<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended April 4, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934.
For the transition period from __________________ to ___________________
Commission File Number: 333-43129
BIG 5 CORP.
SUCCESSOR TO: UNITED MERCHANDISING CORP.
DBA: BIG 5 SPORTING GOODS
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
95-1854273
(I.R.S employer identification number)
2525 EAST EL SEGUNDO BOULEVARD
EL SEGUNDO, CALIFORNIA 90245
(310) 536-0611
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
Indicate by check mark whether the registrant has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports). Yes [X] No [ ]
Indicate by check mark whether the registrant has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding for each of the registrant's classes
of common stock, as of the latest practicable date. 1,000 shares of common
stock, $.01 par value, at May 18, 1999.
<PAGE> 2
BIG 5 CORP.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Title Page 1
Index 2
PART I -FINANCIAL INFORMATION
Item 1. Condensed Financial Statements (Unaudited)
Condensed Balance Sheets - April 4, 1999 and
January 3, 1999 3
Condensed Statements of Operations -
3 months ended April 4, 1999 and
March 29, 1998 4
Condensed Statements of Cash Flows -
3 months ended April 4, 1999 and
March 29, 1998 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-13
Item 3. Market Risk Disclosure 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of
Security-Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
</TABLE>
2
<PAGE> 3
BIG 5 CORP.
Condensed Balance Sheets
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
April 4, January 3,
1999 1999
--------- ---------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 818 $ --
Trade and other receivables, net of allowance for doubtful
accounts of $220 and $201, respectively 3,230 6,347
Merchandise inventories 158,341 147,296
Prepaid expenses 1,038 1,336
--------- ---------
Total current assets 163,427 154,979
--------- ---------
Property and equipment:
Land 186 186
Buildings and improvements 19,413 18,910
Furniture and equipment 39,285 37,870
Less accumulated depreciation and amortization (28,665) (27,428)
--------- ---------
Net property and equipment 30,219 29,538
--------- ---------
Deferred income taxes, net 6,158 6,158
Leasehold interest, net of accumulated amortization of
$16,269 and $15,669, respectively 12,465 12,793
Other assets, at cost, less accumulated
amortization of $1,213 and $995, respectively 10,223 8,773
Goodwill, less accumulated amortization of $1,433
and $1,371, respectively 5,112 5,174
--------- ---------
$ 227,604 $ 217,415
========= =========
Liabilities and Stockholder's Equity
Current liabilities:
Accounts payable $ 61,687 $ 53,710
Accrued expenses 28,228 33,644
--------- ---------
Total current liabilities 89,915 87,354
Deferred rent 6,763 6,586
Long-term debt 159,015 151,352
--------- ---------
Total liabilities 255,693 245,292
--------- ---------
Commitments and contingencies
Stockholder's deficit:
Common stock, $.01 par value. Authorized 3,000 shares;
issued and outstanding 1,000 shares -- --
Additional paid-in capital 39,281 39,281
Accumulated deficit (67,370) (67,158)
--------- ---------
Total stockholder's deficit (28,089) (27,877)
--------- ---------
$ 227,604 $ 217,415
========= =========
</TABLE>
See accompanying notes to condensed financial statements
3
<PAGE> 4
BIG 5 CORP.
Condensed Statements of Operations
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
April 4, 1999 March 29, 1998
------------- --------------
<S> <C> <C>
Net sales $ 117,097 $ 110,089
Cost of goods sold, buying and occupancy 78,828 74,765
--------- ---------
Gross profit 38,269 35,324
--------- ---------
Operating expenses:
Selling and administrative 31,706 29,309
Depreciation and amortization 2,380 2,067
--------- ---------
Total operating expenses 34,086 31,376
--------- ---------
Operating income 4,183 3,948
Interest expense, net 4,542 4,876
--------- ---------
Loss before
income taxes (359) (928)
Income tax benefit (147) (380)
--------- ---------
Net loss $ (212) $ (548)
========= =========
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE> 5
BIG 5 CORP.
