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OFFON

THE BUCKLE, INC.

(BKE)
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BUCKLE : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

04/01/2020 | 05:50pm EDT
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto of the Company included in this Form
10-K. The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial condition and
results of operations during the periods included in the accompanying
consolidated financial statements included in this Form 10-K.

EXECUTIVE OVERVIEW

Company management considers the following items to be key performance indicators in evaluating Company performance.


Comparable Store Sales - Stores are deemed to be comparable stores if they were
open in the prior year on the first day of the fiscal period being presented.
Stores which have been remodeled, expanded, and/or relocated, but would
otherwise be included as comparable stores, are not excluded from the comparable
store sales calculation. Online sales are included in comparable store sales.
Management considers comparable store sales to be an important indicator of
current Company performance, helping leverage certain fixed costs when results
are positive. Negative comparable store sales results could reduce net sales and
have a negative impact on operating leverage, thus reducing net earnings.

Net Merchandise Margins - Management evaluates the components of merchandise
margin including initial markup and the amount of markdowns during a period. Any
inability to obtain acceptable levels of initial markups or any significant
increase in the Company's use of markdowns could have an adverse effect on the
Company's gross margin and results of operations.

Operating Margin - Operating margin is a good indicator for management of the
Company's success. Operating margin can be positively or negatively affected by
comparable store sales, merchandise margins, occupancy costs, and the Company's
ability to control operating costs.

Cash Flow and Liquidity (working capital) - Management reviews current cash and
short-term investments along with cash flow from operating, investing, and
financing activities to determine the Company's short-term cash needs for
operations and expansion. The Company believes that existing cash, short-term
investments, and cash flow from operations will be sufficient to fund current
and long-term anticipated capital expenditures and working capital requirements
for the next several years.


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RESULTS OF OPERATIONS


The following table sets forth certain financial data expressed as a percentage
of net sales and the percentage change in the dollar amount of such items
compared to the prior period:

                                     Percentage of Net Sales                    Percentage Increase
                                      For Fiscal Years Ended                         (Decrease)
                            February 1,     February 2,    February 3,    Fiscal Year     Fiscal Year 2017
                               2020             2019           2018       2018 to 2019        to 2018

Net sales                       100.0 %          100.0 %        100.0 %         1.7  %         (3.1 )%
Cost of sales (including
buying, distribution, and
occupancy costs)                 58.1 %           58.7 %         58.4 %         0.6  %         (2.6 )%
Gross profit                     41.9 %           41.3 %         41.6 %         3.1  %         (3.7 )%
Selling expenses                 22.7 %           22.8 %         22.5 %         1.2  %         (2.0 )%
General and administrative
expenses                          4.6 %            4.9 %          4.4 %        (3.7 )%          8.1  %
Income from operations           14.6 %           13.6 %         14.7 %         8.7  %         (9.8 )%
Other income, net                 0.7 %            0.7 %          0.6 %         8.6  %          5.7  %
Income before income taxes       15.3 %           14.3 %         15.3 %         8.7  %         (9.2 )%
Provision for income taxes        3.7 %            3.5 %          5.5 %         7.2  %        (37.7 )%
Net income                       11.6 %           10.8 %          9.8 %         9.2  %          6.6  %


Fiscal 2019 Compared to Fiscal 2018


Net sales for the 52-week fiscal year ended February 1, 2020, increased 1.7% to
$900.3 million from net sales of $885.5 million for the 52-week fiscal year
ended February 2, 2019. Comparable store net sales for the 52-week fiscal year
increased 2.2% from comparable store net sales for the prior year 52-week period
ended February 2, 2019. The comparable store sales increase was primarily
attributable to a 2.7% increase in the number of transactions and a 2.1%
increase in the average number of units sold per transaction, partially offset
by a 2.4% reduction in the average retail price per piece of merchandise sold.
Total net sales for the year were also impacted by the closing of 7 stores
during fiscal 2018 and by the opening of 2 news stores and closure of 4 stores
during fiscal 2019. Online sales for the fiscal year increased 6.9% to $110.8
million for the 52-week fiscal year ended February 1, 2020 compared to $103.7
million for the 52-week fiscal year ended February 2, 2019. Average sales per
square foot for fiscal 2019 increased 2.0% from $334 to $341. Total square
footage as of February 1, 2020 was 2.320 million compared to 2.335 million as of
February 2, 2019.

