Company Increases Annual EPS and Cash Flow Guidance Company
Announces $150 Million Share Repurchase Program COLUMBUS, Ohio,
Dec. 4 /PRNewswire-FirstCall/ -- Big Lots, Inc. (NYSE: BIG) is
reporting third quarter fiscal 2009 income from continuing
operations of $30.3 million, or $0.37 per diluted share. Excluding
a net gain on sale of real estate of $8.2 million, or $0.10 per
diluted share, discussed later in this release, adjusted (non-GAAP)
income from continuing operations totaled $22.1 million, or $0.27
per diluted share, compared to $12.4 million, or $0.15 per diluted
share, in the third quarter of fiscal 2008. (Logo:
http://www.newscom.com/cgi-bin/prnh/20011026/BIGLOTSLOGO ) For the
year to date period ended October 31, 2009, income from continuing
operations totaled $95.2 million, or $1.15 per diluted share. On an
adjusted (non-GAAP) basis, income from continuing operations
totaled $87.0 million, or $1.05 per diluted share, compared to
$73.0 million, or $0.89 per diluted share, for the same period in
fiscal 2008. THIRD QUARTER HIGHLIGHTS -- Record income from
continuing operations (on an adjusted non-GAAP basis) of $0.27 per
diluted share versus income from continuing operations of $0.15 per
diluted share last year -- Record EPS from continuing operations
for the 12th consecutive quarter -- Operating profit dollars (on an
adjusted non-GAAP basis) increased 72% compared to the third
quarter of 2008 as operating profit rate increased 130 basis points
Third Quarter Results Net sales for the third quarter of fiscal
2009 increased 1.3% to $1,035.3 million, compared to $1,021.6
million for the same period in fiscal 2008. Comparable store sales
for stores open at least two years at the beginning of the fiscal
year decreased 0.2% for the quarter. Operating profit (adjusted
non-GAAP basis) for the third quarter of fiscal 2009 was $34.6
million, or 3.3% of sales, compared to last year's operating profit
of $20.1 million, or 2.0% of sales. The 72% improvement in
operating profit dollars was the result of improvement in our gross
margin rate and lower overall expense dollars compared to last
year. Our gross margin rate for the quarter increased 60 basis
points compared to last year due to improved initial markup, lower
inbound freight expense, and the favorable resolution of an import
duty contingency related to a prior year. As expected, total
expense dollars and expenses as a percent of sales were down to
last year due to certain efficiencies in distribution and
transportation, lower advertising expenses, lower store payroll
costs, and lower depreciation expense, partially offset by higher
occupancy costs related to net new store growth in 2009 and a
favorable early lease termination buyout recognized in 2008. For
the third quarter of fiscal 2009, net interest expense was $0.5
million compared to net interest expense of $1.6 million last year
with the improvement directly attributed to the overall cash flow
of the business in the last 12 months. The effective income tax
rate (adjusted non-GAAP basis) for the third quarter of fiscal 2009
was 35.2% compared to 33.2% last year, which benefited from
favorable settlement activity spread over a smaller pretax income
base. Inventory and Cash Management Inventory ended the third
quarter of fiscal 2009 at $918 million compared to $958 million
last year. The 4% decline in overall inventory reflected a 4%
decrease in average store inventory as store count at the end of
the quarter was fairly similar to last year. We ended the third
quarter of fiscal 2009 with borrowings of $1 million under our
credit facility compared to $269 million of borrowings under our
credit facility as of the end of the third quarter of fiscal 2008.
The debt reduction was attributable to cash generated by our
business over the last 12 months. Gain on Sale of Real Estate In
September 2006, to avoid litigation and under threat of eminent
domain, we sold a company-owned and operated store in California
for a gain. As part of the sale, we entered into a lease which
permitted us to continue to occupy and operate the store through
January 2009 in exchange for rent of $1 per year plus the taxes,
insurance, and common area maintenance. Subsequently, this lease
was modified to allow us to occupy this space through September
2009 under substantially the same terms. Because of the favorable
lease terms, we deferred recognition of the gain until we no longer
held a continuing involvement with this property. In September
2009, after attempts to further extend the lease term were
unsuccessful, we closed the store, ending our continuing
involvement with this property, and recognized the pretax gain on
sale of real estate of $13.0 million ($8.2 million net of tax, or
$0.10 per diluted share), during the third quarter of fiscal 2009.
