2) Prepare a Profitability And Total Asset Management Analysis by calculating for The Buckle company the:
a) profit margin
b) asset turnover
c) return on assets
Buckle JANUARY 31, 2015 FEBRUARY 1, 2014 FEBRUARY 2, 2013 (a) $ 1,153,142 $ $ 1,124,007 INCOME STATEMENT DATA NET SALES INCOME BEFORE INCOME TAXES PROVISION FOR INCOME TAXES 1,128,001 260,456 259,696 97,132 261,699 97,394 97,872 NET INCOME 162,564 164,305 162,584 3.39 3.38 3.44 DILUTED EARNINGS PER SHARE NET INCOME AS A PERCENTAGE OF NET SALES 14.1% 14.4% 14.6% $ $ 218,756 147,917 BALANCE SHEET DATA WORKING CAPITAL LONG-TERM INVESTMENTS TOTAL ASSETS LONG-TERM DEBT STOCKHOLDERS' EQUITY 202,318 43,698 542,993 43,436 546,293 35,735 477,974 $ 355,278 $ 361,930 $ 289,649 460 450 440 SELECTED OPERATING DATA NUMBER OF STORES OPEN AT YEAR END AVERAGE SALES PER SQUARE FOOT AVERAGE SALES PER STORE (000'S) 459 461 475 2,321 $ 2,318 2,380 COMPARABLE STORE SALES CHANGE 2.1% (a) CONSISTS OF 53 WEEKS. $501 $530 $620 $792 $898 2005 2006 2007 2008 NET SALES (AMOUNTS IN MILLIONS) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $950 DILUTED EARNINGS PER SHARE $1.13 $1.24 $1.63 $2.24 $2.73 $2.86 $3.20 $3.44 $3.39 $3.38 2009 2010 2011 2012 2013 2014 $1,063 $1,124 $1,128 $1,153 STEADY GROWTH At Buckle, we are always seeking opportunities to continue our growth. In 2014, we opened 16 new stores, including our first store in Alaska, and completed 18 full remodels. As of January 31, 2015, 365 of our 460 stores featured our signature store design. Plans for 2015 include 9 new store openings and 11 full remodels. 17 - 1815 15 811 2 CORPORATE OFFICE IN KEARNEY, NE * 2015 CONFIRMED NEW STORE OPENINGS AS OF JANUARY 31, 2015 2015 CONFIRMED NEW STORE OPENINGS BRADLEY, WV MOUNT PLEASANT, SC Crossroads Mall Mount Pleasant Towne Centre LAKEWOOD (DENVER), CO OMAHA, NE Colorado Mills Village Pointe PANAMA CITY BEACH, FL Pier Park SAN ANTONIO, TX Rivercenter SLIDELL, LA Fremaux Town Center WEST CHESTER (CINCINNATI), OH Liberty Center $298 $302 $335 AVERAGE SALES PER STORE (AMOUNTS IN THOUSANDS) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $1,474 $1,493 $1,668 $1,995 $2,129 $2,133 $2,314 $2,380 $2,318 $2,321 AVERAGE SALES PER SQUARE FOOT 2005 2006 2007 2008 2009 2010 2011 2012 $401 $428 $428 $462 $475 $461 $459 2013 2014 THE BUCKLE, INC. CONSOLIDATED BALANCE SHEETS (Amounts in Thousands Except Share and Per Share Amounts) January 31, 2015 February 1, 2014 ASSETS S CURRENT ASSETS: Cash and cash equivalents Short-term investments (Notes A, B, and C) Receivables 133,708 25,857 8,567 129,921 26,536 324.589 164,868 20,197 4,318 124.141 28,613 342.137 Inventory Prepaid expenses and other assets (Note F) Total current assets PROPERTY AND EQUIPMENT (Note D) Less accumulated depreciation and amortization 427,915 (255,252) 172,663 393,656 (235,087) 158,569 LONG-TERM INVESTMENTS (Notes A, B, and C) OTHER ASSETS (Note G) 43,698 2,043 43,436 2,151 $ 542,993 $ 546,293 LIABILITIES AND STOCKHOLDERS' EQUITY $ CURRENT LIABILITIES: Accounts payable Accrued employee compensation Accrued store operating expenses Gift certificates redeemable Income taxes payable Total current liabilities 35,714 36,920 9,984 23,992 15,661 122,271 37,147 36,933 9,983 23,131 16,187 123,381 DEFERRED COMPENSATION (Note I) DEFERRED RENT LIABILITY OTHER LIABILITIES (Note F) Total liabilities 14,261 40,566 10,617 187,715 12.797 37,564 10,621 184,363 COMMITMENTS (Notes E and H) STOCKHOLDERS' EQUITY (Note J): Common stock, authorized 100,000,000 shares of $.01 par value; 48,379,613 and 48,336,392 shares issued and outstanding at January 31, 2015 and February 1, 2014, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total stockholders' cquity 484 131,112 224,111 (429) 355,278 483 124,134 238,151 (838) 361,930 542,993 S 546,293 THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands Except Per Share Amounts) January 31, 2015 Fiscal Years Ended February 1, 2014 February 2, 2013 SALES, Net of returns and allowances of $110,793, $108,851, and $106,612, respectively $ 1,153,142 $ 1,128,001 $ 1,124,007 COST OF SALES (Including buying, distribution, and occupancy costs) 645,810 628,856 624,692 Gross profit 507,332 499,145 499,315 OPERATING EXPENSES: Selling General and administrative 212,688 37,671 250,359 206,893 35,258 242,151 201,963 39,177 241,140 INCOME FROM OPERATIONS 256,973 256,994 258,175 OTHER INCOME, Net (Note A) 2,723 3,462 3,524 INCOME BEFORE INCOME TAXES 259,696 260,456 261,699 PROVISION FOR INCOME TAXES (Note F) 97,132 97,872 9 7,394 NET INCOME $ 162,564 $ 162,584 S 164,305 EARNINGS PER SHARE (Note K): Basic $ 3.39 $ 3.41 $ 3.47 Diluted $ 3.38 $ 3.39 $ 3.44 See notes to consolidated financial