- Earnings Per Share Increases 60% to $0.24 On A Pro Forma Basis (Excludes $0.30 Per Share of One-time Expenses Associated With IPO)
- Same Store Sales Up 5.3%; 27th Consecutive Quarterly Increase of Same Store Sales
- Conference Call Scheduled Today at 2:00 p.m. (Pacific); Simultaneous Webcast at www.firstcallevents.com/service/ajwz368710382gf12.html
El Segundo, CA -- October 30, 2002 -- Big 5 Sporting Goods Corporation (Nasdaq: BGFV), the leading sporting goods retailer in the western United States, today reported financial results for the fiscal third quarter and the 39 weeks ended September 29, 2002.
Net sales for the 2002 third quarter increased by $12.8 million, or 8.1%, to $170.9 million from $158.1 million in the third quarter of 2001. Same store sales grew 5.3% during the third quarter, representing the twenty-seventh consecutive quarterly increase in same store sales over comparable prior periods. Gross profit margin increased 1.1% during the third quarter to 34.6% from 33.5% for the same period last year. Pro forma selling and administration expenses, which excludes certain effects related to the IPO and over-allotment option, improved to 25.7% of net sales, compared with 25.8% for the same period last year.
Pro forma net income available to common stockholders increased by $2.0 million, or 60.3%, during the third quarter to $5.5 million from $3.5 million for the same period last year. Pro forma earnings per diluted share increased 60.0% during the third quarter to $0.24 from $0.15 for the same period last year.
Net loss to common stockholders calculated in accordance with generally accepted accounting principles (GAAP) was $1.4 million for the third quarter, or $0.06 per diluted share, and includes $6.9 million, or $0.30 per diluted share, of after-tax non-recurring expenses and other items related to the company's initial public offering (IPO) for which the company makes pro forma adjustments. This compares to GAAP net income available to common stockholders of $1.1 million, or $0.07 per diluted share, for the same period last year, which includes $2.3 million, or $0.08 per diluted share, of after-tax non-recurring expenses and other items related to the IPO for which the company makes pro forma adjustments.
Pro forma operating income increased by $3.0 million, or 30.7%, during the third quarter to $12.8 million from $9.8 million for the same period last year. GAAP operating income totaled $12.3 million for the third quarter versus $9.7 million for the same period last year.
Big 5 reports net income and earnings per diluted share in accordance with GAAP and additionally on a pro forma basis to exclude certain effects of the company's IPO, including the exercise of the underwriters' over-allotment option. The company raised a total of $86.4 million of net proceeds from the IPO, which occurred in June 2002, during the company's second quarter, and the exercise of the underwriters' over-allotment option, which occurred in July 2002, during the company's third quarter. During the company's third quarter, the company utilized IPO proceeds and borrowings under its credit facility to redeem all of Big 5's outstanding senior discount notes and preferred stock and to repurchase approximately 500,000 shares of common stock from non-executive employees. The pro forma figures assume that the IPO took place at the beginning of the periods presented and exclude the effects of certain one-time IPO-related and over-allotment 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 IPO, interest payments and premium payable on debt redeemed in connection with the IPO, dividends and premium payable on preferred stock redeemed in connection with the IPO 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 IPO 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 for the first nine months of 2002 increased by $38.0 million, or 8.4%, to $490.7 million from $452.7 million for the first nine months of 2001. Same store sales increased 5.4% for the first nine months. Gross profit margin increased 1.3% to 35.4% from 34.1% for the same period last year. Pro forma selling and administration expenses were 26.4% of net sales, unchanged from the same period last year.
Pro forma net income available to common stockholders increased by $7.1 million, or 80.1%, during the first nine months to $15.8 million from $8.7 million for the same period last year. Pro forma earnings per diluted share increased by 79.5% for the first nine months to $0.70 from $0.39 for the same period last year.
