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Buckle American Eagle Debt to Equity Ratio Accounts Payable Notes Payable Income Taxes Payable Bonds Payable Total Debt Common Stock, Par $20 Paid in Capital Retained Earning Total Equity Total Equity Debt to Equity Ratio Buckle American Eagle Return on Equity Net Income Average Equity Return on Equity Buckle American Eagle Investing Coverage Net Income Interest Expense Total Interest Expense Investing Coverage APPENDOXB The Buckle, Inc. 2014 Annual Report B-7 THE HUCKLE, INC. CONSOLIDATED BALANCE SHEETS munis in Thousands Esp Share and Share Ames) January 31, 2015 February 1. 2014 ASSETS CURRENT ASSETS 5 16 15.ASTRI Show A. Rece every Pepe(N) Tool current 13414 32613 342137 30656 PROPERTY AND EQUIPMENT IN depreciation 29 15 11 41 LONG-TERM INVESTMENTS IN A, C) OTHER ASSETS (NO) 46 2,191 LIABILITIES AND STOCKHOLDERS' EQUITY 3.10 1714 16.30 CURRENT LABELITIES Ace Arengenes Ghartim Ince payable 23131 TANT 12.17 19 DEFERID COMPENSATION) DEFERRED RENT LIABILITY OTHER LANTES Tools 10.617 187 TIS COMMITMENTS (N) STOCKHOLDERS TUTTY IN Cho 100.000 hrs of ary 31, 2015 and 1, 2014 App 34111 Tolony SAN See notes to consolidated facial w B-8 APPENDIX B The Buckle, Ine, 2014 Annual Report THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF INCOME (Amounis in Thousands Except Per Share Amounts) January 31, 2015 Fiscal Years Ended February 1, 2014 February 2, 2013 SALES, Net of retums and allowances of ST 10.793. STORST, and $106,612, respectively S 1.153.142 5 1.128.001 S 1.134.007 COST OF SALES (Including buying, distribution, and occupancy costs) 645.80 628.856 624 692 307,332 499,145 Gross profit 499315 OPERATING EXPENSES: Selling General and administrative 212,68 37,671 250, 159 206,893 35258 243.151 201.963 39.177 241.140 256,973 256.994 258,175 INCOME FROM OPERATIONS 3.462 OTHER INCOME, Net (Note A INCOME BEFORE INCOME TAXES PROVISION FOR INCOME TAXES (Note ) 2.59,096 260,456 261.699 97.132 97.872 97.94 162,3645 16234 S 164305 NET INCOME EARNINCS PER SHARE (Note KX Basic 3395 341 $ 3.10 314 Diluted 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. 2013 Fiscal Years Ended February 2014 February 2013 NET INCOME 564 162,50 5 TOS OTHER COMPREHENSIVE INCOMH, NUT OF TAX Change in unrelied out on investments, net ofte of 240. SS. and S(13), respectively Other prehensive income 215 035) COMPREHENSIVE INCOME 162.210 1626 164020 See notes to consolidated financial statements THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in Thousands Except Share and Per Share Amounts) Accumulated Other Comprehensive Los Number of Shares Additional Paldia Capital Commen Stock Retained Earnings Total 47,432,089 BALANCE, January 28, 2012 5 414 S 100,133 5 5 263.019 $ 363,147 164,305 (254,633) 164305 (254,633) 846 842 377,520 249,660 (3) Net income Dividends paid on common ock, (55.30 per share) Common stock issued on exercise of stock options Issuance of non-vested ack, net of forfeitures Amortization of non-vested stock grants, net of forfeitures Income tax benefit related to exercise of Mock options Change in unrealized loss on investments of 8.38 7,831 8,38 7,831 (235) (235) 48,059,269 5 $ BALANCE. February 2, 2013 117.391 172,711 $ (934) 5 289,649 162,584 (97.144) 162,584 (97,144 25.555 251.568 (2) Net income Dividends paid on common sock, (52.02 per share) Common stocked on Exercise of stock options Iance of non-vested stock, net of forfeitures Amortization of non-vestidock grants, net of forfeitures Income tax benefit related to exercise of stock options Change in realised loss on investments, net of tax JE LII-IIIIIIIIIIIII 5,066 1.679 5,066 1.679 96 $ 5 48.336392 124.134 5 238,151 $ S BALANCE, February 1, 2014 361,930 162.564 (176.604) (1766040 70 17,091 26,130 70 (0) Net income Dividends paid on common ock. (53.66 per share) Common stock des exercise of stock options Iwance of non-vested stock, net of forfeitures Amortization of non-vested a grants, net of forfeitures Income tax benefit related to exercise of stock options Change in realized loss on investments, set of III II 6,013 896 409 5 234,111 48.379,613 S 355.278 S BALANCE, January 31, 2015 See notes to consolidated financial statements. Monterey One Wat... E, pa water payment https://web.afts.co... EDD https://sdio.edd.ca... THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) January 31, 2015 Fiscal Year Ended February 1, 2014 February 2, 2013 $ 162.564 5 5 164305 31 679 6013 (1.675) 1.163 32,631 3.066 2086) 98 33.834 8.385 (1939) 1.528 596 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 openting 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) 65,780) 3.508 2.915) - 13) 1 851 (1970) 4.466 1991 (20,253) 0.255) 2.738 63.250) 0359 910 0.699) 356 (10.281) 6534 1671) (1.004) 1.935 14,897 2.463 195,76 114.036 220.941 Net cash flows from operating activities 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 105 11 112 (33314) 30,981 (30.297) 1,140 130 (29933) 37.294 38.131 Net cash flows from investing activities 50.5193 (30.021) Q1.566) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the exercise of stock options Excess tax benefit from stock option exercises Payment of dividends 70 225 (76.804) 399 (97.144) 8-16 5.609 (254,633) Net cash flows from financing activities (176.309) (9,745) (248,178) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 01.160) 47.260 (48.903) CASH AND CASH EQUIVALENTS. Beginning of year 164.868 117.18 166,511 CASH AND CASH EQUIVALENTS, End of your 133,703 5 16468 $ 117.608 See notes to consolidated financial statements. water payment D. PROPERTY AND EQUIPMENT January 31, 2015 February 1, 2014 Land Building and improvements Office equipment Transportation equipment Leasehold improvements Furniture and fixtures Shipping/receiving equipment Screenprinting equipment Construction-in-progress Total 2.165 28,033 10,080 20,790 154441 167,575 27.172 2,165 28,006 9,357 20,782 146,655 157,771 26,392 17.3.48 427915 2,417 393,656 5 E FINANCING ARRANGEMENTS The Company has available an unsecured line of credit of $25.000 with Wells Fargo Bank, NA for operating moods and letters of credit. The line of credit provides that outstanding letters of credit cannot exceed 520,000. Bonowings under the line of credit provide for interest to be paid at a rate based