a50496516.htm
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 October 27, 2012
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)
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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for a shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act).
þ Large accelerated filer; |
o Accelerated filer; |
o Non-accelerated filer; |
o Smaller Reporting Company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ
The number of shares outstanding of the Registrant's Common Stock, as of November 30, 2012, was 48,049,452.
THE BUCKLE, INC.
FORM 10-Q
INDEX
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Pages |
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Part I. Financial Information (unaudited) |
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3 |
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17 |
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26 |
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26 |
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Part II. Other Information |
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27 |
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27 |
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27 |
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27 |
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27 |
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27 |
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27 |
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28 |
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THE BUCKLE, INC.
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(Amounts in Thousands Except Share and Per Share Amounts)
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(Unaudited)
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October 27,
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January 28,
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ASSETS
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2012
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2012
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CURRENT ASSETS:
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Cash and cash equivalents
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$ |
213,036 |
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$ |
166,511 |
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Short-term investments
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31,705 |
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29,998 |
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Receivables
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7,906 |
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4,584 |
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Inventory
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134,507 |
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104,209 |
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Prepaid expenses and other assets
|
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18,079 |
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14,825 |
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Total current assets
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405,233 |
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320,127 |
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PROPERTY AND EQUIPMENT
|
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376,527 |
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358,866 |
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Less accumulated depreciation and amortization
|
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(205,965 |
) |
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(189,832 |
) |
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170,562 |
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169,034 |
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LONG-TERM INVESTMENTS
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33,847 |
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39,985 |
|
OTHER ASSETS
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2,254 |
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2,393 |
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$ |
611,896 |
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$ |
531,539 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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CURRENT LIABILITIES:
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Accounts payable
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$ |
38,249 |
|
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$ |
27,416 |
|
Accrued employee compensation
|
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|
28,126 |
|
|
|
42,854 |
|
Accrued store operating expenses
|
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|
11,625 |
|
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11,125 |
|
Gift certificates redeemable
|
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13,381 |
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20,286 |
|
Income taxes payable
|
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|
12,521 |
|
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8,150 |
|
Total current liabilities
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103,902 |
|
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109,831 |
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DEFERRED COMPENSATION
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10,065 |
|
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8,581 |
|
DEFERRED RENT LIABILITY
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|
37,093 |
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36,503 |
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OTHER LIABILITIES
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12,351 |
|
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13,477 |
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Total liabilities
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163,411 |
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168,392 |
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COMMITMENTS
|
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STOCKHOLDERS’ EQUITY:
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Common stock, authorized 100,000,000 shares of $.01 par value; 47,941,952 and 47,432,089
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shares issued and outstanding at October 27, 2012 and January 28, 2012, respectively
|
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479 |
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|
474 |
|
Additional paid-in capital
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111,398 |
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100,333 |
|
Retained earnings
|
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|
337,232 |
|
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|
263,039 |
|
Accumulated other comprehensive loss
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|
(624 |
) |
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|
(699 |
) |
Total stockholders’ equity
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448,485 |
|
|
|
363,147 |
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$ |
611,896 |
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$ |
531,539 |
|
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See notes to unaudited condensed consolidated financial statements.
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THE BUCKLE, INC.
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CONSOLIDATED STATEMENTS OF INCOME
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(Amounts in Thousands Except Per Share Amounts)
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(Unaudited)
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Thirteen Weeks Ended
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Thirty-nine Weeks Ended
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October 27,
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October 29,
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October 27,
|
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October 29,
|
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2012
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2011
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2012
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2011
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SALES, Net of returns and allowances
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$ |
284,147 |
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$ |
273,400 |
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$ |
763,392 |
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$ |
725,870 |
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COST OF SALES (Including buying,
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distribution, and occupancy costs)
|
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158,732 |
|
|
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154,735 |
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437,279 |
|
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417,116 |
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Gross profit
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125,415 |
|
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118,665 |
|
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326,113 |
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308,754 |
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OPERATING EXPENSES:
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Selling
|
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49,257 |
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50,144 |
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|
137,018 |
|
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|
135,303 |
|
General and administrative
|
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|
9,995 |
|
|
|
8,146 |
|
|
|
28,520 |
|
|
|
24,947 |
|
|
|
|
59,252 |
|
|
|
58,290 |
|
|
|
165,538 |
|
|
|
160,250 |
|
|
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|
INCOME FROM OPERATIONS
|
|
|
66,163 |
|
|
|
60,375 |
|
|
|
160,575 |
|
|
|
148,504 |
|
|
|
|
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|
|
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OTHER INCOME, Net
|
|
|
172 |
|
|
|
313 |
|
|
|
2,345 |
|
|
|
2,431 |
|
|
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|
|
|
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|
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INCOME BEFORE INCOME TAXES
|
|
|
66,335 |
|
|
|
60,688 |
|
|
|
162,920 |
|
|
|
150,935 |
|
|
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|
PROVISION FOR INCOME TAXES
|
|
|
24,418 |
|
|
|
22,339 |
|
|
|
59,971 |
|
|
|
55,559 |
|
|
|
|
|
|
|
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|
|
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|
NET INCOME
|
|
$ |
41,917 |
|
|
$ |
38,349 |
|
|
$ |
102,949 |
|
|
$ |
95,376 |
|
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EARNINGS PER SHARE:
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|
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|
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|
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|
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|
Basic
|
|
$ |
0.89 |
|
|
$ |
0.82 |
|
|
$ |
2.18 |
|
|
$ |
2.04 |
|
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Diluted
|
|
$ |
0.88 |
|
|
$ |
0.81 |
|
|
$ |
2.16 |
|
|
$ |
2.02 |
|
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|
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|
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|
|
|
|
|
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|
Basic weighted average shares
|
|
|
47,358 |
|
|
|
46,831 |
|
|
|
47,307 |
|
|
|
46,801 |
|
Diluted weighted average shares
|
|
|
47,689 |
|
|
|
47,342 |
|
|
|
47,650 |
|
|
|
47,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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See notes to unaudited condensed consolidated financial statements.
