Big Lots Earnings 2020-10-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

big-20201031

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 001-08897

BIG LOTS INC

(Exact name of registrant as specified in its charter)

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)

(614) 278-6800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares	BIG	New York Stock Exchange

Indicate by check mark whether the registrant (1) 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), and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesþ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

The number of the registrant’s common shares, $0.01 par value, outstanding as of December 4, 2020, was 37,110,016.

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BIG LOTS, INC.

FORM 10-Q

FOR THE FISCAL QUARTER ENDED OCTOBER 31, 2020

TABLE OF CONTENTS


		Page
Part I. Financial Information		2

Item 1.	Financial Statements	2

a)	Consolidated Statements of Operations and Comprehensive Income for the Thirteen and Thirty-Nine Weeks Ended Oct ober 3 1, 2020 (Unaudited) and November 2 , 2019 (Unaudited)	2

b)	Consolidated Balance Sheets at October 3 1, 2020 (Unaudited) and February 1, 2020 (Unaudited)	3

c)	Consolidated Statements of Shareholders’ Equity for the Thirteen and Thirty-Nine Weeks Ended October 3 1, 2020 (Unaudited) and November 2 , 20 19 (Unaudited)	4

d)	Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended October 3 1, 2020 (Unaudited) and November 2 , 2019 (Unaudited)	5

e)	Notes to Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

Part II. Other Information		27

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	28

Signature		28

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Part I. Financial Information

Item 1. Financial Statements


BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Operations and Comprehensive Income (Unaudited) (In thousands, except per share amounts)


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Net sales	$	1,377,925	$	1,167,988	$	4,461,271	$	3,716,198
Cost of sales (exclusive of depreciation expense shown separately below)	820,032		704,602		2,649,058		2,235,535
Gross margin	557,893		463,386		1,812,213		1,480,663
Selling and administrative expenses	482,307		436,714		1,444,938		1,352,345
Depreciation expense	33,086		34,752		104,750		97,572
Gain on sale of distribution centers	—		(178,534)		(463,053)		(178,534)
Operating profit	42,500		170,454		725,578		209,280
Interest expense	(2,586)		(5,359)		(8,456)		(13,657)
Other income (expense)	(484)		(322)		(2,444)		(201)
Income before income taxes	39,430		164,773		714,678		195,422
Income tax expense	9,520		37,791		183,473		46,722
Net income and comprehensive income	$	29,910	$	126,982	$	531,205	$	148,700

Earnings per common share
Basic	$	0.79	$	3.25	$	13.69	$	3.78
Diluted	$	0.76	$	3.25	$	13.46	$	3.77

Weighted-average common shares outstanding
Basic	38,054		39,017		38,807		39,313
Dilutive effect of share-based awards	1,137		77		659		85
Diluted	39,191		39,094		39,466		39,398

Cash dividends declared per common share	$	0.30	$	0.30	$	0.90	$	0.90

The accompanying notes are an integral part of these consolidated financial statements.

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BIG LOTS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (In thousands, except par value)


	October 31, 2020		February 1, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	547,831	$	52,721
Inventories	1,089,068		921,266
Other current assets	84,814		89,962
Total current assets	1,721,713		1,063,949
Operating lease right-of-use assets	1,679,054		1,202,252
Property and equipment - net	721,668		849,147
Deferred income taxes	15,428		4,762
Other assets	66,533		69,171
Total assets	$	4,204,396	$	3,189,281

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	569,434	$	378,241
Current operating lease liabilities	215,027		212,144
Property, payroll, and other taxes	99,399		82,109
Accrued operating expenses	142,162		118,973
Insurance reserves	34,094		36,131
Accrued salaries and wages	40,049		39,292
Income taxes payable	52,813		3,930
Total current liabilities	1,152,978		870,820
Long-term debt	39,434		279,464
Noncurrent operating lease liabilities	1,491,571		1,035,377
Deferred income taxes	9,303		48,610
Insurance reserves	55,089		57,567
Unrecognized tax benefits	10,073		10,722
Other liabilities	189,646		41,257
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 37,088 shares and 39,037 shares, respectively	1,175		1,175
Treasury shares - 80,407 shares and 78,458 shares, respectively, at cost	(2,636,939)		(2,546,232)
Additional paid-in capital	627,301		620,728
Retained earnings	3,264,765		2,769,793
Total shareholders’ equity	1,256,302		845,464
Total liabilities and shareholders’ equity	$	4,204,396	$	3,189,281

The accompanying notes are an integral part of these consolidated financial statements.