The Company's average retail price per piece of merchandise sold decreased
$1.10, or 2.4%, during fiscal 2019 compared to fiscal 2018. This $1.10 decrease
was primarily attributable to the following changes (with their corresponding
effect on the overall average price per piece): a 1.9% reduction in average
denim price points (-$0.35), a 8.0% reduction in average accessories price
points (-$0.34), a 5.5% reduction in average footwear price points (-$0.20), and
a reduction in average price points for certain other merchandise categories
(-$0.21). These changes are primarily a reflection of merchandise shifts in
terms of brands and product styles, fabrics, details, and finishes.

Gross profit after buying, distribution, and occupancy costs increased from
$366.1 million in fiscal 2018 to $377.5 million in fiscal 2019. As a percentage
of net sales, gross profit was 41.9% in fiscal 2019 compared to 41.3% in fiscal
2018. The increase was attributable to an improvement in merchandise margins
(0.40%, as a percentage of net sales) and a reduction in occupancy, buying, and
distribution expenses (0.20%, as a percentage of net sales). Merchandise
shrinkage was 0.6% of net sales for fiscal 2019 compared to 0.5% of net sales
for fiscal 2018.

Selling expenses increased from $202.0 million in fiscal 2018 to $204.5 million
in fiscal 2019. As a percentage of net sales, selling expenses decreased from
22.8% in fiscal 2018 to 22.7% in fiscal 2019. The decrease was primarily
attributable to a reduction in store compensation expense (0.15%, as a
percentage of net sales), partially offset by increases in online fulfillment
and certain other selling expenses (0.05%, as a percentage of net sales).


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General and administrative expenses decreased from $43.1 million in fiscal 2018
to $41.5 million in fiscal 2019. As a percentage of net sales, general and
administrative expenses decreased from 4.9% in fiscal 2018 to 4.6% in fiscal
2019. The decrease was driven by reductions (as a percentage of net sales)
across several expense categories.

As a result of the above changes, the Company's income from operations increased
from $120.9 million for fiscal 2018 to $131.5 million for fiscal 2019. Income
from operations was 14.6% as a percentage of net sales in fiscal 2019 compared
to 13.6% as a percentage of net sales in fiscal 2018.

Other income was $6.2 million in fiscal 2019 compared to $5.7 million in fiscal
2018. The Company's other income is derived primarily from investment income
related to the Company's cash and investments.

Income tax expense as a percentage of pre-tax income was 24.2% in fiscal 2019
and 24.5% in fiscal 2018, bringing net income to $104.4 million in fiscal 2019
versus $95.6 million in fiscal 2018.

Fiscal 2018 Compared to Fiscal 2017


Net sales for the 52-week fiscal year ended February 2, 2019, decreased 3.1% to
$885.5 million from net sales of $913.4 million for the 53-week fiscal year
ended February 3, 2018. Comparable store net sales for the 52-week fiscal year
decreased 0.9% from comparable store net sales for the prior year 52-week period
ended February 3, 2018. The comparable store sales decline was primarily
attributable to a 0.4% reduction in the number of transactions at comparable
stores during the year and a 2.6% reduction in the average retail price per
piece of merchandise sold, which were partially offset by a 2.1% increase in the
average number of units sold per transaction. Total net sales for the year were
also impacted by the closing of 12 stores during fiscal 2017 and 7 stores during
fiscal 2018, partially offset by the inclusion of a full year of operating
results for the 2 new stores opened during fiscal 2017. Additionally, fiscal
2017 included an extra week of sales due to the fact that 2017 was a 53-week
fiscal year while 2018 was a 52-week fiscal year. Online sales for the fiscal
year increased 5.6% to $103.7 million for the 52-week fiscal year ended
February 2, 2019 compared to $98.2 million for the 53-week fiscal year ended
February 3, 2018. Compared to the 52-week period ended February 3, 2018,
however, online sales for the fiscal year were up 7.5%. Average sales per square
foot for fiscal 2018 decreased 2.8% from $344 to $334. Total square footage as
of February 2, 2019 was 2.335 million compared to 2.367 million as of
February 3, 2018.

The Company's average retail price per piece of merchandise sold decreased
$1.21, or 2.6%, during fiscal 2018 compared to fiscal 2017. This $1.21 decrease
was primarily attributable to the following changes (with their corresponding
effect on the overall average price per piece): a 4.2% reduction in average
denim price points (-$0.83), a 2.3% reduction in average knit shirt price points
(-$0.25), a 5.5% reduction in average woven shirt price points (-$0.19), and a
reduction in average price points for certain other merchandise categories
(-$0.19); which were partially offset by a shift in the merchandise mix ($0.25).
These changes are primarily a reflection of merchandise shifts in terms of
brands and product styles, fabrics, details, and finishes.

