Ohio | 06-1119097 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
4900 E. Dublin-Granville Road, Columbus, Ohio | 43081 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | Emerging growth company o |
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BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Operations and Comprehensive Income (Unaudited) (In thousands, except per share amounts) |
Thirteen Weeks Ended | ||||||
May 5, 2018 | April 29, 2017 | |||||
Net sales | $ | 1,267,983 | $ | 1,294,970 | ||
Cost of sales (exclusive of depreciation expense shown separately below) | 756,025 | 770,695 | ||||
Gross margin | 511,958 | 524,275 | ||||
Selling and administrative expenses | 438,092 | 415,972 | ||||
Depreciation expense | 28,529 | 28,595 | ||||
Operating profit | 45,337 | 79,708 | ||||
Interest expense | (1,576 | ) | (1,009 | ) | ||
Other income (expense) | 508 | (517 | ) | |||
Income before income taxes | 44,269 | 78,182 | ||||
Income tax expense | 13,030 | 26,670 | ||||
Net income and comprehensive income | $ | 31,239 | $ | 51,512 | ||
Earnings per common share | ||||||
Basic | $ | 0.74 | $ | 1.16 | ||
Diluted | $ | 0.74 | $ | 1.15 | ||
Weighted-average common shares outstanding | ||||||
Basic | 42,113 | 44,361 | ||||
Dilutive effect of share-based awards | 105 | 367 | ||||
Diluted | 42,218 | 44,728 | ||||
Cash dividends declared per common share | $ | 0.30 | $ | 0.25 |
BIG LOTS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (In thousands, except par value) |
May 5, 2018 | February 3, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 64,830 | $ | 51,176 | |||
Inventories | 849,627 | 872,790 | |||||
Other current assets | 137,714 | 98,007 | |||||
Total current assets | 1,052,171 | 1,021,973 | |||||
Property and equipment - net | 604,524 | 565,977 | |||||
Deferred income taxes | 21,335 | 13,986 | |||||
Other assets | 48,956 | 49,790 | |||||
Total assets | $ | 1,726,986 | $ | 1,651,726 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 342,185 | $ | 351,226 | |||
Property, payroll, and other taxes | 80,747 | 80,863 | |||||
Accrued operating expenses | 92,080 | 72,013 | |||||
Insurance reserves | 72,669 | 38,517 | |||||
Accrued salaries and wages | 23,019 | 39,321 | |||||
Income taxes payable | 25,612 | 7,668 | |||||
Total current liabilities | 636,312 | 589,608 | |||||
Long-term obligations | 174,000 | 199,800 | |||||
Deferred rent | 59,858 | 58,246 | |||||
Insurance reserves | 56,321 | 55,015 | |||||
Unrecognized tax benefits | 15,165 | 14,929 | |||||
Other liabilities | 96,218 | 64,541 | |||||
Shareholders’ equity: | |||||||
Preferred shares - authorized 2,000 shares; $0.01 par value; none issued | — | — | |||||
Common shares - authorized 298,000 shares; $0.01 par value; issued 117,495 shares; outstanding 42,338 shares and 41,925 shares, respectively | 1,175 | 1,175 | |||||
Treasury shares - 75,157 shares and 75,570 shares, respectively, at cost | (2,412,437 | ) | (2,422,396 | ) | |||
Additional paid-in capital | 613,621 | 622,550 | |||||
Retained earnings | 2,486,753 | 2,468,258 | |||||
Total shareholders' equity | 689,112 | 669,587 | |||||
Total liabilities and shareholders' equity | $ | 1,726,986 | $ | 1,651,726 |
BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Shareholders’ Equity (Unaudited) (In thousands) |
Common | Treasury | Additional Paid-In Capital | Retained Earnings | ||||||||||||||||
Shares | Amount | Shares | Amount | Total | |||||||||||||||
Balance - January 28, 2017 | 44,259 | $ | 1,175 | 73,236 | $ | (2,291,379 | ) | $ | 617,516 | $ | 2,323,318 | $ | 650,630 | ||||||
Comprehensive income | — | — | — | — | — | 51,512 | 51,512 | ||||||||||||
Dividends declared ($0.25 per share) | — | — | — | — | — | (11,547 | ) | (11,547 | ) | ||||||||||
Adjustment for ASU 2016-09 | — | — | — | — | 241 | (146 | ) | 95 | |||||||||||
Purchases of common shares | (992 | ) | — | 992 | (48,508 | ) | — | — | (48,508 | ) | |||||||||
Exercise of stock options | 105 | — | (105 | ) | 3,289 | 583 | — | 3,872 | |||||||||||
Restricted shares vested | 311 | — | (311 | ) | 9,741 | (9,741 | ) | — | — | ||||||||||
Performance shares vested | 431 | — | (431 | ) | 13,523 | (13,523 | ) | — | — | ||||||||||
Share activity related to deferred compensation plan | — | — | — | (1 | ) | — | — | (1 | ) | ||||||||||
Other | — | — | — | — | — | — | — | ||||||||||||
Share-based employee compensation expense | — | — | — | — | 7,852 | — | 7,852 | ||||||||||||
Balance - April 29, 2017 | 44,114 | 1,175 | 73,381 | (2,313,335 | ) | 602,928 | 2,363,137 | 653,905 | |||||||||||
Comprehensive income | — | — | — | — | — | 138,320 | 138,320 | ||||||||||||
Dividends declared ($0.75 per share) | — | — | — | — | — | (33,199 | ) | (33,199 | ) | ||||||||||
Purchases of common shares | (2,445 | ) | — | 2,445 | (117,249 | ) | — | — | (117,249 | ) | |||||||||
Exercise of stock options | 199 | — | (199 | ) | 6,370 | 1,470 | — | 7,840 | |||||||||||
Restricted shares vested | 57 | — | (57 | ) | 1,821 | (1,821 | ) | — | — | ||||||||||
Performance shares vested | — | — | — | — | — | — | — | ||||||||||||
Share activity related to deferred compensation plan | — | — | — | (3 | ) | — | — | (3 | ) | ||||||||||
Other | — | — | — | — | — | — | — | ||||||||||||
Share-based employee compensation expense | — | — | — | — | 19,973 | — | 19,973 | ||||||||||||
Balance - February 3, 2018 | 41,925 | 1,175 | 75,570 | (2,422,396 | ) | 622,550 | 2,468,258 | 669,587 | |||||||||||
Comprehensive income | — | — | — | — | — | 31,239 | 31,239 | ||||||||||||
Dividends declared ($0.30 per share) | — | — | — | — | — | (12,744 | ) | (12,744 | ) | ||||||||||
Purchases of common shares | (247 | ) | — | 247 | (11,193 | ) | — | — | (11,193 | ) | |||||||||
Exercise of stock options | 1 | — | (1 | ) | 20 | — | — | 20 | |||||||||||
Restricted shares vested | 366 | — | (366 | ) | 11,736 | (11,736 | ) | — | — | ||||||||||
Performance shares vested | 293 | — | (293 | ) | 9,391 | (9,391 | ) | — | — | ||||||||||
Share activity related to deferred compensation plan | — | — | — | — | — | — | — | ||||||||||||
Other | — | — | — | 5 | 2 | — | 7 | ||||||||||||
Share-based employee compensation expense | — | — | — | — | 12,196 | — | 12,196 | ||||||||||||
Balance - May 5, 2018 | 42,338 | $ | 1,175 | 75,157 | $ | (2,412,437 | ) | $ | 613,621 | $ | 2,486,753 | $ | 689,112 |
BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (In thousands) |
Thirteen Weeks Ended | ||||||
May 5, 2018 | April 29, 2017 | |||||
Operating activities: | ||||||
Net income | $ | 31,239 | $ | 51,512 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization expense | 26,056 | 26,030 | ||||
Deferred income taxes | (7,349 | ) | 1,544 | |||
Loss on disposition of equipment | 201 | 4 | ||||
Non-cash share-based compensation expense | 12,196 | 7,852 | ||||
Unrealized (gain) loss on fuel derivatives | (530 | ) | 221 | |||
Change in assets and liabilities, excluding effect of foreign currency adjustments: | ||||||
Inventories | 23,163 | 22,569 | ||||
Accounts payable | (9,041 | ) | (31,359 | ) | ||
Current income taxes | 19,742 | 24,848 | ||||
Other current assets | (40,818 | ) | (4,816 | ) | ||
Other current liabilities | 36,606 | (16,093 | ) | |||
Other assets | 932 | (4,504 | ) | |||
Other liabilities | 4,488 | 7,646 | ||||
Net cash provided by operating activities | 96,885 | 85,454 | ||||
Investing activities: | ||||||
Capital expenditures | (31,015 | ) | (22,125 | ) | ||
Cash proceeds from sale of property and equipment | 62 | 115 | ||||
Assets acquired under synthetic lease | (34,482 | ) | — | |||
Other | (2 | ) | — | |||
Net cash used in investing activities | (65,437 | ) | (22,010 | ) | ||
Financing activities: | ||||||
Net (repayments of) proceeds from borrowings under bank credit facility | (25,800 | ) | 9,300 | |||
Payment of capital lease obligations | (924 | ) | (857 | ) | ||
Dividends paid | (14,386 | ) | (12,683 | ) | ||
Proceeds from the exercise of stock options | 20 | 3,872 | ||||
Payment for treasury shares acquired | (11,193 | ) | (48,508 | ) | ||
