
$
|
271
|
$
|
(85
|
)
|
$
|
35,750
|
|||||
Trading
Securities:
|
|||||||||||||
Mutual
funds
|
$
|
4,987
|
$
|
-
|
$
|
(157
|
)
|
$
|
4,830
|
Gross
|
Gross
|
Estimated
|
|||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
||||||||||
Cost
|
Gains
|
Losses
|
Value
|
||||||||||
Available-for-Sale
Securities:
|
|||||||||||||
Auction-rate
securities
|
$
|
145,835
|
$
|
-
|
$
|
-
|
$
|
145,835
|
|||||
Held-to-Maturity
Securities:
|
|||||||||||||
State
and municipal bonds
|
$
|
26,260
|
$
|
375
|
$
|
(10
|
)
|
$
|
26,625
|
||||
Fixed
maturities
|
2,899
|
1
|
-
|
2,900
|
|||||||||
U.S.
treasuries
|
4,990
|
24
|
-
|
5,014
|
|||||||||
$
|
34,149
|
$
|
400
|
$
|
(10
|
)
|
$
|
34,539
|
|||||
Trading
Securities:
|
|||||||||||||
Mutual
funds
|
$
|
4,143
|
$
|
5
|
$
|
(21
|
)
|
$
|
4,127
|
Amortized
|
Fair
|
||||||
Cost
|
Value
|
||||||
Fiscal
Periods
|
|||||||
Twelve
months ending August 1, 2009
|
$
|
14,405
|
$
|
14,454
|
|||
Twelve
months ending July 31, 2010
|
6,709
|
6,757
|
|||||
Twelve
months ending July 30, 2011
|
4,412
|
4,459
|
|||||
Twelve
months ending July 28, 2012
|
2,196
|
2,235
|
|||||
Twelve
months ending August 3, 2013
|
1,010
|
1,022
|
|||||
Thereafter
|
6,832
|
6,823
|
|||||
$
|
35,564
|
$
|
35,750
|
5.
|
Fair
Value Measurements
|
·
|
Level
1 – Quoted market prices in active markets for identical assets or
liabilities.
|
·
|
Level
2 – Observable market-based inputs or unobservable inputs that are
corroborated by market data.
|
·
|
Level
3 – Unobservable inputs that are not corroborated by market
data.
|
Fair Value Measurements at Reporting Date Using
|
|||||||||||||
Quoted Prices in
|
|||||||||||||
Active Markets
|
Significant
|
Significant
|
|||||||||||
for Identical
|
Observable
|
Unobservable
|
|||||||||||
Assets
|
Inputs
|
Inputs
|
|||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||
ASSETS:
|
|||||||||||||
Available-for-sale
securities
(including
auction-rate securities)
|
$
|
8,355
|
$
|
45,891
|
$
|
-
|
$
|
54,246
|
|||||
Trading
securities (including mutual funds)
|
4,830
|
-
|
-
|
4,830
|
|||||||||
Totals
|
$
|
13,185
|
$
|
45,891
|
$
|
-
|
$
|
59,076
|
6.
|
Comprehensive
Income
|
Thirteen Weeks Ended
|
|||||||
August 2, 2008
|
August 4, 2007
|
||||||
Net
income
|
$
|
22,276
|
$
|
11,792
|
|||
Changes
in net unrealized losses on investments in auction-rate-securities,
net of
taxes of $169 and $0
|
(288
|
)
|
-
|
||||
Comprehensive
Income
|
$
|
21,988
|
$
|
11,792
|
Twenty-six Weeks Ended
|
|||||||
August 2, 2008
|
August 4, 2007
|
||||||
Net
income
|
$
|
40,993
|
$
|
23,985
|
|||
Changes
in net unrealized losses on investments in auction-rate-securities,
net of
taxes of $573 and $0
|
(976
|
)
|
-
|
||||
Comprehensive
Income
|
$
|
40,017
|
$
|
23,985
|
7.
|
Other
Income
|
Thirteen Weeks Ended
|
Twenty-six Weeks Ended
|
||||||||||||
August 2, 2008
|
August 4, 2007
|
August 2, 2008
|
August 4, 2007
|
||||||||||
Interest/dividends
from investments
|
$
|
1,915
|
$
|
2,173
|
$
|
4,147
|
$
|
4,059
|
|||||
Insurance
proceeds
|
69
|
-
|
69
|
162
|
|||||||||
Miscellaneous
|
65
|
87
|
153
|
162
|
|||||||||
Other
Income, net
|
$
|
2,049
|
$
|
2,260
|
$
|
4,369
|
$
|
4,383
|
8.
|
Supplemental
Cash Flow Information
|
9.
|
Stock-Based
Compensation
|
2008
|
2007
|
||||||
Risk-free
interest rate (1)
|
3.10
|
%
|
4.80
|
%
|
|||
Dividend
yield (2)
|
2.40
|
%
|
2.40
|
%
|
|||
Expected
volatility (3)
|
33.0
|
%
|
39.0
|
%
|
|||
Expected
lives - years (4)
|
7.0
|
7.0
|
(1) |
Based
on the U.S. Treasury yield curve in effect at the time of grant with
a
term consistent with the expected lives of stock
options.
