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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended FEBRUARY 2, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ____________ to ____________
Commission File Number: 000-20132
THE BUCKLE, INC.
(Exact name of Registrant as specified in its charter)
NEBRASKA 47-0366193
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2407 WEST 24TH STREET, KEARNEY, NEBRASKA 68845-4915
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (308) 236-8491
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
Indicate whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ].
The aggregate market value (based on the closing price of the New York Stock
Exchange) of the Common Stock of the Registrant held by non-affiliates of the
Registrant was $177,206,578.68 on March 26, 2002. For purposes of this response,
executive officers and directors are deemed to be the affiliates of the
Registrant and the holdings by non-affiliates was computed as 7,420,711 shares.
The number of shares outstanding of the Registrant's Common Stock, as of March
26, 2002, was 21,518,647.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement dated April 26, 2002 for Registrant's
2002 Annual Meeting of Shareholders to be held May 30, 2002 are incorporated by
reference in Part III.
THE BUCKLE, INC.
FORM 10-K
FEBRUARY 2, 2002
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. Business 3
Item 2. Properties 10
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
PART II
Item 5. Market for Registrant's Common Equity and Related 11
Shareholder Matters
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of Financial 11
Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 11
Item 8. Financial Statements and Supplementary Data 11
Item 9. Changes In and Disagreements With Accountants on 11
Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant 12
Item 11. Executive Compensation 12
Item 12. Security Ownership of Certain Beneficial Owners and 12
Management
Item 13. Certain Relationships and Related Transactions 12
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports 12
on Form 8-K
2
PART I
ITEM 1 - BUSINESS
The Buckle, Inc. (the "Company") is a retailer of medium to better-priced casual
apparel, footwear and accessories for fashion conscious young men and women. As
of February 2, 2002, the Company operated 295 retail stores in 37 states
throughout the central United States, as well as in the northwest, southeast 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 86 stores at the start
of 1992 to 295 stores by the close of fiscal 2001. The Company changed its
corporate name to The Buckle, Inc. on April 23, 1991. All references herein to
fiscal 2001 refer to the 52-week period ended February 2, 2002. Fiscal 2000
refers to the 53-week period ending February 3, 2001 and fiscal 1999 refers to
the 52-week period ended January 29, 2000.
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, slacks/casual
bottoms, tops, sweaters, sportswear, outerwear, accessories and footwear. Denim
is a significant contributor to total sales (28.8% of fiscal 2001 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 (33.5% of fiscal 2001 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.
Percentage of Net Sales
---------------------------------
Merchandise Group Fiscal Fiscal Fiscal
----------------- 2001 2000 1999
------ ------ ------
Denims 28.8% 26.6% 25.0%
Slacks/Casual Bottoms 5.0 5.4 4.3
Tops (including sweaters) 33.5 32.2 34.0
Sportswear/Fashion Clothes 5.7 6.5 7.8
Outerwear 2.9 3.3 2.7
Accessories 11.0 9.1 7.1
Footwear 11.8 14.4 16.6
Little Guys/Gals 1.0 2.2 2.4
Other 0.3 0.3 0.1
----- ----- -----
Total 100.0% 100.0% 100.0%
===== ===== =====
3
Brand name merchandise constitutes nearly 90% of the Company's sales volume. The
remaining 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,
Silver, Fossil and Polo Jeans Company. The Company believes brand name
merchandise will continue to constitute a 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 five to
six percent of net sales have 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 that
shifts specific merchandise to locations where it is selling best. 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 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.
During fiscal 2001, the Company worked with a nationally recognized design firm
to review architectural finishes, lighting, column treatments, cashwrap design
and other stores features. A total of 10 new and remodeled locations in fiscal
2001, plus 4 new and remodeled stores in fiscal 2002, have introduced these new
finishes and they were very highly received by guests and management. Based on
the success of these elements, the Company contracted with the design firm for a
full new store design including all wall systems, finishes and fixtures. The
last update to the store look was in fiscal 1997. New materials include: wood
flooring, enhanced graphic elements, corrugated metals and Icon brand elements.