We believe the completion of this transaction is not directly
related to our ongoing operations. Therefore, we have provided a
complementary schedule entitled "Big Lots, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures" that excludes this
item. We believe that these non-GAAP financial measures should
facilitate analysis by investors and others who follow our
financial performance. Discontinued Operations As discussed in our
Form 10-K filed with the SEC on April 1, 2009, activity related to
KB Toys, our former division, as well as the operating results and
costs associated with 130 stores closed in January 2006 are
classified as discontinued operations. Results from discontinued
operations for the third quarter of fiscal 2009 totaled income of
$0.1 million compared to a net loss from discontinued operations of
$0.1 million for the third quarter of fiscal 2008. For the
year-to-date period ended October 31, 2009, results from
discontinued operations totaled a net loss of $0.2 million compared
to a net loss from discontinued operations of $0.2 million for the
same period in fiscal 2008. 2009 OUTLOOK (Adjusted non-GAAP basis)
-- Increasing Q4 guidance for income from continuing operations to
$1.09 to $1.14 per diluted share, a 9% to 14% increase compared to
income from continuing operations of $1.00 per diluted share for
the same period last year. -- Increasing fiscal 2009 annual
guidance for income from continuing operations to $2.15 to $2.20
per diluted share, a 14% to 16% increase compared to income from
continuing operations of $1.89 per diluted share last year. --
Estimating fiscal year 2009 operating profit rate to be in the
range of 6.2% to 6.4% -- Increasing Cash Flow (defined as operating
activities less capital expenditures) guidance for fiscal 2009 to a
range of $210 to $215 million versus Cash Flow of $123 million for
fiscal 2008 For the fourth quarter of fiscal 2009, we anticipate
comparable store sales will increase in a range of 1.5% to 2.5%. At
this level of comp sales performance, we expect our gross margin
rate will be up to last year and expenses as a percent of sales
will be down slightly to last year. Given these assumptions, we
raised our earnings expectations for the fourth quarter to be in a
range of $1.09 to $1.14 per diluted share, compared to our prior
guidance which called for $0.99 to $1.04 per diluted share. Income
from continuing operations for the fourth quarter of fiscal 2008
was $1.00 per diluted share. Based on the strength of our third
quarter operating results and an increase to our fourth quarter
expectations, we raised our fiscal 2009 guidance for income from
continuing operations (on a non-GAAP basis) to be in a range of
$2.15 to $2.20 per diluted share, compared to prior guidance of
$1.92 to $2.02 per diluted share, and compared to $1.89 per diluted
share for fiscal 2008. Our annual guidance on an adjusted non-GAAP
basis excludes the $13.0 million gain ($8.2 million net of tax, or
$0.10 per diluted share) recognized in the third fiscal quarter of
2009. Additionally, we are raising our annual cash flow guidance to
a range of $210 to $215 million compared to prior guidance which
called for approximately $155 million. The $55 million to $60
million increase to prior guidance reflects higher earnings
expectations, lower inventory levels per store, and improved
accounts payable leverage. Additionally, we have opened 52 new
stores this year compared to our prior estimate of 50 new stores,
and expect to close a total of only 30 locations this year, down
from our prior estimate of 40 store closings. Based on these
assumptions, we will be operating 1,361 stores as of the end of
fiscal 2009, a 2% increase in store count compared to the end of
fiscal 2008. BOARD OF DIRECTORS AUTHORIZES $150 MILLION SHARE
REPURCHASE PROGRAM We are also announcing that our Board of
Directors authorized a new repurchase program providing for the
repurchase of up to $150 million of the Company's common shares.
The program commences immediately and will continue until
exhausted. We expect the purchases to be made from time to time in
the open market and/or in privately negotiated transactions at our
discretion, subject to market conditions and other factors. Common
shares acquired through the repurchase program will be available to
meet obligations under equity compensation plans and for general
corporate purposes. The Board believes that the size of the new
repurchase program fits well within the Company's capital structure
and the cash flow expected to be generated in fiscal 2009.
Conference Call/Webcast We will host a conference call today at
8:00 a.m. to discuss our financial results for the third quarter
and provide commentary on our outlook for fiscal 2009. We invite
you to listen to the webcast of the conference call through the
Investor Relations section of our website
(http://www.biglots.com/). An archive of the call will be available
through the Investor Relations section of our website
(http://www.biglots.com/) beginning two hours after the call ends
and will remain available through midnight on Friday, December 18.
