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 30, 2011 | |||
o |
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: 001-12951 | |||
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
|
Securities registered pursuant to Section 12(b) of the Act:
|
Title of class
|
Name of Each Exchange on Which Registered
|
||
Common Stock, $.01 par value
|
New York Stock Exchange
|
Securities registered pursuant to Section 12(g) of the Act: None
|
||
___________________________________________________________
|
||
(Former name, former address, and former fiscal year if changed since last report)
|
þ Large accelerated filer; o Accelerated filer; o Non-accelerated filer; o Smaller Reporting Company
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THE BUCKLE, INC. | |||
FORM 10-Q | |||
INDEX
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|||
Pages
|
|||
|
3
|
||
|
17
|
||
|
25
|
||
|
25
|
||
|
26
|
||
26
|
|||
|
26
|
||
26
|
|||
|
26
|
||
|
26
|
||
|
26
|
||
|
27
|
BALANCE SHEETS
|
||||||||
(Amounts in Thousands Except Share and Per Share Amounts)
|
||||||||
(Unaudited)
|
||||||||
April 30,
|
January 29,
|
|||||||
ASSETS
|
2011
|
2011
|
||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 139,292 | $ | 116,470 | ||||
Short-term investments
|
21,497 | 22,892 | ||||||
Receivables
|
4,051 | 14,363 | ||||||
Inventory
|
89,866 | 88,593 | ||||||
Prepaid expenses and other assets
|
22,876 | 14,718 | ||||||
Total current assets
|
277,582 | 257,036 | ||||||
PROPERTY AND EQUIPMENT
|
347,959 | 342,413 | ||||||
Less accumulated depreciation and amortization
|
(178,103 | ) | (173,179 | ) | ||||
169,856 | 169,234 | |||||||
LONG-TERM INVESTMENTS
|
65,179 | 66,162 | ||||||
OTHER ASSETS
|
2,416 | 2,412 | ||||||
$ | 515,033 | $ | 494,844 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Accounts payable
|
$ | 41,076 | $ | 33,489 | ||||
Accrued employee compensation
|
15,278 | 36,018 | ||||||
Accrued store operating expenses
|
9,323 | 9,653 | ||||||
Gift certificates redeemable
|
12,914 | 17,213 | ||||||
Income taxes payable
|
9,796 | - | ||||||
Total current liabilities
|
88,387 | 96,373 | ||||||
DEFERRED COMPENSATION
|
8,734 | 7,727 | ||||||
DEFERRED RENT LIABILITY
|
37,617 | 37,430 | ||||||
OTHER LIABILITIES
|
7,421 | 7,649 | ||||||
Total liabilities
|
142,159 | 149,179 | ||||||
COMMITMENTS
|
||||||||
STOCKHOLDERS’ EQUITY:
|
||||||||
Common stock, authorized 100,000,000 shares of $.01 par value; 47,342,895 and 47,127,926
|
||||||||
shares issued and outstanding at April 30, 2011 and January 29, 2011, respectively
|
474 | 471 | ||||||
Additional paid-in capital
|
92,900 | 89,719 | ||||||
Retained earnings
|
280,150 | 256,146 | ||||||
Accumulated other comprehensive loss
|
(650 | ) | (671 | ) | ||||
Total stockholders’ equity
|
372,874 | 345,665 | ||||||
$ | 515,033 | $ | 494,844 | |||||
See notes to unaudited condensed financial statements.
|
THE BUCKLE, INC.