Proceeds from synthetic lease | 34,482 | — | ||||
Other | 7 | (1 | ) | |||
Net cash used in financing activities | (17,794 | ) | (48,877 | ) | ||
Increase in cash and cash equivalents | 13,654 | 14,567 | ||||
Cash and cash equivalents: | ||||||
Beginning of period | 51,176 | 51,164 | ||||
End of period | $ | 64,830 | $ | 65,731 |
BIG LOTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) |
Thirteen Weeks Ended | |||||||
(In thousands) | May 5, 2018 | April 29, 2017 | |||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest, including capital leases | $ | 1,513 | $ | 822 | |||
Cash paid for income taxes, excluding impact of refunds | 1,071 | 609 | |||||
Gross proceeds from borrowings under bank credit facility | 387,300 | 365,100 | |||||
Gross payments of borrowings under bank credit facility | 413,100 | 355,800 | |||||
Non-cash activity: | |||||||
Assets acquired under capital leases | — | 18 | |||||
Accrued property and equipment | $ | 13,078 | $ | 8,835 |
Dividends Per Share | Amount Declared | Amount Paid | |||||||||
2018: | (In thousands) | (In thousands) | |||||||||
First quarter | $ | 0.30 | $ | 12,744 | $ | 14,386 | |||||
Total | $ | 0.30 | $ | 12,744 | $ | 14,386 | |||||
Number of Shares | Weighted Average Grant-Date Fair Value Per Share | ||||
Outstanding non-vested restricted stock at February 3, 2018 | 589,843 | $ | 44.77 | ||
Granted | 212,456 | 47.36 | |||
Vested | (365,667 | ) | 42.19 | ||
Forfeited | (26,597 | ) | 43.51 | ||
Outstanding non-vested restricted stock at May 5, 2018 | 410,035 | $ | 47.92 |
Issue Year | Outstanding PSUs at May 5, 2018 | Actual Grant Date | Expected Valuation (Grant) Date | Actual or Expected Expense Period | |
2015 | 2,194 | March 2017 | Fiscal 2017 | ||
2016 | 293,275 | March 2018 | Fiscal 2018 | ||
2017 | 233,770 | March 2019 | Fiscal 2019 | ||
2018 | 244,526 | March 2020 | Fiscal 2020 | ||
Total | 773,765 |
Number of Units | Weighted Average Grant-Date Fair Value Per Share | ||||
Outstanding PSUs at February 3, 2018 | 249,324 | $ | 51.49 | ||
Granted | 337,421 | 55.67 | |||
Vested | (247,130 | ) | 51.49 | ||
Forfeited | (44,146 | ) | 43.94 | ||
Outstanding PSUs at May 5, 2018 | 295,469 | $ | 55.64 |
Number of Options | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (000's) | ||||||
Outstanding stock options at February 3, 2018 | 280,626 | $ | 39.04 | ||||||
Exercised | (625 | ) | 31.76 | ||||||
Forfeited | — | — | |||||||
Outstanding stock options at May 5, 2018 | 280,001 | $ | 39.06 | 1.5 | $ | 930 | |||
Vested or expected to vest at May 5, 2018 | 280,001 | $ | 39.06 | 1.5 | $ | 930 | |||
Exercisable at May 5, 2018 | 280,001 | $ | 39.06 | 1.5 | $ | 930 |
First Quarter | |||||||
(In thousands) | 2018 | 2017 | |||||
Total intrinsic value of stock options exercised | $ | 8 | $ | 1,538 | |||
Total fair value of restricted stock vested | 17,245 | 16,200 | |||||
Total fair value of performance shares vested | $ | 12,683 | $ | 21,026 |
First Quarter | ||||||||
(In thousands) | 2018 | 2017 | ||||||
Furniture | $ | 356,974 | $ | 362,939 | ||||
Soft Home | 199,153 | 188,074 | ||||||
Food | 189,424 | 195,274 | ||||||
Consumables | 186,034 | 189,793 | ||||||
Seasonal | 175,601 | 183,612 | ||||||
Hard Home | 87,686 | 90,519 | ||||||
Electronics, Toys, & Accessories | 73,111 | 84,759 | ||||||
Net sales | $ | 1,267,983 | $ | 1,294,970 |
(In thousands) | May 5, 2018 | February 3, 2018 | |||
Diesel fuel collars | 5,100 | 3,600 |
(In thousands) | Assets (Liabilities) | |||||||
Derivative Instrument | Balance Sheet Location | May 5, 2018 | February 3, 2018 | |||||
Diesel fuel collars | Other current assets | $ | 725 | $ | 312 | |||
Other assets | 520 | 262 | ||||||
Accrued operating expenses | (121 | ) | (77 | ) | ||||
Other liabilities | (205 | ) | (107 | ) | ||||
Total derivative instruments | $ | 919 | $ | 390 |
Amount of Gain (Loss) | ||||||||
(In thousands) | First Quarter | |||||||
Derivative Instrument | Statements of Operations and Comprehensive Income Location | 2018 | 2017 | |||||
Diesel fuel collars | ||||||||
Realized | Other income (expense) | $ | 6 | $ | (285 | ) | ||
Unrealized | Other income (expense) | 530 | (221 | ) | ||||
Total derivative instruments | $ | 536 | $ | (506 | ) |
• | Net sales decreased $27.0 million, or 2.1%. |
• | Comparable store sales for stores open at least fifteen months, including e-commerce, decreased $38.8 million, or 3.0%. |
• | Gross margin dollars decreased $12.3 million with a 10 basis point decrease in gross margin rate to 40.4% of sales. |
• | Selling and administrative expenses increased $22.1 million. As a percentage of net sales, selling and administrative expenses increased 250 basis points to 34.6% of net sales. |
• | Operating profit rate decreased 260 basis points to 3.6%. |
• | Diluted earnings per share decreased to $0.74 per share from $1.15 per share. |
• | Inventory increased by 1.6% or $13.5 million to $849.6 million from the first quarter of 2017. |
• | We declared and paid a quarterly cash dividend in the amount of $0.30 per common share in the first quarter of 2018 compared to quarterly cash dividend of $0.25 per common share paid in the first quarter of 2017. |
2018 | 2017 | ||||
Stores open at the beginning of the fiscal year | 1,416 | 1,432 | |||
Stores opened during the period | 1 | 2 | |||
Stores closed during the period | (2 | ) | — | ||
Stores open at the end of the period | 1,415 | 1,434 |
First Quarter | ||||
2018 | 2017 | |||
Net sales | 100.0 | % | 100.0 | % |
Cost of sales (exclusive of depreciation expense shown separately below) | 59.6 | 59.5 | ||
Gross margin | 40.4 | 40.5 | ||
Selling and administrative expenses | 34.6 | 32.1 | ||
Depreciation expense | 2.2 | 2.2 | ||
Operating profit | 3.6 | 6.2 | ||
Interest expense | (0.1 | ) | (0.1 | ) |
Other income (expense) | 0.0 | (0.0 | ) | |
Income before income taxes | 3.5 | 6.0 | ||
Income tax expense | 1.0 | 2.1 | ||
Net income | 2.5 | % | 4.0 | % |
First Quarter | ||||||||||||||||||||
($ in thousands) | 2018 | 2017 | Change | Comps | ||||||||||||||||
Furniture | $ | 356,974 | 28.2 | % | $ | 362,939 | 28.0 | % | $ | (5,965 | ) | (1.6 | )% | (1.8 | )% | |||||
Soft Home | 199,153 | 15.7 | 188,074 | 14.5 | 11,079 | 5.9 | 5.3 | |||||||||||||
Food | 189,424 | 14.9 | 195,274 | 15.1 | (5,850 | ) | (3.0 | ) | (2.0 | ) | ||||||||||
Consumables | 186,034 | 14.7 | 189,793 | 14.7 | (3,759 | ) | (2.0 | ) | (1.6 | ) | ||||||||||
Seasonal | 175,601 | 13.8 | 183,612 | 14.2 | (8,011 | ) | (4.4 | ) | (10.9 | ) | ||||||||||
Hard Home | 87,686 | 6.9 | 90,519 | 7.0 | (2,833 | ) | (3.1 | ) | (3.3 | ) | ||||||||||
Electronics, Toys, & Accessories | 73,111 | 5.8 | 84,759 | 6.5 | (11,648 | ) | (13.7 | ) | (14.1 | ) | ||||||||||
Net sales | $ | 1,267,983 | 100.0 | % | $ | 1,294,970 | 100.0 | % | $ | (26,987 | ) | (2.1 | )% | (3.0 | )% |
• | Soft Home experienced increases in net sales and comps which were primarily driven by continued improvement in the product assortment, quality, and perceived value by our customers, particularly in our bath and flooring departments. |
• | The Furniture category experienced decreased net sales and comps during the first quarter of 2018, primarily driven by challenges in our mattresses and upholstery departments. Substantial promotional pricing activity in our competitive set in the mattress department presented significant challenges to our sales in the President’s Day time period, and additionally, we are learning we need to change styles more frequently in our upholstery category to continue to drive sales. Partially offsetting the negative merchandise comps was the continued positive impact of our Easy Leasing lease-to-own program and our third party, private label credit card offering. |
• | Seasonal was negatively impacted by the later than usual increase in spring temperatures, particularly in the eastern half of the U.S. Our summer, lawn & garden, and spring holiday departments were particularly challenged by the later than usual increase in spring temperatures. This challenge impacts not only sales in this merchandise category but also has an impact on store-level traffic and transactions which has a corresponding impact on non-seasonal purchases as well. |
