Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
May 3, 2010
BIG 5 SPORTING GOODS CORPORATION
(Exact name of registrant as specified in charter)
| Delaware (State or Other Jurisdiction of Incorporation) |
000-49850 (Commission File Number) |
95-4388794 (IRS Employer Identification No.) |
||
| 2525 East El Segundo Boulevard, El Segundo, California (Address of principal executive offices) |
90245 (Zip Code) |
Registrant’s telephone number, including area code: (310) 536-0611
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2):
o Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (7 CFR 240.13e-4(c))
TABLE OF CONTENTS
| Item 1.01. Entry into a Material Definitive Agreement. | ||||||||
| Item 2.02. Results of Operations and Financial Condition | ||||||||
| Item 9.01. Financial Statements and Exhibits | ||||||||
| SIGNATURES | ||||||||
| EX-10.1 | ||||||||
| EX-99.1 | ||||||||
Table of Contents
Item 1.01. Entry into a Material Definitive Agreement.
Big 5 Corp. and
Big 5 Services Corp. (“Borrowers”), subsidiaries of Big 5 Sporting Goods Corporation, are parties to a
Second Amended and Restated Financing Agreement, dated as December 15, 2004 (as amended, the “Financing
Agreement”), with The CIT Group/Business Credit, Inc., as agent
for the lenders. On May 3, 2010, in
order to reduce expenses under the Financing Agreement, the Borrowers elected to exercise their right
to permanently reduce the line of credit under the Financing Agreement from $175,000,000
to $140,000,000. A copy of the letter of amendment effecting this reduction is filed as
Exhibit 10.1 to this Current Report on Form 8-K.
Item 2.02. Results of Operations and Financial Condition.
The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is
furnished pursuant to Item 2.02, “Results of Operations and Financial Condition” and shall not be
deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) or otherwise subject to liability under that Section, except as specifically
incorporated by reference into a filing under the Securities Act of 1933, as amended, or the
Exchange Act.
On
May 6, 2010, Big 5 Sporting Goods Corporation issued a press release in which, among
other things, it reported financial results for its fiscal 2010
first quarter. The press release
is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits
| Exhibit No. | Description | |
10.1
|
Letter of Reduction in Line of Credit under Financing Agreement, dated May 3, 2010. | |
99.1
|
Press release, dated May 6, 2010, issued by Big 5 Sporting Goods Corporation. |
Table of Contents
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 hereunto duly authorized.
| BIG 5 SPORTING GOODS CORPORATION | ||||||
Date:
May 6, 2010 |
||||||
| /s/ Steven G. Miller | ||||||
| Steven G. Miller | ||||||
| President and Chief Executive Officer | ||||||
EXHIBIT 10.1
|
Corporate Offices: 2525 East El Segundo Boulevard El Segundo, California 90245-4632 (310) 536-0611 |
May 3, 2010
The CIT Group/Business Credit, Inc.
11 West 42nd Street, 13th Floor
New York, NY 10036
11 West 42nd Street, 13th Floor
New York, NY 10036
Attention: Eddy Milstein & Alan Strauss
Re: Reduction in Line of Credit Pursuant to Section 7.12 of Financing Agreement
Dear Messrs. Milstein and Strauss:
Reference is made to the Second Amended and Restated Financing Agreement dated as of December 15,
2004 (as amended, modified, or supplemented from time to time, the “Financing Agreement”)
by and between The CIT Group/Business Credit, Inc., as the agent (the “Agent”) for the
financial institutions party thereto from time to time as lenders (the “Lenders”), Big 5
Corp. (“Big 5”), and Big 5 Services Corp. (“Big 5 Services,” and together with Big
5, the “Companies”). Terms used herein but not defined herein have the meanings given in
the Financing Agreement.
The Companies hereby irrevocably elect to permanently reduce the Line of Credit from $175,000,000
to $140,000,000, in accordance with Section 7.12 of the Financing Agreement, on May 17, 2010, ten
business days after delivery of this notice to the Agent.
Please do not hesitate to contact me with any questions or concerns.
| Sincerely, BIG 5 CORP. |
||||
| /s/ BARRY D. EMERSON | ||||
| Barry D. Emerson Senior Vice President & Chief Financial Officer |
||||
Page 1 of 2
Address Reply To: Post Office Box 92088, Los Angeles, California 90009-2088
| BIG 5 SERVICES CORP. |
||||
| /s/ BARRY D. EMERSON | ||||
| Barry D. Emerson Senior Vice President & Chief Financial Officer |
||||
CC: Jenkens & Gilchrist, LLP
Page 2 of 2
EXHIBIT 99.1
Contact:
Big 5 Sporting Goods Corporation
Barry Emerson
Sr. Vice President and Chief Financial Officer
(310) 536-0611
Big 5 Sporting Goods Corporation
Barry Emerson
Sr. Vice President and Chief Financial Officer
(310) 536-0611
ICR, Inc.