|
||||||||
STATEMENTS OF INCOME
|
||||||||
(Amounts in Thousands Except Per Share Amounts)
|
||||||||
(Unaudited)
|
||||||||
Thirteen Weeks Ended
|
||||||||
April 30,
|
May 1,
|
|||||||
2011
|
2010
|
|||||||
SALES, Net of returns and allowances
|
$ | 240,092 | $ | 214,797 | ||||
COST OF SALES (Including buying, distribution, and occupancy costs)
|
137,148 | 121,346 | ||||||
Gross profit
|
102,944 | 93,451 | ||||||
OPERATING EXPENSES:
|
||||||||
Selling
|
42,731 | 39,843 | ||||||
General and administrative
|
8,859 | 7,421 | ||||||
51,590 | 47,264 | |||||||
INCOME FROM OPERATIONS
|
51,354 | 46,187 | ||||||
OTHER INCOME, Net
|
1,612 | 1,833 | ||||||
INCOME BEFORE INCOME TAXES
|
52,966 | 48,020 | ||||||
PROVISION FOR INCOME TAXES
|
19,497 | 17,910 | ||||||
NET INCOME
|
$ | 33,469 | $ | 30,110 | ||||
EARNINGS PER SHARE:
|
||||||||
Basic
|
$ | 0.72 | $ | 0.65 | ||||
Diluted
|
$ | 0.71 | $ | 0.64 | ||||
Basic weighted average shares
|
46,748 | 46,053 | ||||||
Diluted weighted average shares
|
47,264 | 46,993 | ||||||
See notes to unaudited condensed financial statements.
|
THE BUCKLE, INC.
|
||||||||||||||||||||||||
STATEMENTS OF STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||
(Dollar Amounts in Thousands Except Share and Per Share Amounts)
|
||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Other
|
|||||||||||||||||||||||
Number
|
Common
|
Paid-in
|
Retained
|
Comprehensive
|
||||||||||||||||||||
of Shares
|
Stock
|
Capital
|
Earnings
|
Loss
|
Total
|
|||||||||||||||||||
FISCAL 2011
|
||||||||||||||||||||||||
BALANCE, January 30, 2011
|
47,127,926 | $ | 471 | $ | 89,719 | $ | 256,146 | $ | (671 | ) | $ | 345,665 | ||||||||||||
Net income
|
- | - | - | 33,469 | - | 33,469 | ||||||||||||||||||
Dividends paid on common stock,
|
||||||||||||||||||||||||
($0.20 per share)
|
- | - | - | (9,465 | ) | - | (9,465 | ) | ||||||||||||||||
Common stock issued on exercise
|
||||||||||||||||||||||||
of stock options
|
83,819 | 1 | 512 | - | - | 513 | ||||||||||||||||||
Issuance of non-vested stock, net of forfeitures
|
131,150 | 2 | (2 | ) | - | - | - | |||||||||||||||||
Amortization of non-vested stock grants,
|
||||||||||||||||||||||||
net of forfeitures
|
- | - | 1,621 | - | - | 1,621 | ||||||||||||||||||
Income tax benefit related to exercise of
|
||||||||||||||||||||||||
stock options
|
- | - | 1,050 | - | - | 1,050 | ||||||||||||||||||
Unrealized loss on investments, net of tax
|
- | - | - | - | 21 | 21 | ||||||||||||||||||
BALANCE, April 30, 2011
|
47,342,895 | $ | 474 | $ | 92,900 | $ | 280,150 | $ | (650 | ) | $ | 372,874 | ||||||||||||
FISCAL 2010
|
||||||||||||||||||||||||
BALANCE, January 31, 2010
|
46,381,263 | $ | 464 | $ | 78,837 | $ | 275,751 | $ | (793 | ) | $ | 354,259 | ||||||||||||
Net income
|
- | - | - | 30,110 | - | 30,110 | ||||||||||||||||||
Dividends paid on common stock,
|
||||||||||||||||||||||||
($0.20 per share)
|
- | - | - | (9,337 | ) | - | (9,337 | ) | ||||||||||||||||
Common stock issued on exercise
|
||||||||||||||||||||||||
of stock options
|
101,463 | 1 | 470 | - | - | 471 | ||||||||||||||||||
Issuance of non-vested stock, net of forfeitures
|
243,765 | 2 | (2 | ) | - | - | - | |||||||||||||||||
Amortization of non-vested stock grants,
|
||||||||||||||||||||||||
net of forfeitures
|
- | - | 1,500 | - | - | 1,500 | ||||||||||||||||||
Stock option compensation expense
|
- | - | 16 | - | - | 16 | ||||||||||||||||||
Income tax benefit related to exercise of
|
||||||||||||||||||||||||
stock options
|
- | - | 1,211 | - | - | 1,211 | ||||||||||||||||||
Unrealized loss on investments, net of tax
|
- | - | - | - | 34 | 34 | ||||||||||||||||||
BALANCE, May 1, 2010
|
46,726,491 | $ | 467 | $ | 82,032 | $ | 296,524 | $ | (759 | ) | $ | 378,264 | ||||||||||||
See notes to unaudited condensed financial statements.
