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 August
1, 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  ̈





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  ̈  No  ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. (See
definition of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act). þ Large accelerated
filer;  ̈
Accelerated filer;  ̈ Non-accelerated filer
(Do not check if a smaller reporting company);  ̈ Smaller reporting
company





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





The
number of shares outstanding of the Registrant's Common Stock, as of August 28,
2009, was 46,276,564.





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
              19Item
      3.
              Quantitative
      and Qualitative Disclosures About Market Risk
              29Item
      4.
              Controls
      and Procedures
              30Part
      II. Other InformationItem
      1.
              Legal
      Proceedings
              31Item
      1A.
              Risk
      Factors
              31Item
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              31Item
      3.
              Defaults
      Upon Senior Securities
              31Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              32Item
      5.
              Other
      Information
              32Item
      6.
              Exhibits
              32Signatures
              33


2





THE
BUCKLE, INC.





BALANCE
SHEETS


(Amounts
in Thousands Except Share and Per Share Amounts)


(Unaudited)





August 1,
                        
                        
                        January 31,2009
                        
                        
                        2009ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                        
                        $
                        145,736
                        
                        
                        $
                        162,463Short-term
      investments
                        
                        
                        17,288
                        
                        
                        
                        19,150Accounts
      receivable, net of allowance of $28 and $46, respectively
                        
                        
                        6,719
                        
                        
                        
                        3,734Inventory
                        
                        
                        106,523
                        
                        
                        
                        83,963Prepaid
      expenses and other assets
                        
                        
                        18,865
                        
                        
                        
                        17,655Total
      current assets
                        
                        
                        295,131
                        
                        
                        
                        286,965PROPERTY
      AND EQUIPMENT
                        
                        
                        286,136
                        
                        
                        
                        264,154Less
      accumulated depreciation and amortization
                        
                        
                        (154,023
                        )
                        
                        
                        (147,460
                        )132,113
                        
                        
                        
                        116,694LONG-TERM
      INVESTMENTS
                        
                        
                        65,448
                        
                        
                        
                        56,213OTHER
      ASSETS
                        
                        
                        4,650
                        
                        
                        
                        5,468$
                        497,342
                        
                        
                        $
                        465,340LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIES:Accounts
      payable
                        
                        $
                        42,546
                        
                        
                        $
                        22,472Accrued
      employee compensation
                        
                        
                        19,748
                        
                        
                        
                        40,460Accrued
      store operating expenses
                        
                        
                        8,397
                        
                        
                        
                        7,701Gift
      certificates redeemable
                        
                        
                        6,986
                        
                        
                        
                        10,144Income
      taxes payable
                        
                        
                        2,042
                        
                        
                        
                        8,649Total
      current liabilities
                        
                        
                        79,719
                        
                        
                        
                        89,426DEFERRED
      COMPENSATION
                        
                        
                        5,761
                        
                        
                        
                        4,090DEFERRED
      RENT LIABILITY
                        
                        
                        35,886
                        
                        
                        
                        34,602Total
      liabilities
                        
                        
                        121,366
                        
                        
                        
                        128,118COMMITMENTSSTOCKHOLDERS’
      EQUITY:Common
      stock, authorized 100,000,000 shares of $.01 par value; 46,277,205 and
      45,906,265 shares issued and outstanding at August 1, 2009 and January 31,
      2009, respectively
                        
                        
                        463
                        
                        
                        
                        459Additional
      paid-in capital
                        
                        
                        74,359
                        
                        
                        
                        68,894Retained
      earnings
                        
                        
                        302,169
                        
                        
                        
                        268,789Accumulated
      other comprehensive loss
                        
                        
                        (1,015
                        )
                        
                        
                        (920
                        )Total
      stockholders’ equity
                        
                        
                        375,976
                        
                        
                        
                        337,222$
                        497,342
                        
                        
                        $
                        465,340





See notes
to unaudited condensed financial statements.


3





THE
BUCKLE, INC.





STATEMENTS
OF INCOME


(Amounts
in Thousands Except Per Share Amounts)


(Unaudited)





Thirteen Weeks Ended
                  
                  
                  Twenty-six Weeks EndedAugust 1,
                  
                  
                  August 2,
                  
                  
                  August 1,
                  
                  
                  August 2,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008SALES,
      Net of returns and allowances
                  
                  $
                  192,906
                  
                  
                  $
                  169,765
                  
                  
                  $
                  392,603
                  
                  
                  $
                  330,065COST
      OF SALES (Including buying,distribution,
      and occupancy costs)
                  
                  
                  110,628
                  
                  
                  
                  99,497
                  
                  
                  
                  223,622
                  
                  
                  
                  194,175Gross
      profit
                  
                  
                  82,278
                  
                  
                  
                  70,268
                  
                  
                  
                  168,981
                  
                  
                  
                  135,890OPERATING
      EXPENSES:Selling
                  
                  
                  37,507
                  
                  
                  
                  33,480
                  
                  
                  
                  75,104
                  
                  
                  
                  65,039General
      and administrative
                  
                  
                  6,647
                  
                  
                  
                  3,477
                  
                  
                  
                  14,025
                  
                  
                  
                  10,17244,154
                  
                  
                  
                  36,957
                  
                  
                  
                  89,129
                  
                  
                  
                  75,211INCOME
      FROM OPERATIONS
                  
                  
                  38,124
                  
                  
                  
                  33,311
                  
                  
                  
                  79,852
                  
                  
                  
                  60,679OTHER
      INCOME, Net
                  
                  
                  1,549
                  
                  
                  
                  2,049
                  
                  
                  
                  2,459
                  
                  
                  
                  4,369INCOME
      BEFORE INCOME TAXES
                  
                  
                  39,673
                  
                  
                  
                  35,360
                  
                  
                  
                  82,311
                  
                  
                  
                  65,048PROVISION
      FOR INCOME TAXES
                  
                  
                  14,679
                  
                  
                  
                  13,084
                  
                  
                  
                  30,455
                  
                  
                  
                  24,055NET
      INCOME
                  
                  $
                  24,994
                  
                  
                  $
                  22,276
                  
                  
                  $
                  51,856
                  
                  
                  $
                  40,993EARNINGS
      PER SHARE:Basic
                  
                  $
                  0.55
                  
                  
                  $
                  0.49
                  
                  
                  $
                  1.14
                  
                  
                  $
                  0.91Diluted
                  
                  $
                  0.54
                  
                  
                  $
                  0.48
                  
                  
                  $
                  1.11
                  
                  
                  $
                  0.88Basic
      weighted average shares
                  
                  
                  45,640
                  
                  
                  
                  45,346
                  
                  
                  
                  45,585
                  
                  
                  
                  45,076Diluted
      weighted average shares
                  
                  
                  46,623
                  
                  
                  
                  46,587
                  
                  
                  
                  46,572
                  
                  
                  
                  46,418





See notes
to unaudited condensed financial statements.


4





THE
BUCKLE, INC.





