BUCKLE INC 10-K

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of The Buckle, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of The Buckle, Inc. and subsidiary (the “Company”) as of February 1, 2025 and February 3, 2024, the related consolidated statements of income, stockholders’ equity, and cash flows, for each of the three years in the period ended February 1, 2025, 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 February 1, 2025 and February 3, 2024, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2025, 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 February 1, 2025, 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 April 2, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Inventory – Adjustment to Inventory for Markdowns and Obsolescence – Refer to Note A to the financial statements Critical Audit Matter Description Inventory is stated at the lower of cost or net realizable value. The Company periodically evaluates the carrying value of inventory, which requires management to make assumptions and estimate the amount necessary to adjust inventory for markdowns and obsolescence. Changes in assumptions applied to the current inventory levels within each different markdown level and the overall aging of inventory could have a significant impact on the valuation of inventory. Given the judgments made by management to estimate the adjustment to inventory for markdowns and obsolescence, auditing the adjustment to inventory for markdowns and obsolescence involved a higher degree of auditor judgment and the involvement of more senior members of the engagement team in executing, supervising, and reviewing the results of the procedures. 27 How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the adjustment to inventory for markdowns and obsolescence included the following, among others: • We tested the effectiveness of the control related to evaluating the appropriateness of the assumptions and reasonableness of the adjustment to inventory for markdowns and obsolescence. • We tested the accuracy and completeness of the inventory balance within each markdown level and the overall aging of inventory. • We evaluated the reasonableness of management’s adjustment to inventory for markdowns and obsolescence by performing the following: ◦ Developing estimates of the adjustment to inventory for markdowns and obsolescence and comparing our estimates to management’s estimate. ◦ Comparing management’s current assumptions related to the inventory levels, within each different markdown level, and the overall aging of inventory to management’s historical assumptions and analyzing trends related to gross margin percentages. • We tested the mathematical accuracy of the Company’s calculation of the adjustment to inventory for markdowns and obsolescence. /s/ Deloitte & Touche LLP Omaha, Nebraska April 2, 2025 We have served as the Company’s auditor since 1990. 28 THE BUCKLE, INC. CONSOLIDATED BALANCE SHEETS (Amounts in Thousands Except Share and Per Share Amounts) ASSETS February 1, 2025 February 3, 2024 CURRENT ASSETS: Cash and cash equivalents $ 266,929 $ 268,213 Short-term investments (Notes B and C) 23,801 22,210 Receivables 6,758 8,697 Inventory 120,789 126,290 Prepaid expenses and other assets 20,932 18,846 Total current assets 439,209 444,256 PROPERTY AND EQUIPMENT (Note E) 510,088 489,037 Less accumulated depreciation and amortization ( 364,336 ) ( 360,200 ) 145,752 128,837 OPERATING LEASE RIGHT-OF-USE ASSETS (Note D) 289,793 280,813 LONG-TERM INVESTMENTS (Notes B and C) 28,116 24,993 OTHER ASSETS (Notes G and H) 10,303 10,911 Total assets $ 913,173 $ 889,810 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 45,982 $ 45,958 Accrued employee compensation 46,717 49,827 Accrued store operating expenses 19,266 19,067 Gift certificates redeemable 17,007 16,667 Current portion of operating lease liabilities (Note D) 78,942 85,265 Income taxes payable (Note G) 6,018 4,672 Total current liabilities 213,932 221,456 DEFERRED COMPENSATION (Note J) 28,116 24,993 NON-CURRENT OPERATING LEASE LIABILITIES (Note D) 247,321 230,141 Total liabilities 489,369 476,590 COMMITMENTS (Notes F and I) STOCKHOLDERS’ EQUITY (Note K): Common stock, authorized 100,000,000 shares of $ 0.01 par value; 50,773,556 and 50,445,186 shares issued and outstanding at February 1, 2025 and February 3, 2024, respectively 508 504 Additional paid-in capital 205,817 192,686 Retained earnings 217,479 220,030 Total stockholders’ equity 423,804 413,220 Total liabilities and stockholders' equity $ 913,173 $ 889,810 See notes to consolidated financial statements. 