* Record Full Fiscal Year Net Sales of $778.9 Million, up 7.8% on a
Comparative 52-week basis from Fiscal 2003
* 36th Consecutive Quarter of Same Store Sales Growth
* Announces Anticipated Restatement of Prior Financial Statements to
Correct Accounting for Certain Payables
* Declares Quarterly Cash Dividend
* Conference Call Scheduled for Today at 2:00 p.m. (Pacific);
Simultaneous Webcast at www.big5sportinggoods.com
EL SEGUNDO, Calif., Feb. 9 /PRNewswire-FirstCall/ -- Big 5 Sporting Goods Corporation (Nasdaq: BGFV) today reported preliminary financial results for the fiscal 2004 fourth quarter and full year that ended on January 2, 2005.
For the 2004 14-week fiscal fourth quarter, net sales increased by $25.8 million, or 13.4%, to $217.6 million from $191.8 million in the corresponding 13-week fourth quarter of 2003. On a comparative 13-week basis for both fiscal 2004 and 2003, net sales increased 6.0% and same store sales increased 2.6%. The 2.6% same store sales increase represented the Company's thirty-sixth consecutive quarterly increase in same store sales over comparable prior periods and includes a 0.5% negative impact from the effect of a sales return allowance that was implemented in the fiscal third quarter of 2004. Net income for the 2004 fourth quarter increased to $11.6 million, or $0.51 per diluted share, compared with net income, as preliminarily restated, of $8.6 million, or $0.37 per diluted share, in the same period last year. Net income for the 2004 fourth fiscal quarter includes a charge of $0.8 million, net of taxes, or $0.03 per diluted share, associated with the redemption of $33.1 million principal amount of the Company's 10.875% senior notes, and net income for the 2003 fourth fiscal quarter includes a charge of $1.2 million, net of taxes, or $0.06 per diluted share, associated with the redemption of $35.0 million principal amount of these notes.
For fiscal 2004, which included 53 weeks, net sales increased by $69.2 million, or 9.8%, to $778.9 million from $709.7 million for the corresponding 52-week fiscal year 2003. On a comparative 52-week basis for both fiscal 2004 and 2003, net sales increased 7.8% and same store sales increased 3.5%. The 3.5% same store sales increase includes a 0.4% negative impact from the effect of a sales return allowance that was implemented in the fiscal third quarter of 2004. Net income for fiscal 2004 increased to $34.2 million, or $1.50 per diluted share, compared with net income for fiscal 2003, as preliminarily restated, of $24.9 million, or $1.10 per diluted share. Net income for fiscal 2004 includes a charge of $1.3 million, net of taxes, or $0.06 per diluted share, associated with the redemption of $48.1 million principal amount of the Company's 10.875% senior notes, and net income for fiscal 2003 includes a charge of $2.1 million, net of taxes, or $0.09 per diluted share, associated with the redemption of $55.0 million principal amount of these notes.
Steven G. Miller, Big 5's Chairman, President and Chief Executive Officer, said, "We are pleased to report the continuation of our consistently strong performance for the fourth quarter and full year of 2004. We are particularly pleased to have achieved our fourth quarter results despite unseasonably warm and dry weather in the majority of our markets during the weeks preceding Christmas, which negatively impacted our winter categories. Our apparel category was down in the low single digits for the quarter, but that softness was more than offset by our performance in the hardgoods category, which was up in the low single digits, and our performance in the footwear category, which was up in the mid-to-high single digit range. Our ability to consistently generate significant cash flow from operations, combined with our significant borrowing capacity under our bank facility, enabled us during the fourth quarter to pay off the remaining $33.1 million of our 10.875% senior notes, which had an original principal amount of $131.0 million in 1997. We believe we are well positioned to continue our strong performance in 2005."
Big 5's results are preliminary because, during the course of the year-end closing process, the Company identified the need to correct prior period reconciliations of certain accounts within its accounts payable. Management has made an internal evaluation of the resulting impact and has included preliminary financial results reflecting these estimates. In addition, Big 5 and its Audit Committee are, in consultation with its independent registered public accounting firm, KPMG LLP, reviewing prior financial statements filed with the Securities and Exchange Commission to determine if any other adjustments or corrections are necessary. Big 5 has not identified any other necessary adjustments at this time.
