ITEM 1 - BUSINESS
The Buckle, Inc. (the "Company") is a retailer of medium to better-priced casual apparel for fashion conscious young men and women. As of January 29, 2000, the Company operated 248 retail stores in 35 states throughout the central United States, as well as in the northwest and southwestern states under the names "Buckle" and "The Buckle." The Company markets a wide selection of mostly brand name casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories, and footwear. The Company emphasizes personalized attention to its customers and provides individual customer services such as free alterations, free gift-wrapping, easy layaways and a frequent shopper program. Most stores are located in regional, high-traffic shopping malls, and this is the Company's strategy for future expansion. All of the Company's central office functions, including purchasing, pricing, advertising and distribution, are controlled from its headquarters and distribution center in Kearney, Nebraska.
Incorporated in Nebraska in 1948, the Company commenced business under the name Mills Clothing, Inc., a conventional men's clothing store with only one location. In 1967, a second store, under the trade name Brass Buckle, was purchased. In the early 1970s, the store image changed to that of a jeans store, with a wide selection of denims and shirts. The first branch store was opened in Columbus, Nebraska, in 1976. In 1977, the Company began selling young women's apparel as well, and opened its first mall store. The Company has experienced significant growth over the past ten years, growing from 56 stores at the start of 1989 to 248 stores by the close of fiscal 1999. The Company changed its corporate name to The Buckle, Inc. on April 23, 1991. All references herein to fiscal 1999 refer to the 52-week period ended January 29, 2000. Fiscal 1998 and fiscal 1997 refer to the 52-week periods ended January 30, 1999 and January 31, 1998, respectively.
The Company's principal executive offices and distribution center are located at 2407 West 24th Street, Kearney, Nebraska 68845. The Company's telephone number is (308) 236-8491. The Company publishes its corporate web site at www.buckle.com.
MARKETING AND MERCHANDISING
The Company's marketing and merchandising strategy is to offer customers a wide selection of key brand name merchandise while also providing a broad range of services designed to create customer loyalty. The Company provides a unique specialty apparel store with merchandise designed to appeal to the fashion conscious 12 to 24 year old. The merchandise mix includes denims, casual bottoms, tops, sweaters, sportswear, outerwear, accessories, and footwear. Denim is a significant contributor to total sales (25% of fiscal 1999 net sales) and is a key to the Company's merchandising concept. The Company believes it attracts customers with a selection of key brands and a wide variety of fits, finishes and styles in denim. Shirts and tops are also significant contributors to the total sales (34% of fiscal 1999 net sales). The Company strives to provide a continually changing selection of the latest casual fashions.
The percentage of net sales over the past three fiscal years of the Company's major product lines are set forth in the following table.
Brand name merchandise constitutes over 85% of the Company's sales volume. The balance is comprised of private label merchandise that is manufactured to the Company's specifications. The Company's merchandisers continually work with manufacturers and vendors to produce brand name merchandise that is unique in color and style compared to the merchandise sold in other stores. While the brands offered by the Company change to meet current customer preferences, the Company currently offers brands such as Lucky Brand Dungarees, Dr. Martens, Tommy Jeans, Silver, Fossil, and Polo Jeans Company. The Company believes brand name merchandise will continue to constitute the substantial majority of sales.
Management believes the Company provides a unique store setting by maintaining a high level of customer service, and by offering a wide selection of fashionable, quality merchandise at good values. The Company believes that it is essential to create an enjoyable shopping atmosphere and to provide highly motivated employees who give personal attention to customers. Each salesperson is educated to help create a complete look for the customer by showing merchandise as coordinating outfits. The Company also offers specialized services such as free alterations, free gift wrapping, layaways, a special order system which allows stores to obtain specifically requested merchandise from other Company stores, a frequent shopper card, and The Buckle private label credit card. Customers are encouraged to use the Company's layaway plan, which allows customers to make a partial payment on merchandise that is then held by the store until the balance is paid. For the past three fiscal years, an average of approximately 7% of net sales has been made on a layaway basis.