Attention will also be directed to the development of accessory and shoe
fixtures for potential roll out to all stores in fiscal 2002. The Company
expects to open the first new prototype stores in the summer of 2002 with all
subsequent remodels and new stores featuring the new design.
The basic overall store architectural design presents a unique atmosphere in
which the store's architectural elements, including feature display walls,
provide a backdrop and create a strong visual presentation for the customer.
Special care is taken to provide a comfortable environment to which customers
can relate.
ADVERTISING AND PROMOTION
In fiscal 2001, the Company spent $3.7 million (net co-op reimbursements) or
1.0% of net sales on advertising, promotions and in-store point of sale
materials. In-store seasonal sign kits, promotional signage and image brochures
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. The Buckle partners with key vendors on magazine
opportunities to extend the reach in these publications. Radio advertising
continues as a media source used to support special events and promotions such
as sweepstakes, grand openings and end-of-season sales 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 offers a
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.
4
The Company publishes a corporate web site at www.buckle.com. The Company's web
site serves as a marketing tool reaching a growing online audience. Buckle.com
is an interactive, entertaining, informative and brand building environment
where visitors can get the latest Buckle fashion information with special
features including an online denim guide, shoe guides and style boutiques. The
Company has an opt-in online database and sends weekly e-mail blasts to fill
members in on the latest store promotions and product offerings. Online guests
can shop, enter monthly contests, fill out a wish list, find out about career
opportunities, and read the latest Buckle financial news. The Buckle Online
Store was launched April 26, 1999 as a marketing tool, to extend the Company's
brand beyond the physical locations. Offering a small sampling of the
merchandise inventory 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 an Executive Vice President of Sales, a Vice President of Sales,
one regional manager, 14 district managers and 49 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 and focuses on building its management
organization from within. 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.
Store managers perform sales training of new employees at the store level.
Salespeople displaying particular talent are generally 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.
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 approximately 98% of the Company's stores as well as surveillance camera
systems in approximately 64% of the stores. As a result, the Company achieved a
merchandise shrinkage rate of 0.7% of net sales for fiscal 2001, 0.6% of net
sales for fiscal 2000 and 0.7% for fiscal year 1999.
The average store is approximately 4,800 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 8,475 square feet.
PURCHASING AND DISTRIBUTION
The Company has a very experienced buying team. The buying team includes the
President, two head women's merchandisers, six women's buyers, and three men's
merchandisers and one men's buyer. 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 that date.
In fiscal 2001, Lucky Brand Dungarees (including their children's division) made
up 23.7% 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, Fossil, Silver, Ecko Apparel 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.
5
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, Nebraska. Merchandise is received daily in Kearney where it is 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.
The Company's current building space and distribution system will allow for
handling of 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 provide a 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 an over-crowded look in the stores at the
beginning of a season.
STORE LOCATIONS AND EXPANSION STRATEGIES
As of April 1, 2002, the Company operated 298 stores in 37 states, including 3
stores opened in fiscal 2002. The existing stores are in 4 downtown locations,
10 strip centers, 2 lifestyle centers and 282 shopping malls. The Company
anticipates opening approximately 9 to 13 additional new stores in fiscal 2002.
All new stores for fiscal 2002 will be located in higher traffic shopping malls.
The following table lists the location of existing stores as of April 1, 2002.
