Edgar Filing: BUCKLE INC

a6849025.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended July 30, 2011

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ____________ to ____________

Commission File Number: 001-12951

THE BUCKLE, INC.

(Exact name of Registrant as specified in its charter)

Nebraska	47-0366193
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

2407 West 24th Street, Kearney, Nebraska 68845-4915

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (308) 236-8491

Securities registered pursuant to Section 12(b) of the Act:

Title of class	Name of Each Exchange on Which Registered
Common Stock, $.01 par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

___________________________________________________________

(Former name, former address, and former fiscal year if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for a shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act).

þ Large accelerated filer; o Accelerated filer; o Non-accelerated filer; o Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

The number of shares outstanding of the Registrant's Common Stock, as of September 2, 2011, was 47,353,305.

THE BUCKLE, INC.

FORM 10-Q

INDEX

		Pages
Part I. Financial Information (unaudited)

Item 1.	Financial Statements	3

Item 2.	Management's Discussion and Analysis of Financial
	Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26


Part II. Other Information

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Reserved	27

Item 5.	Other Information	27

Item 6.	Exhibits	27

Signatures		28

THE BUCKLE, INC.

BALANCE SHEETS
(Dollar Amounts in Thousands Except Share and Per Share Amounts)
(Unaudited)

	July 30,			January 29,
ASSETS	2011			2011

CURRENT ASSETS:
Cash and cash equivalents	$	114,903		$	116,470
Short-term investments		24,628			22,892
Receivables		9,388			14,363
Inventory		126,842			88,593
Prepaid expenses and other assets		15,074			14,718
Total current assets		290,835			257,036

PROPERTY AND EQUIPMENT		355,525			342,413
Less accumulated depreciation and amortization		(180,361	)		(173,179	)
		175,164			169,234

LONG-TERM INVESTMENTS		58,563			66,162
OTHER ASSETS		2,416			2,412

	$	526,978		$	494,844

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	46,469		$	33,489
Accrued employee compensation		17,225			36,018
Accrued store operating expenses		9,346			9,653
Gift certificates redeemable		11,514			17,213
Total current liabilities		84,554			96,373

DEFERRED COMPENSATION		8,547			7,727
DEFERRED RENT LIABILITY		37,736			37,430
OTHER LIABILITIES		7,187			7,649
Total liabilities		138,024			149,179

COMMITMENTS

STOCKHOLDERS’ EQUITY:
Common stock, authorized 100,000,000 shares of $.01 par value; 47,361,905 and 47,127,926
shares issued and outstanding at July 30, 2011 and January 29, 2011, respectively		474			471
Additional paid-in capital		94,804			89,719
Retained earnings		294,235			256,146
Accumulated other comprehensive loss		(559	)		(671	)
Total stockholders’ equity		388,954			345,665

	$	526,978		$	494,844

See notes to unaudited condensed financial statements.

THE BUCKLE, INC.

STATEMENTS OF INCOME
(Amounts in Thousands Except Per Share Amounts)
(Unaudited)

	Thirteen Weeks Ended				Twenty-six Weeks Ended
	July 30,		July 31,		July 30,		July 31,
	2011		2010		2011		2010

SALES, Net of returns and allowances	$	212,378	$	188,639	$	452,470	$	403,436

COST OF SALES (Including buying,
distribution, and occupancy costs)		125,233		113,251		262,381		234,597

Gross profit		87,145		75,388		190,089		168,839

OPERATING EXPENSES:
Selling		42,428		36,644		85,159		76,487
General and administrative		7,942		6,218		16,801		13,639
		50,370		42,862		101,960		90,126

INCOME FROM OPERATIONS		36,775		32,526		88,129		78,713

OTHER INCOME, Net		506		566		2,118		2,399

INCOME BEFORE INCOME TAXES		37,281		33,092		90,247		81,112

PROVISION FOR INCOME TAXES		13,723		12,345		33,220		30,255

NET INCOME	$	23,558	$	20,747	$	57,027	$	50,857


EARNINGS PER SHARE:
Basic	$	0.50	$	0.45	$	1.22	$	1.10

Diluted	$	0.50	$	0.44	$	1.21	$	1.08

Basic weighted average shares		46,824		46,165		46,786		46,109
Diluted weighted average shares		47,314		47,059		47,289		47,026

See notes to unaudited condensed financial statements.