Merchandising and pricing decisions are made centrally; however, the Company's distribution system allows for variation in the mix of merchandise distributed to each store so that individual store inventories can be tailored to reflect differences in customer buying patterns at various locations. In addition, to assure a continually fresh, new look in its stores, the Company ships new merchandise daily to most stores, including varying styles and colors that differ from prior merchandise. The Company also has a transfer program which shifts specific merchandise to locations where it is selling better. This distribution and transfer system helps to maintain customer satisfaction by providing in stock popular items and reducing the need to mark down slow-moving merchandise at a particular location. The Company believes that the reduced markdowns justify the incremental costs of distribution associated with the transfer system. The Company does not hold storewide off-price sales at anytime.
In 1997, the store decor and fixtures were redesigned to provide an appealing, up-to-date appearance. The first store with the new design was opened in February 1997. Since that time, all new and fully remodeled stores have received this design. The design presents a unique atmosphere in which the store's architectural elements, including feature display walls, provide a backdrop, creating a stronger visual presentation for the customer. Special care is taken to provide a comfortable environment to which customers can relate. The interior is well lighted to provide true, bright color rendition of the merchandise. The fixtures that were redesigned help enhance the merchandise presentation within the stores.
Prior to the 1997 design, all stores opened and fully remodeled since June 1990 through the end of 1996 (180 stores) have the previous more contemporary format and do business as "The Buckle."
ADVERTISING AND PROMOTION
In fiscal 1999, the Company spent $4.1 million (net co-op reimbursements) or 1.1% of net sales on advertising and in-store point of sale materials. In-store seasonal sign kits, promotional signage and the Company's own Buckle Magazine are used to enhance merchandising presentations, the stores' image and special events at point of sale.
Magazine advertising in leading teen publications is used during key seasons to introduce new merchandise, build awareness and brand the Buckle's image. On-screen theatre advertising is utilized in select larger markets as an image builder for the Company. Radio advertising will continue to be a media source used to support special events in approximately 75% of the Company's markets.
The Company has developed programs to help strengthen relationships with loyal guests. Seasonal fliers and birthday cards are mailed to guests who have signed up on the Buckle's in-house mailing list. In addition, the Company will continue offering the frequent shopper program (the Buckle Primo Card), a rewards program designed to build customer loyalty. Private label credit card marketing is another avenue for marketing to loyal guests. The Company offers exclusive benefits to active Buckle Cardholders such as a seasonal newsletter, coupons and other special targeted mailings.
The Company publishes a corporate web site at www.buckle.com. The Company's website is primarily a marketing tool reaching a growing online audience. It serves as an interactive, entertaining, informative and brand building environment where visitors can get the latest Buckle fashion information, play with a interactive Buckle closet, find out about career opportunities, and read the latest Buckle financial news online. The Buckle Online Store was launched April 26, 1999 as a marketing tool, extending the Company's brand beyond the physical locations. Offering a small sampling of merchandise online, the Company presents the online store as a "taste test" in new markets as well as a customer service tool in existing markets.
STORE OPERATIONS
The Company has two Vice Presidents of Sales, two regional managers, nine district managers, and 47 area managers. Seven of the district managers and all of the area managers also serve as manager of their home base store. Each store has one manager, one or two assistant managers, one to three additional full-time salespeople and up to 20 part-time salespeople. Most stores have peak levels of staff during the back-to-school and Christmas seasons. Almost every location also employs a seamstress.
The Company places great importance on educating quality personnel. The Company recruits interns and management trainees on college campuses and focuses on building its management organization from within. Store managers perform sales training of new employees at the store level. Salespeople displaying particular talent generally are assigned to stores operated by district managers for training as a store manager. A majority of the Company's store managers and most of its middle and upper level management are former salespeople, including the President of the Company, Dennis Nelson, and its Chairman, Dan Hirschfeld.