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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
Thirteen Weeks Ended November 2, 2019
Balance - August 3, 2019	39,001	$	1,175	78,494	$	(2,547,556)	$	617,993	$	2,572,931	$	644,543
Comprehensive income	—	—		—	—		—		126,982		126,982
Dividends declared ($0.30 per share)	—	—		—	—		—		(11,954)		(11,954)
Purchases of common shares	(18)	—		18	(423)		—		—		(423)
Exercise of stock options	—	—		—	—		—		—		—
Restricted shares vested	47	—		(47)	1,526		(1,526)		—		—
Performance shares vested	6	—		(6)	204		(204)		—		—
Other	—	—		—	(2)		—		—		(2)
Share-based employee compensation expense	—	—		—	—		3,178		—		3,178
Balance - November 2, 2019	39,036	$	1,175	78,459	$	(2,546,251)	$	619,441	$	2,687,959	$	762,324

Thirty-Nine Weeks Ended November 2, 2019
Balance - February 2, 2019	40,042	$	1,175	77,453	$	(2,506,086)	$	622,685	$	2,575,267	$	693,041
Comprehensive income	—	—		—	—		—		148,700		148,700
Dividends declared ($0.90 per share)	—	—		—	—		—		(36,356)		(36,356)
Adjustment for ASU 2016-02	—	—		—	—		—		348		348
Purchases of common shares	(1,474)	—		1,474	(55,342)		—		—		(55,342)
Exercise of stock options	6	—		(6)	202		(2)		—		200
Restricted shares vested	201	—		(201)	6,521		(6,521)		—		—
Performance shares vested	261	—		(261)	8,459		(8,459)		—		—
Other	—	—		—	(5)		—		—		(5)
Share-based employee compensation expense	—	—		—	—		11,738		—		11,738
Balance - November 2, 2019	39,036	$	1,175	78,459	$	(2,546,251)	$	619,441	$	2,687,959	$	762,324

Thirteen Weeks Ended October 31, 2020
Balance - August 1, 2020	39,251	$	1,175	78,244	$	(2,537,359)	$	617,496	$	3,246,848	$	1,328,160
Comprehensive income	—	—		—	—		—		29,910		29,910
Dividends declared ($0.30 per share)	—	—		—	—		—		(11,993)		(11,993)
Purchases of common shares	(2,197)	—		2,197	(100,690)		—		—		(100,690)
Exercise of stock options	—	—		—	10		—		—		10
Restricted shares vested	34	—		(34)	1,102		(1,102)		—		—
Performance shares vested	—	—		—	—		—		—		—
Other	—	—		—	(2)		1		—		(1)
Share-based employee compensation expense	—	—		—	—		10,906		—		10,906
Balance - October 31, 2020	37,088	$	1,175	80,407	$	(2,636,939)	$	627,301	$	3,264,765	$	1,256,302

Thirty-Nine Weeks Ended October 31, 2020
Balance - February 1, 2020	39,037	$	1,175	78,458	$	(2,546,232)	$	620,728	$	2,769,793	$	845,464
Comprehensive income	—	—		—	—		—		531,205		531,205
Dividends declared ($0.90 per share)	—	—		—	—		—		(36,233)		(36,233)
Purchases of common shares	(2,316)	—		2,316	(102,641)		—		—		(102,641)
Exercise of stock options	3	—		(3)	101		7		—		108
Restricted shares vested	298	—		(298)	9,679		(9,679)		—		—
Performance shares vested	65	—		(65)	2,107		(2,107)		—		—
Other	1	—		(1)	47		8		—		55
Share-based employee compensation expense	—	—		—	—		18,344		—		18,344
Balance - October 31, 2020	37,088	$	1,175	80,407	$	(2,636,939)	$	627,301	$	3,264,765	$	1,256,302

The accompanying notes are an integral part of these consolidated financial statements.