John Mills
Senior Managing Director
(310) 954-1105
John Mills
Senior Managing Director
(310) 954-1105
BIG 5 SPORTING GOODS CORPORATION ANNOUNCES FISCAL 2010 FIRST
QUARTER RESULTS
QUARTER RESULTS
| • | First Quarter Earnings per Diluted Share Increase 77% to $0.23 Compared to Prior Year Earnings per Diluted Share of $0.13 | ||
| • | Same Store Sales Increase 2.4% from Comparable Period Last Year | ||
| • | Declares Quarterly Cash Dividend of $0.05 per Share |
EL SEGUNDO, Calif., May 6, 2010 — Big 5 Sporting Goods Corporation (NASDAQ: BGFV), a leading
sporting goods retailer, today reported financial results for the first quarter ended April 4,
2010.
For the fiscal 2010 first quarter, net sales increased to $218.5 million from net sales of $210.3
million for the first quarter of fiscal 2009. Same store sales increased 2.4% versus the
comparable period last year, representing the Company’s fourth consecutive quarterly increase in
same store sales. As anticipated, first quarter sales were negatively affected by a shift in the
timing of the Easter holiday, during which the Company’s stores are closed, into the first quarter
from the second quarter last year.
Gross profit for the fiscal 2010 first quarter increased to $71.6 million from $67.1 million in the
first quarter of the prior year. The Company’s gross profit margin improved to 32.7% in the fiscal
2010 first quarter versus 31.9% in the first quarter of the prior year. The increase in gross
profit margin was driven primarily by an increase in merchandise margins of approximately 15 basis
points and increased sales leverage on distribution and store occupancy costs.
Selling and administrative expense as a percentage of net sales decreased to 28.8% in the fiscal
2010 first quarter versus 29.4% in the first quarter of the prior year. The Company leveraged
selling and administrative costs through higher sales. Overall selling and
administrative expense increased $1.2 million during the quarter from the same period last year due
mainly to the increase in store count.
Net income for the first quarter of fiscal 2010 improved to $5.0 million, or $0.23 per diluted
share, from net income of $2.8 million, or $0.13 per diluted share, for the first quarter of fiscal
2009.
“We are pleased to have significantly improved both our top and bottom lines during the first
quarter of fiscal 2010,” said Steven G. Miller, the Company’s Chairman, President and Chief
Executive Officer. “We achieved earnings per share at the high end of our guidance range for the
quarter, driven by growth in customer traffic and average sale and expansion of merchandise and
operating margins. Our same store sales growth of 2.4% represented our strongest quarterly same
store growth since the fourth quarter of 2006, as favorable winter weather conditions in many of
our markets led to sales increases across our three major merchandise categories of apparel,
footwear and hardgoods. Additionally, our strong cash flow enabled us to continue to reduce debt
levels, and we ended the quarter with $46 million in debt compared to $55 million at the end of
2009 and $77 million at the end of the first quarter of 2009.”
Mr. Miller continued, “We believe we are well positioned to grow same store sales again during the
second quarter of fiscal 2010. While the economic environment in our markets remains challenging,
we remain confident in our overall strategy and believe our focus on providing compelling values to
our customers will continue to serve our business well.”
Quarterly Cash Dividend
The Company’s Board of Directors has declared a quarterly cash dividend of $0.05 per share of
outstanding common stock, which will be paid on June 15, 2010 to stockholders of record as of June
1, 2010.
Guidance
For the fiscal 2010 second quarter, the Company expects same store sales in the positive low
single-digit range and earnings per diluted share in the range of $0.24 to $0.30. For comparative
purposes, the Company’s earnings per diluted share for the second quarter of fiscal 2009 were
$0.22.
Store Openings
During the first quarter, the Company opened two new stores and relocated one store. The Company
ended the fiscal 2010 first quarter with 386 stores, and anticipates opening between 10 and 15 new
stores, net of relocations, during fiscal 2010.
Conference Call Information
The Company will host a conference call and audio webcast today, May 6, 2010, at 2:00 p.m. Pacific
(5:00 p.m. EDT) to discuss financial results for the fiscal 2010 first quarter. To
access the conference call, participants in North America should dial (888) 503-8162, and
international participants should dial (719) 325-2171. Participants are encouraged to dial in to
the conference call ten minutes prior to the scheduled start time. The call will also be broadcast
live over the Internet and accessible through the Investor Relations section of the Company’s
website at www.big5sportinggoods.com. The webcast will be archived and accessible on the
same website for 30 days following the call. A telephone replay will be available through May 20,
2010 by calling (888) 203-1112; passcode is 4409849.