Net income available to common stockholders calculated in accordance with GAAP was $2.3 million for the first nine months, or $0.12 per diluted share, and includes $13.5 million, or $0.58 per diluted share, of after-tax non-recurring expenses and other items related to the IPO for which the company makes pro forma adjustments. This compares to GAAP net income available to common stockholders of $3.5 million, or $0.22 per diluted share, for the same period last year, which includes $5.2 million, or $0.17 per diluted share, of after-tax non-recurring expenses and other items related to the IPO for which the company makes pro forma adjustments.
Pro forma operating income increased by $9.8 million, or 35.5%, during the first nine months to $37.2 million from $27.5 million for the same period last year. GAAP operating income totaled $34.2 million for the first nine months of 2002 versus $27.2 million for the same period last year.
Steven G. Miller, Chairman, President, and Chief Executive Officer, said, "We are pleased to report another outstanding quarter for our business. The time-proven abilities of the Big 5 team were again demonstrated by our strong same store sales performance in a challenging economic environment. Our sales, combined with higher profit margins and sound expense controls, have allowed us to deliver excellent bottom line results for the first nine months of fiscal 2002. We are well positioned to continue this strong performance over the remainder of this year and into fiscal 2003."
EPS Guidance - Pro Forma
Big 5 expects to realize same store sales growth in the mid-single digit range during the fourth quarter of fiscal 2002. Reflecting this same store sales growth and anticipated continued strength in operating margins, Big 5 currently expects earnings per diluted share on a pro forma basis to be in the range of $0.42 to $0.44 per diluted share for the fourth quarter of 2002 resulting in earnings per diluted share of $1.12 to $1.14 for the fiscal year ending December 29, 2002.
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 ended September 29, 2002. The webcast will be available at www.firstcallevents.com/service/ajwz368710382gf12.html and archived until November 15, 2002.
About Big 5 Sporting Goods Corporation
Big 5 is the leading sporting goods retailer in the western United States, operating 266 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) | |||||||||
| September 29, 2002 |
September 30, 2001 |
September
29, 2002 |
September
30, 2001 |
|||||||
| Net sales | $ | 170,913 | $ | 158,085 | $ | 170,913 | $ | 158,085 | ||
| Cost of goods sold, buying and occupancy | 111,851 | 105,129 | 111,851 | 105,129 | ||||||
| Gross profit | 59,062 | 52,956 | 59,062 | 52,956 | ||||||
| Selling and administrative | 44,456 | 40,888 | 43,985 | 40,801 | ||||||
| Depreciation and amortization | 2,336 | 2,364 | 2,336 | 2,365 | ||||||
| Operating income | 12,270 | 9,704 | 12,741 | 9,790 | ||||||
| Interest expense, net | 3,486 | 4,712 | 3,486 | 3,944 | ||||||
| Income before income taxes and extraordinary gain | 8,784 | 4,992 | 9,255 | 5,846 | ||||||
| Income tax | 3,602 | 2,047 | 3,795 | 2,396 | ||||||
| Net income | 5,182 | 2,945 | 5,460 | 3,450 | ||||||
| Redeemable preferred stock dividends | - | 1,815 | - | - | ||||||
| Net income available to common stockholders | $ | 5,182 | $ | 1,130 | $ | 5,460 | $ | 3,450 | ||
| Earnings per share: | ||||||||||
| Basic | $ | 0.23 | $ | 0.07 | $ | 0.25 | $ | 0.16 | ||
| Diluted | $ | 0.23 | $ | 0.07 | $ | 0.24 | $ | 0.15 | ||
| Shares used to calculate earnings per share: | ||||||||||
| Basic | 22,178 | 15,605 | 22,178 | 22,183 | ||||||
