EX-99.1 2 exhibit991-earningsrelease.htm EXHIBIT 99.1 Exhibit 99.1 - Earnings Release Q2'13



Exhibit 99.1
PRESS RELEASE
 
 
 
 
FOR IMMEDIATE RELEASE
 
 
Contact: Andrew D. Regrut
 
 
 
 
Director, Investor Relations
 
 
 
 
614-278-6622
 
 
 
 
 
 


BIG LOTS REPORTS SECOND QUARTER ADJUSTED CONSOLIDATED INCOME
FROM CONTINUING OPERATIONS OF $0.31 PER DILUTED SHARE

COMPANY PROVIDES UPDATED OUTLOOK FOR FISCAL 2013

Columbus, Ohio - August 30, 2013 - Big Lots, Inc. (NYSE: BIG) today reported consolidated income from continuing operations of $18.1 million, or $0.31 per diluted share, for the second quarter of fiscal 2013 ended August 3, 2013. This result includes a non-recurring, after tax benefit of $0.4 million, or $0.01 per diluted share, associated with the settlement of a store-related legal contingency. Excluding this non-recurring benefit, adjusted consolidated income from continuing operations totaled $17.7 million, or $0.31 per diluted share (non-GAAP), which compares favorably to our guidance issued on May 30, 2013, of $0.17 to $0.27 per diluted share. Consolidated income from continuing operations for the second quarter of fiscal 2012 was $22.1 million, or $0.36 per diluted share. Consolidated net sales for the second quarter of fiscal 2013 increased 0.6% to $1,225.6 million, compared to $1,218.0 million for the same period of fiscal 2012. Consolidated comparable store sales decreased 1.9% for the quarter, slightly better than our guidance for a decrease of 2% to 4%.

For the year-to-date period ended August 3, 2013, income from continuing operations totaled $50.5 million, or $0.87 per diluted share. Excluding the non-recurring store-related legal settlement activity on a year-to-date basis of $ 2.8 million, after tax, or $0.05 per diluted share, adjusted consolidated income from continuing operations for the year-to-date period ended August 3, 2013 totaled $53.2 million, or $0.92 per diluted share (non-GAAP). This result compared to adjusted consolidated income from continuing operations of $66.3 million, or $1.05 per diluted share (non-GAAP), for the same period in fiscal 2012. Discontinued operations activity was minimal for the second quarter and year-to-date period of fiscal 2013 and the corresponding periods in fiscal 2012.


 
 
EPS From Continuing Operations (1)
 
 
 
 
 
 
 
 
 
 
 
Q2 2013
 
Q2 2012
 
YTD 2013
 
YTD 2012
 
 
 
 
 
 
 
 
 
U.S. Operations
 
$0.38
 
$0.42
 
$1.01
 
$1.15
Impact of non-recurring charges
 
($0.01)
 
 
$0.05
 
$0.05
 
 
 
 
 
 
 
 
 
U.S. Operations - adjusted basis
 
$0.37
 
$0.42
 
$1.06
 
$1.20
Canadian Operations
 
($0.07)
 
($0.05)
 
($0.14)
 
($0.15)
 
 
 
 
 
 
 
 
 
Consolidated Operations - adjusted basis
 
$0.31
 
$0.36
 
$0.92
 
$1.05
 
 
 
 
 
 
 
 
 
(1) Non-GAAP. See detailed segment reporting below.
 
 
 
 
 
 
 
 






Shareholder Relations Department
 
300 Phillipi Road
 
Columbus, OH 43228-5311
 
Phone: (614) 278-6622 Fax: (614) 278-6666
 
E-mail: aschmidt@biglots.com
 



SECOND QUARTER HIGHLIGHTS

• Adjusted consolidated income from continuing operations of $0.31 per diluted share (non-GAAP), compared to consolidated income from continuing operations of $0.36 per diluted share last year
• Consolidated net sales of $1.2 billion, an increase of 0.6% compared to last year
• Opened 13 stores in the U.S. and rebranded 2 stores in Canada to Big Lots stores

Second Quarter Results

U.S. Operations

Net sales for U.S. operations for the second quarter of fiscal 2013 increased 0.4% to $1,187.7 million, compared to $1,183.0 million for the same period of fiscal 2012. Comparable store sales for U.S. stores open at least fifteen months decreased 2.2% for the quarter, consistent with our guidance of a 2% to 4% decline. Adjusted income from continuing U.S. operations totaled $21.5 million, or $0.37 per diluted share (non-GAAP), compared to our guidance of $0.27 to $0.32 per diluted share (non-GAAP) and income from continuing U.S. operations of $25.4 million, or $0.42 per diluted share (non-GAAP), for the same period of fiscal 2012.

