Big 5 Sporting Goods (BGFV) 8-K Big 5 Sporting Goods Corporation Announces Preliminary Fiscal 2004 Fourth Quarter and Full Year Results

Exhibit 99.1

Contacts:
Big 5 Sporting Goods Corporation
Charles Kirk
Sr. Vice President and Chief Financial Officer
(310) 536-0611

John Mills
Integrated Corporate Relations, Inc.
(310) 395-2215

BIG 5 SPORTING GOODS CORPORATION ANNOUNCES PRELIMINARY FISCAL 2004 FOURTH QUARTER AND FULL YEAR RESULTS

•   Record Full Fiscal Year Net Sales of $778.9 Million, up 7.8% on a Comparative 52-week basis from Fiscal 2003

•   36^th Consecutive Quarter of Same Store Sales Growth

•   Announces Anticipated Restatement of Prior Financial Statements to Correct Accounting for Certain Payables

•   Declares Quarterly Cash Dividend

•   Conference Call Scheduled For Today at 2:00 p.m. (Pacific); Simultaneous Webcast at www.big5sportinggoods.com

El Segundo, CA – February 9, 2005 –Big 5 Sporting Goods Corporation (Nasdaq: BGFV) today reported preliminary financial results for the fiscal 2004 fourth quarter and full year that ended on January 2, 2005.

For the 2004 14-week fiscal fourth quarter, net sales increased by $25.8 million, or 13.4%, to $217.6 million from $191.8 million in the corresponding 13-week fourth quarter of 2003. On a comparative 13-week basis for both fiscal 2004 and 2003, net sales increased 6.0% and same store sales increased 2.6%. The 2.6% same store sales increase represented the Company’s thirty-sixth consecutive quarterly increase in same store sales over comparable prior periods and includes a 0.5% negative impact from the effect of a sales return allowance that was implemented in the fiscal third quarter of 2004. Net income for the 2004 fourth quarter increased to $11.6 million, or $0.51 per diluted share, compared with net income, as preliminarily restated, of $8.6 million, or $0.37 per diluted share, in the same period last year. Net income for the 2004 fourth fiscal quarter includes a charge of $0.8 million, net of taxes, or $0.03 per diluted share, associated with the redemption of $33.1 million principal amount of the Company’s 10.875% senior notes, and net income for the 2003 fourth fiscal quarter includes a charge of $1.2 million, net of taxes, or $0.06 per diluted share, associated with the redemption of $35.0 million principal amount of these notes.

For fiscal 2004, which included 53 weeks, net sales increased by $69.2 million, or 9.8%, to $778.9 million from $709.7 million for the corresponding 52-week fiscal year 2003. On a comparative 52-week basis for both fiscal 2004 and 2003, net sales increased 7.8% and same store sales increased 3.5%. The 3.5% same store sales increase includes a 0.4% negative impact from the effect of a sales return allowance that was implemented in the fiscal third quarter of 2004. Net income for fiscal 2004 increased to $34.2 million, or $1.50 per diluted share, compared with net income for fiscal 2003, as preliminarily restated, of $24.9 million, or $1.10 per diluted share. Net income for fiscal 2004 includes a charge of $1.3 million, net of taxes, or $0.06 per diluted share, associated with the

redemption of $48.1 million principal amount of the Company’s 10.875% senior notes, and net income for fiscal 2003 includes a charge of $2.1 million, net of taxes, or $0.09 per diluted share, associated with the redemption of $55.0 million principal amount of these notes.

Steven G. Miller, Big 5’s Chairman, President and Chief Executive Officer, said, “We are pleased to report the continuation of our consistently strong performance for the fourth quarter and full year of 2004. We are particularly pleased to have achieved our fourth quarter results despite unseasonably warm and dry weather in the majority of our markets during the weeks preceding Christmas, which negatively impacted our winter categories. Our apparel category was down in the low single digits for the quarter, but that softness was more than offset by our performance in the hardgoods category, which was up in the low single digits, and our performance in the footwear category, which was up in the mid-to-high single digit range. Our ability to consistently generate significant cash flow from operations, combined with our significant borrowing capacity under our bank facility, enabled us during the fourth quarter to pay off the remaining $33.1 million of our 10.875% senior notes, which had an original principal amount of $131.0 million in 1997. We believe we are well positioned to continue our strong performance in 2005.”

