Pro Forma Earnings Per Diluted Share Increase 68.8% to $0.27 and GAAP Earnings Per Diluted Share Increase 44.4% to $0.13 in Second Quarter
26th Consecutive Quarter of Positive Same Store Sales Results
Big 5 Sporting Goods Corporation (Nasdaq: BGFV), the leading sporting goods retailer in the western United States, today reported financial results for the fiscal second quarter ended June 30, 2002.
Net sales increased by $11.2 million, or 7.4%, to $162.7 million in the second quarter of 2002 from $151.5 million in the second quarter of 2001. Same store sales increased 4.3% for the quarter, representing the twenty-sixth consecutive quarterly increase in same store sales over comparable prior periods.
Gross profit margin increased by 1.3% to 36.7% for the quarter from 35.4% for the same period last year. This increase was driven primarily by improved selling margins in all of our major product categories. Pro forma selling, general and administrative expenses improved to 26.6% of net sales for the quarter compared with 26.7% for the same period last year.
Net income available to common stockholders was $2.1 million for the quarter, or $0.13 per diluted share on a GAAP basis, compared to $1.5 million, or $0.09 per diluted share, for the same period last year.
Pro forma net income increased by $2.4 million, or 62.8%, to $6.1 million for the quarter from $3.7 million in the same period last year. Pro forma earnings per diluted share increased by $0.11, or 68.8%, to $0.27 for the quarter from $0.16 for the same period last year.
Big 5 reports net income and earnings per diluted share in accordance with generally accepted accounting principles (GAAP) and additionally on a pro forma basis to exclude certain effects of the company's initial public offering, which was completed on June 28, 2002. The pro forma figures assume that the initial public offering took place at the beginning of the periods presented and exclude the effects of certain IPO-related expenses, use of funds generated from the reduction of the redemption premium applicable to the redemption of preferred stock to pay bonuses in connection with the initial public offering, interest payments on debt retired in connection with the initial public offering, dividends payable on preferred stock redeemed in connection with the initial public offering and related income tax effects. Big 5 uses this pro forma reporting internally to evaluate its operating performance without regard to certain non-recurring financial effects of the initial public offering and believes this presentation will provide investors with additional insight into its operating results. A reconciliation of the pro forma adjustments to GAAP appears in the financial statements portion of this release.
Net sales increased by $25.2 million, or 8.6%, to $319.8 million in the first six months of 2002 from $294.6 million in the first six months of 2001. Same store sales increased 5.4% for the first six months.
Gross profit margin increased by 1.4% to 35.8% for the first six months from 34.4% for the same period last year. The increase was driven primarily by improved selling margins in all of our major product categories. Pro forma selling, general and administrative expenses were 26.7% of net sales for the first six months, unchanged from the 26.7% reported for the same period last year.
Net income available to common stockholders was $3.7 million for the first six months, or $0.23 per diluted share on a GAAP basis, compared to $2.4 million, or $0.15 per diluted share, for the same period last year.
Pro forma net income increased by $4.9 million, or 93.0%, to $10.2 million for the first six months from $5.3 million for the same period last year. Pro forma earnings increased by $0.22, or 95.7%, to $0.45 per diluted share for the first six months from $0.23 per diluted share for the same period last year.
In the second quarter of 2002, Big 5 completed an initial public offering of 8.1 million shares of common stock, of which 1.6 million shares were sold by selling stockholders. The underwriters subsequently exercised their right to purchase an additional 1.2 million shares, of which 0.5 million shares were sold by selling stockholders. With net proceeds of $84.6 million from the offering, together with borrowings under the company's credit facility, Big 5 redeemed all of its outstanding senior discount notes and Series A exchangeable preferred stock, paid bonuses to executive officers and directors and repurchased 0.5 million shares of Big 5 common stock from non-executive employees.
Big 5 expects to continue to realize same store sales growth in the mid-single digit range during the second half of fiscal 2002. Reflecting this same store sales growth and anticipated continued strength in operating margins, Big 5 currently expects pro forma earnings per diluted share in the range of $1.07 to $1.11 for the fiscal year ending December 29, 2002.
Steven G. Miller, Chairman, President, and Chief Executive Officer, said, "This has been a tremendous period for Big 5 Sporting Goods. We successfully completed an IPO in a very difficult market environment and now have a greatly improved balance sheet. Our strong sales and gross margins have allowed us to realize excellent bottom line results for the second quarter and first six months of 2002. We are well positioned to continue this strong performance and expect to achieve meaningful earnings increases over the remainder of this year and into fiscal 2003."
Big 5 will host a conference call and audio webcast today at 2:00 p.m. PT to discuss financial results for the quarter ended June 30, 2002. The webcast will be available at http://www.firstcallevents.com/service/ajwz363813111gf12.html and archived until August 15, 2002.