STATEMENTS
OF STOCKHOLDERS' EQUITY


(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
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                51,856
                                
                                
                                
                                -
                                
                                
                                
                                51,856Dividends
      paid on common stock, ($0.20 per share)
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (18,476
                                )
                                
                                
                                -
                                
                                
                                
                                (18,476
                                )Common
      stock issued on exercise of stock options
                                
                                
                                173,511
                                
                                
                                
                                2
                                
                                
                                
                                1,136
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                1,138Issuance
      of non-vested stock, net of forfeitures
                                
                                
                                197,429
                                
                                
                                
                                2
                                
                                
                                
                                (2
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Amortization
      of non-vested stock grants, net of forfeitures
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,413
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,413Stock
      option compensation expense
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                109
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                109Income
      tax benefit related to exerciseof
      stock options
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                1,809
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                1,809Unrealized
      loss on investments, net of tax
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (95
                                )
                                
                                
                                (95
                                )BALANCE,
      August 1, 2009
                                
                                
                                46,277,205
                                
                                
                                $
                                463
                                
                                
                                $
                                74,359
                                
                                
                                $
                                302,169
                                
                                
                                $
                                (1,015
                                )
                                
                                $
                                375,976FISCAL
      2008BALANCE,
      February 3, 2008
                                
                                
                                29,841,668
                                
                                
                                $
                                298
                                
                                
                                $
                                46,977
                                
                                
                                $
                                291,045
                                
                                
                                $
                                -
                                
                                
                                $
                                338,320Net
      income
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                40,993
                                
                                
                                
                                -
                                
                                
                                
                                40,993Dividends
      paid on common stock, ($0.1667 per share)
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (15,269
                                )
                                
                                
                                -
                                
                                
                                
                                (15,269
                                )Common
      stock issued on exercise of stock options
                                
                                
                                669,725
                                
                                
                                
                                8
                                
                                
                                
                                8,868
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                8,876Issuance
      of non-vested stock, net of forfeitures
                                
                                
                                139,950
                                
                                
                                
                                1
                                
                                
                                
                                (1
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Amortization
      of non-vested stock grants, net of forfeitures
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,599
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,599Stock
      option compensation expense
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                199
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                199Income
      tax benefit related to exercise of stock options
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                7,630
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                7,630Unrealized
      loss on investments, net of tax
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (976
                                )
                                
                                
                                (976
                                )BALANCE,
      August 2, 2008
                                
                                
                                30,651,343
                                
                                
                                $
                                307
                                
                                
                                $
                                66,272
                                
                                
                                $
                                316,769
                                
                                
                                $
                                (976
                                )
                                
                                $
                                382,372





See notes
to unaudited condensed financial statements.


5





THE
BUCKLE, INC.





STATEMENTS
OF CASH FLOWS


(Amounts
in Thousands)


(Unaudited)





Twenty-six
      Weeks EndedAugust
      1,
                    
                    
                    August
      2,2009
                    
                    
                    2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                    
                    $
                    51,856
                    
                    
                    $
                    40,993Adjustments
      to reconcile net income to net cash flowsfrom
      operating activities:Depreciation
      and amortization
                    
                    
                    11,438
                    
                    
                    
                    10,383Amortization
      of non-vested stock grants, net of forfeitures
                    
                    
                    2,413
                    
                    
                    
                    2,599Stock
      option compensation expense
                    
                    
                    109
                    
                    
                    
                    199Gain
      on involuntary conversion of corporate aircraft to monetary
      asset
                    
                    
                    -
                    
                    
                    
                    (2,963
                    )Realized
      gain on securities
                    
                    
                    (907
                    )
                    
                    
                    -Deferred
      income taxes
                    
                    
                    (936
                    )
                    
                    
                    -Other
                    
                    
                    (113
                    )
                    
                    
                    50Changes
      in operating assets and liabilities:Accounts
      receivable
                    
                    
                    (511
                    )
                    
                    
                    (1,874
                    )Inventory
                    
                    
                    (22,560
                    )
                    
                    
                    (25,793
                    )Prepaid
      expenses and other assets
                    
                    
                    (769
                    )
                    
                    
                    (1,196
                    )Accounts
      payable
                    
                    
                    19,064
                    
                    
                    
                    23,247Accrued
      employee compensation
                    
                    
                    (20,712
                    )
                    
                    
                    (11,335
                    )Accrued
      store operating expenses
                    
                    
                    696
                    
                    
                    
                    1,300Gift
      certificates redeemable
                    
                    
                    (3,158
                    )
                    
                    
                    (2,697
                    )Income
      taxes payable
                    
                    
                    (7,753
                    )
                    
                    
                    (1,712
                    )Changes
      in long-term liabilities and deferred compensation
                    
                    
                    2,955
                    
                    
                    
                    4,326Net
      cash flows from operating activities
                    
                    
                    31,112
                    
                    
                    
                    35,527CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of property and equipment
                    
                    
                    (26,041
                    )
                    
                    
                    (15,044
                    )Proceeds
      from sale of property and equipment
                    
                    
                    307
                    
                    
                    
                    11,587Change
      in other assets
                    
                    
                    38
                    
                    
                    
                    (167
                    )Purchases
      of investments
                    
                    
                    (22,201
                    )
                    
                    
                    (16,581
                    )Proceeds
      from sales/maturities of investments
                    
                    
                    15,584
                    
                    
                    
                    104,503Net
      cash flows from investing activities
                    
                    
                    (32,313
                    )
                    
                    
                    84,298CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from the exercise of stock options
                    
                    
                    1,138
                    
                    
                    
                    8,876Excess
      tax benefit from stock option exercises
                    
                    
                    1,812
                    
                    
                    
                    6,419Payment
      of dividends
                    
                    
                    (18,476
                    )
                    
                    
                    (15,269
                    )Net
      cash flows from financing activities
                    
                    
                    (15,526
                    )
                    
                    
                    26NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                    
                    
                    (16,727
                    )
                    
                    
                    119,851CASH
      AND CASH EQUIVALENTS, Beginning of period
                    
                    
                    162,463
                    
                    
                    
                    64,293CASH
      AND CASH EQUIVALENTS, End of period
                    
                    $
                    145,736
                    
                    
                    $
                    184,144





See notes
to unaudited condensed financial statements.


6


THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2009 AND AUGUST 2, 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 401 stores located
in 41 states throughout the continental United States as of August 1, 2009 and
381 stores in 39 states as of August 2, 2008. During the second quarter of
fiscal 2009, the Company opened nine new stores and substantially remodeled
seven stores. During the second quarter of fiscal 2008, the Company opened seven
new stores and substantially remodeled four stores.





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





Percentage of Net Sales
                        
                        
                        Percentage of Net SalesThirteen Weeks Ended
                        
                        
                        Twenty-six Weeks EndedMerchandise Group
                        
                        August 1, 2009
                        
                        
                        August 2, 2008
                        
                        
                        August 1, 2009
                        
                        
                        August 2, 2008Denims
                        
                        
                        35.3
                        %
                        
                        
                        34.9
                        %
                        
                        
                        38.6
                        %
                        
                        
                        38.4
                        %Tops
      (including sweaters)
                        
                        
                        39.0
                        
                        
                        
                        40.9
                        
                        
                        
                        37.7
                        
                        
                        
                        38.5Sportswear/Fashions
                        
                        
                        11.1
                        
                        
                        
                        10.2
                        
                        
                        
                        9.7
                        
                        
                        
                        9.3Accessories
                        
                        
                        8.3
                        
                        
                        
                        7.8
                        
                        
                        
                        7.7
                        
                        
                        
                        7.5Footwear
                        
                        
                        5.0
                        
                        
                        
                        5.0
                        
                        
                        