| Diluted | 22,664 | 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 | |||||||||
| 39 Weeks Ended | 39 Weeks Ended (1) | |||||||||
| September 29, 2002 |
September 30, 2001 |
September
29, 2002 |
September
30, 2001 |
|||||||
| Net sales | $ | 490,749 | $ | 452,721 | $ | 490,749 | $ | 452,721 | ||
| Cost of goods sold, buying and occupancy | 317,048 | 298,320 | 317,048 | 298,320 | ||||||
| Gross profit | 173,701 | 154,401 | 173,701 | 154,401 | ||||||
| Selling and administrative | 132,376 | 119,676 | 129,370 | 119,417 | ||||||
| Depreciation and amortization | 7,158 | 7,508 | 7,158 | 7,508 | ||||||
| Operating income | 34,167 | 27,217 | 37,173 | 27,476 | ||||||
| Interest expense, net | 12,297 | 14,893 | 10,456 | 12,652 | ||||||
| Income before income taxes and extraordinary gain | 21,870 | 12,324 | 26,717 | 14,824 | ||||||
| Income tax | 8,990 | 5,079 | 10,978 | 6,075 | ||||||
| Income before extraordinary gain (loss) | 12,880 | 7,245 | 15,739 | 8,749 | ||||||
| Extraordinary gain (loss) from early extinguishments | ||||||||||
| debt, net of income tax | (39) | 1,600 | (56) | - | ||||||
| Net income | 12,841 | 8,845 | 15,683 | 8,749 | ||||||
| Redeemable preferred stock dividends | 3,989 | 5,344 | - | - | ||||||
| Net income available to common stockholders | $ | 8,852 | $ | 3,501 | $ | 15,683 | $ | 8,749 | ||
| Earnings per share: | ||||||||||
| Basic | $ | 0.49 | $ | 0.22 | $ | 0.71 | $ | 0.39 | ||
| Diluted | $ | 0.48 | $ | 0.22 | $ | 0.69 | $ | 0.39 | ||
| Shares used to calculate earnings per share: | ||||||||||
| Basic | 17,984 | 15,605 | 22,178 | 22,183 | ||||||
| Diluted | 18,470 | 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 | 39 Weeks Ended | ||||||||
| September 29, 2002 |
September 30, 2001 |
September
29, 2002 |
September
30, 2001 |
|||||||
| Reported net income available to common stockholders | $ 5,182 | $ 1,130 | $ 8,852 | $ 3,501 | ||||||
| Redeemable preferred stock dividends (a) | - | 1,815 | 3,989 | 5,344 | ||||||
| Reported net income | 5,182 | 2,945 | 12,841 | 8,845 | ||||||
| Bonus expense (b) | 471 | - | 1,962 | - | ||||||
| Interest expense (c) | - | 768 | 1,841 | 2,241 | ||||||
| Management fees (d) | - | 87 | 1,044 | 259 | ||||||
| Extraordinary (gain) loss (e) | - | - | (17) | (1,600) | ||||||
| Income taxes (f) | (193) | (350) | (1,988) | (996) | ||||||
| Pro forma net income available to common stockholders | $ 5,460 | $ 3,450 | $ 15,683 | $ 8,749 | ||||||
| Pro forma earnings per share - diluted | $ 0.24 | $ 0.15 | $ 0.69 | $ 0.39 | ||||||
| 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 in connection with the initial public offering and the exercise of the underwriter's overallotment | ||||||||||
| option 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 | ||||||||||
| September 30, | December 30, | |||||||||
| 2002 | 2001 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash | $ | 5,938 | $ | 7,865 | ||||||
| Merchandise inventories | 171,640 | 163,680 | ||||||||
| Other current assets | 6,134 | 9,698 | ||||||||
| Total current assets | 183,712 | 181,243 | ||||||||
| Property and equipment, net | 41,180 | 42,650 | ||||||||
| Other long-term assets | 35,633 | 28,635 | ||||||||
| Total Assets | $ | 260,525 | $ | 252,528 | ||||||
| Liabilities and Stockholder's Equity | ||||||||||
| Current liabilities | $ | 105,153 | $ | 114,951 | ||||||
| Deferred rent | 7,951 | 7,791 | ||||||||
| Long-term debt | 148,959 | 153,351 | ||||||||
| Total liabilities | 262,063 | 276,093 | ||||||||
| Preferred Stock | - | 58,911 | ||||||||
| Net stockholders deficit | (1,538) | (82,476) | ||||||||
| Total liabilities, preferred stock and stockholders' deficit | $ | 260,525 | $ | 252,528 | ||||||