Big 5 is the leading sporting goods retailer in the western United States, operating 261 stores in 10 states under the "Big 5 Sporting Goods" name. Big 5 provides a full-line product offering of over 25,000 stock keeping units 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, 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 registration statement on Form S-1 originally filed on August 21, 2001. 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 (Unaudited, in thousands, except per share data) | ||||||||||
| As Reported | Pro Forma | |||||||||
| 13 Weeks Ended | 13 Weeks Ended (1) | |||||||||
| June 30, 2002 | July 1, 2001 | June 30, 2002 | July 1, 2001 | |||||||
| Net sales | $ | 162,703 | $ | 151,456 | $ | 162,703 | $ | 151,456 | |||
| Cost of goods sold, buying and occupancy | 103,070 | 97,847 | 103,070 | 97,847 | |||||||
| Gross profit | 59,633 | 53,609 | 59,633 | 53,609 | |||||||
| Selling and administrative | 45,805 | 40,537 | 43,356 | 40,451 | |||||||
| Depreciation and amortization | 2,461 | 2,570 | 2,461 | 2,570 | |||||||
| Operating income | 11,367 | 10,502 | 13,816 | 10,588 | |||||||
| Interest expense, net | 4,328 | 4,956 | 3,501 | 4,253 | |||||||
| Income before income taxes and extraordinary gain | 7,039 | 5,546 | 10,315 | 6,335 | |||||||
| Income tax | 2,910 | 2,289 | 4,253 | 2,612 | |||||||
| Net income | 4,129 | 3,257 | 6,062 | 3,723 | |||||||
| Redeemable preferred stock dividends | 2,025 | 1,781 | - | - | |||||||
| Net income available to common stockholders | $ | 2,104 | $ | 1,476 | $ | 6,062 | $ | 3,723 | |||
| Earnings per share: | |||||||||||
| Basic | $ | 0.13 | $ | 0.09 | $ | 0.27 | $ | 0.17 | |||
| Diluted | $ | 0.13 | $ | 0.09 | $ | 0.27 | $ | 0.16 | |||
| Shares used to calculate earnings per share: | |||||||||||
| Basic | 16,026 | 15,605 | 22,178 | 22,183 | |||||||
| Diluted | 16,512 | 16,091 | 22,664 | 22,669 | |||||||
| Big 5 Sporting Goods Corporation | |||||||||||
| Consolidated Statements of Operations (Unaudited, in thousands, except per share data) | |||||||||||
| As Reported | Pro Forma | ||||||||||
| 26 Weeks Ended | 26 Weeks Ended (1) | ||||||||||
| June 30, 2002 | July 1, 2001 | June 30, 2002 | July 1, 2001 | ||||||||
| Net sales | $ | 319,836 | $ | 294,635 | $ | 319,836 | $ | 294,635 | |||
| Cost of goods sold, buying and occupancy | 205,196 | 193,189 | 205,196 | 193,189 | |||||||
| Gross profit | 114,640 | 101,446 | 114,640 | 101,446 | |||||||
| Selling and administrative | 87,920 | 78,789 | 85,385 | 78,617 | |||||||
| Depreciation and amortization | 4,822 | 5,144 | 4,822 | 5,144 | |||||||
| Operating income | 21,898 | 17,513 | 24,433 | 17,685 | |||||||
| Interest expense, net | 8,811 | 10,181 | 6,970 | 8,708 | |||||||
| Income before income taxes and extraordinary gain | 13,087 | 7,332 | 17,463 | 8,977 | |||||||
| Income tax | 5,389 | 3,032 | 7,183 | 3,679 | |||||||
| Income before extraordinary gain (loss) | 7,699 | 4,300 | 10,280 | 5,298 | |||||||
| Extraordinary gain (loss) from early extinguishments | |||||||||||
| debt, net of income tax | (39) | 1,600 | (56) | - | |||||||
| Net income | 7,659 | 5,900 | 10,224 | 5,298 | |||||||
| Redeemable preferred stock dividends | 3,989 | 3,529 | - | - | |||||||
| Net income available to common stockholders | $ | 3,670 | $ | 2,371 | $ | 10,224 | $ | 5,298 | |||
| Earnings per share: | |||||||||||
| Basic | $ | 0.23 | $ | 0.15 | $ | 0.46 | $ | 0.24 | |||
| Diluted | $ | 0.23 | $ | 0.15 | $ | 0.45 | $ | 0.23 | |||
| Shares used to calculate earnings per share: | |||||||||||
| Basic | 15,813 | 15,605 | 22,178 | 22,183 | |||||||
| Diluted | 16,299 | 16,091 | 22,664 | 22,669 | |||||||
| (1) The above pro forma statements are based upon the company's unaudited consolidated financial statements, with certain adjustments. | |||||||||||
| This presentation is not in accordance with, or an alternative for, generally accepted accounting principles (GAAP) and may | |||||||||||
| not be consistent with the presentation used by other companies. However, Big 5 believes this presentation will provide | |||||||||||