29 THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands Except Per Share Amounts) Fiscal Years Ended February 1, 2025 February 3, 2024 January 28, 2023 SALES, Net of returns and allowances $ 1,217,689 $ 1,261,102 $ 1,345,187 COST OF SALES (Including buying, distribution, and occupancy costs) 624,902 642,037 669,184 Gross profit 592,787 619,065 676,003 OPERATING EXPENSES: Selling 293,176 291,018 293,891 General and administrative 58,247 56,988 53,980 351,423 348,006 347,871 INCOME FROM OPERATIONS 241,364 271,059 328,132 OTHER INCOME, Net 16,413 18,156 6,924 INCOME BEFORE INCOME TAXES 257,777 289,215 335,056 INCOME TAX EXPENSE (Note G) 62,309 69,296 80,430 NET INCOME $ 195,468 $ 219,919 $ 254,626 EARNINGS PER SHARE (Note L): Basic $ 3.92 $ 4.44 $ 5.17 Diluted $ 3.89 $ 4.40 $ 5.13 See notes to consolidated financial statements. 30 THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in Thousands Except Share and Per Share Amounts) Number of Shares Common Stock Additional Paid-in Capital Retained Earnings Total BALANCE, January 29, 2022 49,728,651 $ 497 $ 167,328 $ 145,099 $ 312,924 Net income — — — 254,626 254,626 Dividends paid on common stock, ($ 4.05 per share) — — — ( 202,876 ) ( 202,876 ) Issuance of non-vested stock, net of forfeitures 363,965 4 ( 4 ) — — Amortization of non-vested stock grants, net of forfeitures — — 11,640 — 11,640 BALANCE, January 28, 2023 50,092,616 $ 501 $ 178,964 $ 196,849 $ 376,314 Net income — — — 219,919 219,919 Dividends paid on common stock, ($ 3.90 per share) — — — ( 196,738 ) ( 196,738 ) Issuance of non-vested stock, net of forfeitures 352,570 3 ( 3 ) — — Amortization of non-vested stock grants, net of forfeitures — — 13,725 — 13,725 BALANCE, February 3, 2024 50,445,186 $ 504 $ 192,686 $ 220,030 $ 413,220 Net income — — — 195,468 195,468 Dividends paid on common stock, ($ 3.90 per share) — — — ( 198,019 ) ( 198,019 ) Issuance of non-vested stock, net of forfeitures 328,370 4 ( 4 ) — — Amortization of non-vested stock grants, net of forfeitures — — 13,135 — 13,135 BALANCE, February 1, 2025 50,773,556 $ 508 $ 205,817 $ 217,479 $ 423,804 See notes to consolidated financial statements. 31 THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) Fiscal Years Ended February 1, 2025 February 3, 2024 January 28, 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 195,468 $ 219,919 $ 254,626 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 22,993 20,830 18,855 Amortization of non-vested stock grants, net of forfeitures 13,135 13,725 11,640 Deferred income taxes 637 ( 1,089 ) 1,142 Other 912 1,036 705 Changes in operating assets and liabilities: Receivables 615 ( 1,015 ) ( 94 ) Inventory 5,501 ( 1,156 ) ( 23,039 ) Prepaid expenses and other assets ( 2,086 ) ( 6,366 ) ( 2,352 ) Accounts payable 1,479 92 ( 16,213 ) Accrued employee compensation ( 3,110 ) ( 5,663 ) ( 6,565 ) Accrued store operating expenses 199 ( 280 ) ( 459 ) Gift certificates redeemable 340 ( 110 ) 307 Income taxes payable 2,670 9,638 ( 1,996 ) Other assets and liabilities 3,261 5,083 5,825 Net cash flows from operating activities 242,014 254,644 242,382 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment ( 42,275 ) ( 37,274 ) ( 30,360 ) Proceeds from sale of property and equipment — 4 — Change in other assets ( 29 ) ( 26 ) ( 30 ) Purchases of investments ( 40,002 ) ( 43,389 ) ( 34,039 ) Proceeds from sales/maturities of investments 37,027 38,915 23,030 Net cash flows from investing activities ( 45,279 ) ( 41,770 ) ( 41,399 ) CASH FLOWS FROM FINANCING ACTIVITIES: Payment of dividends ( 198,019 ) ( 196,738 ) ( 202,876 ) Net cash flows from financing activities ( 198,019 ) ( 196,738 ) ( 202,876 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 1,284 ) 16,136 ( 1,893 ) CASH AND CASH EQUIVALENTS, Beginning of year 268,213 252,077 253,970 CASH AND CASH EQUIVALENTS, End of year $ 266,929 $ 268,213 $ 252,077 See notes to consolidated financial statements. 32 THE BUCKLE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar Amounts in Thousands Except Share and Per Share Amounts) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fiscal Year - The Buckle, Inc. (the “Company”) has its fiscal year end on the Saturday nearest January 31. All references in these consolidated financial statements to fiscal years are to the calendar year in which the fiscal year begins. Fiscal 2024 represents the 52-week period ended February 1, 2025, fiscal 2023 represents the 53-week period ended February 3, 2024, and fiscal 2022 represents the 52-week period ended January 28, 2023. Nature of Operations - The Company is a retailer of medium to better-priced casual apparel, footwear, and accessories for fashion-conscious men, women, and kids. The Company operates its business as one reportable segment and sells its merchandise through its retail stores and e-Commerce platform. The Company operated 441 stores located in 42 states throughout the United States as of February 1, 2025. During fiscal 2024, the Company opened 8 new stores, substantially remodeled 18 stores, and closed 11 stores. During fiscal 