• | Our Consumables and Food categories experienced decreases in comps and net sales as this category remains highly competitive in the discount, grocery, and online marketplace. Additionally, lower than expected sales and store traffic generated by our Seasonal category has historically generated add-on sales in our customers' basket of goods. |
• | Hard Home experienced decreases in net sales and negative comps as a result of an intentionally narrowed assortment, particularly in our auto department. In several departments where we have not narrowed our assortment, such as appliances and tabletop, our net sales increased. |
• | The decreased net sales and negative comps in Electronics, Toys, & Accessories were a result of our intentionally narrowed assortment and reduced space allocation, particularly in our electronics and infant accessories departments, as we continue to refine our understanding of where we can be successful in this category. |
(In thousands) | 2018 | 2017 | Change | ||||||||
Net cash provided by operating activities | $ | 96,885 | $ | 85,454 | $ | 11,431 | |||||
Net cash used in investing activities | (65,437 | ) | (22,010 | ) | (43,427 | ) | |||||
Net cash used in financing activities | $ | (17,794 | ) | $ | (48,877 | ) | $ | 31,083 |
Calendar Year of Maturity | Diesel Fuel Derivatives | Fair Value | ||||||||
Puts | Calls | Asset (Liability) | ||||||||
(Gallons, in thousands) | (In thousands) | |||||||||
2018 | 2,700 | 2,700 | $ | 440 | ||||||
2019 | 2,400 | 2,400 | 479 | |||||||
2020 | — | — | — | |||||||
Total | 5,100 | 5,100 | $ | 919 |
(In thousands, except price per share data) | ||||||||||
Period | (a) Total Number of Shares Purchased (1)(2) | (b) Average Price Paid per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||
February 4, 2018 - March 3, 2018 | — | $ | — | — | $ | — | ||||
March 4, 2018 - March 31, 2018 | 44 | 48.47 | — | 100,000 | ||||||
April 1, 2018 - May 5, 2018 | 23 | 43.28 | — | 100,000 | ||||||
Total | 67 | $ | 46.66 | — | $ | 100,000 |
(1) | In March and April 2018, in connection with the vesting of certain outstanding restricted stock awards, restricted stock units, and performance share units, we acquired 43,501 and 23,241 of our common shares, respectively, which were withheld to satisfy minimum statutory income tax withholdings. |
(2) | The 2018 Repurchase Program is comprised of a March 7, 2018 authorization by our Board of Directors for the repurchase of up to $100.0 million of our common shares. During the first quarter of 2018, we did not acquire any common shares under the 2018 Repurchase Program. |
Exhibit No. | Document | ||
Separation Agreement with David J. Campisi. | |||
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
101** | XBRL Instance Document. |
BIG LOTS, INC. | |
By: /s/ Timothy A. Johnson | |
Timothy A. Johnson | |
Executive Vice President, Chief Administrative Officer and Chief Financial Officer | |
(Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and Duly Authorized Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Big Lots, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: /s/ Lisa M. Bachmann | |
Lisa M. Bachmann | |
Executive Vice President, Chief Merchandising and | |
Operating Officer | |
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Big Lots, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: /s/ Timothy A. Johnson | |
Timothy A. Johnson | |
Executive Vice President, Chief Administrative Officer | |
and Chief Financial Officer | |
(Principal Executive Officer and Principal Financial Officer) |
(i) | the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
(ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: /s/ Lisa M. Bachmann | |
Lisa M. Bachmann | |
Executive Vice President, Chief Merchandising and | |
Operating Officer | |
(Principal Executive Officer) |
(i) | the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
(ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: /s/ Timothy A. Johnson | |
Timothy A. Johnson | |
Executive Vice President, Chief Administrative Officer | |
and Chief Financial Officer | |
(Principal Executive Officer and Principal Financial Officer) |
Document and Entity Information Document - shares |
3 Months Ended | |
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May 05, 2018 |
Jun. 08, 2018 |
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Document Information [Line Items] | ||
Document Period End Date | May 05, 2018 | |
Entity Registrant Name | BIG LOTS INC | |
Entity Central Index Key | 0000768835 | |
Current Fiscal Year End Date | --02-02 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 40,341,282 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false |
Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
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May 05, 2018 |
Apr. 29, 2017 |
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Net sales | $ 1,267,983 | $ 1,294,970 |
Cost of sales (exclusive of depreciation expense shown separately below) | 756,025 | 770,695 |
Gross margin | 511,958 | 524,275 |
Selling and administrative expenses | 438,092 | 415,972 |
Depreciation expense | 28,529 | 28,595 |
Operating profit | 45,337 | 79,708 |
Interest expense | (1,576) | (1,009) |
Other income (expense) | 508 | (517) |
Income before income taxes | 44,269 | 78,182 |
Income tax expense | 13,030 | 26,670 |
Net income and comprehensive income | $ 31,239 | $ 51,512 |
Earnings per common share | ||
Earnings per common share - basic (in dollars per share) | $ 0.74 | $ 1.16 |
Earnings per common share - diluted (in dollars per share) | $ 0.74 | $ 1.15 |
Weighted-average common shares outstanding: | ||
Basic | 42,113 | 44,361 |
Dilutive effect of share-based awards | 105 | 367 |
Diluted | 42,218 | 44,728 |
Cash dividends declared per common share | $ 0.30 | $ 0.25 |
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands |
May 05, 2018 |
Feb. 03, 2018 |
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Statement of Financial Position [Abstract] | ||
Preferred Stock, Shares Authorized | 2,000 | 2,000 |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Shares Authorized | 298,000 | 298,000 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares, Issued | 117,495 | 117,495 |
Common Stock, Shares, Outstanding | 42,338 | 41,925 |
Treasury Stock, Shares | 75,157 | 75,570 |
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares |
3 Months Ended | 9 Months Ended | |
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May 05, 2018 |
Apr. 29, 2017 |
Feb. 03, 2018 |
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Statement of Stockholders' Equity [Abstract] | |||
Cash dividends declared per common share | $ 0.30 | $ 0.25 | $ 0.75 |
