UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





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


THE
SECURITIES EXCHANGE ACT OF 1934





For the
Quarterly Period Ended May 2,
2009





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.
      Employerincorporation
      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 RegisteredCommon 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 o  No o





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


þLarge accelerated
filer;  o Accelerated
filer;  o
Non-accelerated filer





Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the
Act).Yes oNoþ





The
number of shares outstanding of the Registrant's Common Stock, as of May 29,
2009, was 46,121,455.










THE
BUCKLE, INC.





FORM
10-Q


INDEX




PagesPart
      I. Financial Information (unaudited)Item
      1.
            Financial
      Statements
            3Item
      2.
            Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
            17Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            26Item
      4.
            Controls
      and Procedures
            26Part
      II. Other InformationItem
      1.
            Legal
      Proceedings
            27Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            27Item
      3.
            Defaults
      Upon Senior Securities
            27Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            27Item
      5.
            Other
      Information
            27Item
      6.
            Exhibits
            27Signatures
            
            28





2




THE
      BUCKLE, INC.BALANCE
      SHEETS(Amounts
      in Thousands Except Share and Per Share Amounts)(Unaudited)May
      2,
              
              
              January
      31,ASSETS
              
              2009
              
              
              2009CURRENT
      ASSETS:Cash
      and cash equivalents
              
              $
              170,907
              
              
              $
              162,463Short-term
      investments
              
              
              18,749
              
              
              
              19,150Accounts
      receivable, net of allowance of $28 and $46, respectively
              
              
              3,786
              
              
              
              3,734Inventory
              
              
              82,792
              
              
              
              83,963Prepaid
      expenses and other assets
              
              
              18,388
              
              
              
              17,655Total
      current assets
              
              
              294,622
              
              
              
              286,965PROPERTY
      AND EQUIPMENT
              
              
              277,691
              
              
              
              264,154Less
      accumulated depreciation and amortization
              
              
              (150,707
              )
              
              
              (147,460
              )126,984
              
              
              
              116,694LONG-TERM
      INVESTMENTS
              
              
              59,617
              
              
              
              56,213OTHER
      ASSETS
              
              
              5,723
              
              
              
              5,468$
              486,946
              
              
              $
              465,340LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIES:Accounts
      payable
              
              $
              39,209
              
              
              $
              22,472Accrued
      employee compensation
              
              
              16,676
              
              
              
              40,460Accrued
      store operating expenses
              
              
              7,858
              
              
              
              7,701Gift
      certificates redeemable
              
              
              7,606
              
              
              
              10,144Income
      taxes payable
              
              
              18,812
              
              
              
              8,649Total
      current liabilities
              
              
              90,161
              
              
              
              89,426DEFERRED
      COMPENSATION
              
              
              5,348
              
              
              
              4,090DEFERRED
      RENT LIABILITY
              
              
              35,310
              
              
              
              34,602Total
      liabilities
              
              
              130,819
              
              
              
              128,118COMMITMENTSSTOCKHOLDERS’
      EQUITY:Common
      stock, authorized 100,000,000 shares of $.01 par value; 46,108, 655 and
      45,906,265shares
      issued and outstanding at May 2, 2009 and January 31, 2009,
      respectively
              
              
              461
              
              
              
              459Additional
      paid-in capital
              
              
              70,175
              
              
              
              68,894Retained
      earnings
              
              
              286,429
              
              
              
              268,789Accumulated
      other comprehensive loss
              
              
              (938
              )
              
              
              (920
              )Total
      stockholders’ equity
              
              
              356,127
              
              
              
              337,222$
              486,946
              
              
              $
              465,340See
      notes to unaudited condensed financial statements.




3




THE
      BUCKLE, INC.STATEMENTS
      OF INCOME(Amounts
      in Thousands Except Per Share Amounts)(Unaudited)
  Thirteen
      Weeks EndedMay
      2,
              
              
              May
      3,2009
              
              
              2008SALES,
      Net of returns and allowances
              
              $
              199,697
              
              
              $
              160,300COST
      OF SALES (Including buying, distribution,and
      occupancy costs)
              
              
              112,994
              
              
              
              94,678Gross
      profit
              
              
              86,703
              
              
              
              65,622OPERATING
      EXPENSES:Selling
              
              
              37,597
              
              
              
              31,559General
      and administrative
              
              
              7,378
              
              
              
              6,69544,975
              
              
              
              38,254INCOME
      FROM OPERATIONS
              
              
              41,728
              
              
              
              27,368OTHER
      INCOME, Net
              
              
              910
              
              
              
              2,320INCOME
      BEFORE INCOME TAXES
              
              
              42,638
              
              
              
              29,688PROVISION
      FOR INCOME TAXES
              
              
              15,776
              
              
              
              10,971NET
      INCOME
              
              $
              26,862
              
              
              $
              18,717EARNINGS
      PER SHARE:Basic
              
              $
              0.59
              
              
              $
              0.42Diluted
              
              $
              0.58
              
              
              $
              0.40Basic
      weighted average shares
              
              
              45,529
              
              
              
              44,806Diluted
      weighted average shares
              
              
              46,521
              
              
              
              46,250See
      notes to unaudited condensed financial statements.




4




THE
      BUCKLE, INC.STATEMENTS
      OF STOCKHOLDERS' EQUITY(Dollar
      Amounts in Thousands Except Share and Per Share Amounts)(Unaudited)
  AccumulatedAdditional
              
              
              
              
              
              OtherNumber
              
              
              Common
              
              
              Paid-in
              
              
              Retained
              
              
              Comprehensiveof Shares
              
              
              Stock
              
              
              Capital
              
              
              Earnings
              
              
              Loss
              
              
              TotalFISCAL 2009BALANCE,
      February 1, 2009
              
              
              45,906,265
              
              
              $
              459
              
              
              $
              68,894
              
              
              $
              268,789
              
              
              $
              (920
              )
              
              $
              337,222Net
      income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              26,862
              
              
              
              -
              
              
              
              26,862Dividends
      paid on common stock,($0.20
      per share)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (9,222
              )
              
              
              -
              
              
              
              (9,222
              )Common
      stock issued on exerciseof
      stock options
              
              
              2,337
              
              
              
              -
              
              
              
              18
              
              
              
              -
              
              
              
              -
              
              
              
              18Issuance
      of non-vested stock, net of forfeitures
              
              
              200,053
              
              
              
              2
              
              
              
              (2
              )
              
              
              -
              
              
              
              -
              
              
              
              -Amortization
      of non-vested stock grants,net
      of forfeitures
              
              
              -
              
              
              
              -
              
              
              
              1,225
              
              
              
              -
              
              
              
              -
              
              
              
              1,225Stock
      option compensation expense
              
              
              -
              
              
              
              -
              
              
              
              40
              
              
              
              -
              
              
              
              -
              
              
              
              40Unrealized
      loss on investments, net of tax
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (18
              )
              
              
              (18
              )BALANCE,
      May 2, 2009
              
              
              46,108,655
              
              
              $
              461
              
              
              $
              70,175
              
              
              $
              286,429
              
              
              $
              (938
              )
              
              $
              356,127FISCAL 2008BALANCE,
      February 3, 2008
              
              
              29,841,668
              
              
              $
              298
              
              
              $
              46,977
              
              
              $
              291,045
              
              
              $
              -
              
              
              $
              338,320Net
      income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              18,717
              