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BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (In thousands)


	Thirty-Nine Weeks Ended
	October 31, 2020		November 2, 2019
Operating activities:
Net income	$	531,205	$	148,700
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	105,136		98,153
Non-cash lease amortization expense	175,174		171,564
Deferred income taxes	(49,973)		16,842
Non-cash impairment charge	920		3,292
Gain on disposition of property and equipment	(463,191)		(178,431)
Non-cash share-based compensation expense	18,344		11,738
Unrealized loss on fuel derivatives	1,635		126
Change in assets and liabilities:
Inventories	(167,801)		(147,702)
Accounts payable	191,193		79,092
Operating lease liabilities	(193,818)		(163,970)
Current income taxes	62,204		2,000
Other current assets	(7,738)		(4,880)
Other current liabilities	36,823		48,538
Other assets	2,420		(2,066)
Other liabilities	24,877		(2,448)
Net cash provided by operating activities	267,410		80,548
Investing activities:
Capital expenditures	(103,000)		(231,889)
Cash proceeds from sale of property and equipment	588,231		190,679
Other	(22)		(21)
Net cash provided by (used in) investing activities	485,209		(41,231)
Financing activities:
Net (repayments of) proceeds from long-term debt	(239,677)		140,926
Net financing proceeds from sale and leaseback	123,435		—
Payment of finance lease obligations	(2,962)		(72,479)
Dividends paid	(35,825)		(36,707)
Proceeds from the exercise of stock options	108		200
Payment for treasury shares acquired	(102,641)		(55,342)
Payments for debt issuance costs	—		(150)
Other	53		(5)
Net cash used in financing activities	(257,509)		(23,557)
Increase in cash and cash equivalents	495,110		15,760
Cash and cash equivalents:
Beginning of period	52,721		46,034
End of period	$	547,831	$	61,794

The accompanying notes are an integral part of these consolidated financial statements.

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BIG LOTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited)

NOTE 1 – 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 neighborhood discount retailer operating in the United States (“U.S.”). At October 31, 2020, we operated 1,411 stores in 47 states and an e-commerce platform. 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 website are not incorporated into or otherwise 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, including as a result of the COVID-19 coronavirus pandemic, which has disrupted and may continue to disrupt our business. We have historically experienced seasonal fluctuations, with a larger percentage of our net sales and operating profit realized in our fourth fiscal quarter. However, due to demand volatility we have experienced during the COVID-19 coronavirus pandemic, the seasonality of our 2020 results may differ from our historical experience. 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 1, 2020 (“2019 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 2020 (“2020”) is comprised of the 52 weeks that began on February 2, 2020 and will end on January 30, 2021. Fiscal year 2019 (“2019”) was comprised of the 52 weeks that began on February 3, 2019 and ended on February 1, 2020. The fiscal quarters ended October 31, 2020 (“third quarter of 2020”) and November 2, 2019 (“third quarter of 2019”) were both comprised of 13 weeks. The year-to-date periods ended October 31, 2020 (“year-to-date 2020") and November 2, 2019 (“year-to-date 2019”) were both comprised of 39 weeks.

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of amounts on deposit with financial institutions, outstanding checks, credit and debit card receivables, and highly liquid investments, including money market funds, treasury bills and commercial paper, which are unrestricted to withdrawal or use and which have an original maturity of three months or less. We review cash and cash equivalent balances on a bank by bank basis in order to identify book overdrafts. Book overdrafts occur when the aggregate amount of outstanding checks and electronic fund transfers exceed the cash deposited at a given bank. We reclassify book overdrafts, if any, to accounts payable on our consolidated balance sheets.

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/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 $66.3 million and $48.8 million for the third quarter of 2020 and the third quarter of 2019, respectively, and $178.3 million and $137.1 million for the year-to-date 2020 and the year-to-date 2019, respectively.