on LIBOR. The Company has, from time to time, bomowed against these lines during periods of peak inventory build-up. There were no bank borowings 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 53.226 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 letter of credit from $20.000 to $10.000 H. COMMITMENTS Leases. The Company conducts its operations in leased facilities under numerous son-cancelable operating lases espiring at various dutes 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 allowancest holidays, rent escalation clauses under contingentot provisions. For purposes of recognizing lease incentives and minimum rental expenses on a straight-time basis over the terms of the lease the Company was 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. For tenant improvement allowances and rent holidays, the Company reconds a deemed reliability on the consolidated balance sheets and amortires the defendent over the terms of the lenses as reductions to rent expense on the consolidated statements of income. For scheduled rent escalation classes 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 lases provide for contingentrents, which are determined as a percentage of grow sales in excess of specified levels. The Company records a contingent rent liability on the consolidated balance sheets and the coresponding rent expense when specified levels have been achieved or reasonably probable to be achieved. Operating lease bus rental expense for fiscal 2014, 2013, and 2012 was $65,712, 561.640, and $58,68), respectively. Most of the rol payments are based on a minimum annual rental plus a percentage of sales in crew of a specified amount. Powentagerents for fiscal 2014, 2015, und 2012 were 54434.55.080, und 55,163, respectively, Total future minimum rental commitments under these operating lases 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 mismental commen 66,147 61JS $6,020 48.542 41.355 92,540 366,292 Lingerie - From time to time, the Company is involved in litigations relating to come rising out of its operations in the normal counse of business. As of the date of these consolidated financial statements, the Company was die any legal proceedings that are expected individually or in the grat, 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 Fheal Years Ended February 1, 2014 Weighted Average Per Share Share Amount February 2, 2013 Weighted Average Shares Per Share Amount Per Share Amount Income Income Income $ 162,564 47,927 $ 139 $ 162,584 47,744 $ 3:41 $164,105 47,333 S 3.47 Basi EPS Effect of Dilutive Securities: Stock options and non- vested shares Diluted EPS 327 163 48,090 10.01) 3.38 232 47.976 5 (0.02) 3.30 (0.03) 3.44 $ 162,564 5 $ 162,584 3 164.305 47,7105 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 Denims Tops (including wweaters) Accessories Sportswear Fashions Footwear Outerwear Casual bottoms Other Total 43.7% 30.8 8.6 6.2 5.9 45.3% 30.2 8.5 6.0 5.8 46.4% 30.9 8.4 5.7 SJ 2.2 0.8 03 100.0% 0.9 1.2 13 100.0% 1.0 100.0% 4 APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED BALANCE SHEETS January 31, 2015 February 1, 2014 $ 410,697 278,972 67,894 73.848 59,102 890,513 694.856 47.206 13,096 14,035 37,202 $1,696,908 $ 418,933 10,002 291,541 73.882 88,155 45.478 927991 632,986 49,271 13,530 24.835 45.551 $1,694,164 (in thousands, except per share am) Assets Current assets: Cash and cash equivalents Short-term investments Merchandise inventory Accounts receivable Prepaid expenses and other Deferred income taxes Total current assets Property and equipment, at cost, net of accumulated depreciation Intangible assets, at cost, net of accumulated amortization Goodwill Non-current deferred income taxes Other assets Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued compensation and payroll taxes Accrued rent Accrued income and other taxes Unredeemed gift cards and gift certificates Current portion of deferred lease credits Other liabilities and accrued expenses Total current liabilities Non-current liabilities: Deferred lease credits Non-current accrued income taxes Other non-current liabilities Total non-current liabilities Commitments and contingencies Stockholders' equity: Preferred stock. $0.01 par value: 5,000 shares authorized: none issued and outstanding Common stock, S0.01 par value; 600,000 shares authorized; 249,566 shares issued: 194,516 and 193.149 shares outstanding, respectively Contributed capital Accumulated other comprehensive income Retained earnings Treasury stock, 55,050 and 56,417 shares, respectively, at cost Total stockholders' equity Total liabilities and stockholders' equity $191,146 44.884 78,567 33.110 47,888 12.969 50,529 459,093 $ 203,872 23.560 76397 5,778 47.194 13.293 45,384 415.478 54,516 10,456 33,097 98,069 59,510 16,543 36,455 112.508 2,496 569,675 1,543.085 1965.566 1.139.746 S1,696,908 2,496 573.003 12.157 1,569.851 1991,334) 1.166,178 $1,694,164 Refer to Notes to Consolidated Financial Statements APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report A-5 AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Faded February 1. 2014 $3,305.802 2,191 803 1,113,999 796,505 February 2, 2013 $3,475,802 2,085,480 1.390,322 834,601 January JI, 2015 $3,282,867 2.128,193 1,154,674 806,498 17,752 33,468 141,191 155.765 3.737 159,502 70.715 88,787 (8.465) $ 80.322 (I thousand, FPT share am) Total net revenue Cost of sales, including certain buying, occupancy and warehousing expenses Gross profit Selling, general and administrative expenses Restructuring charges Loss on impairment of assets Depreciation and amortization expense Operating income Other income, net Income before income taxes Provision for income taxes Income from continuing operations Loss from discontinued operations, net of tax Net income Basic income per common share: Income from continuing operations Loss from discontinued operations Basic net income per common share Diluted income per common share: Income from continuing operations Loss from discontinued operations Diluted net income per common share Weighted average common shares outstanding - basic Weighted average common shares outstanding-diluted 44,465 131,974 141,055 1,022 142,077 59,094 82,983 34,869 126,246 394,606 7,432 402,038 137.940 264,098 (31.990) $ 232,108 82,983 s 0.43 S 