BIG LOTS, INC. 
By COLUMBUS, Ohio, March 7, 2014 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported income from continuing operations of $81.0 million, or $1.39 per diluted share, for the fourth quarter of fiscal 2013 ended February 1, 2014. Excluding a deferred tax benefit of $0.41 per diluted share associated with the loss on our investment in our Canadian operations, adjusted income from continuing operations totaled $57.1 million, or $0.98 per diluted share (see non-GAAP table included later in this release). This compares to guidance issued on December 5, 2013 which called for net income from continuing operations of $0.65 to $0.90 per diluted share for the fourth quarter of fiscal 2013. Income from continuing operations was $120.1 million, or $2.08 per diluted share, for the fourth quarter of fiscal 2012.
http://photos.prnewswire.com/prnvar/20011026/BIGLOTSLOGO
FOURTH QUARTER HIGHLIGHTS
-- Adjusted income from continuing U.S. operations of $1.45 per diluted
share (non-GAAP), compares to guidance of $1.40 to $1.55 per diluted
share and last year's income from continuing U.S. operations of $2.08
per diluted share (non-GAAP)
-- Wind down of Canadian operations remains on schedule and closure
activity resulted in a lower loss than originally anticipated
Fourth Quarter Results
U.S. Operations
Net sales for continuing U.S. operations for the fourth quarter of fiscal 2013 decreased 7.3% to $1,571.9 million, compared to $1,696.0 million for the fourth quarter last year. Comparable store sales for U.S. stores open at least fifteen months decreased 3.0% for the quarter, which is consistent with our previously communicated guidance. Excluding the deferred tax benefit associated with the loss on our investment in Canadian operations, adjusted income from continuing U.S. operations totaled $84.1 million, or $1.45 per diluted share (non-GAAP), which compares to our guidance of $1.40 to $1.55 per diluted share, and income from continuing U.S. operations of $119.9 million, or $2.08 per diluted share (non-GAAP), for the same period of fiscal 2012. As a reminder, the fourth quarter of fiscal 2013 had 13 weeks compared to 14 weeks in the fourth quarter last year. We estimate the impact of the extra week last year was approximately $0.05 per diluted share. Also, as anticipated, our wholesale operations closed during the fourth quarter of fiscal 2013 and are now reported as discontinued operations.
Canadian Operations
Net loss for Canadian operations for the fourth quarter of fiscal 2013 totaled $27.0 million, or $0.47 per diluted share (non-GAAP), which compares to our guidance of a net loss of $0.65 to $0.75 per diluted share. The favorable result in the fourth quarter resulted from the higher sell-through of merchandise at better margins, lower operating expenses, and the timing of recognition of lease liability charges and certain asset write downs.
Inventory and Cash Management
On a consolidated basis, Inventory ended the fourth quarter of fiscal 2013 at $915 million, compared to $918 million for the fourth quarter of fiscal 2012. The change in inventory was driven by the liquidation of inventory in Canada associated with store closings, partially offset by an increase in per store inventory in our U.S. stores.
We ended fiscal 2013 with $69 million of Cash and Cash Equivalents and $77 million of borrowings under our credit facility compared to $61 million of Cash and Cash Equivalents and $171 million of borrowings under our credit facility as of the end of fiscal 2012. Our use of cash generated by our U.S. operations during fiscal 2013 was focused on repaying debt.
FISCAL 2013
For the full year of fiscal 2013, consolidated income from continuing operations totaled $124.8 million, or $2.15 per diluted share, which compares to consolidated income from continuing operations of $177.0 million, or $2.93 per diluted share, for fiscal 2012. This year's result includes a deferred tax benefit for the loss on our investment in Canada of $23.9 million, or $0.41 per diluted share, and other non-recurring activity netting to $0.6 million, or $0.01 per diluted share. Excluding these items, adjusted consolidated income from continuing operations for fiscal 2013 totaled $101.5 million, or $1.75 per diluted share (non-GAAP), which compares to adjusted consolidated income from continuing operations for fiscal 2012 of $180.4 million, or $2.98 per diluted share (non-GAAP).
Q4 Full Year
--- ---------
EPS
from
Continuing
Operations
(non-
GAAP) 2013 2012 2013 2012
---- ---- ---- ----
U.S.
