What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-30 compared with 2021-03-31 · 56 added, 94 removed, 469 unchanged (24% of the section changed)

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of The Buckle, Inc.

and subsidiary (the “Company”) as of January 30, 2021 and February 1, 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows, for each of the three fiscal years in the period ended January 30, 2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 30, 2021 and February 1, 2020, and the results of its operations and its cash flows for each of the three fiscal years in the period ended January 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

and subsidiary (the “Company”) as of January 29, 2022 and January 30, 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows, for each of the three fiscal years in the period ended January 29, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 29, 2022 and January 30, 2021, and the results of its operations and its cash flows for each of the three fiscal years in the period ended January 29, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 29, 2022 based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 30, 2022, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note A to the financial statements, effective February 3, 2019, the Company adopted Financial Accounting Standards Board Accounting Standards Update No.

2016-02, Leases (Topic 842) .

Basis for Opinion

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ASSETS January 29,

2021 February 1,

2022 January 30,

CURRENT ASSETS:

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Common stock, authorized 100,000,000 shares of $ 0.01 par value;

49,407,731 and 49,205,681 shares issued and outstanding at January 30, 2021 and February 1, 2020, respectively

49,728,651 and 49,407,731 shares issued and outstanding at January 29, 2022 and January 30, 2021, respectively

Additional paid-in capital 167,328 158,058

7 unchanged sentences

Fiscal Years Ended

2021 February 1,

2022 January 30,

2021 February 1,

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COST OF SALES (Including buying, distribution, and occupancy costs) 641,598 500,610 522,780

500,610 522,780 519,423

Gross profit 653,009 400,668 377,474

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THE BUCKLE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in Thousands)

Fiscal Years Ended

2021 February 1,

2020 February 2,

NET INCOME $ 130,139 $ 104,429 $ 95,608

OTHER COMPREHENSIVE INCOME, NET OF TAX:

Change in unrealized loss on investments, net of tax — — 89

Other comprehensive income — — 89

COMPREHENSIVE INCOME $ 130,139 $ 104,429 $ 95,697

See notes to consolidated financial statements.

THE BUCKLE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

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Capital Retained

Earnings Accumulated

Comprehensive

Earnings Total

BALANCE, February 2, 2019 49,017,395 $ 490 $ 148,564 $ 244,823 $ 393,877

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Amortization of non-vested stock grants, net of forfeitures — — 3,764 — 3,764

Change in unrealized loss on investments, net of tax — — — — 89 89

Cumulative effect of change in accounting upon adoption of ASC Topic 606 — — — 389 — 389

Common stock purchased and retired ( 4,552 ) — ( 68 ) — ( 68 )

BALANCE, February 1, 2020 49,205,681 $ 492 $ 152,258 $ 236,398 $ 389,148

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Common stock purchased and retired ( 25,000 ) — ( 372 ) — ( 372 )

BALANCE, February 1, 2020 49,205,681 $ 492 $ 152,258 $ 236,398 $ — $ 389,148

BALANCE, January 30, 2021 49,407,731 $ 494 $ 158,058 $ 238,077 $ 396,629

Net income — — — 254,820 254,820

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Amortization of non-vested stock grants, net of forfeitures — — 9,273 — 9,273

Common stock purchased and retired ( 25,000 ) — ( 372 ) — — ( 372 )

BALANCE, January 29, 2022 49,728,651 $ 497 $ 167,328 $ 145,099 $ 312,924

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Fiscal Years Ended

2021 February 1,

2022 January 30,

2021 February 1,

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Net cash flows from financing activities ( 347,798 ) ( 128,832 ) ( 112,922 )

NET INCREASE IN CASH AND CASH EQUIVALENTS 97,820 52,498 3,385

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 64,819 ) 97,820 52,498

CASH AND CASH EQUIVALENTS, Beginning of year 318,789 220,969 168,471

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All references in these consolidated financial statements to fiscal years are to the calendar year in which the fiscal year begins.

Fiscal 2020 represents the 52-week period ended January 30, 2021, fiscal 2019 represents the 52-week period ended February 1, 2020, and fiscal 2018 represents the 52-week period ended February 2, 2019.

Fiscal 2021 represents the 52-week period ended January 29, 2022, fiscal 2020 represents the 52-week period ended January 30, 2021, and fiscal 2019 represents the 52-week period ended February 1, 2020.