| investors with additional insight into its operating results. The following table reconciles the pro forma data to that reported in | |||||||||||
| the financial statements by making certain adjustments as if the initial public offering were completed at the beginning of the periods | |||||||||||
| presented. | |||||||||||
| (in thousands except earnings per share data) | 13 Weeks Ended | 26 Weeks Ended | |||||||||
| June 30, 2002 | July 1, 2001 | June 30, 2002 | July 1, 2001 | ||||||||
| Reported net income available to common stockholders | $ 2,104 | $ 1,476 | $ 3,670 | $ 2,371 | |||||||
| Redeemable preferred stock dividends (a) | 2,025 | 1,781 | 3,989 | 3,529 | |||||||
| Reported net income | 4,129 | 3,257 | 7,659 | 5,900 | |||||||
| Bonus expense (b) | 1,491 | - | 1,491 | - | |||||||
| Interest expense (c) | 827 | 704 | 1,841 | 1,473 | |||||||
| Management fees (d) | 958 | 86 | 1,044 | 172 | |||||||
| Extraordinary (gain) loss (e) | - | - | (17) | (1,600) | |||||||
| Income taxes (f) | (1,343) | (324) | (1,794) | (647) | |||||||
| Pro forma net income available to common stockholders | $ 6,062 | $ 3,723 | $ 10,224 | $ 5,298 | |||||||
| Pro forma earnings per share - diluted | $ 0.27 | $ 0.16 | $ 0.45 | $ 0.23 | |||||||
| Pro forma weighted average shares outstanding - diluted | 22,664 | 22,669 | 22,664 | 22,669 | |||||||
| (a) To eliminate dividends payable on preferred stock redeemed in connection with the initial public offering. | |||||||||||
| (b) To eliminate the payment of bonuses that were funded through a reduction of the redemption price that would otherwise have been | |||||||||||
| applicable to redemption of the company's outstanding preferred stock. | |||||||||||
| (c) To eliminate interest expense and amortization of debt issue costs associated with the senior discount notes redeemed in connection | |||||||||||
| with the initial public offering and to reflect interest expense on borrowings under the revolving credit facility. | |||||||||||
| (d) To eliminate management services agreement fees and the management services agreement termination cost incurred in | |||||||||||
| connection with the initial public offering. | |||||||||||
| (e) To eliminate the extraordinary gain (loss), net of taxes, associated with the repurchase of the senior discount notes. | |||||||||||
| (f) To reflect tax expense (benefit) for items (b) through (d) noted above at the effective tax rate | |||||||||||
| Big 5 Sporting Goods Corporation | |||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||
| Pro Forma | Actual | ||||||||||
| June 30, | June 30, | December 30, | |||||||||
| 2002 (2) | 2002 | 2001 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash | $ | 5,845 | $ | 79,755 | $ | 7,865 | |||||
| Merchandise inventories | 181,209 | 181,209 | 163,680 | ||||||||
| Other current assets | 7,963 | 7,963 | 9,698 | ||||||||
| Total current assets | 195,017 | 268,927 | 181,243 | ||||||||
| Property and equipment, net | 41,564 | 41,564 | 42,650 | ||||||||
| Other long-term assets | 26,203 | 26,780 | 28,635 | ||||||||
| Total Assets | $ | 262,784 | $ | 337,271 | $ | 252,528 | |||||
| Liabilities and Stockholder's Equity | |||||||||||
| Current liabilities | $ | 114,939 | $ | 116,509 | $ | 114,951 | |||||
| Deferred rent | 7,950 | 7,950 | 7,791 | ||||||||
| Long-term debt | 146,781 | 156,254 | 153,351 | ||||||||
| Total liabilities | 269,670 | 280,713 | 276,093 | ||||||||
| Preferred Stock | - | 63,555 | 58,911 | ||||||||
| Net stockholders deficit | (6,886) | (6,997) | (82,476) | ||||||||
| Total liabilities, preferred stock and stockholders' deficit | $ | 262,784 | $ | 337,271 | $ | 252,528 | |||||
| (2) To pro forma June 30, 2002 balance sheet to reflect use of proceeds of initial public offering, including redemption of senior discount notes | |||||||||||
| and preferred stock, the payment of bonuses and other costs associated with these transactions as well as the exercise of the underwriter's | |||||||||||
| overallotment option. | |||||||||||
CONTACT: Big 5 Sporting Goods Corporation
Senior Vice President and Chief Financial Officer
Charles P. Kirk, 310/536-0611