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THE BUCKLE, INC.
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
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(Amounts in Thousands)
|
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|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
Thirteen Weeks Ended
|
|
|
Thirty-nine Weeks Ended
|
|
|
|
October 27,
|
|
|
October 29,
|
|
|
October 27,
|
|
|
October 29,
|
|
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|
2012
|
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|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$ |
41,917 |
|
|
$ |
38,349 |
|
|
$ |
102,949 |
|
|
$ |
95,376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
OTHER COMPREHENSIVE INCOME, NET OF TAX:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized loss on investments
|
|
|
64 |
|
|
|
2 |
|
|
|
75 |
|
|
|
114 |
|
Other comprehensive income
|
|
|
64 |
|
|
|
2 |
|
|
|
75 |
|
|
|
114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME
|
|
$ |
41,981 |
|
|
$ |
38,351 |
|
|
$ |
103,024 |
|
|
$ |
95,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
See notes to unaudited condensed consolidated financial statements.
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|
THE BUCKLE, INC.
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|
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|
|
|
|
|
|
(Amounts in Thousands Except Share and Per Share Amounts)
|
|
|
|
|
|
|
|
(Unaudited)
|
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|
|
|
|
|
|
|
|
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|
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|
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|
Accumulated
|
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|
|
|
|
|
|
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|
Additional
|
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|
|
|
|
Other
|
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|
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|
Number
|
|
|
Common
|
|
|
Paid-in
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
|
|
|
|
of Shares
|
|
|
Stock
|
|
|
Capital
|
|
|
Earnings
|
|
|
Loss
|
|
|
Total
|
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|
|
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|
FISCAL 2012
|
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|
|
|
|
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|
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|
|
|
BALANCE, January 29, 2012
|
|
|
47,432,089 |
|
|
$ |
474 |
|
|
$ |
100,333 |
|
|
$ |
263,039 |
|
|
$ |
(699 |
) |
|
$ |
363,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
102,949 |
|
|
|
- |
|
|
|
102,949 |
|
Dividends paid on common stock,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($0.60 per share)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(28,756 |
) |
|
|
- |
|
|
|
(28,756 |
) |
Common stock issued on exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of stock options
|
|
|
260,203 |
|
|
|
3 |
|
|
|
570 |
|
|
|
- |
|
|
|
- |
|
|
|
573 |
|
Issuance of non-vested stock, net of forfeitures
|
|
|
249,660 |
|
|
|
2 |
|
|
|
(2 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Amortization of non-vested stock grants,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of forfeitures
|
|
|
- |
|
|
|
- |
|
|
|
6,136 |
|
|
|
- |
|
|
|
- |
|
|
|
6,136 |
|
Income tax benefit related to exercise of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock options
|
|
|
- |
|
|
|
- |
|
|
|
4,361 |
|
|
|
- |
|
|
|
- |
|
|
|
4,361 |
|
Change in unrealized loss on investments,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of tax
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
75 |
|
|
|
75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, October 27, 2012
|
|
|
47,941,952 |
|
|
$ |
479 |
|
|
$ |
111,398 |
|
|
$ |
337,232 |
|
|
$ |
(624 |
) |
|
$ |
448,485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FISCAL 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, January 30, 2011
|
|
|
47,127,926 |
|
|
$ |
471 |
|
|
$ |
89,719 |
|
|
$ |
256,146 |
|
|
$ |
(671 |
) |
|
$ |
345,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
95,376 |
|
|
|
- |
|
|
|
95,376 |
|
Dividends paid on common stock,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($2.85 per share)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(135,077 |
) |
|
|
- |
|
|
|
(135,077 |
) |
Common stock issued on exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of stock options
|
|
|
155,244 |
|
|
|
2 |
|
|
|
758 |
|
|
|
- |
|
|
|
- |
|
|
|
760 |
|
Issuance of non-vested stock, net of forfeitures
|
|
|
128,595 |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Amortization of non-vested stock grants,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of forfeitures
|
|
|
- |
|
|
|
- |
|
|
|
4,634 |
|
|
|
- |
|
|
|
- |
|
|
|
4,634 |
|
Common stock purchased and retired
|
|
|
(8,600 |
) |
|
|
- |
|
|
|
(297 |
) |
|
|
- |
|
|
|
- |
|
|
|
(297 |
) |
Income tax benefit related to exercise of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock options
|
|
|
- |
|
|
|
- |
|
|
|
2,140 |
|
|
|
- |
|
|
|
- |
|
|
|
2,140 |
|
Change in unrealized loss on investments,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of tax
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
114 |
|
|
|
114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, October 29, 2011
|
|
|
47,403,165 |
|
|
$ |
474 |
|
|
$ |
96,953 |
|
|
$ |
216,445 |
|
|
$ |
(557 |
) |
|
$ |
313,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to unaudited condensed consolidated financial statements.