Basis of Presentation and Summary of Significant Accounting Policies |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES All references in this report to “we,” “us,” or “our” are to Big Lots, Inc. and its subsidiaries. We are a community retailer in the United States (“U.S.”). At May 5, 2018, we operated 1,415 stores in 47 states. We make available, free of charge, through the “Investor Relations” section of our website (www.biglots.com) under the “SEC Filings” caption, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as soon as reasonably practicable after we file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”). The contents of our websites are not part of this report. The accompanying consolidated financial statements and these notes have been prepared in accordance with the rules and regulations of the SEC for interim financial information. The consolidated financial statements reflect all normal recurring adjustments which management believes are necessary to present fairly our financial condition, results of operations, and cash flows for all periods presented. The consolidated financial statements, however, do not include all information necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Interim results may not necessarily be indicative of results that may be expected for, or actually result during, any other interim period or for the year as a whole. We have historically experienced, and expect to continue to experience, seasonal fluctuations, with a larger percentage of our net sales and operating profit realized in our fourth fiscal quarter. The accompanying consolidated financial statements and these notes should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended February 3, 2018 (“2017 Form 10-K”). Fiscal Periods Our fiscal year ends on the Saturday nearest to January 31, which results in fiscal years consisting of 52 or 53 weeks. Unless otherwise stated, references to years in this report relate to fiscal years rather than calendar years. Fiscal year 2018 (“2018”) is comprised of the 52 weeks that began on February 4, 2018 and will end on February 2, 2019. Fiscal year 2017 (“2017”) was comprised of the 53 weeks that began on January 29, 2017 and ended on February 3, 2018. The fiscal quarters ended May 5, 2018 (“first quarter of 2018”) and April 29, 2017 (“first quarter of 2017”) were both comprised of 13 weeks. Selling and Administrative Expenses Selling and administrative expenses include store expenses (such as payroll and occupancy costs) and costs related to warehousing, distribution, outbound transportation to our stores, advertising, purchasing, insurance, non-income taxes, accepting credit and debit cards, and overhead. Our selling and administrative expense rates may not be comparable to those of other retailers that include warehousing, distribution, and outbound transportation costs in cost of sales. Warehousing, distribution, and outbound transportation costs included in selling and administrative expenses were $42.9 million and $39.3 million for the first quarter of 2018 and the first quarter of 2017, respectively. Advertising Expense Advertising costs, which are expensed as incurred, consist primarily of television and print advertising, digital, internet or e-mail marketing and advertising, and in-store point-of-purchase signage and presentations. Advertising expenses are included in selling and administrative expenses. Advertising expenses were $22.0 million and $19.9 million for the first quarter of 2018 and the first quarter of 2017, respectively. Derivative Instruments We use derivative instruments to mitigate the risk of market fluctuations in the price of diesel fuel that we expect to consume to support our outbound transportation of inventory to our stores. We do not enter into derivative instruments for speculative purposes. Our derivative instruments may consist of collar or swap contracts. Our current derivative instruments do not meet the requirements for cash flow hedge accounting. Instead, our derivative instruments are marked-to-market to determine their fair value and any gains or losses are recognized currently in other income (expense) on our consolidated statements of operations and comprehensive income. Supplemental Cash Flow Disclosures The following table provides supplemental cash flow information for the first quarter of 2018 and 2017:
Reclassifications Merchandise Categories We periodically assess, and make minor adjustments to, our product hierarchy, which can impact the roll-up of our merchandise categories. Our financial reporting process utilizes the most current product hierarchy in reporting net sales by merchandise category for all periods presented. Therefore, there may be minor reclassifications of net sales by merchandise category compared to previously reported amounts. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). The update requires a lessee to recognize, on the balance sheet, a liability to make lease payments and a right-of-use asset representing a right to use the underlying asset for the lease term. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The ASU allows for either the modified or full retrospective method of adoption. However, the FASB recently issued Proposed ASU No. 2018-200, Leases (Topic 842), Targeted Improvements which would allow entities to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in the consolidated financial statements. The proposed ASU will allow entities to continue to apply the legacy guidance in Topic 840, Leases, including its disclosure requirements, in the comparative periods presented in the year the new leases standard is adopted. Entities that elect this option would still adopt the new leases standard using a modified retrospective transition method, but would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. We are currently evaluating the impact that this standard will have on our consolidated financial statements and which practical expedients to employ during adoption. We will not early adopt this standard. Recently Adopted Accounting Standards In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update provided a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Additionally, this guidance expanded related disclosure requirements. During the first quarter of 2018, we adopted the new standard on the retrospective method. The adoption had no impact on the timing of the recognition of our revenue or costs. The adoption did result in an immaterial adjustment to the amount of gross revenue and costs that we had previously reported, as certain of our vendor relationships had different principal versus agent treatment under the new standard. Additionally, we considered the disclosure requirements of the standard and determined that no additional disclosures were necessary. |
Bank Credit Facility |
3 Months Ended |
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May 05, 2018 | |
Debt Disclosure [Abstract] | |
BANK CREDIT FACILITY | BANK CREDIT FACILITY On July 22, 2011, we entered into a $700 million five-year unsecured credit facility, which was first amended on May 30, 2013. On May 28, 2015, we entered into a second amendment of the credit facility that, among other things, extended its term to May 30, 2020 (as amended, the “2011 Credit Agreement”). Borrowings under the 2011 Credit Agreement are available for general corporate purposes and working capital. The 2011 Credit Agreement includes a $30 million swing loan sublimit and a $150 million letter of credit sublimit. The interest rates, pricing and fees under the 2011 Credit Agreement fluctuate based on our debt rating. The 2011 Credit Agreement allows us to select our interest rate for each borrowing from multiple interest rate options. The interest rate options are generally derived from the prime rate or LIBOR. We may prepay revolving loans made under the 2011 Credit Agreement. The 2011 Credit Agreement contains financial and other covenants, including, but not limited to, limitations on indebtedness, liens and investments, as well as the maintenance of two financial ratios – a leverage ratio and a fixed charge coverage ratio. A violation of any of the covenants could result in a default under the 2011 Credit Agreement that would permit the lenders to restrict our ability to further access the 2011 Credit Agreement for loans and letters of credit and require the immediate repayment of any outstanding loans under the 2011 Credit Agreement. At May 5, 2018, we had $174.0 million of borrowings outstanding under the 2011 Credit Agreement while $8.6 million was committed to outstanding letters of credit, leaving $517.4 million available under the 2011 Credit Agreement. |
Fair Value Measurements |
3 Months Ended |