Big 5’s results are preliminary because, during the course of the year-end closing process, the Company identified the need to correct prior period reconciliations of certain accounts within its accounts payable. Management has made an internal evaluation of the resulting impact and has included preliminary financial results reflecting these estimates. In addition, Big 5 and its Audit Committee are, in consultation with its independent registered public accounting firm, KPMG LLP, reviewing prior financial statements filed with the Securities and Exchange Commission to determine if any other adjustments or corrections are necessary. Big 5 has not identified any other necessary adjustments at this time.

Accounting Restatements

In the course of its annual year-end closing process, Big 5 identified an error in an account within accounts payable as reported in its financial statements. This account reflects as credits items received into inventory at Big 5’s distribution center. Credits in this accounts payable account are cleared as the Company’s receiving documentation is matched against vendor invoices or, in the case of inventory paid for by prior draws on letters of credit, commercial invoices. The process of clearing credits related to commercial invoices involves matching those credits in the accounts payable account against corresponding items, in a separate accounts payable contra–liability account, which were previously entered at the time draws were made against letters of credit.

The error occurred when certain credits in the accounts payable account related to commercial invoices were not matched on a timely basis with the corresponding letter of credit items in the contra-liability account as required by Big 5’s established accounting procedures. Certain of the Company’s accounting personnel failed to understand that, even though vendors had already been paid by prior draws on letters of credit and inventories had been properly accounted for, timely reconciliation of all related commercial invoices still was necessary for proper internal bookkeeping. This failure created unmatched credits in accounts payable for each of the Company’s 2000, 2001, 2002 and 2003 fiscal years, which were erroneously assumed to be over-accruals. These assumed over-accruals were reversed at year end and included in net income. This resulted in an understatement of accounts payable and an overstatement of net income, as well as a corresponding overstatement of stockholders’ equity, for each of these periods.

As a result, Big 5’s management and its Audit Committee have recommended, and its Board of Directors has approved, the review and restatement of its financial statements for fiscal 2001, 2002 and 2003. The accompanying preliminary financial statements include adjustments that resulted from changes to address the matters described above. The expected impact on net income is $1.2 million for 2001, $2.1 million for 2002 and $1.4 million

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for 2003. The attached preliminary financial statements are being reviewed by the Company and its independent registered public accounting firm and could change. Accordingly, investors are cautioned not to rely on the Company’s historical financial statements for such periods.

These non-cash adjustments of net income do not have any impact on:

•   the Company’s previously reported net sales or same store sales;

•   the Company’s previously reported assets, including cash;

•   the Company’s previously reported cash flows from operating activities; or

•   the Company’s compliance with financial covenants contained in its bank credit agreement.

Additionally, the Company anticipates a refund or credit of approximately $3.2 million attributable to an over-payment of income taxes for the affected periods.

“While our prior fiscal year 2004 full year and fourth quarter guidance was impacted by $0.06 per share, these accounting adjustments do not affect the Company’s underlying business or business prospects,” explained Charles Kirk, Big 5’s Senior Vice President and Chief Financial Officer. “We have corrected our internal controls associated with these accounting adjustments. Further, as all public companies are doing at this time, we are in the process of completing a full review of our internal controls as dictated by Sarbanes-Oxley requirements. Management brought this situation to the attention of the Audit Committee of the Company’s Board of Directors as soon as it became aware of it and its potential effect on the Company’s financial statements, and is working with the Audit Committee and KPMG LLP, to review those effects and to take appropriate corrective action. We anticipate the review of this matter will be concluded promptly and permit a timely filing of our Annual Report on Form 10-K for fiscal 2004.”

Declaration of Quarterly Cash Dividend

Big 5 also announced that its Board of Directors has voted to declare a cash dividend, at an annual rate of $0.28 per share of outstanding common stock. The next quarterly dividend, of $0.07 per share, will be paid on March 15, 2005, to stockholders of record as of March 1, 2005.

