Big 5 Sporting Goods Corporation reported financial net sales for the 2003 second quarter increased by $7.4 million, or 4.6%, to $170.1 million from $162.7 million in the second quarter of 2002. Same store sales increased 0.9% versus the second quarter last year, representing the company's thirtieth consecutive quarterly increase in same store sales over comparable prior periods.
Gross profit margin increased 0.1% during the second quarter to 36.8% from gross profit margin of 36.7% for the same period last year. Selling and administrative expenses were 27.3% of net sales for the 2003 second quarter. This compares to 2002 second quarter selling and administrative expense calculated in accordance with generally accepted accounting principles (GAAP) of 28.2% of net sales and 2002 pro forma selling and administrative expenses of 26.6% of net sales after excluding certain effects related to the company's initial public offering (IPO) and exercise of the underwriters' overallotment option in mid-2002.
Net income available to common stockholders for the 2003 second quarter, calculated in accordance with GAAP, increased to $6.3 million, or $0.28 per diluted share, compared to GAAP net income available to common stockholders of $2.1 million, or $0.13 per diluted share in the same period last year. This compares to 2002 second quarter pro forma net income available to common stockholders of $6.1 million, or $0.27 per diluted share.
For the six months ended June 29, 2003, net sales increased by $14.8 million, or 4.6%, to $334.6 million from $319.8 million in the first six months of fiscal 2002. Same store sales increased 0.8% versus the same period last year. Gross profit margin increased 0.2% during the first six months of 2003 to 36.0% from gross profit margin of 35.8% for the comparable period last year. Selling and administrative expenses were 27.4% of net sales for the first six months of 2003. This compares to selling and administrative expenses calculated in accordance with GAAP of 27.5% of net sales for the first six months of 2002 and pro forma selling and administrative expenses of 26.7% of net sales for the first six months of 2002.
Net income available to common stockholders for the first six months of 2003, calculated in accordance with GAAP, increased to $9.7 million, or $0.43 per diluted share, compared to GAAP net income available to common stockholders of $3.7 million, or $0.23 per diluted share in the same period last year. Results for the six months ended June 29, 2003 include $875,000, net of taxes, or $0.04 per diluted share, related to a charge associated with the redemption of $20.0 million face value of the company's 10.875% senior notes. Excluding this charge, net income available to stockholders for the first six months of 2003 was $10.5 million, or $0.46 per diluted share. This compares to pro forma net income available to common stockholders for the first six months of 2002 of $10.2 million, or $0.45 per diluted share.
“We are pleased to report another solid quarter for our business. We accomplished our thirtieth consecutive quarter of positive same store sales performance and produced earnings within our guidance despite the continuation of a challenging business environment,” said Steven G. Miller, Big 5's Chairman, President and Chief Executive Officer. “Business trends improved over the course of the quarter, benefiting from the return of more normal seasonal weather patterns. We are well-positioned for strong execution of our merchandising and operating plans and expect to continue to realize improved sales and improved earnings in the third and fourth quarters of 2003 compared to 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 senior note redemption (as described above) and to exclude certain effects of the company's IPO, including the exercise of the underwriters' over-allotment option. The company raised a total of $84.0 million of net proceeds from the IPO, which occurred in June 2002, during the company's second fiscal quarter, and the exercise of the underwriters' over-allotment option, which occurred in July 2002, during the company's third fiscal quarter. During the company's third fiscal 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 otherwise applicable to the redemption of preferred stock to pay bonuses in connection with the IPO, interest payments and premiums payable on debt redeemed in connection with the IPO, dividends and premiums 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.
Big 5 expects to realize same store sales growth in the low single-digit range for the third fiscal quarter of 2003, resulting in earnings per diluted share in the range of $0.26 to $0.29. For the fiscal year ending December 28, 2003, the company's guidance remains unchanged from the prior quarter. The company currently expects to realize same store sales growth for the fiscal year in the low single-digit range, resulting in earnings per diluted share of $1.18 to $1.23. The quarterly estimate of earnings per diluted share is calculated in accordance with GAAP. The full-year estimate of earnings per diluted share excludes $0.04 per diluted share, recorded in the fiscal 2003 first quarter, related to the charge associated with the partial redemption of the company's senior notes.
BIG 5 SPORTING GOODS
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except earnings per share data)
As Reported Pro Forma
13 Weeks Ended 13 Weeks Ended(1)
June 29, June 30, June 30, 2002
2003 2002
Net sales $170,125 $162,703 $162,703
Cost of goods sold, buying
and occupancy 107,530 103,070 103,070
Gross profit 62,595 59,633 59,633
Selling and administrative 46,521 45,805 43,356
Depreciation and amortization 2,527 2,461 2,461
Operating income 13,547 11,367 13,816
Interest expense, net 2,922 4,328 3,501
Income before income taxes 10,625 7,039 10,315
Income tax 4,357 2,910 4,253
Net income 6,268 4,129 6,062
Redeemable preferred stock
dividends and redemption
premium -- 2,025 --
Net income available to
common stockholders $ 6,268 $ 2,104 $ 6,062
Earnings per share:
Basic $ 0.28 $ 0.14 $ 0.27
Diluted $ 0.28 $ 0.13 $ 0.27