Condensed Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
April 4, 1999 March 29, 1998
------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (212) $ (548)
Adjustments to reconcile net loss to net cash
provided/(used) by operating activities:
Depreciation and amortization 2,380 2,067
Amortization of deferred finance charge and discounts 85 248
Change in assets and liabilities:
Merchandise inventories (11,045) (14,389)
Trade accounts receivable, net 3,117 2,530
Prepaid expenses and other assets 119 283
Accounts payable 7,977 19,395
Accrued expenses (3,084) (2,228)
-------- --------
Net cash provided/(used) by operating activities (663) 7,358
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (2,434) (1,419)
Purchase of long-term investments (1,363) --
-------- --------
Net cash used in investing activities (3,797) (1,419)
-------- --------
Cash flows from financing activities:
Net (payment)/borrowings under revolving credit facilities,
and other 5,278 (3,248)
-------- --------
Net cash provided by (used in) financing activities 5,278 (3,248)
-------- --------
Net increase/(decrease) in cash and cash equivalents 818 2,691
Cash and cash equivalents at beginning of period -- 1,364
-------- --------
Cash and cash equivalents at end of period $ 818 $ 4,055
======== ========
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE> 6
BIG 5 CORP.
Notes to Unaudited Condensed Financial Statements
(Dollars in Thousands)
FINANCIAL INFORMATION
1. Big 5 Corp. ("the Company") operates in one business segment, as a
sporting goods retailer under the Big 5 Sporting Goods name carrying a
broad range of hardlines, softlines and footwear, operating 221 stores
at April 4, 1999 in California, Washington, Arizona, Oregon, Texas,
New Mexico, Nevada, Utah and Idaho.
2. In the opinion of management of Big 5 Corp. ("the Company"), the
accompanying unaudited condensed financial statements contain all
adjustments, consisting only of normal recurring adjustments, which in the
opinion of management are necessary to present fairly and in accordance with
generally accepted accounting principles the financial position, results of
operations and cash flows as of and for the period ended April 4, 1999. It
should be understood that accounting measurements at interim dates
inherently involve greater reliance on estimates than at fiscal year-end.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission; however, management
believes that the disclosures are adequate to make the information presented
not misleading.
3. These unaudited condensed financial statements should be read in conjunction
with the Company's 1998 audited financial statements included in the
Company's Annual Report on Form 10-K for the fiscal year ended January 3,
1999.
4. Summary of Significant Accounting Policies
In March 1998, the AICPA Accounting Standard Executive Committee issued
Statement of Position 98-1 ("SOP 98-1"), Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use. The SOP requires
capitalization of certain costs related to computer software developed or
obtained for internal use. The Company has adopted the application of SOP
98-1 effective in fiscal 1999 without a material impact on its financial
position or results of operations.
6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
RESULTS OF OPERATIONS
The results of the interim periods are not necessarily indicative of results for
the entire fiscal year.
THREE MONTHS ENDED APRIL 4, 1999 VERSUS THREE MONTHS ENDED MARCH 29, 1998
The following table sets forth for the periods indicated operating results in
thousands of dollars and expressed as a percentage of sales.
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------------------
April 4, 1999 March 29, 1998
----------------------- -----------------------
<S> <C> <C> <C> <C>
Net sales $ 117,097 100.0% $ 110,089 100.0%
Cost of goods sold, buying and
occupancy 78,828 67.3 74,765 67.9
--------- ----- --------- -----
Gross profit 38,269 32.7 35,324 32.1
--------- ----- --------- -----
Operating expenses:
Selling and administrative 31,706 27.1 29,309 26.6
Depreciation and amortization 2,380 2.0 2,067 1.9
--------- ----- --------- -----
Total operating expense 34,086 29.1 31,376 28.5
--------- ----- --------- -----
Operating income 4,183 3.6 3,948 3.6
Interest expense 4,542 3.9 4,876 4.4
--------- ----- --------- -----
Net loss before
income taxes (359) (0.3) (928) (0.8)
Income taxes (147) (0.1) (380) (0.3)
--------- ----- --------- -----
Net loss $ (212) (0.2)% $ (548) (0.5)%
========= ===== ========= =====
EBITDA(a) $ 6,563 5.6% $ 6,015 5.5%
========= ===== ========= =====
</TABLE>
(a) EBITDA represents net earnings (loss) before taking into consideration net
interest expense, income tax expense, depreciation expense, amortization
expense, non-cash rent expense (see Footnote 5 in "Notes to Financial
Statements" of the Company's Annual Report on Form 10-K for the fiscal year
ended January 3, 1999). While EBITDA is not intended to represent cash flow
from operations as defined by generally accepted accounting principles
("GAAP") and should not be considered as an indicator of operating
performance or an alternative to cash flow (as measured by GAAP) as a
measure of liquidity, it is included herein because some investors believe
it provides additional information with respect to the ability of the
Company to meet its future debt service, capital expenditure and working
capital requirements.