|
THE BUCKLE, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
(Amounts in Thousands)
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirty-nine Weeks Ended
|
|
|
|
October 27,
|
|
|
October 29,
|
|
|
|
2012
|
|
|
2011
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income
|
|
$ |
102,949 |
|
|
$ |
95,376 |
|
Adjustments to reconcile net income to net cash flows
|
|
|
|
|
|
|
|
|
from operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
24,715 |
|
|
|
23,437 |
|
Amortization of non-vested stock grants, net of forfeitures
|
|
|
6,136 |
|
|
|
4,634 |
|
Deferred income taxes
|
|
|
(2,270 |
) |
|
|
(1,715 |
) |
Other
|
|
|
1,081 |
|
|
|
475 |
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
236 |
|
|
|
826 |
|
Inventory
|
|
|
(30,298 |
) |
|
|
(52,188 |
) |
Prepaid expenses and other assets
|
|
|
(2,223 |
) |
|
|
(91 |
) |
Accounts payable
|
|
|
9,738 |
|
|
|
9,896 |
|
Accrued employee compensation
|
|
|
(14,728 |
) |
|
|
(6,161 |
) |
Accrued store operating expenses
|
|
|
500 |
|
|
|
1,840 |
|
Gift certificates redeemable
|
|
|
(6,905 |
) |
|
|
(5,981 |
) |
Income taxes payable
|
|
|
1,346 |
|
|
|
14,961 |
|
Deferred rent liabilities and deferred compensation
|
|
|
2,074 |
|
|
|
525 |
|
|
|
|
|
|
|
|
|
|
Net cash flows from operating activities
|
|
|
92,351 |
|
|
|
85,834 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(26,129 |
) |
|
|
(31,460 |
) |
Change in other assets
|
|
|
139 |
|
|
|
49 |
|
Purchases of investments
|
|
|
(22,703 |
) |
|
|
(8,988 |
) |
Proceeds from sales/maturities of investments
|
|
|
27,153 |
|
|
|
18,677 |
|
|
|
|
|
|
|
|
|
|
Net cash flows from investing activities
|
|
|
(21,540 |
) |
|
|
(21,722 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from the exercise of stock options
|
|
|
573 |
|
|
|
760 |
|
Excess tax benefit from stock option exercises
|
|
|
3,897 |
|
|
|
1,988 |
|
Purchases of common stock
|
|
|
- |
|
|
|
(297 |
) |
Payment of dividends
|
|
|
(28,756 |
) |
|
|
(135,077 |
) |
|
|
|
|
|
|
|
|
|
Net cash flows from financing activities
|
|
|
(24,286 |
) |
|
|
(132,626 |
) |
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
46,525 |
|
|
|
(68,514 |
) |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, Beginning of period
|
|
|
166,511 |
|
|
|
116,470 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, End of period
|
|
$ |
213,036 |
|
|
$ |
47,956 |
|
|
|
|
|
|
|
|
|
|
See notes to unaudited condensed consolidated financial statements.
|
|
|
|
|
|
|
|
|
THE BUCKLE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THIRTEEN AND THIRTY-NINE WEEKS ENDED OCTOBER 27, 2012 AND OCTOBER 29, 2011
(Dollar Amounts in Thousands Except Share and Per Share Amounts)
(Unaudited)
1.
|
Management Representation
|
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles 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 accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments necessary for the 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 consolidated financial statements for the fiscal year ended January 28, 2012, included in The Buckle, Inc.'s 2011 Form 10-K.
The Company follows generally accepted accounting principles (“GAAP”) established by the Financial Accounting Standards Board (“FASB”). References to GAAP in these notes are to the FASB Accounting Standards Codification (“ASC”).
2.
|
Description of the Business
|
The Company is a retailer of medium to better priced casual apparel, footwear, and accessories for fashion conscious young men and women. The Company operates its business as one reportable industry segment. The Company had 440 stores located in 43 states throughout the continental United States as of October 27, 2012 and 429 stores in 43 states as of October 29, 2011. During the thirty-nine week period ended October 27, 2012, the Company opened 9 new stores and substantially remodeled 19 stores; which includes 1 new store and 7 substantial remodels during the third quarter. During the thirty-nine week period ended October 29, 2011, the Company opened 11 new stores, substantially remodeled 23 stores, and closed 2 stores; which includes 2 new stores and 7 substantial remodels during the third quarter.