THE BUCKLE, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollar Amounts in Thousands Except Share and Per Share Amounts)
(Unaudited)

											Accumulated
					Additional						Other
	Number		Common		Paid-in			Retained			Comprehensive
	of Shares		Stock		Capital			Earnings			Loss			Total

FISCAL 2011
BALANCE, January 30, 2011		47,127,926	$	471	$	89,719		$	256,146		$	(671	)	$	345,665

Net income		-		-		-			57,027			-			57,027
Dividends paid on common stock,
($0.40 per share)		-		-		-			(18,938	)		-			(18,938	)
Common stock issued on exercise
of stock options		105,244		1		570			-			-			571
Issuance of non-vested stock, net of forfeitures		128,735		2		(2	)		-			-			-
Amortization of non-vested stock grants,
net of forfeitures		-		-		3,128			-			-			3,128
Income tax benefit related to exercise of
stock options		-		-		1,389			-			-			1,389
Unrealized loss on investments, net of tax		-		-		-			-			112			112

BALANCE, July 30, 2011		47,361,905	$	474	$	94,804		$	294,235		$	(559	)	$	388,954


FISCAL 2010
BALANCE, January 31, 2010		46,381,263	$	464	$	78,837		$	275,751		$	(793	)	$	354,259

Net income		-		-		-			50,857			-			50,857
Dividends paid on common stock,
($0.40 per share)		-		-		-			(18,694	)		-			(18,694	)
Common stock issued on exercise
of stock options		166,323		2		839			-			-			841
Issuance of non-vested stock, net of forfeitures		243,235		2		(2	)		-			-			-
Amortization of non-vested stock grants,
net of forfeitures		-		-		2,168			-			-			2,168
Stock option compensation expense		-		-		32			-			-			32
Income tax benefit related to exercise of
stock options		-		-		1,842			-			-			1,842
Unrealized loss on investments, net of tax		-		-		-			-			126			126

BALANCE, July 31, 2010		46,790,821	$	468	$	83,716		$	307,914		$	(667	)	$	391,431

See notes to unaudited condensed financial statements.

THE BUCKLE, INC.

STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
(Unaudited)

	Twenty-six Weeks Ended
	July 30,			July 31,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	57,027		$	50,857
Adjustments to reconcile net income to net cash flows
from operating activities:
Depreciation and amortization		15,308			13,362
Amortization of non-vested stock grants, net of forfeitures		3,128			2,168
Stock option compensation expense		-			32
Deferred income taxes		(1,157	)		(815	)
Other		428			272
Changes in operating assets and liabilities:
Receivables		(348	)		1,401
Inventory		(38,249	)		(20,493	)
Prepaid expenses and other assets		203			(8,203	)
Accounts payable		14,482			16,628
Accrued employee compensation		(18,793	)		(25,187	)
Accrued store operating expenses		(307	)		(528	)
Gift certificates redeemable		(5,699	)		(4,197	)
Income taxes payable		5,436			(6,809	)
Deferred rent liabilities and deferred compensation		1,126			2,101

Net cash flows from operating activities		32,585			20,589

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(23,170	)		(37,492	)
Proceeds from sale of property and equipment		2			14
Change in other assets		(4	)		(794	)
Purchases of investments		(7,973	)		(32,281	)
Proceeds from sales/maturities of investments		14,014			23,760

Net cash flows from investing activities		(17,131	)		(46,793	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercise of stock options		571			841
Excess tax benefit from stock option exercises		1,346			1,799
Payment of dividends		(18,938	)		(18,694	)

Net cash flows from financing activities		(17,021	)		(16,054	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(1,567	)		(42,258	)

CASH AND CASH EQUIVALENTS, Beginning of period		116,470			135,340

CASH AND CASH EQUIVALENTS, End of period	$	114,903		$	93,082

See notes to unaudited condensed financial statements.