7
<PAGE> 8
1. Net Sales
Net sales increased 6.4% (or $7.0 million) from $110.1 million reported for
the three months ended March 29, 1998 to $117.1 million for the three months
ended April 4, 1999. Same store sales increased 0.8%, representing the
thirteenth consecutive quarter of positive same store sales results. The
three months ended April 4, 1999 reflected one less business day versus last
year's quarter due to the timing of the Easter holiday versus last year. On
a like day comparison to last year, same store sales were up 2.1% for the
three months ended April 4, 1999 versus the three months ended March 29,
1998.
2. Gross Profit
Gross profit increased 8.3% (or $3.0 million) from $35.3 million for the
three months ended March 29, 1998 to $38.3 million for the three months
ended April 4, 1999, reflecting increased sales discussed above and improved
gross profit margin. Gross profit margin increased from 32.1% of sales for
the three month period in 1998 to 32.7% for the comparable three month
period this year. The improvement is a result of positive comparisons in
many of the Company's product categories.
3. Operating Expenses
Selling and administrative expenses increased 8.2% (or $2.4 million) from
$29.3 million for the three months ended March 29, 1998 to $31.7 million for
the three months ended April 4, 1999, reflecting the increase in the
Company's store count between periods. As a percentage of sales, selling and
administrative expenses increased from 26.6% for the 1998 period to 27.1% of
sales in the 1999 period primarily reflecting the impact of the Easter
holiday which resulted in one less day of sales during the quarter ended
April 4, 1999.
Depreciation and amortization increased 15.1% (or $0.3 million) from $2.1
million for the prior year period to $2.4 million for the three months ended
April 4, 1999. The increase resulted from depreciation and amortization on
expenditures due to the growth in the Company's store base during the past
fiscal year.
4. Interest Expense
Interest expense decreased 6.8% (or $0.4 million) from $4.9 million for the
prior year period to $4.5 million for the three months ended April 4, 1999.
This decrease reflected lower than average revolver borrowings during the
first quarter of 1999 versus the same period last year. The Company's
borrowings under the CIT Credit Facility (see Liquidity and Capital
Resources) were $28.6 million at April 4, 1999 compared to $40.0 million at
March 29, 1998.
5. Income Taxes
The Company's income tax benefit decreased from $0.4 million for the prior
year period to $0.1 million for the three months ended April 4, 1999,
reflecting a reduction in the Company's pre-tax loss between years. Income
taxes are provided based upon the estimated effective tax rate for the
entire fiscal year applied to the pre-tax income (loss) for the period. The
effective tax rate is subject to ongoing evaluation by management.
8
<PAGE> 9
6. Net Loss
Net loss for the three months ended April 4, 1999 was reduced 61.3% (or
$0.3 million) from $0.5 million for the three months ended March 29, 1998 to
$0.2 million for the three months ended April 4, 1999. This reduction
reflects the positive sales and margin results achieved during the three
months ended April 4, 1999.
7. Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA")
EBITDA increased 9.1% (or $0.6 million) from $6.0 million for the three
months ended March 29, 1998 to $6.6 million for the three months ended April
4, 1999. This improvement reflects the positive sales and margin results
achieved during the three months ended April 4, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are cash flow from
operations and borrowings under the Company's five year, non-amortizing, $125.0
million revolving credit facility (the "CIT Credit Facility"). The CIT Credit
Facility is secured by the Company's trade accounts receivable, merchandise
inventories and general intangible assets. Subject to certain terms and
conditions, the CIT Credit Facility permits the Company to obtain revolving
loans up to a maximum aggregate principal amount that, together with the
aggregate undrawn amount of all outstanding letters of credit and of all
unreimbursed amounts drawn under letters of credit, does not exceed the lesser
of $125.0 million and the Borrowing Base (as defined therein), which is
generally equal to 70% of the aggregate value of Eligible Inventory (as defined
therein) during November through February and 65% of the aggregate value of
Eligible Inventory during the remaining months of the year. The value of the
Company's Eligible Inventory as of April 4, 1999 was approximately $148.5
million. The Company intends to use net cash provided by operating activities
and borrowings under the CIT Credit Facility to fund its anticipated capital
expenditures and working capital requirements. However, if additional cash is
required, it may be difficult for the Company to obtain because the Company is
highly leveraged and is limited from incurring additional indebtedness, among
other things, by restrictions contained in the CIT Credit Facility and the
indenture governing the Senior Notes.