Gross profit after buying, distribution, and occupancy costs decreased from
$380.0 million in fiscal 2017 to $366.1 million in fiscal 2018. As a percentage
of net sales, gross profit was 41.3% in fiscal 2018 compared to 41.6% in fiscal
2017. The decrease was attributable to deleveraged occupancy, buying, and
distribution expenses (0.30%, as a percentage of net sales). Merchandise margins
for the year were flat and merchandise shrinkage was 0.5% of net sales for
fiscal 2018 compared to 0.6% of net sales for fiscal 2017.

Selling expenses decreased from $206.1 million in fiscal 2017 to $202.0 million
in fiscal 2018. Selling expenses as a percentage of net sales increased from
22.5% in fiscal 2017 to 22.8% in fiscal 2018. The increase was primarily
attributable to an increase in store compensation expense (0.60%, as a
percentage of net sales), partially offset by reductions across certain other
selling expenses (0.30%, as a percentage of net sales).

General and administrative expenses increased from $39.9 million in fiscal 2017
to $43.1 million in fiscal 2018. As a percentage of net sales, general and
administrative expenses increased from 4.4% in fiscal 2017 to 4.9% in fiscal
2018. The increase was primarily attributable to increased information
technology investments, both in terms of increased home office payroll as well
as spending for other strategic initiatives (0.65%, as a percentage of net
sales), partially offset by a reduction in professional and consulting fees
(0.15%, as a percentage of net sales).

As a result of the above changes, the Company's income from operations decreased
from $134.1 million for fiscal 2017 to $120.9 million for fiscal 2018. Income
from operations was 13.6% as a percentage of net sales in fiscal 2018 compared
to 14.7% as a percentage of net sales in fiscal 2017.


                                       23
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Other income was $5.7 million in fiscal 2018 compared to $5.4 million in fiscal
2017. The Company's other income is derived primarily from investment income
related to the Company's cash and investments.

Income tax expense as a percentage of pre-tax income was 24.5% in fiscal 2018
and 35.7% in fiscal 2017, bringing net income to $95.6 million in fiscal 2018
versus $89.7 million in fiscal 2017.

LIQUIDITY AND CAPITAL RESOURCES


As of February 1, 2020, the Company had working capital of $206.2 million,
including $221.0 million of cash and cash equivalents and $12.5 million of
short-term investments. The Company's cash receipts are generated from retail
sales and from investment income, and the Company's primary ongoing cash
requirements are for inventory, payroll, occupancy costs, dividend payments, new
store expansion, remodeling, and other capital expenditures. Historically, the
Company's primary source of working capital has been cash flow from operations.
During fiscal 2019, 2018, and 2017 the Company's cash flow from operations was
$130.7 million, $108.7 million, and $119.7 million, respectively. Changes in
operating cash flow between each of the three years is primarily a function of
changes in net income, along with changes in inventory and accounts payable
based on the timing and amount of merchandise purchased in each respective
period. Operating cash flow was also impacted by the timing of certain other
payments, including rent and income taxes.

During fiscal 2019, 2018, and 2017, the Company invested $6.4 million, $8.3 million, and $12.5 million, respectively, in new store construction, store renovation, and store technology upgrades. The Company spent $0.9 million, $1.7 million, and $1.0 million in fiscal 2019, 2018, and 2017, respectively, in capital expenditures for the corporate headquarters and distribution facility.


During fiscal 2020, the Company anticipates opening 3 new stores and completing
approximately 4 store remodels and/or relocations. Management estimates that
total capital expenditures during fiscal 2020 will be approximately $7.0 to
$10.0 million, which includes primarily planned store projects and technology
investments. The Company believes that existing cash and cash equivalents,
investments, and cash flow from operations will be sufficient to fund current
and long-term anticipated capital expenditures and working capital requirements
for the next several years. The Company has had a consistent record of
generating positive cash flow each year and, as of February 1, 2020, had total
cash and investments of $249.4 million, including $15.9 million of long-term
investments. The Company does not currently have plans for any merger or
acquisition, and has fairly consistent plans for store projects. Based upon past
results and current plans, management does not anticipate any large swings in
the Company's need for cash in the upcoming years.

Future conditions, however, may reduce the availability of funds based upon factors such as a decrease in demand for the Company's product, change in product mix, competitive factors, and general economic conditions as well as other risks and uncertainties which would reduce the Company's sales, net profitability, and cash flows. Also, the Company's acceleration in store openings and/or remodels, or entering into a merger, acquisition, or other financial related transaction could reduce the amount of cash available for further capital expenditures and working capital requirements.