Canadian Operations

Net sales for Canadian operations for the second quarter of fiscal 2013 increased 8.2% to $37.9 million, and comparable stores sales increased 8.3%, both consistent with our previously communicated guidance. For the second quarter of fiscal 2013, we incurred a net loss of $3.8 million, or $0.07 per diluted share (non-GAAP), compared to our guidance of a net loss of $3 to $6 million, or $0.05 to $0.10 per diluted share (non-GAAP), and a net loss of $3.3 million, or $0.05 per diluted share (non-GAAP) for the same period of fiscal 2012.

 
 
Comparable Store Sales
 
Store Count
 
 
 
 
 
 
 
 
 
 
 
Q2 2013
 
Q2 2012
 
Q2 2013
 
Q2 2012
 
 
 
 
 
 
 
 
 
U.S. Operations
 
-2.2%
 
-1.9%
 
1,514
 
1,463
 
 
 
 
 
 
 
 
 
Canadian Operations (1)
 
+8.3%
 
na
 
79
 
81
 
 
 
 
 
 
 
 
 
Consolidated Operations
 
-1.9%
 
-1.9%
 
1,593
 
1,544
 
 
 
 
 
 
 
 
 
(1) Comparable store sales for Canada for fiscal 2012 do not qualify under our calculation due to an acquisition date of July 2011.

Inventory and Cash Management

On a consolidated basis, Inventory ended the second quarter of fiscal 2013 at $914 million, compared to $881 million for the second quarter of fiscal 2012. The growth in inventory was driven by an increase in U.S. store count, and a 1% increase in inventory per store in our U.S. stores.

We ended the second quarter of fiscal 2013 with $64 million of Cash and Cash Equivalents and $142 million of borrowings under our credit facility compared to $62 million of Cash and Cash Equivalents and $243 million of borrowings under our credit facility as of the end of the second quarter of fiscal 2012. Our use of cash generated by our U.S. operations during the last 12 months was focused on repaying debt, share repurchase activity, and funding our Canadian operations.


Shareholder Relations Department
 
300 Phillipi Road
 
Columbus, OH 43228-5311
 
Phone: (614) 278-6622 Fax: (614) 278-6666
 
E-mail: aschmidt@biglots.com
 



2013 OUTLOOK

• Updates outlook for fiscal 2013 adjusted consolidated income from continuing operations to $2.80 to $3.05 per diluted share (non-GAAP), compared to fiscal 2012 adjusted consolidated income from continuing operations of $2.99 per diluted share (non-GAAP)
• Outlook for Cash Flow of $175 million (defined as operating activities less investing activities)

Based on operating results for the first two quarters and our expectations for the third and fourth quarters of fiscal 2013, we now estimate our fiscal 2013 adjusted consolidated income from continuing operations to be in the range of $2.80 to $3.05 per diluted share (non-GAAP, see reconciliation below) compared to adjusted consolidated income from continuing operations of $2.99 per diluted share for fiscal 2012 (non-GAAP). This outlook excludes the previously mentioned non-recurring activity from the first and second quarters, and is based on estimated consolidated net sales in the range of flat to +1% for fiscal 2013 and consolidated comparable store sales in the range of flat to -1% (see table below). We estimate this financial performance will result in cash flow of approximately $175 million in fiscal 2013.

U.S. Operations

We are forecasting adjusted income from continuing U.S. operations to be in the range of $3.05 to $3.20 per diluted share (non-GAAP), compared to fiscal 2012 adjusted income from continuing U.S. operations of $3.21 per diluted share (non-GAAP). This outlook excludes the previously mentioned non-recurring activity from the first and second quarters, and is based on estimated net sales for U.S. operations in the range of flat to +1% and comparable store sales for U.S. operations in the range of flat to -1%.