Location of Stores
State Number of Stores State Number of Stores
- ----- ---------------- ----- ----------------
Alabama 2 Montana 5
Arizona 6 Nebraska 15
Arkansas 5 New Mexico 4
California 6 North Carolina 7
Colorado 10 North Dakota 3
Florida 3 Ohio 13
Georgia 3 Oklahoma 13
Idaho 5 Oregon 2
Illinois 16 Pennsylvania 4
Indiana 12 South Carolina 1
Iowa 20 South Dakota 3
Kansas 15 Tennessee 8
Kentucky 5 Texas 32
Louisiana 7 Utah 8
Michigan 18 Virginia 1
Minnesota 10 Washington 5
Mississippi 4 West Virginia 2
Missouri 12 Wisconsin 12
Wyoming 1
---
Total 298
===
6
The Buckle has grown significantly over the past ten years, with the number of
stores increasing from 86 at the beginning of 1992 to 295 at the end of fiscal
2001. 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 1992 to the end of fiscal 2001:
Total Number of Stores Per Year
Fiscal Open at start Opened in Closed in
Year of year Current Year Current Year Total
------ ------------- ------------ ------------ -----
1992 86 18 - 104
1993 104 27 - 131
1994 131 16 - 147
1995 147 17 - 164
1996 164 17 - 181
1997 181 19 1 199
1998 199 24 1 222
1999 222 27 1 248
2000 248 28 2 274
2001 274 24 3 295
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.
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
$690,000, including construction costs of approximately $530,000 (which is prior
to any construction allowance received) and inventory costs of approximately
$160,000.
The Company anticipates opening approximately 12 new stores during fiscal 2002
and completing the remodeling of approximately 10 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 2002, it is estimated that each will receive full remodeling. The
Company has budgeted a total of $19.0 million (before estimated construction
allowances from landlords of $2.9 million) for new store construction,
remodeling, technology upgrades and improvements at the corporate headquarters
during fiscal 2002.
The Company plans to expand in 2002 by opening stores 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.
7
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.
EMPLOYEES
As of February 2, 2002, the Company had approximately 5,500 employees -
approximately 1,023 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 300 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 February 2, 2002, 825 employees
participated in the medical plan, 825 in the dental plan, 796 in the life
insurance plan, 735 in the long-term disability plan and 289 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 20% 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
8
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 Abercrombie & Fitch, American Eagle Outfitters, Gadzooks, Gap and
Pacific Sunwear. The men's market also competes with certain department stores,
such as Dillards, Federated stores, May Company stores, Saks 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 Abercrombie & Fitch, American Eagle Outfitters, Express, Gadzooks, Gap,
Maurices, Pacific Sunwear and Vanity. The women's sales also compete with
department stores, such as Dillards, Federated stores, May Company stores, Saks
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 intense.
TRADEMARKS
"BUCKLE", "BKLE", "RECLAIM", "BKE" 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 60. 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 52. 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 43. Ms. Rhoads is the Vice-President - Finance, Treasurer,
Chief Financial Officer and a Director of the Company. 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.
JAMES E. SHADA, AGE 46. Mr. Shada is Executive 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.
BRETT P. MILKIE, AGE 42. 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.
9
KARI SMITH, AGE 38. Ms. Smith is Vice President - Sales. She has held this
position since May 31, 2001. Ms. Smith joined the Company May 16, 1978 as a
part-time salesperson. Later she became store manager in Great Bend, KS and then
began working with other stores as an area manager. As regional manager, Ms.
Smith has continued to develop her involvement with the sales management
executive team, helping with manager meetings and new store manager development,
as well as providing support for store managers, area managers and district
managers.
PATRICIA WHISLER, AGE 45. Ms. Whisler is Vice President of Women's
Merchandising. She has held this position since May 31, 2001. Ms. Whisler joined
the Company in February 1976 as a part-time salesperson and later became manager
of a Buckle store before returning to the corporate office in 1983 to work as
part of the growing merchandising team.
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. In the past, the Company has not
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 experienced problems in obtaining
such consent in the past. 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
------------ -------------------
2002 30
2003 34
2004 29
2005 27
2006 19
2007 22
2008 21
2009 and later 116
---
Total 298
===
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. During fiscal 2000, the Company purchased a 40,000 square foot
building with warehouse and office space near the corporate headquarters, which
will give the Company flexibility in its growth. The Company also acquired a
50-year lease, with favorable lease terms, on the land the building is built
upon.