2023, the Company opened 9 new stores, substantially remodeled 18 stores, and closed 6 stores. During fiscal 2022, the Company opened 4 new stores, substantially remodeled 23 stores, and closed 3 stores. Principles of Consolidation - The consolidated financial statements include the accounts of The Buckle, Inc. and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. Revenue Recognition - Retail store sales are recorded, net of expected returns, upon the purchase of merchandise by customers. Online sales are recorded, net of expected returns, when the merchandise is tendered for delivery to the common carrier. Shipping fees charged to customers are included in revenue and shipping costs are included in selling expenses. The Company recognizes revenue from sales made under its layaway program upon delivery of the merchandise to the customer. Revenue is not recorded when gift cards and gift certificates are sold, but rather when a card or certificate is redeemed for merchandise. 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 $ 17,007 and $ 16,667 as of February 1, 2025 and February 3, 2024, 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. The estimated breakage rate is based on historical issuance and redemption patterns and is re-assessed by the Company on a regular basis. Sales tax collected from customers is excluded from revenue and is included as part of accrued store operating expenses on the Company's consolidated balance sheets. The Company establishes a liability for estimated merchandise returns, based upon the historical average sales return percentage, that is recognized at the transaction value. 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 $ 2,587 as of February 1, 2025 and $ 2,551 as of February 3, 2024. 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. In addition, through partnership with Bread Financial and Comenity Bank (collectively the "Bank"), the Company offers a private label credit card ("PLCC") program. Buckle Rewards members with a PLCC earn additional points under the Buckle Rewards program for every qualifying purchase on their PLCC card. Reported revenue is net of both current period reward redemptions and accruals for estimated future rewards earned under the Buckle Rewards program. 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 February 1, 2025 and February 3, 2024, $ 10,295 and $ 10,355 was included in accrued store operating expenses as a liability for estimated future rewards. 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. 33 Investments - Investments classified as short-term investments include securities with a maturity of greater than three months and less than one year. Available-for-sale securities are reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders’ equity (net of the effect of income taxes), using the specific identification method, until they are sold. Held-to-maturity securities are carried at amortized cost. Trading securities are reported at fair value, with unrealized gains and losses included in earnings, using the specific identification method. Inventory - Inventory is valued at the lower of cost or net realizable value. Cost is determined using an average cost method that approximates the first-in, first-out (FIFO) method. Management makes adjustments to inventory and cost of goods sold, based upon estimates, to account for merchandise obsolescence and markdowns that could affect net realizable value, based on assumptions using calculations applied to current inventory levels within each different markdown level. 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 $ 9,222 and $ 9,113 as of February 1, 2025 and February 3, 2024, respectively. Property and Equipment - Property and equipment are stated on the basis of historical cost. Depreciation is provided using primarily the straight-line method based upon the estimated useful lives of the assets. The majority of property and equipment have useful lives of 5 to 10 years with the exception of buildings, which have estimated useful lives of 31.5 to 39 years. Leasehold improvements are stated on the basis of historical cost and are amortized over the shorter of the life of the lease or the estimated economic life of the assets. When circumstances indicate the carrying values of long-lived assets may be impaired, an evaluation is performed on current net book value amounts. Judgments made by the Company related to the expected useful lives of property and equipment and the ability to realize cash flows in excess of carrying amounts of such assets are affected by factors such as changes in economic conditions and changes in operating performance. As the Company assesses the expected cash flows and carrying amounts of long-lived assets, adjustments are made to such carrying values. Pre-Opening Expenses - Costs related to opening new stores are expensed as incurred. Advertising Costs - Advertising costs are expensed as incurred and were $ 21,778 , $ 21,262 , and $ 19,227 for fiscal years 2024, 2023, and 2022, respectively. Health Care Costs - The Company is self-funded for health and dental claims up to $ 200 per individual per plan year. 