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 October
31, 2009





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


THE
SECURITIES EXCHANGE ACT OF 1934





For the
Transition Period from ____________ to ____________





Commission
File Number: 001-12951





THE BUCKLE, INC.


(Exact
name of Registrant as specified in its charter)





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





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


(Address
of principal executive offices)     (Zip
Code)





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





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





Title of Class
              
              Name of Each Exchange on Which
      RegisteredCommon
      Stock, $.01 par value
              
              New
      York Stock Exchange





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











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





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





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





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





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





The
number of shares outstanding of the Registrant's Common Stock, as of November
27, 2009, was 46,294,580.





THE
BUCKLE, INC.





FORM
10-Q


INDEX





PagesPart
      I. Financial Information (unaudited)Item
      1.
                  Financial
      Statements
                  3Item
      2.
                  Management's
      Discussion and Analysis of FinancialCondition
      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
                  31Item
      5.
                  Other
      Information
                  31Item
      6.
                  Exhibits
                  31Signatures
                  
                  32


2





THE
BUCKLE, INC.





BALANCE
SHEETS


(Amounts
in Thousands Except Share and Per Share Amounts)


(Unaudited)





October 31,
                
                
                January 31,2009
                
                
                2009ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                
                $
                73,995
                
                
                $
                162,463Short-term
      investments
                
                
                19,620
                
                
                
                19,150Accounts
      receivable, net of allowance of $35 and $46, respectively
                
                
                4,993
                
                
                
                3,734Inventory
                
                
                118,213
                
                
                
                83,963Prepaid
      expenses and other assets
                
                
                20,820
                
                
                
                17,655Total
      current assets
                
                
                237,641
                
                
                
                286,965PROPERTY
      AND EQUIPMENT
                
                
                292,904
                
                
                
                264,154Less
      accumulated depreciation and amortization
                
                
                (157,905
                )
                
                
                (147,460
                )134,999
                
                
                
                116,694LONG-TERM
      INVESTMENTS
                
                
                73,553
                
                
                
                56,213OTHER
      ASSETS
                
                
                4,945
                
                
                
                5,468$
                451,138
                
                
                $
                465,340LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIES:Accounts
      payable
                
                $
                36,597
                
                
                $
                22,472Accrued
      employee compensation
                
                
                30,142
                
                
                
                40,460Accrued
      store operating expenses
                
                
                9,757
                
                
                
                7,701Gift
      certificates redeemable
                
                
                7,079
                
                
                
                10,144Income
      taxes payable
                
                
                7,696
                
                
                
                8,649Total
      current liabilities
                
                
                91,271
                
                
                
                89,426DEFERRED
      COMPENSATION
                
                
                5,961
                
                
                
                4,090DEFERRED
      RENT LIABILITY
                
                
                35,680
                
                
                
                34,602Total
      liabilities
                
                
                132,912
                
                
                
                128,118COMMITMENTSSTOCKHOLDERS’
      EQUITY:Common
      stock, authorized 100,000,000 shares of $.01 par value; 46,294,580 and
      45,906,265 shares issued and outstanding at October 31, 2009 and January
      31, 2009, respectively
                
                
                463
                
                
                
                459Additional
      paid-in capital
                
                
                75,969
                
                
                
                68,894Retained
      earnings
                
                
                242,885
                
                
                
                268,789Accumulated
      other comprehensive loss
                
                
                (1,091
                )
                
                
                (920
                )Total
      stockholders’ equity
                
                
                318,226
                
                
                
                337,222$
                451,138
                
                
                $
                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
                
                
                Thirty-nine Weeks EndedOctober
      31,
                
                
                November
      1,
                
                
                October
      31,
                
                
                November
      1,2009
                
                
                2008
                
                
                2009
                
                
                2008SALES,
      Net of returns and allowances
                
                $
                231,238
                
                
                $
                210,567
                
                
                $
                623,841
                
                
                $
                540,632COST
      OF SALES (Including buying, distribution, and occupancy
    costs)
                
                
                129,121
                
                
                
                118,762
                
                
                
                352,743
                
                
                
                312,937Gross
      profit
                
                
                102,117
                
                
                
                91,805
                
                
                
                271,098
                
                
                
                227,695OPERATING
      EXPENSES:Selling
                
                
                43,017
                
                
                
                39,415
                
                
                
                118,121
                
                
                
                104,454General
      and administrative
                
                
                7,427
                
                
                
                7,000
                
                
                
                21,452
                
                
                
                17,17250,444
                
                
                
                46,415
                
                
                
                139,573
                
                
                
                121,626INCOME
      FROM OPERATIONS
                
                
                51,673
                
                
                
                45,390
                
                
                
                131,525
                
                
                
                106,069OTHER
      INCOME, Net
                
                
                1,192
                
                
                
                1,794
                
                
                
                3,651
                
                
                
                6,163UNREALIZED
      LOSS ON SECURITIES
                
                
                -
                
                
                
                (1,800
                )
                
                
                -
                
                
                
                (1,800
                )INCOME
      BEFORE INCOME TAXES
                
                
                52,865
                
                
                
                45,384
                
                
                
                135,176
                
                
                
                110,432PROVISION
      FOR INCOME TAXES
                
                
                19,560
                
                
                
                16,308
                
                
                
                50,015
                
                
                
                40,363NET
      INCOME
                
                $
                33,305
                
                
                $
                29,076
                
                
                $
                85,161
                
                
                $
                70,069EARNINGS
      PER SHARE:Basic
                
                $
                0.73
                
                
                $
                0.64
                
                
                $
                1.87
                
                
                $
                1.55Diluted
                
                $
                0.71
                
                
                $
                0.62
                
                
                $
                1.83
                
                
                $
                1.50Basic
      weighted average shares
                
                
                45,709
                
                
                
                45,666
                
                
                
                45,626
                
                
                
                45,273Diluted
      weighted average shares
                
                
                46,719
                
                
                
                46,851
                
                
                
                46,621
                
                
                
                46,563





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
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  85,161
                  
                  
                  
                  -
                  
                  
                  
                  85,161Dividends
      paid on common stock,($0.20
      per share - 1st, 2nd, and 3rd quarters)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (27,735
                  )
                  
                  
                  -
                  
                  
                  
                  (27,735
                  )($1.80
      per share - 3rd quarter)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (83,330
                  )
                  
                  
                  -
                  
                  
                  
                  (83,330
                  )Common
      stock issued on exercise of stock options
                  