As further disclosed in Footnote O of the Consolidated Financial Statements,
subsequent to the end of the fiscal year the Company announced that it was
indefinitely closing all of its brick and mortar stores effective March 18, 2020
in response to the global COVID-19 pandemic. The Company also announced that it
was furloughing the majority of its store and corporate office teammates
effective April 5, 2020. The Company cannot reasonably estimate the length or
severity of this pandemic, but expects that it will have a material adverse
impact on the Company's consolidated financial position, consolidated results of
operations, and consolidated cash flows in fiscal 2020.

The Company has available an unsecured line of credit of $25.0 million 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, 2021 and provides that $10.0
million of the $25.0 million line is available for letters of credit. Borrowings
under the line of credit provide for interest to be paid at a rate based on
LIBOR. The Company has, from time to time, borrowed against these lines of
credit. There were no borrowings during fiscal 2019, 2018, and 2017. The Company
had no bank borrowings as of February 1, 2020 and was in compliance with the
terms and conditions of the line of credit agreement.


                                       24
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Dividend payments - During fiscal 2019, the Company paid total cash dividends of
$112.9 million as follows: $0.25 per share in each of the first three quarters,
$0.30 per share in the fourth quarter, and a special cash dividend of $1.25 per
share in the fourth quarter. During fiscal 2018, the Company paid total cash
dividends of $97.7 million as follows: $0.25 per share in each of the four
quarters and a special cash dividend of $1.00 per share in the fourth quarter.
During fiscal 2017, the Company paid total cash dividends of $133.9 million as
follows: $0.25 per share in each of the four quarters and a special cash
dividend of $1.75 per share in the fourth quarter. As announced on March 24,
2020, at its quarterly meeting on March 23, 2020, the Company's Board of
Director's suspended the Company's quarterly cash dividend in order to maintain
the Company's cash position and give it financial flexibility given the
uncertainty regarding the potential length and severity of the global COVID-19
pandemic as well as the potential impact to the Company.

Stock repurchase plan - During fiscal 2019, the Company repurchased 4,552 shares
of its common stock at an average price of $14.92 per share. The Company did not
repurchase any of shares of its common stock during fiscal 2018 or fiscal 2017.
As of February 1, 2020, 435,655 shares remained available under the Company's
current 1,000,000 share repurchase plan that was approved by the Board of
Directors on November 20, 2008.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES


Management's Discussion and Analysis of Financial Condition and Results of
Operations are based upon The Buckle, Inc.'s consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these consolidated
financial statements requires that management make estimates and judgments that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the financial statement date, and the
reported amounts of sales and expenses during the reporting period. The Company
regularly evaluates its estimates, including those related to inventory,
investments, incentive bonuses, and income taxes. Management bases its estimates
on past experience and on various other factors that are thought to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. Management believes that
the estimates and judgments used in preparing these consolidated financial
statements were the most appropriate at that time. Presented below are those
critical accounting policies that management believes require subjective and/or
complex judgments that could potentially affect reported results of operations.

1. 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 $15.3 million and $16.6 million as of February 1,

2020 and February 2, 2019, 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. Customer returns could potentially exceed the
historical average, thus reducing future net sales results and potentially
reducing future net earnings. The accrued liability for reserve for sales
returns was $2.3 million as of February 1, 2020 and $2.2 million as of
February 2, 2019.

The Company's Guest Loyalty 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. Reported revenue
is net of both current period reward redemptions and accruals for estimated
future rewards earned under the Guest Loyalty 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, 2020 and February 2, 2019, $9.6 million and $10.9 million was
included in "accrued store operating expenses" as a liability for estimated
future rewards.


                                       25
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Through partnership with Comenity Bank, the Company offers a private label
credit card ("PLCC"). Customers with a PLCC are enrolled in our B-Rewards
incentive program and earn points for every qualifying purchase on their card.
At the end of each rewards period, customers who have exceeded a minimum point
threshold receive a reward to be redeemed on a future purchase. The B-Rewards
program also provides other discount and promotional opportunities to
cardholders on a routine basis. Reported revenue is net of both current period
reward redemptions, current period discounts and promotions, and accruals for
estimated future rewards earned under the B-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, which is included in "gift certificates redeemable" on the Company's
consolidated balance sheets.