0.46 (0.04 S0.42 1.35 (0.16 1.19 0.43 S $ 0.43 s S 0.46 (0.04) 0.42 194,437 195,135 S s 0.43 192,802 194,475 1.32 (0.16) 1.16 196,211 200,665 A-6 APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME February 2, January 31, 2015 $ 80,322 For the Year Ended February 1, 2014 $ 82,983 2013 $232,108 (I thousands) Net income Other comprehensive (loss) income: Foreign currency translation (loss) gain Other comprehensive (loss) income Comprehensive income 22.100) (22.101) $ 58,221 (17.140) (17.140) $ 65,843 638 638 $232.746 APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report A-7 AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Shares Outstanding (0) 193,848 Accumulated Other Comprehensive Commen Contributed Retained Treasury Income Stockholders' Stock Capital Earning Stock(2) (Loss) $ 2,496 $552,797 $1,771,464 S1938,565) $ 28,659 $1,416,851 76,108 76,108 (8,407) (280) 7,443 (173,554) (4,125) 125,515 (11.054) (36,213) 232,108 (173,554) (4,125) 78,248 232,108 638 638 192,604 9,214 (414,301 $ 2,496 5627,065 $1,553,058 $1990.729) S 1,184 (405,087) 29,297 $1,221.187 1,184 (a thousand share Balance at January 28, 2012 Stock awards Repurchase of common stock as part of publicly announced programs Repurchase of common stock from employees Reissuance of treasury stock Net income Other comprehensive income Cash dividends and dividend equivalents ($2.05 per share) Balance at February 2, 2013 Stock awards Repurchase of common stock as part of publicly announced programs Repurchase of common stock from employees Reissuance of treasury stock Net income Other comprehensive income Cash dividends and dividend equivalents (50.375 per share) Balance at February 1, 2014 Stock awards Repurchase of common stock from employees Reissuance of treasury stock Net income Other comprehensive income Cash dividends and dividend equivalents (50.50 per share) Balance at January 31, 2015 (1.600) (1.059) 3,204 (33,051) (23,385) 55.831 (56,706) 6,090 82,983 (33,051) (23,385) 5,215 82,983 (17.140) (17.140) 1.465 (72.280) 193,149 S 2.496 5573,008 S1,569.851 S1991,334) 12,372 (517) (7.464) 1,884 (17,988) (7,503) 33,232 80,322 III III (70,815 12,157 S1,166,178 12,372 (7,464) 7,741 80,322 (22,101) (22,101) 2.283 (99,585) 194,516 S2,496 S569.675 S1,543.085 (965,566) S (97,302) (9.944) $1,139,746 (1) 600,000 authorized, 249,566 issued and 194,516 outstanding, 30.01 par value common stock at January 31, 2015: 600,000 authorized, 249.566 issued and 193,149 outstanding, 50.01 par value common stock at February 1, 2014; 600,000 authorized, 249,566 issued and 192,604 outstanding, $0.01 par value common stock at February 2, 2013. The Company has 5,000 authorized, with none issued or outstanding, 30.01 par value preferred stock at January 31, 2015 February 1, 2014 and February 2, 2013 (2) 55,050 shares, 56,417 shares, and 56,962 shares at January 31, 2015, February 1, 2014 and February 2, 2013, respectively. During Fiscal 2014, Fiscal 2013, and Fiscal 2012, 1,884 shares, 3,204 shares, and 7,443 shares, respectively, were reissued from treasury stock for the issuance of share-based payments. A-8 APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended February 1, February 2, January 31, 2015 2014 2013 s $ 22.01 $ 80 122 465 K 787 232.IOS 31,990 264,098 $ $ 82.983 $ 1422151 16.070 (2.2793 (495) 33,468 134.047 (6.541) 20,100 1.37% 44,465 128,397 66 1.49 (30.547 100 34.869 35,202 404 (165) (10,468 8.56 3,084 1422 5612 15.) 12 (4528 20,716 24.06 (9,012) 40,148 (29.500 (10,844) (36,089) 28.568 1.26 58) (42.465) 25.RO) 27.605 146,7 229,856 (11,073) 23.018 (7.405) 20,186 215 571 499,671 426 (93.939) In thousands) Operating activities: Net income Loss from discontinued operations, net of tax Income from continuing operations Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization Share-based compensation Deferred income taxes Foreign currency Transaction loss (in) Los on impairment of assets Changes in assets and liabilities Merchandise inventory Accounts receivable Prepaid expenses and other Others Accounts payable Unredeemed gift cards and in certificates Deferred lease credits Accrued compensation and payroll lines Accrued income and other taxes Accrued liabilities Total adjustments Netcash provided by operating this from coming operations Investing activities Capital expenditures for property and equipment Purchase or long-lived ants in a business combination Acquisition of Intangibles Purchase of available for sale securities Sale of available for sale securities Net cash (used for provided by investing activities from continuing operations Financing activities Payments on capital leases and other Repurchase of common of publicly and program Repurchase of common stock from employees Net proceeds from stock options eerd Excess tax benefit from share-based payments Cash wed to set it awards Cash dividends paid Nethed for financing activities from continuing operations Effect of exchange rates on cash Cash flow of discontinued operations Net cash provided by used for operating activities Net cash used for investing activities Net cash used for financing activities Effect of exchange rates on cash Net cash provided by used for discontinued operations Net decrease in cash and cash equivalents Cash and cash equivalents -- beginning of period Cash and chequivalents del period (245.002) (1.264) (278.499) (20,751) (6.835) (52,065) 162.85 (195.165 (1.125) (111,056) 15.500 (190.650) 10,002 (236.264) 0.143) (2.839) (33.051) (23,386) 6.197 (3.066) (173.550 (4,125) 76,401 17.464) 742 7103 (401.490 (494,455 (1784 (116.836 04 Co 25.1960 1.4) 413001 410 M SO9119 41 AMERICAN EAGLE OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JANUARY 31, 2015 1. Business Operations American Eagle Outfitters, Inc. (the "Company), a Delaware corporation, operates under the American Eagle Outfitters ("AEO") and aerie by American Eagle Outfitters ("aerie) brands. The Company operated 77kids by American Eagle Outfitters * (*77kids") until its exi in Fiscal 2012 Founded in 1977. American Eagle Outfitters is a leading apparel and accessories retailer that operates more than 1,000 retail stores in th U.S. and internationally, online at ae.com and aerie.com and international store locations managed by third-party operators. Through its brand the Company offers