statements. APPENDIX B The Buckle, Inc., 2014 Annual Report B-9 THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in Thousands) January 31, 2015 Fiscal Years Ended February 1, 2014 February 2, 2013 NET INCOME $ 162,564 $ 162,584 $ 164,305 OTHER COMPREHENSIVE INCOME, NET OF TAX: Change in unrealized loss on investments, net of tax of S240, $56, and S(138), respectively Other comprehensive income 409 - re 96 96 (235) (235) 409 S COMPREHENSIVE INCOME $ 162,973 S 1 62,680 $ 164,070 See notes to consolidated financial statements. B-10 APPENDIX B The Buckle, Inc., 2014 Annual Report THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in Thousands Except Share and Per Share Amounts) Number of Shares Additional Paid-in Capital Common Stock Accumulated Other Comprehensive Loss Retained Earnings Total BALANCE, January 28, 2012 47,432,089 5 4 74 S 100,333 S 263,039 $ (699) S 363,147 Net income 164,305 (254,633) 164,305 (254,633) 846 + 842 Dividends paid on common stock, ($5.30 per share) Common stock issued on exercise of stock options Issuance of non-vested stock, net of forfeitures Amortization of non-vested stock grants, net of forfeitures Income tax benefit related to exercise of stock options 377,520 249,660 8,388 7,831 8,388 7,831 (235) Change in unrealized loss on investments, net of tax (235) BALANCE, February 2, 2013 48,059,269 $ 481 $ 117,391 $ 172,711 S (934) $ 289,649 | || 162,584 (97,144) 162,584 (97,144) 25,555 251,568 Net income Dividends paid on common stock, (S2.02 per share) Common stock issued on exercise of stock options Issuance of non-vested stock, net of forfeitures Amortization of non-vested stock grants, net of forfeitures Income tax benefit related to exercise of stock options Change in unrealized loss on investments, net of tax TUTTI 5,066 1,679 5,066 1,679 96 96 BALANCE, February 1, 2014 48,336,392 $ 483 $ 124,134 $ 238,151 $ (838) S 361,930 162,564 (176,604) - 162,564 (176,604) 70 - Net income Dividends paid on common stock, (83.66 per share) Common stock issued on exercise of stock options Issuance of non-vested stock, net of forfeitures Amortization of non-vested stock grants, net of forfeitures Income tax benefit related to exercise of stock options Change in unrealized loss on investments, net of tax 17,091 26,130 70 (1) 6,013 896 6,013 896 409 --_ - -_ - _ - _-_ _ 409_ - BALANCE, January 31, 2015 48,379,613 $ 484 S 131,112 S 224,111 S (429) S 355,278 See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) January 31, 2015 Fiscal Years Ended February 1, 2014 February 2, 2013 $ 162,564 S 162,584 $ 164,305 31,679 6,013 (1,675) 1,163 32,631 5,066 (2,086) 988 33,834 8,388 (1,939) 1,528 CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization Amortization of non-vested stock grants, net of forfeitures Deferred income taxes Other Changes in operating assets and liabilities: Receivables Inventory Prepaid expenses and other assets Accounts payable Accrued employee compensation Accrued store operating expenses Gift certificates redeemable Income taxes payable Deferred rent liabilities and deferred compensation (2,134) (5,780) 3,508 (2,915) (13) (989) (20,288) (2,255) 2,738 (5,250) (138) 910 (2,699) 2,814 596 356 (10,281) 6,534 (671) (1,004) 1,935 14,897 2,463 1 861 (1,970) 4,466 Net cash flows from operating activities 195,768 174,026 220,941 (45,454) (28,811) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment Proceeds from sale of property and equipment Other Purchases of investments Proceeds from sales/maturities of investments 108 (43,404) 38,131 112 (32,314) 30,981 (30,297) 1,140 130 (29,933) 37,294 Net cash flows from investing activities (50,619) (30,021) (21,666) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the exercise of stock options Excess tax benefit from stock option exercises Payment of dividends 70 225 (176,604) 399 (97,144) 846 5,609 (254,633) Net cash flows from financing activities (176,309) (96,745) (248,178) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (31,160) 47,260 (48,903) CASH AND CASH EQUIVALENTS, Beginning of year 164,868 117,608 166,511 CASH AND CASH EQUIVALENTS, End of year $ 133,708 S 164,868 $ 117,608 See notes to consolidated financial statements. D. PROPERTY AND EQUIPMENT January 31, 2015 February 1, 2014 $ Land Building and improvements Office equipment Transportation equipment Leasehold improvements Fumiture and fixtures Shipping/receiving equipment Screenprinting equipment Construction-in-progress Total 2,165 28,033 10,080 20.790 154,441 167,575 27,172 111 17,548 427,915 2,165 28,006 9,357 20,782 146,655 157,771 26,392 111 2,417 393,656 $ E. 