Nature of Operations - The Company is a retailer of medium to better-priced casual apparel, footwear, and accessories for fashion-conscious young men and women.

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The Company operated 440 stores located in 42 states throughout the United States as of January 29, 2022.

During fiscal 2021, the Company opened 1 new store, substantially remodeled 15 stores, and closed 4 stores.

During fiscal 2020, the Company opened 3 new stores, substantially remodeled 4 stores, and closed 8 stores.

During fiscal 2019, the Company opened 2 new stores, substantially remodeled 5 stores, and closed 4 stores.

During fiscal 2018, the Company opened no new stores, substantially remodeled 6 stores, and closed 7 stores.

Principles of Consolidation - The consolidated financial statements include the accounts of The Buckle, Inc.

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A current liability for unredeemed gift cards and certificates is recorded at the time the card or certificate is purchased.

The liability recorded for unredeemed gift certificates and gift cards was $ 14,279 and $ 15,319 as of January 30, 2021 and February 1, 2020, respectively.

The liability recorded for unredeemed gift certificates and gift cards was $ 16,470 and $ 14,279 as of January 29, 2022 and January 30, 2021, respectively.

Gift card and gift certificate breakage is recognized as revenue in proportion to the redemption pattern of customers by applying an estimated breakage rate.

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The Company also recognizes a return asset and a corresponding adjustment to cost of sales for the Company's right to recover returned merchandise, which is measured at the estimated carrying value, less any expected recovery costs.

The accrued liability for reserve for sales returns was $ 2,559 as of January 30, 2021 and $ 2,257 as of February 1, 2020.

The accrued liability for reserve for sales returns was $ 3,013 as of January 29, 2022 and $ 2,559 as of January 30, 2021.

The Company's Buckle Rewards program allows participating guests to earn points for every qualifying purchase, which (after achievement of certain point thresholds) are redeemable as a discount off a future purchase.

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A liability has been recorded for future rewards based on the Company's estimate of how many earned points will turn into rewards and ultimately be redeemed prior to expiration.

As of January 30, 2021 and February 1, 2020, $ 10,235 and $ 9,615 was included in "accrued store operating expenses" as a liability for estimated future rewards.

As of January 29, 2022 and January 30, 2021, $ 10,640 and $ 10,235 was included in "accrued store operating expenses" as a liability for estimated future rewards.

Through partnership with Comenity Bank, the Company offers a private label credit card ("PLCC").

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In October 2020, the Company merged the B-Rewards program and the Buckle Rewards program enabling participating guests to earn additional points for qualifying purchases on their PLCC card under the newly enhanced Buckle Rewards program.

Effective January 30, 2021, and for all future periods, the accrual for points earned under the combined Buckle Rewards program is included in "accrued store operating expenses" on the Company's consolidated balance sheets as referenced in the previous paragraph.

Cash and Cash Equivalents - The Company considers all debt instruments with an original maturity of three months or less when purchased to be cash equivalents.

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Management also reviews the levels of inventory in each markdown group and the overall aging of the inventory versus the estimated future demand for such product and the current market conditions.

The adjustment to inventory for markdowns and/or obsolescence reduced the Company’s inventory valuation by $ 10,832 and $ 12,178 as of January 30, 2021 and February 1, 2020, respectively.

The adjustment to inventory for markdowns and/or obsolescence reduced the Company’s inventory valuation by $ 5,604 and $ 10,832 as of January 29, 2022 and January 30, 2021, respectively.

Property and Equipment - Property and equipment are stated on the basis of historical cost.

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The Company’s plan covers eligible employees, and management makes estimates at period end to record a reserve for unpaid claims based upon historical claims information.

The accrued liability as a reserve for unpaid health care claims was $ 655 and $ 685 as of January 30, 2021 and February 1, 2020, respectively.

The accrued liability as a reserve for unpaid health care claims was $ 850 and $ 655 as of January 29, 2022 and January 30, 2021, respectively.

Leases - The Company's lease portfolio is primarily comprised of leases for retail store locations.

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Lease agreements do not contain any residual value guarantees, material restrictive covenants, or options to purchase the leased property.

The Company records its lease liabilities at the present value of the lease payments not yet paid, discounted at the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term.