              
              
              -
              
              
              
              18,717Dividends
      paid on common stock,($0.1667
      per share)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (7,611
              )
              
              
              -
              
              
              
              (7,611
              )Common
      stock issued on exerciseof
      stock options
              
              
              640,983
              
              
              
              7
              
              
              
              8,514
              
              
              
              -
              
              
              
              -
              
              
              
              8,521Issuance
      of non-vested stock, net of forfeitures
              
              
              139,950
              
              
              
              1
              
              
              
              (1
              )
              
              
              -
              
              
              
              -
              
              
              
              -Amortization
      of non-vested stock grants,net
      of forfeitures
              
              
              -
              
              
              
              -
              
              
              
              1,300
              
              
              
              -
              
              
              
              -
              
              
              
              1,300Stock
      option compensation expense
              
              
              -
              
              
              
              -
              
              
              
              142
              
              
              
              -
              
              
              
              -
              
              
              
              142Income
      tax benefit related to exerciseof
      stock options
              
              
              -
              
              
              
              -
              
              
              
              7,236
              
              
              
              -
              
              
              
              -
              
              
              
              7,236Unrealized
      loss on investments, net of tax
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (688
              )
              
              
              (688
              )BALANCE,
      May 3, 2008
              
              
              30,622,601
              
              
              $
              306
              
              
              $
              64,168
              
              
              $
              302,151
              
              
              $
              (688
              )
              
              $
              365,937See
      notes to unaudited condensed financial statements.




5




THE
      BUCKLE, INC.STATEMENTS
      OF CASH FLOWS(Dollar
      Amounts in Thousands)(Unaudited)
  Thirteen
      Weeks EndedMay
      2,
              
              
              May
      3,2009
              
              
              2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
              
              $
              26,862
              
              
              $
              18,717Adjustments
      to reconcile net income to net cash flowsfrom
      operating activities:Depreciation
      and amortization
              
              
              5,481
              
              
              
              5,141Amortization
      of non-vested stock grants, net of forfeitures
              
              
              1,225
              
              
              
              1,300Stock
      option compensation expense
              
              
              40
              
              
              
              142Deferred
      income taxes
              
              
              (472
              )
              
              
              -Other
              
              
              23
              
              
              
              2Changes
      in operating assets and liabilities:Accounts
      receivable
              
              
              (52
              )
              
              
              (1,191
              )Inventory
              
              
              1,171
              
              
              
              3,663Prepaid
      expenses and other assets
              
              
              (505
              )
              
              
              (958
              )Accounts
      payable
              
              
              15,800
              
              
              
              2,499Accrued
      employee compensation
              
              
              (23,784
              )
              
              
              (14,421
              )Accrued
      store operating expenses
              
              
              157
              
              
              
              315Gift
      certificates redeemable
              
              
              (2,538
              )
              
              
              (2,081
              )Income
      taxes payable
              
              
              10,147
              
              
              
              (3,561
              )Changes
      in long-term liabilities and deferred compensation
              
              
              1,966
              
              
              
              2,635Net
      cash flows from operating activities
              
              
              35,521
              
              
              
              12,202CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of property and equipment
              
              
              (14,865
              )
              
              
              (7,585
              )Proceeds
      from sale of property and equipment
              
              
              8
              
              
              
              87Purchases
      of investments
              
              
              (9,660
              )
              
              
              (15,787
              )Proceeds
      from sales/maturities of investments
              
              
              6,628
              
              
              
              80,991Net
      cash flows from investing activities
              
              
              (17,889
              )
              
              
              57,706CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from the exercise of stock options
              
              
              18
              
              
              
              8,521Excess
      tax benefit from stock option exercises
              
              
              16
              
              
              
              6,063Payment
      of dividends
              
              
              (9,222
              )
              
              
              (7,611
              )Net
      cash flows from financing activities
              
              
              (9,188
              )
              
              
              6,973NET
      INCREASE IN CASH AND CASH EQUIVALENTS
              
              
              8,444
              
              
              
              76,881CASH
      AND CASH EQUIVALENTS, Beginning of period
              
              
              162,463
              
              
              
              64,293CASH
      AND CASH EQUIVALENTS, End of period
              
              $
              170,907
              
              
              $
              141,174See
      notes to unaudited condensed financial statements.




6




THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
WEEKS ENDED MAY 2, 2009 AND MAY 3, 2008


(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 31, 2009, included in The Buckle, Inc.'s 2008 Form
10-K.





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 392 stores located
in 40 states throughout the continental United States as of May 2, 2009 and 374
stores in 39 states as of May 3, 2008. During the first quarter of fiscal 2009,
the Company opened six new stores, substantially remodeled six stores, and
closed one store. During the first quarter of fiscal 2008, the Company opened
seven new stores, substantially remodeled two stores, and closed one
store.





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





Percentage
      of Net SalesThirteen
      Weeks EndedMerchandise
      Group
              
              May
      2, 2009
              
              
              May
      3, 2008Denims
              
              
              41.7
              %
              
              
              42.1
              %Tops
      (including sweaters)
              
              
              36.5
              
              
              
              36.0Sportswear/Fashions
              
              
              8.4
              
              
              
              8.3Accessories
              
              
              7.2
              
              
              
              7.0Footwear
              
              
              4.8
              
              
              
              5.1Outerwear
              
              
              0.8
              
              
              
              0.4Casual
      bottoms
              
              
              0.5
              
              
              
              1.0Other
              
              
              0.1
              
              
              
              0.1100.0
              %
              
              
              100.0
              %




7





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
WEEKS ENDED MAY 2, 2009 AND MAY 3, 2008


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


(Unaudited)





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 EndedMay
      2, 2009
              
              
              May
      3, 2008Weighted
              
              
              Per
              
              
              
              
              
              Weighted
              
              
              PerAverage
              
              
              Share
              
              
              
              
              
              Average
              
              
              ShareIncome
              
              
              Shares
              
              
              Amount
              
              
              Income
              
              
              Shares
              
              
              AmountBasic
      EPS
              
              $
              26,862
              
              
              
              45,529
              
              
              $
              0.59
              
              
              $
              18,717
              
              
              
              44,806
              
              
              $
              0.42Effect
      of Dilutive Securities:Stock
      options andnon-vested
      shares
              
              
              -
              
              
              
              992
              
              
              
              (0.01
              )
              
              
              -
              
              
              
              1,444
              
              
              
              (0.02
              )Diluted
      EPS
              
              $
              26,862
              
              
              
              46,521
              
              
              $
              0.58
              
              
              $
              18,717
              
              
              
              46,250
              
              
              $
              0.40


4.
            Stock
      Split





On
September 15, 2008, the Company’s Board of Directors approved a 3-for-2 stock
split payable in the form of a stock dividend for shareholders of record as of
October 15, 2008, with a distribution date of October 30, 2008. All share and
per share data (except par value and historical stockholders’ equity data)
presented in the financial statements for all periods has been adjusted to
reflect the impact of this stock split.