Canadian Operations

Canadian net sales are expected to be in the range of $165 to $173 million for fiscal 2013, resulting in a net loss in the range of $9 to $14 million, or $0.15 to $0.25 per diluted share (non-GAAP). This compares to a net loss for fiscal 2012 of $13.5 million, or $0.22 per diluted share (non-GAAP). Our outlook for fiscal 2013 is based on a Canadian net sales increase in the range of 7% to 12% and a comparable store sales increase in the range of 7% to 12%. From a real estate perspective, we expect to open 2 new stores in Canada under the Big Lots banner during fiscal 2013.

EPS from Continuing Operations (non-GAAP)
 
Full Year
 
 
 
 
 
2013 Guidance
 
2012
 
 
 
 
 
U.S. Operations
 
$3.00 - $3.15
 
$3.15
 
 
 
 
 
Impact of non-recurring charges
 
$0.05
 
$0.06
 
 
 
 
 
U.S. Operations - adjusted basis
 
$3.05 - $3.20
 
$3.21
 
 
 
 
 
Canadian Operations
 
($0.15) - ($0.25)
 
($0.22)
 
 
 
 
 
Consolidated Operations - adjusted basis
 
$2.80 - $3.05
 
$2.99
 
 
 
 
 


Sales Guidance
 
Full Year 2013
 
 
Total Sales
 
Comp
U.S. Operations
 
0% to +1%
 
0% to -1%
Canadian Operations
 
+7% to +12%
 
+7% to +12%
Consolidated Operations
 
0% to +1%
 
0% to -1%


Shareholder Relations Department
 
300 Phillipi Road
 
Columbus, OH 43228-5311
 
Phone: (614) 278-6622 Fax: (614) 278-6666
 
E-mail: aschmidt@biglots.com
 




Conference Call/Webcast

We will host a conference call today at 8:00 a.m. to discuss our financial results for the second quarter and provide commentary on our outlook for fiscal 2013. We invite you to listen to the webcast of the conference call through the Investor Relations section of our website (www.biglots.com).

If you are unable to join the live webcast, an archive of the call will be available through the Investor Relations section of our website (www.biglots.com) beginning two hours after the call ends and will remain available through midnight on Friday, September 13. A replay of the call will be available beginning today at 12:00 noon through September 13 at midnight by dialing: 1.888.203.1112 (United States and Canada) or 1.719.457.0820 (International). The Replay Confirmation Code is 6565635. All times are Eastern Time.

Big Lots is North America's largest broadline closeout retailer. As of the end of the second quarter of fiscal 2013, we operated 1,514 BIG LOTS stores in the 48 contiguous United States, 3 BIG LOTS stores in Canada, and 76 LIQUIDATION WORLD and LW stores in Canada. Wholesale operations are conducted through BIG LOTS WHOLESALE, CONSOLIDATED INTERNATIONAL, and WISCONSIN TOY and with online sales at www.biglotswholesale.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 conditions, 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.


Shareholder Relations Department
 
300 Phillipi Road
 
Columbus, OH 43228-5311
 
Phone: (614) 278-6622 Fax: (614) 278-6666
 
E-mail: aschmidt@biglots.com
 



 
 
 
 
 
 
 
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
 
 
 
 
 
 
 
 
 
AUGUST 3
 
JULY 28
 
 
 
 
2013
 
2012
 
 
 
 
(Unaudited)
 
(Unaudited)
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 

$63,810

 

$61,679

 
 
Inventories
 
913,687

 
881,090

 
 
Deferred income taxes
 
42,524

 
42,840

 
 
Other current assets
 
111,341

 
91,167

 
 
   Total current assets
 
1,131,362

 
1,076,776

 
 
 
 
 
 
 
 
Property and equipment - net
 
592,945

 
587,515

 
 
 
 
 
 
 
 
Deferred income taxes
 
7,482

 
6,146

 
Goodwill
 
12,991

 
13,428

 
Other assets
 
56,531

 
41,780

 
 
 
 

$1,801,311

 

$1,725,645

 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Accounts payable
 

$427,243

 

$409,578

 
 
Property, payroll and other taxes
 
77,685

 
79,520

 
 
Accrued operating expenses
 
70,420

 
70,239

 
 
Insurance reserves
 
36,440

 
36,297

 
 
KB bankruptcy lease obligation
 
3,069

 
3,069

 
 
Accrued salaries and wages
 
26,827

 
23,262

 
 
Income taxes payable
 
1,792

 
670

 
 
   Total current liabilities
 
643,476

 
622,635

 
 
 
 
 
 