Operations $1.86 $2.08 $2.85 $3.15
Impact
of
deferred
tax
benefit
for
investment
in
Canada ($0.41) - ($0.41) -
Impact
of
other
non-
recurring
charges - - $0.01 $0.06
--- --- ----- -----
U.S.
Operations
-
adjusted
basis $1.45 $2.08 $2.45 $3.21
Canadian
Operations
(1) ($0.47) $0.00 ($0.70) ($0.22)
------ ----- ------ ------
Consolidated
-
adjusted
basis $0.98 $2.08 $1.75 $2.98
===== ===== ===== =====
(1) 2013 includes costs associated with the wind down of our
Canadian operations
SHARE REPURCHASE PROGRAM
On March 4, 2014, our Board of Directors approved a share repurchase program ("2014 share repurchase program") providing for the repurchase of up to $125 million of our common shares. The $125 million authorization is expected to be utilized to repurchase shares 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 2014 share repurchase program will be available to meet obligations under equity compensation plans and for general corporate purposes. The 2014 share repurchase program is eligible to begin on March 11, 2014 and will continue until exhausted.
2014 GUIDANCE
-- Forecasting fiscal 2014 income from continuing U.S. operations to be
$2.25 to $2.45 per diluted share (non-GAAP), compared to fiscal 2013
adjusted income from continuing U.S. operations of $2.45 per diluted
share (non-GAAP)
-- Forecasting U.S. comparable store sales in the range of flat to +2% for
fiscal 2014
-- Forecasting cash flow from continuing U.S. operations of $165 million
and consolidated cash flow of approximately $140 million after the
impact of the wind down of our Canadian discontinued operations
U.S. Operations
We estimate fiscal 2014 income from continuing U.S. operations will be in the range of $2.25 to $2.45 per diluted share (non-GAAP), compared to adjusted income from continuing U.S. operations of $2.45 per diluted share (non-GAAP) for fiscal 2013. This guidance is based on U.S. comparable store sales in a range of flat to up 2% and total U.S. sales in the range of flat to slightly down. From a real estate perspective, we expect to open 30 new stores and close 50 existing locations in the U.S. during fiscal 2014. We estimate this financial performance will result in cash flow (defined as cash provided by operating activities less cash used in investing activities) of approximately $165 million.
Fiscal Q1 2014 Guidance
For the first quarter of fiscal 2014, we estimate income from continuing U.S. operations in the range of $0.40 to $0.45 per diluted share (non-GAAP), compared to last year's adjusted income from continuing U.S. operations of $0.70 per diluted share (non-GAAP). This guidance assumes U.S. comparable store sales are in a range of slightly positive to slightly negative.
Discontinued Canadian Operations
With the closure of all Canadian stores by the end of February 2014, we will report our former Canadian business as discontinued operations beginning with the first quarter of fiscal 2014. We estimate a first quarter loss from our discontinued Canadian operations in the range of $37 to $41 million, or $0.64 to $0.71 per diluted share, as we continue our wind down efforts. This estimate includes charges related to lease liabilities, severance and asset impairment. We estimate approximately $25 million of cash outflow to satisfy our obligations could occur as early as first quarter of fiscal 2014.
Q1 Full Year
--- ---------
EPS from Continuing Operations (non-GAAP) 2014 Guidance 2013 2014 Guidance 2013
------------- ---- ------------- ----
U.S. Operations $0.40 - $0.45 $0.64 $2.25 - $2.45 $2.85
Impact of deferred tax benefit for investment in Canada - - - ($0.41)
Impact of other non-recurring charges - $0.06 - $0.01
--- ----- --- -----
U.S. Operations - adjusted basis $0.40 - $0.45 $0.70 $2.25 - $2.45 $2.45
EPS from Discontinued Operations (1) ($0.71) - ($0.64) ($0.08) ($0.71) - ($0.64) ($0.70)
(1) Includes our Canadian operations and wholesale operations
Conference Call/Webcast
We will host a conference call today at 8:00 a.m. to discuss our financial results for the fourth quarter and provide commentary on our outlook for fiscal 2014. We invite you to listen to the webcast of the conference call through the Investor Relations section of our website http://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 http://www.biglots.com/after 12:00 noon today and will remain available through midnight on Friday, March 21, 2014. A replay of this call will also be available beginning today at 12:00 noon through March 21 by dialing 1.888.203.1112 (Toll Free USA and Canada) or 1.719.457.0820 (International), and entering Replay Passcode 2138376. All times are Eastern Time.