Store managers receive compensation in the form of a base salary and incentive bonuses. District and area managers also receive added incentives based upon the sales performance of stores in their district/area.
The Company has established a comprehensive program stressing the prevention and control of shrinkage losses. Steps taken to reduce shrinkage include monitoring cash refunds, voids, inappropriate discounts, employee sales and returns-to-vendor. The company also has electronic article surveillance systems in 97% of the Company's stores as well as surveillance camera systems in approximately 50% of the stores. As a result, the Company achieved a merchandise shrinkage rate of 0.7% of net sales for fiscal 1999, 0.5% of net sales for fiscal 1998 and 0.4% for fiscal year 1997.
The average store is approximately 4,750 square feet (of which the Company estimates an average of approximately 80% is selling space), and stores range in size from 2,450 square feet to 7,900 square feet.
PURCHASING AND DISTRIBUTION
The Company has a very experienced buying team. The buying team includes the President, Vice President of Men's Merchandising, two head women's merchandisers, and six women's buyers and three men's buyers. Five members of this buying team have between 16 and 30 years of experience with the Company. The experience and leadership within the buying team contributes significantly to the company's success by enabling the buying team to react quickly to changes in fashion and by providing extensive knowledge of sources for branded and private label goods.
The Company purchases products from manufacturers within the United States and from some foreign manufacturers. The Company's merchandising team monitors U.S. fashion centers (in New York and on the West Coast) and shops high fashion stores to adapt new ideas to The Buckle. The Company continually monitors fabric selection, quality and delivery schedules. The Company has not experienced any material difficulties with merchandise manufactured in foreign countries. The Company does not have long-term or exclusive contracts with any brand name manufacturer or supplier. The Company does have a long term relationship with an agent in Hong Kong for the manufacture of The Buckle, Inc.'s private label merchandise. An agreement with this company was entered into on November 28, 1994, for orders placed subsequent to this date. Management believes that as the Company has grown it has been able to obtain better purchasing terms.
In fiscal 1999, Tommy Hilfiger (including purchases from 7 different Tommy divisions), Lucky Brand Dungarees and Dr. Martens made up 22%, 18%, and 15%, respectively, of the Company's net sales. No other vendor accounted for more than 10% of the Company's sales. Current significant vendors include Lucky Brand Dungarees, Dr. Martens, Tommy Jeans, Silver, and Polo Jeans Company. The Company continually strives to offer brands that are currently popular with its customers and therefore, the Company's suppliers and purchases from specific vendors may vary significantly from year to year.
The Buckle stores generally carry the same merchandise, with quantity and seasonal variations based upon historical sales data, climate and perceived local customer interest. The Company uses a centralized receiving and distribution center located within the corporate headquarters building in Kearney, NE. Merchandise is received daily in Kearney, sorted, tagged with bar-coded tickets, (unless the vendor UPC code can be used or the merchandise is pre-ticketed), and packaged for distribution to individual stores primarily via United Parcel Service. The Company's goal is to ship the majority of its merchandise out to the stores within one to two business days of receipt. This system allows stores to receive new merchandise almost every day, providing customers with a good reason to shop often and helping create excitement within each store. During fiscal 1998, the Company began using "pre-packs" to expedite the movement of merchandise through the distribution center.
In fiscal 1999, the Company completed remodeling its corporate headquarters and during fiscal 1998 finished the expansion of its distribution center. The current building space and distribution system will allow for handling up to 450 stores. The Company has developed an effective computerized system for tracking merchandise from the time it is checked in at the Company's distribution center until it arrives at the stores and is sold to a customer. The system's function is to insure that store shipments are delivered accurately and promptly, to account for inventory, and to assist in allocating merchandise among stores. Management can track on a daily basis which merchandise is selling at specific locations and directs transfers of merchandise from one store to another as necessary. This allows stores to carry a reduced inventory while at the same time satisfying customer demands.