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 $ 1,020 and $ 930 as of February 1, 2025 and February 3, 2024, respectively. Leases - The Company's lease portfolio is primarily comprised of leases for retail store locations. The Company also leases certain equipment and corporate office space. Store leases for new stores typically have an initial term of 10 years, with options to renew for an additional 1 to 5 years. The exercise of lease renewal options is at the Company's sole discretion and is included in the lease term for calculations of its right-of-use assets and liabilities when it is reasonably certain that the Company plans to renew these leases. Certain store lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. 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. fixed payments for rent, insurance, and real estate taxes) and non-lease components (e.g. fixed payments for common area maintenance) together as a single component for all underlying asset classes. Additionally, the Company elected as an accounting policy to exclude short-term leases from the recognition requirements. Other Income - The Company’s other income is derived primarily from interest and dividends received on cash and investments. 34 Income Taxes - The Company records a deferred tax asset and liability for expected future tax consequences resulting from temporary differences between the financial reporting and tax bases of assets and liabilities. The Company considers future taxable income and ongoing tax planning in assessing the value of its deferred tax assets. If the Company determines that it is more than likely that these assets will not be realized, the Company would reduce the value of these assets to their expected realizable value, thereby decreasing net income. If the Company subsequently determined that the deferred tax assets, which had been written down, would be realized in the future, such value would be increased, thus increasing net income in the period such determination was made. The Company records tax benefits only for tax positions that are more than likely to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 % likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. Financial Instruments and Credit Risk Concentrations - Financial instruments, which potentially subject the Company to concentrations of credit risk, are primarily cash, investments, and accounts receivable. The Company’s investments are primarily in tax-free municipal bonds, corporate bonds, or U.S. Treasury securities with short-term maturities. The majority of the Company’s cash and cash equivalents are held by Wells Fargo Bank, N.A. This amount, as well as cash and investments held by certain other financial institutions, exceeds federally insured limits. Concentrations of credit risk with respect to accounts receivable are limited due to the nature of the Company’s receivables, which include primarily employee receivables that can be offset against future compensation. The Company’s financial instruments have a fair value approximating the carrying value. Earnings Per Share - Basic earnings per share data are based on the weighted average outstanding common shares during the period. Diluted earnings per share data are based on the weighted average outstanding common shares and the effect of all dilutive potential common shares. Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Recently Issued Accounting Pronouncements - In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires enhanced disclosures around significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The ASU requires public entities to adopt this new guidance on a retrospective basis. The Company adopted ASU 2023-07 for the fiscal year ended February 1, 2025, and applied it retrospectively to all prior periods presented. See Footnote N "Segment Reporting" for further information. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires business entities to expand their annual disclosures of income taxes paid and the effective rate reconciliation. The ASU is effective for fiscal years beginning after December 15, 2024. The Company plans to adopt ASU 2023-09 effective for fiscal 2025. The Company is currently evaluating the impact of this new guidance and believes the adoption will not have a material impact on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses, which requires the disaggregated disclosure of certain costs and expenses on an interim and annual basis. The ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The ASU may be applied on either a prospective or retrospective basis. The Company is currently evaluating the impact that this guidance will have on its disclosures. 