 
 
Long-term obligations under bank credit facility
141,700

 
242,800

 
 
 
 
 
 
 
 
Deferred rent
 
79,309

 
65,078

 
Insurance reserves
 
63,107

 
50,400

 
Unrecognized tax benefits
 
17,168

 
16,159

 
Other liabilities
 
38,931

 
38,565

 
 
 
 
 
 
 
 
Shareholders' equity
 
817,620

 
690,008

 
 
 
 

$1,801,311

 

$1,725,645

 
 
 
 
 
 
 
 






 
 
 
 
 
 
 
 
 
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
13 WEEKS ENDED
 
13 WEEKS ENDED
 
 
 
 
AUGUST 3, 2013
 
JULY 28, 2012
 
 
 
 
 
%
 
 
%
 
 
 
 
(Unaudited)
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
Net sales
 

$1,225,572

100.0

 

$1,218,037

100.0

 
 
Gross margin
 
479,455

39.1

 
477,835

39.2

 
 
Selling and administrative expenses
 
418,495

34.1

 
412,220

33.8

 
 
Depreciation expense
 
28,149

2.3

 
26,271

2.2

 
Operating profit
 
32,811

2.7

 
39,344

3.2

 
 
Interest expense
 
(733
)
(0.1
)
 
(895
)
(0.1
)
 
 
Other income (expense)
 
(118
)
(0.0
)
 
(38
)
(0.0
)
 
Income from continuing operations before income taxes
 
31,960

2.6

 
38,411

3.2

 
 
Income tax expense
 
13,835

1.1

 
16,321

1.3

 
Income from continuing operations
 
18,125

1.5

 
22,090

1.8

 
 
Income (Loss) from discontinued operations, net of tax expense (benefit) of $1 and $(10), respectively
 
1

0.0

 
(15
)
(0.0
)
 
Net income
 

$18,126

1.5

 

$22,075

1.8

 
 
 
 
 
 
 
 
 
 
Earnings per common share - basic (a)
 
 
 
 
 
 
 
 
Continuing operations
 

$0.32

 
 

$0.37

 
 
 
Discontinued operations
 
0.00

 
 
0.00

 
 
 
Net income
 

$0.32

 
 

$0.37

 
 
 
 
 
 
 
 
 
 
 
Earnings per common share - diluted (a)
 
 
 
 
 
 
 
 
Continuing operations
 

$0.31

 
 

$0.36

 
 
 
Discontinued operations
 
0.00

 
 
0.00

 
 
 
Net income
 

$0.31

 
 

$0.36

 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
 
Basic
 
57,382

 
 
60,466

 
 
 
Dilutive effect of share-based awards
 
542

 
 
531

 
 
 
Diluted
 
57,924

 
 
60,997

 
 
 
 
 
 
 
 
 
 
 
(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)
 
 
 
 
 
 
 
 
 
 
 
 
26 WEEKS ENDED
 
26 WEEKS ENDED
 
 
 
 
AUGUST 3, 2013
 
JULY 28, 2012
 
 
 
 
 
%
 
 
%
 
 
 
 
(Unaudited)
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
Net sales
 

$2,536,910

100.0

 

$2,512,518

100.0

 
 
Gross margin
 
996,084

39.3

 
990,283

39.4

 
 
Selling and administrative expenses
 
850,962

33.5

 
830,538

33.1

 
 
Depreciation expense
 
55,619

2.2

 
51,559

2.1

 
Operating profit
 
89,503

3.5

 
108,186

4.3

 
 
Interest expense
 
(1,459
)
(0.1
)
 
(1,231
)
(0.0
)
 
 
Other income (expense)
 
(264
)
(0.0
)
 
(1
)
(0.0
)
 
Income from continuing operations before income taxes
 
87,780

3.5

 
106,954

4.3

 
 
Income tax expense
 
37,322

1.5

 
44,084

1.8

 
Income from continuing operations
 
50,458

2.0

 
62,870

2.5

 
 
Income (Loss) from discontinued operations, net of tax expense (benefit) of $0 and ($32), respectively
 
1

0.0

 
(49
)
(0.0
)
 
Net income
 

$50,459

2.0

 

$62,821

2.5

 
 
 
 
 
 
 
 
 
 
Earnings per common share - basic (a)
 
 
 
 
 
 
 
 
Continuing operations
 

$0.88

 
 