|
THE BUCKLE, INC.
|
||||||||
STATEMENTS OF CASH FLOWS
|
||||||||
(Dollar Amounts in Thousands)
|
||||||||
(Unaudited)
|
||||||||
Thirteen Weeks Ended
|
||||||||
April 30,
|
May 1,
|
|||||||
2011
|
2010
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$ | 33,469 | $ | 30,110 | ||||
Adjustments to reconcile net income to net cash flows
|
||||||||
from operating activities:
|
||||||||
Depreciation and amortization
|
7,500 | 6,490 | ||||||
Amortization of non-vested stock grants, net of forfeitures
|
1,621 | 1,500 | ||||||
Stock option compensation expense
|
- | 16 | ||||||
Deferred income taxes
|
(600 | ) | (562 | ) | ||||
Other
|
311 | 11 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Receivables
|
1,580 | 759 | ||||||
Inventory
|
(1,273 | ) | 3,446 | |||||
Prepaid expenses and other assets
|
(7,865 | ) | (7,352 | ) | ||||
Accounts payable
|
9,744 | 11,177 | ||||||
Accrued employee compensation
|
(20,740 | ) | (24,765 | ) | ||||
Accrued store operating expenses
|
(330 | ) | (474 | ) | ||||
Gift certificates redeemable
|
(4,299 | ) | (3,266 | ) | ||||
Income taxes payable
|
18,620 | 15,384 | ||||||
Deferred rent liabilities and deferred compensation
|
1,194 | 1,138 | ||||||
Net cash flows from operating activities
|
38,932 | 33,612 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase of property and equipment
|
(10,590 | ) | (20,700 | ) | ||||
Proceeds from sale of property and equipment
|
- | 14 | ||||||
Change in other assets
|
(4 | ) | - | |||||
Purchases of investments
|
(2,107 | ) | (15,240 | ) | ||||
Proceeds from sales/maturities of investments
|
4,519 | 6,088 | ||||||
Net cash flows from investing activities
|
(8,182 | ) | (29,838 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from the exercise of stock options
|
513 | 471 | ||||||
Excess tax benefit from stock option exercises
|
1,024 | 1,169 | ||||||
Payment of dividends
|
(9,465 | ) | (9,337 | ) | ||||
Net cash flows from financing activities
|
(7,928 | ) | (7,697 | ) | ||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
22,822 | (3,923 | ) | |||||
CASH AND CASH EQUIVALENTS, Beginning of period
|
116,470 | 135,340 | ||||||
CASH AND CASH EQUIVALENTS, End of period
|
$ | 139,292 | $ | 131,417 | ||||
See notes to unaudited condensed financial statements.