35 Supplemental Cash Flow Information - The Company had non-cash investing activities during fiscal years 2024, 2023, and 2022 of $ 1,455 , $( 1,031 ), and $( 1,098 ), 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 $ 2,030 , $ 3,485 , and $ 2,454 as of February 1, 2025, February 3, 2024, and January 28, 2023, 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. Additional cash flow information for the Company includes cash paid for income taxes during fiscal years 2024, 2023, and 2022 of $ 58,990 , $ 60,598 , and $ 81,135 , respectively. B. INVESTMENTS The following is a summary of investments as of February 1, 2025: Amortized Cost or Par Value Gross Unrealized Gains Gross Unrealized Losses Other-than- Temporary Impairment Estimated Fair Value Held-to-Maturity Securities: State and municipal bonds $ 23,801 $ 31 $ ( 1 ) $ — $ 23,831 Trading Securities: Mutual funds $ 25,516 $ 2,600 $ — $ — $ 28,116 The following is a summary of investments as of February 3, 2024: Amortized Cost or Par Value Gross Unrealized Gains Gross Unrealized Losses Other-than- Temporary Impairment Estimated Fair Value Held-to-Maturity Securities: State and municipal bonds $ 22,210 $ 23 $ ( 11 ) $ — $ 22,222 Trading Securities: Mutual funds $ 24,132 $ 861 $ — $ — $ 24,993 The amortized cost and fair value of debt securities by contractual maturity as of February 1, 2025 is as follows: Amortized Cost Fair Value Held-to-Maturity Securities Less than 1 year $ 23,801 $ 23,831 1 - 5 years — — Total $ 23,801 $ 23,831 As of February 1, 2025 and February 3, 2024, 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. 36 C. FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories: • Level 1 – Quoted market prices in active markets for identical assets or liabilities. Short-term and long-term investments with active markets or known redemption values are reported at fair value utilizing Level 1 inputs. • Level 2 – Observable market-based inputs (either directly or indirectly) such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or inputs that are corroborated by market data. • Level 3 – Unobservable inputs that are not corroborated by market data and are projections, estimates, or interpretations that are supported by little or no market activity and are significant to the fair value of the assets. As of February 1, 2025 and February 3, 2024, 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: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Observable Inputs Significant Unobservable Inputs February 1, 2025 (Level 1) (Level 2) (Level 3) Total Trading securities (including mutual funds) $ 28,116 $ — $ — $ 28,116 Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Observable Inputs Significant Unobservable Inputs February 3, 2024 (Level 1) (Level 2) (Level 3) Total Trading securities (including mutual funds) $ 24,993 $ — $ — $ 24,993 Securities included in Level 1 represent securities which have publicly traded quoted prices. The carrying value of cash equivalents approximates fair value due to the low level of risk these assets present and their relatively liquid nature, particularly given their short maturities. The Company also holds certain financial instruments that are not carried at fair value on the consolidated balance sheets, including held-to-maturity securities. Held-to-maturity securities consist primarily of state and municipal bonds. The fair values of these debt securities are based on quoted market prices and yields for the same or similar securities, which the Company determined to be Level 2 inputs. As of February 1, 2025, the fair value of held-to-maturity securities was $ 23,831 compared to the carrying amount of $ 23,801 . As of February 3, 2024, the fair value of held-to-maturity securities was $ 22,222 compared to the carrying amount of $ 22,210 . 37 The carrying values of receivables, accounts payable, accrued expenses, and other current liabilities approximates fair value because of their short-term nature. From time to time, the Company measures certain assets at fair value on a non-recurring basis, specifically long-lived assets evaluated for impairment. These are typically store specific assets, which are reviewed for impairment when circumstances indicate impairment may exist due to the questionable recoverability of the carrying values of long-lived assets. If expected future cash flows related to a store’s assets are less than their carrying value, an impairment loss would be recognized for the difference between the carrying value and the estimated fair value of the store's assets. The fair value of the store's assets is estimated utilizing an income-based