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
|
|
|
Percentage of Net Sales
|
|
|
|
Thirteen Weeks Ended
|
|
|
Thirty-nine Weeks Ended
|
|
Merchandise Group
|
|
Oct. 27, 2012
|
|
|
Oct. 29, 2011
|
|
|
Oct. 27, 2012
|
|
|
Oct. 29, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denims
|
|
|
50.6 |
% |
|
|
49.8 |
% |
|
|
44.5 |
% |
|
|
44.8 |
% |
Tops (including sweaters)
|
|
|
30.3 |
|
|
|
31.8 |
|
|
|
31.3 |
|
|
|
32.4 |
|
Accessories
|
|
|
8.0 |
|
|
|
7.8 |
|
|
|
8.2 |
|
|
|
8.1 |
|
Sportswear/Fashions
|
|
|
1.4 |
|
|
|
1.5 |
|
|
|
7.6 |
|
|
|
6.9 |
|
Footwear
|
|
|
5.3 |
|
|
|
5.0 |
|
|
|
5.6 |
|
|
|
5.3 |
|
Outerwear
|
|
|
3.2 |
|
|
|
3.4 |
|
|
|
1.7 |
|
|
|
1.7 |
|
Casual bottoms
|
|
|
0.8 |
|
|
|
0.6 |
|
|
|
0.8 |
|
|
|
0.6 |
|
Other
|
|
|
0.4 |
|
|
|
0.1 |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
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.
|
|
Thirteen Weeks Ended
|
|
|
Thirteen Weeks Ended
|
|
|
|
October 27, 2012
|
|
|
October 29, 2011
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Per Share
|
|
|
|
|
|
Average
|
|
|
Per Share
|
|
|
|
Income
|
|
|
Shares
|
|
|
Amount
|
|
|
Income
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
$ |
41,917 |
|
|
|
47,358 |
|
|
$ |
0.89 |
|
|
$ |
38,349 |
|
|
|
46,831 |
|
|
$ |
0.82 |
|
Effect of Dilutive Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-vested shares
|
|
|
- |
|
|
|
331 |
|
|
|
(0.01 |
) |
|
|
- |
|
|
|
511 |
|
|
|
(0.01 |
) |
Diluted EPS
|
|
$ |
41,917 |
|
|
|
47,689 |
|
|
$ |
0.88 |
|
|
$ |
38,349 |
|
|
|
47,342 |
|
|
$ |
0.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirty-nine Weeks Ended
|
|
|
Thirty-nine Weeks Ended
|
|
|
|
October 27, 2012
|
|
|
October 29, 2011
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Per Share
|
|
|
|
|
|
Average
|
|
|
Per Share
|
|
|
|
Income
|
|
|
Shares
|
|
|
Amount
|
|
|
Income
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
$ |
102,949 |
|
|
|
47,307 |
|
|
$ |
2.18 |
|
|
$ |
95,376 |
|
|
|
46,801 |
|
|
$ |
2.04 |
|
Effect of Dilutive Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-vested shares
|
|
|
- |
|
|
|
343 |
|
|
|
(0.02 |
) |
|
|
- |
|
|
|
505 |
|
|
|
(0.02 |
) |
Diluted EPS
|
|
$ |
102,949 |
|
|
|
47,650 |
|
|
$ |
2.16 |
|
|
$ |
95,376 |
|
|
|
47,306 |
|
|
$ |
2.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a summary of investments as of October 27, 2012:
|
|
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
|
|
$ |
13,075 |
|
|
$ |
- |
|
|
$ |
(990 |
) |
|
$ |
(725 |
) |
|
$ |
11,360 |
|
Preferred stock
|
|
|
2,000 |
|
|
|
- |
|
|
|
- |
|
|
|
(1,974 |
) |
|
|
26 |
|
|
|
$ |
15,075 |
|
|
$ |
- |
|
|
$ |
(990 |
) |
|
$ |
(2,699 |
) |
|
$ |
11,386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and municipal bonds
|
|
$ |
43,601 |
|
|
$ |
136 |
|
|
$ |
(22 |
) |
|
$ |
- |
|
|
$ |
43,715 |
|
Certificates of deposit
|
|
|
500 |
|
|
|
7 |
|
|
|
- |
|
|
|
- |
|
|
|
507 |
|
|
|
$ |
44,101 |
|
|
$ |
143 |
|
|
$ |
(22 |
) |
|
$ |
- |
|
|
$ |
44,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds
|
|
$ |
10,081 |
|
|
$ |
- |
|
|
$ |
(16 |
) |
|
$ |
- |
|
|
$ |
10,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a summary of investments as of January 28, 2012:
|
|
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
|
|
$ |
15,975 |
|
|
$ |
- |
|
|
$ |
(1,110 |
) |
|
$ |
(725 |
) |
|
$ |
14,140 |
|
Preferred stock
|
|
|
2,000 |
|
|
|
- |
|
|
|
- |
|
|
|
(1,974 |
) |
|
|
26 |
|
|
|
$ |
17,975 |
|
|
$ |
- |
|
|
$ |
(1,110 |
) |
|
$ |
(2,699 |
) |
|
$ |
14,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and municipal bonds
|
|
$ |
43,474 |
|
|
$ |
323 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
43,797 |
|
Fixed maturities
|
|
|
3,262 |
|
|
|
20 |
|
|
|
- |
|
|
|
- |
|
|
|
3,282 |
|
Certificates of deposit
|
|
|
500 |
|
|
|
16 |
|
|
|
- |
|
|
|
- |
|
|
|
516 |
|
|
|
$ |
47,236 |
|
|
$ |
359 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
47,595 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds
|
|
$ |
8,946 |
|
|
$ |
- |
|
|
$ |
(365 |
) |
|
$ |
- |
|
|
$ |
8,581 |
|
The auction-rate securities and preferred stock were invested as follows as of October 27, 2012:
Nature
|
|
Underlying Collateral
|
|
Par Value
|
|
|
|
|
|
|
|
Municipal revenue bonds
|
|
100% insured by AAA/AA/A-rated bond insurers at October 27, 2012
|
|
$ |
10,075 |
|
Municipal bond funds
|
|
Fixed income instruments within issuers' money market funds
|
|
|
50 |
|
Student loan bonds
|
|
Student loans guaranteed by state entities
|
|
|
2,950 |
|
Preferred stock
|
|
Underlying investments of closed-end funds
|
|
|
2,000 |
|
Total par value
|
|
|
|
$ |
15,075 |
|
As of October 27, 2012, the Company’s auction-rate securities portfolio was 1% AAA/Aaa-rated, 67% AA/Aa-rated, 19% A-rated, and 13% below A-rated.
The amortized cost and fair value of debt securities by contractual maturity as of October 27, 2012 is as follows:
|
|
Amortized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Value
|
|
Held-to-maturity securities
|
|
|
|
|
|
|
Less than 1 year
|
|
$ |
31,705 |
|
|
$ |
31,782 |
|
1 - 5 years
|
|
|
12,396 |
|
|
|
12,440 |
|
|
|
$ |
44,101 |
|
|
$ |
44,222 |
|
At October 27, 2012 and January 28, 2012, $11,386 and $14,141 of available-for-sale securities and $12,396 and $17,263 of held-to-maturity securities are classified in long-term investments. Trading securities are held in a Rabbi Trust, intended to fund the Company’s deferred compensation plan, and are classified in long-term investments.
The Company’s investments in auction-rate securities (“ARS”) and preferred securities are classified as available-for-sale and reported at fair market value. As of October 27, 2012, the reported investment amount is net of $990 of temporary impairment and $2,699 of other-than-temporary impairment (“OTTI”) to account for the impairment of certain securities from their stated par value. The $990 temporary impairment is reported, net of tax, as an “accumulated other comprehensive loss” of $624 in stockholders’ equity as of October 27, 2012. For the investments considered temporarily impaired, the Company believes that these ARS can be successfully redeemed or liquidated in the future at par value plus accrued interest. The Company believes it has the ability and maintains its intent to hold these investments until such recovery of market value occurs; therefore, the Company believes the current lack of liquidity has created the temporary impairment in valuation.
As of October 27, 2012, the Company had $13,075 invested in ARS and $2,000 invested in preferred securities, at par value, which are reported at their estimated fair value of $11,360 and $26, respectively. As of January 28, 2012, the Company had $15,975 invested in ARS and $2,000 invested in preferred securities, which were reported at their estimated fair value of $14,140 and $26, respectively. ARS 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 failed auctions have limited the current liquidity of certain of the Company’s investments in ARS and the Company has reason to believe that certain of the underlying issuers of its ARS are currently at risk. The Company does not, however, anticipate that further auction failures will have a material impact on the Company’s ability to fund its business. During the third quarter of fiscal 2012, the Company was able to successfully liquidate ARS with a par value of $2,000. For the year-to-date period, the Company was able to successfully liquidate ARS with a par value of $2,900. The Company reviews all investments for OTTI at least quarterly or as indicators of impairment exist. Indicators of impairment include the duration and severity of decline in market value. In addition, the Company considers qualitative factors including, but not limited to, the financial condition of the investee, the credit rating of the investee, and the current and expected market and industry conditions in which the investee operates.
As of October 27, 2012, all of the Company’s investments in ARS and preferred securities were classified in long-term investments. As of January 28, 2012, $25 of the Company’s investments in ARS and preferred securities was classified in short-term investments (due to a known upcoming redemption at par value) and $14,141 was classified in long-term investments.
