Big Lots 2012 Annual Report Download - page 109

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Other Performance Factors
Interest Expense
Interest expense increased $0.7 million to $4.2 million in 2012 compared to $3.5 million in 2011. The increase
in interest expense was primarily driven by increased borrowings in 2012. This increase was offset by decreases
due to $0.8 million of non-recurring prepayment fees in the second quarter of 2011 that were associated with
repayment of the notes payable assumed in the acquisition of Big Lots Canada. The increase was also offset by
lower amortization of deferred bank fees on our 2011 Credit Agreement in 2012 as compared to deferred bank fees
on our prior credit agreement in 2011. We had total average borrowings (including capital leases) of $200.3 million
in 2012 compared to total average borrowings of $88.2 million in 2011. The increase in total average borrowings
was primarily the result of our investment of $298.5 million in 2012 to purchase approximately 8.1 million of our
outstanding shares under the 2011 and 2012 Repurchase Programs.
Income Taxes
The effective income tax rate in 2012 and 2011 for income from continuing operations was 39.8% and 39.4%,
respectively. The higher rate in 2012 is primarily due to a valuation allowance relative to the deferred tax benefit
of the loss generated by our Canadian segment on a lower pretax income base and a net decrease in favorable
discrete income tax items.
2011 Compared to 2010
U.S. Segment
Net Sales
Net sales by merchandise category, in dollars and as a percentage of total net sales, and net sales change in
dollars and percentage from 2011 compared to 2010 were as follows:
2011 2010 Change
(In thousands)
Furniture..................... $ 883,341 17.2% $ 829,725 16.8% $ 53,616 6.5%
Consumables ................. 848,492 16.5 798,931 16.1 49,561 6.2
Home ....................... 799,494 15.5 783,860 15.8 15,634 2.0
Food........................ 723,280 14.1 653,852 13.2 69,428 10.6
Seasonal..................... 683,498 13.3 642,220 13.0 41,278 6.4
Electronics & Other ............ 607,606 11.8 625,783 12.6 (18,177) (2.9)
Hardlines & Toys.............. 594,453 11.6 617,873 12.5 (23,420) (3.8)
Net sales .................. $5,140,164 100.0% $4,952,244 100.0% $187,920 3.8%
As discussed above in the section “2012 Compared To 2011”, in the fourth quarter of 2012, we realigned our
merchandise categories in our U.S. segment to be consistent with the realignment of our merchandising team
and changes to our management reporting. All results for 2011 and 2010 have been reclassified to represent the
current merchandise category structure for comparability.
Net sales increased $187.9 million or 3.8% to $5,140.2 million in 2011, compared to $4,952.2 million in 2010.
The increase in net sales was principally due to the net addition of 53 stores since the end of 2010, which
increased net sales by $179.6 million and a 0.1% increase in comparable store sales, which increased net sales
by $8.3 million. Our comparable store sales were calculated by using all stores that were open for at least two
fiscal years as of the beginning of 2011. The primary drivers of the sales increase in the Furniture category were
the upholstery and mattresses departments, partially offset by a decrease in case goods as 2010 benefited from a
few large closeout deals. The Consumables and Food categories experienced increases in nearly all departments
as customers responded to our new assortments and specialty offerings. The Home category experienced
growth in the domestics department, where new merchandising initiatives positively impacted sales throughout
the majority of the year. The growth in the domestics department was partially offset by comparable store sales
declines in most other departments. The Seasonal category increase was driven by strong sales of Christmas