A replay of the call will be available beginning December 4 at noon
through December 18 at midnight by dialing: 1.888.203.1112 (United
States and Canada) or 1.719.457.0820 (International). All times are
Eastern Time. The PIN number is 7835547. Big Lots is the nation's
largest broadline closeout retailer. As of the end of the third
quarter of fiscal 2009 (October 31, 2009), we operated 1,368 BIG
LOTS stores in 47 states. We also sell merchandise via our
wholesale operations which are conducted through BIG LOTS
WHOLESALE, CONSOLIDATED INTERNATIONAL, and WISCONSIN TOY. Our
website is located at http://www.biglots.com/. Cautionary Statement
Concerning Forward-Looking Statements Certain statements in this
release are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, and such
statements are intended to qualify for the protection of the safe
harbor provided by the Act. The words "anticipate," "estimate,"
"expect," "objective," "goal," "project," "intend," "plan,"
"believe," "will," "should," "may," "target," "forecast,"
"guidance," "outlook" and similar expressions generally identify
forward-looking statements. Similarly, descriptions of our
objectives, strategies, plans, goals or targets are also
forward-looking statements. Forward-looking statements relate to
the expectations of management as to future occurrences and trends,
including statements expressing optimism or pessimism about future
operating results or events and projected sales, earnings, capital
expenditures and business strategy. Forward-looking statements are
based upon a number of assumptions concerning future conditions
that may ultimately prove to be inaccurate. Forward-looking
statements are and will be based upon management's then-current
views and assumptions regarding future events and operating
performance, and are applicable only as of the dates of such
statements. Although we believe the expectations expressed in
forward-looking statements are based on reasonable assumptions
within the bounds of our knowledge, forward-looking statements, by
their nature, involve risks, uncertainties and other factors, any
one or a combination of which could materially affect our business,
financial condition, results of operations or liquidity.
Forward-looking statements that we make herein and in other reports
and releases are not guarantees of future performance and actual
results may differ materially from those discussed in such
forward-looking statements as a result of various factors,
including, but not limited to, the current economic and credit
crisis, the cost of goods, our inability to successfully execute
strategic initiatives, competitive pressures, economic pressures on
our customers and us, the availability of brand name closeout
merchandise, trade restrictions, freight costs, the risks discussed
in the Risk Factors section of our most recent Annual Report on
Form 10-K, and other factors discussed from time to time in our
other filings with the SEC, including Quarterly Reports on Form
10-Q and Current Reports on Form 8-K. This release should be read
in conjunction with such filings, and you should consider all of
these risks, uncertainties and other factors carefully in
evaluating forward-looking statements. You are cautioned not to
place undue reliance on forward-looking statements, which speak
only as of the date thereof. We undertake no obligation to publicly
update forward-looking statements, whether as a result of new
information, future events or otherwise. You are advised, however,
to consult any further disclosures we make on related subjects in
our public announcements and SEC filings. BIG LOTS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
----------- ----------- OCTOBER 31, NOVEMBER 1, 2009 2008
----------- ----------- (Unaudited) (Unaudited) ASSETS Current
assets: Cash and cash equivalents $45,907 $39,236 Inventories
918,205 957,979 Deferred income taxes 47,433 57,899 Other current
assets 80,043 68,202 ------ ------ Total current assets 1,091,588
1,123,316 --------- --------- Property and equipment - net 497,923
494,369 Deferred income taxes 37,880 45,964 Other assets 27,111
19,374 ---------- ---------- $1,654,502 $1,683,023 ==========
========== LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Current maturities under bank credit facilities $0
$269,100 Accounts payable 423,520 385,761 Property, payroll and
other taxes 74,485 72,143 Accrued operating expenses 52,225 48,790