high quality, on-trend clothing, accessories and personal care products at affordable prices. The Company's online business, AEO Direct, ships to 81 countries worldwide. Merchandise Mix The following table sets forth the approximate consolidated percentage of total net revenue from continuing operations attributable to cach merchandise group for each of the periods indicated: January 31, Men's apparel and accessories Women's apparel and accessories (excluding aerie) aerie Total 39% 53% 896 100% For the Years Faded February 1, 2014 40% 52% 8% 100% February 2, 2013 39% 52% 9% 100% APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report AMERICAN EAGLE OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Cash and Cash Equivalents, Short-term Investments and Long-term Investments The following table summarizes the fair market value of our cash and marketable securities, which are recorded on the Consolidated ce Sheets: January 31, February 1, 2015 2014 370,692 40,005 (In thousands) Cash and cash equivalents: Cash Money-market Treasury bills Total cash and cash equivalents Short-term investments: Treasury bills Total short-term investments $330,013 25,696 63,224 $418,933 410,697 $ 10,002 $ 10,002 $428,935 Total 410.697 Proceeds from the sale of available-for-sale securities were $10.0 million, S162.8 million and $15.5 million for Fiscal 2014, Fiscal 2013 Fiscal 2012, respectively. Purchases of available-for-sale securities for Fiscal 2013 and Fiscal 2012 were $52.1 million and $111.1 million, ectively. At January 31, 2015 and February 1, 2014, the fair value of all available for sale securities approximated par, with no gross alized holding gains or losses. Fair Value Measurements ASC 820, Fair Value Measurement Disclosures ("ASC 820"), defines fair value, establishes a framework for measuring fair value in ordance with GAAP, and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price ociated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. Financial Instruments Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of observable inputs. In addition, ASC 820 establishes this three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair ue. These tiers include: Level I Quoted prices in active markets for identical assets or liabilities. In accordance with ASC 820, the following tables represent the fair value hierarchy for the Company's financial assets (cash equivalents d investments) measured at fair value on a recurring basis as of January 31, 2015 and February 1, 2014 Fair Value Measurements Jury 2015 Quoted Market Prices in Active Markets for Identical Assets Significant Other Significant Unobservable Carrying Amount Observable Lapas le Inputs S $ (In thinamant) Cash and cash equivalents Cash Money-market Total cash and cash equivalents Total short-term investments Total $370,692 40,005 $410,697 370,692 40,005 410,697 S S $410,697 $ 410,697 yright 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education APPENDIX A American Eagle Outfitters, Inc, 2014 Annual Report A-13 AMERICAN EAGLE OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Fair Value Measurements struary 1, 2014 Quoted Market Prices in Active Significant U observable Markets for Identiel Assets Significant Other Carrying Observable led Inputs $ (in thousands) Cash and cash equivalents Cash Treasury bills Money-market Total cash and cash equivalents Short-term investments Treasury bills Total short-term investments Total 5330,013 63,224 25,696 S418,933 $ 330,013 63,224 25,696 $ 418,933 $ 10,002 $ 10,002 $428,935 s 10,002 $ 10,002 S428 935 s In the event the Company holds Level 3 investments, a discounted cash flow model is used to value those investments. There were no AMERICAN EAGLE OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued) 6. Accounts Receivable Accounts receivable are comprised of the following: February (In thousands) Franchise and license receivable Merchandise sell-offs and vendor receivables Credit card program receivable Marketing cost reimbursements Gift card receivable Landlord construction allowances Other Items Total January 31, 2015 $ 24,945 12,953 9,637 4,640 4,453 3,354 7.912 $ 67,894 2014 $ 22,94 16,10 15,00 6,06 986 11,620 1.158 $ 73,882 7. Property and Equipment Property and equipment consists of the following: (in thousands) Land Buildings Leasehold improvements Fixtures and equipment Construction in progress Property and equipment, at cost Less: Accumulated depreciation Property and equipment, net Depreciation expense is summarized as follows: January 31. 2015 17,495 201,024 571,312 852,408 42.470 $1,684,709 (989.853) $ 694,856 February I. 2014 S 17,986 140,600 600,572 732,228 102,974 $1,594,360 (961,374) S 632.986 For the Year Ended January 31, February 1. February 2 (in thousands) 2015 2014 2013 Depreciation expense S132,529 $116,761 S122,756 Additionally, during Fiscal 2014, Fiscal 2013 and Fiscal 2012, the Company recorded $6.4 million, $14.6 million and $3.7 million, respectively, related to asset write-offs within depreciation and amortization expense. 8. Intangible Assets Intangible assets include entstamine and enter the Water payu https//web.arts.co EDD https://scio.edd.ca.... Monterey One Wat... PG&E, Pacific G Trangture ASSES Intangible assets include costs to acquire and register the Company's trademark assets. The following table represents intangible assets as January 31, 2015 and February 1, 2014: January 31, February 1, (In the sands) Trademarks, at cost Less: Accumulated amortization Intangible assets, net 2015 $ 59,385 (12.179) $ 47,206 2014 $ 58,121 (8,850) $ 49,271 Amortization expense is summarized as follows: For the Years Faded February 1 February 2 (In thousands) Amortization expense January 31, 2015 $ 3,465 $ 2,714 2013 $ 1,952 pyright 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report A-15 AMERICAN EAGLE OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The table below summarizes the estimated future amortization expense for intangible assets existing as of January 31, 2015 for the next five Fiscal Years: in thousands) 2015 2016 2017 2018 2019 Amarta 3,404 3.473 3.472 3,452 3,433 9. Other Credit Arrangements In December 2014, the Company entered into a new Credit Agreement ("Credit Agreement") for five-year, syndicated, asset-based Buckle American Eagle Debt to Equity Ratio Accounts Payable Notes Payable Income Taxes Payable Bonds Payable Total Debt Common Stock, Par $20 Paid in Capital Retained Earning Total Equity Total Equity Debt to Equity Ratio Buckle American Eagle Return on Equity Net Income Average Equity Return on Equity Buckle American Eagle Investing Coverage Net Income Interest Expense Total Interest Expense Investing Coverage APPENDOXB The Buckle, Inc. 2014 Annual Report B-7 THE HUCKLE, INC. CONSOLIDATED BALANCE SHEETS munis in Thousands Esp Share and Share Ames) January 31, 2015 February 1. 