                  
                  191,527
                  
                  
                  
                  2
                  
                  
                  
                  1,472
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,474Issuance
      of non-vested stock, net of forfeitures
                  
                  
                  196,788
                  
                  
                  
                  2
                  
                  
                  
                  (2
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Amortization
      of non-vested stock grants, net of forfeitures
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,592
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,592Stock
      option compensation expense
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  142
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  142Income
      tax benefit related to exercise of stock options
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,871
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,871Unrealized
      loss on investments, net of tax
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (171
                  )
                  
                  
                  (171
                  )BALANCE,
      October 31, 2009
                  
                  
                  46,294,580
                  
                  
                  $
                  463
                  
                  
                  $
                  75,969
                  
                  
                  $
                  242,885
                  
                  
                  $
                  (1,091
                  )
                  
                  $
                  318,226FISCAL
      2008BALANCE,
      February 3, 2008
                  
                  
                  29,841,668
                  
                  
                  $
                  298
                  
                  
                  $
                  46,977
                  
                  
                  $
                  291,045
                  
                  
                  $
                  -
                  
                  
                  $
                  338,320Net
      income
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  70,069
                  
                  
                  
                  -
                  
                  
                  
                  70,069Dividends
      paid on common stock,($0.1667
      per share - 1st and 2nd quarters)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (15,269
                  )
                  
                  
                  -
                  
                  
                  
                  (15,269
                  )($0.20
      per share - 3rd quarter)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (9,293
                  )
                  
                  
                  -
                  
                  
                  
                  (9,293
                  )($2.00
      per share - 3rd quarter)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (92,922
                  )
                  
                  
                  -
                  
                  
                  
                  (92,922
                  )Common
      stock issued on exercise of stock options
                  
                  
                  993,583
                  
                  
                  
                  11
                  
                  
                  
                  12,705
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  12,716Issuance
      of non-vested stock, net of forfeitures
                  
                  
                  139,950
                  
                  
                  
                  1
                  
                  
                  
                  (1
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Amortization
      of non-vested stock grants, net of forfeitures
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,899
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,899Stock
      option compensation expense
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  257
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  257Income
      tax benefit related to exercise of stock options
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  12,613
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  12,6133-for-2
      stock split
                  
                  
                  15,487,507
                  
                  
                  
                  155
                  
                  
                  
                  (155
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Unrealized
      loss on investments, net of tax
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,257
                  )
                  
                  
                  (1,257
                  )BALANCE,
      November 1, 2008
                  
                  
                  46,462,708
                  
                  
                  $
                  465
                  
                  
                  $
                  76,295
                  
                  
                  $
                  243,630
                  
                  
                  $
                  (1,257
                  )
                  
                  $
                  319,133





See notes
to unaudited condensed financial statements.


5


THE
BUCKLE, INC.





STATEMENTS
OF CASH FLOWS


(Amounts
in Thousands)


(Unaudited)





Thirty-nine Weeks EndedOctober
      31,
                
                
                November
      1,2009
                
                
                2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                
                $
                85,161
                
                
                $
                70,069Adjustments
      to reconcile net income to net cash flows from operating
      activities:Depreciation
      and amortization
                
                
                17,811
                
                
                
                15,620Amortization
      of non-vested stock grants, net of forfeitures
                
                
                3,592
                
                
                
                3,899Stock
      option compensation expense
                
                
                142
                
                
                
                257Gain
      on involuntary conversion of corporate aircraft to monetary
      asset
                
                
                -
                
                
                
                (2,963
                )Unrealized
      loss on securities
                
                
                -
                
                
                
                1,800Realized
      gain on securities
                
                
                (1,379
                )
                
                
                -Deferred
      income taxes
                
                
                (1,385
                )
                
                
                -Other
                
                
                (90
                )
                
                
                177Changes
      in operating assets and liabilities:Accounts
      receivable
                
                
                (1,259
                )
                
                
                (1,770
                )Inventory
                
                
                (34,250
                )
                
                
                (40,563
                )Prepaid
      expenses and other assets
                
                
                (2,516
                )
                
                
                (3,193
                )Accounts
      payable
                
                
                12,421
                
                
                
                16,904Accrued
      employee compensation
                
                
                (10,318
                )
                
                
                (557
                )Accrued
      store operating expenses
                
                
                2,056
                
                
                
                3,439Gift
      certificates redeemable
                
                
                (3,065
                )
                
                
                (2,695
                )Income
      taxes payable
                
                
                386
                
                
                
                (3,524
                )Changes
      in long-term liabilities and deferred compensation
                
                
                2,949
                
                
                
                3,872Net
      cash flows from operating activities
                
                
                70,256
                
                
                
                60,772CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of property and equipment
                
                
                (34,630
                )
                
                
                (40,654
                )Proceeds
      from sale of property and equipment
                
                
                308
                
                
                
                11,816Change
      in other assets
                
                
                28
                
                
                
                (212
                )Purchases
      of investments
                
                
                (43,212
                )
                
                
                (42,481
                )Proceeds
      from sales/maturities of investments
                
                
                26,510
                
                
                
                132,387Net
      cash flows from investing activities
                
                
                (50,996
                )
                
                
                60,856CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from the exercise of stock options
                
                
                1,474
                
                
                
                12,716Excess
      tax benefit from stock option exercises
                
                
                1,863
                
                
                
                11,266Payment
      of dividends
                
                
                (111,065
                )
                
                
                (117,484
                )Net
      cash flows from financing activities
                
                
                (107,728
                )
                
                
                (93,502
                )NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                
                
                (88,468
                )
                
                
                28,126CASH
      AND CASH EQUIVALENTS, Beginning of period
                
                
                162,463
                
                
                
                64,293CASH
      AND CASH EQUIVALENTS, End of period
                
                $
                73,995
                
                
                $
                92,419





See notes
to unaudited condensed financial statements.


6


THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 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.





The
Company follows generally accepted accounting principles (“GAAP”) established by
the Financial Accounting Standards Board (“FASB”). References to GAAP in these
footnotes are to the FASB Accounting Standards Codification(“ASC”), which was established by FASB as the sole source of
authoritative GAAP for financial statements issued for reporting periods ending
on or after September 15, 2009.