As the Company's leases do not provide an implicit interest rate, the Company obtains an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The Company has elected to apply the practical expedient to account for lease components (e.g.

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Additionally, the Company elected as an accounting policy to exclude short-term leases from the recognition requirements.

Consistent with guidance in the FASB Staff Q&A regarding lease concessions related to the effects of the COVID-19 pandemic, the Company has made the election to treat all lease concessions as though the enforceable rights and obligations existed in each contract and, therefore, has not applied the lease modification guidance in ASC 842.

Consistent with guidance in the FASB Staff Q&A regarding lease concessions related to the effects of the COVID-19 pandemic, the Company made the election to treat all lease concessions as though the enforceable rights and obligations existed in each contract and, therefore, did not apply the lease modification guidance in ASC 842.

Other Income - The Company’s other income is derived primarily from interest and dividends received on cash and investments.

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Actual results could differ from these estimates.

Recently Issued Accounting Pronouncements - Except as noted below, the Company has considered all recent accounting pronouncements and concluded that there are no recent accounting pronouncements that may have a material impact on the Company's consolidated financial statements, based on current information.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for fair value investments.

The amendments are effective for all entities for annual and interim periods in fiscal years beginning after December 15, 2019.

This ASU did not have a material impact on the Company's consolidated financial statements for the fifty-two week period ended January 30, 2021.

Recently Issued Accounting Pronouncements - The Company has considered all recent accounting pronouncements and concluded that there are no recent accounting pronouncements that may have a material impact on the Company's consolidated financial statements, based on current information.

Supplemental Cash Flow Information - The Company had non-cash investing activities during fiscal years 2021, 2020, and 2019 of $( 637 ), $( 160 ), and $( 150 ), respectively.

The non-cash investing activity relates to the change in the balance of unpaid purchases of property, plant, and equipment included in accounts payable as of the end of the year.

The liability for unpaid purchases of property, plant, and equipment included in accounts payable was $ 719 , $ 559 , and $ 409 as of January 30, 2021, February 1, 2020, and February 2, 2019, respectively.

The liability for unpaid purchases of property, plant, and equipment included in accounts payable was $ 1,356 , $ 719 , and $ 559 as of January 29, 2022, January 30, 2021, and February 1, 2020, respectively.

Amounts reported as unpaid purchases are recorded as cash outflows from investing activities for purchases of property, plant, and equipment in the consolidated statement of cash flows in the period they are paid.

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Mutual funds $ 17,932 $ 1,420 $ — $ — $ 19,352

The following is a summary of investments as of February 1, 2020:

The following is a summary of investments as of January 30, 2021:

Par Value Gross

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Total $ 12,926 $ 12,923

As of January 30, 2021 and February 1, 2020, all of the Company's investments in held-to-maturity securities are classified in short-term investments.

As of January 29, 2022 and January 30, 2021, all of the Company's investments in held-to-maturity securities are classified in short-term investments.

Trading securities are held in a Rabbi Trust, intended to fund the Company’s deferred compensation plan, and are classified in long-term investments.

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• Level 3 – Unobservable inputs that are not corroborated by market data and are projections, estimates, or interpretations that are supported by little or no market activity and are significant to the fair value of the assets.

As of January 30, 2021 and February 1, 2020, the Company held certain assets that are required to be measured at fair value on a recurring basis including its investments in trading securities.

As of January 29, 2022 and January 30, 2021, the Company held certain assets that are required to be measured at fair value on a recurring basis including its investments in trading securities.

The Company’s financial assets measured at fair value on a recurring basis are as follows:

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Inputs Significant

February 1, 2020 (Level 1) (Level 2) (Level 3) Total

January 30, 2021 (Level 1) (Level 2) (Level 3) Total

Trading securities (including mutual funds) 18,320 — — 18,320

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As of January 29, 2022, the fair value of held-to-maturity securities was $ 12,923 compared to the carrying amount of $ 12,926 .

As of February 1, 2020, the fair value of held-to-maturity securities was $ 12,544 compared to the carrying amount of $ 12,532 .

As of January 30, 2021, the fair value of held-to-maturity securities was $ 3,366 compared to the carrying amount of $ 3,359 .

The carrying values of receivables, accounts payable, accrued expenses, and other current liabilities approximates fair value because of their short-term nature.