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Advertising Expense

Advertising costs, which are expensed as incurred, consist primarily of television and print advertising, digital, social media, internet and 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 $24.4 million and $18.2 million for the third quarter of 2020 and the third quarter of 2019, respectively, and $69.2 million and $57.9 million for the year-to-date 2020 and the year-to-date 2019, 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 year-to-date 2020 and the year-to-date 2019:


	Thirty-Nine Weeks Ended
(In thousands)	October 31, 2020		November 2, 2019
Supplemental disclosure of cash flow information:
Cash paid for interest	$	5,864	$	13,828
Cash paid for income taxes, excluding impact of refunds	171,155		28,379
Gross proceeds from long-term debt	514,500		1,425,400
Gross payments of long-term debt	754,177		1,284,474
Gross financing proceeds from sale and leaseback	133,999		—
Gross repayments of financing from sale and leaseback	10,564		—
Cash paid for operating lease liabilities	264,676		217,935
Non-cash activity:
Assets acquired under finance leases	—		70,831
Accrued property and equipment	19,608		23,906
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	661,182	$	1,489,449

Reclassification of 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.

Recently Adopted Accounting Standards

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15 Intangibles - Goodwill and Other - Internal-Use Software. This update evaluates the accounting for costs paid by a customer to implement a cloud computing arrangement. The new guidance aligns cloud computing arrangement implementation cost accounting with the capitalization requirements for internal-use software development, while leaving the accounting for service elements unchanged. On February 2, 2020, we adopted ASU 2018-15 on a prospective basis. The impact of the adoption was immaterial to the consolidated financial statements.

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NOTE 2 – DEBT

Bank Credit Facility

On August 31, 2018, we entered into a $700 million five-year unsecured credit facility (“2018 Credit Agreement”). The 2018 Credit Agreement expires on August 31, 2023. In connection with our entry into the 2018 Credit Agreement, we paid bank fees and other expenses in the aggregate amount of $1.5 million, which are being amortized over the term of the 2018 Credit Agreement.

Borrowings under the 2018 Credit Agreement are available for general corporate purposes, working capital, and to repay certain indebtedness. The 2018 Credit Agreement includes a $30 million swing loan sublimit, a $75 million letter of credit sublimit, a $75 million sublimit for loans to foreign borrowers, and a $200 million optional currency sublimit. The interest rates, pricing and fees under the 2018 Credit Agreement fluctuate based on our debt rating. The 2018 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 2018 Credit Agreement. The 2018 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. The covenants of the 2018 Credit Agreement do not restrict our ability to pay dividends. Additionally, we are subject to cross-default provisions associated with the synthetic lease for our distribution center in Apple Valley, CA. A violation of any of the covenants could result in a default under the 2018 Credit Agreement that would permit the lenders to restrict our ability to further access the 2018 Credit Agreement for loans and letters of credit and require the immediate repayment of any outstanding loans under the 2018 Credit Agreement. At October 31, 2020, we had no borrowings outstanding under the 2018 Credit Agreement, while $6.3 million was committed to outstanding letters of credit, leaving $693.7 million available under the 2018 Credit Agreement.

Secured Equipment Term Note

On August 7, 2019, we entered into a $70 million term note agreement (“2019 Term Note”), which is secured by the equipment at our Apple Valley, CA distribution center. The 2019 Term Note will expire on May 7, 2024. We are required to make monthly payments over the term of the 2019 Term Note and are permitted to prepay, subject to penalties, at any time. The interest rate on the 2019 Term Note is 3.3%. In connection with our entry into the 2019 Term Note, we paid debt issuance costs of $0.2 million.

Debt was recorded in our consolidated balance sheets as follows:


Instrument (In thousands)	October 31, 2020		February 1, 2020
2019 Term Note	$	53,815	$	64,291
2018 Credit Agreement	—		229,200
Total debt	$	53,815	$	293,491
Less current portion of long-term debt (included in Accrued operating expenses)	$	(14,381)	$	(14,027)
Long-term debt	$	39,434	$	279,464

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NOTE 3 – FAIR VALUE MEASUREMENTS

In 2020, we invested a portion of the proceeds from the sale of four distribution centers (see note 9 for additional information on the sale and leaseback transactions) in money market fund investments and commercial paper investments. These highly liquid investments were recorded in cash and cash equivalents in our consolidated balance sheets at their fair value. The fair values of the money market 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 the commercial paper investments were Level 2 valuations under the fair value hierarchy because the instruments’ market values were determined based on quoted market prices in active markets.