5.
            Investments





The
following is a summary of investments as of May 2, 2009:




Amortized
              
              
              Gross
              
              
              Gross
              
              
              Other-than-
              
              
              EstimatedCost
      or
              
              
              Unrealized
              
              
              Unrealized
              
              
              Temporary
              
              
              FairPar
      Value
              
              
              Gains
              
              
              Losses
              
              
              Impairment
              
              
              ValueAvailable-for-Sale
      Securities:Auction-rate
      securities
              
              $
              28,370
              
              
              $
              -
              
              
              $
              (1,489
              )
              
              $
              -
              
              
              $
              26,881Preferred
      stock
              
              
              7,400
              
              
              
              -
              
              
              
              -
              
              
              
              (5,157
              )
              
              
              2,243$
              35,770
              
              
              $
              -
              
              
              $
              (1,489
              )
              
              $
              (5,157
              )
              
              $
              29,124Held-to-Maturity
      Securities:State
      and municipal bonds
              
              $
              35,958
              
              
              $
              471
              
              
              $
              (123
              )
              
              $
              -
              
              
              $
              36,306Fixed
      maturities
              
              
              3,500
              
              
              
              49
              
              
              
              (11
              )
              
              
              -
              
              
              
              3,538Certificates
      of deposit
              
              
              3,695
              
              
              
              43
              
              
              
              -
              
              
              
              -
              
              
              
              3,738U.S.
      treasuries
              
              
              741
              
              
              
              9
              
              
              
              -
              
              
              
              -
              
              
              
              750$
              43,894
              
              
              $
              572
              
              
              $
              (134
              )
              
              $
              -
              
              
              $
              44,332Trading
      Securities:Mutual
      funds
              
              $
              6,200
              
              
              $
              -
              
              
              $
              (852
              )
              
              $
              -
              
              
              $
              5,348


8




THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
WEEKS ENDED MAY 2, 2009 AND MAY 3, 2008


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


(Unaudited)





The
following is a summary of investments as of January 31, 2009:




Amortized
              
              
              Gross
              
              
              Gross
              
              
              Other-than-
              
              
              EstimatedCost
      or
              
              
              Unrealized
              
              
              Unrealized
              
              
              Temporary
              
              
              FairPar
      Value
              
              
              Gains
              
              
              Losses
              
              
              Impairment
              
              
              ValueAvailable-for-Sale
      Securities:Auction-rate
      securities
              
              $
              35,495
              
              
              $
              -
              
              
              $
              (1,460
              )
              
              $
              (3,757
              )
              
              $
              30,278Preferred
      stock
              
              
              2,000
              
              
              
              -
              
              
              
              -
              
              
              
              (1,400
              )
              
              
              600$
              37,495
              
              
              $
              -
              
              
              $
              (1,460
              )
              
              $
              (5,157
              )
              
              $
              30,878Held-to-Maturity
      Securities:State
      and municipal bonds
              
              $
              31,965
              
              
              $
              536
              
              
              $
              (90
              )
              
              $
              -
              
              
              $
              32,411Fixed
      maturities
              
              
              2,500
              
              
              
              37
              
              
              
              (7
              )
              
              
              -
              
              
              
              2,530Certificates
      of deposit
              
              
              2,945
              
              
              
              42
              
              
              
              -
              
              
              
              -
              
              
              
              2,987U.S.
      treasuries
              
              
              2,985
              
              
              
              19
              
              
              
              (9
              )
              
              
              -
              
              
              
              2,995$
              40,395
              
              
              $
              634
              
              
              $
              (106
              )
              
              $
              -
              
              
              $
              40,923Trading
      Securities:Mutual
      funds
              
              $
              5,165
              
              
              $
              -
              
              
              $
              (1,075
              )
              
              $
              -
              
              
              $
              4,090


The
auction-rate securities were invested as follows as of May 2, 2009:




Nature
              
              Underlying
      Collateral
              
              Par ValueMunicipal revenue
      bonds
              
              83% insured by AAA/AA/A-rated bond
      insurers at May 2, 2009
              
              $
              13,370Municipal bond
      funds
              
              Fixed income instruments within
      issuers' money market funds
              
              
              11,250Student loan
      bonds
              
              Student loans guaranteed by state
      entities
              
              
              3,750Total par
    value
              
              
              
              $
              28,370


As of May
2, 2009, the Company’s auction-rate securities portfolio was 60% AAA/Aaa-rated,
31% AA/Aa-rated, and 9% A-rated.





The
amortized cost and fair value of debt securities by contractual maturity as of
May 2, 2009 is as follows:




Amortized
              
              
              FairCost
              
              
              ValueFiscal
      PeriodsTwelve
      months ending May 1, 2010
              
              $
              18,749
              
              
              $
              18,869Twelve
      months ending April 30, 2011
              
              
              10,197
              
              
              
              10,278Twelve
      months ending April 28, 2012
              
              
              4,479
              
              
              
              4,536Twelve
      months ending May 4, 2013
              
              
              3,642
              
              
              
              3,680Twelve
      months ending May 3, 2014
              
              
              684
              
              
              
              711Thereafter
              
              
              6,143
              
              
              
              6,258$
              43,894
              
              
              $
              44,332




9




THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
WEEKS ENDED MAY 2, 2009 AND MAY 3, 2008


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


(Unaudited)





At May 2,
2009 and January 31, 2009, held-to-maturity investments of $25,145 and $22,795
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”) are classified as
available-for-sale and reported at fair market value. As of May 2, 2009, the
reported investment amount is net of $1,489 of temporary impairment and $5,157
of other-than-temporary impairment (“OTTI”). These amounts have been recorded to
account for the impairment of certain securities from their stated par value.
The $1,489 temporary impairment is reported, net of tax, as an “accumulated
other comprehensive loss” of $938 in stockholders’ equity as of May 2, 2009. The
Company reported the $5,157 OTTI ($3,249 net of tax) as a loss in the statement
of income during both the third and fourth quarters of the fiscal year ended
January 31, 2009.





As of May
2, 2009, the Company had $28,370 invested in ARS and $7,400 invested in
preferred securities, at par value, which are reported at their estimated fair
value of $26,881 and $2,243, respectively. As of January 31, 2009, the Company
had $35,495 invested in ARS and $2,000 invested in preferred securities, which
are reported at their estimated fair value of $30,278 and $600, 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. The Company was able to
successfully liquidate $1,725 of its investments in ARS at par value during the
first quarter of fiscal 2009.





As of May
2, 2009, all of the Company’s investment in ARS and preferred securities was
classified in long-term investments and is net of $1,489 of temporary impairment
plus $5,157 of OTTI. The OTTI is related to investments in auction-rate
preferred securities (“ARPS”) that have all been converted to perpetual
preferred stock as a result of the September 2008 bankruptcy of Lehman Brothers
(the broker and auction agent for all of the ARPS purchased by the Company). The
converted shares are valued at the quoted price of the securities as of May 2,
2009. All of these issues of preferred stock are publicly traded and have
experienced significant declines in value. The Company recorded a charge for
OTTI during fiscal 2008 based on the closing price of the preferred securities
as of January 31, 2009. 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
January 31, 2009, $1,550 of the Company’s investment in ARS and preferred
securities was classified in short-term investments and $29,328 was classified
in long-term investments.