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 provides that outstanding letters of credit cannot exceed $20,000. Borrowings under the line of credit provide for interest to be paid at a rate based on LIBOR. The Company has, from time to time, borrowed against these lines during periods of peak inventory build-up. There were no bank borrowings as of January 31, 2015 and February 1, 2014. There were no bank borrowings during fiscal 2014, 2013, and 2012. The Company had outstanding letters of credit totaling $2,026 and $3,226 as of January 31, 2015 and February 1, 2014, respectively. The line of credit agreement was amended effective February 16, 2015, subsequent to the end of the fiscal year. The amended agreement extended the expiration date of the note from July 31, 2015 to July 31, 2017 and reduced the amount available for letters of credit from $20,000 to $10,000. H. COMMITMENTS Leases - The Company conducts its operations in leased facilities under numerous non-cancelable operating leases expiring at various dates through fiscal 2025. Most of the Company's stores have lease terms of approximately ten years and generally do not contain renewal options. Most lease agreements contain tenant improvement allowances, rent holidays, rent escalation clauses, and/or contingent rent provisions. For purposes of recognizing lease incentives and minimum rental expenses on a straight-line basis over the terms of the leases, the Company uses the date of initial possession to begin amortization, which is generally when the Company enters the space and begins to make improvements in preparation of intended use. For tenant improvement allowances and rent holidays, the Company records a deferred rent liability on the consolidated balance sheets and amortizes the deferred rent over the terms of the leases as reductions to rent expense on the consolidated statements of income. For scheduled rent escalation clauses during the lease terms or for rental payments commencing at a date other than the date of initial occupancy, the Company records minimum rental expenses on a straight-line basis over the terms of the leases on the consolidated statements of income. Certain leases provide for contingent rents, which are determined as a percentage of gross sales in excess of specified levels. The Company records a contingent rent liability on the consolidated balance sheets and the corresponding rent expense when specified levels have been achieved or are reasonably probable to be achieved. Operating Icase base rental expense for fiscal 2014, 2013, and 2012 was $65,712, 561,640, and $58,683, respectively. Most of the rental payments are based on a minimum annual rental plus a percentage of sales in excess of a specified amount. Percentage rents for fiscal 2014, 2013, and 2012 were $4,434, 85,080, and $5,163, respectively. Total future minimum rental commitments under these operating leases with remaining lease terms in excess of one year as of January 31, 2015 are as follows: Minimum Rental Commitments Fiscal Year 2015 2016 2017 2018 2019 Thereafter Total minimum rental commitments 66,147 61,388 56,020 48,842 41,355 92,540 366,292 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. B-14 APPENDIX B The Buckle, Inc., 2014 Annual Report K EARNINGS PER SHARE The following table provides reconciliation between basic and diluted earnings per share: January 31, 2015 Weighted Average Shares Fiscal Years Ended February 1, 2014 Weighted Average Per Share I ncome Shares Amount February 2, 2013 Weighted Average Shares Per Share Amount Per Share Amount Income Income $ 162,564 47,927 $ 3.39 $ 162,584 47,744 S 3.41 $164,305 47,383 S 3.47 Basic EPS Effect of Dilutive Securities: Stock options and non- vested shares Diluted EPS 163 - 162,584 232 7,976 (0.02) 3.39 S (0.01) 3.38 162.564 48,090 $ - 164,305 327 47.710 (0.03) 3.44 $ 4 S $ S No stock options were deemed anti-dilutive and excluded from the computation of diluted camings per share for fiscal 2014, 2013 or 2012 L. SEGMENT INFORMATION The Company is a retailer of medium to better priced casual apparel, footwear, and accessories. The Company operates its business as one reportable segment. The Company operated 460 stores located in 44 states throughout the United States as of January 31, 2015. The following is information regarding the Company's major product lines, stated as a percentage of the Company's net sales: January 31, 2015 Fiscal Years Ended February 1, 2014 February 2, 2013 Merchandise Group 45.3% 30.2 8,5 Denims Tops (including sweaters) Accessories Sportswear Fashions Footwear Outerwear Casual bottoms Other Total 43.7% 30.8 8.6 6.2 5.9 2.3 1.2 1.3 100.0% 46.4% 30.9 8.4 5.7 5.3 2.2 6.0 5.8 2.3 0.9 1.0 100.0% 0.8 0.3 100.0%