THE BUCKLE, INC.

NOTES TO FINANCIAL STATEMENTS

THIRTEEN AND TWENTY-SIX WEEKS ENDED JULY 30, 2011 AND JULY 31, 2010

(Dollar Amounts in Thousands Except Share and Per Share Amounts)

(Unaudited)

1.	Management Representation

	The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the results of operations for the interim periods have been included. All such adjustments are of a normal recurring nature. Because of the seasonal nature of the business, results for interim periods are not necessarily indicative of a full year's operations. The accounting policies followed by the Company and additional footnotes are reflected in the financial statements for the fiscal year ended January 29, 2011, included in The Buckle, Inc.'s 2010 Form 10-K.

	The Company follows generally accepted accounting principles (“GAAP”) established by the Financial Accounting Standards Board (“FASB”). References to GAAP in these notes are to the FASB Accounting Standards Codification (“ASC”).

2.	Description of the Business

	The Company is a retailer of medium to better priced casual apparel, footwear, and accessories for fashion conscious young men and women. The Company operates its business as one reportable industry segment. The Company had 427 stores located in 41 states throughout the continental United States as of July 30, 2011 and 419 stores in 41 states as of July 31, 2010. During the twenty-six week period ended July 30, 2011, the Company opened nine new stores, substantially remodeled sixteen stores, and closed two stores; which includes seven new stores, ten substantial remodels, and two closed stores during the second quarter. During the twenty-six week period ended July 31, 2010, the Company opened eighteen new stores and substantially remodeled fifteen stores; which includes seven new stores and twelve substantial remodels during the second quarter.

The following is information regarding the Company’s major product lines, stated as a percentage of the Company’s net sales:

	Percentage of Net Sales						Percentage of Net Sales
	Thirteen Weeks Ended						Twenty-six Weeks Ended
Merchandise Group	July 30, 2011			July 31, 2010			July 30, 2011			July 31, 2010

Denims		38.5	%		37.8	%		41.7	%		41.9	%
Tops (including sweaters)		34.5			36.3			32.8			34.5
Sportswear/Fashions		11.1			10.9			10.2			9.6
Accessories		8.9			8.9			8.3			7.6
Footwear		5.6			4.9			5.5			5.1
Outerwear		0.5			0.5			0.6			0.7
Casual bottoms		0.6			0.5			0.6			0.5
Other		0.3			0.2			0.3			0.1
		100.0	%		100.0	%		100.0	%		100.0	%

3.	Net Earnings Per Share

Basic earnings per share data are based on the weighted average outstanding common shares during the period. Diluted earnings per share data are based on the weighted average outstanding common shares and the effect of all dilutive potential common shares, including stock options.

	Thirteen Weeks Ended						Thirteen Weeks Ended
	July 30, 2011						July 31, 2010
			Weighted						Weighted
			Average		Per Share				Average		Per Share
	Income		Shares		Amount		Income		Shares		Amount

Basic EPS	$	23,558		46,824	$	0.50	$	20,747		46,165	$	0.45
Effect of Dilutive Securities:
Stock options and
non-vested shares		-		490		-		-		894		(0.01	)
Diluted EPS	$	23,558		47,314	$	0.50	$	20,747		47,059	$	0.44

	Twenty-six Weeks Ended							Twenty-six Weeks Ended
	July 30, 2011							July 31, 2010
			Weighted							Weighted
			Average		Per Share					Average		Per Share
	Income		Shares		Amount			Income		Shares		Amount

Basic EPS	$	57,027		46,786	$	1.22		$	50,857		46,109	$	1.10
Effect of Dilutive Securities:
Stock options and
non-vested shares		-		503		(0.01	)		-		917		(0.02	)
Diluted EPS	$	57,027		47,289	$	1.21		$	50,857		47,026	$	1.08

4.	Investments

The following is a summary of investments as of July 30, 2011:


	Amortized		Gross		Gross			Other-than-			Estimated
	Cost or		Unrealized		Unrealized			Temporary			Fair
	Par Value		Gains		Losses			Impairment			Value
Available-for-sale securities:
Auction-rate securities	$	19,025	$	-	$	(887	)	$	(725	)	$	17,413
Preferred stock		2,000		-		-			(1,974	)		26
	$	21,025	$	-	$	(887	)	$	(2,699	)	$	17,439

Held-to-maturity securities:
State and municipal bonds	$	51,569	$	537	$	(30	)	$	-		$	52,076
Fixed maturities		5,036		50		-			-			5,086
Certificates of deposit		600		20		-			-			620
	$	57,205	$	607	$	(30	)	$	-		$	57,782

Trading securities:
Mutual funds	$	8,787	$	-	$	(240	)	$	-		$	8,547

The following is a summary of investments as of January 29, 2011:


	Amortized		Gross		Gross			Other-than-			Estimated
	Cost or		Unrealized		Unrealized			Temporary			Fair
	Par Value		Gains		Losses			Impairment			Value
Available-for-sale securities:
Auction-rate securities	$	21,725	$	-	$	(1,065	)	$	(725	)	$	19,935
Preferred stock		2,000		-		-			(1,974	)		26
	$	23,725	$	-	$	(1,065	)	$	(2,699	)	$	19,961

Held-to-maturity securities:
State and municipal bonds	$	52,352	$	428	$	(39	)	$	-		$	52,741
Fixed maturities		6,314		80		-			-			6,394
Certificates of deposit		700		22		-			-			722
U.S. treasuries		2,000		-		-			-			2,000
	$	61,366	$	530	$	(39	)	$	-		$	61,857

Trading securities:
Mutual funds	$	7,453	$	274	$	-		$	-		$	7,727

The auction-rate securities and preferred stock were invested as follows as of July 30, 2011:


Nature	Underlying Collateral	Par Value

Municipal revenue bonds	98% insured by AAA/AA/A-rated bond insurers at July 30, 2011	$	10,375
Municipal bond funds	Fixed income instruments within issuers' money market funds		5,700
Student loan bonds	Student loans guaranteed by state entities		2,950
Preferred stock	Underlying investments of closed-end funds		2,000
Total par value		$	21,025

As of July 30, 2011, the Company’s auction-rate securities portfolio was 27% AAA/Aaa-rated, 50% AA/Aa-rated, 14% A-rated, and 9% below A-rated.

The amortized cost and fair value of debt securities by contractual maturity as of July 30, 2011 is as follows:


	Amortized		Fair
	Cost		Value
Held-to-maturity securities
Less than 1 year	$	24,628	$	24,760
1 - 5 years		31,837		32,197
5 - 10 years		496		566
Greater than 10 years		244		259
	$	57,205	$	57,782

At July 30, 2011 and January 29, 2011, $17,439 and $19,961 of available-for-sale securities and $32,577 and $38,474 of held-to-maturity securities are classified in long-term investments. Trading securities are held in a Rabbi Trust, intended to fund the Company’s deferred compensation plan, and are classified in long-term investments.

	The Company’s investments in auction-rate securities (“ARS”) and preferred securities are classified as available-for-sale and reported at fair market value. As of July 30, 2011, the reported investment amount is net of $887 of temporary impairment and $2,699 of other-than-temporary impairment (“OTTI”) to account for the impairment of certain securities from their stated par value. The $887 temporary impairment is reported, net of tax, as an “accumulated other comprehensive loss” of $559 in stockholders’ equity as of July 30, 2011. For the investments considered temporarily impaired, the Company believes that these ARS can be successfully redeemed or liquidated through future auctions at par value plus accrued interest. The Company believes it has the ability and maintains its intent to hold these investments until such recovery of market value occurs; therefore, the Company believes the current lack of liquidity has created the temporary impairment in valuation.