|
Management Representation
|
Description of the Business
|
Percentage of Net Sales
|
||||||||
Thirteen Weeks Ended
|
||||||||
Merchandise Group
|
April 30, 2011
|
May 1, 2010
|
||||||
Denims
|
44.6 | % | 45.4 | % | ||||
Tops (including sweaters)
|
31.3 | 32.9 | ||||||
Sportswear/Fashions
|
9.4 | 8.4 | ||||||
Accessories
|
7.7 | 6.5 | ||||||
Footwear
|
5.4 | 5.3 | ||||||
Outerwear
|
0.7 | 0.9 | ||||||
Casual bottoms
|
0.7 | 0.5 | ||||||
Other
|
0.2 | 0.1 | ||||||
100.0 | % | 100.0 | % |
Net Earnings Per Share
|
Thirteen Weeks Ended
|
Thirteen Weeks Ended
|
|||||||||||||||||||||||
April 30, 2011
|
May 1, 2010
|
|||||||||||||||||||||||
Weighted
|
Per
|
Weighted
|
Per
|
|||||||||||||||||||||
Average
|
Share
|
Average
|
Share
|
|||||||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
|||||||||||||||||||
Basic EPS
|
$ | 33,469 | 46,748 | $ | 0.72 | $ | 30,110 | 46,053 | $ | 0.65 | ||||||||||||||
Effect of Dilutive Securities:
|
||||||||||||||||||||||||
Stock options and
|
||||||||||||||||||||||||
non-vested shares
|
- | 516 | (0.01 | ) | - | 940 | (0.01 | ) | ||||||||||||||||
Diluted EPS
|
$ | 33,469 | 47,264 | $ | 0.71 | $ | 30,110 | 46,993 | $ | 0.64 |
Investments
|
Amortized
|
Gross
|
Gross
|
Other-than-
|
Estimated
|
||||||||||||||||
Cost or
|
Unrealized
|
Unrealized
|
Temporary
|
Fair
|
||||||||||||||||
Par Value
|
Gains
|
Losses
|
Impairment
|
Value
|
||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||
Auction-rate securities
|
$ | 21,275 | $ | - | $ | (1,031 | ) | $ | (725 | ) | $ | 19,519 | ||||||||
Preferred stock
|
2,000 | - | - | (1,974 | ) | 26 | ||||||||||||||
$ | 23,275 | $ | - | $ | (1,031 | ) | $ | (2,699 | ) | $ | 19,545 | |||||||||
Held-to-maturity securities:
|
||||||||||||||||||||
State and municipal bonds
|
$ | 51,497 | $ | 456 | $ | (37 | ) | $ | - | $ | 51,916 | |||||||||
Fixed maturities
|
6,300 | 68 | - | - | 6,368 | |||||||||||||||
Certificates of deposit
|
600 | 21 | - | - | 621 | |||||||||||||||
$ | 58,397 | $ | 545 | $ | (37 | ) | $ | - | $ | 58,905 | ||||||||||
Trading securities:
|
||||||||||||||||||||
Mutual funds
|
$ | 8,734 | $ | - | $ | - | $ | - | $ | 8,734 |
Amortized
|
Gross
|
Gross
|
Other-than-
|
Estimated
|
||||||||||||||||
Cost or
|
Unrealized
|
Unrealized
|
Temporary
|
Fair
|
||||||||||||||||
Par Value
|
Gains
|
Losses
|
Impairment
|
Value
|
||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||
Auction-rate securities
|
$ | 21,725 | $ | - | $ | (1,065 | ) | $ | (725 | ) | $ | 19,935 | ||||||||
Preferred stock
|
2,000 | - | - | (1,974 | ) | 26 | ||||||||||||||
$ | 23,725 | $ | - | $ | (1,065 | ) | $ | (2,699 | ) | $ | 19,961 | |||||||||
Held-to-maturity securities:
|
||||||||||||||||||||
State and municipal bonds
|
$ | 52,352 | $ | 428 | $ | (39 | ) | $ | - | $ | 52,741 | |||||||||
Fixed maturities
|
6,314 | 80 | - | - | 6,394 | |||||||||||||||
Certificates of deposit
|
700 | 22 | - | - | 722 | |||||||||||||||
U.S. treasuries
|
2,000 | - | - | - | 2,000 | |||||||||||||||
$ | 61,366 | $ | 530 | $ | (39 | ) | $ | - | $ | 61,857 | ||||||||||
Trading securities:
|
||||||||||||||||||||
Mutual funds
|
$ | 7,453 | $ | 274 | $ | - | $ | - | $ | 7,727 |
Nature
|
Underlying Collateral
|
Par Value
|
|||||
Municipal revenue bonds
|
98% insured by AAA/AA/A-rated bond insurers at April 30, 2011
|
$ | 10,400 | ||||
Municipal bond funds
|
Fixed income instruments within issuers' money market funds
|
7,925 | |||||
Student loan bonds
|
Student loans guaranteed by state entities
|
2,950 | |||||
Preferred stock
|
Underlying investments of closed-end funds
|
2,000 | |||||
Total par value
|
$ | 23,275 |
Amortized
|
Fair
|
|||||||
Cost
|
Value
|
|||||||
Held-to-maturity securities
|
||||||||
Less than 1 year
|
$ | 21,497 | $ | 21,580 | ||||
1 - 5 years
|
36,160 | 36,509 | ||||||
5 - 10 years
|
496 | 559 | ||||||
Greater than 10 years
|
244 | 257 | ||||||
$ | 58,397 | $ | 58,905 |
Fair Value Measurements
|
|
●
|
Level 1 – Quoted market prices in active markets for identical assets or liabilities. Short-term and long-term investments with active markets or known redemption values are reported at fair value utilizing Level 1 inputs.