                        5.0
                        
                        
                        
                        5.0Casual
      bottoms
                        
                        
                        0.6
                        
                        
                        
                        0.9
                        
                        
                        
                        0.5
                        
                        
                        
                        0.9Outerwear
                        
                        
                        0.6
                        
                        
                        
                        0.2
                        
                        
                        
                        0.7
                        
                        
                        
                        0.3Other
                        
                        
                        0.1
                        
                        
                        
                        0.1
                        
                        
                        
                        0.1
                        
                        
                        
                        0.1100.0
                        %
                        
                        
                        100.0
                        %
                        
                        
                        100.0
                        %
                        
                        
                        100.0
                        %




7





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2009 AND AUGUST 2, 2008


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


(Unaudited)





3.
            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 EndedAugust 1, 2009
                  
                  
                  August 2, 2008Weighted
                  
                  
                  
                  
                  
                  
                  
                  
                  WeightedAverage
                  
                  
                  Per Share
                  
                  
                  
                  
                  
                  Average
                  
                  
                  Per ShareIncome
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  Income
                  
                  
                  Shares
                  
                  
                  AmountBasic
      EPS
                  
                  $
                  24,994
                  
                  
                  
                  45,640
                  
                  
                  $
                  0.55
                  
                  
                  $
                  22,276
                  
                  
                  
                  45,346
                  
                  
                  $
                  0.49Effect
      of Dilutive Securities:Stock
      options and non-vested shares
                  
                  
                  -
                  
                  
                  
                  983
                  
                  
                  
                  (0.01
                  )
                  
                  
                  -
                  
                  
                  
                  1,241
                  
                  
                  
                  (0.01
                  )Diluted
      EPS
                  
                  $
                  24,994
                  
                  
                  
                  46,623
                  
                  
                  $
                  0.54
                  
                  
                  $
                  22,276
                  
                  
                  
                  46,587
                  
                  
                  $
                  0.48





Twenty-six Weeks Ended
                  
                  
                  Twenty-six Weeks EndedAugust 1, 2009
                  
                  
                  August 2, 2008Weighted
                  
                  
                  
                  
                  
                  
                  
                  
                  WeightedAverage
                  
                  
                  Per Share
                  
                  
                  
                  
                  
                  Average
                  
                  
                  Per ShareIncome
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  Income
                  
                  
                  Shares
                  
                  
                  AmountBasic
      EPS
                  
                  $
                  51,856
                  
                  
                  
                  45,585
                  
                  
                  $
                  1.14
                  
                  
                  $
                  40,993
                  
                  
                  
                  45,076
                  
                  
                  $
                  0.91Effect
      of Dilutive Securities:Stock
      options and non-vested shares
                  
                  
                  -
                  
                  
                  
                  987
                  
                  
                  
                  (0.03
                  )
                  
                  
                  -
                  
                  
                  
                  1,342
                  
                  
                  
                  (0.03
                  )Diluted
      EPS
                  
                  $
                  51,856
                  
                  
                  
                  46,572
                  
                  
                  $
                  1.11
                  
                  
                  $
                  40,993
                  
                  
                  
                  46,418
                  
                  
                  $
                  0.88





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.


8





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2009 AND AUGUST 2, 2008


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


(Unaudited)





5.
            Investments





The
following is a summary of investments as of August 1, 2009:





Amortized
                  
                  
                  Gross
                  
                  
                  Gross
                  
                  
                  Other-than-
                  
                  
                  EstimatedCost or
                  
                  
                  Unrealized
                  
                  
                  Unrealized
                  
                  
                  Temporary
                  
                  
                  FairPar Value
                  
                  
                  Gains
                  
                  
                  Losses
                  
                  
                  Impairment
                  
                  
                  ValueAvailable-for-Sale
      Securities:Auction-rate
      securities
                  
                  $
                  26,720
                  
                  
                  $
                  -
                  
                  
                  $
                  (1,611
                  )
                  
                  $
                  -
                  
                  
                  $
                  25,109Preferred
      stock
                  
                  
                  4,400
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3,219
                  )
                  
                  
                  1,181$
                  31,120
                  
                  
                  $
                  -
                  
                  
                  $
                  (1,611
                  )
                  
                  $
                  (3,219
                  )
                  
                  $
                  26,290Held-to-Maturity
      Securities:State
      and municipal bonds
                  
                  $
                  43,215
                  
                  
                  $
                  509
                  
                  
                  $
                  (66
                  )
                  
                  $
                  -
                  
                  
                  $
                  43,658Fixed
      maturities
                  
                  
                  3,000
                  
                  
                  
                  54
                  
                  
                  
                  (2
                  )
                  
                  
                  -
                  
                  
                  
                  3,052Certificates
      of deposit
                  
                  
                  3,720
                  
                  
                  
                  34
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,754U.S.
      treasuries
                  
                  
                  750
                  
                  
                  
                  4
                  
                  
                  
                  (1
                  )
                  
                  
                  -
                  
                  
                  
                  753$
                  50,685
                  
                  
                  $
                  601
                  
                  
                  $
                  (69
                  )
                  
                  $
                  -
                  
                  
                  $
                  51,217Trading
      Securities:Mutual
      funds
                  
                  $
                  6,250
                  
                  
                  $
                  -
                  
                  
                  $
                  (489
                  )
                  
                  $
                  -
                  
                  
                  $
                  5,761








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


9





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2009 AND AUGUST 2, 2008


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


(Unaudited)





The
auction-rate securities were invested as follows as of August 1,
2009:





Nature
                              
                              Underlying
      Collateral
                              
                              Par ValueMunicipal
      revenue bonds
                              
                              83%
      insured by AAA/AA/A-rated bond insurers at Aug. 1, 2009
                              
                              $
                              13,345Municipal
      bond funds
                              
                              Fixed
      income instruments within issuers' money market funds
                              
                              
                              9,625Student
      loan bonds
                              
                              Student
      loans guaranteed by state entities
                              
                              
                              3,750Total
      par value
                              
                              
                              
                              $
                              26,720





As of
August 1, 2009, the Company’s auction-rate securities portfolio was 58%
AAA/Aaa-rated, 33% AA/Aa-rated, and 9% A-rated.





The
amortized cost and fair value of held-to-maturity securities by contractual
maturity as of August 1, 2009 is as follows:





Amortized
                    
                    
                    FairFiscal
      Periods
                    
                    Cost
                    
                    
                    ValueTwelve
      months ending July 31, 2010
                    
                    $
                    15,643
                    
                    
                    $
                    15,730Twelve
      months ending July 30, 2011
                    
                    
                    12,299
                    
                    
                    
                    12,438Twelve
      months ending July 28, 2012
                    
                    
                    11,624
                    
                    
                    
                    11,703Twelve
      months ending August 3, 2013
                    
                    
                    4,158
                    
                    
                    
                    4,254Twelve
      months ending August 2, 2014
                    
                    
                    850
                    
                    
                    
                    847Thereafter
                    
                    
                    6,111
                    
                    
                    
                    6,245$
                    50,685
                    
                    
                    $
                    51,217





At August
1, 2009 and January 31, 2009, held-to-maturity investments of $35,042 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 August 1, 2009, the
reported investment amount is net of $1,611 of temporary impairment and $3,219
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 $1,611 temporary impairment is reported, net of tax, as an “accumulated
other comprehensive loss” of $1,015 in stockholders’ equity as of August 1,
2009. The Company reported the $3,219 OTTI ($2,028 net of tax) as part of the
total of $5,157 OTTI ($3,249 net of tax) reported as a loss in the statement of
income during both the third and fourth quarters of the fiscal year ended
January 31, 2009.