	As of July 30, 2011, the Company had $19,025 invested in ARS and $2,000 invested in preferred securities, at par value, which are reported at their estimated fair value of $17,413 and $26, respectively. As of January 29, 2011, the Company had $21,725 invested in ARS and $2,000 invested in preferred securities, which were reported at their estimated fair value of $19,935 and $26, respectively. ARS have a long-term stated maturity, but are reset through a “dutch auction” process that occurs every 7 to 49 days, depending on the terms of the individual security. Until February 2008, the ARS market was highly liquid. During February 2008, however, a significant number of auctions related to these securities failed, meaning that there was not enough demand to sell the entire issue at auction. The failed auctions have limited the current liquidity of certain of the Company’s investments in ARS and the Company has reason to believe that certain of the underlying issuers of its ARS are currently at risk. The Company does not, however, anticipate that further auction failures will have a material impact on the Company’s ability to fund its business. During the second quarter of fiscal 2011, the Company was able to successfully liquidate $2,250 of its investments in ARS at par value. The Company reviews all investments for OTTI at least quarterly or as indicators of impairment exist. Indicators of impairment include the duration and severity of decline in market value. In addition, the Company considers qualitative factors including, but not limited to, the financial condition of the investee, the credit rating of the investee, and the current and expected market and industry conditions in which the investee operates.

	As of July 30, 2011 and January 29, 2011, all of the Company’s investments in ARS and preferred securities were classified in long-term investments.

5.	Fair Value Measurements

	Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories:

	●	Level 1 – Quoted market prices in active markets for identical assets or liabilities. Short-term and long-term investments with active markets or known redemption values are reported at fair value utilizing Level 1 inputs.
	●	Level 2 – Observable market-based inputs (either directly or indirectly) such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or inputs that are corroborated by market data.
	●	Level 3 – Unobservable inputs that are not corroborated by market data and are projections, estimates, or interpretations that are supported by little or no market activity and are significant to the fair value of the assets. The Company has concluded that certain of its ARS represent Level 3 valuation and should be valued using a discounted cash flow analysis. The assumptions used in preparing the discounted cash flow model include estimates for interest rates, timing and amount of cash flows, and expected holding periods of the ARS.

As of July 30, 2011 and January 29, 2011, the Company held certain assets that are required to be measured at fair value on a recurring basis including available-for-sale and trading securities. The Company’s available-for-sale securities include its investments in ARS, as further described in Note 4. The failed auctions, beginning in February 2008, related to certain of the Company’s investments in ARS have limited the availability of quoted market prices. The Company has determined the fair value of its ARS using Level 1 inputs for known or anticipated subsequent redemptions at par value, Level 2 inputs using observable inputs, and Level 3 using unobservable inputs where the following criteria were considered in estimating fair value:

	●	Pricing was provided by the custodian of ARS;
	●	Pricing was provided by a third-party broker for ARS;
	●	Sales of similar securities;
	●	Quoted prices for similar securities in active markets;
	●	Quoted prices for publicly traded preferred securities;
	●	Quoted prices for similar assets in markets that are not active - including markets where there are few transactions for the asset, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly;
	●	Pricing was provided by a third-party valuation consultant (using Level 3 inputs).

	In addition, the Company considers other factors including, but not limited to, the financial condition of the investee, the credit rating, insurance, guarantees, collateral, cash flows, and the current and expected market and industry conditions in which the investee operates. Management believes it has used information that was reasonably obtainable in order to complete its valuation process and determine if the Company’s investments in ARS had incurred any temporary and/or other-than-temporary impairment as of July 30, 2011 and January 29, 2011.

	Future fluctuations in fair value of ARS that the Company judges to be temporary, including any recoveries of previous write-downs, would be recorded as an adjustment to “accumulated other comprehensive loss.” The value and liquidity of ARS held by the Company may be affected by continued auction-rate failures, the credit quality of each security, the amount and timing of interest payments, the amount and timing of future principal payments, and the probability of full repayment of the principal. Additional indicators of impairment include the duration and severity of the decline in market value. The interest rates on these investments will be determined by the terms of each individual ARS. The material risks associated with the ARS held by the Company include those stated above as well as the current economic environment, downgrading of credit ratings on investments held, and the volatility of the entities backing each of the issues.