10





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
WEEKS ENDED MAY 2, 2009 AND MAY 3, 2008


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


(Unaudited)





6.
            Fair Value
      Measurements





Effective
February 3, 2008, the Company adopted the provisions of FASB Statement No. 157
(“SFAS 157”), Fair Value
Measurements. This standard defines fair value, establishes a framework
for measuring fair value, and expands disclosures about fair value measurements.
The provisions of SFAS 157 apply to all financial instruments that are being
measured and reported on a fair value basis. In addition, in February 2008, FASB
issued FASB Staff Position (“FSP”) FAS 157-2, Effective Date of FASB Statement No.
157. This FSP, which was adopted in the quarter ended May 2, 2009,
delayed the effective date of SFAS 157 to fiscal years beginning after November
15, 2008 for all non-financial assets and liabilities. The adoption of SFAS 157
did not have any impact on the Company’s financial position or results of
operations.





As
defined by SFAS 157, 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 May
2, 2009 and January 31, 2009, 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 5. 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;


·
            Pricing
      was provided by a third-part valuation
  consultant;


·
            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.





11





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
WEEKS ENDED MAY 2, 2009 AND MAY 3, 2008


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


(Unaudited)





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 May 2, 2009 and January
31, 2009.





As a
result of the decline in fair value for certain of the Company’s investments in
ARS, the Company has reported its investments net of $1,489 of temporary
impairment and $5,157 of OTTI as of May 2, 2009. The Company has reported the
$1,489 of temporary impairment, net of tax, as a $938 reduction to stockholders’
equity in “accumulated other comprehensive loss” as of May 2, 2009. Any future
fluctuation in fair value related to these securities 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 Company
reported the $5,157 OTTI ($3,249, net of tax) as a loss in the statement of
income during both the third and fourth quarters of the fiscal year ended
January 31, 2009. The Company reviews all investments for OTTI at least
quarterly or as indicators of impairment exist. 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. In addition, the Company considers other 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.





The
Company’s financial assets measured at fair value on a recurring basis subject
to the disclosure requirements of SFAS 157 as of May 2, 2009 were as
follows:


Fair Value Measurements at
      Reporting Date UsingQuoted Prices
      in Active
      Markets for
      Identical Assets
                  (Level
      1)
                
                
                Significant
      Observable
      Inputs
      (Level
      2)
                
                
                Significant
      Unobservable
      Inputs
                  (Level
      3)
                
                
                TotalASSETS:Available-for-sale securities
      (includingauction-rate securities and
      preferred stock)
                
                $
                2,243
                
                
                $
                19,621
                
                
                $
                7,260
                
                
                $
                29,124Trading securities (including
      mutual funds)
                
                
                5,348
                
                
                
                -
                
                
                
                -
                
                
                
                5,348Total
                
                $
                7,591
                
                
                $
                19,621
                
                
                $
                7,260
                
                
                $
                34,472





ARS and
preferred securities included in Level 1 represent securities which have a known
or anticipated upcoming redemption as of May 2, 2009 and those that have
publicly traded quoted prices. ARS included in Level 2 represent securities
which have not experienced a successful auction subsequent to February 2, 2008.
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 $690 of the Company’s recorded
temporary impairment. The use of different assumptions would result in a
different valuation and related temporary impairment charge.




12




THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
WEEKS ENDED MAY 2, 2009 AND MAY 3, 2008


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


(Unaudited)





7.
            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 EndedMay
      2, 2009
              
              
              May
      3, 2008Net
      income
              
              $
              26,862
              
              
              $
              18,717Changes
      in net unrealized losses on investmentsin
      auction-rate-securities, net of taxes of $11 and $404
              
              
              (18
              )
              
              
              (688
              )Comprehensive
      income
              
              $
              26,844
              
              
              $
              18,029


8.
            Supplemental Cash Flow
      Information





The
Company had non-cash investing activities during the thirteen week periods ended
May 2, 2009 and May 3, 2008 of $(937) and $355, 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 thirteen week periods ended May 2, 2009 and May 3, 2008 of $6,085 and
$8,587, respectively.





9.
            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 May
2, 2009, 637,126 shares were available for grant under the various stock option
plans, of which 452,502 were available for grant to executive officers. Also as
of May 2, 2009, 204,887 shares were available for grant under the various
restricted stock plans, of which 128,387 were available for grant to executive
officers.





The
Company accounts for stock-based compensation in accordance with FASB Statement
No. 123 (revised 2004) (“SFAS 123(R)”), Share-Based Payment.
Compensation expense was recognized during the first quarter of fiscal 2009 and
fiscal 2008 for new awards, based on the grant date fair value, as well as for
the portion of awards granted in fiscal years prior to SFAS 123(R) adoption that
was not vested as of the beginning of fiscal 2006. 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.





13





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
WEEKS ENDED MAY 2, 2009 AND MAY 3, 2008


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


(Unaudited)





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





Thirteen Weeks
      EndedMay 2, 2009
              
              
              May 3,
      2008Stock-based compensation expense,
      before tax:Stock
    options
              
              $
              40
              
              
              $
              142Non-vested shares of common
      stock
              
              
              1,225
              
              
              
              1,300Total stock-based compensation
      expense, before tax
              
              $
              1,265
              
              
              $
              1,442Total stock-based compensation
      expense, after tax
              
              $
              797
              
              
              $
              908


SFAS
123(R) 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 fiscal quarters
ended May 2, 2009 and May 3, 2008, the excess tax benefit realized from
exercised stock options was $16 and $6,063, respectively.





No stock
options were granted during the first quarter of fiscal 2009. Stock options
granted during the first quarter of fiscal 2008 were granted under the Company’s
1993 Director Stock Option Plan. Grants were made with an exercise price equal
to the market value of the Company’s common stock on the date of grant and a
contractual term of ten years. Options granted under the 1993 Director Stock
Option Plan typically vest over a period of three years.





The
weighted average grant date fair value of options granted during the first
quarter of fiscal 2008 was $8.40. The fair value of options granted was
estimated at the date of grant using the Black-Scholes option pricing model with
the following assumptions:




Thirteen Weeks
      EndedMay 3, 2008Risk-free interest rate(1)
              
              
              3.10
              %Dividend yield(2)
              
              
              2.40
              %Expected volatility(3)
              
              
              33.00
              %Expected lives - years(4)
              
              
              7.0
 
 (1)
              Based on the U.S. Treasury yield
      curve in effect at the time of grant with a term consistentwith the expected lives of stock
      options(2)
              Based on expected dividend yield
      as of the date of grant.(3)
              Based on historical volatility of
      the Company’s common stock over a period consistentwith the expected lives of stock
      options.(4)
              Based on historical and expected
      exercise behavior.





On
September 15, 2008, the Board of Directors authorized another $3.00 per share
($2.00 per share after 3-for-2 stock split) special one-time cash dividend to be
paid on October 27, 2008 to shareholders of record at the close of business on
October 15, 2008. 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.





14




THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
WEEKS ENDED MAY 2, 2009 AND MAY 3, 2008


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


(Unaudited)





A summary
of the Company’s stock-based compensation activity related to stock options for
the fiscal quarter ended May 2, 2009 is as follows:




Shares
                
                
                Weighted
                  Average
                  Exercise
                  Price
                
                
                Weighted
                  Average
                  Remaining
                  Contractual
                  Life
                
                
                
                Aggregate
                  Intrinsic
                  ValueOutstanding - beginning of
      year
                
                
                1,635,163
                
                
                $
                6.91Granted
                
                
                -
                
                
                
                n/aExpired/forfeited
                
                
                -
                
                
                
                n/aExercised
                
                
                (2,337
                )
                
                
                7.62Outstanding - end of
      quarter
                
                
                1,632,826
                
                
                $
                6.91
                
                
                
                3.89
                
                years
                
                $
                48,374Exercisable - end of
      quarter
                
                
                1,602,238
                
                
                $
                6.58
                
                
                
                3.80
                
                years
                
                $
                47,996


The total
intrinsic value of options exercised during the fiscal quarters ended May 2,
2009 and May 3, 2008 was $52 and $20,679, respectively. As of May 2, 2009, there
was $199 of unrecognized compensation expense related to non-vested stock
options. It is expected that this expense will be recognized over a weighted
average period of approximately 1.4 years.