Insurance reserves 40,620 36,204 KB bankruptcy lease obligation
3,680 0 Accrued salaries and wages 39,902 37,450 Income taxes
payable 1,191 724 ----- --- Total current liabilities 635,623
850,172 ------- ------- Long-term bank obligations under bank
credit facility 1,000 0 Deferred rent 32,299 28,545 Insurance
reserves 45,240 44,899 Unrecognized tax benefits 26,430 25,510
Other liabilities 30,946 32,490 Shareholders' equity 882,964
701,407 ------- ------- $1,654,502 $1,683,023 ========== ==========
BIG LOTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (In thousands, except per share data) 13 WEEKS ENDED
13 WEEKS ENDED ----------------- ----------------- OCTOBER 31, 2009
NOVEMBER 1, 2008 % % ----------------- -----------------
(Unaudited) (Unaudited) Net sales $1,035,269 100.0 $1,021,580 100.0
---------- ----- ---------- ----- Gross margin 417,991 40.4 406,262
39.8 Selling and administrative expenses 365,194 35.3 366,505 35.9
Depreciation expense 18,184 1.8 19,632 1.9 Gain on sale of real
estate (12,964) (1.3) 0 0.0 ------- ---- --- --- Operating profit
47,577 4.6 20,125 2.0 Interest expense (507) (0.0) (1,635) (0.2)
Interest and investment income 14 0.0 10 0.0 -- --- -- --- Income
from continuing operations before income taxes 47,084 4.5 18,500
1.8 Income tax expense 16,828 1.6 6,142 0.6 ------ --- ----- ---
Income from continuing operations 30,256 2.9 12,358 1.2 ====== ====
====== === Income (loss) from discontinued operations, net of tax
expense (benefit) of $48 and $(64), respectively 73 0.0 (110) (0.0)
-- --- ---- ---- Net income $30,329 2.9 $12,248 1.2 ======= ===
======= === Earnings per common share - basic (a) Continuing
operations $0.37 $0.15 Discontinued operations 0.00 0.00 -----
----- Net income $0.37 $0.15 ===== ===== Earnings per common share
- diluted (a) Continuing operations $0.37 $0.15 Discontinued
operations 0.00 0.00 ----- ----- Net income $0.37 $0.15 ===== =====
Weighted average common shares outstanding Basic 81,674 81,255
Dilutive effect of share-based awards 1,059 1,129 ------ -----
Diluted 82,733 82,384 ====== ====== (a) The earnings per share for
Continuing Operations, Discontinued Operations and Net Income are
separately calculated in accordance with accounting pronouncements;
therefore, the sum of earnings per share for Continuing Operations
and Discontinued Operations may differ, due to rounding, from the
calculated earnings per share of Net Income. BIG LOTS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands, except per share data) 39 WEEKS ENDED 39 WEEKS ENDED
----------------- ----------------- OCTOBER 31, 2009 NOVEMBER 1,
2008 % % ----------------- ----------------- (Unaudited)
(Unaudited) Net sales $3,263,492 100.0 $3,278,358 100.0 ----------
----- ---------- ----- Gross margin 1,314,554 40.3 1,304,857 39.8
Selling and administrative expenses 1,115,657 34.2 1,124,246 34.3
Depreciation expense 56,348 1.7 58,868 1.8 Gain on sale of real
estate (12,964) (0.4) 0 0.0 ------- ---- --- --- Operating profit
155,513 4.8 121,743 3.7 Interest expense (1,334) (0.0) (4,153)
(0.1) Interest and investment income 39 0.0 36 0.0 -- --- -- ---
Income from continuing operations before income taxes 154,218 4.7
117,626 3.6 Income tax expense 59,036 1.8 44,635 1.4 ------ ---
------ --- Income from continuing operations 95,182 2.9 72,991 2.2
Loss from discontinued operations, net of tax benefit of $115 and
$123, respectively (179) (0.0) (209) (0.0) ---- ---- ---- ---- Net
income $95,003 2.9 $72,782 2.2 ======= === ======= === Earnings per
common share - basic (a) Continuing operations $1.17 $0.90
Discontinued operations 0.00 0.00 ----- ----- Net income $1.16
$0.90 ===== ===== Earnings per common share - diluted (a)
Continuing operations $1.15 $0.89 Discontinued operations 0.00 0.00
----- ----- Net income $1.15 $0.89 ===== ===== Weighted average
common shares outstanding Basic 81,568 81,043 Dilutive effect of
share-based awards 924 1,064 --- ----- Diluted 82,492 82,107 ======
====== (a) The earnings per share for Continuing Operations,
Discontinued Operations and Net Income are separately calculated in
accordance with accounting pronouncements; therefore, the sum of
earnings per share for Continuing Operations and Discontinued
Operations may differ, due to rounding, from the calculated
earnings per share of Net Income. BIG LOTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In thousands, except
per share data) (Unaudited) The following table reconciles