10
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 - 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 2001.
PART II
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 2001, 2000 or 1999, and has no current plans for
dividend payment.
The number of record holders of the Company's common stock as of March 26, 2002
was 406. Based upon information from the principal market makers, the Company
believes there are more than 4,200 beneficial owners. The closing price of the
Company's common stock on March 26, 2002 was $23.88.
Additional information required by this item is incorporated by reference to the
information on page 32 of the Company's 2001 Annual Report to Shareholders under
the caption "Stock Prices by Quarter" which is attached to this Form 10-K. The
remainder of the information required by this item appears under the caption
"Equity Compensation Plan Information" in the Company's Proxy Statement for its
2002 Annual Shareholders' Meeting and is incorporated by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information required by this item is incorporated by reference to the
information on page 11 in the Company's 2001 Annual Report to Shareholders under
the caption "Selected Financial Data" which is attached to this Form 10-K.
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 12 through 16 in the Company's 2001 Annual Report
to Shareholders which is attached to this Form 10-K.
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 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements together with the independent auditors' report thereon
of Deloitte & Touche LLP dated March 4, 2002, appearing on pages 17 through 32
of the Company's 2001 Annual Report to Shareholders (which is attached to this
Form 10-K) are incorporated by reference in this Form 10-K.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
11
PART III
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 2002 Annual
Shareholders' Meeting and is incorporated by reference.
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
2002 Annual Shareholders' Meeting and is incorporated by reference.
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 2002 Annual Shareholders'
Meeting and is incorporated by reference.
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 2002 Annual Shareholders' Meeting and is incorporated by reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS
The Company's 2001 Annual Report to Shareholders, a copy of which appears as
Exhibit 13 to this Form 10-K Report, contains the following on pages 17 through
32 and are hereby incorporated by reference to this report:
Balance Sheets as of February 2, 2002, and February 3, 2001
Statements of Income for each of the three years in the period
ended February 2, 2002
Statements of Stockholders' Equity for each of the three years
in the period ended February 2, 2002
Statements of Cash Flows for each of the three years in the
period ended February 2, 2002
Notes to Financial Statements for each of the three years in
the period ended February 2, 2002
Independent Auditors' Report
(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 February
2, 2002.
(c) EXHIBITS
See index to exhibits on pages 15 and 16.
12
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 22, 2002 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 22nd day of April, 2002.
/s/ DANIEL J. HIRSCHFELD
- ----------------------------------------- ----------------------------------
Daniel J. Hirschfeld Bill L. Fairfield
Chairman of the Board and Director Director
/s/ DENNIS H. NELSON
- ----------------------------------------- ----------------------------------
Dennis H. Nelson Ralph M. Tysdal
President and Chief Executive Officer Director
and Director
/s/ KAREN B. RHOADS
- ----------------------------------------- ----------------------------------
Karen B. Rhoads Bruce L. Hoberman
Vice President of Finance and Director
Chief Financial Officer and Director
/s/ JAMES E. SHADA
- ----------------------------------------- ----------------------------------
James E. Shada David A. Roehr
Executive Vice President of Sales Director
/s/ ROBERT E. CAMPBELL /s/ WILLIAM D. ORR
- ----------------------------------------- ----------------------------------
Robert E. Campbell William D. Orr
Director Director
13
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS
THE BUCKLE, INC.
We have audited the financial statements of The Buckle, Inc., ("the Company") as
of February 2, 2002 and February 3, 2001, and for each of the three years in the
period ended February 2, 2002, and have issued our report thereon dated March 4,
2002; such financial statements and report are included in your 2001 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
March 4, 2002
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Allowance for
Doubtful Accounts
-----------------
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
Amounts charged to costs and expenses 857,968
Write-off of uncollectible accounts (832,968)
-----------
Balance, February 3, 2001 250,000
Amounts charged to costs and expenses 816,276
Write-off of uncollectible accounts (816,276)
-----------
Balance, February 2, 2002 $ 250,000
===========
14
INDEX TO EXHIBITS
EXHIBITS PAGE NUMBER OR INCORPORATION
BY REFERENCE TO
(3) Articles of Incorporation and By-Laws.