|
(2) |
Based
on expected dividend yield as of the date of
grant.
|
(3) |
Based
on historical volatility of the Company’s common stock over a period
consistent with the expected lives of
options.
|
(4) |
Based
on historical and expected exercise
behavior.
|
2008
|
||||||||||||||||
Weighted
|
||||||||||||||||
Weighted
|
Average
|
|||||||||||||||
Average
|
Remaining
|
Aggregate
|
||||||||||||||
Exercise
|
Contractual
|
Intrinsic
|
||||||||||||||
Shares
|
Price
|
Life
|
Value
|
|||||||||||||
Outstanding
- beginning
|
||||||||||||||||
of
year
|
2,057,228
|
$
|
12.72
|
|||||||||||||
Granted
|
27,000
|
42.02
|
||||||||||||||
Expired/forfeited
|
(169
|
)
|
15.98
|
|||||||||||||
Exercised
|
(669,725
|
)
|
13.25
|
|||||||||||||
Outstanding
- end of quarter
|
1,414,334
|
$
|
13.02
|
4.20
|
years
|
$
|
52,894
|
|||||||||
Exercisable
- end of quarter
|
1,374,841
|
$
|
12.36
|
4.07
|
years
|
$
|
52,332
|
2008
|
|||||||
Weighted Average
|
|||||||
Grant Date
|
|||||||
Shares
|
Fair Value
|
||||||
Non-Vested
- beginning of year
|
289,615
|
$
|
28.44
|
||||
Granted
|
140,050
|
42.02
|
|||||
Forfeited
|
(100
|
)
|
33.87
|
||||
Vested
|
(27,880
|
)
|
33.87
|
||||
Non-Vested
- end of quarter
|
401,685
|
$
|
32.79
|
10.
|
Recently
Issued Accounting
Pronouncements
|
11.
|
Insurance
Proceeds
|
Percentage of Net Sales
|
Percentage
|
Percentage of Net Sales
|
Percentage
|
||||||||||||||||
Thirteen Weeks Ended
|
Increase/
|
Twenty-six Weeks Ended
|
Increase/
|
||||||||||||||||
Aug.2, 2008
|
Aug.4, 2007
|
(Decrease)
|
Aug.2, 2008
|
Aug.4, 2007
|
(Decrease)
|
||||||||||||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
36.6
|
%
|
100.0
|
%
|
100.0
|
%
|
34.5
|
%
|
|||||||
Cost
of sales (including buying, distribution and occupancy
costs)
|
58.6
|
%
|
62.6
|
%
|
27.8
|
%
|
58.8
|
%
|
62.5
|
%
|
26.5
|
%
|
|||||||
Gross
profit
|
41.4
|
%
|
37.4
|
%
|
51.4
|
%
|
41.2
|
%
|
37.5
|
%
|
47.8
|
%
|
|||||||
Selling
expenses
|
19.7
|
%
|
20.2
|
%
|
33.6
|
%
|
19.7
|
%
|
19.8
|
%
|
34.1
|
%
|
|||||||
General
and administrative expenses
|
2.1
|
%
|
3.9
|
%
|
-28.9
|
%
|
3.1
|
%
|
4.0
|
%
|
3.0
|
%
|
|||||||
Income
from operations
|
19.6
|
%
|
13.3
|
%
|
102.4
|
%
|
18.4
|
%
|
13.7
|
%
|
80.8
|
%
|
|||||||
Other
income, net
|
1.2
|
%
|
1.8
|
%
|
-9.4
|
%
|
1.3
|
%
|
1.8
|
%
|
-0.3
|
%
|
|||||||
Income
before income taxes
|
20.8
|
%
|
15.1
|
%
|
88.9
|
%
|
19.7
|
%
|
15.5
|
%
|
71.5
|
%
|
|||||||
Provision
for income taxes
|
7.7
|
%
|
5.6
|
%
|
88.9
|
%
|
7.3
|
%
|
5.7
|
%
|
72.4
|
%
|
|||||||
Net
income
|
13.1
|
%
|
9.5
|
%
|
88.9
|
%
|
12.4
|
%
|
9.8
|
%
|
70.9
|
%
|
1.
|
Revenue
Recognition.
Retail store sales are recorded upon the purchase of merchandise
by
customers. Online sales are recorded when merchandise is delivered
to the
customer, with the time of delivery being based on estimated shipping
time
from the Company’s distribution center to the customer. Shipping fees
charged to customers are included in revenue and shipping costs are
included in selling expenses. The Company accounts for layaway sales
in
accordance with SAB No. 101, Revenue
Recognition,
recognizing revenue from sales made under its layaway program upon
delivery of the merchandise to the customer. Revenue is not recorded
when
gift cards and gift certificates are sold, but rather when a card
or
certificate is redeemed for merchandise. A current liability for
unredeemed gift cards and certificates is recorded at the time the
card or
certificate is purchased. The amount of the gift certificate liability
is
determined using the outstanding balances from the prior three years
of
issuance and the gift card liability is determined using the outstanding
balances from the prior four years of issuance. The liability recorded
for
unredeemed gift cards and gift certificates was $5.8 million and
$8.5
million as of August 2, 2008 and February 2, 2008, respectively.