In connection with our nonqualified deferred compensation plan, we had mutual fund investments, which 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.

As of October 31, 2020, the fair value of our investments were recorded in our consolidated balance sheets as follows:


(In thousands)	Balance Sheet Location	October 31, 2020		Level 1		Level 2
Assets:
Money market funds	Cash and cash equivalents	$	175,070	$	175,070	$	—
Commercial paper	Cash and cash equivalents	29,996		—		29,996
Mutual funds - deferred compensation plan	Other Assets	$	30,777	$	30,777	$	—

As of February 1, 2020, the fair value of our investments were recorded in our consolidated balance sheets as follows:


(In thousands)	Balance Sheet Location	February 1, 2020		Level 1		Level 2
Assets:
Money market funds	Cash and cash equivalents	$	—	$	—	$	—
Commercial paper	Cash and cash equivalents	—		—		—
Mutual funds - deferred compensation plan	Other Assets	$	33,715	$	33,715	$	—

The fair values of our long-term obligations under the 2018 Credit Agreement are estimated based on 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. The carrying value of these instruments was $0 as of October 31, 2020.

The fair value of our long-term obligations under the 2019 Term Note are based on quoted market prices and are classified as Level 2 within the fair value hierarchy. The carrying value of the instrument approximates its fair value.

The carrying value of accounts receivable and accounts payable approximates fair value because of the relatively short maturity of these items.

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NOTE 4 – 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 October 31, 2020 and November 2, 2019, we excluded from securities outstanding for the computation of earnings per share, antidilutive stock options, restricted stock units, and performance share units, for which the minimum applicable performance conditions had not been attained as of October 31, 2020 and November 2, 2019, respectively. For the third quarter of 2020, it was determined that an immaterial amount of stock options outstanding were antidilutive and excluded from the computation of diluted earnings per share, and for the third quarter of 2019, there were 0.1 million stock options outstanding that were antidilutive. Antidilutive stock options for the year-to-date 2020 and the year-to-date 2019 were immaterial and 0.1 million, respectively. 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 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 units and performance share units that were antidilutive, as determined under the treasury stock method, were immaterial and 0.5 million for the third quarter of 2020 and the third quarter of 2019, respectively, and immaterial and 0.4 million for the year-to-date 2020 and the year-to-date 2019, respectively.

Share Repurchase Programs

On August 27, 2020, our Board of Directors authorized the repurchase of up to $500 million of our common shares (“2020 Repurchase Authorization”). Pursuant to the 2020 Repurchase Authorization, we may repurchase 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 2020 Repurchase Authorization will be available to meet obligations under our equity compensation plans and for general corporate purposes. The 2020 Repurchase Authorization has no scheduled termination date.

During the third quarter of 2020, we acquired approximately 2.2 million of our outstanding common shares for $100.0 million under the 2020 Repurchase Authorization.

Dividends

The Company declared and paid cash dividends per common share during the quarterly periods presented as follows:


	Dividends Per Share		Amount Declared		Amount Paid
2020:			(In thousands)		(In thousands)
First quarter	$	0.30	$	11,905	$	12,478
Second quarter	0.30		12,335		11,807
Third quarter	0.30		11,993		11,540
Total	$	0.90	$	36,233	$	35,825

The amount of dividends declared may vary from the amount of dividends paid in a period due to the vesting of restricted stock units and performance share units, which accrue dividend equivalent rights that are paid when the award vests. 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.