(3.1) Articles of Incorporation Exhibit 3.1 to Form S-1
of The Buckle, Inc. as amended No. 33-46294
(3.1.1) Amendment to the Articles of
Incorporation of The Buckle, Inc.
(3.2) By-Laws of The Buckle, Inc. Exhibit 3.2 to Form S-1
No. 33-46294
(4) Instruments defining the rights of security
holders, including indentures
(4.1) See Exhibits 3.1 and 3.2 for provisions of the
Articles of Incorporation and By-laws of the
Registrant defining rights of holders of Common
Stock of the registrant
(4.2) Form of stock certificate for Common Stock Exhibit 4.1 to Form S-1
No. 33-46294
(9) Not applicable
(10) Material Contracts
(10.1) 1991 Stock Incentive Plan Exhibit 10.1 to Form S-1
No. 33-46294
(10.2) 1991 Non-Qualified Stock Option Plan Exhibit 10.2 to Form S-1
No. 33-46294
(10.3) Non-Qualified Stock Option Plan and Exhibit 10.3 to Form S-1
Agreement With Dennis Nelson No. 33-46294
(10.4) Acknowledgment for Dennis H. Nelson
dated April 18, 2002
(10.6) Acknowledgment for James E. Shada
dated April 18, 2002
(10.7) Acknowledgment for Kari G. Smith
dated April 18, 2002
(10.8) Acknowledgment for Brett P. Milkie
dated April 18, 2002
(10.9) Acknowledgment for Patricia K. Whisler
dated April 18, 2002
(10.10) Cash or Deferred Profit Sharing Plan Exhibit 10.10 to Form S-1
No. 33-46294
(10.10.1) Non-Qualified Deferred Compensation Plan
(10.11) Commercial Note dated May 31, 2001
between The Buckle, Inc. and Wells
Fargo Bank Nebraska, N.A. for a
$10.0 million line of credit for issuance
of letters of credit.
15
(10.12) Commercial Note and Credit
agreement dated May 31, 2001
between The Buckle, Inc. and Wells
Fargo Bank Nebraska, N.A, regarding
$7.5 million operating line of credit
(10.17) 1993 Director Stock Option Plan Exhibit A to Proxy Statement
for Annual Meeting to be held
May 26, 1993
(10.18) 1993 Executive Stock Option Plan Exhibit B to Proxy Statement
for Annual Meeting to be held
May 26, 1993
(10.19) 1995 Management Incentive Plan Exhibit A to Proxy Statement
for Annual Meeting to be held
June 2, 1995
(10.20) 1995 Executive Stock Option Plan Exhibit B to Proxy Statement
for Annual Meeting to be held
June 2, 1995
(10.21) 1997 Management Incentive Plan Exhibit A to Proxy Statement
for Annual Meeting to be held
June 2, 1997
(10.22) 1998 Management Incentive Plan Exhibit A to Proxy Statement
for Annual Meeting to be held
May 28, 1998
(10.23) 1997 Executive Stock Option Plan Exhibit B to Proxy Statement
for Annual Meeting to be held
May 28, 1998
(10.24) 1998 Restricted Stock Plan Exhibit C to Proxy Statement
for Annual Meeting to be held
May 28, 1998
(10.25) 1999 Management Incentive Plan Exhibit A to Proxy Statement
for Annual Meeting to be held
June 4, 1999
(10.26) 2002 Management Incentive Plan Exhibit A to Proxy Statement
for Annual Meeting to be held
May 30, 2002
(12) Not applicable
(13) 2001 Annual Report to Stockholders
(18) Not applicable
(19) Not applicable
(22) Not applicable
(23) Consent of Deloitte & Touche LLP
(25) Not applicable
(28) Not applicable
16