$1.01

 
 
 
Discontinued operations
 
0.00

 
 
0.00

 
 
 
Net income
 

$0.88

 
 

$1.01

 
 
 
 
 
 
 
 
 
 
 
Earnings per common share - diluted (a)
 
 
 
 
 
 
 
 
Continuing operations
 

$0.87

 
 

$1.00

 
 
 
Discontinued operations
 
0.00

 
 
0.00

 
 
 
Net income
 

$0.87

 
 

$1.00

 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
 
Basic
 
57,344

 
 
62,292

 
 
 
Dilutive effect of share-based awards
 
540

 
 
779

 
 
 
Diluted
 
57,884

 
 
63,071

 
 
 
 
 
 
 
 
 
 
 
(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
SEGMENT OPERATING PERFORMANCE
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13 WEEKS ENDED
 
 
 
 
AUG 3, 2013
 
JULY 28, 2012
 
AUG 3, 2013
 
JULY 28, 2013
 
 
 
 
U.S.
 
U.S.
 
Canada
 
Canada
 
 
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 

$1,187,677

 

$1,183,023

 

$37,895

 

$35,014

 
 
Gross margin
 
465,287

 
465,422

 
14,168

 
12,413

 
 
Selling and administrative expenses
 
401,173

 
397,327

 
17,322

 
14,893

 
 
Depreciation expense
 
27,570

 
25,468

 
579

 
803

 
Operating profit (loss)
 
36,544

 
42,627

 
(3,733
)
 
(3,283
)
 
 
Interest expense
 
(730
)
 
(895
)
 
(3
)
 
0

 
 
Other income (expense)
 
(11
)
 
0

 
(107
)
 
(38
)
 
Income (loss) from continuing operations before income taxes
 
35,803

 
41,732

 
(3,843
)
 
(3,321
)
 
 
Income tax expense
 
13,835

 
16,321

 
0

 
0

 
Income (loss) from continuing operations
 

$21,968

 

$25,411

 

($3,843
)
 

($3,321
)
 
Diluted earnings (loss) per common share from continuing operations (a)
 

$0.38

 

$0.42

 

($0.07
)
 

($0.05
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26 WEEKS ENDED
 
 
 
 
AUGUST 3, 2013
 
JULY 28, 2012
 
AUGUST 3, 2013
 
JULY 28, 2012
 
 
 
 
U.S.
 
U.S.
 
Canada
 
Canada
 
 
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 

$2,462,421

 

$2,445,258

 

$74,489

 

$67,260

 
 
Gross margin
 
968,377

 
966,366

 
27,707

 
23,917

 
 
Selling and administrative expenses
 
816,393

 
798,852

 
34,569

 
31,686

 
 
Depreciation expense
 
54,450

 
49,892

 
1,169

 
1,667

 
Operating profit (loss)
 
97,534

 
117,622

 
(8,031
)
 
(9,436
)
 
 
Interest expense
 
(1,456
)
 
(1,231
)
 
(3
)
 
0

 
 
Other income (expense)
 
(11
)
 
0

 
(253
)
 
(1
)
 
Income (loss) from continuing operations before income taxes
 
96,067

 
116,391

 
(8,287
)
 
(9,437
)
 
 
Income tax expense
 
37,322

 
44,084

 
0

 
0

 
Income (loss) from continuing operations
 

$58,745

 

$72,307

 

($8,287
)
 

($9,437
)
 
Diluted earnings (loss) per common share from continuing operations (a)
 

$1.01

 

$1.15

 

($0.14
)
 

($0.15
)
 
 
 
 
 
 
 
 
 
 
 
 
(a)
The diluted earnings (loss) per share from continuing operations by segment are separately calculated; therefore, the sum of diluted earnings (loss) per share from continuing operations by segment may differ, due to rounding, from the calculated consolidated diluted earnings (loss) per share from continuing operations. Diluted earnings (loss) per share from continuing operations by segment is a “non-GAAP financial measure,” 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), which our management believes is useful information to investors.
 