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 404 stores located
in 41 states throughout the continental United States as of October 31, 2009 and
384 stores in 39 states as of November 1, 2008. During the third quarter of
fiscal 2009, the Company opened four new stores, substantially remodeled four
stores, and closed one store. During the third quarter of fiscal 2008, the
Company opened three 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
                  
                  
                  Thirty-nine
      Weeks EndedMerchandise
      Group
                  
                  Oct. 31, 2009
                  
                  
                  Nov. 1, 2008
                  
                  
                  Oct. 31, 2009
                  
                  
                  Nov. 1, 2008Denims
                  
                  
                  46.2
                  %
                  
                  
                  43.6
                  %
                  
                  
                  41.4
                  %
                  
                  
                  40.4
                  %Tops
      (including sweaters)
                  
                  
                  35.2
                  
                  
                  
                  39.6
                  
                  
                  
                  36.8
                  
                  
                  
                  38.9Accessories
                  
                  
                  7.1
                  
                  
                  
                  7.4
                  
                  
                  
                  7.5
                  
                  
                  
                  7.4Sportswear/Fashions
                  
                  
                  1.5
                  
                  
                  
                  1.3
                  
                  
                  
                  6.7
                  
                  
                  
                  6.2Footwear
                  
                  
                  5.2
                  
                  
                  
                  4.7
                  
                  
                  
                  5.0
                  
                  
                  
                  4.9Outerwear
                  
                  
                  4.3
                  
                  
                  
                  2.9
                  
                  
                  
                  2.0
                  
                  
                  
                  1.3Casual
      bottoms
                  
                  
                  0.4
                  
                  
                  
                  0.4
                  
                  
                  
                  0.5
                  
                  
                  
                  0.8Other
                  
                  
                  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 THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 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 EndedOctober
      31, 2009
                              
                              
                              November
      1, 2008Weighted
                              
                              
                              
                              
                              
                              
                              
                              
                              WeightedAverage
                              
                              
                              Per
      Share
                              
                              
                              
                              
                              
                              Average
                              
                              
                              Per
      ShareIncome
                              
                              
                              Shares
                              
                              
                              Amount
                              
                              
                              Income
                              
                              
                              Shares
                              
                              
                              AmountBasic
      EPS
                              
                              $
                              33,305
                              
                              
                              
                              45,709
                              
                              
                              $
                              0.73
                              
                              
                              $
                              29,076
                              
                              
                              
                              45,666
                              
                              
                              $
                              0.64Effect
      of Dilutive Securities:Stock
      options and non-vested shares
                              
                              
                              -
                              
                              
                              
                              1,010
                              
                              
                              
                              (0.02
                              )
                              
                              
                              -
                              
                              
                              
                              1,185
                              
                              
                              
                              (0.02
                              )Diluted
      EPS
                              
                              $
                              33,305
                              
                              
                              
                              46,719
                              
                              
                              $
                              0.71
                              
                              
                              $
                              29,076
                              
                              
                              
                              46,851
                              
                              
                              $
                              0.62Thirty-nine
      Weeks Ended
                              
                              
                              Thirty-nine
      Weeks EndedOctober
      31, 2009
                              
                              
                              November
      1, 2008Weighted
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              WeightedAverage
                              
                              
                              Per
      Share
                              
                              
                              
                              
                              
                              
                              Average
                              
                              
                              Per
      ShareIncome
                              
                              
                              Shares
                              
                              
                              Amount
                              
                              
                              Income
                              
                              
                              Shares
                              
                              
                              AmountBasic
      EPS
                              
                              $
                              85,161
                              
                              
                              
                              45,626
                              
                              
                              $
                              1.87
                              
                              
                              $
                              70,069
                              
                              
                              
                              45,273
                              
                              
                              $
                              1.55Effect
      of Dilutive Securities:Stock
      options and non-vested shares
                              
                              
                              -
                              
                              
                              
                              995
                              
                              
                              
                              (0.04
                              )
                              
                              
                              -
                              
                              
                              
                              1,290
                              
                              
                              
                              (0.05
                              )Diluted
      EPS
                              
                              $
                              85,161
                              
                              
                              
                              46,621
                              
                              
                              $
                              1.83
                              
                              
                              $
                              70,069
                              
                              
                              
                              46,563
                              
                              
                              $
                              1.50


8





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 2008


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


(Unaudited)





4.
            Investments





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





Amortized
                  
                  
                  Gross
                  
                  
                  Gross
                  
                  
                  Other-than-
                  
                  
                  EstimatedCost
      or
                  
                  
                  Unrealized
                  
                  
                  Unrealized
                  
                  
                  Temporary
                  
                  
                  FairPar
      Value
                  
                  
                  Gains
                  
                  
                  Losses
                  
                  
                  Impairment
                  
                  
                  ValueAvailable-for-Sale
      Securities:Auction-rate
      securities
                  
                  $
                  25,075
                  
                  
                  $
                  -
                  
                  
                  $
                  (1,732
                  )
                  
                  $
                  -
                  
                  
                  $
                  23,343Municipal
      Bonds
                  
                  
                  6,099
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  6,099Preferred
      stock
                  
                  
                  2,873
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (2,498
                  )
                  
                  
                  375$
                  34,047
                  
                  
                  $
                  -
                  
                  
                  $
                  (1,732
                  )
                  
                  $
                  (2,498
                  )
                  
                  $
                  29,817Held-to-Maturity
      Securities:State
      and municipal bonds
                  
                  $
                  51,110
                  
                  
                  $
                  420
                  
                  
                  $
                  (30
                  )
                  
                  $
                  -
                  
                  
                  $
                  51,500Fixed
      maturities
                  
                  
                  2,500
                  
                  
                  
                  34
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,534Certificates
      of deposit
                  
                  
                  1,735
                  
                  
                  
                  26
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,761U.S.
      treasuries
                  
                  
                  2,050
                  
                  
                  
                  4
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,054$
                  57,395
                  
                  
                  $
                  484
                  
                  
                  $
                  (30
                  )
                  
                  $
                  -
                  
                  
                  $
                  57,849Trading
      Securities:Mutual
      funds
                  
                  $
                  6,305
                  
                  
                  $
                  -
                  
                  
                  $
                  (344
                  )
                  
                  $
                  -
                  
                  
                  $
                  5,961





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 THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 2008


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


(Unaudited)





The
auction-rate securities were invested as follows as of October 31,
2009:





Nature
                        
                        Underlying Collateral
                        
                        Par ValueMunicipal
      revenue bonds
                        
                        87%
      insured by AAA/AA/A-rated bond insurers at Oct. 31, 2009
                        
                        $
                        11,700Municipal
      bond funds
                        
                        Fixed
      income instruments within issuers' money market funds
                        
                        
                        9,625Student
      loan bonds
                        
                        Student
      loans guaranteed by state entities
                        
                        
                        3,750Total
      par value
                        
                        
                        
                        $
                        25,075





As of
October 31, 2009, the Company’s auction-rate securities portfolio was 61%
AAA/Aaa-rated, 29% AA/Aa-rated, and 10% A-rated.