approach based on the expected cash flows over the remaining life of the store's lease. The amount of impairment related to long-lived assets was immaterial for all periods presented. D. LEASES The Company's lease portfolio is primarily comprised of leases for retail store locations. The Company also leases certain equipment and corporate office space. Store leases for new stores typically have an initial term of 10 years, with options to renew for an additional 1 to 5 years. The exercise of lease renewal options is at the Company's sole discretion and is included in the lease term for calculations of its right-of-use assets and liabilities when it is reasonably certain that the Company plans to renew these leases. Certain store lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. 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. fixed payments for rent, insurance, and real estate taxes) and non-lease components (e.g. fixed payments for common area maintenance) together as a single component for all underlying asset classes. Additionally, the Company elected as an accounting policy to exclude short-term leases from the recognition requirements. Lease expense is included in cost of sales in the consolidated statements of income. The components of total lease cost are as follows: Fiscal Years Ended February 1, 2025 February 3, 2024 January 28, 2023 Operating lease cost $ 102,140 $ 99,172 $ 94,546 Variable lease cost (a) 22,694 24,243 29,114 Total lease cost $ 124,834 $ 123,415 $ 123,660 (a) Includes variable payments related to both lease and non-lease components, such as contingent rent payments based on performance and payments related to taxes, insurance, and maintenance costs. Also includes payments related to short-term leases with periods of less than twelve months. 38 Supplemental cash flow information related to leases is as follows: Fiscal Years Ended February 1, 2025 February 3, 2024 January 28, 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 105,553 $ 102,383 $ 97,547 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 131,897 $ 122,824 $ 125,554 The Company uses its incremental borrowing rate as the discount rate to determine the present value of lease payments. As of February 1, 2025, the weighted-average remaining lease term was 6.0 years and the weighted-average discount rate was 6.2 %. The table below reconciles undiscounted future lease payments (e.g. fixed payments for rent, insurance, real estate taxes, and common area maintenance) for each of the next five fiscal years and the total of the remaining years to the operating lease liabilities recorded on the consolidated balance sheet as of February 1, 2025: Fiscal Year Operating Leases (a) 2025 $ 96,435 2026 78,006 2027 53,462 2028 37,529 2029 29,213 Thereafter 100,567 Total lease payments 395,212 Less: Imputed interest 68,949 Total operating lease liability $ 326,263 (a) Operating lease payments exclude $ 67,884 of legally binding minimum lease payments for leases signed, but not yet commenced. E. PROPERTY AND EQUIPMENT February 1, 2025 February 3, 2024 Land $ 2,491 $ 2,491 Building and improvements 43,320 43,173 Office equipment 11,537 11,236 Transportation equipment 21,126 21,100 Leasehold improvements 198,595 186,902 Furniture and fixtures 198,172 188,794 Shipping/receiving equipment 29,397 29,362 Construction-in-progress 5,450 5,979 Total $ 510,088 $ 489,037 39 F. FINANCING ARRANGEMENTS The Company has available an unsecured line of credit of $ 25,000 with Wells Fargo Bank, N.A. for operating needs and letters of credit. The line of credit agreement has an expiration date of July 31, 2025 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 SOFR. The Company has, from time to time, borrowed against these lines of credit. There were no bank borrowings as of February 1, 2025 or February 3, 2024. The Company had outstanding letters of credit totaling $ 2,167 and $ 3,176 as of February 1, 2025 and February 3, 2024, respectively. G. INCOME TAXES The provision for income taxes consists of: Fiscal Years Ended February 1, 2025 February 3, 2024 January 28, 2023 Current income tax expense: Federal $ 52,846 $ 59,652 $ 68,003 State 8,826 10,733 11,285 Deferred income tax expense (benefit) 637 ( 1,089 ) 1,142 Total $ 62,309 $ 69,296 $ 80,430 Total income tax expense for the year varies from the amount which would be provided by applying the statutory income tax rate to earnings before income taxes. The primary reasons for this difference (expressed as a percent of pre-tax income) are as follows: Fiscal Years Ended February 1, 2025 February 3, 2024 January 28, 2023 Statutory rate 21.0 % 21.0 % 21.0 % State income tax effect 2.7 2.9 2.7 Other 0.5 0.1 0.3 Effective tax rate 24.2 % 24.0 % 24.0 % 40 Deferred income tax assets and liabilities are comprised of the following: February 1, 2025 February 