About Big 5 Sporting Goods Corporation
Big 5 is a leading sporting goods retailer in the western United States, operating 386 stores in 12
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 and other factors that may cause Big 5’s actual results in current or future periods
to differ materially from forecasted results. Those risks and uncertainties include, among other
things, continued or worsening weakness in the consumer spending environment and the U.S. financial
and credit markets, 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 cost of goods, operating expense fluctuations,
disruption in product flow, changes in interest rates, credit availability and Big 5’s ability to
refinance its current financing agreement on favorable terms or at all, and higher costs associated
with current and new sources of credit resulting from uncertainty in financial markets and economic
conditions in general. Those and other risks and uncertainties are more fully described in Big 5’s
filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K/A for
the fiscal year ended January 3, 2010. Big 5 conducts its business in a highly competitive and
rapidly changing environment. Accordingly, new risk factors may arise. It is not possible for
management to predict all such risk factors, nor to assess the impact of all such risk factors on
Big 5’s business or the extent to which any individual risk factor, or combination of factors, may
cause results to differ materially from those contained in any forward-looking statement. Big 5
undertakes no obligation to revise or update any forward-looking statement that may be made from
time to time by it or on its behalf.
# # #
FINANCIAL TABLES FOLLOW
BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
| April 4, | January 3, | |||||||
| 2010 | 2010 | |||||||
| ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 5,313 | $ | 5,765 | ||||
Accounts receivable, net of allowances of $136 and $223, respectively |
7,742 | 13,398 | ||||||
Merchandise inventories, net |
240,100 | 230,911 | ||||||
Prepaid expenses |
9,153 | 9,683 | ||||||
Deferred income taxes |
7,475 | 7,723 | ||||||
Total current assets |
269,783 | 267,480 | ||||||
Property and equipment, net |
80,171 | 81,817 | ||||||
Deferred income taxes |
12,363 | 11,327 | ||||||
Other assets, net of accumulated amortization of $359 and $346, respectively |
1,026 | 1,065 | ||||||
Goodwill |
4,433 | 4,433 | ||||||
Total assets |
$ | 367,776 | $ | 366,122 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 98,307 | $ | 85,721 | ||||
Accrued expenses |
53,115 | 59,314 | ||||||
Current portion of capital lease obligations |
1,900 | 1,904 | ||||||
Short-term revolving credit borrowings |
45,504 | — | ||||||
Total current liabilities |
198,826 | 146,939 | ||||||
Deferred rent, less current portion |
23,913 | 23,832 | ||||||
Capital lease obligations, less current portion |
2,005 | 2,278 | ||||||
Long-term revolving credit borrowings |
— | 54,955 | ||||||
Other long-term liabilities |
6,612 | 6,257 | ||||||
Total liabilities |
231,356 | 234,261 | ||||||
Commitments and contingencies |
||||||||
Stockholders’ equity: |
||||||||
Common stock, $0.01 par value, authorized 50,000,000 shares;
issued 23,223,857 and 23,050,061 shares, respectively;
outstanding 21,740,562 and 21,566,766 shares, respectively |
232 | 230 | ||||||
Additional paid-in capital |
95,863 | 95,259 | ||||||
Retained earnings |
61,691 | 57,738 | ||||||
Less: Treasury stock, at cost; 1,483,295 shares |
(21,366 | ) | (21,366 | ) | ||||
Total stockholders’ equity |
136,420 | 131,861 | ||||||
Total liabilities and stockholders’ equity |
$ | 367,776 | $ | 366,122 | ||||
BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
| 13 Weeks Ended | ||||||||
| April 4, | March 29, | |||||||
| 2010 | 2009 | |||||||
Net sales |
$ | 218,521 | $ | 210,291 | ||||
Cost of sales |
146,971 | 143,219 | ||||||
Gross profit |
71,550 | 67,072 | ||||||
Selling and administrative expense |
63,063 | 61,838 | ||||||
Operating income |
8,487 | 5,234 | ||||||
Interest expense |
404 | 713 | ||||||
Income before income taxes |
8,083 | 4,521 | ||||||
Income taxes |
3,050 | 1,761 | ||||||
Net income |
$ | 5,033 | $ | 2,760 | ||||
Earnings per share: |
||||||||
Basic |
$ | 0.23 | $ | 0.13 | ||||
Diluted |
$ | 0.23 | $ | 0.13 | ||||
Dividends per share |
$ | 0.05 | $ | 0.05 | ||||
Weighted-average shares of common stock outstanding: |
||||||||
Basic |
21,484 | 21,414 | ||||||
Diluted |
21,843 | 21,424 | ||||||