2014 ASSETS CURRENT ASSETS 5 16 15.ASTRI Show A. Rece every Pepe(N) Tool current 13414 32613 342137 30656 PROPERTY AND EQUIPMENT IN depreciation 29 15 11 41 LONG-TERM INVESTMENTS IN A, C) OTHER ASSETS (NO) 46 2,191 LIABILITIES AND STOCKHOLDERS' EQUITY 3.10 1714 16.30 CURRENT LABELITIES Ace Arengenes Ghartim Ince payable 23131 TANT 12.17 19 DEFERID COMPENSATION) DEFERRED RENT LIABILITY OTHER LANTES Tools 10.617 187 TIS COMMITMENTS (N) STOCKHOLDERS TUTTY IN Cho 100.000 hrs of ary 31, 2015 and 1, 2014 App 34111 Tolony SAN See notes to consolidated facial w B-8 APPENDIX B The Buckle, Ine, 2014 Annual Report THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF INCOME (Amounis in Thousands Except Per Share Amounts) January 31, 2015 Fiscal Years Ended February 1, 2014 February 2, 2013 SALES, Net of retums and allowances of ST 10.793. STORST, and $106,612, respectively S 1.153.142 5 1.128.001 S 1.134.007 COST OF SALES (Including buying, distribution, and occupancy costs) 645.80 628.856 624 692 307,332 499,145 Gross profit 499315 OPERATING EXPENSES: Selling General and administrative 212,68 37,671 250, 159 206,893 35258 243.151 201.963 39.177 241.140 256,973 256.994 258,175 INCOME FROM OPERATIONS 3.462 OTHER INCOME, Net (Note A INCOME BEFORE INCOME TAXES PROVISION FOR INCOME TAXES (Note ) 2.59,096 260,456 261.699 97.132 97.872 97.94 162,3645 16234 S 164305 NET INCOME EARNINCS PER SHARE (Note KX Basic 3395 341 $ 3.10 314 Diluted 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. 2013 Fiscal Years Ended February 2014 February 2013 NET INCOME 564 162,50 5 TOS OTHER COMPREHENSIVE INCOMH, NUT OF TAX Change in unrelied out on investments, net ofte of 240. SS. and S(13), respectively Other prehensive income 215 035) COMPREHENSIVE INCOME 162.210 1626 164020 See notes to consolidated financial statements THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in Thousands Except Share and Per Share Amounts) Accumulated Other Comprehensive Los Number of Shares Additional Paldia Capital Commen Stock Retained Earnings Total 47,432,089 BALANCE, January 28, 2012 5 414 S 100,133 5 5 263.019 $ 363,147 164,305 (254,633) 164305 (254,633) 846 842 377,520 249,660 (3) Net income Dividends paid on common ock, (55.30 per share) Common stock issued on exercise of stock options Issuance of non-vested ack, net of forfeitures Amortization of non-vested stock grants, net of forfeitures Income tax benefit related to exercise of Mock options Change in unrealized loss on investments of 8.38 7,831 8,38 7,831 (235) (235) 48,059,269 5 $ BALANCE. February 2, 2013 117.391 172,711 $ (934) 5 289,649 162,584 (97.144) 162,584 (97,144 25.555 251.568 (2) Net income Dividends paid on common sock, (52.02 per share) Common stocked on Exercise of stock options Iance of non-vested stock, net of forfeitures Amortization of non-vestidock grants, net of forfeitures Income tax benefit related to exercise of stock options Change in realised loss on investments, net of tax JE LII-IIIIIIIIIIIII 5,066 1.679 5,066 1.679 96 $ 5 48.336392 124.134 5 238,151 $ S BALANCE, February 1, 2014 361,930 162.564 (176.604) (1766040 70 17,091 26,130 70 (0) Net income Dividends paid on common ock. (53.66 per share) Common stock des exercise of stock options Iwance of non-vested stock, net of forfeitures Amortization of non-vested a grants, net of forfeitures Income tax benefit related to exercise of stock options Change in realized loss on investments, set of III II 6,013 896 409 5 234,111 48.379,613 S 355.278 S BALANCE, January 31, 2015 See notes to consolidated financial statements. Monterey One Wat... E, pa water payment https://web.afts.co... EDD https://sdio.edd.ca... THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) January 31, 2015 Fiscal Year Ended February 1, 2014 February 2, 2013 $ 162.564 5 5 164305 31 679 6013 (1.675) 1.163 32,631 3.066 2086) 98 33.834 8.385 (1939) 1.528 596 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 openting 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) 65,780) 3.508 2.915) - 13) 1 851 (1970) 4.466 1991 (20,253) 0.255) 2.738 63.250) 0359 910 0.699) 356 (10.281) 6534 1671) (1.004) 1.935 14,897 2.463 195,76 114.036 220.941 Net cash flows from operating activities 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 105 11 112 (33314) 30,981 (30.297) 1,140 130 (29933) 37.294 38.131 Net cash flows from investing activities 50.5193 (30.021) Q1.566) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the exercise of stock options Excess tax benefit from stock option exercises Payment of dividends 70 225 (76.804) 399 (97.144) 8-16 5.609 (254,633) Net cash flows from financing activities (176.309) (9,745) (248,178) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 01.160) 47.260 (48.903) CASH AND CASH EQUIVALENTS. Beginning of year 164.868 117.18 166,511 CASH AND CASH EQUIVALENTS, End of your 133,703 5 16468 $ 117.608 See notes to consolidated financial statements. water payment D. PROPERTY AND EQUIPMENT January 31, 2015 February 1, 2014 Land Building and improvements Office equipment Transportation equipment Leasehold improvements Furniture and fixtures Shipping/receiving equipment Screenprinting equipment Construction-in-progress Total 2.165 28,033 10,080 20,790 154441 167,575 27.172 2,165 28,006 9,357 20,782 146,655 157,771 26,392 17.3.48 427915 2,417 393,656 5 E FINANCING ARRANGEMENTS The Company has available an unsecured line of credit of $25.000 with Wells Fargo Bank, NA for operating moods and letters of credit. The line of credit provides that outstanding letters of credit cannot exceed 520,000. Bonowings under the line of credit provide for interest to be paid at a rate based on LIBOR. The Company has, from time to time, bomowed against