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May 05, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS In connection with our nonqualified deferred compensation plan, we had mutual fund investments of $32.6 million and $33.0 million at May 5, 2018 and February 3, 2018, respectively, which were recorded in other assets. These investments were classified as trading securities and were recorded at their fair value. The fair values of mutual fund investments were Level 1 valuations under the fair value hierarchy because each fund’s quoted market value per share was available in an active market. The fair values of our long-term obligations are estimated based on the quoted market prices for the same or similar issues and the current interest rates offered for similar instruments. These fair value measurements are classified as Level 2 within the fair value hierarchy. Given the variable rate features and relatively short maturity of the instruments underlying our long-term obligations, the carrying value of these instruments approximates their fair value. The carrying value of accounts receivable, accounts payable, and accrued expenses approximates fair value because of the relatively short maturity of these items. |
Shareholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY | SHAREHOLDERS’ EQUITY Earnings per Share There were no adjustments required to be made to the weighted-average common shares outstanding for purposes of computing basic and diluted earnings per share. At May 5, 2018, we excluded from securities outstanding for the computation of earnings per share both certain performance share units, as their performance conditions had not been attained as of May 5, 2018, and antidilutive stock options and restricted stock units. At April 29, 2017, there were no securities outstanding, which were excluded from the computation of earnings per share other than antidilutive stock options, restricted stock awards, restricted stock units, and performance share units. The stock options outstanding that were antidilutive and excluded from the computation of diluted earnings per share were immaterial for both the first quarter of 2018 and the first quarter of 2017. Antidilutive stock options generally consist of outstanding stock options where the exercise price per share is greater than the weighted-average market price per share for our common shares for each period. Antidilutive stock options, restricted stock awards, restricted stock units and performance share units are excluded from the calculation because they decrease the number of diluted shares outstanding under the treasury stock method. The restricted stock awards, restricted stock units, and performance share units that were antidilutive, as determined under the treasury stock method, were 0.1 million for the first quarter of 2018 and 0.1 million for the first quarter of 2017. Share Repurchase Programs On March 7, 2018, our Board of Directors authorized a share repurchase program providing for the repurchase of $100 million of our common shares (“2018 Repurchase Program”). Pursuant to the 2018 Repurchase Program, we may repurchase common 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 2018 Repurchase Program will be available to meet obligations under our equity compensation plans and for general corporate purposes. The 2018 Repurchase Program has no scheduled termination date and will be funded with cash and cash equivalents, cash generated from operations or, if needed, by drawing on the 2011 Credit Agreement. During the first quarter of 2018, we did not acquire any common shares under the 2018 Repurchase Program. Dividends The Company declared and paid cash dividends per common share during the first quarter of 2018 as follows:
The amount of dividends declared may vary from the amount of dividends paid in a period due to the vesting of restricted stock awards, restricted stock units, and performance share units. The payment of future dividends will be at the discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements, compliance with applicable laws and agreements and any other factors deemed relevant by our Board of Directors. |
Share-Based Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED PLANS | SHARE-BASED PLANS We have issued nonqualified stock options, restricted stock awards, restricted stock units, and performance share units under our shareholder-approved equity compensation plans. Our restricted stock awards, restricted stock units, and performance share units, as described below and in note 7 to the consolidated financial statements in our 2017 Form 10-K, are expensed and reported as non-vested shares. We recognized share-based compensation expense of $12.2 million and $7.9 million in the first quarter of 2018 and the first quarter of 2017, respectively. Non-vested Restricted Stock The following table summarizes the non-vested restricted stock awards and restricted stock units activity for the first quarter of 2018:
The non-vested restricted stock units granted in the first quarter of 2018 generally vest and are expensed on a ratable basis over three years from the grant date of the award, if certain threshold financial performance objectives are achieved and the grantee remains employed by us through the vesting dates. The non-vested restricted stock awards granted in 2013 have met the threshold financial performance objective and vested in the first quarter of 2018. Performance Share Units In the first quarter of 2018, we issued performance share units (“PSUs”) to certain members of management, which vest if certain financial performance objectives are achieved over a three-year performance period and the grantee remains employed by us during that period. The financial performance objectives for each fiscal year within the three-year performance period are approved by the Compensation Committee of our Board of Directors during the first quarter of the respective fiscal year. As a result of the process used to establish the financial performance objectives, we will only meet the requirements of establishing a grant date for the PSUs when we communicate the financial performance objectives for the third fiscal year of the award to the award recipients, which will then trigger the service inception date, the fair value of the awards, and the associated expense recognition period. If we meet the applicable threshold financial performance objectives over the three-year performance period and the grantee remains employed by us through the end of the performance period, the PSUs will vest on the first trading day after we file our Annual Report on Form 10-K for the last fiscal year in the performance period. We have begun or expect to begin recognizing expense related to PSUs as follows:
The number of shares to be distributed upon vesting of the PSUs depends on the average performance attained during the three-year performance period as compared to the targets defined by the Compensation Committee, and may result in the distribution of an amount of shares that is greater or less than the number of PSUs granted, as defined in the award agreement. During the first quarter of 2018, the PSUs issued in 2015 vested with an average performance attainment greater than the targets established. At May 5, 2018, we estimate the attainment of an average performance that is greater than the targets established for the PSUs issued in 2016. During the first quarters of 2018 and 2017, we recognized $8.6 million and $4.5 million in share-based compensation expense related to PSUs, respectively. The following table summarizes the activity related to PSUs for the first quarter of 2018:
Stock Options The following table summarizes stock option activity for the first quarter of 2018:
The stock options granted in prior years vest in equal amounts on the first four anniversaries of the grant date and have a contractual term of seven years. The following activity occurred under our share-based plans during the respective periods shown:
The total unearned compensation cost related to all share-based awards outstanding, excluding PSUs issued in 2017 and 2018, at May 5, 2018 was approximately $25.9 million. This compensation cost is expected to be recognized through March 2021 based on existing vesting terms with the weighted-average remaining expense recognition period being approximately 1.7 years from May 5, 2018. |