|
|
●
|
Level 2 – Observable market-based inputs (either directly or indirectly) such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or inputs that are corroborated by market data.
|
|
●
|
Level 3 – Unobservable inputs that are not corroborated by market data and are projections, estimates, or interpretations that are supported by little or no market activity and are significant to the fair value of the assets. The Company has concluded that certain of its ARS represent Level 3 valuation and should be valued using a discounted cash flow analysis. The assumptions used in preparing the discounted cash flow model include estimates for interest rates, timing and amount of cash flows, and expected holding periods of the ARS.
|
|
●
|
Pricing was provided by the custodian of ARS;
|
|
●
|
Pricing was provided by a third-party broker for ARS;
|
|
●
|
Sales of similar securities;
|
|
●
|
Quoted prices for similar securities in active markets;
|
|
●
|
Quoted prices for publicly traded preferred securities;
|
|
●
|
Quoted prices for similar assets in markets that are not active - including markets where there are few transactions for the asset, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly;
|
|
●
|
Pricing was provided by a third-party valuation consultant (using Level 3 inputs).
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||
Quoted Prices in
|
||||||||||||||||
Active Markets
|
Significant
|
Significant
|
||||||||||||||
for Identical
|
Observable
|
Unobservable
|
||||||||||||||
Assets
|
Inputs
|
Inputs
|
||||||||||||||
April 30, 2011
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Auction-rate securities
|
$ | - | $ | 8,171 | $ | 11,348 | $ | 19,519 | ||||||||
Preferred stock
|
26 | - | - | 26 | ||||||||||||
Trading securities (including mutual funds)
|
8,734 | - | - | 8,734 | ||||||||||||
Totals
|
$ | 8,760 | $ | 8,171 | $ | 11,348 | $ | 28,279 |
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||
Quoted Prices in
|
||||||||||||||||
Active Markets
|
Significant
|
Significant
|
||||||||||||||
for Identical
|
Observable
|
Unobservable
|
||||||||||||||
Assets
|
Inputs
|
Inputs
|
||||||||||||||
January 29, 2011
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Auction-rate securities
|
$ | - | $ | 11,349 | $ | 8,586 | $ | 19,935 | ||||||||
Preferred stock
|
26 | - | - | 26 | ||||||||||||
Trading securities (including mutual funds)
|
7,727 | - | - | 7,727 | ||||||||||||
Totals
|
$ | 7,753 | $ | 11,349 | $ | 8,586 | $ | 27,688 |
Thirteen Weeks Ended April 30, 2011
|
|||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
|||||||||||||||||
Available-for-Sale Securities
|
Trading Securities
|
||||||||||||||||
Auction-rate
|
Preferred
|
Mutual
|
|||||||||||||||
Securities
|
Stock
|
Funds
|
Total
|
||||||||||||||
Balance, beginning of year
|
$ | 8,586 | $ | - | $ | - | $ | 8,586 | |||||||||
Transfers into Level 3
|
2,787 |
(a)
|
- | - | 2,787 | ||||||||||||
Transfers out of Level 3
|
- | - | - | - | |||||||||||||
Total gains and losses:
|
|||||||||||||||||
Included in net income
|
- | - | - | - | |||||||||||||
Included in other
|
|||||||||||||||||
comprehensive income
|
- | - | - | - | |||||||||||||
Purchases, Issuances,
|
|||||||||||||||||
Sales, and Settlements:
|
|||||||||||||||||
Purchases
|
- | - | - | - | |||||||||||||
Issuances
|
- | - | - | - | |||||||||||||
Sales
|
(25 | ) | - | - | (25 | ) | |||||||||||
Settlements
|
- | - | - | - | |||||||||||||
Balance, end of quarter
|
$ | 11,348 | $ | - | $ | - | $ | 11,348 |
|
(a)
|
Transferred from Level 2 to Level 3 due to lack of observable market data due to reduction in market activity. The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period in which the transfer occurred.