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 August 1, 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.


10





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2009 AND AUGUST 2, 2008


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


(Unaudited)





As of
August 1, 2009, the Company had $26,720 invested in ARS and $4,400 invested in
preferred securities, at par value, which are reported at their estimated fair
value of $25,109 and $1,181, 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 liquidated
$1,650 of its investments in ARS at par value and $3,000 of its investments in
preferred securities at par value during the first half of fiscal 2009. These
investments were valued at $1,062 and were liquidated for $1,969 in
proceeds.





As of
August 1, 2009, $1,645 of the Company’s investment in ARS and preferred
securities was classified in short-term investments and $24,645 was classified
in long-term investments. 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.





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.


11





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2009 AND AUGUST 2, 2008


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


(Unaudited)





As of
August 1, 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 inputs using unobservable inputs where the
following criteria were considered in estimating fair value:





·
            Pricing
      was provided by the custodian of
ARS;


·
            Pricing
      was provided by a third-party broker for
ARS;


·
            Sales
      of similar securities;


·
            Quoted
      prices for similar securities in active
markets;


·
            Quoted
      prices for publicly traded preferred
securities;


·
            Quoted
      prices for similar assets in markets that are not active - including
      markets where there are few transactions for the asset, the prices are not
      current, or price quotations vary substantially either over time or among
      market makers, or in which little information is released
      publicly;


·
            Pricing
      was provided by a third-part valuation consultant (using Level 3
      inputs).





In
addition, the Company considers other factors including, but not limited to, the
financial condition of the investee, the credit rating, insurance, guarantees,
collateral, cash flows, and the current and expected market and industry
conditions in which the investee operates. Management believes it has used
information that was reasonably obtainable in order to complete its valuation
process and determine if the Company’s investments in ARS had incurred any
temporary and/or other-than-temporary impairment as of August 1, 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 $1,611 of temporary
impairment and $3,219 of OTTI as of August 1, 2009. The Company has reported the
$1,611 of temporary impairment, net of tax, as a $1,015 reduction to
stockholders’ equity in “accumulated other comprehensive loss” as of August 1,
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 $3,219 OTTI ($2,028 net of tax) as
part of the total of $5,157 OTTI ($3,249 net of tax) reported 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.


12





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2009 AND AUGUST 2, 2008


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


(Unaudited)





The
Company’s financial assets measured at fair value on a recurring basis subject
to the disclosure requirements of SFAS 157 as of August 1, 2009 were as
follows:





Fair Value Measurements at Reporting Date UsingQuoted Prices inActive Markets
                              
                              
                              Significant
                              
                              
                              Significantfor Identical
                              
                              
                              Observable
                              
                              
                              UnobservableAssets
                              
                              
                              Inputs
                              
                              
                              Inputs(Level
      1)
                              
                              
                              (Level
      2)
                              
                              
                              (Level
      3)
                              
                              
                              TotalASSETS:Available-for-sale
      securities (includingauction-rate
      securities and preferred stock)
                              
                              $
                              2,824
                              
                              
                              $
                              16,231
                              
                              
                              $
                              7,235
                              
                              
                              $
                              26,290Trading
      securities (including mutual funds)
                              
                              
                              5,761
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              5,761Total
                              
                              $
                              8,585
                              
                              
                              $
                              16,231
                              
                              
                              $
                              7,235
                              
                              
                              $
                              32,051





ARS and
preferred securities included in Level 1 represent securities which have a known
or anticipated upcoming redemption as of August 1, 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.





Changes
in the fair value of the Company’s financial assets measured at fair value on a
recurring basis using significant unobservable inputs (Level 3), as defined in
SFAS 157, are as follows for the 26-week year-to-date period ended August 1,
2009:





Available-for-SaleSecurities(Level
      3)Balance
      as of February 1, 2009
                            
                            $
                            7,260Total
      gains or losses (realized and unrealized):Included
      in net income
                            
                            
                            -Included
      in other comprehensive income
                            
                            
                            -Purchases,
      sales, issuances, and settlements (net)
                            
                            
                            (25
                            )Transfers
      in and/or out of Level 3
                            
                            
                            -Balance
      as of August 1, 2009
                            
                            $
                            7,235


13




THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2009 AND AUGUST 2, 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
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 EndedAugust 1, 2009
                  
                  
                  August 2, 2008Net
      income
                  
                  $
                  24,994
                  
                  
                  $
                  22,276Changes
      in net unrealized losses on investments, net of taxes of $45 and
      $169
                  
                  
                  (77
                  )
                  
                  
                  (288
                  )Comprehensive
      Income
                  
                  $
                  24,917
                  
                  
                  $
                  21,988





Twenty-six Weeks EndedAugust 1, 2009
                  
                  
                  August 2, 2008Net
      income
                  
                  $
                  51,856
                  
                  
                  $
                  40,993Changes
      in net unrealized losses on investments, net of taxes of $56 and
      $573
                  
                  
                  (95
                  )
                  
                  
                  (976
                  )Comprehensive
      Income
                  
                  $
                  51,761
                  
                  
                  $
                  40,017





8.
            Supplemental Cash Flow
      Information





The
Company had non-cash investing activities during the twenty-six week periods
ended August 1, 2009 and August 2, 2008 of $(1,010) and $184, respectively. The
non-cash investing activity relates to unpaid purchases of property, plant, and
equipment included in accounts payable as of the end of the quarter. Amounts
reported as unpaid purchases are recorded as cash outflows from investing
activities for purchases of property, plant, and equipment in the statement of
cash flows in the period they are paid.





Additional
cash flow information for the Company includes cash paid for income taxes during
the twenty-six week periods ended August 1, 2009 and August 2, 2008 of $37,282
and $18,944, 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
August 1, 2009, 642,195 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 August 1, 2009, 207,511 shares were available for grant under the
various restricted stock plans, of which 128,387 were available for grant to
executive officers.


14





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2009 AND AUGUST 2, 2008


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


(Unaudited)





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 two quarters 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.





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


Thirteen
      Weeks Ended
                                      
                                      
                                      Twenty-six
      Weeks EndedAugust
      1, 2009
                                      
                                      
                                      August
      2, 2008
                                      
                                      
                                      August
      1, 2009
                                      
                                      
                                      August
      2, 2008Stock-based
      compensation expense, before tax:Stock
      options
                                      
                                      $
                                      69
                                      
                                      
                                      $
                                      57
                                      
                                      
                                      $
                                      109
                                      
                                      
                                      $
                                      199Non-vested
      shares of common stock
                                      
                                      
                                      1,188
                                      
                                      
                                      
                                      1,299
                                      
                                      
                                      
                                      2,413
                                      
                                      
                                      
                                      2,599Total
      stock-based compensation expense, before tax
                                      
                                      $
                                      1,257
                                      
                                      
                                      $
                                      1,356
                                      
                                      
                                      $
                                      2,522
                                      
                                      
                                      $
                                      2,798Total
      stock-based compensation expense, after tax
                                      
                                      $
                                      792
                                      
                                      
                                      $
                                      854
                                      
                                      
                                      $
                                      1,589
                                      
                                      
                                      $
                                      1,763


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 twenty-six week
periods ended August 1, 2009 and August 2, 2008, the excess tax benefit realized
from exercised stock options was $1,812 and $6,419, respectively.