3, 2024 Deferred income tax assets (liabilities): Inventory $ 5,641 $ 5,458 Stock-based compensation 5,657 5,417 Accrued compensation 7,002 6,318 Accrued store operating costs 2,880 2,880 Unrealized (gain)/loss on securities ( 624 ) ( 207 ) Gift certificates redeemable 1,188 1,015 Deferred rent liability — — Property and equipment ( 21,744 ) ( 19,802 ) Operating lease right-of-use assets ( 69,550 ) ( 67,395 ) Operating lease liabilities 78,303 75,697 Capitalized research and development costs 51 60 Net deferred income tax asset $ 8,804 $ 9,441 As of February 1, 2025 and February 3, 2024, respectively, the net deferred income tax assets of $ 8,804 and $ 9,441 are classified in other assets. There were no unrecognized tax benefits recorded in the Company’s consolidated financial statements as of February 1, 2025 or February 3, 2024. Fiscal years 2021 through 2024 remain subject to potential federal examination. Additionally, fiscal years 2020 through 2024 are subject to potential examination by various state taxing authorities. H. RELATED PARTY TRANSACTIONS Included in other assets is a note receivable of $ 1,485 as of February 1, 2025 and $ 1,455 as of February 3, 2024, 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. The note accrues interest at 5 % of the principal balance per year and is to be paid from the life insurance proceeds. The note is secured by a life insurance policy on the Chairman. I. COMMITMENTS AND CONTINGENCIES Litigation - 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 these consolidated financial statements, the Company was not engaged in any legal proceedings that are expected, individually or in the aggregate, to have a material effect on the Company's consolidated results of operations and financial position. J. EMPLOYEE BENEFITS The Company has a 401(k) profit sharing plan covering all eligible employees who elect to participate. Contributions to the plan are based upon the amount of the employees’ deferrals and the employer’s discretionary matching formula. The Company may contribute to the plan at its discretion. The total expense under the profit sharing plan was $ 2,125 , $ 1,918 , and $ 1,840 for fiscal years 2024, 2023, and 2022, respectively. The Buckle, Inc. 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. The Company’s contributions were $ 479 , $ 630 , and $ 615 for fiscal years 2024, 2023, and 2022, respectively. 41 K. STOCK-BASED COMPENSATION The Company has several stock option plans which allow for granting of stock options to employees, executives, and directors. The Company has not granted any stock options since fiscal 2008 and there are currently no stock options outstanding. The Company also has restricted stock plans that allow for the granting of non-vested shares of common stock to employees and executives and restricted stock plans that allow for the granting of non-vested shares of common stock to non-employee directors. As of February 1, 2025, 2,958,900 shares were available for grant under the Company’s various restricted stock plans, of which 2,658,900 shares were available for grant to executive officers. Included in the total shares available for grant are 300,000 shares available for grant to non-employee directors under the Company's 2024 Director Restricted Stock Plan. This plan was approved by stockholders at the Company's 2024 annual meeting to replace the Company's 2008 Director Restricted Stock Plan. The Company has not yet granted any shares under the new plan. Compensation expense was recognized during fiscal 2024, 2023, and 2022 for equity-based grants, based on the grant date fair value of the awards. The fair value of grants of non-vested common stock awards is the stock price on the date of grant. Information regarding the impact of compensation expense related to grants of non-vested shares of common stock is as follows: Fiscal Years Ended February 1, 2025 February 3, 2024 January 28, 2023 Stock-based compensation expense, before tax $ 13,135 $ 13,725 $ 11,640 Stock-based compensation expense, after tax $ 9,956 $ 10,431 $ 8,846 Non-vested shares of common stock granted during fiscal 2024 were granted pursuant to the Company's 2023 Employee Restricted Stock Plan and the Company's 2008 Director Restricted Stock Plan. Non-vested shares of common stock granted during fiscal 2023 and fiscal 2022 were granted pursuant to the Company's 2005 Restricted Stock Plan and the Company's 2008 Director Restricted Stock Plan. The 2023 Employee Restricted Stock Plan was approved by stockholders at the Company's 2023 annual meeting to replace the 2005 Restricted Stock Plan. Shares granted under the 2023 Employee Restricted Stock Plan and 2005 Restricted Stock Plan are typically "performance based" and vest over a period of four years , only upon certification by the Compensation Committee of the