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Lease agreements do not contain any residual value guarantees, material restrictive covenants, or options to purchase the leased property.

The Company has elected to apply the practical expedient to account for lease components (e.g.

2 unchanged sentences

Additionally, the Company elected as an accounting policy to exclude short-term leases from the recognition requirements.

Given the store closures resulting from the COVID-19 pandemic, the Company paid essentially full rent for the month of April but was then able to negotiate substantial rent deferrals for May and June.

Consistent with guidance in the FASB Staff Q&A regarding lease concessions related to the effects of the COVID-19 pandemic, the Company has made the election to treat all lease concessions as though the enforceable rights and obligations existed in each contract and, therefore, will not apply the lease modification guidance in ASC 842.

As such, these deferrals have had no impact to rent expense.

During the period of store closures in fiscal 2020 in response to the COVID-19 pandemic, the Company paid essentially full rent for the month of April but was then able to negotiate substantial rent deferrals for May and June.

As such, these deferrals had no impact on rent expense.

Amounts deferred and payable in future periods have been included in "accounts payable" on the Company's consolidated balance sheets.

2 unchanged sentences

Fiscal Years Ended

2021 February 1,

2022 January 30,

Operating lease cost $ 94,384 $ 97,450

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Fiscal Years Ended

2021 February 1,

2022 January 30,

Cash paid for amounts included in the measurement of lease liabilities:

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PROPERTY AND EQUIPMENT

2021 February 1,

2022 January 30,

Land $ 2,491 $ 2,491

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The line of credit agreement has an expiration date of July 31, 2023 and provides that $ 10,000 of the $ 25,000 line is available for letters of credit.

Borrowings under the line of credit provide for interest to be paid at a rate based on LIBOR.

Borrowings under the line of credit provide for interest to be paid at a rate based on SOFR.

The Company has, from time to time, borrowed against these lines of credit.

There were no bank borrowings as of January 30, 2021 and February 1, 2020.

There were no bank borrowings during fiscal 2020, 2019, and 2018.

The Company had outstanding letters of credit totaling $ 1,809 and $ 1,523 as of January 30, 2021 and February 1, 2020, respectively.

There were no bank borrowings as of January 29, 2022 or January 30, 2021.

The Company had outstanding letters of credit totaling $ 2,735 and $ 1,809 as of January 29, 2022 and January 30, 2021, respectively.

The provision for income taxes consists of:

Fiscal Years Ended

2021 February 1,

2022 January 30,

2021 February 1,

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Fiscal Years Ended

2021 February 1,

2022 January 30,

2021 February 1,

1 unchanged sentence

State income tax effect 3.3 2.9 3.2

Tax exempt interest income ( 0.1 ) ( 0.2 ) ( 0.2 )

Other 0.3 — —

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Deferred income tax assets and liabilities are comprised of the following:

2021 February 1,

2022 January 30,

Deferred income tax assets (liabilities):

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Accrued store operating costs 3,006 2,862

Realized and unrealized loss on securities ( 528 ) ( 312 )

Unrealized (gain)/loss on securities ( 341 ) ( 528 )

Gift certificates redeemable 921 918

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(a) Relates to the liability for deferred payment of the employer's portion of Social Security taxes, as provided for under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted on March 27, 2020.

As of January 30, 2021 and February 1, 2020, respectively, the net deferred income tax assets of $ 9,114 and $ 7,816 are classified in "other assets." There were no unrecognized tax benefits recorded in the Company’s consolidated financial statements as of January 30, 2021 or February 1, 2020.

As of January 29, 2022 and January 30, 2021, respectively, the net deferred income tax assets of $ 9,494 and $ 9,114 are classified in "other assets." There were no unrecognized tax benefits recorded in the Company’s consolidated financial statements as of January 29, 2022 or January 30, 2021.

Fiscal years 2018 through 2021 remain subject to potential federal examination.

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RELATED PARTY TRANSACTIONS

Included in other assets is a note receivable of $ 1,365 as of January 30, 2021 and $ 1,335 as of February 1, 2020, respectively, from a life insurance trust fund controlled by the Company’s Chairman.

Included in other assets is a note receivable of $ 1,395 as of January 29, 2022 and $ 1,365 as of January 30, 2021, respectively, from a life insurance trust fund controlled by the Company’s Chairman.