In October 1997, Big 5 Holdings Corp. (the "Parent"), Robert W.
Miller, Steven G. Miller and Green Equity Investors, L.P. ("GEI") agreed to a
recapitalization agreement (the "Recapitalization Agreement") which resulted in
existing management and employees of the Company (and members of their families)
beneficially gaining majority ownership of the Company when the recapitalization
was completed on November 13, 1997 (the "Recapitalization").
In connection with the Recapitalization, the Company issued $131.0
million in aggregate principal amount of Series A 10 7/8% Senior Notes due 2007,
requiring semi-annual interest payments. These notes were subsequently exchanged
for a like aggregate principal amount of Series B 10 7/8% Senior Notes due 2007
(the "Senior Notes"), having substantially identical terms. The Company has no
mandatory payments of principal on the Senior Notes prior to their final
maturity in 2007.
The Company believes that cash flow from operations will be
sufficient to cover the interest expense arising from the CIT Credit Facility
and the Senior Notes. However, the Company's ability to meet its debt service
obligations depends upon its future performance, which, in turn, is subject to,
among other things, general economic conditions and regional risks, and to
financial, business and other factors
9
<PAGE> 10
affecting the operations of the Company, including factors beyond its control.
Accordingly, there can be no assurance that cash flow from operations will be
sufficient to meet the Company's debt service obligations.
Net cash provided by/(used in) operating activities changed from net
cash provided of $7.4 million for the 13 weeks ended March 29, 1998 to net cash
used in operating activities of $0.7 million for the 13 weeks ended April 4,
1999, primarily reflecting normalization of working capital seasonal trends
following the Company's Recapitalization.
Net cash provided by/(used in) financing activities changed from net
cash used in financing activities of $3.2 million last year to cash provided of
$5.3 million for the three months ended April 4, 1999. As of April 4, 1999, the
Company had borrowings of $28.6 million and letter of credit commitments of $4.0
million outstanding under the CIT Credit Facility compared to $40.0 million and
$4.0 million as of March 29, 1998, with cash and cash equivalents of $0.8
million at April 4, 1999 compared to $4.1 million at March 29, 1998.
Capital expenditures increased from $1.4 million for the three months
ended March 29, 1998 to $2.4 million for the three months ended April 4, 1999.
Management expects capital expenditures for the current fiscal year will range
from $10 to $11 million and will be used primarily to fund the opening of 15 to
20 new stores (of which 1 has already been opened), as well as approximately
$3.8 million for the installation of new point-of-sale registers and software in
the Company's stores.
The CIT Credit Facility and the Senior Notes indenture contain
various covenants which impose certain restrictions on the Company, including
the incurrence of additional indebtedness, the payment of dividends, and the
ability to make acquisitions. In addition, the CIT Credit Facility requires
compliance with certain financial ratios and other financial covenants. The
Company is currently in compliance with all the covenants under the CIT Credit
Agreement and the Senior Notes indenture.
The Company is not aware of any material environmental liabilities
relating to either past or current properties owned, operated or leased by it.
There can be no assurance that such liabilities do not currently exist or will
not exist in the future.
IMPACT OF ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Statement No. 133,
(Accounting for Derivative Instruments and Hedging Activities) effective for all
fiscal quarters of fiscal years beginning after June 15, 1999. Management has
determined that the disclosure requirements from this statement will not impact
the financial statements of the Company.
10
<PAGE> 11
YEAR 2000
Background
The Year 2000 issue is primarily the result of computer programs using
a two-digit format, as opposed to four digits, to indicate the year. Computer
programs that are date dependent are found in the software that operates many
information technology ("IT") systems as well as in the computer based devices
which control many types of electronic equipment. Computer programs that are not
Year 2000 compliant will be unable to interpret dates beyond the year 1999,
which could cause a system failure or other computer errors, leading to a
disruption in the operation of the related IT systems or electronic equipment.