Accounting Restatements
In the course of its annual year-end closing process, Big 5 identified an error in an account within accounts payable as reported in its financial statements. This account reflects as credits items received into inventory at Big 5's distribution center. Credits in this accounts payable account are cleared as the Company's receiving documentation is matched against vendor invoices or, in the case of inventory paid for by prior draws on letters of credit, commercial invoices. The process of clearing credits related to commercial invoices involves matching those credits in the accounts payable account against corresponding items, in a separate accounts payable contra-liability account, which were previously entered at the time draws were made against letters of credit.
The error occurred when certain credits in the accounts payable account related to commercial invoices were not matched on a timely basis with the corresponding letter of credit items in the contra-liability account as required by Big 5's established accounting procedures. Certain of the Company's accounting personnel failed to understand that, even though vendors had already been paid by prior draws on letters of credit and inventories had been properly accounted for, timely reconciliation of all related commercial invoices still was necessary for proper internal bookkeeping. This failure created unmatched credits in accounts payable for each of the Company's 2000, 2001, 2002 and 2003 fiscal years, which were erroneously assumed to be over-accruals. These assumed over-accruals were reversed at year end and included in net income. This resulted in an understatement of accounts payable and an overstatement of net income, as well as a corresponding overstatement of stockholders' equity, for each of these periods.
As a result, Big 5's management and its Audit Committee have recommended, and its Board of Directors has approved, the review and restatement of its financial statements for fiscal 2001, 2002 and 2003. The accompanying preliminary financial statements include adjustments that resulted from changes to address the matters described above. The expected impact on net income is $1.2 million for 2001, $2.1 million for 2002 and $1.4 million for 2003. The adjustments reflected in the attached preliminary financial statements are being reviewed by the Company and its independent registered public accounting firm and could change. Accordingly, investors are cautioned not to rely on the Company's historical financial statements for such periods.
These non-cash adjustments of net income do not have any impact on:
* the Company's previously reported net sales or same store sales;
* the Company's previously reported assets, including cash;
* the Company's previously reported cash flows from operating activities;
or
* the Company's compliance with financial covenants contained in its bank
credit agreement.
Additionally, the Company anticipates a refund or credit of approximately $3.2 million attributable to an over-payment of income taxes for the affected periods.
"While our prior fiscal year 2004 full year and fourth quarter guidance was impacted by $0.06 per share, these accounting adjustments do not affect the Company's underlying business or business prospects," explained Charles Kirk, Big 5's Senior Vice President and Chief Financial Officer. "We have corrected our internal controls associated with these accounting adjustments. Further, as all public companies are doing at this time, we are in the process of completing a full review of our internal controls as dictated by Sarbanes-Oxley requirements. Management brought this situation to the attention of the Audit Committee of the Company's Board of Directors as soon as it became aware of it and its potential effect on the Company's financial statements, and is working with the Audit Committee and KPMG LLP, to review those effects and to take appropriate corrective action. We anticipate the review of this matter will be concluded promptly and permit a timely filing of our Annual Report on Form 10-K for fiscal 2004."
Declaration of Quarterly Cash Dividend
Big 5 also announced that its Board of Directors has voted to declare a cash dividend, at an annual rate of $0.28 per share of outstanding common stock. The next quarterly dividend, of $0.07 per share, will be paid on March 15, 2005, to stockholders of record as of March 1, 2005.
Store Openings
During the fiscal 2004 fourth quarter, Big 5 opened 11 new stores, including three each in Arizona, California and Colorado, and one each in New Mexico and Utah. These openings brought the Company's year-end store count to 309 versus 293 at the end of fiscal 2003. The Company anticipates opening between 16 and 20 stores in fiscal 2005.