|
Thirteen Weeks Ended May 1, 2010
|
||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
||||||||||||||||
Available-for-Sale Securities
|
Trading Securities
|
|||||||||||||||
Auction-rate
|
Preferred
|
Mutual
|
||||||||||||||
Securities
|
Stock
|
Funds
|
Total
|
|||||||||||||
Balance, beginning of year
|
$ | 8,637 | $ | - | $ | - | $ | 8,637 | ||||||||
Transfers into Level 3
|
- | - | - | - | ||||||||||||
Transfers out of Level 3
|
- | - | - | - | ||||||||||||
Total gains and losses:
|
||||||||||||||||
Included in net income
|
- | - | - | - | ||||||||||||
Included in other
|
||||||||||||||||
comprehensive income
|
- | - | - | - | ||||||||||||
Purchases, Issuances,
|
||||||||||||||||
Sales, and Settlements:
|
||||||||||||||||
Purchases
|
- | - | - | - | ||||||||||||
Issuances
|
- | - | - | - | ||||||||||||
Sales
|
(28 | ) | - | - | (28 | ) | ||||||||||
Settlements
|
- | - | - | - | ||||||||||||
Balance, end of quarter
|
$ | 8,609 | $ | - | $ | - | $ | 8,609 |
Comprehensive Income
|
Thirteen Weeks Ended
|
||||||||
April 30, 2011
|
May 1, 2010
|
|||||||
Net income
|
$ | 33,469 | $ | 30,110 | ||||
Changes in net unrealized losses on investments
|
||||||||
in auction-rate-securities, net of taxes of $(13) and $(20)
|
21 | 34 | ||||||
Comprehensive income
|
$ | 33,490 | $ | 30,144 |
Supplemental Cash Flow Information
|
Stock-Based Compensation
|
Thirteen Weeks Ended
|
||||||||
April 30, 2011
|
May 1, 2010
|
|||||||
Stock-based compensation expense, before tax:
|
||||||||
Stock options
|
$ | - | $ | 16 | ||||
Non-vested shares of common stock
|
1,621 | 1,500 | ||||||
Total stock-based compensation expense, before tax
|
$ | 1,621 | $ | 1,516 | ||||
Total stock-based compensation expense, after tax
|
$ | 1,021 | $ | 955 |
Weighted
|
|||||||||||||||||
Weighted
|
Average
|
||||||||||||||||
Average
|
Remaining
|
Aggregate
|
|||||||||||||||
Exercise
|
Contractual
|
Intrinsic
|
|||||||||||||||
Shares
|
Price
|
Life
|
Value
|
||||||||||||||
Outstanding - beginning of year
|
600,506 | $ | 4.54 | ||||||||||||||
Granted
|
- | - | |||||||||||||||
Expired/forfeited
|
- | - | |||||||||||||||
Exercised
|
(83,819 | ) | 6.12 | ||||||||||||||
Outstanding - end of quarter
|
516,687 | $ | 4.29 | 2.81 |
years
|
$ | 21,289 | ||||||||||
Exercisable - end of quarter
|
516,687 | $ | 4.29 | 2.81 |
years
|
$ | 21,289 |
Weighted Average
|
||||||||
Grant Date
|
||||||||
Shares
|
Fair Value
|
|||||||
Non-Vested - beginning of year
|
436,546 | $ | 26.07 | |||||
Granted
|
245,500 | 35.59 | ||||||
Forfeited
|
(114,350 | ) | 28.42 | |||||
Vested
|
(31,872 | ) | 28.87 | |||||
Non-Vested - end of quarter
|
535,824 | $ | 29.76 |
9.