 
 
 
 
 
 
 
 
 
 
 
 
 
 
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13 WEEKS ENDED
 
13 WEEKS ENDED
 
 
 
 
AUGUST 3, 2013
 
JULY 28, 2012
 
 
 
 
 (Unaudited)
 
 (Unaudited)
 
 
 
 
 
 
 
 
 
  Net cash provided by (used in) operating activities
 

$21,835

 

($34,345
)
 
 
 
 
 
 
 
 
 
  Net cash used in investing activities
 
(34,278
)
 
(44,772
)
 
 
 
 
 
 
 
 
 
  Net cash provided by financing activities
 
4,802

 
58,453

 
 
 
 
 
 
 
 
 
    Impact of foreign currency on cash
 
(218
)
 
(228
)
 
 
 
 
 
 
 
 
Decrease in cash and cash equivalents
 
(7,859
)
 
(20,892
)
 
 
Cash and cash equivalents:
 
 
 
 
 
 
  Beginning of period
 
71,669

 
82,571

 
 
  End of period
 

$63,810

 

$61,679

 








 
 
 
 
 
 
 
 
 
 
 
 
 
 
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26 WEEKS ENDED
 
26 WEEKS ENDED
 
 
 
 
AUGUST 3, 2013
 
JULY 28, 2012
 
 
 
 
 (Unaudited)
 
 (Unaudited)
 
 
 
 
 
 
 
 
 
  Net cash provided by operating activities
 

$82,018

 

$88,749

 
 
 
 
 
 
 
 
 
  Net cash used in investing activities
 
(50,101
)
 
(60,273
)
 
 
 
 
 
 
 
 
 
  Net cash used in financing activities
 
(28,362
)
 
(35,195
)
 
 
 
 
 
 
 
 
 
    Impact of foreign currency on cash
 
(326
)
 
(149
)
 
 
 
 
 
 
 
 
Increase (decrease) in cash and cash equivalents
 

$3,229

 

($6,868
)
 
 
Cash and cash equivalents:
 
 
 
 
 
 
  Beginning of period
 
60,581

 
68,547

 
 
  End of period
 

$63,810

 

$61,679

 








BIG LOTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)

The following tables reconcile: (1) selling and administrative expenses, selling and administrative expense rate, 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 both the second quarter of 2013 and the year-to-date 2013 (GAAP financial measures) to adjusted selling and administrative expenses, adjusted selling and administrative expense rate, 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); and (2) gross margin, gross margin rate, 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 year-to-date 2012 (GAAP financial measures) to adjusted gross margin, adjusted gross margin rate, 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).

Second quarter of 2013 - Thirteen weeks ended August 3, 2013
 
 
 
 
 
 
 
 Consolidated Results
 
 
 
 
 
 
 
 
 As reported
 
Adjustment to loss contingency accrual
 
 As Adjusted (non-GAAP)
 Selling and administrative expenses
 
$
418,495

 
$
677

 
$
419,172

 Selling and administrative expense rate
 
34.1
%
 
0.1
 %
 
34.2
%
 Operating profit
 
32,811

 
(677
)
 
32,134

 Operating profit rate
 
2.7
%
 
(0.1
%)
 
2.6
%
 Income tax expense
 
13,835

 
(247
)
 
13,588

 Effective income tax rate
 
43.3
%
 
0.1
 %
 
43.4
%
 Income from continuing operations
 
18,125

 
(430
)
 
17,695

 Net income
 
18,126

 
(430
)
 
17,696

 Diluted earnings per share from continuing operations
 
$
0.31

 
$
(0.01
)
 
$
0.31

 Diluted earnings per share
 
$
0.31

 
$
(0.01
)
 
$
0.31

 
 
 
 
 
 
 
 U.S. Segment Results
 
 
 
 
 
 
 
 
 As reported
 
Adjustment to loss contingency accrual
 
 As Adjusted (non-GAAP)
 Selling and administrative expenses
 
$
401,173

 
$
677

 
$
401,850

 Selling and administrative expense rate
 
33.8
%
 
0.1
 %
 
33.8
%
 Operating profit
 
36,544

 
(677
)
 
35,867

 Operating profit rate
 
3.1
%
 
(0.1
%)
 
3.0
%
 Income tax expense
 
13,835

 
(247
)
 
13,588

 Effective income tax rate
 
38.6
%
 
0.1
 %
 
38.7
%
 Income from continuing operations
 
21,968

 
(430
)
 
21,538

 Diluted earnings per share from continuing operations
 
$
0.38

 
$
(0.01
)
 
$
0.37


The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, 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 adjustment for settlement of a legal matter of $677 ($430, net of tax).