EPS Guidance
Big 5 expects to realize same store sales growth in the low single-digit range for the first fiscal quarter of 2005, resulting in earnings per diluted share in the range of $0.32 to $0.35. For the 2005 fiscal year, the Company currently expects to realize same store sales growth in the low single-digit range, resulting in earnings per diluted share of $1.70 to $1.80. This full-year guidance excludes $0.09 per diluted share associated with expenses related to the Company's transition to its new distribution center, most of which are expected to be incurred in the third and fourth quarters of fiscal 2005. The Company now anticipates total capital expenditures for its new distribution center to be approximately $22.5 million, of which $8.2 million has been expended through fiscal 2004.
Conference Call Information
Big 5 will host a conference call and audio webcast today at 2:00 p.m. (Pacific) to discuss financial results for the quarter and full year ended January 2, 2005. The webcast will be available at www.big5sportinggoods.com and archived for three months.
About Big 5 Sporting Goods Corporation
Big 5 is a leading sporting goods retailer in the western United States, operating 309 stores in 10 states under the "Big 5 Sporting Goods" name. Big 5 provides a full-line product offering in a traditional sporting goods store format that averages 11,000 square feet. Big 5's product mix includes athletic shoes, apparel and accessories, as well as a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, snowboarding and in-line skating.
Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause Big 5's actual results in future periods to differ materially from forecasted results. Those risks and uncertainties include, among other things, the competitive environment in the sporting goods industry in general and in Big 5's specific market areas, inflation, product availability and growth opportunities, seasonal fluctuations, weather conditions, changes in costs of goods and economic conditions in general. Those and other risks are more fully described in Big 5's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K filed on March 12, 2004 and its Quarterly Report on Form 10-Q for the quarter ended September 26, 2004. Big 5 disclaims any obligation to update any such factors or to publicly announce results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
BIG 5 SPORTING GOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Preliminary and Unaudited)
(in thousands, except earnings per share data)
As As
Previously Preliminarily
Reported Restated
14 Weeks Ended 13 Weeks Ended 13 Weeks Ended
Jan. 2, Dec. 28, Dec. 28,
2005 2003 2003
Net sales $217,595 $191,823 $191,823
Cost of goods sold, buying
and occupancy 139,767 121,554 123,849
Gross profit 77,828 70,269 67,974
Selling and administrative 52,839 46,807 46,807
Depreciation and amortization 3,306 2,784 2,784
Operating income 21,683 20,678 18,383
Premium and unamortized
financing fees related
to redemption of debt 1,275 1,901 1,901
Interest expense, net 1,639 2,661 2,661
Income before income taxes 18,769 16,116 13,821
Income tax 7,164 6,189 5,269
Net income $11,605 $9,927 $8,552
Earnings per share:
Basic $0.51 $0.44 $0.38
Diluted $0.51 $0.43 $0.37
Shares used to calculate
earnings per share:
Basic 22,674 22,664 22,664
Diluted 22,811 22,832 22,832
BIG 5 SPORTING GOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Preliminary and Unaudited)
(in thousands, except earnings per share data)
As As
Previously Preliminarily
Reported Restated
53 Weeks 52 Weeks 52 Weeks
Ended Ended Ended
Jan. 2, Dec. 28, Dec. 28,
2005 2003 2003
Net sales $778,905 $709,740 $709,740
Cost of goods sold, buying and
occupancy 497,346 453,814 456,109
Gross profit 281,559 255,926 253,631
Selling and administrative 204,471 186,798 186,798
Depreciation and amortization 11,672 10,412 10,412
Operating income 65,416 58,716 56,421
Premium and unamortized financing
fees
related to redemption of debt 2,067 3,434 3,434