5.
|
Fair Value Measurements
|
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories:
|
●
|
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. As of October 27, 2012, the unobservable inputs used by the Company and its independent third-party valuation consultant in valuing its Level 3 investments in ARS included:
|
|
o
|
Durations until redemption ranging from 0.5 to 31.0 years, with a weighted average of 5.0 years.
|
|
o
|
Discount rates ranging from 0.57% to 6.10%, with a weighted average of 2.43%.
|
|
o
|
Loss severities ranging from 0% to 25% of par value, with a weighted average of 6.92%.
|
As of October 27, 2012 and January 28, 2012, the Company held certain assets that are required to be measured at fair value on a recurring basis including available-for-sale and trading securities. The Company’s available-for-sale securities include its investments in ARS, as further described in Note 4. The failed auctions, beginning in February 2008, related to certain of the Company’s investments in ARS have limited the availability of quoted market prices. The Company has determined the fair value of its ARS using Level 1 inputs for known or anticipated subsequent redemptions at par value, Level 2 inputs using observable inputs, and Level 3 using unobservable inputs where the following criteria were considered in estimating fair value:
|
●
|
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).
|
In addition, the Company considers other factors including, but not limited to, the financial condition of the investee, the credit rating, insurance, guarantees, collateral, cash flows, and the current and expected market and industry conditions in which the investee operates. Management believes it has used information that was reasonably obtainable in order to complete its valuation process and determine if the Company’s investments in ARS had incurred any temporary and/or other-than-temporary impairment as of October 27, 2012 and January 28, 2012.
Future fluctuations in fair value of ARS that the Company judges to be temporary, including any recoveries of previous write-downs, would be recorded as an adjustment to “accumulated other comprehensive loss.” The value and liquidity of ARS held by the Company may be affected by continued auction-rate failures, the credit quality of each security, the amount and timing of interest payments, the amount and timing of future principal payments, and the probability of full repayment of the principal. Additional indicators of impairment include the duration and severity of the decline in market value. The interest rates on these investments will be determined by the terms of each individual ARS. The material risks associated with the ARS held by the Company include those stated above as well as the current economic environment, downgrading of credit ratings on investments held, and the volatility of the entities backing each of the issues.
The Company’s financial assets measured at fair value on a recurring basis were as follows:
|
|
Fair Value Measurements at Reporting Date Using
|
|
|
Quoted Prices in
|
|
|
|
|
|
|
|
|
|
|
|
|
Active Markets
|
|
|
Significant
|
|
|
Significant
|
|
|
|
|
|
|
for Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
October 27, 2012
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Total
|
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Auction-rate securities
|
|
$ |
- |
|
|
$ |
188 |
|
|
$ |
11,172 |
|
|
$ |
11,360 |
|
Preferred stock
|
|
|
26 |
|
|
|
- |
|
|
|
- |
|
|
|
26 |
|
Trading securities (including mutual funds)
|
|
|
10,065 |
|
|
|
- |
|
|
|
- |
|
|
|
10,065 |
|
Totals
|
|
$ |
10,091 |
|
|
$ |
188 |
|
|
$ |
11,172 |
|
|
$ |
21,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
|
|
|
Quoted Prices in
|
|
|
|
|
|
|
|
|
|
|
|
|
Active Markets
|
|
|
Significant
|
|
|
Significant
|
|
|
|
|
|
|
for Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
January 28, 2012
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Total
|
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Auction-rate securities
|
|
$ |
- |
|
|
$ |
2,920 |
|
|
$ |
11,220 |
|
|
$ |
14,140 |
|
Preferred stock
|
|
|
26 |
|
|
|
- |
|
|
|
- |
|
|
|
26 |
|
Trading securities (including mutual funds)
|
|
|
8,581 |
|
|
|
- |
|
|
|
- |
|
|
|
8,581 |
|
Totals
|
|
$ |
8,607 |
|
|
$ |
2,920 |
|
|
$ |
11,220 |
|
|
$ |
22,747 |
|
Securities included in Level 1 represent securities which have a known or anticipated upcoming redemption as of the reporting date and those that have publicly traded quoted prices. ARS included in Level 2 represent securities which have not experienced a successful auction subsequent to the end of fiscal 2007. The fair market value for these securities was determined by applying a discount to par value based on auction prices for similar securities and by utilizing a discounted cash flow model, using market-based inputs, to determine fair value. The Company used a discounted cash flow model to value its Level 3 investments, using estimates regarding recovery periods, yield, and liquidity. The assumptions used are subjective based upon management’s judgment and views on current market conditions, and resulted in $978 of the Company’s recorded temporary impairment and $725 of the OTTI as of October 27, 2012. The use of different assumptions would result in a different valuation and related temporary impairment charge.