Store Openings

During the fiscal 2004 fourth quarter, Big 5 opened 11 new stores, including three each in Arizona, California and Colorado, and one each in New Mexico and Utah. These openings brought the Company’s year-end store count to 309 versus 293 at the end of fiscal 2003. The Company anticipates opening between 16 and 20 stores in fiscal 2005.

EPS Guidance

Big 5 expects to realize same store sales growth in the low single-digit range for the first fiscal quarter of 2005, resulting in earnings per diluted share in the range of $0.32 to $0.35. For the 2005 fiscal year, the Company currently expects to realize same store sales growth in the low single-digit range, resulting in earnings per diluted share of $1.70 to $1.80. This full-year guidance excludes $0.09 per diluted share associated with expenses related to the Company’s transition to its new distribution center, most of which are expected to be incurred in the third and fourth quarters of fiscal 2005. The Company now anticipates total capital expenditures for its new distribution center to be approximately $22.5 million, of which $8.2 million has been expended through fiscal 2004.

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Conference Call Information

Big 5 will host a conference call and audio webcast today at 2:00 p.m. (Pacific) to discuss financial results for the quarter and full year ended January 2, 2005. The webcast will be available at www.big5sportinggoods.com and archived for three months.

About Big 5 Sporting Goods Corporation

Big 5 is a leading sporting goods retailer in the western United States, operating 309 stores in 10 states under the “Big 5 Sporting Goods” name. Big 5 provides a full-line product offering in a traditional sporting goods store format that averages 11,000 square feet. Big 5’s product mix includes athletic shoes, apparel and accessories, as well as a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, snowboarding and in-line skating.

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause Big 5’s actual results in future periods to differ materially from forecasted results. Those risks and uncertainties include, among other things, the competitive environment in the sporting goods industry in general and in Big 5’s specific market areas, inflation, product availability and growth opportunities, seasonal fluctuations, weather conditions, changes in costs of goods and economic conditions in general. Those and other risks are more fully described in Big 5’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K filed on March 12, 2004 and its Quarterly Report on Form 10-Q for the quarter ended September 26, 2004. Big 5 disclaims any obligation to update any such factors or to publicly announce results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

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FINANCIAL TABLES FOLLOW

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BIG 5 SPORTING GOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Preliminary and Unaudited)
(in thousands, except earnings per share data)

			As Previously		As Preliminarily
			Reported		Restated
	14 Weeks Ended		13 Weeks Ended		13 Weeks Ended
	January 2,		December 28,		December 28,
	2005		2003		2003
Net sales	$	217,595	$	191,823	$	191,823
Cost of goods sold, buying and occupancy		139,767		121,554		123,849
Gross profit		77,828		70,269		67,974
Selling and administrative		52,839		46,807		46,807
Depreciation and amortization		3,306		2,784		2,784
Operating income		21,683		20,678		18,383
Premium and unamortized financing fees related to redemption of debt		1,275		1,901		1,901
Interest expense, net		1,639		2,661		2,661
Income before income taxes		18,769		16,116		13,821
Income tax		7,164		6,189		5,269
Net income	$	11,605	$	9,927	$	8,552
Earnings per share:
Basic	$	0.51	$	0.44	$	0.38
Diluted	$	0.51	$	0.43	$	0.37
Shares used to calculate earnings per share:
Basic		22,674		22,664		22,664
Diluted		22,811		22,832		22,832

BIG 5 SPORTING GOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Preliminary and Unaudited)
(in thousands, except earnings per share data)

			As Previously		As Preliminarily
			Reported		Restated
	53 Weeks		52 Weeks		52 Weeks
	Ended		Ended		Ended
	January 2,		December 28,		December 28,
	2005		2003		2003
Net sales	$	778,905	$	709,740	$	709,740
Cost of goods sold, buying and occupancy		497,346		453,814		456,109
Gross profit		281,559		255,926		253,631
Selling and administrative		204,471		186,798		186,798
Depreciation and amortization		11,672		10,412		10,412
Operating income		65,416		58,716		56,421
Premium and unamortized financing fees related to redemption of debt		2,067		3,434		3,434
Interest expense, net		6,841		11,405		11,405
Income before income taxes		56,508		43,877		41,582
Income tax		22,249		17,587		16,667
Net income		34,259		26,290		24,915
Earnings per share:
Basic	$	1.51	$	1.16	$	1.10
Diluted	$	1.50	$	1.16	$	1.10
Shares used to calculate earnings per share:
Basic		22,669		22,651		22,651
Diluted		22,792		22,753		22,753