these lines during periods of peak inventory build-up. There were no bank borowings 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 53.226 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 letter of credit from $20.000 to $10.000 H. COMMITMENTS Leases. The Company conducts its operations in leased facilities under numerous son-cancelable operating lases espiring at various dutes 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 allowancest holidays, rent escalation clauses under contingentot provisions. For purposes of recognizing lease incentives and minimum rental expenses on a straight-time basis over the terms of the lease the Company was 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. For tenant improvement allowances and rent holidays, the Company reconds a deemed reliability on the consolidated balance sheets and amortires the defendent over the terms of the lenses as reductions to rent expense on the consolidated statements of income. For scheduled rent escalation classes 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 lases provide for contingentrents, which are determined as a percentage of grow sales in excess of specified levels. The Company records a contingent rent liability on the consolidated balance sheets and the coresponding rent expense when specified levels have been achieved or reasonably probable to be achieved. Operating lease bus rental expense for fiscal 2014, 2013, and 2012 was $65,712, 561.640, and $58,68), respectively. Most of the rol payments are based on a minimum annual rental plus a percentage of sales in crew of a specified amount. Powentagerents for fiscal 2014, 2015, und 2012 were 54434.55.080, und 55,163, respectively, Total future minimum rental commitments under these operating lases 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 mismental commen 66,147 61JS $6,020 48.542 41.355 92,540 366,292 Lingerie - From time to time, the Company is involved in litigations relating to come rising out of its operations in the normal counse of business. As of the date of these consolidated financial statements, the Company was die any legal proceedings that are expected individually or in the grat, 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 Fheal Years Ended February 1, 2014 Weighted Average Per Share Share Amount February 2, 2013 Weighted Average Shares Per Share Amount Per Share Amount Income Income Income $ 162,564 47,927 $ 139 $ 162,584 47,744 $ 3:41 $164,105 47,333 S 3.47 Basi EPS Effect of Dilutive Securities: Stock options and non- vested shares Diluted EPS 327 163 48,090 10.01) 3.38 232 47.976 5 (0.02) 3.30 (0.03) 3.44 $ 162,564 5 $ 162,584 3 164.305 47,7105 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 Denims Tops (including wweaters) Accessories Sportswear Fashions Footwear Outerwear Casual bottoms Other Total 43.7% 30.8 8.6 6.2 5.9 45.3% 30.2 8.5 6.0 5.8 46.4% 30.9 8.4 5.7 SJ 2.2 0.8 03 100.0% 0.9 1.2 13 100.0% 1.0 100.0% 4 APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED BALANCE SHEETS January 31, 2015 February 1, 2014 $ 410,697 278,972 67,894 73.848 59,102 890,513 694.856 47.206 13,096 14,035 37,202 $1,696,908 $ 418,933 10,002 291,541 73.882 88,155 45.478 927991 632,986 49,271 13,530 24.835 45.551 $1,694,164 (in thousands, except per share am) Assets Current assets: Cash and cash equivalents Short-term investments Merchandise inventory Accounts receivable Prepaid expenses and other Deferred income taxes Total current assets Property and equipment, at cost, net of accumulated depreciation Intangible assets, at cost, net of accumulated amortization Goodwill Non-current deferred income taxes Other assets Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued compensation and payroll taxes Accrued rent Accrued income and other taxes Unredeemed gift cards and gift certificates Current portion of deferred lease credits Other liabilities and accrued expenses Total current liabilities Non-current liabilities: Deferred lease credits Non-current accrued income taxes Other non-current liabilities Total non-current liabilities Commitments and contingencies Stockholders' equity: Preferred stock. $0.01 par value: 5,000 shares authorized: none issued and outstanding Common stock, S0.01 par value; 600,000 shares authorized; 249,566 shares issued: 194,516 and 193.149 shares outstanding, respectively Contributed capital Accumulated other comprehensive income Retained earnings Treasury stock, 55,050 and 56,417 shares, respectively, at cost Total stockholders' equity Total liabilities and stockholders' equity $191,146 44.884 78,567 33.110 47,888 12.969 50,529 459,093 $ 203,872 23.560 76397 5,778 47.194 13.293 45,384 415.478 54,516 10,456 33,097 98,069 59,510 16,543 36,455 112.508 2,496 569,675 1,543.085 1965.566 1.139.746 S1,696,908 2,496 573.003 12.157 1,569.851 1991,334) 1.166,178 $1,694,164 Refer to Notes to Consolidated Financial Statements APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report A-5 AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Faded February 1. 2014 $3,305.802 2,191 803 1,113,999 796,505 February 2, 2013 $3,475,802 2,085,480 1.390,322 834,601 January JI, 2015 $3,282,867 2.128,193 1,154,674 806,498 17,752 33,468 141,191 155.765 3.737 159,502 70.715 88,787 (8.465) $ 80.322 (I thousand, FPT share am) Total net revenue Cost of sales, including certain buying, occupancy and warehousing expenses Gross profit Selling, general and administrative expenses Restructuring charges Loss on impairment of assets Depreciation and amortization expense Operating income Other income, net Income before income taxes Provision for income taxes Income from continuing operations Loss from discontinued operations, net of tax Net income Basic income per common share: Income from continuing operations Loss from discontinued operations Basic net income per common share Diluted income per common share: Income from continuing operations Loss from discontinued operations Diluted net income per common share Weighted average common shares outstanding - basic Weighted average common shares outstanding-diluted 44,465 131,974 141,055 1,022 142,077 59,094 82,983 34,869 126,246 394,606 7,432 402,038 137.940 264,098 (31.990) $ 232,108 82,983 s 0.43 S 0.46 (0.04 S0.42 1.35 (0.16 1.19 0.43 S $ 0.43 s S 0.46 (0.04) 