The
amortized cost and fair value of held-to-maturity securities by contractual
maturity as of October 31, 2009 is as follows:





Amortized
                    
                    
                    FairFiscal
      Periods
                    
                    Cost
                    
                    
                    ValueTwelve
      months ending October 30, 2010
                    
                    $
                    16,670
                    
                    
                    $
                    16,735Twelve
      months ending October 29, 2011
                    
                    
                    14,238
                    
                    
                    
                    14,365Twelve
      months ending October 27, 2012
                    
                    
                    16,627
                    
                    
                    
                    16,733Twelve
      months ending November 2, 2013
                    
                    
                    6,154
                    
                    
                    
                    6,207Twelve
      months ending November 1, 2014
                    
                    
                    959
                    
                    
                    
                    960Thereafter
                    
                    
                    2,747
                    
                    
                    
                    2,849$
                    57,395
                    
                    
                    $
                    57,849





At
October 31, 2009 and January 31, 2009, held-to-maturity investments of $40,725
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 October 31, 2009,
the reported investment amount is net of $1,732 of temporary impairment and
$2,498 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 $1,732 temporary impairment is reported, net of tax, as an
“accumulated other comprehensive loss” of $1,091 in stockholders’ equity as of
October 31, 2009. The Company reported the $2,498 OTTI ($1,574 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 October 31, 2009. All of these issues
of preferred stock are publicly traded and experienced significant declines in
value during the second half of fiscal 2008. 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 THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 2008


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


(Unaudited)





As of
October 31, 2009, the Company had $25,075 invested in ARS and $2,873 invested in
preferred securities, at par value, which are reported at their estimated fair
value of $23,343 and $375, 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
$1,645 of its investments in ARS at par value and $1,527 of its investments in
preferred securities at par value during the third quarter of fiscal 2009. These
investments were valued at $2,449 as of January 31, 2009 and were liquidated for
$2,923 in proceeds.





As of
October 31, 2009, $2,950 of the Company’s investment in available-for-sale
securities was classified in short-term investments and $26,867 was classified
in long-term investments. As of January 31, 2009, $1,550 of the Company’s
investment in available-for-sale securities was classified in short-term
investments and $29,328 was classified in long-term investments.





5.
            Fair Value
      Measurements





Effective
February 3, 2008, the Company adopted the provisions of FASB ASC 820, Fair Value Measurements and
Disclosures. FASB ASC 820 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements. The
provisions of FASB ASC 820 apply to all financial instruments that are being
measured and reported on a fair value basis. In addition, FASB ASC 820-10-15-1A
delayed the effective date of FASB ASC 820 to fiscal years beginning after
November 15, 2008 for all non-financial assets and liabilities. The Company
adopted the provisions of FASB ASC 820-10-15-1A in the quarter ended May 2,
2009. The adoption of FASB ASC 820 did not have any impact on the Company’s
financial position or results of operations.





As
defined by FASB ASC 820, 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 THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 2008


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


(Unaudited)





As of
October 31, 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 4. The
failed auctions, beginning in February 2008, related to certain of the Company’s
investments in ARS have limited the availability of quoted market prices. The
Company has determined the fair value of its ARS using Level 1 inputs for known
or anticipated subsequent redemptions at par value, Level 2 inputs using
observable inputs, and Level 3 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 October 31, 2009and 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 $1,732 of temporary
impairment and $2,498 of OTTI as of October 31, 2009. The Company has reported
the $1,732 of temporary impairment, net of tax, as a $1,091 reduction to
stockholders’ equity in “accumulated other comprehensive loss” as of October 31,
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 $2,498 OTTI ($1,574 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 THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 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 FASB ASC 820 as of October 31, 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, municipalbonds,
      and preferred stock)
                        
                        $
                        7,727
                        
                        
                        $
                        14,855
                        
                        
                        $
                        7,235
                        
                        
                        $
                        29,817Trading
      securities (including mutual funds)
                        
                        
                        5,961
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        5,961Total
                        
                        $
                        13,688
                        
                        
                        $
                        14,855
                        
                        
                        $
                        7,235
                        
                        
                        $
                        35,778




ARS,
municipal bonds, and preferred securities included in Level 1 represent
securities which have a known or anticipated upcoming redemption as of October
31, 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
FASB ASC 820, are as follows for the 39-week year-to-date period ended October
31, 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 October 31, 2009
                            
                            $
                            7,235




13





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 2008


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


(Unaudited)





6.
            Comprehensive
      Income





Comprehensive
income consists of net income and unrealized gains and losses on
available-for-sale securities. Unrealized losses on the Company’s investments
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 EndedOctober 31, 2009
                      
                      
                      November 1, 2008Net
      income
                      
                      $
                      33,305
                      
                      
                      $
                      29,076Changes
      in net unrealized losses on investments,net
      of taxes of $44 and $166
                      
                      
                      (76
                      )
                      
                      
                      (281
                      )Comprehensive
      Income
                      
                      $
                      33,229
                      
                      
                      $
                      28,795





Thirty-nine Weeks EndedOctober 31, 2009
                        
                        
                        November 1, 2008Net
      income
                        
                        $
                        85,161
                        
                        
                        $
                        70,069Changes
      in net unrealized losses on investments,net
      of taxes of $100 and $739
                        
                        
                        (171
                        )
                        
                        
                        (1,257
                        )Comprehensive
      Income
                        
                        $
                        84,990
                        
                        
                        $
                        68,812





7.
            Supplemental Cash Flow
      Information





The
Company had non-cash investing activities during the thirty-nine week periods
ended October 31, 2009 and November 1, 2008 of $(1,704) and $1,544,
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 thirty-nine week periods ended October 31, 2009 and November 1, 2008 of
$49,153 and $33,310, respectively.





8.
            Stock-Based
      Compensation





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





As of
October 31, 2009, 641,748 shares were available for grant under the various
stock option plans, of which 452,111 were available for grant to executive
officers. Also as of October 31, 2009, 208,152 shares were available for grant
under the various restricted stock plans, of which 129,028 were available for
grant to executive officers.


14





THE
BUCKLE, INC.