Board of Directors that the Company has achieved its pre-established performance targets for the fiscal year. Certain shares granted under both plans, however, are "non-performance based" and vest over a period of four years without being subject to the achievement of performance targets. Shares granted under the 2008 Director Plan vest 25 % on the date of grant and then in equal portions on each of the first three anniversaries of the date of grant. A summary of the Company’s stock-based compensation activity related to grants of non-vested shares of common stock for the fiscal year ended February 1, 2025 is as follows: Shares Weighted Average Grant Date Fair Value Non-Vested - beginning of year 654,256 $ 40.60 Granted 366,250 37.98 Forfeited ( 37,880 ) 40.20 Vested ( 334,668 ) 39.98 Non-Vested - end of year 647,958 $ 39.46 As of February 1, 2025, there was $ 11,030 of unrecognized compensation expense related to grants of non-vested shares. It is expected that this expense will be recognized over a weighted average period of approximately 1.9 years. The total fair value of shares vested during fiscal 2024, 2023, and 2022 was $ 15,337 , $ 13,446 , and $ 12,411 respectively. 42 L. EARNINGS PER SHARE The following table provides a reconciliation between basic and diluted earnings per share: Fiscal Years Ended February 1, 2025 February 3, 2024 January 28, 2023 Net Income Weighted Average Shares (a) Per Share Amount Net Income Weighted Average Shares (a) Per Share Amount Net Income Weighted Average Shares (a) Per Share Amount Basic EPS $ 195,468 49,922 $ 3.92 $ 219,919 49,582 $ 4.44 $ 254,626 49,269 $ 5.17 Effect of Dilutive Securities: Non-vested shares — 388 ( 0.03 ) — 373 ( 0.04 ) — 362 ( 0.04 ) Diluted EPS $ 195,468 50,310 $ 3.89 $ 219,919 49,955 $ 4.40 $ 254,626 49,631 $ 5.13 (a) Shares in thousands . M. REVENUES The Company is a retailer of medium to better-priced casual apparel, footwear, and accessories for fashion-conscious men, women, and kids. The Company operates its business as one reportable segment. The Company sells its merchandise through its retail stores and e-Commerce platform. The Company operated 441 stores located in 42 states throughout the United States as of February 1, 2025. During fiscal years 2024, 2023, and 2022, online revenues accounted for 16.2 %, 16.4 %, and 17.1 %, respectively, of the Company's net sales. No sales to an individual customer or country, other than the United States, accounted for more than 10.0% of net sales. The following is information regarding the Company’s major product lines, stated as a percentage of the Company’s net sales: Fiscal Years Ended Merchandise Group February 1, 2025 February 3, 2024 January 28, 2023 Denims 42.5 % 40.9 % 39.3 % Tops (including sweaters) 29.0 29.3 29.7 Accessories 11.0 10.8 10.0 Footwear 5.3 6.7 9.2 Sportswear/Fashions 5.1 5.4 5.5 Outerwear 2.0 2.2 2.1 Casual bottoms 1.5 1.3 1.1 Youth 3.6 3.4 3.1 Total 100.0 % 100.0 % 100.0 % 43 N. SEGMENT REPORTING The Company's operations are managed at a consolidated level and function as a single operating and reporting segment. The segment generates revenue from the sale of merchandise through its retail stores and e-Commerce platform, all of which are located in the United States. The Company's President and Chief Executive Officer is its Chief Operating Decision Maker ("CODM"). The CODM evaluates the financial performance of the segment to allocate resources, reinvest profits into the business, and make capital allocation decisions based on income from operations and net income, as reported in the consolidated statements of income. The table below presents the Company's significant segment expenses and results of operations which are regularly reviewed by the CODM: Fiscal Years Ended Income Statement February 1, 2025 February 3, 2024 January 28, 2023 Net Sales $ 1,217,689 $ 1,261,102 $ 1,345,187 Merchandise COGS (a) 422,432 444,256 471,736 Other COGS (b) 202,470 197,781 197,448 Personnel Costs (c) 264,991 263,728 260,659 Other Operating Expenses 86,432 84,278 87,212 Income From Operations 241,364 271,059 328,132 Other Income, Net 16,413 18,156 6,924 Income Tax Expense 62,309 69,296 80,430 Net Income $ 195,468 219,919 $ 254,626 (a) Merchandise COGS represents expenses related to the sale of merchandise, including product costs, inbound freight, and shrinkage. (b) Other COGS consists of buying, distribution, warehousing, and occupancy expenses. (c) Personnel costs include wages, incentive compensation, benefits, and insurance costs related to store and non-buying related home office teammates. As the Company operates as a single reportable segment, the additional disclosures required by ASC 280, Segment Reporting , are included in the consolidated financial statements and accompanying notes. 44 ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.