Changes in the fair value of the Company’s financial assets measured at fair value on a recurring basis are as follows:
|
|
Thirty-nine Weeks Ended October 27, 2012
|
|
|
|
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
|
|
$ |
11,220 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
11,220 |
|
Total gains and losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive income
|
|
|
2 |
|
|
|
- |
|
|
|
- |
|
|
|
2 |
|
Purchases, Issuances,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales, and Settlements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
(50 |
) |
|
|
- |
|
|
|
- |
|
|
|
(50 |
) |
Balance, end of quarter
|
|
$ |
11,172 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
11,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirty-nine Weeks Ended October 29, 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 |
|
Total gains and losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive income
|
|
|
91 |
|
|
|
|
- |
|
|
|
- |
|
|
|
91 |
|
Purchases, Issuances,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales, and Settlements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
(50 |
) |
|
|
|
- |
|
|
|
- |
|
|
|
(50 |
) |
Balance, end of quarter
|
|
$ |
11,414 |
|
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
11,414 |
|
|
(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.
|
The carrying value of cash equivalents approximates fair value due to the low level of risk these assets present and their relatively liquid nature, particularly given their short maturities. The Company also holds certain financial instruments that are not carried at fair value on the consolidated balance sheets, including held-to-maturity securities. Held-to-maturity securities consist of state and municipal bonds, corporate bonds, and certificates of deposit. The fair values of these debt securities are based on quoted market prices and yields for the same or similar securities, which the Company determined to be Level 2 inputs. As of October 27, 2012, the fair value of held-to-maturity securities was $44,222 compared to the carrying amount of $44,101. As of January 28, 2012, the fair value of held-to-maturity securities is $47,595 compared to the carrying amount of $47,236.
6.
|
Supplemental Cash Flow Information
|
The Company had non-cash investing activities during the thirty-nine week periods ended October 27, 2012 and October 29, 2011 of ($1,095) and $2,166, respectively. The non-cash investing activity relates to the change in the balance of unpaid purchases of property, plant, and equipment included in accounts payable as of the end of the period. Amounts reported as unpaid purchases are recorded as cash outflows from investing activities for purchases of property, plant, and equipment in the consolidated statement of cash flows in the period they are paid.
Additional cash flow information for the Company includes cash paid for income taxes during the thirty-nine week periods ended October 27, 2012 and October 29, 2011 of $56,998 and $40,083, respectively.
7.
|
Stock-Based Compensation
|
The Company has several stock option plans which allow for granting of stock options to employees, executives, and directors. The options are in the form of non-qualified stock options and are granted with an exercise price equal to the market value of the Company’s common stock on the date of grant. The options generally expire ten years from the date of grant. The Company also has a restricted stock plan that allows for the granting of non-vested shares of common stock to employees and executives and a restricted stock plan that allows for the granting of non-vested shares of common stock to non-employee directors.
As of October 27, 2012, 637,509 shares were available for grant under the various stock option plans, of which 447,884 were available for grant to executive officers. Also as of October 27, 2012, 590,864 shares were available for grant under the Company’s various restricted stock plans, of which 552,240 shares were available for grant to executive officers.
Compensation expense was recognized during fiscal 2012 and fiscal 2011 for equity-based grants, based on the grant date fair value of the awards. The fair value of grants of non-vested common stock awards is the stock price on the date of grant.
Information regarding the impact of compensation expense related to grants of non-vested shares of common stock is as follows:
|
|
Thirteen Weeks Ended
|
|
|
|
October 27, 2012
|
|
|
October 29, 2011
|
|
|
|
|
|
|
|
|
Stock-based compensation expense, before tax
|
|
$ |
1,999 |
|
|
$ |
1,506 |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense, after tax
|
|
$ |
1,259 |
|
|
$ |
949 |
|
|
|
|
|
|
|
|
|
|
|
|
Thirty-nine Weeks Ended
|
|
|
|
October 27, 2012
|
|
|
October 29, 2011
|
|
|
|
|
|
|
|
|
Stock-based compensation expense, before tax
|
|
$ |
6,136 |
|
|
$ |
4,634 |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense, after tax
|
|
$ |
3,866 |
|
|
$ |
2,919 |
|
|
|
|
|
|
|
|
|
|
FASB ASC 718 requires the benefits of tax deductions in excess of the compensation cost recognized for stock options exercised during the period to be classified as financing cash inflows. This amount is shown as “excess tax benefit from stock option exercises” on the consolidated statements of cash flows. For the thirty-nine week periods ended October 27, 2012 and October 29, 2011, the excess tax benefit realized from exercised stock options was $3,897 and $1,988, respectively.
A summary of the Company’s stock-based compensation activity related to stock options for the thirty-nine week period ended October 27, 2012 is as follows:
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Weighted
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Weighted
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Average
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Average
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Remaining
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Aggregate
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Exercise
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Contractual
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Intrinsic
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Shares
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Price
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Life
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Value
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Outstanding - beginning of year
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|
417,972 |
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|
$ |
2.38 |
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|
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|
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Granted
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|
- |
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|
- |
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|
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Expired/forfeited
|
|
|
- |
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|
- |
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|
|
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Exercised
|
|
|
(260,203 |
) |
|
|
2.20 |
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Outstanding - end of quarter
|
|
|
157,769 |
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|
$ |
2.68 |
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|
|
1.48 |
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years
|
|
$ |
6,527 |
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Exercisable - end of quarter
|
|
|
157,769 |
|
|
$ |
2.68 |
|
|
|
1.48 |
|
years
|
|
$ |
6,527 |
|
No stock options were granted during fiscal 2012 or fiscal 2011. The total intrinsic value of options exercised during the thirty-nine week periods ended October 27, 2012 and October 29, 2011 was $11,976 and $5,999, respectively. As of October 27, 2012, there was no unrecognized compensation expense as all outstanding stock options were vested.