NOTES TO
FINANCIAL STATEMENTS


THIRTEEN
AND THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 2008


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


(Unaudited)




The
Company accounts for stock-based compensation in accordance with FASB ASC 718,
Compensation-Stock
Compensation. Compensation expense was recognized during the first three
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 FASB ASC 718 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
                    
                    
                    Thirty-nine Weeks EndedOctober 31, 2009
                    
                    
                    November 1, 2008
                    
                    
                    October 31, 2009
                    
                    
                    November 1, 2008Stock-based
      compensation expense, before tax:Stock
      options
                    
                    $
                    33
                    
                    
                    $
                    58
                    
                    
                    $
                    142
                    
                    
                    $
                    257Non-vested
      shares of common stock
                    
                    
                    1,179
                    
                    
                    
                    1,300
                    
                    
                    
                    3,592
                    
                    
                    
                    3,899Total
      stock-based compensation expense, before tax
                    
                    $
                    1,212
                    
                    
                    $
                    1,358
                    
                    
                    $
                    3,734
                    
                    
                    $
                    4,156Total
      stock-based compensation expense, after tax
                    
                    $
                    764
                    
                    
                    $
                    856
                    
                    
                    $
                    2,352
                    
                    
                    $
                    2,618





FASB ASC
718 requires the benefits of tax deductions in excess of the compensation cost
recognized for stock options exercised during the period to be classified as
financing cash inflows. This amount is shown as “excess tax benefit from stock
option exercises” on the statements of cash flows. For the thirty-nine week
periods ended October 31, 2009 and November 1, 2008, the excess tax benefit
realized from exercised stock options was $1,863 and $11,266,
respectively.





No stock
options were granted during the first three quarters of fiscal 2009. Stock
options granted during the first three quarters 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 thirty-nine
week period ended November 1, 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:





Thirty-nine Weeks EndedNovember 1, 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 THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 2008


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


(Unaudited)





On
September 15, 2008, the Board of Directors authorized a $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. Additionally, on September 21, 2009, the Board of Directors
authorized a $1.80 per share special one-time cash dividend to be paid on
October 27, 2009 to shareholders of record at the close of business on October
15, 2009. To preserve the intrinsic value for option holders, the Board also
approved on each occasion, 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 thirty-nine week period ended October 31, 2009 is as follows:





WeightedWeighted
                      
                      AverageAverage
                      
                      Remaining
                      
                      AggregateExercise
                      
                      Contractual
                      
                      IntrinsicShares
                      
                      
                      Price
                      
                      Life
                      
                      ValueOutstanding
      - beginning of year
                      
                      
                      1,635,163
                      
                      
                      $
                      6.91Granted
                      
                      
                      -
                      
                      
                      
                      n/aOther
      (1)
                      
                      
                      447
                      
                      
                      
                      5.83Expired/forfeited
                      
                      
                      (5,069
                      )
                      
                      
                      24.21Exercised
                      
                      
                      (191,527
                      )
                      
                      
                      7.70Outstanding
      - end of quarter
                      
                      
                      1,439,014
                      
                      
                      $
                      4.96
                      
                      3.48
                      years
                      $
                      36,047Exercisable
      - end of quarter
                      
                      
                      1,418,719
                      
                      
                      $
                      4.71
                      
                      3.41
                      years
                      $
                      35,893





(1)
            An
      adjustment was made to the exercise price and number of options
      outstanding for the special cash dividend paid during October 2009.
      “Other” represents additional options issued as a result of this
      adjustment in the third quarter of fiscal
2009.





The total
intrinsic value of options exercised during the thirty-nine week periods ended
October 31, 2009 and November 1, 2008 was $5,286 and $35,436, respectively. As
of October 31, 2009, there was $97 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 1.1 years.





Non-vested
shares of common stock granted during the thirty-nine week period ended November
1, 2008 were granted pursuant to the Company’s 2005 Restricted Stock Plan.
Non-vested shares granted during the thirty-nine week period ended October 31,
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 THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 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 thirty-nine week period ended October
31, 2009 is as follows:





Weighted AverageGrant DateShares
                  
                  
                  Fair ValueNon-Vested
      - beginning of year
                  
                  
                  423,171
                  
                  
                  $
                  23.84Granted
                  
                  
                  243,800
                  
                  
                  
                  21.20Forfeited
                  
                  
                  (47,012
                  )
                  
                  
                  22.65Vested
                  
                  
                  (45,506
                  )
                  
                  
                  27.54Non-Vested
      - end of quarter
                  
                  
                  574,453
                  
                  
                  $
                  22.52




As of
October 31, 2009, there was $5,213 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 1.9 years. The total
fair value of shares vested during the thirty-nine week periods ended October
31, 2009 and November 1, 2008 was $1,393 and $1,341, respectively.





9.
            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. Also during the second quarter of fiscal 2008, the
Company recorded a $2,963 gain from the involuntary disposal 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
$15,175.





10.
            Recently Issued
      Accounting Pronouncements





Effective
February 3, 2008, the Company adopted the provisions of FASB ASC 820, Fair Value Measurements and
Disclosures. FASB ASC 820 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements. The
provisions of FASB ASC 820 apply to all financial instruments that are being
measured and reported on a fair value basis. In addition, FASB ASC 820-10-15-1A
delayed the effective date of FASB ASC 820 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 FASB ASC 820 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 ASC 825, Financial Instruments. FASB
ASC 825 provides an option for companies to report selected financial assets and
liabilities at fair value. Although the Company adopted the provisions of FASB
ASC 825 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 FASB ASC 825 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 THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009 AND NOVEMBER 1, 2008


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


(Unaudited)





In May
2009, FASB issued FASB ASC 855, Subsequent Events. This
guidance 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. FASB ASC 855 was effective for financial statements issued for
interim or annual reporting periods ending after June 15, 2009. Therefore, the
Company adopted this guidance effective May 3, 2009. The adoption of FASB ASC
855 did not have any impact on the Company’s financial position or results of
operations.





In June
2009, FASB issued FASB ASC 105, Generally Accepted Accounting
Principles, which establishes the FASB Accounting Standards
Codification (“ASC”) as the single source of 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 FASB ASC 105, 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. FASB ASC 105 was effective for
financial statements issues for interim or annual reporting periods ending after
September 15, 2009. Therefore, the Company adopted the provisions of FASB ASC
105 on August 2, 2009. The adoption of FASB ASC 105 did not have any impact on
the Company’s financial position or results of operations.