General
In 1997, the Company began to develop a program to coordinate changes
to computer and non-computer systems in order to achieve a Year 2000 date
conversion without disruption to the Company's operations. The Year 2000 effort,
which includes the implementation of previously planned business critical
systems and specific Year 2000 projects, is on track to be completed before the
end of 1999, although no assurances can be given. The majority of the Company's
applications that are not Year 2000 compliant have been, or will be replaced by
upgrades to existing systems. Making the remaining non-compliant applications
Year 2000 compliant will not result in incremental costs to the Company, but
rather will be accomplished by the redeployment of existing IT resources.
Accordingly, the Company does not expect its internal Year 2000 effort to have a
material impact on its results of operations, liquidity or financial condition,
although the Company cannot predict whether its outside vendors, suppliers and
support systems will be compliant and whether that might have an effect. In
addition, the Company has not deferred any other projects that will have a
material impact on its results of operations, liquidity or financial condition.
IT Systems
During 1997, the Company began a study to determine the scope of its
Year 2000 exposure. Since the Company relies on outside software vendors for all
of its merchandise distribution and financial systems, the Company's first
efforts were to gain assurance that all systems were either compliant or
upgradable to a Year 2000 compliant version. After completion of its study in
March 1998, the Company found that all of its systems either were compliant, or
could be compliant with an upgrade to existing software. Certain of these
outside software systems have customized add-on features created by the
Company's IT department. Therefore, the Company has redeployed one full-time
programmer to the Year 2000 project to update software code that was customized
by the Company and added on to its outside software systems to make these custom
changes compliant. These changes are expected to be completed before the end of
the second quarter of 1999.
The Year 2000 plan also focuses on the Company's IT hardware where
date sensitive embedded technology could create the need for upgrades. In August
and September of 1997 the Company's main computer platform, two IBM AS 400's,
were upgraded from CISC technology to Year 2000 compliant RISC technology. In
addition, all personal computers have been checked for compliance. Approximately
75% of all personal computers currently comply, with the remainder to be
upgraded before the end of 1999. The Company's network server was upgraded in
late 1997 and is fully compliant. Other hardware, including Telxon hand held
radio frequency devices, cash registers, modems, routers and other IT
communications devices are either Year 2000 compliant, or are in the process of
being upgraded. There are no other internal software or hardware issues to the
best of the
11
<PAGE> 12
Company's knowledge and the Company fully expects to have all systems compliant
prior to the end of 1999.
Non-IT Systems
Non-IT systems may contain date sensitive embedded technology
requiring Year 2000 upgrades. Examples of this technology include security
equipment such as access and alarm systems, as well as telephone equipment. The
Company is not a product manufacturer; therefore, the embedded chip issue
relates to equipment used by the Company in its internal facilities. The Company
expects to complete assessment of its non-IT systems by the end of the second
quarter of 1999.
The Company has contacted each of its major suppliers and vendors
prior to the end of 1998 to request written certification regarding their Year
2000 compliance. Approximately 25% of suppliers and vendors have responded to
the Company's requests to date. The Company will continue follow-up mailings
throughout 1999 but cannot guarantee full supplier and vendor compliance by
year-end.
Costs
The total cost associated with required modifications for Year 2000
compliance is not expected to be material to the Company's results of
operations, liquidity and financial condition. The estimated total cost of the
Year 2000 effort is approximately $0.5 million, plus an additional $6.5 million
in replacement costs for projects that are not Year 2000 related but have some
Year 2000 remediation benefits. The total amount expended through April 4, 1999,
was approximately $0.3 million directly related to Year 2000 remediation and
$2.7 million for projects which are not Year 2000 related but have some Year
2000 remediation benefits. The estimated future cost of completing the Year 2000
effort is estimated to be approximately $0.2 million. The Year 2000 effort is
funded primarily from the existing IT budget and has not forced the deferral or
cancellation of any budgeted IT projects.
Risks and Contingency Planning
The Company has initiated contingency planning for possible Year 2000
issues including such outside factors as credit card processing, supply chain
and banking operations. Where needed, the Company will establish contingency
plans based on the Company's actual testing experience and assessment of outside
risks. The Company anticipates final contingency plans to be in place by June
1999. However, to the extent outside support systems (such as credit card
processors and suppliers) may not be Year 2000 compliant by the end of 1999,
such noncompliance could result in circumstances which could have a material
adverse effect on the Company's business, financial condition, and operating
results.