Big Lots is America's largest broadline closeout retailer, operating 1,495 BIG LOTS stores in 48 states. For more information, visit 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, 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.
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
FEBRUARY 1 FEBRUARY 2
2014 2013
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash
equivalents $68,629 $60,581
Inventories 914,965 918,023
Deferred income taxes 59,781 37,696
Other current assets 77,686 74,330
Total current assets 1,121,061 1,090,630
--------- ---------
Property and equipment
-net 569,682 593,562
Deferred income taxes 5,106 0
Goodwill 0 13,522
Other assets 43,750 55,912
$1,739,599 $1,753,626
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $365,772 $393,652
Property, payroll and
other taxes 73,334 74,973
Accrued operating
expenses 57,167 53,788
Insurance reserves 37,607 36,861
KB bankruptcy lease
obligation 0 3,069
Accrued salaries and
wages 29,175 26,753
Income taxes payable 14,392 40,538
Total current
liabilities 577,447 629,634
------- -------
Long-term obligations
under bank credit
facility 77,000 171,200
Deferred income taxes 0 2,693
Deferred rent 76,364 73,658
Insurance reserves 55,755 63,332
Unrecognized tax
benefits 17,975 16,335
Other liabilities 33,631 38,632
Shareholders' equity 901,427 758,142
$1,739,599 $1,753,626
========== ==========
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
13 WEEKS ENDED 14 WEEKS ENDED
-------------- --------------
FEBRUARY 1, FEBRUARY 2,
2014 2013
% %
--- ---
(Unaudited) (Recast)
Net sales $1,636,277 100.0 $1,744,583 100.0
---------- ----- ---------- -----
Gross margin 625,663 38.2 693,316 39.7
Selling and administrative expenses 487,286 29.8 469,262 26.9
Depreciation expense 30,152 1.8 27,397 1.6
--- ---
Operating profit 108,225 6.6 196,657 11.3
Interest expense (841) (0.1) (1,470) (0.1)
Other income (expense) (802) (0.0) 6 0.0
---- ---
Income from continuing operations before income taxes 106,582 6.5 195,193 11.2
Income tax expense 25,603 1.6 75,054 4.3
--- ---
Income from continuing operations 80,979 4.9 120,139 6.9
Income from discontinued operations, net of tax
expense of $2,198 and $159, respectively 3,374 0.2 148 0.0
--- ---
Net Income $84,353 5.2 $120,287 6.9
======= === ======== ===
Earnings per common share - basic (a)
Continuing operations $1.41 $2.10
Discontinued operations 0.06 0.00
Net Income $1.47 $2.10
Earnings per common share - diluted (a)
Continuing operations $1.39 $2.08
Discontinued operations 0.06 0.00
Net Income $1.45 $2.09
Weighted average common shares outstanding
Basic 57,513 57,266
Dilutive effect of share-based awards 546 418
Diluted 58,059 57,684
(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)
52 WEEKS ENDED 53 WEEKS ENDED
-------------- --------------
FEBRUARY 1, FEBRUARY 2,
2014 2013
% %
--- ---
(Unaudited) (Recast)
Net sales $5,301,912 100.0 $5,367,165 100.0
---------- ----- ---------- -----
Gross margin 2,065,306 39.0 2,112,328 39.4
Selling and administrative expenses 1,759,745 33.2 1,708,160 31.8
Depreciation expense 115,122 2.2 106,137 2.0
--- ---
Operating profit 190,439 3.6 298,031 5.6
Interest expense (3,339) (0.1) (4,192) (0.1)