0.42 194,437 195,135 S s 0.43 192,802 194,475 1.32 (0.16) 1.16 196,211 200,665 A-6 APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME February 2, January 31, 2015 $ 80,322 For the Year Ended February 1, 2014 $ 82,983 2013 $232,108 (I thousands) Net income Other comprehensive (loss) income: Foreign currency translation (loss) gain Other comprehensive (loss) income Comprehensive income 22.100) (22.101) $ 58,221 (17.140) (17.140) $ 65,843 638 638 $232.746 APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report A-7 AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Shares Outstanding (0) 193,848 Accumulated Other Comprehensive Commen Contributed Retained Treasury Income Stockholders' Stock Capital Earning Stock(2) (Loss) $ 2,496 $552,797 $1,771,464 S1938,565) $ 28,659 $1,416,851 76,108 76,108 (8,407) (280) 7,443 (173,554) (4,125) 125,515 (11.054) (36,213) 232,108 (173,554) (4,125) 78,248 232,108 638 638 192,604 9,214 (414,301 $ 2,496 5627,065 $1,553,058 $1990.729) S 1,184 (405,087) 29,297 $1,221.187 1,184 (a thousand share Balance at January 28, 2012 Stock awards Repurchase of common stock as part of publicly announced programs Repurchase of common stock from employees Reissuance of treasury stock Net income Other comprehensive income Cash dividends and dividend equivalents ($2.05 per share) Balance at February 2, 2013 Stock awards Repurchase of common stock as part of publicly announced programs Repurchase of common stock from employees Reissuance of treasury stock Net income Other comprehensive income Cash dividends and dividend equivalents (50.375 per share) Balance at February 1, 2014 Stock awards Repurchase of common stock from employees Reissuance of treasury stock Net income Other comprehensive income Cash dividends and dividend equivalents (50.50 per share) Balance at January 31, 2015 (1.600) (1.059) 3,204 (33,051) (23,385) 55.831 (56,706) 6,090 82,983 (33,051) (23,385) 5,215 82,983 (17.140) (17.140) 1.465 (72.280) 193,149 S 2.496 5573,008 S1,569.851 S1991,334) 12,372 (517) (7.464) 1,884 (17,988) (7,503) 33,232 80,322 III III (70,815 12,157 S1,166,178 12,372 (7,464) 7,741 80,322 (22,101) (22,101) 2.283 (99,585) 194,516 S2,496 S569.675 S1,543.085 (965,566) S (97,302) (9.944) $1,139,746 (1) 600,000 authorized, 249,566 issued and 194,516 outstanding, 30.01 par value common stock at January 31, 2015: 600,000 authorized, 249.566 issued and 193,149 outstanding, 50.01 par value common stock at February 1, 2014; 600,000 authorized, 249,566 issued and 192,604 outstanding, $0.01 par value common stock at February 2, 2013. The Company has 5,000 authorized, with none issued or outstanding, 30.01 par value preferred stock at January 31, 2015 February 1, 2014 and February 2, 2013 (2) 55,050 shares, 56,417 shares, and 56,962 shares at January 31, 2015, February 1, 2014 and February 2, 2013, respectively. During Fiscal 2014, Fiscal 2013, and Fiscal 2012, 1,884 shares, 3,204 shares, and 7,443 shares, respectively, were reissued from treasury stock for the issuance of share-based payments. A-8 APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended February 1, February 2, January 31, 2015 2014 2013 s $ 22.01 $ 80 122 465 K 787 232.IOS 31,990 264,098 $ $ 82.983 $ 1422151 16.070 (2.2793 (495) 33,468 134.047 (6.541) 20,100 1.37% 44,465 128,397 66 1.49 (30.547 100 34.869 35,202 404 (165) (10,468 8.56 3,084 1422 5612 15.) 12 (4528 20,716 24.06 (9,012) 40,148 (29.500 (10,844) (36,089) 28.568 1.26 58) (42.465) 25.RO) 27.605 146,7 229,856 (11,073) 23.018 (7.405) 20,186 215 571 499,671 426 (93.939) In thousands) Operating activities: Net income Loss from discontinued operations, net of tax Income from continuing operations Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization Share-based compensation Deferred income taxes Foreign currency Transaction loss (in) Los on impairment of assets Changes in assets and liabilities Merchandise inventory Accounts receivable Prepaid expenses and other Others Accounts payable Unredeemed gift cards and in certificates Deferred lease credits Accrued compensation and payroll lines Accrued income and other taxes Accrued liabilities Total adjustments Netcash provided by operating this from coming operations Investing activities Capital expenditures for property and equipment Purchase or long-lived ants in a business combination Acquisition of Intangibles Purchase of available for sale securities Sale of available for sale securities Net cash (used for provided by investing activities from continuing operations Financing activities Payments on capital leases and other Repurchase of common of publicly and program Repurchase of common stock from employees Net proceeds from stock options eerd Excess tax benefit from share-based payments Cash wed to set it awards Cash dividends paid Nethed for financing activities from continuing operations Effect of exchange rates on cash Cash flow of discontinued operations Net cash provided by used for operating activities Net cash used for investing activities Net cash used for financing activities Effect of exchange rates on cash Net cash provided by used for discontinued operations Net decrease in cash and cash equivalents Cash and cash equivalents -- beginning of period Cash and chequivalents del period (245.002) (1.264) (278.499) (20,751) (6.835) (52,065) 162.85 (195.165 (1.125) (111,056) 15.500 (190.650) 10,002 (236.264) 0.143) (2.839) (33.051) (23,386) 6.197 (3.066) (173.550 (4,125) 76,401 17.464) 742 7103 (401.490 (494,455 (1784 (116.836 04 Co 25.1960 1.4) 413001 410 M SO9119 41 AMERICAN EAGLE OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JANUARY 31, 2015 1. Business Operations American Eagle Outfitters, Inc. (the "Company), a Delaware corporation, operates under the American Eagle Outfitters ("AEO") and aerie by American Eagle Outfitters ("aerie) brands. The Company operated 77kids by American Eagle Outfitters * (*77kids") until its exi in Fiscal 2012 Founded in 1977. American Eagle Outfitters is a leading apparel and accessories retailer that operates more than 1,000 retail stores in th U.S. and internationally, online at ae.com and aerie.com and international store locations managed by third-party operators. Through its brand the Company offers high quality, on-trend clothing, accessories and personal