Readers are cautioned that forward looking statements contained in the
Year 2000 Update should be read in conjunction with the Company's disclosures
under the heading "Forward-Looking Statements".
SEASONALITY
The Company's business is seasonal in nature. As a result, the
Company's results of operations are likely to vary during its fiscal year.
Historically, the Company's revenues and income are highest during its fourth
quarter, due to industry wide retail sales trends. The fourth quarter
contributed 27.8% in 1998 and 26.9% in 1997 of fiscal year net sales and 32.9%
in 1998 and 33.7% in 1997 of fiscal
12
<PAGE> 13
year EBITDA. Any decrease in sales for such period could have a material adverse
effect on the Company's business, financial condition and operating results for
the entire fiscal year.
IMPACT OF INFLATION
The Company does not believe that inflation has a material impact on
the Company's earnings from operations. The Company believes that it is
generally able to pass any inflationary increases in costs to its customers.
FORWARD-LOOKING STATEMENTS
Certain information contained herein includes "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 and is subject to the safe harbor created by that Act. Forward-looking
statements can be identified by the use of forward-looking terminology, such as
"may," "will," "should," "expect," "anticipate," "estimate," "continue," "plan,"
"intend" or other similar terminology. Such forward-looking statements, which
relate to, among other things, the financial condition, results of operations
and business of the Company, are subject to significant risks and uncertainties
that could cause actual results to differ materially and adversely from those
set forth in such statements. These include, without limitation, the Company's
ability to open new stores on a timely and profitable basis, the impact of
competition on revenues and margins, the effect of weather conditions and
general economic conditions in the Western United States (which is the Company's
area of operation), the seasonal nature of the Company's business, and other
risks and uncertainties including the risk factors listed in the Company's
Registration Statement on Form S-4 as filed with the Securities and Exchange
Commission on January 16, 1998 and as may be detailed from time to time in the
Company's public announcements and filings with the Securities and Exchange
Commission. The Company assumes no obligation to publicly release the results of
any revisions to the forward-looking statements contained herein which may be
made to reflect events or circumstances occurring subsequent to the filing of
this Form 10-Q with the Securities and Exchange Commission or otherwise to
revise or update any oral or written forward-looking statements that may be made
from time to time by or on behalf of the Company.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
In the ordinary course of its business, the Company is exposed to
certain market risks, primarily changes in interest rates. After an assessment
of these risks to the Company's operations, the Company believes that its
primary market risk exposures (within the meaning of Regulation S-K Item 305)
are not material and are not expected to have any material adverse effect on the
Company's financial condition, results of operations or cash flows for the next
fiscal year.
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various legal actions arising in the
ordinary course of business. In the opinion of management, the
ultimate disposition of matters currently pending against the Company
will not have a material adverse effect on the Company's financial
position.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security-Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
None.
--------------------------------------------
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIG 5 CORP.
A DELAWARE CORPORATION
Date: 5/18/99 By: /S/ STEVEN G. MILLER
------------------------------------------
Steven G. Miller
President and
Chief Operating Officer
Date: 5/18/99 By: /S/ CHARLES P. KIRK
------------------------------------------
Charles P. Kirk
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-2000
<PERIOD-START> JAN-04-1999
<PERIOD-END> APR-04-1999
<CASH> 818
<SECURITIES> 0
<RECEIVABLES> 3,230
<ALLOWANCES> 220
<INVENTORY> 158,341
<CURRENT-ASSETS> 163,427
<PP&E> 30,219
<DEPRECIATION> 28,665
<TOTAL-ASSETS> 227,604
<CURRENT-LIABILITIES> 89,915
<BONDS> 159,015
0
0
<COMMON> 0
<OTHER-SE> (28,089)
<TOTAL-LIABILITY-AND-EQUITY> 227,604
<SALES> 117,097
<TOTAL-REVENUES> 117,097
<CGS> 78,828
<TOTAL-COSTS> 78,828
<OTHER-EXPENSES> 34,086
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,542
<INCOME-PRETAX> (359)
<INCOME-TAX> (147)
<INCOME-CONTINUING> (212)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (212)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>