Year-to-date 2013 - Twenty-six weeks ended August 3, 2013
 
 
 
 
 
 
 
 Consolidated Results
 
 
 
 
 
 
 
 
 As reported
 
Adjustment to exclude loss contingency
 
 As Adjusted (non-GAAP)
 Selling and administrative expenses
 
$
850,962

 
$
(4,375
)
 
$
846,587

 Selling and administrative expense rate
 
33.5
%
 
(0.2
%)
 
33.4
%
 Operating profit
 
89,503

 
4,375

 
93,878

 Operating profit rate
 
3.5
%
 
0.2
 %
 
3.7
%
 Income tax expense
 
37,322

 
1,615

 
38,937

 Effective income tax rate
 
42.5
%
 
(0.2
%)
 
42.3
%
 Income from continuing operations
 
50,458

 
2,760

 
53,218

 Net income
 
50,459

 
2,760

 
53,219

 Diluted earnings per share from continuing operations
 
$
0.87

 
$
0.05

 
$
0.92

 Diluted earnings per share
 
$
0.87

 
$
0.05

 
$
0.92

 
 
 
 
 
 
 
 U.S. Segment Results
 
 
 
 
 
 
 
 
 As reported
 
Adjustment to exclude loss contingency
 
 As Adjusted (non-GAAP)
 Selling and administrative expenses
 
$
816,393

 
$
(4,375
)
 
$
812,018

 Selling and administrative expense rate
 
33.2
%
 
(0.2
%)
 
33.0
%
 Operating profit
 
97,534

 
4,375

 
101,909

 Operating profit rate
 
4.0
%
 
0.2
 %
 
4.1
%
 Income tax expense
 
37,322

 
1,615

 
38,937

 Effective income tax rate
 
38.8
%
 
0.0
 %
 
38.8
%
 Income from continuing operations
 
58,745

 
2,760

 
61,505

 Diluted earnings per share from continuing operations
 
$
1.01

 
$
0.05

 
$
1.06


The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, 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 accrual of a loss contingency related to a legal matter of $5,052 ($3,190, net of tax) combined with a pretax adjustment for settlement of the related legal matter, which resulted in a reduction of the accrual of $677 ($430, net of tax) for a total adjustment of $4,375 ($2,760, net of tax).







Year-to-date 2012 - Twenty-six weeks ended July 28, 2012
 
 
 
 
 
 
 
 Consolidated Results
 
 
 
 
 
 
 
 
 As reported
 
 Adjustment to exclude change in inventory accounting principle
 
 As Adjusted (non-GAAP)
 Gross margin
 
$
990,283

 
$
5,574

 
$
995,857

 Gross margin rate
 
39.4
%
 
0.2
 %
 
39.6
%
 Operating profit
 
108,186

 
5,574

 
113,760

 Operating profit rate
 
4.3
%
 
0.2
 %
 
4.5
%
 Income tax expense
 
44,084

 
2,186

 
46,270

 Effective income tax rate
 
41.2
%
 
(0.1
%)
 
41.1
%
 Income from continuing operations
 
62,870

 
3,388

 
66,258

 Net income
 
62,821

 
3,388

 
66,209

 Diluted earnings per share from continuing operations
 
$
1.00

 
$
0.05

 
$
1.05

 Diluted earnings per share
 
$
1.00

 
$
0.05

 
$
1.05

 
 
 
 
 
 
 
 U.S. Segment Results
 
 
 
 
 
 
 
 
 As reported
 
 Adjustment to exclude change in inventory accounting principle
 
 As Adjusted (non-GAAP)
 Gross margin
 
$
966,366

 
$
5,574

 
$
971,940

 Gross margin rate
 
39.5
%
 
0.2
 %
 
39.7
%
 Operating profit
 
117,622

 
5,574

 
123,196

 Operating profit rate
 
4.8
%
 
0.2
 %
 
5.0
%
 Income tax expense
 
44,084

 
2,186

 
46,270

 Effective income tax rate
 
37.9
%
 
0.0
 %
 
37.9
%
 Income from continuing operations
 
72,307

 
3,388

 
75,695

 Diluted earnings per share from continuing operations
 
$
1.15

 
$
0.05

 
$
1.20


The above adjusted gross margin, adjusted gross margin rate, 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 charge for a change in an accounting principle associated with our implementation of new inventory management information systems of $5,574 ($3,388, 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.