11.
            Subsequent
      Events





In
accordance with the provisions of FASB ASC 855, the Company has evaluated
subsequent events through December 10, 2009. All subsequent events requiring
recognition as of October 31, 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 thirty-nine week
periods ended October 31, 2009 and November 1, 2008:




Thirteen Weeks Ended
                                              
                                              
                                              Increase/
                                              
                                              
                                              Thirty-nine Weeks Ended
                                              
                                              
                                              Increase/Oct. 31, 2009
                                              
                                              
                                              Nov. 1, 2008
                                              
                                              
                                              (Decrease)
                                              
                                              
                                              Oct. 31, 2009
                                              
                                              
                                              Nov. 1, 2008
                                              
                                              
                                              (Decrease)Net
      sales
                                              
                                              
                                              100.0
                                              %
                                              
                                              
                                              100.0
                                              %
                                              
                                              
                                              9.8
                                              %
                                              
                                              
                                              100.0
                                              %
                                              
                                              
                                              100.0
                                              %
                                              
                                              
                                              15.4
                                              %Cost
      of sales (including buying, distribution, and occupancy
    costs)
                                              
                                              
                                              55.8
                                              %
                                              
                                              
                                              56.4
                                              %
                                              
                                              
                                              8.7
                                              %
                                              
                                              
                                              56.6
                                              %
                                              
                                              
                                              57.9
                                              %
                                              
                                              
                                              12.7
                                              %Gross
      profit
                                              
                                              
                                              44.2
                                              %
                                              
                                              
                                              43.6
                                              %
                                              
                                              
                                              11.2
                                              %
                                              
                                              
                                              43.4
                                              %
                                              
                                              
                                              42.1
                                              %
                                              
                                              
                                              19.1
                                              %Selling
      expenses
                                              
                                              
                                              18.6
                                              %
                                              
                                              
                                              18.7
                                              %
                                              
                                              
                                              9.1
                                              %
                                              
                                              
                                              18.9
                                              %
                                              
                                              
                                              19.3
                                              %
                                              
                                              
                                              13.1
                                              %General
      and administrative expenses
                                              
                                              
                                              3.2
                                              %
                                              
                                              
                                              3.3
                                              %
                                              
                                              
                                              6.1
                                              %
                                              
                                              
                                              3.4
                                              %
                                              
                                              
                                              3.2
                                              %
                                              
                                              
                                              24.9
                                              %Income
      from operations
                                              
                                              
                                              22.4
                                              %
                                              
                                              
                                              21.6
                                              %
                                              
                                              
                                              13.8
                                              %
                                              
                                              
                                              21.1
                                              %
                                              
                                              
                                              19.6
                                              %
                                              
                                              
                                              24.0
                                              %Other
      income, net
                                              
                                              
                                              0.5
                                              %
                                              
                                              
                                              0.9
                                              %
                                              
                                              
                                              -33.5
                                              %
                                              
                                              
                                              0.6
                                              %
                                              
                                              
                                              1.1
                                              %
                                              
                                              
                                              -40.7
                                              %Unrealized
      loss on securities
                                              
                                              
                                              0.0
                                              %
                                              
                                              
                                              -0.9
                                              %
                                              
                                              
                                              0.0
                                              %
                                              
                                              
                                              0.0
                                              %
                                              
                                              
                                              -0.3
                                              %
                                              
                                              
                                              0.0
                                              %Income
      before income taxes
                                              
                                              
                                              22.9
                                              %
                                              
                                              
                                              21.6
                                              %
                                              
                                              
                                              16.5
                                              %
                                              
                                              
                                              21.7
                                              %
                                              
                                              
                                              20.4
                                              %
                                              
                                              
                                              22.4
                                              %Provision
      for income taxes
                                              
                                              
                                              8.5
                                              %
                                              
                                              
                                              7.8
                                              %
                                              
                                              
                                              19.9
                                              %
                                              
                                              
                                              8.0
                                              %
                                              
                                              
                                              7.4
                                              %
                                              
                                              
                                              23.9
                                              %Net
      income
                                              
                                              
                                              14.4
                                              %
                                              
                                              
                                              13.8
                                              %
                                              
                                              
                                              14.5
                                              %
                                              
                                              
                                              13.7
                                              %
                                              
                                              
                                              13.0
                                              %
                                              
                                              
                                              21.5
                                              %




Net sales
increased from $210.6 million in the third quarter of fiscal 2008 to $231.2
million in the third quarter of fiscal 2009, a 9.8% increase. Comparable store
sales increased by $8.6 million, or 4.3%, for the thirteen week period ended
October 31, 2009 compared to the same period in the prior year. The comparable
store sales increase was primarily due to a 2.1% increase in the average retail
price per piece of merchandise sold during the period and a 4.7% increase in the
average number of units sold per transaction, which were partially offset by a
reduction 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 7 new stores opened during the
second half of fiscal 2008, to the opening of 19 new stores during the first
three quarters of fiscal 2009, and to growth in online sales. Online sales for
the quarter (which are not included in comparable store sales) increased 41.9%
to $12.5 million.





The
Company’s average retail price per piece of merchandise sold increased $0.95, or
2.1%, during the third quarter of fiscal 2009 compared to the third quarter of
fiscal 2008. This $0.95 increase was primarily attributable to the following
changes (with their corresponding effect on the overall average price per
piece): a 7.7% increase in average denim price points ($1.55), a 10.6% increase
in average footwear price points ($0.24), and a 12.2% increase in average
outerwear price points ($0.22). These increases were partially offset by a 6.0%
decrease in average knit shirt price points (-$0.78), a 5.5% decrease in average
woven shirt price points (-$0.14), and a 4.1% decrease in average accessory
price points (-$0.14).
These changes are primarily a reflection of merchandise shifts in terms of
brands and product styles, fabrics, details, and finishes.





Net sales
increased from $540.6 million for the first three quarters of fiscal 2008 to
$623.8 million for the first three quarters of fiscal 2009, a 15.4% increase.
Comparable store sales increased by $49.1 million, or 9.7%, for the thirty-nine
week period ended October 31, 2009 compared to the same period in the prior
year. The comparable store sales increase was primarily due to a 3.8% increase
in the average retail price per piece of merchandise sold during the period, a
2.8% 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 thirty-nine week period was also attributable to the
inclusion of a full three quarters of operating results for the 21 new stores
opened during fiscal 2008, to the opening of 19 new stores during the first
three quarters of fiscal 2009, and to growth in online sales. Online sales for
the year-to-date period increased 50.8% to $34.3 million. Average sales per
square foot increased 8.6% from $275.49 for the thirty-nine week period ended
November 1, 2008 to $299.27 for the thirty-nine week period ended October 31,
2009. Total square footage as of October 31, 2009 was 2.012
million.