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NOTE 5 – SHARE-BASED PLANS

We have issued nonqualified stock options, restricted stock units, and performance share units under our shareholder-approved equity compensation plans. At October 31, 2020, the number of nonqualified stock options outstanding was immaterial. Our restricted stock units and performance share units, as described below, are expensed and reported as non-vested shares. We recognized share-based compensation expense of $10.9 million and $3.2 million in the third quarter of 2020 and the third quarter of 2019, respectively, and $18.3 million and $11.7 million for the year-to-date 2020 and the year-to-date 2019, respectively.

Non-vested Restricted Stock Units

The following table summarizes the non-vested restricted stock units activity for the year-to-date 2020:


	Number of Shares	Weighted Average Grant-Date Fair Value Per Share
Outstanding non-vested restricted stock units at February 1, 2020	648,510	$	38.52
Granted	921,309	15.82
Vested	(239,856)	43.07
Forfeited	(1,511)	38.06
Outstanding non-vested restricted stock units at May 2, 2020	1,328,452	$	21.95
Granted	74,244	33.20
Vested	(24,498)	27.99
Forfeited	(41,074)	25.26
Outstanding non-vested restricted stock units at August 1, 2020	1,337,124	$	22.35
Granted	33,868	49.83
Vested	(33,628)	37.45
Forfeited	(108,120)	21.93
Outstanding non-vested restricted stock units at October 31, 2020	1,229,244	$	22.68

The non-vested restricted stock units granted in the year-to-date 2020 generally vest and are expensed on a ratable basis over three years from the grant date of the award, if a threshold financial performance objective is achieved and the grantee remains employed by us through the vesting dates.

Non-vested Restricted Stock Units Granted to Non-Employee Directors

In the second quarter of 2020, 44,229 common shares underlying the restricted stock units granted in 2019 to the non-employee members of our Board vested on the trading day immediately preceding our 2020 Annual Meeting of Shareholders (“2020 Annual Meeting”). These units were part of the annual compensation of the non-employee directors of the Board. Additionally, in the second quarter of 2020, the chairman of our Board received an annual restricted stock unit grant having a grant date fair value of approximately $210,000. The remaining non-employees elected to our Board at our 2020 Annual Meeting each received an annual restricted stock unit grant having a grant date fair value of approximately $145,000. The 2020 restricted stock units will vest on the earlier of (1) the trading day immediately preceding our 2021 Annual Meeting of Shareholders, or (2) the non-employee director’s death or disability. However, the non-employee directors will forfeit their restricted stock units if their service on the Board terminates before either vesting event occurs.

Performance Share Units

In 2020, we awarded performance share units with a restriction feature to certain members of senior management, which vest based on the achievement of share price performance goals and a minimum service requirement of one year (“RPSUs”). The RPSUs have a contractual term of three years. We use a Monte Carlo simulation to estimate the fair value of the RPSUs on the grant date and recognize expense over the derived service period. If the share price performance goals applicable to the RPSUs are not achieved prior to expiration, the unvested portion of the awards will be forfeited. Shares issued in connection with vested RPSUs are generally restricted from sale, transfer, or other disposition prior to the third anniversary of the grant date except under certain circumstances, including death, disability, or change in control.

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Prior to 2020, we awarded performance share units (“PSUs”) to certain members of management, which will vest if certain financial performance objectives are achieved over a three-year performance period and the grantee remains employed by us during the performance period. Typically, the financial performance objectives for each fiscal year within the three-year performance period will be approved by the Compensation Committee of our Board of Directors during the first quarter of the respective fiscal year. In 2020, due to the lack of business visibility resulting from the COVID-19 pandemic, the Compensation Committee chose to defer the establishment of the 2020 performance objectives until the third quarter of 2020.

As a result of the process used to establish the financial performance objectives, we will only meet the requirements for 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.

In the third quarter of 2020, the Compensation Committee established the financial performance objectives for the third fiscal year of PSUs issued in 2018; therefore, the 2018 PSUs were deemed granted in August 2020.