No stock
options were granted during the first half of fiscal 2009. Stock options granted
during the first half 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 twenty-week
period ended August 2, 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:





Twenty-six Weeks EndedAugust 2, 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 consistent with 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
      consistent with the expected lives of stock
  options.
 (4)
              Based
      on historical and expected exercise
behavior.
  15





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2009 AND AUGUST 2, 2008


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


(Unaudited)





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.





A summary
of the Company’s stock-based compensation activity related to stock options for
the twenty-six week period ended August 1, 2009 is as follows:





WeightedWeighted
                      
                      AverageAverage
                      
                      Remaining
                      
                      AggregateExercise
                      
                      Contractual
                      
                      IntrinsicShares
                      
                      
                      Price
                      
                      Life
                      
                      ValueOutstanding
      - beginning of year
                      
                      
                      1,635,163
                      
                      
                      $
                      6.91Granted
                      
                      
                      -
                      
                      
                      
                      n/aExpired/forfeited
                      
                      
                      (5,069
                      )
                      
                      
                      24.21Exercised
                      
                      
                      (173,511
                      )
                      
                      
                      6.56Outstanding
      - end of quarter
                      
                      
                      1,456,583
                      
                      
                      $
                      6.90
                      
                      3.76 years
                      
                      $
                      35,020Exercisable
      - end of quarter
                      
                      
                      1,436,303
                      
                      
                      $
                      6.65
                      
                      3.70 years
                      
                      $
                      34,884


The total
intrinsic value of options exercised during the twenty-six week periods ended
August 1, 2009 and August 2, 2008 was $5,026 and $21,764, respectively. As of
August 1, 2009, there was $130 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 1.2 years.





Non-vested
shares of common stock granted during the twenty-six week period ended August 2,
2008 were granted pursuant to the Company’s 2005 Restricted Stock Plan.
Non-vested shares granted during the twenty-six week period ended August 1, 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
its 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.


16





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2009 AND AUGUST 2, 2008


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


(Unaudited)





A summary
of the Company’s stock-based compensation activity related to grants of
non-vested shares of common stock for the twenty-six week period ended August 1,
2009 is as follows:





Weighted
      AverageGrant
      DateShares
                      
                      
                      Fair ValueNon-Vested
      - beginning of year
                      
                      
                      423,171
                      
                      
                      $
                      23.84Granted
                      
                      
                      243,800
                      
                      
                      
                      21.20Forfeited
                      
                      
                      (46,371
                      )
                      
                      
                      22.63Vested
                      
                      
                      (45,506
                      )
                      
                      
                      27.54Non-Vested
      - end of quarter
                      
                      
                      575,094
                      
                      
                      $
                      22.53


As of
August 1, 2009, there was $6,407 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 2.0 years. The total fair value
of shares vested during the twenty-six week periods ended August 1, 2009 and
August 2, 2008 was $1,393 and $1,341, respectively.





10.
            Insurance
      Proceeds





During
the second quarter of fiscal 2008, one of the Company’s corporate aircrafts was
destroyed in a tornado. The Company received $11,500 of insurance proceeds,
which is included in proceeds from sale of property and equipment in the
statements of cash flows. During the second quarter, Company recorded a $2,963
gain from the involuntary conversion of the aircraft, which is included in
general and administrative expenses. During the third quarter of fiscal 2008 the
Company purchased a replacement aircraft at a cost of $14,304.





11.
            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.


17





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND TWENTY-SIX WEEKS ENDED AUGUST 1, 2009 AND AUGUST 2, 2008


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


(Unaudited)





In May
2009, FASB issued FASB Statement No. 165 (“SFAS 165”), Subsequent Events. This
statement requires management to evaluate subsequent events through the date the
financial statements are issued, or are available to be issued, and requires
companies to disclose the date through which such subsequent events have been
evaluated. SFAS 165 is effective for financial statements issued for interim or
annual reporting periods ending after June 15, 2009, therefore the Company
adopted the provisions of SFAS 165 effective May 3, 2009. The adoption of SFAS
165 did not have any impact on the Company’s financial position or results of
operations.





In June
2009, FASB issues FASB Statement No. 168 (“SFAS 168”), The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles – a
replacement of FASB Statement No. 162. The codification will become the
source of Generally Accepted Accounting Principles (“GAAP”) recognized by FASB
to be applied by nongovernmental entities. Rules and interpretive releases of
the Securities and Exchange Commission (“SEC”) under authority of federal
securities laws are also sources of authoritative GAAP for SEC registrants. On
the effective date of SFAS 168, the codification will supersede all
then-existing non-SEC accounting and reporting standards. All other
non-grandfathered, non-SEC accounting literature not included in the
codification will become non-authoritative. SFAS 168 is effective for financial
statements issued for interim or annual reporting periods ending after September
15, 2009. The Company does not anticipate that the adoption of SFAS 168 will
have any impact on the Company’s financial position or results of
operations.





12.
            Subsequent
      Events





In
accordance with the provisions of SFAS 165, the Company has evaluated subsequent
events through September 10, 2009. All subsequent events requiring recognition
as of August 1, 2009 or disclosure in this Form 10-Q have been incorporated into
the financial statements contained herein.


18


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.





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.


19


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 and twenty-six week
periods ended August 1, 2009 and August 2, 2008:





Percentage
      of Net Sales
                    
                    
                    Percentage
                    
                    
                    Percentage
      of Net Sales
                    
                    
                    PercentageThirteen Weeks Ended
                    
                    
                    Increase/
                    
                    
                    Twenty-six Weeks Ended
                    
                    
                    Increase/Aug.1, 2009
                    
                    
                    Aug.2, 2008
                    
                    
                    (Decrease)
                    
                    
                    Aug.1, 2009
                    
                    
                    Aug.2, 2008
                    
                    
                    (Decrease)Net
      sales
                    
                    
                    100.0
                    %
                    
                    
                    100.0
                    %
                    
                    
                    13.6
                    %
                    
                    
                    100.0
                    %
                    
                    
                    100.0
                    %
                    
                    
                    18.9
                    %Cost
      of sales (including buying, distribution, and occupancy
    costs)
                    