Income Taxes |
3 Months Ended |
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May 05, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES In 2017, and in accordance with Staff Accounting Bulletin No. 118, we recorded the provisional tax impacts of the Tax Cut and Jobs Creation Act (“TCJA”) on then existing current and deferred tax amounts. During the first quarter ended May 5, 2018, we made no adjustments to previously recorded provisional amounts related to the TCJA. We have estimated the reasonably possible expected net change in unrecognized tax benefits through May 4, 2019, based on (1) expected cash and noncash settlements or payments of uncertain tax positions, and (2) lapses of the applicable statutes of limitations for unrecognized tax benefits. The estimated net decrease in unrecognized tax benefits for the next 12 months is approximately $4.0 million. Actual results may differ materially from this estimate. |
Contingencies |
3 Months Ended |
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May 05, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES Shareholder and Derivative Matters On May 21, May 22 and July 2, 2012, three shareholder derivative lawsuits were filed in the U.S. District Court for the Southern District of Ohio against us and certain of our current and former outside directors and executive officers. The lawsuits were consolidated, and, on August 13, 2012, plaintiffs filed a consolidated complaint captioned In re Big Lots, Inc. Shareholder Litigation, No. 2:12-cv-00445 (S.D. Ohio) (the “Consolidated Derivative Action”), which generally alleged that the individual defendants traded in our common shares based on material, nonpublic information concerning our guidance for fiscal 2012 and the first quarter of fiscal 2012 and the director defendants failed to suspend our share repurchase program during such trading activity. The consolidated complaint asserted claims under Ohio law for breach of fiduciary duty, unjust enrichment, misappropriation of trade secrets and corporate waste and sought declaratory relief and disgorgement to us of proceeds from any wrongful sales of our common shares, plus attorneys’ fees and expenses. Following the Court’s April 14, 2015 ruling on defendants’ motion to dismiss, plaintiffs filed an amended complaint on August 3, 2015, asserting a single claim for corporate waste against Jeffrey Berger, Steven Fishman, David Kollat, Brenda Lauderback, Philip Mallott, Russell Solt, and Dennis Tishkoff. On October 18, 2013, a different shareholder filed an additional derivative lawsuit captioned Brosz v. Fishman et al., No. 1:13-cv-00753 (S.D. Ohio) (the “Brosz Action”) in the U.S. District Court for the Southern District of Ohio against us and each of the current and former outside directors and executive officers originally named in the 2012 shareholder derivative lawsuit. The plaintiff’s complaint generally alleged that the individual defendants traded in our common shares based on material, nonpublic information concerning our guidance for fiscal 2012 and the first quarter of fiscal 2012 and the director defendants failed to suspend our share repurchase program during such trading activity. The complaint asserted claims under Ohio law for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, corporate waste and misappropriation of trade secrets and sought damages, injunctive relief and disgorgement to us of proceeds from any wrongful sales of our common shares, plus attorneys’ fees and expenses. Following the Court’s April 14, 2015 ruling on defendants’ motion to dismiss, plaintiffs filed an amended complaint on August 17, 2015, asserting a single claim for corporate waste. On December 29, 2016, the Court ordered that the Brosz Action be consolidated with the Consolidated Derivative Action. On December 14, 2017, the parties entered into a Stipulation and Agreement of Settlement and plaintiffs filed an Unopposed Motion for Preliminary Approval of Derivative Settlement with the Court. On April 6, 2018, the Court issued an Order granting preliminary approval of the Settlement and setting a Fairness Hearing for July 26, 2018. On July 9, 2012, a putative securities class action lawsuit captioned Willis, et al. v. Big Lots, Inc., et al., 2:12-cv-00604 (S.D. Ohio) was filed in the U.S. District Court for the Southern District of Ohio on behalf of persons who acquired our common shares between February 2, 2012 and April 23, 2012. This lawsuit was filed against us, Lisa Bachmann, Mr. Cooper, Mr. Fishman and Mr. Haubiel. The complaint in the putative class action generally alleges that the defendants made statements concerning our financial performance that were false or misleading. The complaint asserted claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 and sought damages in an unspecified amount, plus attorneys’ fees and expenses. The lead plaintiff filed an amended complaint on April 4, 2013, which added Mr. Johnson as a defendant, removed Ms. Bachmann as a defendant, and extended the putative class period to August 23, 2012. Effective May 16, 2018, the parties executed a Stipulation of Settlement. On May 18, 2018, plaintiffs filed a Motion for Preliminary Approval of Class Action Settlement with the Court. That motion remains pending with the Court. In connection with the settlement of the Willis class action and the Consolidated Derivative Action, we recorded $34.5 million in other current assets and current insurance reserves for the estimated payout for this matter that is covered by insurance contracts. During the first quarter of 2018, we recorded a net charge of $3.5 million related to the expected cost of the settlements for the funds in excess of our insurance coverage. Other Matters We are involved in other legal actions and claims arising in the ordinary course of business. We currently believe that each such action and claim will be resolved without a material effect on our financial condition, results of operations, or liquidity. However, litigation involves an element of uncertainty. Future developments could cause these actions or claims to have a material effect on our financial condition, results of operations, and liquidity. |
Business Segment Data |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS SEGMENT DATA | BUSINESS SEGMENT DATA We use the following seven merchandise categories, which match our internal management and reporting of merchandise net sales: Food, Consumables, Soft Home, Hard Home, Furniture, Seasonal, and Electronics, Toys & Accessories. The Food category includes our beverage & grocery, candy & snacks, and specialty foods departments. The Consumables category includes our health, beauty and cosmetics, plastics, paper, chemical, and pet departments. The Soft Home category includes the home décor, frames, fashion bedding, utility bedding, bath, window, decorative textile, home organization and area rugs departments. The Hard Home category includes our small appliances, table top, food preparation, stationery, greeting cards, and home maintenance departments. The Furniture category includes our upholstery, mattress, ready-to-assemble, and case goods departments. The Seasonal category includes our lawn & garden, summer, Christmas, and other holiday departments. The Electronics, Toys, & Accessories category includes the electronics, jewelry, hosiery, and toys departments. We periodically assess, and potentially enact minor adjustments to, our product hierarchy, which can impact the roll-up of our merchandise categories. Our financial reporting process utilizes the most current product hierarchy in reporting net sales by merchandise category for all periods presented. Therefore, there may be minor reclassifications of net sales by merchandise category compared to previously reported amounts. The following table presents net sales data by merchandise category:
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Derivative Instruments |
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Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS We enter into derivative instruments designed to mitigate certain risks, including collar contracts to mitigate our risk associated with market fluctuations in diesel fuel prices. These contracts are used strictly to limit our risk exposure and not as speculative transactions. Our derivative instruments associated with diesel fuel do not meet the requirements for cash flow hedge accounting. Therefore, our derivative instruments associated with diesel fuel will be marked-to-market to determine their fair value and the associated gains and losses will be recognized currently in other income (expense) on our consolidated statements of operations and comprehensive income. Our outstanding derivative instrument contracts were comprised of the following:
The fair value of our outstanding derivative instrument contracts was as follows:
The effect of derivative instruments on the consolidated statements of operations and comprehensive income was as follows:
The fair values of our derivative instruments are determined using observable inputs from commonly quoted markets. These fair value measurements are classified as Level 2 within the fair value hierarchy. |
Subsequent Events |
3 Months Ended |
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May 05, 2018 | |
Subsequent Event [Line Items] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENTS On June 5, 2018, we utilized the entire authorization under our 2018 Repurchase Program to execute a $100.0 million accelerated share repurchase transaction (“ASR Transaction”) which reduced our common shares outstanding by 2.0 million initially. The total number of shares repurchased under the ASR Transaction will be based upon the volume weighted average price of our stock over a predetermined period and will not be known until that period ends and a final settlement occurs. The final settlement could increase or decrease the shares initially reduced from our outstanding common shares. |
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
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May 05, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Fiscal Period, Policy [Policy Text Block] | Fiscal Periods Our fiscal year ends on the Saturday nearest to January 31, which results in fiscal years consisting of 52 or 53 weeks. Unless otherwise stated, references to years in this report relate to fiscal years rather than calendar years. Fiscal year 2018 (“2018”) is comprised of the 52 weeks that began on February 4, 2018 and will end on February 2, 2019. Fiscal year 2017 (“2017”) was comprised of the 53 weeks that began on January 29, 2017 and ended on February 3, 2018. The fiscal quarters ended May 5, 2018 (“first quarter of 2018”) and April 29, 2017 (“first quarter of 2017”) were both comprised of 13 weeks. |
Selling, General and Administrative Expenses, Policy [Policy Text Block] | Selling and Administrative Expenses Selling and administrative expenses include store expenses (such as payroll and occupancy costs) and costs related to warehousing, distribution, outbound transportation to our stores, advertising, purchasing, insurance, non-income taxes, accepting credit and debit cards, and overhead. Our selling and administrative expense rates may not be comparable to those of other retailers that include warehousing, distribution, and outbound transportation costs in cost of sales. Warehousing, distribution, and outbound transportation costs included in selling and administrative expenses were $42.9 million and $39.3 million for the first quarter of 2018 and the first quarter of 2017, respectively. |
Advertising Costs, Policy [Policy Text Block] | Advertising Expense Advertising costs, which are expensed as incurred, consist primarily of television and print advertising, digital, internet or e-mail marketing and advertising, and in-store point-of-purchase signage and presentations. Advertising expenses are included in selling and administrative expenses. Advertising expenses were $22.0 million and $19.9 million for the first quarter of 2018 and the first quarter of 2017, respectively. |
Derivatives, Policy [Policy Text Block] | Derivative Instruments We use derivative instruments to mitigate the risk of market fluctuations in the price of diesel fuel that we expect to consume to support our outbound transportation of inventory to our stores. We do not enter into derivative instruments for speculative purposes. Our derivative instruments may consist of collar or swap contracts. Our current derivative instruments do not meet the requirements for cash flow hedge accounting. Instead, our derivative instruments are marked-to-market to determine their fair value and any gains or losses are recognized currently in other income (expense) on our consolidated statements of operations and comprehensive income. |
Comparability of Prior Year Financial Data, Policy [Policy Text Block] | Reclassifications Merchandise Categories We periodically assess, and make minor adjustments to, our product hierarchy, which can impact the roll-up of our merchandise categories. Our financial reporting process utilizes the most current product hierarchy in reporting net sales by merchandise category for all periods presented. Therefore, there may be minor reclassifications of net sales by merchandise category compared to previously reported amounts. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). The update requires a lessee to recognize, on the balance sheet, a liability to make lease payments and a right-of-use asset representing a right to use the underlying asset for the lease term. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The ASU allows for either the modified or full retrospective method of adoption. However, the FASB recently issued Proposed ASU No. 2018-200, Leases (Topic 842), Targeted Improvements which would allow entities to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in the consolidated financial statements. The proposed ASU will allow entities to continue to apply the legacy guidance in Topic 840, Leases, including its disclosure requirements, in the comparative periods presented in the year the new leases standard is adopted. Entities that elect this option would still adopt the new leases standard using a modified retrospective transition method, but would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. We are currently evaluating the impact that this standard will have on our consolidated financial statements and which practical expedients to employ during adoption. We will not early adopt this standard. Recently Adopted Accounting Standards In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update provided a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Additionally, this guidance expanded related disclosure requirements. During the first quarter of 2018, we adopted the new standard on the retrospective method. The adoption had no impact on the timing of the recognition of our revenue or costs. The adoption did result in an immaterial adjustment to the amount of gross revenue and costs that we had previously reported, as certain of our vendor relationships had different principal versus agent treatment under the new standard. Additionally, we considered the disclosure requirements of the standard and determined that no additional disclosures were necessary. |
Basis of Presentation and Summary of Significant Accounting Policies Supplemental Cash Flow Disclosures (Tables) |
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Other Significant Noncash Transactions [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Significant Noncash Transactions [Table Text Block] | The following table provides supplemental cash flow information for the first quarter of 2018 and 2017:
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Shareholders' Equity Dividends Declared (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends Declared [Table Text Block] | The Company declared and paid cash dividends per common share during the first quarter of 2018 as follows:
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Share-Based Plans (Tables) |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | The following table summarizes the non-vested restricted stock awards and restricted stock units activity for the first quarter of 2018:
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Schedule of Nonvested Performance-based Units Activity [Table Text Block] | The following table summarizes the activity related to PSUs for the first quarter of 2018:
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Share-based Compensation, Stock Options, Activity [Table Text Block] | The following table summarizes stock option activity for the first quarter of 2018:
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Schedule of Share Based Compensation, Additional Information [Table Text Block] | The following activity occurred under our share-based plans during the respective periods shown:
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Performance Shares [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share Based Compensation, Additional Information [Table Text Block] | We have begun or expect to begin recognizing expense related to PSUs as follows:
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Business Segment Data (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Sales by Category [Table Text Block] | The following table presents net sales data by merchandise category:
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Derivative Instruments (Tables) |
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Derivative [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block] | Our outstanding derivative instrument contracts were comprised of the following:
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The fair value of our outstanding derivative instrument contracts was as follows:
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Derivative Instruments, Gain (Loss) [Table Text Block] | The effect of derivative instruments on the consolidated statements of operations and comprehensive income was as follows:
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Basis of Presentation and Summary of Significant Accounting Policies (Details) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
May 05, 2018
USD ($)
store
|
Apr. 29, 2017
USD ($)
|
Feb. 02, 2019 |
Feb. 03, 2018 |
|
Components of Operating Cost and Expense [Abstract] | ||||
Number of Stores | store | 1,415 | |||
Number of States in which Entity Operates | 47 | |||
Operating Cycle | 52 or 53 weeks | |||
Fiscal Period Duration | 91 days | 91 days | 364 days | 371 days |
Distribution and Outbound Transportation Costs | $ 42.9 | $ 39.3 | ||
Advertising Expense | $ 22.0 | $ 19.9 |
Basis of Presentation and Summary of Significant Accounting Policies - Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 05, 2018 |
Apr. 29, 2017 |
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Supplemental disclosure of cash flow information: | ||
Cash paid for interest, including capital leases | $ 1,513 | $ 822 |
Cash paid for income taxes, excluding impact of refunds | 1,071 | 609 |
Gross proceeds from from borrowings under bank credit facility | 387,300 | 365,100 |
Gross payments of borrowings under bank credit facility | 413,100 | 355,800 |
Non-cash activity: | ||
Assets acquired under capital leases | 0 | 18 |
Accrued property and equipment | $ 13,078 | $ 8,835 |
Bank Credit Facility (Details) - 2011 Credit Agreement [Member] - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
May 30, 2015 |
May 05, 2018 |
May 28, 2015 |
|
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 700.0 | ||
Debt Instrument, Term | 5 years | ||
Line of Credit Facility, Swing Loan Sublimit | $ 30.0 | ||
Line of Credit Facility, Letter of Credit Sublimit | 150.0 | ||
Line of Credit Facility, Amount Outstanding | 174.0 | ||
Line of Credit Facility, Letters of Credit Outstanding | 8.6 | ||
Line of Credit Facility, Remaining Borrowing Capacity | $ 517.4 |
Fair Value Measurements (Details) - USD ($) $ in Millions |
May 05, 2018 |
Feb. 03, 2018 |
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Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading Securities, Fair Value Disclosure | $ 32.6 | $ 33.0 |
Shareholders' Equity - Earnings Per Share (Details) - shares |
3 Months Ended | |
---|---|---|
May 05, 2018 |
Apr. 29, 2017 |
|
Class of Stock [Line Items] | ||
Weighted Average Number Diluted Shares Outstanding Adjustment | 0 | 0 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Other Than Stock Options and Restricted Stock Awards, Amount | 0 | 0 |
Stock Options [Member] | ||
Class of Stock [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 0 |
Restricted Stock [Member] | ||
Class of Stock [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 100,000 | 100,000 |
Shareholders' Equity - Share Repurchase Programs (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jun. 05, 2018 |
May 05, 2018 |
Apr. 29, 2017 |
Feb. 03, 2018 |
Mar. 07, 2018 |
|
Class of Stock [Line Items] | |||||
Stock Repurchased During Period, Value | $ 11,193 | $ 48,508 | $ 117,249 | ||
Common Stock [Member] | 2018 Repurchase Program [Member] | |||||
Class of Stock [Line Items] | |||||
Stock Repurchase Program, Authorized Amount | $ 100,000 | ||||
Stock Repurchased During Period, Shares | 2,000 | ||||
Stock Repurchased During Period, Value | $ 100,000 | $ 0 |
Shareholders' Equity - Dividends Declared (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
May 05, 2018 |
Apr. 29, 2017 |
Feb. 03, 2018 |
|
Equity [Abstract] | |||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.30 | ||
Amount declared (Dividends) | $ 12,744 | $ 11,547 | $ 33,199 |
Amount paid (Dividends) | $ (14,386) | $ (12,683) |
Income Taxes (Details) $ in Millions |
May 05, 2018
USD ($)
|
---|---|
Income Tax Contingency [Line Items] | |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | $ (4.0) |
Contingencies (Details) $ in Millions |
3 Months Ended |
---|---|
May 05, 2018
USD ($)
| |
Pending Litigation [Member] | |
Loss Contingencies [Line Items] | |
Number of Shareholder Derivative Lawsuits | 3 |
Shareholder and Derivatives Matter [Member] | Settled Litigation [Member] | |
Loss Contingencies [Line Items] | |
Loss Contingency, Loss in Period | $ 3.5 |
Loss Contingency, Receivable, Current | $ 34.5 |
Business Segment Data (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
May 05, 2018 |
Apr. 29, 2017 |
|
Segment Reporting Information [Line Items] | ||
Net sales | $ 1,267,983 | $ 1,294,970 |
Furniture [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | 356,974 | 362,939 |
Soft Home [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | 199,153 | 188,074 |
Food [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | 189,424 | 195,274 |
Consumables [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | 186,034 | 189,793 |
Seasonal [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | 175,601 | 183,612 |
Hard Home [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | 87,686 | 90,519 |
Electronics, Toys, & Accessories [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 73,111 | $ 84,759 |
Subsequent Events (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 05, 2018 |
May 05, 2018 |
Apr. 29, 2017 |
Feb. 03, 2018 |
|
Subsequent Event [Line Items] | ||||
Stock Repurchased During Period, Value | $ 11,193 | $ 48,508 | $ 117,249 | |
Common Stock [Member] | 2018 Repurchase Program [Member] | ||||
Subsequent Event [Line Items] | ||||
Stock Repurchased During Period, Value | $ 100,000 | $ 0 | ||
Stock Repurchased During Period, Shares | 2,000 |
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