To reduce inter-store shipping costs and to provide more timely restocking of in-season merchandise, the Company has increased its focus on warehousing a portion of initial shipments. Sales reports are then used to replenish on a basis of one to three times each week, those stores that are experiencing the greatest success selling specific styles, colors, and sizes of merchandise. This system is also designed to prevent a crowded, cluttered look in the stores at the beginning of a season.
STORE LOCATIONS AND EXPANSION STRATEGIES
As of April 1, 2000, the Company operated 260 stores in 35 states, including 12 stores opened in 2000. The existing stores are in 5 downtown locations, 9 strip centers, 2 lifestyle centers and 244 shopping malls. The Company anticipates opening approximately 16 additional new stores in fiscal 2000 and adding South Carolina as a new state. All new stores for 2000 will be located in higher traffic shopping malls. The following table lists the location of existing stores as of April 1, 2000.
Location of Stores
State Number of Stores State Number of Stores ----- ---------------- ----- ----------------
Alabama 2 Montana 5 Arizona 3 Nebraska 15 Arkansas 5 New Mexico 4 California 2 North Carolina 3 Colorado 10 North Dakota 3 Florida 3 Ohio 12 Georgia 3 Oklahoma 14 Idaho 5 Oregon 1 Illinois 15 Pennsylvania 3 Indiana 11 South Dakota 3 Iowa 21 Tennessee 6 Kansas 15 Texas 26 Kentucky 4 Utah 5 Louisiana 7 Washington 3 Michigan 14 West Virginia 1 Minnesota 7 Wisconsin 12 Mississippi 3 Wyoming 1 Missouri 13 --- Total 260 ===
The Buckle has grown significantly over the past ten years, with the number of stores increasing from 66 at the beginning of 1990 to 248 at the end of fiscal 1999. The Company's plan is to continue expansion by developing the geographic region it currently serves and by expanding into contiguous markets. The Company intends to open new stores only when management believes there is a reasonable expectation of satisfactory results.
The following table sets forth information regarding store openings and closings since the beginning of fiscal 1990 to the end of fiscal 1999:
The Company's criteria used when considering a particular location for expansion include:
1. Market area, including proximity to existing markets to capitalize on name recognition; 2. Trade area population (number, average age, and college population); 3. Economic vitality of market area; 4. Mall location, anchor tenants, tenant mix, average sales per square foot; 5. Available location within a mall, square footage, storefront width, and facility of using the current store design; 6. Availability of suitable management personnel for the market; 7. Cost of rent, including minimum rent, common area and extra charges; 8. Estimated construction costs, including landlord charge backs and tenant allowances.
In 1996, The Buckle began development of an updated store design. This design was used in fiscal 1997 and will continue to be used on new stores, and any regularly scheduled remodels or relocations. The Company does not plan to remodel all existing stores with the new design at this time.
The Company generally seeks sites of 4,000 to 5,000 square feet for its stores. The projected cost of opening a store with the new design is approximately $570,000, including construction costs of approximately $420,000 (which is prior to any construction allowance received) and inventory costs of approximately $150,000.
The Company anticipates opening approximately 28 new stores during fiscal 2000 and completing the remodeling of approximately nine existing stores. Remodels range from partial to full, with construction costs for a full remodel being nearly the same as for a new store. Of the stores scheduled for remodeling during fiscal 2000, it is estimated that each will receive full remodeling. The Company has budgeted a total of $22.5 million (before estimated construction allowances from landlords of $1.5 million) for new store construction, remodeling, technology upgrades and improvements at the corporate headquarters during fiscal 2000.
The Company plans to expand in 2000 by opening stores in one new state as well as openings in existing markets. New store openings are generally scheduled to coincide with the increased customer traffic of the Easter, back-to-school or Christmas holiday shopping seasons.
The Company believes that, given the time required for training personnel, staffing a store and developing adequate district and regional managers, its current management infrastructure is sufficient to support its currently planned rate of growth.
The Company's ability to expand in the future will depend, in part, on general business conditions; the ability to find suitable malls with acceptable sites on satisfactory terms; the availability of financing; and the readiness of trained store managers. There can be no assurance that the Company's expansion plans will be fulfilled in whole or in part, or that leases under negotiation for planned new sites will be obtained on terms favorable to the Company.