                    
                    57.3
                    %
                    
                    
                    58.6
                    %
                    
                    
                    11.2
                    %
                    
                    
                    57.0
                    %
                    
                    
                    58.8
                    %
                    
                    
                    15.2
                    %Gross
      profit
                    
                    
                    42.7
                    %
                    
                    
                    41.4
                    %
                    
                    
                    17.1
                    %
                    
                    
                    43.0
                    %
                    
                    
                    41.2
                    %
                    
                    
                    24.4
                    %Selling
      expenses
                    
                    
                    19.4
                    %
                    
                    
                    19.7
                    %
                    
                    
                    12.0
                    %
                    
                    
                    19.1
                    %
                    
                    
                    19.7
                    %
                    
                    
                    15.5
                    %General
      and administrative expenses
                    
                    
                    3.5
                    %
                    
                    
                    2.1
                    %
                    
                    
                    91.2
                    %
                    
                    
                    3.6
                    %
                    
                    
                    3.1
                    %
                    
                    
                    37.9
                    %Income
      from operations
                    
                    
                    19.8
                    %
                    
                    
                    19.6
                    %
                    
                    
                    14.4
                    %
                    
                    
                    20.3
                    %
                    
                    
                    18.4
                    %
                    
                    
                    31.6
                    %Other
      income, net
                    
                    
                    0.8
                    %
                    
                    
                    1.2
                    %
                    
                    
                    -24.4
                    %
                    
                    
                    0.7
                    %
                    
                    
                    1.3
                    %
                    
                    
                    -43.7
                    %Income
      before income taxes
                    
                    
                    20.6
                    %
                    
                    
                    20.8
                    %
                    
                    
                    12.2
                    %
                    
                    
                    21.0
                    %
                    
                    
                    19.7
                    %
                    
                    
                    26.5
                    %Provision
      for income taxes
                    
                    
                    7.6
                    %
                    
                    
                    7.7
                    %
                    
                    
                    12.2
                    %
                    
                    
                    7.8
                    %
                    
                    
                    7.3
                    %
                    
                    
                    26.6
                    %Net
      income
                    
                    
                    13.0
                    %
                    
                    
                    13.1
                    %
                    
                    
                    12.2
                    %
                    
                    
                    13.2
                    %
                    
                    
                    12.4
                    %
                    
                    
                    26.5
                    %





Net sales
increased from $169.8 million in the second quarter of fiscal 2008 to $192.9
million in the second quarter of fiscal 2009, a 13.6% increase. Comparable store
sales increased by $13.8 million, or 8.6%, for the thirteen week period ended
August 1, 2009 compared to the same period in the prior year. The comparable
store sales increase was primarily due to a 5.0% increase in the average retail
price per piece of merchandise sold during the period, a 3.0% increase in the
average number of units sold per transaction, and an increase in the number of
transactions at comparable stores during the period. 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 15 new stores during the first two quarters of fiscal 2009, and to
growth in online sales. Online sales for the quarter (which are not included in
comparable store sales) increased 39.0% to $10.1 million.





The
Company’s average retail price per piece of merchandise sold increased $2.05, or
5.0%, during the second quarter of fiscal 2009 compared to the second quarter of
fiscal 2008. This $2.05 increase was primarily attributable to the following
changes (with their corresponding effect on the overall average price per
piece): a 10.8% increase in average denim price points ($1.39), a 3.9% increase
in average knit shirt price points ($0.49), a 7.8% increase in average active
apparel price points ($0.28), an 11.3% increase in average woven shirt price
points ($0.24), and a 7.7% increase in average footwear price points ($0.15).
These increases were partially offset by the impact of a shift in the
merchandise mix (-$0.50). These changes are primarily a reflection of
merchandise shifts in terms of brands and product styles, fabrics, details, and
finishes.





Net sales
increased from $330.1 million for the first two quarters of fiscal 2008 to
$392.6 million for the first two quarters of fiscal 2009, an 18.9% increase.
Comparable store sales increased by $40.5 million, or 13.1%, for the twenty-six
week period ended August 1, 2009 compared to the same period in the prior year.
The comparable store sales increase was primarily due to a 6.0% increase in the
average retail price per piece of merchandise sold during the period, a 2.5%
increase in the average number of units sold per transaction, and an increase in
the number of transactions at comparable stores during the period. Sales growth
for the twenty-six week period was also attributable to the inclusion of a full
two quarters of operating results for the 21 new stores opened during fiscal
2008, to the opening of 15 new stores during the first two quarters of fiscal
2009, and to growth in online sales. Online sales for the year-to-date period
increased 56.4% to $21.8 million. Average sales per square foot increased 11.9%
from $168.69 for the twenty-six week period ended August 2, 2008 to $188.68 for
the twenty-six week period ended August 1, 2009.


20





THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





The
Company’s average retail price per piece of merchandise sold increased $2.30, or
6.0%, during the first two quarters of fiscal 2009 compared to the first two
quarters of fiscal 2008. This $2.30 increase was primarily attributable to the
following changes (with their corresponding effect on the overall average price
per piece): a 9.8% increase in average denim price points ($1.45), a 5.1%
increase in average knit shirt price points ($0.64), an 8.4% increase in average
active apparel price points ($0.28), a 10.6% increase in average woven shirt
price points ($0.23), a 7.6% increase in average footwear price points ($0.15),
and increased average price points in certain other categories ($0.10). These
increases were partially offset by the impact of a shift in the merchandise mix
(-$0.55). These changes are primarily a reflection of merchandise shifts in
terms of brands and product styles, fabrics, details, and finishes.





Gross
profit after buying, distribution, and occupancy expenses increased $12.0
million in the second quarter of fiscal 2009 to $82.3 million, a 17.1% increase.
As a percentage of net sales, gross profit increased from 41.4% in the second
quarter of fiscal 2008 to 42.7% in the second 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 0.40% reduction, as a percentage of net sales,
related to the leveraging of buying, distribution, and occupancy
costs.





Year-to-date,
gross profit increased $33.1 million for the first twenty-six weeks of fiscal
2009 to $169.0 million, a 24.4% increase. As a percentage of net sales, gross
profit increased from 41.2% for the first half of fiscal 2008 to 43.0% for the
first half 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 0.90% reduction,
as a percentage of net sales, related to the leveraging of buying, distribution,
and occupancy costs.





Selling
expenses increased from $33.5 million for the second quarter of fiscal 2008 to
$37.5 million for the second quarter of fiscal 2009, a 12.0% increase. As a
percentage of net sales, selling expenses decreased from 19.7% in the second
quarter of fiscal 2008 to 19.4% in the second quarter of fiscal 2009. The
reduction was primarily attributable to a 0.40% reduction, as a percentage of
net sales, in expense related to the incentive bonus accrual and to a 0.10%
reduction related to the leveraging of certain other selling expenses. These
reductions were, however, partially offset by an increase in internet-related
fulfillment and marketing expenses (0.20%, as a percentage of net
sales).





Year-to-date,
selling expenses increased from $65.0 million in the first half of fiscal 2008
to $75.1 million in the first half of fiscal 2009, a 15.5% increase. As a
percentage of net sales, selling expenses decreased from 19.7% in fiscal 2008 to
19.1% in fiscal 2009. The decrease was primarily attributable to a 0.40%
reduction, as a percentage of net sales, in store payroll expense, a 0.10%
reduction in expense related to the incentive bonus accrual, and a 0.25%
reduction related to the leveraging of certain other selling expenses. These
reductions were, however, partially offset by an increase in internet related
fulfillment and marketing expenses (0.15%, as a percentage of net
sales).





General
and administrative expenses increased from $3.5 million in the second quarter of
fiscal 2008 to $6.6 million in the second quarter of fiscal 2009, a 91.2%
increase. As a percentage of net sales, general and administrative expenses
increased from 2.1% in the second quarter of fiscal 2008 to 3.5% in the second
quarter of fiscal 2009. General and administrative expenses for the second
quarter of fiscal 2008 were reported net of a $3.0 million gain from the
involuntary conversion of one of the Company’s corporate aircrafts to a monetary
asset upon receipt of $11.5 million in insurance proceeds. The aircraft was
destroyed by a tornado that hit the airport in Kearney, Nebraska on May 29,
2008. Excluding the $3.0 million gain recognized during the second quarter of
fiscal 2008, general and administrative expenses were 3.8% of net sales for the
second quarter of fiscal 2008 compared to 3.5% of net sales for the second
quarter of fiscal 2009. The reduction was primarily attributable to a 0.10%
reduction, as a percentage of net sales, in equity compensation expense, a 0.10%
reduction in expense related to the incentive bonus accrual, and a 0.10%
reduction related to the leveraging of certain other general and administrative
expenses.