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


	Fair Value Measurements at Reporting Date Using
	Quoted Prices in
	Active Markets		Significant		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs
July 30, 2011	(Level 1)		(Level 2)		(Level 3)		Total
Available-for-sale securities:
Auction-rate securities	$	-	$	5,999	$	11,414	$	17,413
Preferred stock		26		-		-		26
Trading securities (including mutual funds)		8,547		-		-		8,547
Totals	$	8,573	$	5,999	$	11,414	$	25,986


	Fair Value Measurements at Reporting Date Using
	Quoted Prices in
	Active Markets		Significant		Significant
	for Identical		Observable		Unobservable
	Assets		Inputs		Inputs
January 29, 2011	(Level 1)		(Level 2)		(Level 3)		Total
Available-for-sale securities:
Auction-rate securities	$	-	$	11,349	$	8,586	$	19,935
Preferred stock		26		-		-		26
Trading securities (including mutual funds)		7,727		-		-		7,727
Totals	$	7,753	$	11,349	$	8,586	$	27,688

Securities included in Level 1 represent securities which have a known or anticipated upcoming redemption as of the reporting date and those that have publicly traded quoted prices. ARS included in Level 2 represent securities which have not experienced a successful auction subsequent to the end of fiscal 2007. The fair market value for these securities was determined by applying a discount to par value based on auction prices for similar securities and by utilizing a discounted cash flow model, using market-based inputs, to determine fair value. The Company used a discounted cash flow model to value its Level 3 investments, using estimates regarding recovery periods, yield, and liquidity. The assumptions used are subjective based upon management’s judgment and views on current market conditions, and resulted in $786 of the Company’s recorded temporary impairment and $725 of the OTTI as of July 30, 2011. The use of different assumptions would result in a different valuation and related temporary impairment charge.

Changes in the fair value of the Company’s financial assets measured at fair value on a recurring basis are as follows:


	Twenty-six Weeks Ended July 30, 2011
	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Available-for-Sale Securities						Trading Securities
	Auction-rate				Preferred		Mutual
	Securities				Stock		Funds		Total
Balance, beginning of year	$	8,586			$	-	$	-	$	8,586
Transfers into Level 3		2,787		(a)		-		-		2,787
Transfers out of Level 3		-				-		-		-
Total gains and losses:
Included in net income		-				-		-		-
Included in other
comprehensive income		91				-		-		91
Purchases, Issuances,
Sales, and Settlements:
Purchases		-				-		-		-
Issuances		-				-		-		-
Sales		(50	)			-		-		(50	)
Settlements		-				-		-		-
Balance, end of quarter	$	11,414			$	-	$	-	$	11,414

(a)

Transferred from Level 2 to Level 3 due to lack of observable market data due to reduction in market activity. The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period in which the transfer occurred.


	Twenty-six Weeks Ended July 31, 2010
	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Available-for-Sale Securities					Trading Securities
	Auction-rate			Preferred		Mutual
	Securities			Stock		Funds		Total
Balance, beginning of year	$	8,637		$	-	$	-	$	8,637
Transfers into Level 3		-			-		-		-
Transfers out of Level 3		-			-		-		-
Total gains and losses:
Included in net income		-			-		-		-
Included in other
comprehensive income		-			-		-		-
Purchases, Issuances,
Sales, and Settlements:
Purchases		-			-		-		-
Issuances		-			-		-		-
Sales		(51	)		-		-		(51	)
Settlements		-			-		-		-
Balance, end of quarter	$	8,586		$	-	$	-	$	8,586

6.	Comprehensive Income

Comprehensive income consists of net income and unrealized gains and losses on available-for-sale securities. Unrealized losses on the Company’s investments in auction-rate securities have been included in accumulated other comprehensive loss and are separately included as a component of stockholders’ equity, net of related income taxes.