The
Company records breakage as other income when the probability of
redemption, which is based on historical redemption patterns, is
remote.
The Company establishes a liability for estimated merchandise returns
based upon the historical average sales return percentage. Customer
returns could potentially exceed the historical average, thus reducing
future net sales results and potentially reducing future net earnings.
The
accrued liability for reserve for sales returns was $0.5 million
and $0.4
million as of August 2, 2008 and February 2, 2008,
respectively.
|
2.
|
Inventory.
Inventory is valued at the lower of cost or market. Cost is determined
using an average cost method that approximates the first-in, first-out
(FIFO) method. Management makes adjustments to inventory and cost
of goods
sold, based upon estimates, to reserve for merchandise obsolescence
and
markdowns that could affect market value, based on assumptions using
calculations applied to current inventory levels within each of four
different markdown levels. Management also reviews the levels of
inventory
in each markdown group and the overall aging of the inventory versus
the
estimated future demand for such product and the current market
conditions. Such judgments could vary significantly from actual results,
either favorably or unfavorably, due to fluctuations in future economic
conditions, industry trends, consumer demand, and the competitive
retail
environment. Such changes in market conditions could negatively impact
the
sale of markdown inventory, causing further markdowns or inventory
obsolescence, resulting in increased cost of goods sold from write-offs
and reducing the Company’s net earnings. The liability recorded as a
reserve for markdowns and/or obsolescence was $5.2 million and $5.8
million as of August 2, 2008 and February 2, 2008, respectively.
The
Company is not aware of any events, conditions or changes in demand
or
price that would indicate that our inventory valuation may not be
materially accurate at this time.
|
3.
|
Income
Taxes.
The Company records a deferred tax asset and liability for expected
future
tax consequences resulting from temporary differences between financial
reporting and tax bases of assets and liabilities. The Company considers
future taxable income and ongoing tax planning in assessing the value
of
its deferred tax assets. If the Company determines that it is more
than
likely that these assets will not be realized, the Company would
reduce
the value of these assets to their expected realizable value, thereby
decreasing net income. Estimating the value of these assets is based
upon
the Company’s judgment. If the Company subsequently determined that the
deferred tax assets, which had been written down, would be realized
in the
future, such value would be increased. Adjustment would be made to
increase net income in the period such determination was made.
|
4.
|
Operating
Leases.
The Company leases retail stores under operating leases. Most lease
agreements contain tenant improvement allowances, rent holidays,
rent
escalation clauses, and/or contingent rent provisions. For purposes
of
recognizing lease incentives and minimum rental expenses on a
straight-line basis over the terms of the leases, the Company uses
the
date of initial possession to begin amortization, which is generally
when
the Company enters the space and begins to make improvements in
preparation of intended use. For tenant improvement allowances and
rent
holidays, the Company records a deferred rent liability on the balance
sheets and amortizes the deferred rent over the terms of the leases
as
reductions to rent expense on the statements of
income.
|
5.
|
Investments.
The Company invests a portion of its short and long-term investments
in
auction-rate securities (“ARS”). As of August 2, 2008 and February 2,
2008, $54.2 million and $145.8 million, respectively, of investments
were
in auction-rate securities. ARSs have a long-term stated maturity,
but are
reset through a “dutch auction” process that occurs every 7 to 49 days,
depending on the terms of the individual security. Until February
2008,
the ARS market was highly liquid. During February 2008, however,
a
significant number of auctions related to these securities failed,
meaning
that there was not enough demand to sell the entire issue at auction.
The
impact of the failed auctions on holders of ARS is that the holder
cannot
sell the securities and the issuer’s interest rate is generally reset to a
higher “penalty” rate. The failed auctions have limited the current
liquidity of certain of the Company’s investments in ARS; however, the
Company has no reason to believe that any of the underlying issuers
of its
ARS are currently at risk or that further auction failures will have
a
material impact on the Company’s ability to fund its
business.
|
Payments Due by Period
|
||||||||||||||||
Contractual obligations (dollar amounts in thousands)
|
Total
|
Less than 1
year
|
1-3 years
|
4-5 years
|
After 5
years
|
|||||||||||
Long term debt and purchase
obligations
|
$
|
4,740
|
$
|
4,464
|
$
|
276
|
$
|
-
|
$
|
-
|
||||||
Deferred
compensation
|
|
4,830
|
|
-
|
|
-
|
|
-
|
|
4,830
|
||||||
Operating
leases
|
|
233,245
|
|
40,832
|
|
70,119
|
|
50,254
|
|
72,040
|
||||||
Total
contractual obligations
|
$
|
239,411
|
$
|
41,426
|
$
|
70,861
|
$
|
50,254
|
$
|
76,870
|
Amount of Commitment Expiration Per Period
|
||||||||||||||||
Other Commercial Commitments
(dollar amounts in thousands)
|
Total
Amounts
Committed
|
Less than 1
|