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1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 1, 1997
Commission File Number: 000-20132
THE BUCKLE, INC.
(Exact name of Registrant as specified in its charter)
Nebraska 47-0366193
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
2407 West 24th Street, Kearney, Nebraska 68847 (308) 236-8491
(Address of principal executive offices) (Zip Code) (Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of each Class on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.05 par value
(Title of Class)
(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 ( X ). No ( ).
Indicate if the 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 a definitive proxy or information statement
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 on the NASDAQ) of the
Common Stock of the Registrant held by non-affiliates of the Registrant was
$60,949,530.00 on April 14, 1997. 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 2,138,580 shares.
The number of shares outstanding of the Registrant's Common Stock, as of April
14, 1997 was 6,983,581 shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for Registrant's 1997 Annual Meeting of
Shareholders to be held June 2, 1997 are incorporated by reference in Part III.
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THE BUCKLE, INC.
FORM 10-K
FEBRUARY 1, 1997
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 12
Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes In and Disagreements With Accountants on 12
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 13
on Form 8-K
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PART I
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
February 1, 1997, the Company operated 181 retail stores in 22 states
throughout the central United States under the names "Brass 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 shoes. 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 38
stores at the start of 1987 to 181 stores by the close of 1996. The Company
changed its corporate name to The Buckle, Inc. on April 23, 1991. All
references herein to fiscal 1996 refer to the 52-week period ended February 1,
1997. Fiscal 1995 and fiscal 1994 refer to the 53 and 52-week periods ended
February 3, 1996 and January 28, 1995, respectively.
The company's principal executive offices and distribution center are
located at 2407 West 24th Street, Kearney, Nebraska 68847. The Company's
telephone number is (308) 236-8491.
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, dresses, outerwear, accessories, and
shoes. Denim is a significant contributor to total sales (over 31% of fiscal
1996 net sales) and is a key to the Company's merchandising concept. The
Company believes it attracts customers with a selection of brands and a wide
variety of fits, finishes and styles in denim. Shirts and tops are also a
significant contributor to the total sales (over 34% of fiscal 1996 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 Fiscal Fiscal Fiscal
Group 1996 1995 1994
- ----- ---- ---- ----
Denims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.6% 32.6% 31.7%
Slacks/Casual Bottoms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 1.7 1.7
Tops (including sweaters) . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.6 37.3 39.9
Sportswear/Fashion Clothes (including dresses) . . . . . . . . . . . . . . . . . 10.6 14.8 16.6
Outerwear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 2.1 2.1
Accessories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 4.9 3.5
Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.6 6.0 3.0
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 .6 1.5
----- ---- ----
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0%
====== ====== ======
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Brand name merchandise constitutes over 80% 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, Mossimo, Calvin Klein, Levi's, Silver, and Tommy
Jeans. The Company believes brand name merchandise will continue to constitute
the substantial majority of sales, although the percentage of private label
merchandise sold has increased over the past several years.
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
which 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 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
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 1990, the store layout and decor were completely redesigned to
provide an appealing and contemporary appearance. At that time, the Company
began operating all new and fully remodeled stores with this design. The
design presents a contemporary 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 an environment comfortable for all customers. The interior is well
lighted to provide true, bright color rendition of the merchandise, and many
fixtures are movable to allow for highlighting specific garments within the
display walls. Finish materials are selected to provide a high quality look
and easy maintenance. All stores opened and fully remodeled since June 1990
(176 stores as of March 10, 1997) have the new format and do business as "The
Buckle."
In 1996, the Company contracted with a national design firm to again
review the store design and assist in development of an updated unique look.
The first store with the new design was opened February 26, 1997 in The
Wolfchase Galleria in Memphis, TN. The Company plans to use this design for
all new stores and will update existing stores only if there is a normally
scheduled remodel.
ADVERTISING AND PROMOTION
In fiscal 1996, The Company spent $2.8 million (net co-op
reimbursements) or 1.34% of net sales on advertising and in-store point of sale
materials. In the past, radio and direct mail have been the primary sources
of advertising for The Company. In 1996 and moving forward, there will be less
emphasis on direct mail coupons and more focus on in-store visual enhancements,
special events and image advertising. On-screen theatre advertising is being
added to the media mix in select markets as an image builder for The Company.