Other income (expense) (1,213) (0.0) 51 0.0
---- ---
Income from continuing operations before income taxes 185,887 3.5 293,890 5.5
Income tax expense 61,118 1.2 116,921 2.2
--- ---
Income from continuing operations 124,769 2.4 176,969 3.3
Income from discontinued operations, net of tax
expense of $351 and $195, respectively 526 0.0 152 0.0
--- ---
Net income $125,295 2.4 $177,121 3.3
======== === ======== ===
Earnings per common share - basic (a)
Continuing operations $2.17 $2.96
Discontinued operations 0.01 0.00
Net income $2.18 $2.96
Earnings per common share - diluted (a)
Continuing operations $2.15 $2.93
Discontinued operations 0.01 0.00
Net income $2.16 $2.93
Weighted average common shares outstanding
Basic 57,415 59,852
Dilutive effect of share-based awards 543 624
Diluted 57,958 60,476
(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 14 WEEKS ENDED 13 WEEKS ENDED 14 WEEKS ENDED
-------------- -------------- -------------- --------------
FEBRUARY 1, 2014 FEBRUARY 2, 2013 FEBRUARY 1, 2014 FEBRUARY 2, 2013
U.S. U.S. Canada Canada
---- ---- ------ ------
(Unaudited) (Recast) (Unaudited) (Unaudited)
Net sales $1,571,912 $1,696,021 $64,365 $48,562
---------- ---------- ------- -------
Gross margin 609,632 674,422 16,031 18,894
Selling and administrative expenses 444,968 451,160 42,318 18,102
Depreciation expense 29,835 26,657 317 740
Operating profit (loss) 134,829 196,605 (26,604) 52
Interest expense (804) (1,469) (37) (1)
Other income (expense) 0 0 (802) 6
Income (loss) from continuing operations before income taxes 134,025 195,136 (27,443) 57
Income tax expense (benefit) 26,029 75,192 (426) (138)
Income (loss) from continuing operations 107,996 119,944 (27,017) 195
======= ======= ======= ===
Diluted earnings (loss) per common share from continuing operations (a) $1.86 $2.08 ($0.47) $0.00
===== ===== ====== =====
52 WEEKS ENDED 53 WEEKS ENDED 52 WEEKS ENDED 53 WEEKS ENDED
-------------- -------------- -------------- --------------
FEBRUARY 1, 2014 FEBRUARY 2, 2013 FEBRUARY 1, 2014 FEBRUARY 2, 2013
U.S. U.S. Canada Canada
---- ---- ------ ------
(Unaudited) (Recast) (Unaudited) (Unaudited)
Net sales $5,124,755 $5,212,318 $177,157 $154,847
---------- ---------- -------- --------
Gross margin 2,007,369 2,054,686 57,937 57,642
Selling and administrative expenses 1,664,232 1,639,816 95,513 68,344
Depreciation expense 113,228 103,146 1,894 2,991
Operating profit (loss) 229,909 311,724 (39,470) (b) (13,693)
Interest expense (3,293) (4,190) (46) (2)
Other income (expense) (12) 2 (1,201) 49
Income (loss) from continuing operations before income taxes 226,604 307,536 (40,717) (13,646)
Income tax expense 61,544 117,059 (426) (138)
Income (loss) from continuing operations 165,060 190,477 (40,291) (13,508)
======= ======= ======= =======
Diluted earnings (loss) per common share from continuing operations (a) $2.85 $3.15 ($0.70) ($0.22)
===== ===== ====== ======
(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 (loss) earnings 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.
(b) The operating loss for the Canadian operating segment of $39,470 for the 52 weeks ended February 1, 2014
equates to $41,748 in Canadian dollars.