BIG 5 SPORTING GOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Preliminary and Unaudited)
(in thousands, except earnings per share data)

	As Previously Reported					As Preliminarily Restated
	52 Weeks Ended					52 Weeks Ended
	December 29,		December 30,			December 29,		December 30,
	2002		2001			2002		2001
Net sales	$	667,469	$	622,481		$	667,469	$	622,481
Cost of goods sold, buying and occupancy		429,858		407,679			433,405		409,784
Gross profit		237,611		214,802			234,064		212,697
Selling and administrative		174,868		160,044			174,868		160,044
Litigation settlement		—		2,515			—		2,515
Depreciation and amortization		9,966		10,031			9,966		10,031
Operating income		52,777		42,212			49,230		40,107
Premium and unamortized financing fees related to redemption of debt		4,557		(2,662	)		4,557		(2,662	)
Interest expense, net		15,825		19,629			15,825		19,629
Income before income taxes		32,395		25,245			28,848		23,140
Income tax		13,313		10,280			11,855		9,423
Net income		19,082		14,965			16,993		13,717
Redeemable preferred stock dividends and redemption premium		7,999		7,284			7,999		7,284
Net income available to common stockholders	$	11,083	$	7,681		$	8,994	$	6,433
Earnings per share:
Basic	$	0.60	$	0.54		$	0.49	$	0.45
Diluted	$	0.57	$	0.48		$	0.46	$	0.40
Shares used to calculate earnings per share:
Basic		18,358		14,247			18,358		14,247
Diluted		19,476		16,090			19,476		16,090

BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Preliminary and Unaudited)
(in thousands)

			As Previously		As Preliminarily
			Reported		Restated
	January 2,		December 28,		December 28,
	2005		2003		2003
Assets
Current assets
Cash	$	6,746	$	9,030	$	9,030
Merchandise inventory		191,881		179,555		179,555
Other current assets		12,251		16,539		16,539
Total current assets		210,878		205,124		205,124
Property and equipment, net		57,838		46,952		46,952
Other long-term assets		19,895		19,949		19,949
Total assets	$	288,611	$	272,025	$	272,025
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	82,757	$	76,004	$	84,788
Accrued expenses		55,209		54,717		51,147
Total current liabilities		137,966		130,721		135,935
Deferred rent		11,662		11,654		11,654
Long-term debt		81,335		99,686		99,686
Total liabilities		230,963		242,061		247,275
Net stockholders’ equity		57,648		29,964		24,750
Total liabilities and stockholders’ equity	$	288,611	$	272,025	$	272,025

BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Preliminary and Unaudited)
(in thousands)

	As Previously Reported					As Preliminarily Restated
	December 29,		December 30,			December 29,			December 30,
	2002		2001			2002			2001
Assets
Current Assets
Cash	$	9,441	$	7,865		$	9,441		$	7,865
Merchandise inventory		169,529		163,680			169,529			163,680
Other current assets		11,442		9,698			11,442			9,698
Total current assets		190,412		181,243			190,412			181,243
Property and equipment, net		45,104		42,650			45,104			42,650
Other long-term assets		22,459		29,990			22,459			29,990
Total assets	$	257,975	$	253,883		$	257,975		$	253,883
Liabilities and Stockholders’ Equity (Deficit)
Accounts payable	$	67,937	$	62,307		$	74,426		$	65,249
Other accrueds		49,708		52,643			47,058			51,451
Deferred rent		11,525		11,096			11,525			11,096
Long-term debt		125,131		153,351			125,131			153,351
Total liabilities		254,301		279,397			258,140			281,148
Preferred stock		—		58,911			—			58,911
Net stockholders’ equity(deficit)		3,674		(84,425	)		(165	)		(86,175	)
Total liabilities, preferred stock and stockholders’ equity (deficit)	$	257,975	$	253,883		$	257,975		$	253,883