Radio advertising will continue to be a media source used to support special
events in approximately 80% of The Company's markets.
In 1996, The Company published a corporate web site at www.buckle.com.
The Internet provides an information source for investors, customers and
employees. The Company will continue offering the frequent shopper program (The
Buckle Primo Card), a program designed to build customer loyalty. In-store
seasonal sign kits and promotional signage is used to enhance merchandising
presentations, the stores' image and special events at point of sale.
5
STORE OPERATIONS
The Company has two Vice Presidents of Sales, two regional managers, eight
district managers, and 34 area managers. All district and 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 recruiting and training quality
personnel. The Company recruits interns and management trainees on college
campuses and focuses on building its management organization from within. Sales
training of new employees is performed at the store level by store managers.
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, as well as the installation of electronic article
surveillance systems in more than 85% of the Company's stores. As a result, the
Company achieved a shrinkage rate of 0.7% of net sales for fiscal 1996, 0.6%
for fiscal 1995 and 0.5% for fiscal 1994.
The average store is approximately 4,600 square feet (of which the Company
estimates an average of approximately 85% is selling space), and stores range in
size from 2,450 square feet to 7,300 square feet.
PURCHASING AND DISTRIBUTION
The Company has a very experienced buying team. The buying team, which
includes the President, Vice President of Men's Merchandising, in addition to
the men's and women's merchandisers, has 5 members who have between 13 and 27
years 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 an exclusive
agreement with an agent in Hong Kong for the manufacture of The Buckle, Inc.'s
private label merchandise. This agreement was entered into as of 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 1996, Lucky Brand Dungarees and AirWair USA (Dr. Martens) made up
16.9% and 13.3%, 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, Mossimo, Calvin Klein, Levi's,
Silver, and Tommy Jeans. 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, tagged with bar coded
tickets, sorted, and packaged for distribution to individual stores via United
Parcel Service. The Company's goal is to ship the majority of its merchandise
out to the stores within one business day of
6
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 1995, the Company began to
direct-ship to its Buckle stores merchandise from Levi Strauss and Company.
Management believes its distribution system can service up to 220 stores in
the current facilities. The Company is currently working on plans for expansion
of its current corporate headquarters and distribution center, with a newly
designed distribution system that would allow for expansion to handle up to 650
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.
In order to reduce interstore 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 March 20, 1997 the Company operated 185 stores in 23 states,
including 4 stores opened in 1997. The existing stores are in 8 downtown
locations, 9 strip centers and 168 shopping malls. The Company anticipates
opening approximately 13 additional new stores in fiscal 1997. All new stores
for 1997 will be located in higher traffic shopping malls. The following table
lists the location of existing stores as of March 20, 1997.
Location of Stores
------------------
State Number of Stores
----- ----------------
Arkansas 5
Colorado 9
Idaho 3
Illinois 11
Indiana 12
Iowa 20
Kansas 15
Kentucky 4
Michigan 13
Minnesota 7
Mississippi 1
Missouri 11
Montana 4
Nebraska 15
New Mexico 3
North Dakota 3
Ohio 8
Oklahoma 13
South Dakota 3
Texas 12
Tennessee 2
Wyoming 1
Wisconsin 10
---
Total 185
===
7
The Buckle has grown significantly over the past ten years, with the number
of stores increasing from 39 at the beginning of 1987 to 181 at the end of 1996.
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
closing since the beginning of fiscal 1987 to the end of fiscal 1996:
Total Number of Stores Per Year
Fiscal Open at start Opened in
Year of year Current Year Total
-----------------------------------------------------------------
1987 39 6 45
1988 45 11 56
1989 56 10 66
1990 66 6 71
1991 71 15 86
1992 86 18 104
1993 104 27 131
1994 131 16 147
1995 147 17 164
1996 164 17 181
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 and 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 fiscal 1990, expansion was suspended for the first two quarters of the
year as management developed and refined the store design to give the stores a
more contemporary look and permitting better presentation of merchandise in
coordinated outfits.