	Thirteen Weeks Ended
	July 30, 2011		July 31, 2010

Net income	$	23,558	$	20,747
Changes in net unrealized losses on investments,
net of taxes of $(53) and $(54)		91		92
Comprehensive Income	$	23,649	$	20,839


	Twenty-six Weeks Ended
	July 30, 2011		July 31, 2010

Net income	$	57,027	$	50,857
Changes in net unrealized losses on investments,
net of taxes of $(66) and $(74)		112		126
Comprehensive Income	$	57,139	$	50,983

7.	Supplemental Cash Flow Information

	The Company had non-cash investing activities during the twenty-six week periods ended July 30, 2011 and July 31, 2010 of $1,502 and $2,378, respectively. The non-cash investing activity relates to unpaid purchases of property, plant, and equipment included in accounts payable as of the end of the quarter. Amounts reported as unpaid purchases are recorded as cash outflows from investing activities for purchases of property, plant, and equipment in the statement of cash flows in the period they are paid.

	Additional cash flow information for the Company includes cash paid for income taxes during the twenty-six week periods ended July 30, 2011 and July 31, 2010 of $27,352 and $36,081, respectively.

8.	Stock-Based Compensation

	The Company has several stock option plans which allow for granting of stock options to employees, executives, and directors. The options are in the form of non-qualified stock options and are granted with an exercise price equal to the market value of the Company’s common stock on the date of grant. The options generally expire ten years from the date of grant. The Company also has a restricted stock plan that allows for the granting of non-vested shares of common stock to employees and executives and a restricted stock plan that allows for the granting of non-vested shares of common stock to non-employee directors.

	As of July 30, 2011, 639,343 shares were available for grant under the various stock option plans, of which 449,739 were available for grant to executive officers. Also as of July 30, 2011, 340,184 shares were available for grant under the Company’s various restricted stock plans, of which 288,060 shares were available for grant to executive officers.

	Compensation expense was recognized during fiscal 2011 and fiscal 2010 for equity-based grants, based on the grant date fair value of the awards. The fair value of stock options is determined using the Black-Scholes option pricing model, while the fair value of grants of non-vested common stock awards is the stock price on the date of grant.

Information regarding the impact of stock-based compensation expense is as follows:


	Thirteen Weeks Ended
	July 30, 2011		July 31, 2010
Stock-based compensation expense, before tax:
Stock options	$	-	$	16
Non-vested shares of common stock		1,507		668
Total stock-based compensation expense, before tax	$	1,507	$	684

Total stock-based compensation expense, after tax	$	949	$	431


	Twenty-six Weeks Ended
	July 30, 2011		July 31, 2010
Stock-based compensation expense, before tax:
Stock options	$	-	$	32
Non-vested shares of common stock		3,128		2,168
Total stock-based compensation expense, before tax	$	3,128	$	2,200

Total stock-based compensation expense, after tax	$	1,971	$	1,386

	FASB ASC 718 requires the benefits of tax deductions in excess of the compensation cost recognized for stock options exercised during the period to be classified as financing cash inflows. This amount is shown as “excess tax benefit from stock option exercises” on the statements of cash flows. For the twenty-six week periods ended July 30, 2011 and July 31, 2010, the excess tax benefit realized from exercised stock options was $1,346 and $1,799, respectively.

	No stock options were granted during fiscal 2011 or fiscal 2010. On November 17, 2010, the Board of Directors authorized a $2.50 per share special cash dividend to be paid on December 21, 2010 to shareholders of record at the close of business on December 3, 2010. To preserve the intrinsic value for option holders, the Board also approved, pursuant to the terms of the Company’s various stock option plans, a proportional adjustment to both the exercise price and the number of shares covered by each award for all outstanding stock options. This adjustment did not result in any incremental compensation expense.

A summary of the Company’s stock-based compensation activity related to stock options for the twenty-six week period ended July 30, 2011 is as follows:

Weighted

Average

Remaining

Aggregate

Exercise

Contractual

Intrinsic

Price

Life

Value

Outstanding - beginning of year

600,506

4.54

Granted

Expired/forfeited

Exercised

(105,244

)

5.43