MANAGEMENT INFORMATION SYSTEMS
The Company's management information systems (MIS) and electronic data processing systems (EDP) consist of a full range of retail, financial and merchandising systems, including purchasing, inventory distribution and control, sales reporting, accounts payable, and merchandise management.
The system includes PC based point-of-sale (POS) registers equipped with bar code readers in each store. These registers are polled nightly by the central computer (IBM AS/400) using a virtual private network for collection of comprehensive data, including complete item-level sales information, employee time clocking, merchandise transfers and receipts, special orders, supply orders and returns-to-vendor. In conjunction with the nightly polling, the central computer sends the PC server messages from various departments at the Company headquarters and price changes for the price lookup (PLU) file maintained within the POS registers.
Each weekday morning, the Company initiates an electronic "sweep" of the individual store bank accounts to the Company's primary concentration account. This allows the Company to meet its obligations with a minimum of borrowing and to invest excess cash on a timely basis.
Management monitors the performance of each of its stores on a continual basis. Daily information is used to evaluate inventory, determine markdowns, analyze profitability and assist management in the scheduling and compensation of employees. Additionally, reports are generated verifying daily bank deposit information against recorded sales, identifying transactions rung at prices that differ from the PLU file, and listing selected "exception" transactions (e.g. refunds, cash paid-outs, discounts). These reports are used to help assure consistency among the stores and to help prevent losses due to error or dishonesty.
The PLU system allows management to control merchandise pricing centrally, permitting faster and more accurate processing of sales at the store and the monitoring of specific inventory items to confirm that centralized pricing decisions are carried out in each of the stores. Management is able to direct all price changes, including promotional, clearance and markdowns on a central basis and estimate the financial impact of such changes.
The Company is committed to ongoing review of the MIS and EDP systems to provide productive, timely information and effective controls. This review includes testing of new products and systems to assure that the Company is aware of technological developments. Most important, continual feedback is sought from every level of the Company to assure that information provided is pertinent to all aspects of the Company's operations. The Company's discussion regarding Year 2000 issues is included in the Company's Annual Report to Shareholders as part of Management's Discussion and Analysis of Financial Condition and Results of Operations.
EMPLOYEES
As of January 29, 2000, the Company had approximately 5500 employees - approximately 800 of whom were full-time. The Company has an experienced management team and substantially all of the management team, from store managers through senior management, commenced work for the Company on the sales floor. The Company experiences high turnover of store and distribution center employees, primarily due to having a significant number of part-time employees. However, the Company has not experienced significant difficulty in hiring qualified personnel. Of the total employees, approximately 250 are employed at the corporate headquarters and in the distribution center. None of the Company's employees are represented by a union. Management believes that employee relations are good.
The Company provides medical, dental, life insurance and long-term disability plans, as well as a 401(k) and a section 125 cafeteria plan for eligible employees. To be eligible for the plans, other than the 401(k) Plan, an employee must have worked for the Company for 90 days or more, and his or her normal workweek must be 35 hours or more. As of January 29, 2000, 691 employees participated in the medical plan, 694 in the dental plan, 713 in the life insurance plan, 714 in the long-term disability plan and 293 in the cafeteria plan. With respect to the medical, dental and life insurance plans, the Company pays 80% to 100% of the employee's expected premium cost, plus 10% to 100% of the expected cost of dependent coverage under the health plan. The exact percentage is based upon the employee's term of employment and job classification within the Company. In addition, all employees receive discounts on company merchandise.
COMPETITION
The men's and women's apparel industries are highly competitive with fashion, selection, quality, price, location, store environment and service being the principal competitive factors. While the Company believes that it is able to compete favorably with other merchandisers, including department stores and specialty retailers, with respect to each of these factors, the Company believes it competes mainly on the basis of customer service and merchandise selection.
