Big Lots 2009 Annual Report Download - page 134

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(a) 2006 is comprised of 53 weeks. All other periods presented included 52 weeks.
(b) We adopted the funding recognition provisions of guidance under Financial Accounting Standards Board
Accounting Standards Codification (“ASC”) 715-30-25, Defined Benefit Plans-Pension (Statement
of Financial Accounting Standard (“SFAS”) No. 158, Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans (SFAS No. 158)), in 2006 which resulted in accumulated other
comprehensive loss of $5,933 ($3,859 net of tax). We adopted the measurement date provisions of the
guidance under ASC 715-30-35 (SFAS No. 158) in 2008, the impacts of which are more fully described in
notes 1 and 8 to the accompanying consolidated financial statements.
(c) We adopted guidance under ASC 740, Income Taxes (FIN No. 48, Accounting for Uncertainty in Income
Taxes an interpretation of SFAS No. 109), in the first fiscal quarter of 2007, on a prospective basis, the
impact of which is more fully discussed in notes 1 and 9 to the accompanying consolidated financial
statements.
(d) We adopted guidance under ASC 718, Compensation – Stock Compensation and ASC 505-50, Equity-
Based Payments to Non Employees (SFAS No. 123(R), Share-Based Payment), in the first fiscal quarter
of 2006, under the modified prospective adoption method. Share-based compensation expense was
$6.6 million in 2006. Share-based compensation expense was not recognized in the income statement
prior to 2006. For years 2009, 2008 and 2007, the impact is more fully described in notes 1 and 7 to the
accompanying consolidated financial statements.
(e) For 2008, working capital included $61.7 million for current maturities under bank credit facility because
the 2004 Credit Agreement terminated in 2009.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The discussion and analysis presented below should be read in conjunction with the accompanying consolidated
financial statements and related notes. Please refer to Item 1A of this Form 10-K for a discussion of forward-
looking statements and certain risk factors that may have a material effect on our business, financial condition,
results of operations, and/or liquidity.
Our fiscal year ends on the Saturday nearest to January 31, which results in some fiscal years with 52 weeks and
some with 53 weeks. Fiscal years 2009, 2008 and 2007 each were comprised of 52 weeks.
Operating Results Summary
The following are the results from 2009 that we believe are key indicators of our operating performance when
compared to our operating performance in 2008.
• Net sales increased 1.8%. Comparable store sales for stores open at least two years at the beginning
of 2009 increased 0.7%. We operated an average of 1,354 stores throughout 2009 compared to 1,356
average stores throughout 2008. Sales per selling square foot were $162 in 2009 and $160 in 2008.
• Gross margin as a percent of sales increased 60 basis points to 40.6% of sales in 2009 from 40.0% of
sales in 2008. Gross margin dollars were higher by 3.3%.
• Average inventory levels were slightly lower throughout 2009 compared to 2008 and, combined
with the 1.8% increase in net sales, resulted in a higher inventory turnover rate of 3.7 times in 2009
compared to 3.6 times in 2008.
• Selling and administrative expenses as a percent of sales decreased 40 basis points to 32.4% of sales
from 32.8% of sales in 2008.
• Depreciation expense as a percent of sales decreased 10 basis points to 1.6% of sales in 2009 from
1.7% of sales in 2008.