Non-vested shares of common stock granted during the thirty-nine week periods ended October 27, 2012 and October 29, 2011 were granted pursuant to the Company’s 2005 Restricted Stock Plan and the Company’s 2008 Director Restricted Stock Plan. Shares granted under the 2005 Plan typically vest over a period of four years, only upon certification by the Compensation Committee of the Board of Directors that the Company has achieved its pre-established performance targets for the fiscal year. Shares granted under the 2008 Director Plan vest 25% on the date of grant and then in equal portions on each of the first three anniversaries of the date of grant.
A summary of the Company’s stock-based compensation activity related to grants of non-vested shares of common stock for the thirty-nine week period ended October 27, 2012 is as follows:
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Weighted Average
|
|
|
|
|
|
|
Grant Date
|
|
|
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Shares
|
|
|
Fair Value
|
|
|
|
|
|
|
|
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Non-Vested - beginning of year
|
|
|
386,202 |
|
|
$ |
31.61 |
|
Granted
|
|
|
250,900 |
|
|
|
43.35 |
|
Forfeited
|
|
|
(1,240 |
) |
|
|
34.96 |
|
Vested
|
|
|
(58,723 |
) |
|
|
35.18 |
|
Non-Vested - end of quarter
|
|
|
577,139 |
|
|
$ |
36.34 |
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As of October 27, 2012, there was $9,449 of unrecognized compensation expense related to grants of non-vested shares. It is expected that this expense will be recognized over a weighted average period of approximately 2.0 years. The total fair value of shares vested during the thirty-nine week periods ended October 27, 2012 and October 29, 2011 was $2,775 and $1,169, respectively.
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Recently Adopted Accounting Pronouncements
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In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income – Presentation of Comprehensive Income. ASU 2011-05 requires comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments in this update are to be applied retrospectively and are effective for interim and annual reporting periods beginning after December 15, 2011. The adoption of ASU 2011-05 did not have a material impact on the Company’s financial position or results of operations.
In May 2011, the FASB issues ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, to improve the comparability of fair value measurements between statements presented in U.S. GAAP and IFRS. ASU 2011-04 clarifies the application of existing fair value measurement requirements including (1) the application of the highest and best use and valuation premise concepts, (2) measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity, and (3) quantitative information required for fair value measurements categorized within Level 3. ASU 2011-04 also provides guidance on measuring the fair value of financial instruments managed within a portfolio and application of premiums and discounts in a fair value measurement. In addition, ASU 2011-04 requires additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. The amendments in this update are to be applied retrospectively and are effective for interim and annual reporting periods beginning after December 15, 2011. The adoption of ASU 2011-04 did not have a material impact on the Company’s financial position or results of operations.
On November 6, 2012, subsequent to the end of the quarter, the Company issued a press release announcing that at a meeting of the Board of Directors, held on November 5, 2012, the Board authorized a $4.50 per share special cash dividend to be paid to shareholders of record at the close of business on December 7, 2012. The Board also authorized a $0.20 per share quarterly dividend to be paid to shareholders of record at the close of business on December 7, 2012. The $0.20 per share quarterly dividend accelerates and replaces the regular quarterly dividend that has historically been paid in January. Both the special cash dividend and the regular quarterly dividend are payable on December 21, 2012 and will be paid together.
THE BUCKLE, INC.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto of the Company included in this Form 10-Q. All references herein to the “Company”, “Buckle”, “we”, “us”, or similar terms refer to The Buckle, Inc. and its subsidiary. 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 consolidated financial statements.
EXECUTIVE OVERVIEW
Company management considers the following items to be key performance indicators in evaluating Company performance.
Comparable Store Sales – Stores are deemed to be comparable stores if they were open in the prior year on the first day of the fiscal period being presented. Stores which have been remodeled, expanded, and/or relocated, but would otherwise be included as comparable stores, are not excluded from the comparable store sales calculation. Online sales are excluded from comparable store sales. Management considers comparable store sales to be an important indicator of current Company performance, helping leverage certain fixed costs when results are positive. Negative comparable store sales results could reduce net sales and have a negative impact on operating leverage, thus reducing net earnings.
Merchandise Margins – Management evaluates the components of merchandise margin including initial markup and the amount of markdowns during a period. Any inability to obtain acceptable levels of initial markups or any significant increase in the Company’s use of markdowns could have an adverse effect on the Company’s gross margin and results of operations.
Operating Margin – Operating margin is a good indicator for management of the Company’s success. Operating margin can be positively or negatively affected by comparable store sales, merchandise margins, occupancy costs, and the Company’s ability to control operating costs.
Cash Flow and Liquidity (working capital) – Management reviews current cash and short-term investments along with cash flow from operating, investing, and financing activities to determine the Company’s short-term cash needs for operations and expansion. The Company believes that existing cash, short-term investments, 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.
RESULTS OF OPERATIONS
The following table sets forth certain financial data expressed as a percentage of net sales and the percentage change in the dollar amount of such items compared to the prior period: