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 Quarter Ended May 1, 2004
Commission file number 001-13143
BJ’S WHOLESALE CLUB, INC.
(Exact name of Registrant as specified in its charter)
| DELAWARE | 04-3360747 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| One Mercer Road Natick, Massachusetts |
01760 | |
| (Address of principal executive offices) | (Zip Code) | |
(508) 651-7400
(Registrant’s telephone number, including area code)
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. Yes x No ¨.
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨.
The number of shares of the Registrant’s common stock outstanding as of May 29, 2004: 69,516,029
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BJ’S WHOLESALE CLUB, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Thirteen Weeks Ended |
||||||||
| May 1, 2004 |
May 3, 2003 |
|||||||
| (Dollars in Thousands except Per Share Amounts) | ||||||||
| Net sales |
$ | 1,610,958 | $ | 1,437,549 | ||||
| Membership fees and other |
36,666 | 33,572 | ||||||
| Total revenues |
1,647,624 | 1,471,121 | ||||||
| Cost of sales, including buying and occupancy costs |
1,497,600 | 1,333,423 | ||||||
| Selling, general and administrative expenses |
123,200 | 113,916 | ||||||
| Preopening expenses |
219 | 3,989 | ||||||
| Operating income |
26,605 | 19,793 | ||||||
| Interest expense, net |
(111 | ) | (68 | ) | ||||
| Gain (loss) on contingent lease obligations |
(73 | ) | 814 | |||||
| Income from continuing operations before income taxes and cumulative effect of accounting principle changes |
26,421 | 20,539 | ||||||
| Provision for income taxes |
10,171 | 7,870 | ||||||
| Income from continuing operations before cumulative effect of accounting principle changes |
16,250 | 12,669 | ||||||
| Loss from discontinued operations, net of income tax benefit of $88 and $99 |
(132 | ) | (149 | ) | ||||
| Income before cumulative effect of accounting principle changes |
16,118 | 12,520 | ||||||
| Cumulative effect of accounting principle changes |
— | (1,253 | ) | |||||
| Net income |
$ | 16,118 | $ | 11,267 | ||||
| Basic and diluted earnings per common share: |
||||||||
| Income from continuing operations before cumulative effect of accounting principle changes |
$ | 0.23 | $ | 0.18 | ||||
| Loss from discontinued operations |
— | — | ||||||
| Cumulative effect of accounting principle changes |
— | (0.02 | ) | |||||
| Net income |
$ | 0.23 | $ | 0.16 | ||||
| Number of common shares for earnings per share computations: |
||||||||
| Basic |
69,809,300 | 69,288,640 | ||||||
| Diluted |
70,362,007 | 69,396,765 | ||||||
| Pro forma amounts assuming accounting principle changes are applied retroactively: |
||||||||
| Net income |
$ | 16,118 | $ | 12,520 | ||||
| Basic and diluted earnings per common share |
$ | 0.23 | $ | 0.18 | ||||
The accompanying notes are an integral part of the financial statements.
-2-
BJ’S WHOLESALE CLUB, INC.
CONSOLIDATED BALANCE SHEETS
| May 1, 2004 |
January 31, 2004 |
May 3, 2003 |
||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| (Dollars in Thousands) | ||||||||||||
| ASSETS |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 75,954 | $ | 78,720 | $ | 42,100 | ||||||
| Accounts receivable |
63,332 | 78,672 | 57,100 | |||||||||
| Merchandise inventories |
707,651 | 709,362 | 659,046 | |||||||||
| Current deferred income taxes |
18,998 | 19,326 | 19,280 | |||||||||
| Prepaid expenses |
19,465 | 22,640 | 17,253 | |||||||||
| Total current assets |
885,400 | 908,720 | 794,779 | |||||||||
| Property at cost: |
||||||||||||
| Land and buildings |
541,127 | 539,885 | 498,452 | |||||||||
| Leasehold costs and improvements |
121,900 | 121,128 | 105,428 | |||||||||
| Furniture, fixtures and equipment |
490,818 | 479,444 | 432,892 | |||||||||
| 1,153,845 | 1,140,457 | 1,036,772 | ||||||||||
| Less: accumulated depreciation and amortization |
375,500 | 351,153 | 316,072 | |||||||||
| 778,345 | 789,304 | 720,700 | ||||||||||
| Other assets |
23,016 | 23,085 | 23,292 | |||||||||
| Total assets |
$ | 1,686,761 | $ | 1,721,109 | $ | 1,538,771 | ||||||
| LIABILITIES |
||||||||||||
| Current liabilities: |
||||||||||||
| Short-term debt |
$ | — | $ | — | $ | 40,000 | ||||||
| Current installments of long-term debt |
407 | 400 | — | |||||||||
| Accounts payable |
488,944 | 506,988 | 442,279 | |||||||||
| Accrued expenses and other current liabilities |
184,473 | 205,669 | 168,912 | |||||||||
| Accrued federal and state income taxes |
30,462 | 37,928 | 21,657 | |||||||||
| Closed store lease obligations due within one year |
8,428 | 10,448 | 21,214 | |||||||||
| Total current liabilities |
712,714 | 761,433 | 694,062 | |||||||||
| Long-term debt, less portion due within one year |
3,521 | 3,625 | — | |||||||||
| Noncurrent closed store lease obligations |
11,055 | 11,463 | 21,663 | |||||||||
| Other noncurrent liabilities |
61,468 | 58,199 | 52,894 | |||||||||
| Deferred income taxes |
35,429 | 34,168 | 18,008 | |||||||||
| Commitments and contingencies |
— | — | — | |||||||||
| STOCKHOLDERS’ EQUITY |
||||||||||||
| Preferred stock, par value $.01, authorized 20,000,000 shares, no shares issued |
— | — | — | |||||||||
| Common stock, par value $.01, authorized 180,000,000 shares, issued 74,410,190 shares |
744 | 744 | 744 | |||||||||
| Additional paid-in capital |
51,039 | 52,683 | 62,008 | |||||||||
| Retained earnings |
980,651 | 964,533 | 872,959 | |||||||||
| Treasury stock, at cost, 4,830,655, 4,620,587 and 5,117,583 shares |
(169,860 | ) | (165,739 | ) | (183,567 | ) | ||||||
| Total stockholders’ equity |
862,574 | 852,221 | 752,144 | |||||||||
| Total liabilities and stockholders’ equity |
$ | 1,686,761 | $ | 1,721,109 | $ | 1,538,771 | ||||||
The accompanying notes are an integral part of the financial statements.
-3-
BJ’S WHOLESALE CLUB, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Thirteen Weeks Ended |
||||||||
| May 1, 2004 |
May 3, 2003 |
|||||||
| (Dollars in Thousands) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income |
$ | 16,118 | $ | 11,267 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| (Gain) loss on contingent lease obligations |
73 | (814 | ) | |||||
| Provision for store closing costs |
220 | 248 | ||||||
| Cumulative effect of accounting principle changes |
— | 1,253 | ||||||
| Depreciation and amortization of property |
24,413 | 20,256 | ||||||
| Loss on property disposals |
20 | 194 | ||||||
| Other noncash items (net) |
245 | 216 | ||||||
| Deferred income taxes |
1,589 | 6,803 | ||||||
| Tax benefit from exercise of stock options |
217 | — | ||||||
| Increase (decrease) in cash due to changes in: |
||||||||
| Accounts receivable |
15,340 | 6,029 | ||||||
| Merchandise inventories |
1,711 | (27,511 | ) | |||||
| Prepaid expenses |
3,175 | 1,773 | ||||||
| Other assets |
9 | (492 | ) | |||||
| Accounts payable |
(12,058 | ) | 19,968 | |||||
| Accrued expenses |
(4,607 | ) | 2,018 | |||||
| Accrued income taxes |
(7,466 | ) | (3,311 | ) | ||||
| Closed store lease obligations |
(2,728 | ) | (14,890 | ) | ||||
| Other noncurrent liabilities |
3,111 | 207 | ||||||
| Net cash provided by operating activities |
39,382 | 23,214 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Property additions |
(30,446 | ) | (55,636 | ) | ||||
| Proceeds from property disposals |
390 | 15 | ||||||
| Net cash used in investing activities |
(30,056 | ) | (55,621 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Borrowing of short-term debt, net |
— | 40,000 | ||||||
| Repayment of long-term debt |
(97 | ) | — | |||||
| Proceeds from issuance of common stock |
1,951 | 51 | ||||||
| Purchase of treasury stock |
(7,960 | ) | — | |||||
| Changes in book overdrafts |
(5,986 | ) | 1,773 | |||||
| Net cash provided by (used in) financing activities |
(12,092 | ) | 41,824 | |||||
| Net increase (decrease) in cash and cash equivalents |
(2,766 | ) | 9,417 | |||||
| Cash and cash equivalents at beginning of year |
78,720 | 32,683 | ||||||
| Cash and cash equivalents at end of period |
$ | 75,954 | $ | 42,100 | ||||