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 $1.59, or
3.8%, during the first three quarters of fiscal 2009 compared to the first three
quarters of fiscal 2008. This $1.59 increase was primarily attributable to the
following changes (with their corresponding effect on the overall average price
per piece): an 8.9% increase in average denim price points ($1.47), an 8.5%
increase in average active apparel price points ($0.20), an 8.8% increase in
average footwear price points ($0.18), a 5.5% increase in average woven shirt
price points ($0.12), and increased average price points in certain other
categories ($0.13). These increases were partially offset by the impact of a
shift in the merchandise mix (-$0.51). 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 $10.3
million in the third quarter of fiscal 2009 to $102.1 million, an 11.2%
increase. As a percentage of net sales, gross profit increased from 43.6% in the
third quarter of fiscal 2008 to 44.2% in the third 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 reduced markdowns and
strong sell through of new product during the period that was partially offset
by an increase in redemptions through the Company’s Primo Card loyalty program.
The improvement in merchandise margins was partially offset by a 0.30% increase,
as a percentage of net sales, in buying, distribution, and occupancy costs;
which were primarily related to increases in percentage rent in stores with
strong year-to-date sales performance, increases in common area maintenance
costs, and additional depreciation expense related to new fixture
rollouts.





Year-to-date,
gross profit increased $43.4 million for the first thirty-nine weeks of fiscal
2009 to $271.1 million, a 19.1% increase. As a percentage of net sales, gross
profit increased from 42.1% for the first three quarters of fiscal 2008 to 43.4%
for the first three quarters 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 reduced markdowns and strong sell through of new
product 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.





Selling
expenses increased from $39.4 million for the third quarter of fiscal 2008 to
$43.0 million for the third quarter of fiscal 2009, a 9.1% increase. As a
percentage of net sales, selling expenses decreased from 18.7% in the third
quarter of fiscal 2008 to 18.6% in the third quarter of fiscal 2009. The
reduction was primarily attributable to a 0.50% reduction, as a percentage of
net sales, in expense related to the incentive bonus accrual and a 0.10%
reduction related to the leveraging of certain other selling expenses. These
reductions were, however, partially offset by increases in internet-related
fulfillment and marketing expenses (0.25%, as a percentage of net sales),
advertising expense (0.15%, as a percentage of net sales), and health insurance
costs (0.10%, as a percentage of net sales).





Year-to-date,
selling expenses increased from $104.5 million in the first three quarters of
fiscal 2008 to $118.1 million in the first three quarters of fiscal 2009, a
13.1% increase. As a percentage of net sales, selling expenses decreased from
19.3% in fiscal 2008 to 18.9% in fiscal 2009. The decrease was primarily
attributable to a 0.30% reduction, as a percentage of net sales, in expense
related to the incentive bonus accrual, a 0.20% reduction in store payroll
expense, and 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).





General
and administrative expenses increased from $7.0 million in the third quarter of
fiscal 2008 to $7.4 million in the third quarter of fiscal 2009, a 6.1%
increase. As a percentage of net sales, general and administrative expenses
decreased from 3.3% in the third quarter of fiscal 2008 to 3.2% in the third
quarter of fiscal 2009. The reduction was primarily attributable to a 0.10%
reduction, as a percentage of net sales, in equity compensation expense and a
0.10% reduction in expense related to the incentive bonus accrual. These reductions were,
however, partially offset by an increase incertain other general and
administrative expenses(0.10%, as a percentage
of net sales).


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 $17.2 million for the first
three quarters of fiscal 2008 to $21.5 million for the first three quarters of
fiscal 2009, a 24.9% increase. As a percentage of net sales, general and
administrative expenses increased from 3.2% in fiscal 2008 to 3.4% 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 3.7% of net sales for fiscal 2008 compared to 3.4%
of net sales for fiscal 2009. The reduction was primarily attributable to a
0.15% reduction, as a percentage of net sales, in equity compensation expense
and a 0.15% 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
13.8% to $51.7 million for the third quarter of fiscal 2009 compared to $45.4
million for the third quarter of fiscal 2008. Income from operations was 22.4%
of net sales for the third quarter of fiscal 2009 compared to 21.6% for the
third quarter of fiscal 2008. Income from operations, for the thirty-nine week
period ended October 31, 2009, increased 24.0% to $131.5 million compared to
$106.1 million for the thirty-nine week period ended November 1, 2008. Income
from operations was 21.1% of net sales for the first three quarters of fiscal
2009 compared to 19.6% for the first three quarters of fiscal 2008. Excluding
the $3.0 million gain on the involuntary disposal of a corporate aircraft in
2008, income from operations for thirty-nine week period ended November 1, 2008
was 19.1%.





Other
income decreased from $1.8 million for the third quarter of fiscal 2008 to $1.2
million for the third quarter of fiscal 2009, a decrease of 33.5%. Other income
for the year-to-date period decreased 40.7% from $6.2 million for the
thirty-nine week period ended November 1, 2008 to $3.7 million for the
thirty-nine week period ended October 31, 2009. The decrease in other income for
both the thirteen and thirty-nine week periods is due to a reduction in income
earned on the Company’s cash and investments as a result of lower interest
rates.





Additionally,
as referenced in Note 4 to the financial statements, during the third quarter of
fiscal 2008 the Company recorded a $1.8 million unrealized loss resulting from
the other-than-temporary impairment of certain of its investments in
auction-rate securities. The other-than-temporary impairment was recorded as a
separate component of the Statements of Income for the quarter and year-to-date
periods ended November 1, 2008.





Income
tax expense as a percentage of pre-tax income was 37.0% in the third quarter of
fiscal 2009 compared to 36.0% in the third quarter of fiscal 2008, bringing net
income to $33.3 million in the third quarter of fiscal 2009 compared to $29.1
million in the third quarter of fiscal 2008, an increase of 14.5%. For the first
three quarters of fiscal 2009, income tax expense was 37.0% of pre-tax income
compared to 36.6% for the first three quarters of fiscal 2008, bringing
year-to-date net income to $85.2 million in fiscal 2009 compared to $70.1
million in fiscal 2008, an increase of 21.5%.