In 1996, The Buckle began development of an updated store design. This
design will be used on the new stores beginning in fiscal 1997, and on 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 $445,000, including construction costs of approximately $325,000
(which is prior to any construction allowance received) and inventory costs of
approximately $120,000.
The Company anticipates opening approximately 17 new stores during fiscal
1997 and completing the remodeling of approximately four 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 four stores scheduled for
remodeling during fiscal 1997, it is estimated that each will receive full
remodeling. The Company has budgeted a total of $13.0 million (before estimated
construction allowances from landlords of $1.5 million) for new store
construction, remodeling, technology upgrades and construction at the corporate
headquarters during fiscal 1997.
The Company plans to expand in 1997 by opening stores in four new states 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.
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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 and the ability to find suitable malls with
acceptable sites on satisfactory terms and the availability of internal or
external financing sources. 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 Fujitsu Atrium 9000 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 cash registers 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 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 1, 1997, the Company had approximately 3300 employees -
approximately 540 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, 170 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
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must have worked for the Company for 90 days or more, and his or her
normal work week must be 35 hours or more. As of February 1, 1997, 488
employees participated in the medical plan, 496 in the dental plan, 508 in the
life insurance plan, 451 in the long-term disability plan and 243 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 being 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, Gadzooks, Pacific Sunwear, Abercrombie & Fitch, and
County Seat. The men's market also competes with certain department stores,
such as Dillards, Proffitt's, May Company stores, Federated stores, and other
local or regional department stores and specialty retailers, and with mail
order merchandisers.
In the women's merchandise area, the Company competes with specialty
retailers such as Maurices, Gadzooks, Express, Gap, and Vanity. The women's
sales also compete with department stores, such as Dillards, Proffitt's, May
Company stores, and certain local and regional department stores and specialty
retailers, and with mail order 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
"Brass Buckle" 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 55. Mr. Hirschfeld is Chairman of the Board of
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 47. 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.
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KAREN B. RHOADS, AGE 38. Ms. Rhoads is the Vice-President - Finance 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 PORTER, AGE 35. Mr. Porter is the Vice President-Men's
Merchandising. 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.
JIM SHADA, AGE 41. 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 advertising, store design and site selection.
GARY LALONE, AGE 47. 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.
S. WAYNE DAUGHERTY, AGE 53. Mr. Daugherty is Vice President - Operations
and Secretary. He joined the Company in June 1978 and began working in various
areas of the Company's business, including advertising, store systems
development, general facilities operations, site selection and leasing. From
1988 to the present, Mr. Daugherty's primary activities have been real estate
and construction, and operational purchasing.
BRETT P. MILKIE, AGE 37. 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 - 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.
11
The current terms of the Company's leases, including automatic renewal
options, expire as follows:
During Fiscal Number of
Year expiring leases
-----------------------------------------
1997 5
1998 1
1999 9
2000 19
2001 18
2002 30
2003 34
2004 and later 69
---
Total 185
===
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 55,000 square feet of space
with over 50% of the area being allocated for the distribution and
returns-to-vendor departments.
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 1996.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's common stock trades in the over-the-counter market under
the NASDAQ National Market System symbol BKLE. 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 1996, 1995
or 1994, and has no plans to for the foreseeable future.
The number of record holders of the Company's common stock as of April
14, 1997 was 302. Based upon information from the principal market makers, the
Company believes there are more than 1,800 beneficial owners. The last
reported sales price of the Company's common stock on April 14, 1997 was
$28.50.
The remainder of the information required by this item is incorporated
by reference to the information on page 28 of the Company's 1996 Annual Report
to Shareholders under the caption "Stock Prices by Quarter" which is attached
to this Form 10-K.
ITEM 6 - SELECTED FINANCIAL DATA
The information required by this item is incorporated by reference to the
information on page 13 of the financial section in the Company's 1996 Annual
Report to Shareholders under the caption "Selected Financial Data" which is
attached to this Form 10-K.