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
13 WEEKS ENDED 14 WEEKS ENDED
-------------- --------------
FEBRUARY 1, 2014 FEBRUARY 2, 2013
---------------- ----------------
(Unaudited) (Unaudited)
Net cash provided by operating activities $269,432 $317,038
Net cash used in investing activities (20,887) (30,743)
Net cash used in financing activities (246,380) (291,992)
Impact of foreign currency on cash (1,262) 21
------ ---
Increase (decrease) in cash and cash equivalents 903 (5,676)
Cash and cash equivalents:
Beginning of period 67,726 66,257
End of period $68,629 $60,581
======= =======
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
52 WEEKS ENDED 53 WEEKS ENDED
-------------- --------------
FEBRUARY 1, 2014 FEBRUARY 2, 2013
---------------- ----------------
(Unaudited)
Net cash provided by operating activities $198,334 $281,133
Net cash used in investing activities (97,495) (130,357)
Net cash used in financing activities (91,196) (158,274)
Impact of foreign currency on cash (1,595) (468)
------ ----
Increase (decrease) in cash and cash equivalents 8,048 (7,966)
Cash and cash equivalents:
Beginning of period 60,581 68,547
End of period $68,629 $60,581
======= =======
BIG LOTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
The following tables reconcile gross margin, selling and administrative expenses, operating profit, income tax expense, income from continuing operations, net income, diluted earnings per share from continuing operations, diluted earnings per share, and effective income tax rate for each of the fourth quarter of 2013, the year-to-date 2013, and the year-to-date 2012 (GAAP financial measures) to adjusted gross margin, adjusted selling and administrative expenses, adjusted operating profit, adjusted income tax expense, adjusted income from continuing operations, adjusted net income, adjusted diluted earnings per share from continuing operations, adjusted diluted earnings per share, and adjusted effective income tax rate (non-GAAP financial measures).
Fourth quarter of 2013 - Thirteen weeks ended February 1, 2014
Consolidated Results As reported U.S. tax benefit of Canadian wind
down As Adjusted
(non-GAAP)
---------
Net sales $1,636,277 100.0% $ - $1,636,277 100.0%
Gross margin 625,663 38.2 - 625,663 38.2
Selling and administrative expenses 487,286 29.8 - 487,286 29.8
Depreciation expense 30,152 1.8 - 30,152 1.8
Operating profit 108,225 6.6 - 108,225 6.6
Income tax expense 25,603 1.6 23,899 49,502 3.0
Income from continuing operations 80,979 4.9 (23,899) 57,080 3.5
Income from discontinued operations 3,374 0.2 - 3,374 0.2
Net income $84,353 5.2% $(23,899) $60,454 3.7%
Diluted earnings per share from
continuing operations $1.39 $(0.41) $0.98
Diluted earnings per share $1.45 $(0.41) $1.04
Effective income tax rate 24.0% 46.4%
U.S. Segment Results As reported U.S. tax benefit of Canadian wind As Adjusted (non-
down GAAP)
----------- --------------------------------- -----------------
Net sales $1,571,912 100.0% $ - $1,571,912 100.0%
Gross margin 609,632 38.8 - 609,632 38.8
Selling and administrative expenses 444,968 28.3 - 444,968 28.3
Depreciation expense 29,835 1.9 - 29,835 1.9
Operating profit 134,829 8.6 - 134,829 8.6
Income tax expense 26,029 1.7 23,899 49,928 3.2
Income from continuing operations $107,996 6.9% $(23,899) $84,097 5.3%
Diluted earnings per share from
continuing operations $1.86 $(0.41) $1.45
Effective income tax rate 19.4% 37.3%
The above adjusted gross margin, adjusted selling and administrative expenses, adjusted operating profit, adjusted income tax expense, adjusted income from continuing operations, adjusted net income, adjusted diluted earnings per share from continuing operations, adjusted diluted earnings per share, and adjusted effective income tax rate 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") the impact of a U.S. tax benefit associated with the wind down of the operations of our Canadian segment of $23,899.