21





THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





Year-to-date,
general and administrative expense increased from $10.2 million for the first
half of fiscal 2008 to $14.0 million for the first half of fiscal 2009, a 37.9%
increase. As a percentage of net sales, general and administrative expenses
increased from 3.1% in fiscal 2008 to 3.6% in fiscal 2009. Excluding the $3.0
million gain recognized during the second quarter of fiscal 2008 on the
involuntary disposal of a corporate aircraft, general and administrative
expenses were 4.0% of net sales for fiscal 2008 compared to 3.6% of net sales
for fiscal 2009. The reduction was primarily attributable to a 0.20% reduction,
as a percentage of net sales, in equity compensation expense and a 0.20%
reduction related to the leveraging of certain other general and administrative
expenses.





As a
result of the above changes, the Company's income from operations increased
14.4% to $38.1 million for the second quarter of fiscal 2009 compared to $33.3
million for the second quarter of fiscal 2008. Income from operations was 19.8%
of net sales for the second quarter of fiscal 2009 compared to 19.6% for the
second quarter of fiscal 2008. Income from operations, for the twenty-six week
period ended August 1, 2009, increased 31.6% to $79.9 million compared to $60.7
million for the twenty-six week period ended August 2, 2008. Income from
operations was 20.3% of net sales for the first half of fiscal 2009 compared to
18.4% for the first half of fiscal 2008. Excluding the $3.0 million gain on the
involuntary disposal of a corporate aircraft, income from operations for the
thirteen and twenty-six week periods ended August 2, 2008, was 17.9% and 17.5%,
respectively.





Other
income decreased from $2.0 million for the second quarter of fiscal 2008 to $1.5
million for the second quarter of fiscal 2009, a decrease of 24.4%. Other income
for the year-to-date period decreased 43.7% from $4.4 million for the twenty-six
week period ended August 2, 2008 to $2.5 million for the twenty-six week period
ended August 1, 2009. The decrease in other income for both the thirteen and
twenty-six week periods 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% for both the second
quarter of fiscal 2009 and the second quarter of fiscal 2008, bringing net
income to $25.0 million in the second quarter of fiscal 2009 compared to $22.3
million in the second quarter of fiscal 2008, an increase of 12.2%. Income tax
expense was also 37.0% of pre-tax income for both the first half of fiscal 2009
and first half of fiscal 2008, bringing year-to-date net income to $51.9 million
for fiscal 2009 compared to $41.0 million for fiscal 2008, an increase of
26.5%.





LIQUIDITY AND CAPITAL
RESOURCES





As of
August 1, 2009, the Company had working capital of $215.4 million, including
$145.7 million of cash and cash equivalents and short-term investments of $17.3
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
two quarters of fiscal 2009 and fiscal 2008, the Company’s cash flow from
operating activities was $31.1 million and $35.5 million,
respectively.





The uses
of cash for both twenty-six 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 two quarters of fiscal 2009 compared to
the first two quarters 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, as well as
insurance proceeds received during fiscal 2008 on the involuntary disposal of
one of the Company’s corporate aircrafts and an increase in capital expenditures
during the first half of fiscal 2009.


22





THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





During
the first half of fiscal 2009 and 2008, the Company invested $17.7 million and
$13.2 million, respectively, in new store construction, store renovation, and
store technology upgrades. The Company also spent $8.3 million and $1.8 million
in the first half of fiscal 2009 and 2008, respectively, in capital expenditures
for the corporate headquarters and distribution facility. The amount spent
during fiscal 2009 for capital expenditures at the corporate headquarters
includes $5.5 million invested in the expansion of our online fulfillment
infrastructure within our current warehouse and distribution center in Kearney,
Nebraska. The newly expanded online fulfillment center went live in June 2009
and the expansion approximately doubled the size of our previous
infrastructure.





During
the remainder of fiscal 2009, the Company anticipates completing approximately
13 additional store construction projects, including approximately 5 new stores
and approximately 8 stores to be substantially remodeled and/or relocated.
Management estimates total capital expenditures during fiscal 2009 will be
approximately $44 to $48 million, prior to any costs incurred for the new
distribution center which the Company plans to build to support the anticipated
growth of the business over the next several years. The Company has purchased
land in Kearney, Nebraska and plans to break ground during the third quarter and
begin construction of a new building with a target completion date of July 2010.
The Company expects the new distribution center to cost approximately $25 to $27
million; however, no capital expenditures related to this project have been
included in the estimated $44 to $48 million for this year as the Company has
not yet determined what portion of the capital spending related to this project
will occur during fiscal 2009 versus fiscal 2010.





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 August 1, 2009, had total cash and investments of
$228.5 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 half of fiscal 2009 or
2008.





As of
August 1, 2009, total cash and investments included $25.1 million of
auction-rate securities (“ARS”) and $1.2 million of preferred securities, which
compares to $30.3 million of ARS and $0.6 million of preferred securities as of
January 31, 2009. Of the $26.3 million in ARS and preferred securities as of
August 1, 2009, $1.6 million has been included in short-term investments and
$24.7 million 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.


23


THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





ARS and
preferred securities are reported at fair market value and, as of August 1,
2009, the reported investment amount is net of a $1.6 million temporary
impairment and a $3.2 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 $1.6 million temporary
impairment, net of tax, as an “accumulated other comprehensive loss” of $1.0
million in stockholders’ equity as of August 1, 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 $3.2 million OTTI ($2.0 million net
of tax) as part of the total $5.2 million OTTI ($3.2 million net of tax)
reported as a loss in the statement of income during both the third and fourth
quarters of the fiscal year ended January 31, 2009.





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 August
1, 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, investments, incentive bonuses, and income taxes.
Management bases its estimates on past experience and on various other factors
that are thought to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.
Management believes that the estimates and judgments used in preparing these
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.


24





THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND 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 $7.0 million and $10.1
      million as of August 1, 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 $0.6 million as of August 1,
      2009 and $0.5 million as of January 31,
  2009.





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 $5.8 million and $6.2
      million as of August 1, 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.


25


THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





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.





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 August 1, 2009, the reported investment amount is net of
a $1.6 million temporary impairment and a $3.2 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 $1.6 million temporary impairment, net of tax, as an “accumulated
other comprehensive loss” of $1.0 million in stockholders’ equity as of August
1, 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
$3.2 million OTTI ($2.0 million net of tax) as part of the total $5.2 million
OTTI ($3.2 million net of tax) reported 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 inputs using unobservable inputs, where the following
criteria were considered in estimating fair value:





·
            Pricing
      was provided by the custodian of
ARS;


·
            Pricing
      was provided by a third-party broker for
ARS;


·
            Sales
      of similar securities;


·
            Quoted
      prices for similar securities in active
markets;


·
            Quoted
      prices for publicly traded preferred
securities;


·
            Quoted
      prices for similar assets in markets that are not active - including
      markets where there are few transactions for the asset, the prices are not
      current, or price quotations vary substantially either over time or among
      market makers, or in which little information is released
      publicly;


·
            Pricing
      was provided by a third-part valuation consultant (using Level 3
      inputs).