Interest expense, net 6,841 11,405 11,405
Income before income taxes 56,508 43,877 41,582
Income tax 22,249 17,587 16,667
Net income 34,259 26,290 24,915
Earnings per share:
Basic $1.51 $1.16 $1.10
Diluted $1.50 $1.16 $1.10
Shares used to calculate earnings per
share:
Basic 22,669 22,651 22,651
Diluted 22,792 22,753 22,753
BIG 5 SPORTING GOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Preliminary and Unaudited)
(in thousands, except earnings per share data)
As Previously As Preliminarily
Reported Restated
52 Weeks Ended 52 Weeks Ended
Dec. 29, Dec. 30, Dec. 29, Dec. 30,
2002 2001 2002 2001
Net sales $667,469 $622,481 $667,469 $622,481
Cost of goods sold,
buying and occupancy 429,858 407,679 433,405 409,784
Gross profit 237,611 214,802 234,064 212,697
Selling and
administrative 174,868 160,044 174,868 160,044
Litigation settlement -- 2,515 -- 2,515
Depreciation and
amortization 9,966 10,031 9,966 10,031
Operating income 52,777 42,212 49,230 40,107
Premium and unamortized
financing fees
related to redemption
of debt 4,557 (2,662) 4,557 (2,662)
Interest expense, net 15,825 19,629 15,825 19,629
Income before income
taxes 32,395 25,245 28,848 23,140
Income tax 13,313 10,280 11,855 9,423
Net income 19,082 14,965 16,993 13,717
Redeemable preferred
stock dividends
and redemption
premium 7,999 7,284 7,999 7,284
Net income available to
common stockholders $11,083 $7,681 $8,994 $6,433
Earnings per share:
Basic $0.60 $0.54 $0.49 $0.45
Diluted $0.57 $0.48 $0.46 $0.40
Shares used to calculate
earnings per share:
Basic 18,358 14,247 18,358 14,247
Diluted 19,476 16,090 19,476 16,090
BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Preliminary and Unaudited)
(in thousands)
As As
Previously Preliminarily
Reported Restated
Jan. 2, Dec. 28, Dec. 28,
2005 2003 2003
Assets
Current assets
Cash $6,746 $9,030 $9,030
Merchandise inventory 191,881 179,555 179,555
Other current assets 12,251 16,539 16,539
Total current assets 210,878 205,124 205,124
Property and equipment, net 57,838 46,952 46,952
Other long-term assets 19,895 19,949 19,949
Total assets $288,611 $272,025 $272,025
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $82,757 $76,004 $84,788
Accrued expenses 55,209 54,717 51,147
Total current liabilities 137,966 130,721 135,935
Deferred rent 11,662 11,654 11,654
Long-term debt 81,335 99,686 99,686
Total liabilities 230,963 242,061 247,275
Net stockholders' equity 57,648 29,964 24,750
Total liabilities and stockholders'
equity $288,611 $272,025 $272,025
BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Preliminary and Unaudited)
(in thousands)
As Previously As Preliminarily
Reported Restated
Dec. 29, Dec. 30, Dec. 29, Dec. 30,
2002 2001 2002 2001
Assets
Current Assets
Cash $9,441 $7,865 $9,441 $7,865
Merchandise inventory 169,529 163,680 169,529 163,680
Other current assets 11,442 9,698 11,442 9,698
Total current assets 190,412 181,243 190,412 181,243
Property and equipment, net 45,104 42,650 45,104 42,650
Other long-term assets 22,459 29,990 22,459 29,990
Total assets $257,975 $253,883 $257,975 $253,883
Liabilities and Stockholders'
Equity (Deficit)
Accounts payable $67,937 $62,307 $74,426 $65,249
Other accrueds 49,708 52,643 47,058 51,451
Deferred rent 11,525 11,096 11,525 11,096
Long-term debt 125,131 153,351 125,131 153,351
Total liabilities 254,301 279,397 258,140 281,147
Preferred stock -- 58,911 -- 58,911
Net stockholders' equity(deficit) 3,674 (84,425) (165) (86,175)
Total liabilities, preferred stock
and stockholders' equity
(deficit) $257,975 $253,883 $257,975 $253,883
SOURCE Big 5 Sporting Goods Corporation
-0- 02/09/2005
/CONTACT: Charles Kirk, Sr. Vice President and Chief Financial Officer of
Big 5 Sporting Goods Corporation, +1-310-536-0611; or John Mills of Integrated
Corporate Relations, Inc., +1-310-395-2215, for Big 5 Sporting Goods
Corporation/
/Web site: http://www.big5sportinggoods.com /
(BGFV)
CO: Big 5 Sporting Goods Corporation
ST: California
IN: REA SPT
SU: ERP CCA ERN DIV
CC-AC
-- LATU136 --
7315 02/09/2005 16:49 EST http://www.prnewswire.com