Year-to-date 2013 - Fifty-two weeks ended February 1, 2014
Consolidated Results As reported Adjustment to loss contingency Gain on sale of real estate U.S. tax benefit of Canadian wind As Adjusted (non-
accrual down GAAP)
----------- ------------------------------- --------------------------- ---------------------------------- ------------------
Net sales $5,301,912 100.0% $ - $ - $ - $5,301,912 100.0%
Gross margin 2,065,306 39.0 - - - 2,065,306 39.0
Selling and administrative expenses 1,759,745 33.2 (4,375) 3,579 - 1,758,949 33.2
Depreciation expense 115,122 2.2 - - - 115,122 2.2
Operating profit 190,439 3.6 4,375 (3,579) - 191,235 3.6
Income tax expense 61,118 1.2 1,615 (1,400) 23,899 85,232 1.6
Income from continuing operations 124,769 2.4 2,760 (2,179) (23,899) 101,451 1.9
Income from discontinued operations 526 0.0 - - - 526 0.0
Net income $125,295 2.4% $2,760 $(2,179) $(23,899) $101,977 1.9%
Diluted earnings per share from
continuing operations $2.15 $0.05 $(0.04) $(0.41) $1.75
Diluted earnings per share $2.16 $0.05 $(0.04) $(0.41) $1.76
Effective income tax rate 32.9% 36.9% 39.1% 45.7%
U.S. Segment Results As reported Adjustment to loss contingency Gain on sale of real estate U.S. tax benefit of Canadian wind As Adjusted (non-
accrual down GAAP)
----------- ------------------------------- --------------------------- ---------------------------------- ------------------
Net sales $5,124,755 100.0% $ - $ - $ - $5,124,755 100.0%
Gross margin 2,007,369 39.2 - - - 2,007,369 39.2
Selling and administrative expenses 1,664,232 32.5 (4,375) 3,579 - 1,663,436 32.5
Depreciation expense 113,228 2.2 - - - 113,228 2.2
Operating profit 229,909 4.5 4,375 (3,579) - 230,705 4.5
Income tax expense 61,544 1.2 1,615 (1,400) 23,899 85,658 1.7
Income from continuing operations $165,060 3.2% $2,760 $(2,179) $(23,899) $141,742 2.8%
Diluted earnings per share from
continuing operations $2.85 $0.05 $(0.04) $(0.41) $2.45
Effective income tax rate 27.2% 36.9% 39.1% 37.7%
The above adjusted gross margin, adjusted selling and administrative expenses, adjusted operating profit, adjusted income tax expense, adjusted income from continuing operations, adjusted net income, adjusted diluted earnings per share from continuing operations, adjusted diluted earnings per share, and adjusted effective income tax rate 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"): (1) a pretax charge related to the settlement of a legal matter of $4,375 ($2,760, net of tax); (2) a pretax adjustment for the gain on the sale of real estate of $3,579 ($2,179, net of tax); and (3) the impact of a U.S. tax benefit associated with the wind down of the operations of our Canadian segment of $23,899.
Year-to-date 2012 - Fifty-three weeks ended February 2, 2013
Consolidated Results As Recast Adjustment to exclude change in inventory accounting As Adjusted (non-
principle GAAP)
--------- ----------------------------------------------------- ------------------
Net sales $5,367,165 100.0% $ - $5,367,165 100.0%
Gross margin 2,112,328 39.4 5,574 2,117,902 39.5
Selling and administrative expenses 1,708,160 31.8 - 1,708,160 31.8
Depreciation expense 106,137 2.0 - 106,137 2.0
Operating profit 298,031 5.6 5,574 303,605 5.7
Income tax expense 116,921 2.2 2,186 119,107 2.2
Income from continuing operations 176,969 3.3 3,388 180,357 3.4
Income from discontinued operations 152 0.0 - 152 0.0
Net income $177,121 3.3% $3,388 $180,509 3.4%
Diluted earnings per share from
continuing operations $2.93 $0.06 $2.98
Diluted earnings per share $2.93 $0.06 $2.98
Effective income tax rate 39.8% 39.2% 39.8%
U.S. Segment Results As Recast Adjustment to exclude change in inventory accounting As Adjusted (non-
principle GAAP)
--------- ----------------------------------------------------- ------------------
Net sales $5,212,318 100.0% $ - $5,212,318 100.0%
Gross margin 2,054,686 39.4 5,574 2,060,260 39.5
Selling and administrative expenses 1,639,816 31.5 - 1,639,816 31.5
Depreciation expense 103,146 2.0 - 103,146 2.0
Operating profit 311,724 6.0 5,574 317,298 6.1
Income tax expense 117,059 2.2 2,186 119,245 2.3
Income from continuing operations $190,477 3.7% $3,388 $193,865 3.7%
Diluted earnings per share from
continuing operations $3.15 $0.06 $3.21
Effective income tax rate 38.1% 39.2% 38.1%
The above adjusted gross margin, adjusted selling and administrative expenses, adjusted operating profit, adjusted income tax expense, adjusted income from continuing operations, adjusted net income, adjusted diluted earnings per share from continuing operations, adjusted diluted earnings per share, and adjusted effective income tax rate 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 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.
Logo - http://photos.prnewswire.com/prnh/20011026/BIGLOTSLOGO
SOURCE Big Lots, Inc.