12
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 25 through 28 in the Company's 1996 Annual
Report to Shareholders which is attached to this Form 10-K.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements together with the report thereon of Deloitte & Touche
LLP dated February 25, 1997, appearing on pages 14 through 24 of the Company's
1996 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.
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 1997
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 1997 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 1997 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 1997 Annual Shareholders' Meeting and is incorporated
by reference.
13
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS
The Company's 1996 Annual Report to Shareholders, a copy of which
appears as Exhibit 13 to this Form 10-K Report, contains the following on pages
14 through 24 and are hereby incorporated by reference to this report:
Independent Auditors' Report
Balance Sheets as of February 1, 1997, and February 3, 1996
Statements of Income for each of the three years in the period
ended February 1, 1997
Statements of Stockholders' Equity for each of the three years
in the period ended February 1, 1997
Statements of Cash Flows for each of the three years in the
period ended February 1, 1997
Notes to Financial Statements for each of the three years in the
period ended February 1, 1997
(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 15.
(b) REPORTS ON FORM 8-K
The Company did not file a report on Form 8-K during the quarter ended
February 1, 1997.
(c) EXHIBITS
See index to exhibits on pages 16 and 17.
14
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 30, 1997 By: 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 30th day of April, 1997.
DANIEL J. HIRSCHFELD ROBERT E. CAMPBELL
- ---------------------------------- ---------------------------
Daniel J. Hirschfeld Robert E. Campbell
Chairman of the Board and Director Director
DENNIS H. NELSON
- ---------------------------------- ---------------------------
Dennis H. Nelson William D. Orr
President and Chief Executive Officer Director
and Director
KAREN B. RHOADS
- ---------------------------------- ---------------------------
Karen B. Rhoads Bill L. Fairfield
Vice President of Finance and Director
Chief Financial Officer and Director
---------------------------
Ralph M. Tysdal
Director
15
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS
THE BUCKLE, INC.
We have audited the financial statements of The Buckle, Inc. as of February
1, 1997 and February 3, 1996 and for each of the three years in the period ended
February 1, 1997, and have issued our report thereon dated February 25, 1997;
such financial statements and report are included in your 1996 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 25, 1997
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Allowance for
Doubtful Accounts
-----------------
Balance, January 29, 1994 $ 154,153
Amounts charged to costs and expenses 430,668
Recoveries of amounts previously written off 10,737
Write-off of uncollectible accounts (383,237)
---------
Balance, January 28, 1995 212,321
Amounts charged to costs and expenses 456,980
Recoveries of amounts previously written off 7,570
Write-off of uncollectible accounts (436,498)
---------
Balance, February 3, 1996 240,373
Amounts charged to costs and expenses 493,232
Recoveries of amounts previously written off 4,034
Write-off of uncollectible accounts (425,844)
---------
Balance, February 1, 1997 $ 311,795
=========
16
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
(3.2) 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 dated April 1, 1997 and
executed April 5, 1997 by Dennis H. Nelson
(10.5) Acknowledgment dated April 1, 1997 and
executed April 1, 1997 by Scott M. Porter
(10.6) Acknowledgment dated April 1, 1997 and
executed April 11, 1997 by James E. Shada
(10.7) Acknowledgment dated April 1, 1997 and
executed April 14, 1997 by Gary L. Lalone
(10.8) Acknowledgment dated April 1, 1997 and
executed April 14, 1997 by S. Wayne Daugherty
(10.10) Cash or Deferred Profit Sharing Plan Exhibit 10.10 to Form S-1
No. 33-46294
(10.11) Programmed Lending Note dated
May 23, 1996 for $5.0 million payable
to First National Bank and Trust Co.
of Kearney
17
(10.12) Loan Agreement dated May 23, 1996
between The Buckle, Inc. and First
National Bank and Trust Co. of Kearney,
regarding $5.0 million line of credit.
(10.13) Letter dated May 21, 1996 from
First National Bank and Trust Co.
of Kearney, regarding $5.0 million
line of credit and $5.0 million
letter of credit facility.
(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
(11) Statement regarding Computation of Pro Forma
Net Income Per Share
(12) Not applicable
(13) 1996 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