Non-vested
shares of common stock granted during the first quarter of fiscal 2008 were
granted pursuant to the Company’s 2005 Restricted Stock Plan. Non-vested shares
granted during the first quarter of fiscal 2009 were granted pursuant to the
Company’s 2005 Restricted Stock Plan and the Company’s 2008 Director Restricted
Stock Plan. Shares granted under the 2005 Plan typically vest over a period of
four years, only upon certification by the Compensation Committee of the Board
of Directors that the Company has achieved it pre-established performance
targets for the fiscal year. Shares granted under the 2008 Director Plan vest
25% on the date of grant and then in equal portions on each of the first three
anniversaries of the date of grant.





A summary
of the Company’s stock-based compensation activity related to grants of
non-vested shares of common stock for the fiscal quarter ended May 2, 2009 is as
follows:




Weighted
                AverageGrant DateShares
              
              
              Fair ValueNon-Vested - beginning of
      year
              
              
              423,171
              
              
              $
              23.84Granted
              
              
              243,050
              
              
              
              21.15Forfeited
              
              
              (42,997
              )
              
              
              22.74Vested
              
              
              (45,318
              )
              
              
              27.50Non-Vested - end of
      quarter
              
              
              577,906
              
              
              $
              22.51


15





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
WEEKS ENDED MAY 2, 2009 AND MAY 3, 2008


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


(Unaudited)





As of May
2, 2009, there was $7,580 of unrecognized compensation expense related to grants
of non-vested shares. It is expected that this expense will be recognized over a
weighted average period of approximately 2.2 years. The total fair value of
shares vested during the fiscal quarters ended May 2, 2009 and May 3, 2008 was
$1,386 and $1,341, respectively.





10.
            Recently Issued
      Accounting Pronouncements





Effective
February 3, 2008, the Company adopted the provisions of FASB Statement No. 157
(“SFAS 157”), Fair Value
Measurements. This standard defines fair value, establishes a framework
for measuring fair value, and expands disclosures about fair value measurements.
The provisions of SFAS 157 apply to all financial instruments that are being
measured and reported on a fair value basis. In addition, in February 2008, FASB
issued FASB Staff Position (“FSP”) FAS 157-2, Effective Date of FASB Statement No.
157. This FSP delayed the effective date of SFAS 157 to fiscal years
beginning after November 15, 2008, and interim periods within those fiscal years
for all non-financial assets and liabilities, except those that are recognized
or disclosed at fair value in the financial statements on a recurring basis. The
adoption of SFAS 157 during fiscal 2008 for all financial instruments and the
adoption during fiscal 2009 for all non-financial assets and liabilities did not
have any impact on the Company’s financial position or results of
operations.





Effective
February 3, 2008, the Company adopted the provisions of FASB Statement No. 159
(“SFAS 159”), The Fair Value
Option for Financial Assets and Financial Liabilities. This standard
provides an option for companies to report selected financial assets and
liabilities at fair value. Although the Company adopted the provisions of SFAS
159 effective with the beginning of the Company’s 2008 fiscal year, it did not
elect the fair value option for any financial instruments or other items held by
the Company. Therefore, the adoption of SFAS 159 did not have any impact on the
Company’s financial position or results of operations.





16




THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





The
following discussion should be read in conjunction with the Financial Statements
and notes thereto of the Company included in this Form 10-Q. 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 financial statements.





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 excluded from 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.




17




THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





RESULTS OF
OPERATIONS





The table
below sets forth the percentage relationships of sales and various expense
categories in the Statements of Income for the thirteen-week periods ended May
2, 2009 and May 3, 2008:




Percentage
      of Net SalesThirteen
      Weeks Ended
              
              
              PercentageMay
      2, 2009
              
              
              May
      3, 2008
              
              
              Increase/(Decrease)Net
      sales
              
              
              100.0
              %
              
              
              100.0
              %
              
              
              24.6
              %Cost
      of sales (including buying,distribution,
      and occupancy costs)
              
              
              56.6
              %
              
              
              59.1
              %
              
              
              19.3
              %Gross
      profit
              
              
              43.4
              %
              
              
              40.9
              %
              
              
              32.1
              %Selling
      expenses
              
              
              18.8
              %
              
              
              19.7
              %
              
              
              19.1
              %General
      and administrative expenses
              
              
              3.7
              %
              
              
              4.2
              %
              
              
              10.2
              %Income
      from operations
              
              
              20.9
              %
              
              
              17.0
              %
              
              
              52.5
              %Other
      income, net
              
              
              0.5
              %
              
              
              1.5
              %
              
              
              -60.8
              %Income
      before income taxes
              
              
              21.4
              %
              
              
              18.5
              %
              
              
              43.6
              %Provision
      for income taxes
              
              
              7.9
              %
              
              
              6.8
              %
              
              
              43.8
              %Net
      income
              
              
              13.5
              %
              
              
              11.7
              %
              
              
              43.5
              %


Net sales
increased from $160.3 million in the first quarter of fiscal 2008 to $199.7
million in the first quarter of fiscal 2009, a 24.6% increase. Comparable store
sales increased by $26.9 million, or 17.7%, for the thirteen week period ended
May 2, 2009 compared to the same period in the prior year. The comparable store
sales increase was primarily due to an increase in the number of transactions at
comparable stores during the period, in addition to a 6.0% increase in the
average retail price per piece of merchandise sold during the period and a 2.0%
increase in the average number of units sold per transaction. Sales growth for
the thirteen week period was also attributable to the inclusion of a full
quarter of operating results for the 21 new stores opened during fiscal 2008, to
the opening of 6 new stores during the first quarter of fiscal 2009, and to
growth in online sales. Online sales for the quarter (which are not included in
comparable store sales) increased 75.7% to $11.7 million.





The
Company’s average retail price per piece of merchandise sold increased $2.46, or
6.0%, during the first quarter of fiscal 2009 compared to the first quarter of
fiscal 2008. This $2.46 increase was primarily attributable to the following
changes (with their corresponding effect on the overall average price per
piece): a 9.2% increase in average denim price points ($1.54), a 6.2% increase
in average knit shirt price points ($0.77), a 9.2% increase in average active
apparel price points ($0.28), a 9.8% increase in average woven shirt price
points ($0.23), a 7.5% increase in average footwear price points ($0.15), and
increased price points in certain other categories ($0.21). These increases were
partially offset by the impact of a shift in the merchandise mix (-$0.72). These
changes are primarily a reflection of merchandise shifts in terms of brands and
product styles, fabrics, details, and finishes. Average sales per square foot
for the quarter increased 16.7% from $82.73 to $96.58.