The note was created over three years , beginning in July 1994, when the Company paid life insurance premiums of $ 200 each year for the Chairman on a personal policy.

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The Buckle, Inc.

Deferred Compensation Plan covers the Company’s executive officers.

Deferred Compensation Plan covers the Company’s officers.

The plan is funded by participant contributions and a specified annual Company matching contribution not to exceed 6 % of the participant’s compensation.

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Fiscal Years Ended

2021 February 1,

2022 January 30,

2021 February 1,

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The total fair value of shares vested during fiscal 2021, 2020, and 2019 was $ 10,125 , $ 6,834 , and $ 4,329 respectively.

During the fiscal year ended January 30, 2021, 143,100 shares (representing one-half of the "performance based" shares granted during fiscal 2019 under the 2005 Restricted Stock Plan) were forfeited because the Company did not achieve all of the performance targets established for the fiscal 2019 grants.

EARNINGS PER SHARE

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Fiscal Years Ended

January 30, 2021 February 1, 2020 February 2, 2019

Income Weighted

January 29, 2022 January 30, 2021 February 1, 2020

Net Income Weighted

Shares (a) Per Share

Amount Income Weighted

Amount Net Income Weighted

Shares (a) Per Share

Amount Income Weighted

Amount Net Income Weighted

Shares (a) Per Share

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The Company operated 440 stores located in 42 states throughout the United States as of January 29, 2022.

The Company temporarily closed all of its brick and mortar stores beginning March 18, 2020 to protect the health and welfare of its guests, teammates, and communities as a result of the COVID-19 pandemic.

Revenue for fiscal 2020 was significantly affected by the impacts of COVID-19.

The Company temporarily closed all of its brick and mortar stores beginning March 18, 2020 to protect the health and welfare of its guests, teammates, and communities.

The Company began the process of reopening certain stores the week of April 26, 2020, following all appropriate federal, state, and local reopening guidelines.

The store closings had a significant impact on the Company's revenue for the twenty-six week period ended August 1, 2020, which was down $ 73,692 or 18.2 % from the same twenty-six week period in the prior year.

As of August 1, 2020, 431 of the Company's 446 stores were open.

The Company's online store remained open without interruption and experienced significant growth during the twenty-six week period ended August 1, 2020, growing $ 30,555 or 64.3 % compared to the same twenty-six week period in the prior year.

The store closings had a significant impact on the Company's revenue during the first half of fiscal 2020, with total revenue down $ 73,692 or 18.2 % compared to the first half of fiscal 2019.

With a strong second half of the year, however, total sales for the 52-week period ended January 30, 2021 were up $ 1,024 or 0.1 % compared to the 52-week period ended February 1, 2020.

The Company's online store remained open without interruption and experienced significant growth.

For the full fiscal year ended January 30, 2021, the Company's online store grew by $ 79,759 or 72.0 %.

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Merchandise Group January 29,

2021 February 1,

2022 January 30,

2021 February 1,

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Total 100.0 % 100.0 % 100.0 %

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Selected unaudited quarterly financial information for fiscal 2020 and 2019 are as follows:

Fiscal 2020 First Second Third Fourth

Net sales $ 115,413 $ 216,025 $ 251,005 $ 318,835

Gross profit $ 26,825 $ 93,382 $ 116,950 $ 163,511

Net income $ ( 11,784 ) $ 34,682 $ 41,635 $ 65,606

Basic earnings per share $ ( 0.24 ) $ 0.71 $ 0.85 $ 1.34

Diluted earnings per share $ ( 0.24 ) $ 0.71 $ 0.85 $ 1.33

Fiscal 2019 First Second Third Fourth

Net sales $ 201,313 $ 203,817 $ 224,121 $ 271,003

Gross profit $ 76,653 $ 78,697 $ 93,534 $ 128,590

Net income $ 15,092 $ 16,374 $ 25,984 $ 46,979

Basic earnings per share $ 0.31 $ 0.34 $ 0.54 $ 0.96

Diluted earnings per share $ 0.31 $ 0.34 $ 0.53 $ 0.96

Basic and diluted shares outstanding are computed independently for each of the quarters presented and, therefore, may not sum to the totals for the year.

Each of the quarters presented is a 13-week quarter.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data