LIQUIDITY AND CAPITAL
RESOURCES





As of
October 31, 2009, the Company had working capital of $146.4 million, including
$74.0 million of cash and cash equivalents and short-term investments of $19.6
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
three quarters of fiscal 2009 and fiscal 2008, the Company’s cash flow from
operating activities was $70.3 million and $60.8 million,
respectively.





The uses
of cash for both thirty-nine 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 nine months of fiscal 2009 compared to
the first nine months 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 and the receipt
of insurance proceeds from the aircraft disposal in fiscal
2008.


22





THE
BUCKLE, INC.


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





During
the first nine months of fiscal 2009 and 2008, the Company invested $25.9
million and $22.2 million, respectively, in new store construction, store
renovation, and store technology upgrades. The Company also spent $8.7 million
and $18.5 million in the first nine months 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
six additional store construction projects, including one new store and
approximately five stores to be substantially remodeled and/or relocated.
Management estimates total capital expenditures during fiscal 2009 will be
approximately $46 to $50 million, which includes anticipated investments made
during the remainder of the year as work progresses on the Company’s new
distribution center currently being built in Kearney, Nebraska. The Company
broke ground on the 240,000 square foot facility in September 2009 and is
targeting a completion date of July 2010. The Company expects the total cost of
the new distribution center to be in the range of approximately $25 to $27
million, with the majority of the capital spending being in 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 October 31, 2009, had total cash and investments of
$167.2 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 three quarters of fiscal 2009 or
2008.





As of
October 31, 2009, total cash and investments included $23.3 million of
auction-rate securities (“ARS”) and $0.4 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 $23.7 million in ARS and preferred securities as of
October 31, 2009, $1.3 million has been included in short-term investments and
$22.4 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 October 31,
2009, the reported investment amount is net of a $1.7 million temporary
impairment and a $2.5 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 $1.7 million temporary
impairment, net of tax, as an “accumulated other comprehensive loss” of $1.1
million in stockholders’ equity as of October 31, 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 $2.5 million OTTI ($1.6
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 statements 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 October
31, 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 FASB ASC 605, 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 $7.1 million and $10.1
      million as of October 31, 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 October 31, 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 $6.3 million and $6.2
      million as of October 31, 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 FASB ASC 320,
      Investments-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 FASB ASC 320 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 October 31, 2009, the reported investment amount is net
of a $1.7 million temporary impairment and a $2.5 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 $1.7 million temporary impairment, net of tax, as an “accumulated
other comprehensive loss” of $1.1 million in stockholders’ equity as of October
31, 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
$2.5 million OTTI ($1.6 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 statements 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 October
31, 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 October
31, 2009:





Payments
      Due by PeriodContractual
      obligations (dollar amounts in thousands):
                  
                  Total
                  
                  
                  Less than 1
                    year
                  
                  
                  1-3 years
                  
                  
                  4-5 years
                  
                  
                  After 5
                    yearsLong
      term debt and purchase obligations
                  
                  $
                  15,887
                  
                  
                  $
                  15,848
                  
                  
                  $
                  39
                  
                  
                  $
                  -
                  
                  
                  $
                  -Deferred
      compensation
                  
                  
                  5,961
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5,961Operating
      leases
                  
                  
                  284,469
                  
                  
                  
                  45,242
                  
                  
                  
                  79,612
                  
                  
                  
                  61,289
                  
                  
                  
                  98,326Total
      contractual obligations
                  
                  $
                  306,317
                  
                  
                  $
                  61,090
                  
                  
                  $
                  79,651
                  
                  
                  $
                  61,289
                  
                  
                  $
                  104,287





Amount
      of Commitment Expiration Per PeriodOther
      commercial commitments (dollar amounts in thousands):
                          
                          Total
                            Amounts
                            Committed
                          
                          
                          Less than 1
                            year
                          
                          
                          1-3 years
                          
                          
                          4-5 years
                          
                          
                          After 5
                            yearsLines
      of credit
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -Total
      commercial commitments
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -





The
Company has available an unsecured line of credit of $17.5 million, of which
$10.0 million is available for letters of credit, which is excluded from the
preceding table. 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 three quarters of fiscal 2009 or the first three quarters of fiscal 2008.
The Company had outstanding letters of credit totaling $0.8 million and $1.1
million at October 31, 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 thirty-nine week periods ended October 31, 2009 and November 1,
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 ASC 820, Fair Value Measurements and
Disclosures. FASB ASC 820 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements. The
provisions of FASB ASC 820 apply to all financial instruments that are being
measured and reported on a fair value basis. In addition, FASB ASC 820-10-15-1A
delayed the effective date of FASB ASC 820 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 FASB ASC 820 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 ASC 825, Financial Instruments. FASB
ASC 825 provides an option for companies to report selected financial assets and
liabilities at fair value. Although the Company adopted the provisions of FASB
ASC 825 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 FASB ASC 825 did not have any
impact on the Company’s financial position or results of
operations.





In May
2009, FASB issued FASB ASC 855, Subsequent Events. This
guidance 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. FASB ASC 855 was effective for financial statements issued for
interim or annual reporting periods ending after June 15, 2009. Therefore, the
Company adopted this guidance effective May 3, 2009. The adoption of FASB ASC
855 did not have any impact on the Company’s financial position or results of
operations.





In June
2009, FASB issued FASB ASC 105, Generally Accepted Accounting
Principles, which establishes the FASB Accounting Standards
Codification (“ASC”) as the single source of 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 FASB ASC 105, 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. FASB ASC 105 was effective for
financial statements issues for interim or annual reporting periods ending after
September 15, 2009. Therefore, the Company adopted the provisions of FASB ASC
105 on August 2, 2009. The adoption of FASB ASC 105 did not 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 October 31, 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. A 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 October 31, 2009, the Company held $27.9 million, at par value, of
investments in auction-rate securities (“ARS”) and preferred stock. The Company
concluded that a $1.7 million temporary impairment and $2.5 million
other-than-temporary impairment existed related to these securities as of
October 31, 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





Item1.
            Legal
      Proceedings:
            None





Item
      1A.
            Risk
      Factors:





The effect of economic
pressures and other business factors – During the thirty-nine week period
ended October 31, 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 October
31, 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
      PlansAug.
      2, 2009 to Aug. 29, 2009
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            799,300Aug.
      30, 2009 to Oct. 3, 2009
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            799,300Oct.
      4, 2009 to Oct. 31, 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





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


31


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




32