Gross
profit after buying, distribution, and occupancy expenses increased $21.1
million in the first quarter of fiscal 2009 to $86.7 million, a 32.1% increase.
As a percentage of net sales, gross profit increased from 40.9% in the first
quarter of fiscal 2008 to 43.4% in the first quarter of fiscal 2009. This
increase was attributable to a 0.90% improvement, as a percentage of net sales,
in actual merchandise margins; which was achieved through an increase in
regular-price selling during the period that was partially offset by an increase
in redemptions through the Company’s Primo Card loyalty program. The increase
was also attributable to a 1.60% reduction, as a percentage of net sales,
related to leveraged buying, distribution, and occupancy costs.




18




THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS




Selling
expenses increased from $31.6 million for the first quarter of fiscal 2008 to
$37.6 million for the first quarter of fiscal 2009, a 19.1% increase. As a
percentage of net sales, selling expenses decreased from 19.7% in the first
quarter of fiscal 2008 to 18.8% in the first quarter of fiscal 2009. The
reduction was primarily attributable to a 0.70% reduction, as a percentage of
net sales, in store payroll expense, a 0.30% reduction in payroll tax expense,
and a 0.30% reduction related to the leveraging of certain other selling
expenses. These reductions were, however, partially offset by increases in
expense related to the incentive bonus accrual (0.15%, as a percentage of net
sales), internet-related fulfillment and marketing expenses (0.15%, as a
percentage of net sales), and investments made during the quarter related to
certain store fixtures and supplies (0.10%, as a percentage of net
sales).




General
and administrative expenses increased from $6.7 million in the first quarter of
fiscal 2008 to $7.4 million in the first quarter of fiscal 2009, a 10.2%
increase. As a percentage of net sales, general and administrative expenses
decreased from 4.2% in the first quarter of fiscal 2008 to 3.7% in the first
quarter of fiscal 2009. The reduction was primarily attributable to a 0.30%
reduction, as a percentage of net sales, in equity compensation expense and a
0.30% reduction related to the leveraging of certain other general and
administrative expenses. These reductions were, however, partially offset by an
increase in expense related to the incentive bonus accrual (0.10%, as a
percentage of net sales).





As a
result of the above changes, the Company's income from operations increased
52.5% to $41.7 million for the first quarter of fiscal 2009 compared to $27.4
million for the first quarter of fiscal 2008. Income from operations was 20.9%
of net sales for the first quarter of fiscal 2009 compared to 17.0% for the
first quarter of fiscal 2008.





Other
income decreased from $2.3 million for the first quarter of fiscal 2008 to $0.9
million for the first quarter of fiscal 2009, a decrease of 60.8%. The decrease
in other income is due to a reduction in income earned on the Company’s cash and
investments as a result of lower interest rates.





Income
tax expense as a percentage of pre-tax income was 37.0% in both the first
quarter of fiscal 2009 and the first quarter of fiscal 2008, bringing net income
to $26.9 million in the first quarter of fiscal 2009 compared to $18.7 million
in the first quarter of fiscal 2008, an increase of 43.5%.





LIQUIDITY AND CAPITAL
RESOURCES





As of May
2, 2009, the Company had working capital of $204.5 million, including $170.9
million of cash and cash equivalents and short-term investments of $18.7
million. 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 the first
quarters of fiscal 2009 and fiscal 2008, the Company’s cash flow from operating
activities was $35.5 million and $12.2 million, respectively.





The uses
of cash for both thirteen week periods include payment of annual bonuses accrued
at fiscal year end, changes in inventory and accounts payable for build-up of
inventory levels, dividend payments, construction costs for new and remodeled
stores, and other capital expenditures. The reduction in cash flow from
investing activities for the first quarter of fiscal 2009 compared to the first
quarter of fiscal 2008 was primarily a result of the large amount of proceeds
received from sales/maturities of investments in 2008 as the Company liquidated
a significant amount of its auction-rate securities during the first quarter of
fiscal 2008.





During
the first quarter of fiscal 2009 and 2008, the Company invested $11.7 million
and $6.8 million, respectively, in new store construction, store renovation, and
store technology upgrades. The Company also spent $3.2 million and $0.8 million
in the first quarter of fiscal 2009 and 2008, respectively, in capital
expenditures for the corporate headquarters and distribution
facility.




19




THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





During
the remainder of fiscal 2009, the Company anticipates completing approximately
30 additional store construction projects, including approximately 15 new stores
and approximately 15 stores to be substantially remodeled and/or relocated.
Management estimates that total capital expenditures during fiscal 2009 will be
approximately $44 to $48 million. 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 a consistent
record of generating positive cash flow each year and, as of May 2, 2009, had
total cash and investments of $249.3 million. The Company does not currently
have plans for a merger or acquisition and has fairly consistent plans for new
store expansion and remodels. 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 the Company 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.





The
Company has available an unsecured line of credit of $17.5 million with Wells
Fargo Bank, N.A. for operating needs and letters of credit. The line of credit
provides that outstanding letters of credit cannot exceed $10.0 million.
Borrowings under the line of credit provide for interest to be paid at a rate
equal to the prime rate established by the Bank. The Company has, from time to
time, borrowed against these lines during periods of peak inventory build-up.
There were no bank borrowings during the first quarters of fiscal 2009 or
2008.





As of May
2, 2009, total cash and investments included $26.9 million of auction-rate
securities (“ARS”) and $2.2 million of preferred securities, which compares to
$30.3 million of ARS and $0.6 million of preferred securities as of January 31,
2009. All of the $29.1 million in ARS and preferred securities as of May 2,
2009, has been included in long-term investments. 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 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 anticipate, however, that further
auction failures will have a material impact on the Company’s ability to fund
its business.





ARS and
preferred securities are reported at fair market value and, as of May 2, 2009,
the reported investment amount is net of a $1.5 million temporary impairment and
a $5.2 million other-than-temporary impairment (“OTTI”). These amounts have been
recorded to account for the impairment of certain securities from their stated
par value. The Company reported the $1.5 million temporary impairment, net of
tax, as an “accumulated other comprehensive loss” of $0.9 million in
stockholders’ equity as of May 2, 2009. The Company has accounted for the
impairment as temporary, as it currently anticipates being able to successfully
liquidate its investments without loss once the ARS market resumes normal
operations. The Company reported the $5.2 million OTTI ($3.2 million, net of
tax) as a loss in the statement of income during both the third and fourth
quarters of the fiscal year ended January 31, 2009.





20





THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





The OTTI
is related to investments in auction-rate preferred securities (“ARPS”) that
were converted to preferred stock as a result of the Lehman bankruptcy (the
broker and auction agent for all of the ARPS purchased by the Company). The
converted shares are valued at the quoted price of the securities as of May 2,
2009. Since it is unlikely that the fair market value of these investments will
recover in the near term, the Company recorded a charge for OTTI during fiscal
2008 based on the closing price of the converted securities as well as for each
of the preferred securities underlying the ARPS that were converted subsequent
to year end. Any future fluctuation in fair value related to these securities
that the Company judges to be other-than-temporary, including any recoveries of
previous write-downs, would be recorded in the statement of income as an
adjustment to net income.





The
Company reviews all investments for OTTI at least quarterly or as indicators of
impairment exist. 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. 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. The Company believes it has the ability and intent to hold these
investments until recovery of market value occurs.