26





THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





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 August
1, 2009.





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 August
1, 2009:





Payments Due by PeriodContractual
      obligations (dollar amounts in
                  
                  
                  
                  
                  Less
      than 1
                  
                  
                  
                  
                  
                  
                  
                  
                  After
      5thousands):
                  
                  Total
                  
                  
                  year
                  
                  
                  1-3 years
                  
                  
                  4-5 years
                  
                  
                  yearsLong
      term debt and purchase obligations
                  
                  $
                  3,413
                  
                  
                  $
                  3,334
                  
                  
                  $
                  79
                  
                  
                  $
                  -
                  
                  
                  $
                  -Deferred
      compensation
                  
                  
                  5,761
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5,761Operating
      leases
                  
                  
                  273,719
                  
                  
                  
                  45,119
                  
                  
                  
                  76,672
                  
                  
                  
                  58,828
                  
                  
                  
                  93,100Total
      contractual obligations
                  
                  $
                  282,893
                  
                  
                  $
                  48,453
                  
                  
                  $
                  76,751
                  
                  
                  $
                  58,828
                  
                  
                  $
                  98,861





Amount of Commitment Expiration Per
      PeriodOther
      commercial commitments (dollar
                  
                  Totalamounts
      in thousands):
                  
                  Amounts
                  
                  
                  Less
      than 1
                  
                  
                  
                  
                  
                  
                  
                  
                  After
      5Committed
                  
                  
                  year
                  
                  
                  1-3 years
                  
                  
                  4-5 years
                  
                  
                  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. This line of credit was extended through July 31, 2012. 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 half of fiscal 2009 or the first half of fiscal 2008. The Company had
outstanding letters of credit totaling $1.7 million and $1.1 million at August
1, 2009 and January 31, 2009, respectively. The Company has no other off-balance
sheet arrangements.


27


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 and twenty-six week periods ended August 1, 2009 and August 2, 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.





In May
2009, FASB issued FASB Statement No. 165 (“SFAS 165”), Subsequent Events. This
statement requires management to evaluate subsequent events through the date the
financial statements are issued, or are available to be issued, and requires
companies to disclose the date through which such subsequent events have been
evaluated. SFAS 165 is effective for financial statements issued for interim or
annual reporting periods ending after June 15, 2009, therefore the Company
adopted the provisions of SFAS 165 effective May 3, 2009. The adoption of SFAS
165 did not have any impact on the Company’s financial position or results of
operations.





In June
2009, FASB issues FASB Statement No. 168 (“SFAS 168”), The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles – a
replacement of FASB Statement No. 162. The codification will become the
source of Generally Accepted Accounting Principles (“GAAP”) recognized by FASB
to be applied by nongovernmental entities. Rules and interpretive releases of
the Securities and Exchange Commission (“SEC”) under authority of federal
securities laws are also sources of authoritative GAAP for SEC registrants. On
the effective date of SFAS 168, the codification will supersede all
then-existing non-SEC accounting and reporting standards. All other
non-grandfathered, non-SEC accounting literature not included in the
codification will become non-authoritative. SFAS 168 is effective for financial
statements issued for interim or annual reporting periods ending after September
15, 2009. The Company does not anticipate that the adoption of SFAS 168 will
have any impact on the Company’s financial position or results of
operations.


28




THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND 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. Such factors are
discussed in the section entitled “Item 1A. Risk Factors” set forth in the
Company’s Form 10-K for the fiscal year ended January 31, 2009, as supplemented
in Part II below and in the Company’s other filings with the Securities and
Exchange Commission. 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.





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 August 1, 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 August 1, 2009, the Company held $31.1 million, at par value, of investments
in auction-rate securities (“ARS”) and preferred stock. The Company concluded
that a $1.6 million temporary impairment and $3.2 million other-than-temporary
impairment existed related to these securities as of August 1, 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.




29





THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





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.


30





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 twenty-six week period
ended August 1, 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 August 1,
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
      PlansMay
      3, 2009 to May 30, 2009
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        799,300May
      31, 2009 to July 4, 2009
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        799,300July
      5, 2009 to Aug. 1, 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:                                                                        None




31





Item
4.    Submission of Matters to a
Vote of Security Holders:





(a)
              May
      29, 2009, Annual Meeting(b)
              Board
      of Directors:Daniel
      J. Hirschfeld
              Robert
      E. CampbellDennis
      H. Nelson
              John
      P. PeetzKaren
      B. Rhoads
              Michael
      E.HussJames
      E. Shada
              Bruce
      L. HobermanBill
      L. Fairfield





Number of
      Shares*For
                              
                              
                              Against
                              
                              
                              Abstain
                              
                              Del N-Vote(c)
                              
                              
                              1.
                              
                              Election
      of Board of Directors:Daniel
      J. Hirschfeld
                              
                              
                              42,363,561
                              
                              
                              
                              0
                              
                              
                              
                              1,331,805Dennis
      H. Nelson
                              
                              
                              42,403,374
                              
                              
                              
                              0
                              
                              
                              
                              1,291,992Karen
      B. Rhoads
                              
                              
                              41,161,037
                              
                              
                              
                              0
                              
                              
                              
                              2,534,329James
      E. Shada
                              
                              
                              42,363,786
                              
                              
                              
                              0
                              
                              
                              
                              1,331,580Bill
      L. Fairfield
                              
                              
                              41,679,225
                              
                              
                              
                              0
                              
                              
                              
                              2,016,141Robert
      E. Campbell
                              
                              
                              42,875,019
                              
                              
                              
                              0
                              
                              
                              
                              820,347John
      P. Peetz
                              
                              
                              43,332,446
                              
                              
                              
                              0
                              
                              
                              
                              362,920Michael
      E. Huss
                              
                              
                              43,191,278
                              
                              
                              
                              0
                              
                              
                              
                              504,088Bruce
      L. Hoberman
                              
                              
                              43,344,199
                              
                              
                              
                              0
                              
                              
                              
                              351,1672.
                              
                              Ratify
      the Selection of Deloitte &  Touche LLP as independent
      registered  public accounting firm.
                              
                              
                              43,228,039
                              
                              
                              
                              457,548
                              
                              
                              
                              9,7793.
                              
                              Approve
      Company’s 2009 Management Incentive Plan
                              
                              
                              42,508,938
                              
                              
                              
                              1,136,813
                              
                              
                              
                              49,6154.
                              
                              Approve
      Awards Pursuant to Company’s 2005 Restricted  Stock
      Plan
                              
                              
                              40,038,458
                              
                              
                              
                              185,428
                              
                              
                              
                              19,447
                              
                              3,452,033





*includes
only shares represented in person or by proxy at the annual meeting





(d)
            None





Item
5.    Other
Information:                                                                                             
   None





Item
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.


32


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:September 10
    ,  2009
                    /s/  DENNIS H.
    NELSONDENNIS
      H. NELSON, President and CEO(principal
      executive officer)Dated:
      September
      10,  2009
                    /s/  KAREN B.
    RHOADSKAREN
      B. RHOADS, Vice Presidentof
      Finance and CFO(principal
      accounting
officer)




33