In the men's merchandise areas, the Company competes with specialty retailers such as Gap, American Eagle Outfitters, Gadzooks, Pacific Sunwear, and Abercrombie & Fitch. The men's market also competes with certain department stores, such as Dillards, Saks, May Company stores, Federated stores, and other local or regional department stores and specialty retailers, as well as with mail order and internet merchandisers.
In the women's merchandise area, the Company competes with specialty retailers such as Maurices, American Eagle Outfitters, Gadzooks, Pacific Sunwear, Abercrombie & Fitch, Express, Gap, and Vanity. The women's sales also compete with department stores, such as Dillards, Saks, May Company stores, Federated stores, and certain local or regional department stores and specialty retailers, as well as with mail order and internet merchandisers.
Many of the Company's competitors are considerably larger and have substantially greater financial, marketing and other resources than the Company, and there is no assurance that the Company will be able to compete successfully with them in the future. Furthermore, while the Company believes it competes effectively for favorable site locations and lease terms, competition for prime locations within a mall is also intense.
TRADEMARKS
"Bkle" and "The Buckle" are federally registered trademarks of the Company. The Company believes the strength of its trademarks is of considerable value to its business, and its trademarks are important to its marketing efforts. The Company intends to protect and promote its trademarks, as management deems appropriate.
EXECUTIVE OFFICERS OF THE COMPANY
The Executive Officers of the Company are listed below, together with brief accounts of their experience and certain other information.
DANIEL J. HIRSCHFELD, AGE 58. Mr. Hirschfeld is Chairman of the Board of the Company. He has served as Chairman of the Board since April 19, 1991. Prior to that time, Mr. Hirschfeld served as President and Chief Executive Officer. Mr. Hirschfeld has been involved in all aspects of the Company's business, including the development of the Company's management information systems.
DENNIS H. NELSON, AGE 50. Mr. Nelson is President and Chief Executive Officer and a Director of the Company. He has held the titles of President and director since April 19, 1991. Mr. Nelson was elected Chief Executive Officer on March 17, 1997. Mr. Nelson began his career with the Company in 1970 as a part-time salesman while he was attending Kearney State College (now the University of Nebraska - Kearney). While attending college, he became involved in merchandising and sales supervision for the Company. Upon graduation from college in 1973, Mr. Nelson became a full-time employee of the Company and he has worked in all phases of the Company's operations since that date. Prior to his election as President and Chief Operating Officer on April 19, 1991, Mr. Nelson performed all of the functions normally associated with those positions.
KAREN B. RHOADS, AGE 41. Ms. Rhoads is the Vice-President - Finance, Treasurer and a Director of the Company, and is the Chief Financial Officer. Ms. Rhoads was elected a Director on April 19, 1991. She worked in the corporate offices during college, and later worked part-time on the sales floor. Ms. Rhoads practiced as a CPA for 6 1/2 years, during which time she began working on tax and accounting matters for the Company as a client. She has been employed with the Company since November 1987.
SCOTT M. PORTER, AGE 38. Mr. Porter has served as the Vice President - Men's Merchandising since April 19, 1991 and was elected as corporate Secretary on May 28, 1998. He joined the Company in May of 1978 as a part-time salesman. In 1983, he commenced full-time employment with the Company as a store manager and began participating in buying trips. Since 1987, Mr. Porter has devoted most of his time to men's merchandising, but also is involved in other aspects of the business, including advertising and store design. On February 9, 2000, Mr. Porter announced that he will step down from his position effective February 3, 2001.
JAMES E. SHADA, AGE 44. Mr. Shada is Vice President - Sales. He began employment with the Company in November of 1978 as a salesperson. Between 1979 and 1985, he managed and opened new stores for the Company, and in 1985 Mr. Shada became the Company's sales manager. He is also involved in other aspects of the business including site selection and development and education of personnel as store managers and as regional and district managers. Mr. Shada will reduce his work schedule and relinquished his vice president's position as of May 1, 2000.