|
Recently Issued Accounting Pronouncements
|
Percentage of Net Sales
|
||||||||||||
Thirteen Weeks Ended
|
Percentage
|
|||||||||||
April 30, 2011
|
May 1, 2010
|
Increase/(Decrease)
|
||||||||||
Net sales
|
100.0 | % | 100.0 | % | 11.8 | % | ||||||
Cost of sales (including buying,
|
||||||||||||
distribution, and occupancy costs)
|
57.1 | % | 56.5 | % | 13.0 | % | ||||||
Gross profit
|
42.9 | % | 43.5 | % | 10.2 | % | ||||||
Selling expenses
|
17.8 | % | 18.5 | % | 7.2 | % | ||||||
General and administrative expenses
|
3.7 | % | 3.5 | % | 19.4 | % | ||||||
Income from operations
|
21.4 | % | 21.5 | % | 11.2 | % | ||||||
Other income, net
|
0.6 | % | 0.8 | % | -12.0 | % | ||||||
Income before income taxes
|
22.0 | % | 22.3 | % | 10.3 | % | ||||||
Provision for income taxes
|
8.1 | % | 8.3 | % | 8.9 | % | ||||||
Net income
|
13.9 | % | 14.0 | % | 11.2 | % |
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 recognizes 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 amounts of the gift certificate and gift card liabilities are determined using the outstanding balances from the prior three and four years of issuance, respectively. The liability recorded for unredeemed gift certificates and gift cards was $12.9 million and $17.2 million as of April 30, 2011and January 29, 2011, respectively. The Company records breakage as other income when the probability of redemption, which is based on historical redemption patterns, is remote.
|
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 $4.6 million and $5.1 million as of April 30, 2011 and January 29, 2011, respectively. The Company is not aware of any events, conditions, or changes in demand or price that would indicate that its 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. As of April 30, 2011 and January 29, 2011, the Company’s non-current deferred tax liability includes a $0.2 million valuation allowance recorded to reduce the value of the Company’s capital loss carryforward to its expected realizable amount prior to expiration.
|
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. Investments classified as short-term investments include securities with a maturity of greater than three months and less than one year, and a portion of the Company’s investments in auction-rate securities (“ARS”), which are available-for-sale securities. Available-for-sale securities are reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders’ equity (net of the effect of income taxes), using the specific identification method, until they are sold.
|
|
●
|
Pricing was provided by the custodian of ARS;
|
|
●
|
Pricing was provided by a third-party broker for ARS;
|
|
●
|
Sales of similar securities;
|
|
●
|
Quoted prices for similar securities in active markets;
|
|
●
|
Quoted prices for publicly traded preferred securities;
|
|
●
|
Quoted prices for similar assets in markets that are not active - including markets where there are few transactions for the asset, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly;
|
|
●
|
Pricing was provided by a third-party valuation consultant (using Level 3 inputs).
|
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
|
$ | 8,471 | $ | 7,277 | $ | 1,194 | $ | - | $ | - | ||||||||||
Deferred compensation
|
8,734 | - | - | - | 8,734 | |||||||||||||||
Operating leases
|
349,650 | 53,705 | 96,344 | 78,232 | 121,369 | |||||||||||||||
Total contractual obligations
|
$ | 366,855 | $ | 60,982 | $ | 97,538 | $ | 78,232 | $ | 130,103 |
Amount of Commitment Expiration Per Period
|
||||||||||||||||||||
Other commercial commitments (dollar amounts in thousands):
|
Total Amounts Committed
|
Less than
1 year
|
1-3 years
|
4-5 years
|
After 5
years
|
|||||||||||||||
Lines of credit
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Total commercial commitments
|
$ | - | $ | - | $ | - | $ | - | $ | - |