CRITICAL ACCOUNTING POLICIES
AND ESTIMATES





Management’s
Discussion and Analysis of Financial Condition and Results of Operations are
based upon The Buckle, Inc.’s financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these 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 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 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 upon the purchase of
      merchandise by customers. Online sales are recorded when merchandise is
      delivered to the customer, with the time of delivery being based on
      estimated shipping time from the Company’s distribution center to the
      customer. Shipping fees charged to customers are included in revenue and
      shipping costs are included in selling expenses. The Company accounts for
      layaway sales in accordance with SAB No. 101, Revenue Recognition,
      recognizing 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 amount of the gift certificate liability is
      determined using the outstanding balances from the prior three years of
      issuance and the gift card liability is determined using the outstanding
      balances from the prior four years of issuance. The liability recorded for
      unredeemed gift cards and gift certificates was $7.6 million and $10.1
      million as of May 2, 2009 and January 31, 2009, respectively. The Company
      records breakage as other income when the probability of redemption, which
      is based on historical redemption patterns, is remote. The Company
      establishes a liability for estimated merchandise returns based upon the
      historical average sales return percentage. 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 $0.5 million as of both May 2,
      2009 and January 31, 2009.




21




THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS




2.
            Inventory.
      Inventory is valued at the lower of cost or market. 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 reserve for merchandise obsolescence and
      markdowns that could affect market value, based on assumptions using
      calculations applied to current inventory levels within each of four
      different markdown levels. 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 liability recorded as a
      reserve for markdowns and/or obsolescence was $5.5 million and $6.2
      million as of May 2, 2009 and January 31, 2009, respectively. The Company
      is not aware of any events, conditions, or changes in demand or price that
      would indicate that our 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.
            Operating
      Leases. The Company leases retail stores under operating leases.
      Most lease agreements contain tenant improvement allowances, rent
      holidays, rent escalation clauses, and/or contingent rent provisions. For
      purposes of recognizing lease incentives and minimum rental expenses on a
      straight-line basis over the terms of the leases, the Company uses the
      date of initial possession to begin amortization, which is generally when
      the Company enters the space and begins to make improvements in
      preparation of intended use. For tenant improvement allowances and rent
      holidays, the Company records a deferred rent liability on the balance
      sheets and amortizes the deferred rent over the terms of the leases as
      reductions to rent expense on the statements of
  income.





For
scheduled rent escalation clauses during the lease terms or for rental payments
commencing at a date other than the date of initial occupancy, the Company
records minimum rental expenses on a straight-line basis over the terms of the
leases on the statements of income. Certain leases provide for contingent rents,
which are determined as a percentage of gross sales in excess of specified
levels. The Company records a contingent rent liability on the balance sheets
and the corresponding rent expense when specified levels have been achieved or
are reasonably probable to be achieved.




22


THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





5.
            Investments.
      The Company accounts for investments in accordance with Statement of
      Financial Accounting Standards Board (SFAS) No. 115, Accounting for Certain
      Investments in Debt and Equity Securities. Investments classified
      as short-term investments include securities with a maturity of greater
      than three months and less than one year, and a portion of the Company’s
      investments in auction-rate securities (“ARS”), which are
      available-for-sale securities. 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. The Company reviews impairments in accordance with Emerging
      Task Force (EITF) 03-1 and FSP SFAS 115-1 and 124-1, The Meaning of
      Other-Than-Temporary-Impairment and its Application to Certain
      Investments, to determine the classification of potential
      impairments as either “temporary” or “other-than-temporary.” A temporary
      impairment results in an unrealized loss being recorded in the other
      comprehensive income. Impairments that are considered other-than-temporary
      are recognized as a loss in the statements of income. The Company
      considers various factors in reviewing impairments, including the length
      of time and extent to which the fair value has been less than the
      Company’s cost basis, the financial condition and near-term prospects of
      the issuer, and the Company’s intent and ability to hold the investments
      for a period of time sufficient to allow for any anticipated recovery in
      market value. Held-to-maturity securities are carried at amortized cost.
      The Company believes it has the ability and maintains its intent to hold
      these investments until recovery of market value occurs. Trading
      securities are reported at fair value, with unrealized gains and losses
      included in earnings, using the specific identification
      method.





The
Company’s investments in ARS and preferred securities are reported at fair
market value, and as of May 2, 2009, the reported investment amount is net of a
$1.5 million temporary impairment and a $5.2 million other-than-temporary
impairment (“OTTI”). These amounts have been recorded to account for the
impairment of certain securities from their stated par value. The Company
reported the $1.5 million temporary impairment, net of tax, as an “accumulated
other comprehensive loss” of $0.9 million in stockholders’ equity as of May 2,
2009. The Company has accounted for the impairment as temporary, as it currently
expects to be able to successfully liquidate its investments without loss once
the ARS market resumes normal operations. The Company reported the $5.2 million
OTTI ($3.2 million, net of tax) as a loss in the statement of income during both
the third and fourth quarters of the fiscal year ended January 31,
2009.





The
Company determined the fair value of 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;


·
            Pricing
      was provided by a third-party valuation
  consultant;


·
            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.





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 the decline in
market value.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 May 2,
2009.





23




THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





OFF-BALANCE SHEET
ARRANGEMENTS,


CONTRACTUAL OBLIGATIONS, AND
COMMERCIAL COMMITMENTS





As
referenced in the tables 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.The operating lease obligations shown in the table below represent future
cash payments to landlords required to fulfill the Company’s minimum rent
requirements. Such amounts are actual cash requirements by year and are not
reported net of any tenant improvement allowances received from
landlords.





The
following tables identify the material obligations and commitments as of May 2,
2009:




Payments
      Due by PeriodContractual
      obligations (dollar amounts in thousands):
              
              Total
              
              
              Less
      than 1 year
              
              
              1-3
      years
              
              
              4-5
      years
              
              
              After
      5 yearsLong
      term debt and purchase obligations
              
              $
              1,348
              
              
              $
              1,269
              
              
              $
              79
              
              
              $
              -
              
              
              $
              -Deferred
      compensation
              
              $
              5,348
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              5,348Operating
      leases
              
              $
              261,043
              
              
              $
              44,811
              
              
              $
              73,578
              
              
              $
              56,557
              
              
              $
              86,097Total
      contractual obligations
              
              $
              267,739
              
              
              $
              46,080
              
              
              $
              73,657
              
              
              $
              56,557
              
              
              $
              91,445
  Amount
      of Commitment Expiration Per PeriodOther
      commercial commitments (dollar amounts in thousands):
              
              Total
      Amounts Committed
              
              
              Less
      than 1 year
              
              
              1-3
      years
              
              
              4-5
      years
              
              
              After
      5 yearsLines
      of credit
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Total
      commercial commitments
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -


The
Company has available an unsecured line of credit of $17.5 million, of which
$10.0 million is available for letters of credit, which is excluded from the
preceding table. 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 the first quarter of fiscal 2009 or the first quarter of
fiscal 2008. The Company had outstanding letters of credit totaling $0.7 million
and $1.1 million at May 2, 2009 and January 31, 2009, respectively. The Company
has no other off-balance sheet arrangements.