GARY L. LALONE, AGE 50. Mr. Lalone is Vice President - Sales. Mr. Lalone joined the Company in March 1982 as the store manager. While managing, he became involved with the men's merchandising. Mr. Lalone became a regional manager and began participating in store site selection, advertising, store design and personnel development. Presently, the majority of Mr. Lalone 's time is spent in sales, and in helping develop and educate personnel as store managers and as regional and district managers. On February 16, 2000, Mr. Lalone announced that he will step down from his position effective February 3, 2001.
BRETT P. MILKIE, AGE 40. Mr. Milkie is Vice President-Leasing. He was elected Vice President-Leasing on May 30, 1996. Mr. Milkie was a leasing agent for a national retail mall developer for 6 years prior to joining the company in January 1992 as director of leasing.
ITEM 2
ITEM 2 - PROPERTIES
All of the store locations operated by the Company are leased facilities. Most of the Company's stores have lease terms of approximately ten years and generally do not contain renewal options. The Company has not in the past experienced problems renewing its leases, although no assurance can be given that the Company can renew existing leases on favorable terms. The Company seeks to negotiate extensions on leases for stores undergoing remodeling to provide terms of approximately ten years after completion of remodeling. Consent of the landlord generally is required to remodel or change the name under which the Company does business. The Company has not in the past experienced problems in obtaining such consent. Most leases provide for a fixed minimum rental plus an additional rental cost based upon a set percentage of sales beyond a specified breakpoint, plus common area and other charges.
The current terms of the Company's leases, including automatic renewal options, expire as follows:
During Fiscal Number of expiring Year leases --------------------------------------------- 2000 1 2001 12 2002 22 2003 27 2004 31 2005 25 2006 30 2007 and later 112 --- Total 260 ===
The corporate headquarters and distribution center for the Company operate within a facility purchased by the Company in 1988, and located in Kearney, NE. The building provides approximately 179,000 square feet of space with over 70% of the area being allocated for the distribution and returns-to-vendor departments.
ITEM 3
ITEM 3 - LEGAL PROCEEDINGS
From time to time, the Company is involved in litigation relating to claims arising out of its operations in the normal course of business. As of the date of this form, the Company was not engaged in any legal proceedings that are expected, individually or in the aggregate, to have a material adverse effect on the Company.
ITEM 4
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fourth quarter of fiscal 1999.
PART II
ITEM 5
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's common stock trades on the New York Stock Exchange under the symbol BKE. Prior to the Company's initial public offering on May 6, 1992, there was no public market for the Company's common stock. The Company has not paid any cash dividends in fiscal 1999, 1998 or 1997, and has no current plans for dividend payment.
The number of record holders of the Company's common stock as of March 31, 2000 was 469. Based upon information from the principal market makers, the Company believes there are more than 4,200 beneficial owners. The last reported sales price of the Company's common stock on March 31, 2000 was $16.125.
The remainder of the information required by this item is incorporated by reference to the information on page 28 of the Company's 1999 Annual Report to Shareholders under the caption "Stock Prices by Quarter" which is attached to this Form 10-K.
ITEM 6
ITEM 6 - SELECTED FINANCIAL DATA
The information required by this item is incorporated by reference to the information on page 7 in the Company's 1999 Annual Report to Shareholders under the caption "Selected Financial Data" which is attached to this Form 10-K.
ITEM 7
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this item is incorporated by reference to the information appearing on pages 23 through 27 in the Company's 1999 Annual Report to Shareholders which is attached to this Form 10-K.
ITEM 7A
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has evaluated the disclosure requirements of Item 305 of S-K "Quantitative and Qualitative Disclosures about Market Risk," and has concluded that the Company has no market risk sensitive instruments for which these additional disclosures are required.
ITEM 8
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements together with the report thereon of Deloitte & Touche LLP dated February 29, 2000, appearing on pages 8 through 22 of the Company's 1999 Annual Report to Shareholders (which is attached to this Form 10-K) are incorporated by reference in this Form 10-K.