We have begun or expect to begin recognizing expense related to PSUs and RPSUs as follows:

Issue Year

Outstanding PSUs and RPSUs at October 31, 2020

Actual Grant Date

Expected Valuation (Grant) Date

Actual or Expected Expense Period

2018

136,199

August 2020

Fiscal 2020

2019

266,118

March 2021

Fiscal 2021

2020

339,568

April 2020

Fiscal 2020 - 2021

Total

741,885

The number of shares to be distributed upon vesting of the PSUs depends on the average performance attained during the three-year performance period compared to the performance targets established 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 related award agreement. We recognized $7.8 million and $

Price	24.25	EPS	7
Shares	39	P/E	4
MCap	955	P/FCF	12
Net Debt	453	EBIT	317
TEV	1,409	TEV/EBIT	4
TTM 2019-11-02, in MM, except price, ratios

10-Q	2020-10-31	Filed 2020-12-09
10-Q	2020-08-01	Filed 2020-09-09
10-Q	2020-05-02	Filed 2020-06-10
10-K	2020-02-01	Filed 2020-03-31
10-Q	2019-11-02	Filed 2019-12-11
10-Q	2019-08-03	Filed 2019-09-11
10-Q	2019-05-04	Filed 2019-06-12
10-K	2019-02-02	Filed 2019-04-02
10-Q	2018-11-03	Filed 2018-12-12
10-Q	2018-08-04	Filed 2018-09-12
10-Q	2018-05-05	Filed 2018-06-13
10-K	2018-02-03	Filed 2018-04-03
10-Q	2017-10-28	Filed 2017-12-06
10-Q	2017-07-29	Filed 2017-09-06
10-Q	2017-04-29	Filed 2017-06-07
10-K	2017-01-28	Filed 2017-03-28
10-Q	2016-10-29	Filed 2016-12-07
10-Q	2016-07-30	Filed 2016-09-07
10-Q	2016-04-30	Filed 2016-06-08
10-K	2016-01-30	Filed 2016-03-29
10-Q	2015-10-31	Filed 2015-12-09
10-Q	2015-08-01	Filed 2015-09-09
10-Q	2015-05-02	Filed 2015-06-10
10-K	2015-01-31	Filed 2015-03-31
10-Q	2014-11-01	Filed 2014-12-10
10-Q	2014-08-02	Filed 2014-09-10
10-Q	2014-05-03	Filed 2014-06-11
10-K	2014-02-01	Filed 2014-04-01
10-Q	2013-08-03	Filed 2013-09-10
10-Q	2013-05-04	Filed 2013-06-12
10-K	2013-02-02	Filed 2013-04-02
10-Q	2012-10-27	Filed 2012-12-05
10-Q	2012-07-28	Filed 2012-09-05
10-Q	2012-04-28	Filed 2012-06-06
10-K	2012-01-28	Filed 2012-03-26
10-Q	2011-10-29	Filed 2011-12-07
10-Q	2011-07-30	Filed 2011-09-07
10-Q	2011-04-30	Filed 2011-06-07
10-K	2011-01-29	Filed 2011-03-30
10-Q	2010-10-30	Filed 2010-12-08
10-Q	2010-07-31	Filed 2010-09-08
10-Q	2010-05-01	Filed 2010-06-10
10-K	2010-01-30	Filed 2010-03-30

EX-10.1	big-20201031xex101.htm
EX-31.1	big-20201031xex311.htm
EX-31.2	big-20201031xex312.htm
EX-32.1	big-20201031xex321.htm
EX-32.2	big-20201031xex322.htm

8-K	2020-10-01
8-K	2020-09-29
8-K	2020-08-27
8-K	2020-06-26
8-K	2020-06-12
8-K	2020-06-10
8-K	2020-05-28
8-K	2020-04-30
8-K	2020-04-22
8-K	2020-04-06
8-K	2020-04-03
8-K	2020-02-26
8-K	2019-12-04
8-K	2019-08-28
8-K	2019-06-28
8-K	2019-06-21
8-K	2019-05-29
8-K	2019-03-05
8-K	2018-12-07
8-K	2018-12-04
8-K	2018-08-29
8-K	2018-08-21
8-K	2018-06-29
8-K	2018-06-27
8-K	2018-05-31
8-K	2018-04-16
8-K	2018-04-12
8-K	2018-03-07

BIG 10Q Quarterly Report

Big Lots Earnings 2020-10-31