24




THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





SEASONALITY AND
INFLATION





The
Company's business is seasonal, with the holiday season (from approximately
November 15 to December 30) and the back-to-school season (from approximately
July 15 to September 1) historically contributing the greatest volume of net
sales. For fiscal years 2008, 2007, and 2006, the holiday and back-to-school
seasons accounted for approximately 37%, 38%, and 36%, respectively, of the
Company's fiscal year net sales. Although the operations of the Company are
influenced by general economic conditions, the Company does not believe that
inflation has had a material effect on the results of operations during the
thirteen-week periods ended May 2, 2009 and May 3, 2008. Quarterly results may
vary significantly depending on a variety of factors including the timing and
amount of sales and costs associated with the opening of new stores, the timing
and level of markdowns, the timing of store closings, the remodeling of existing
stores, competitive factors, and general economic conditions.





RECENTLY ISSUED ACCOUNTING
PRONOUNCEMENTS





Effective
February 3, 2008, the Company adopted the provisions of FASB Statement No. 157
(“SFAS 157”), Fair Value
Measurements. This standard defines fair value, establishes a framework
for measuring fair value, and expands disclosures about fair value measurements.
The provisions of SFAS 157 apply to all financial instruments that are being
measured and reported on a fair value basis. In addition, in February 2008, FASB
issued FASB Staff Position (“FSP”) FAS 157-2, Effective Date of FASB Statement No.
157. This FSP delayed the effective date of SFAS 157 to fiscal years
beginning after November 15, 2008, and interim periods within those fiscal years
for all non-financial assets and liabilities, except those that are recognized
or disclosed at fair value in the financial statements on a recurring basis. The
adoption of SFAS 157 during fiscal 2008 for all financial instruments and the
adoption during fiscal 2009 for all non-financial assets and liabilities did not
have any impact on the Company’s financial position or results of
operations.





Effective
February 3, 2008, the Company adopted the provisions of FASB Statement No. 159
(“SFAS 159”), The Fair Value
Option for Financial Assets and Financial Liabilities. This standard
provides an option for companies to report selected financial assets and
liabilities at fair value. Although the Company adopted the provisions of SFAS
159 effective with the beginning of the Company’s 2008 fiscal year, it did not
elect the fair value option for any financial instruments or other items held by
the Company. Therefore, the adoption of SFAS 159 did not have any impact on the
Company’s financial position or results of operations.





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.




25





THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





ITEM 3 –
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





The
Company has evaluated the disclosure requirements of Item 305 of S-K
“Quantitative and Qualitative Disclosures about Market Risk,” and has concluded
that the Company has inherent risks in its operations as it is exposed to
certain market risks, including interest rates.





Interest Rate Risk -
To the extent that the Company borrows under its line of credit facility, the
Company would be exposed to market risk related to changes in interest rates. As
of May 2, 2009, no borrowings were outstanding under the line of credit
facility. The Company is not a party to any derivative financial instruments.
Additionally, the Company is exposed to market risk related to interest rate
risk on the cash and investments in interest-bearing securities. These
investments have carrying values that are subject to interest rate changes that
could impact earnings to the extent that the Company did not hold the
investments to maturity. If there are changes in interest rates, those changes
would also affect the investment income the Company earns on its cash and
investments. For each one-quarter percent decline in the interest/dividend rate
earned on cash and investments (approximately a 25% change in the rate earned),
the Company’s net income would decrease approximately $390,000 or approximately
$0.01 per share. This amount could vary based upon the number of shares of the
Company’s stock outstanding and the level of cash and investments held by the
Company.





Other Market Risk –
At May 2, 2009, the Company held $35.8 million, at par value, of investments in
auction-rate securities (“ARS”) and preferred stock. The Company concluded that
a $1.5 million temporary impairment and $5.2 million other-than-temporary
impairment existed related to these securities as of May 2, 2009. Given current
market conditions in the ARS and equity markets, the Company may incur
additional temporary or other-than-temporary impairment in the future if market
conditions persist and the Company is unable to recover the cost of its
investments in ARS.





ITEM 4 –
CONTROLS AND PROCEDURES





The
Company maintains a system of disclosure controls and procedures that are
designed to provide reasonable assurance that material information, which is
required to be timely disclosed, is accumulated and communicated to management
in a timely manner. An evaluation of the effectiveness of the design and
operation of the Company’s disclosure controls and procedures (as defined in
Rules 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) was
performed as of the end of the period covered by this report. This evaluation
was performed under the supervision and with the participation of the Company’s
Chief Executive Officer and Chief Financial Officer.





Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures as of the end of
the period covered by this report were effective to provide reasonable assurance
that information required to be disclosed by the Company in the Company’s
reports that it files or submits under the Exchange Act is accumulated and
communicated to management, including its Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure and are effective to provide reasonable assurance that such
information is recorded, processed, summarized, and reported within the time
periods specified by the SEC’s rules and forms.





Change in Internal Control
Over Financial Reporting





There were no changes in the Company's
internal control over financial reporting that occurred during the Company's
last fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial
reporting.




26




THE
BUCKLE, INC.





PART II
-- OTHER INFORMATION




Item
      1.
            Legal
      Proceedings:
            None





Item
      1A.
            Risk
      Factors:





The effect of economic
pressures and other business factors – During the thirteen weeks ended
May 2, 2009, the global recession has continued to cause uncertainty and a
wide-ranging lack of liquidity. The market uncertainty has resulted in a lack of
consumer confidence and a reduction of consumer spending. The success of our
operations depends to a significant extent upon a number of factors relating to
discretionary consumer spending, including economic conditions affecting
disposable consumer income such as employment, consumer debt, interest rates,
increases in energy costs, and consumer confidence. There can be no assurance
that consumer spending will not be further negatively affected by general or
local economic conditions, which could have an adverse impact on our continued
growth and results of operations.





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





The
following table sets forth information concerning purchases made by the Company
of its common stock for each of the months in the fiscal quarter ended May 2,
2009:





Total
      Number
              of
      Shares
              Purchased
            
            
            Average
              Price
      Paid
              Per
      Share
            
            
            Total
      Number of
              Shares
      Purchased
              as
      Part of Publicly
              Announced
      Plans
            
            
            Maximum
      Number of Shares that May Yet Be Purchased
              Under
      Publicly
              Announced
      PlansFeb.
      1, 2009 to Feb. 28, 2009
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            799,300March
      1, 2009 to April 4, 2009
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            799,300April
      5, 2009 to May 2, 2009
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            799,300-
            
            
            
            -
            
            
            
            -


The
Board of Directors authorized a 1,000,000 share repurchase plan on November 20,
2008. The Company has 799,300 shares remaining to complete this
authorization.




Item
      3.
            Defaults
      Upon Senior Securities:
            NoneItem
      4.
            Submission of Matters to a Vote of
      Security Holders:
            NoneItem
      5.
            Other
      Information:
            NoneItem
      6.
            Exhibits:




(a)
              Exhibits
      31.1 and 31.2 certifications, as well as Exhibits 32.1 and 32.2
      Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
      Section 906 of the Sarbanes-Oxley Act of
2002.




27






THE
BUCKLE, INC.





SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.




THE
      BUCKLE, INC.Dated:
      June 11
      ,2009
            /s/ DENNIS H. NELSONDENNIS
      H. NELSON, President and CEO (principal executive
  officer)Dated:
      June 11
      ,2009
            /s/ KAREN B. RHOADSKAREN B. RHOADS,
      Vice President of
      Finance and CFO (principal accounting
      officer)




28