care products at affordable prices. The Company's online business, AEO Direct, ships to 81 countries worldwide. Merchandise Mix The following table sets forth the approximate consolidated percentage of total net revenue from continuing operations attributable to cach merchandise group for each of the periods indicated: January 31, Men's apparel and accessories Women's apparel and accessories (excluding aerie) aerie Total 39% 53% 896 100% For the Years Faded February 1, 2014 40% 52% 8% 100% February 2, 2013 39% 52% 9% 100% APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report AMERICAN EAGLE OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Cash and Cash Equivalents, Short-term Investments and Long-term Investments The following table summarizes the fair market value of our cash and marketable securities, which are recorded on the Consolidated ce Sheets: January 31, February 1, 2015 2014 370,692 40,005 (In thousands) Cash and cash equivalents: Cash Money-market Treasury bills Total cash and cash equivalents Short-term investments: Treasury bills Total short-term investments $330,013 25,696 63,224 $418,933 410,697 $ 10,002 $ 10,002 $428,935 Total 410.697 Proceeds from the sale of available-for-sale securities were $10.0 million, S162.8 million and $15.5 million for Fiscal 2014, Fiscal 2013 Fiscal 2012, respectively. Purchases of available-for-sale securities for Fiscal 2013 and Fiscal 2012 were $52.1 million and $111.1 million, ectively. At January 31, 2015 and February 1, 2014, the fair value of all available for sale securities approximated par, with no gross alized holding gains or losses. Fair Value Measurements ASC 820, Fair Value Measurement Disclosures ("ASC 820"), defines fair value, establishes a framework for measuring fair value in ordance with GAAP, and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price ociated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. Financial Instruments Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of observable inputs. In addition, ASC 820 establishes this three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair ue. These tiers include: Level I Quoted prices in active markets for identical assets or liabilities. In accordance with ASC 820, the following tables represent the fair value hierarchy for the Company's financial assets (cash equivalents d investments) measured at fair value on a recurring basis as of January 31, 2015 and February 1, 2014 Fair Value Measurements Jury 2015 Quoted Market Prices in Active Markets for Identical Assets Significant Other Significant Unobservable Carrying Amount Observable Lapas le Inputs S $ (In thinamant) Cash and cash equivalents Cash Money-market Total cash and cash equivalents Total short-term investments Total $370,692 40,005 $410,697 370,692 40,005 410,697 S S $410,697 $ 410,697 yright 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education APPENDIX A American Eagle Outfitters, Inc, 2014 Annual Report A-13 AMERICAN EAGLE OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Fair Value Measurements struary 1, 2014 Quoted Market Prices in Active Significant U observable Markets for Identiel Assets Significant Other Carrying Observable led Inputs $ (in thousands) Cash and cash equivalents Cash Treasury bills Money-market Total cash and cash equivalents Short-term investments Treasury bills Total short-term investments Total 5330,013 63,224 25,696 S418,933 $ 330,013 63,224 25,696 $ 418,933 $ 10,002 $ 10,002 $428,935 s 10,002 $ 10,002 S428 935 s In the event the Company holds Level 3 investments, a discounted cash flow model is used to value those investments. There were no AMERICAN EAGLE OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued) 6. Accounts Receivable Accounts receivable are comprised of the following: February (In thousands) Franchise and license receivable Merchandise sell-offs and vendor receivables Credit card program receivable Marketing cost reimbursements Gift card receivable Landlord construction allowances Other Items Total January 31, 2015 $ 24,945 12,953 9,637 4,640 4,453 3,354 7.912 $ 67,894 2014 $ 22,94 16,10 15,00 6,06 986 11,620 1.158 $ 73,882 7. Property and Equipment Property and equipment consists of the following: (in thousands) Land Buildings Leasehold improvements Fixtures and equipment Construction in progress Property and equipment, at cost Less: Accumulated depreciation Property and equipment, net Depreciation expense is summarized as follows: January 31. 2015 17,495 201,024 571,312 852,408 42.470 $1,684,709 (989.853) $ 694,856 February I. 2014 S 17,986 140,600 600,572 732,228 102,974 $1,594,360 (961,374) S 632.986 For the Year Ended January 31, February 1. February 2 (in thousands) 2015 2014 2013 Depreciation expense S132,529 $116,761 S122,756 Additionally, during Fiscal 2014, Fiscal 2013 and Fiscal 2012, the Company recorded $6.4 million, $14.6 million and $3.7 million, respectively, related to asset write-offs within depreciation and amortization expense. 8. Intangible Assets Intangible assets include entstamine and enter the Water payu https//web.arts.co EDD https://scio.edd.ca.... Monterey One Wat... PG&E, Pacific G Trangture ASSES Intangible assets include costs to acquire and register the Company's trademark assets. The following table represents intangible assets as January 31, 2015 and February 1, 2014: January 31, February 1, (In the sands) Trademarks, at cost Less: Accumulated amortization Intangible assets, net 2015 $ 59,385 (12.179) $ 47,206 2014 $ 58,121 (8,850) $ 49,271 Amortization expense is summarized as follows: For the Years Faded February 1 February 2 (In thousands) Amortization expense January 31, 2015 $ 3,465 $ 2,714 2013 $ 1,952 pyright 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education APPENDIX A American Eagle Outfitters, Inc., 2014 Annual Report A-15 AMERICAN EAGLE OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The table below summarizes the estimated future amortization expense for intangible assets existing as of January 31, 2015 for the next five Fiscal Years: in thousands) 2015 2016 2017 2018 2019 Amarta 3,404 3.473 3.472 3,452 3,433 9. Other Credit Arrangements In December 2014, the Company entered into a new Credit Agreement ("Credit Agreement") for five-year, syndicated, asset-based
