Big Lots 2009 Annual Report Download - page 135

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• Diluted earnings per share from continuing operations improved to $2.44 per share in 2009
compared to $1.89 per share in 2008.
• Cash provided by operating activities was $392.0 million in 2009 compared to $211.1 million in
2008. Our total inventory per average store was down 2.3% at the end of 2009 compared to 2008.
Our accounts payable leverage increased at the end of 2009 as a result of a shift in our negotiated
vendor payment terms towards a longer payment period which is more consistent with our retail
competitors. Additionally, we paid income taxes of $106.0 million in 2009 compared to $92.4 million
in 2008.
• In December of 2009 our Board of Directors authorized the repurchase of up to $150.0 million of our
common shares. No shares were repurchased under this program in 2009.
The following table compares components of our consolidated statements of operations as a percentage of
net sales:
2009 2008 2007
Net sales ........................................................ 100.0% 100.0% 100.0%
Cost of sales (exclusive of depreciation expense shown separately below) ..... 59.4 60.0 60.5
Gross margin .................................................... 40.6 40.0 39.5
Selling and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.4 32.8 32.5
Depreciation expense .............................................. 1.6 1.7 1.9
Gain on sale of real estate ........................................... (0.3) 0.0 0.0
Operating profit .................................................. 6.9 5.5 5.1
Interest expense .................................................. (0.0) (0.1) (0.1)
Interest and investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 0.0 0.1
Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . 6.8 5.4 5.1
Income tax expense ............................................... 2.6 2.0 1.9
Income from continuing operations ................................... 4.3 3.3 3.2
Income (loss) from discontinued operations, net of tax .................... (0.0) (0.1) 0.2
Net income ...................................................... 4.2% 3.3% 3.4%
See the discussion below under the captions “2009 Compared To 2008” and “2008 Compared To 2007” for
additional details regarding the specific components of our operating results.
Selling and administrative expenses in 2009 were increased by $4.0 million (10 basis points), pretax, for a
legal settlement agreement (see note 10 to the accompanying consolidated financial statements for additional
information on this matter). Gain on sale of real estate in 2009 was $13.0 million (30 basis points), pretax, for a
company-owned and operated store in California sold at a gain.
Selling and administrative expenses in 2007 were reduced by $5.2 million (10 basis points), pretax, for proceeds
we received from the KB Toys bankruptcy trust (see note 11 to the accompanying consolidated financial
statements for additional information) and $4.9 million (10 basis points), pretax, for insurance proceeds we
received as recovery for 2005 hurricane insurance claims.
Seasonality
As discussed in Item 1. under the “Seasonality” caption, our financial results fluctuate from quarter to quarter
depending on various factors such as timing of new or closed stores, timing and extent of advertisements and
promotions, and timing of holidays. We expect that the Christmas holiday selling season will continue to result
in a significant portion of our sales and operating profits. If our sales performance is significantly better or
worse during this time frame, we would expect a more pronounced impact on our annual financial results.