operating profit, operating profit rate, income tax expense,
effective income tax rate, income from continuing operations, net
income, diluted earnings per share from continuing operations, and
diluted earnings per share for the third quarter of 2009 and
year-to-date 2009 (GAAP financial measures) to adjusted operating
profit, adjusted operating profit rate, adjusted income tax
expense, adjusted effective income tax rate, adjusted income from
continuing operations, adjusted net income, adjusted diluted
earnings per share from continuing operations, and adjusted diluted
earnings per share (non-GAAP financial measures). Third quarter of
2009 - Thirteen weeks ended October 31, 2009 Adjustment to exclude
gain on sale of As Adjusted As reported real estate (non-GAAP)
----------- ------------- ----------- Operating profit $47,577
$12,964 $34,613 Operating profit rate 4.6% 1.3% 3.3% Income tax
expense 16,828 4,801 12,027 Effective income tax rate 35.7% 0.5%
35.2% Income from continuing operations 30,256 8,163 22,093 Net
Income 30,329 8,163 22,166 Diluted earnings per share from
continuing operations $0.37 $0.10 $0.27 Diluted earnings per share
$0.37 $0.10 $0.27 Year-to-Date 2009 - Thirty-nine weeks ended
October 31, 2009 Adjustment to exclude gain on sale of As Adjusted
As reported real estate (non-GAAP) ----------- -------------
----------- Operating profit $155,513 $12,964 $142,549 Operating
profit rate 4.8% 0.4% 4.4% Income tax expense 59,036 4,801 54,235
Effective income tax rate 38.3% (0.1%) 38.4% Income from continuing
operations 95,182 8,163 87,019 Net Income 95,003 8,163 86,840
Diluted earnings per share from continuing operations $1.15 $0.10
$1.05 Diluted earnings per share $1.15 $0.10 $1.05 The adjusted
operating profit, adjusted operating profit rate, adjusted income
tax expense, adjusted effective income tax rate, adjusted income
from continuing operations, adjusted net income, adjusted diluted
earnings per share from continuing operations, and adjusted diluted
earnings per share are "non-GAAP financial measures" as that term
is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item
10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial
measures exclude from the most directly comparable financial
measures calculated and presented in accordance with accounting
principles generally accepted in the United States of America
("GAAP") a pretax gain on the sale of real estate of $12,964
($8,163, net of tax). Our management believes that the disclosure
of these non-GAAP financial measures provides useful information to
investors because the non-GAAP financial measures present an
alternative and more relevant method for measuring our operating
performance, excluding special items included in the most directly
comparable GAAP financial measures, that management believes is
more indicative of our on-going operating results and financial
condition. Our management uses these non-GAAP financial measures,
along with the most directly comparable GAAP financial measures, in
evaluating our operating performance. BIG LOTS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands) 13 WEEKS ENDED 13 WEEKS ENDED ----------------
---------------- October 31, 2009 November 1, 2008 ----------------
---------------- (Unaudited) (Unaudited) Net cash used in operating
activities ($31,262) ($106,120) Net cash used in investing
activities (22,483) (22,579) Net cash provided by financing
activities 1,377 124,414 ----- ------- Decrease in cash and cash
equivalents (52,368) (4,285) Cash and cash equivalents: Beginning
of period 98,275 43,521 ------ ------ End of period $45,907 $39,236
======= ======= BIG LOTS, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) 39 WEEKS ENDED
39 WEEKS ENDED ---------------- ---------------- October 31, 2009
November 1, 2008 ---------------- ---------------- Net cash
provided by (used in) operating activities $139,938 ($5,521) Net
cash used in investing activities (61,140) (75,101) Net cash (used
in) provided by financing activities (67,664) 82,727 ------- ------
Increase in cash and cash equivalents 11,134 2,105 Cash and cash
equivalents: Beginning of period 34,773 37,131 ------ ------ End of
period $45,907 $39,236 ======= =======
http://www.newscom.com/cgi-bin/prnh/20011026/BIGLOTSLOGODATASOURCE:
Big Lots, Inc. CONTACT: Timothy A. Johnson, Vice President,
Strategic Planning and Investor Relations, +1-614-278-6622 Web
Site: http://www.biglots.com/
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