2. 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. Such judgments could vary significantly from actual results,

either favorably or unfavorably, due to fluctuations in future economic

conditions, industry trends, consumer demand, and the competitive retail

environment. Such changes in market conditions could negatively impact the

sale of markdown inventory, causing further markdowns or inventory

obsolescence, resulting in increased cost of goods sold from write-offs and

reducing the Company's net earnings. The adjustment to inventory for

markdowns and/or obsolescence was $12.2 million as of February 1, 2020 and

$10.6 million as of February 2, 2019. The Company is not aware of any events,

    conditions, or changes in demand or price that would indicate that its
    inventory valuation may not be materially accurate at this time.


3. Income Taxes. The Company records a deferred tax asset and liability for

expected future tax consequences resulting from temporary differences between

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. Estimating the value of these assets is based upon the

Company's judgment. 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. Adjustment would be made to increase net
    income in the period such determination was made.


4. Leases. Effective February 3, 2019, the Company adopted Financial Accounting

Standards Board ("FASB") Accounting Standards Update ("ASU") 2016-02, Leases

(Topic 842). As a result of the adoption of the standard, the Company

recognized net right-of-use ("ROU") assets and lease liabilities of

approximately $362.6 million and $389.8 million, respectively, as of February

3, 2019 based on the present value of the total fixed payments for retail

store and corporate office operating leases. Refer to Footnote A, Summary of

Significant Accounting Policies, and Footnote D, Leases, for further details.

5. 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 reported at amortized cost. Trading securities are reported at

fair value, with unrealized gains and losses included in earnings, using the

specific identification method.

OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS, AND COMMERCIAL COMMITMENTS


As referenced in the table below, the Company has contractual obligations and
commercial commitments that may affect the financial condition of the Company.
Based on management's review of the terms and conditions of its contractual
obligations and commercial commitments, there is no known trend, demand,
commitment, event, or uncertainty that is reasonably likely to occur which would
have a material effect on the Company's financial condition, results of
operations, or cash flows.

In addition, the commercial obligations and commitments made by the Company are
customary transactions which are similar to those of other comparable retail
companies.


                                       26
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The following table identifies the material obligations and commitments as of
February 1, 2020:

                                                       Payments Due by Period
Contractual obligations
(dollar amounts in                           Less than 1                                       After 5
thousands):                    Total            year           1-3 years    

4-5 years years

Purchase obligations $ 13,497$ 5,035$ 6,483

  $     1,642$      337
Deferred compensation           15,863                 -               -               -         15,863
Operating lease payments
(a)                            417,459           100,016         157,939         104,113         55,391
Total contractual
obligations                 $  446,819$     105,051$   164,422$   105,755$   71,591

(a) See Footnote D of the Consolidated Financial Statements.


The Company has available an unsecured line of credit of $25.0 million, which is
excluded from the preceding table. The line of credit agreement has an
expiration date of July 31, 2021 and provides that $10.0 million of the $25.0
million line of credit is available for letters of credit. Certain merchandise
purchase orders require that the Company open letters of credit. When the
Company takes possession of the merchandise, it releases payment on the letters
of credit. The amounts of outstanding letters of credit reported reflect the
open letters of credit on merchandise ordered, but not yet received or funded.
The Company believes it has sufficient credit available to open letters of
credit for merchandise purchases. There were no bank borrowings during fiscal
2019, 2018, and 2017. The Company had outstanding letters of credit totaling
$1.5 million and $2.0 million as of February 1, 2020 and February 2, 2019,
respectively. The Company has no other off-balance sheet arrangements.

RELATED PARTY TRANSACTIONS


Included in other assets is a note receivable of $1.3 million as of both
February 1, 2020 and February 2, 2019, 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 $0.2
million 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.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Recently issued accounting pronouncements are disclosed in Footnote A of the Consolidated Financial Statements.

FORWARD LOOKING STATEMENTS


Information in this report, other than historical information, may be considered
to be forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "1995 Act"). Such statements are made in good
faith by the Company pursuant to the safe-harbor provisions of the 1995 Act. In
connection with these safe-harbor provisions, this management's discussion and
analysis contains certain forward-looking statements, which reflect management's
current views and estimates of future economic conditions, Company performance,
and financial results. The statements are based on many assumptions and factors
that could cause future results to differ materially. Such factors include, but
are not limited to, changes in product mix, changes in fashion trends,
competitive factors, and general economic conditions, economic conditions in the
retail apparel industry, as well as other risks and uncertainties inherent in
the Company's business and the retail industry in general. Any changes in these
factors could result in significantly different results for the Company. The
Company further cautions that the forward-looking information contained herein
is not exhaustive or exclusive. The Company does not undertake to update any
forward-looking statements, which may be made from time to time by or on behalf
of the Company.

© Edgar Online, source Glimpses

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