ITEM 9
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item appears under the captions "Executive Officers of the Company" appearing on pages 9 and 10 of this report, and "Election of Directors" in the Company's Proxy Statement for its 2000 Annual Shareholders' Meeting and is incorporated by reference.
ITEM 11
ITEM 11 - EXECUTIVE COMPENSATION
The information required by this item appears under the caption "Executive Compensation and Other Information" in the Company's Proxy Statement for its 2000 Annual Shareholders' Meeting and is incorporated by reference.
ITEM 12
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item appears under the caption "Election of Directors" in the Company's Proxy Statement for its 2000 Annual Shareholders' Meeting and is incorporated by reference.
ITEM 13
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item appears under the caption "Compensation Committee Interlocks and Insider Participation" in the Company's Proxy Statement for its 2000 Annual Shareholders' Meeting and is incorporated by reference.
PART IV
ITEM 14
ITEM 14 - EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(A) (1) FINANCIAL STATEMENTS
The Company's 1999 Annual Report to Shareholders, a copy of which appears as Exhibit 13 to this Form 10-K Report, contains the following on pages 8 through 22 and are hereby incorporated by reference to this report:
Independent Auditors' Report Balance Sheets as of January 29, 2000, and January 30, 1999 Statements of Income for each of the three years in the period Ended January 29, 2000 Statements of Stockholders' Equity for each of the three years in the period ended January 29, 2000 Statements of Cash Flows for each of the three years in the period ended January 29, 2000 Notes to Financial Statements for each of the three years in the period ended January 29, 2000
(A) (2) FINANCIAL STATEMENT SCHEDULE
Independent Auditors' Report
II. Valuation and Qualifying Accounts and Reserves
All other schedules are omitted because they are not applicable or the required information is presented in the financial statements or notes thereto. This schedule is on page 14.
(B) REPORTS ON FORM 8-K
The Company did not file a report on Form 8-K during the quarter ended January 29, 2000.
(C) EXHIBITS
See index to exhibits on pages 15 and 16.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE BUCKLE, INC.
Date: April 27, 2000 By: /s/ DENNIS H. NELSON -------------------- Dennis H. Nelson, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities indicated on the 27th day of April, 2000.
/s/ DANIEL J. HIRSCHFELD /s/ ROBERT E. CAMPBELL - ------------------------------------------ ---------------------- Daniel J. Hirschfeld Robert E. Campbell Chairman of the Board and Director Director
/s/ DENNIS H. NELSON /s/ WILLIAM D. ORR - ------------------------------------------ ---------------------- Dennis H. Nelson William D. Orr President and Chief Executive Officer Director and Director
/s/ KAREN B. RHOADS - ----------------------------------------- ---------------------- Karen B. Rhoads Bill L. Fairfield Vice President of Finance and Director Chief Financial Officer and Director
---------------------- Ralph M. Tysdal Director
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS THE BUCKLE, INC.
We have audited the financial statements of The Buckle, Inc. as of January 29, 2000 and January 30, 1999 and for each of the three years in the period ended January 29, 2000, and have issued our report thereon dated February 29, 2000; such financial statements and report are included in your 1999 Annual Report to Stockholders and are incorporated herein by reference. Our audits also included the financial statement schedule of The Buckle, Inc., listed in Item 14(a)(2). This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP Omaha, Nebraska February 29, 2000
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Allowance for Doubtful Accounts -----------------
Balance, February 1, 1997 $ 311,795
Amounts charged to costs and expenses 753,759 Recoveries of amounts previously written off Write-off of uncollectible accounts (574,987) ------------- Balance, January 31, 1998 490,567
Amounts charged to costs and expenses 1,132,004 Recoveries of amounts previously written off Write-off of uncollectible accounts (1,322,571) ------------ Balance, January 30, 1999 300,000
Amounts charged to costs and expenses 1,095,115 Write-off of uncollectible accounts (1,170,115) ------------ Balance, January 29, 2000 $ 225,000 ============