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Today's news...7/29/05

JULY 29, 2005 -- Big 5 Has Another Quarter Of Comp Gains, But Delays SEC Filings

Big 5 Sporting Goods achieved its 38th consecutive quarter of positive same-store sales performance in 2Q. The company expects to report, based upon preliminary sales results, a same-store sales increase of approximately 2.7% for 2Q05.

The company will delay reporting its preliminary results for 2Q05 until it completes its financial statements for FY04 and its previously announced restatement of its financial statements for the fiscal years ended December 28, '03 and December 29, '02, as well as its quarterly financial statements for those years. The previously announced restatement adjustments relate to the correction of an error in an account within accounts payable, an adjustment to accounting for certain leases and the spreading over appropriate periods of the company's prior implementation of a sales return reserve in 3Q04.

In addition, also as previously announced, the company and its independent professional advisors have been conducting a review of the prior financial statements on behalf and under the supervision of the Audit Committee. While the review is not yet complete, Big 5 currently expects that additional corrections to its prior financial statements will be required as part of the restatement. Big 5 believes that the cumulative, net impact on net income of the additional corrections that the company is aware of at this time, as well as the adjustments relating to the previously announced lease accounting changes and sales return reserve, for FY02-FY04 will be less than 3% of aggregate net income as preliminarily reported on February 9, '05 for such fiscal year periods, which reflected the preliminary adjustments to address the error in an account within accounts payable. These matters will also reduce net income for prior periods, which the company anticipates will be reflected in an opening balance sheet adjustment for FY02.

Steven Miller, Big 5's CEO, said, "While I recognize that the restatement process has been frustrating for our shareholders, we are hopeful that this process is drawing to a close. Although significant time and attention has been devoted to the restatement process, we have remained focused on our business and are pleased to have maintained our consistent same store sales performance and to have achieved our 38th consecutive quarter of comp store sales increases. We are also pleased to report that the transition to our new distribution center in Riverside, California is proceeding smoothly in accordance with our plans."

Cabela's 2Q Net Rose 203%

Cabela's reported record 2Q financial results. Total revenue increased 23.2% to a record $343.9 million. 2Q net income increased to $6.0 million, or 9¢ per diluted share, compared to $2.0 million, or 3¢ per diluted share for the same period a year ago. As a result of the company's IPO, weighted average diluted shares outstanding increased 10.6% to 66.3 million for 2Q05 compared to 59.9 million in 2Q04.

During 2Q, direct revenue increased 10.5% to a record $183.2 million. Total retail revenue increased 13.2% to $109.2 million and same-store sales decreased 6.0%, due in part to the strong performance, during the second quarter of fiscal 2004, of the company's Hamburg, PA, retail store. The Hamburg store contributed 2.8% to the same store sales decline. Financial services revenue increased 103.0% to $30.4 million.

Dennis Highby, Cabela's CEO, commented, "We are extremely pleased with our second quarter performance, which exceeded our expectations. Importantly, all three of our operating segments achieved double-digit revenue gains, and we experienced increases in both our consolidated gross margin and consolidated operating margin. However, operating margin in our retail segment decreased primarily due to new store pre-opening costs. Based on our strong momentum heading into the key fall and winter selling seasons, we are confident we will achieve our long-term top and bottom line mid-teens growth rates for fiscal '05."

Closeouts Trim Columbia's 2Q Net

Columbia Sportswear posted net 2Q sales of $186.2 million, an increase of 8.8%. The company reported net income of $6.3 million, a 41.1% decrease over net income of $10.7 million for the same period of '04. EPS were 16¢, compared to 26¢.

Compared to 2Q04, Other International sales increased 44.7% to $40.8 million, US sales increased 4.2% to $110.3 million, European sales increased 3.7% to $25.4 million, and Canadian sales decreased 22.4% to $9.7 million.

Sportswear sales increased 13.3% to $102.4 million, footwear sales increased 11.7% to $34.3 million, accessories sales increased 3.0% to $6.8 million, equipment sales increased 3.8% to $2.7 million, and outerwear sales decreased 2.0% to $40.0 million compared to the second quarter of 2004.

Tim Boyle, CEO, commented, "We have made significant long-term investments in distribution capacity, product design and sourcing infrastructure, and have increased advertising to strengthen our brands to support our long-term growth. These are essential investments and are competitive advantages that position us to remain a primary vendor in a consolidating retail landscape. During the second quarter, we significantly improved inventory levels going into the peak fall shipping season by increasing our shipments of closeout merchandise. These lower margin close-out sales, coupled with our long-term investments, are compressing operating margins in the near-term, but we believe these investments are essential to our long-term growth.

"Our strong financial position provides significant financial flexibility. Our board previously authorized an aggregate $200 million share repurchase program, and during the second quarter, we repurchased approximately 2.6 million shares for $116.5 million. To date, we have repurchased approximately 3.5 million shares for an aggregate purchase price of $164.1 million, with $35.9 million remaining under the program."

Smith & Wesson Delays SEC 10-K Filing

Smith & Wesson Holdings will have to delay its SEC 1o-K filing' CEO Michael Golden said, "We have completed our fundamental accounting work relative to fiscal 2005 and are now concluding the large amount of additional work necessary to early adopt SFAS 123(R)." The new standard requires companies to recognize compensation cost relating to share-based payment transactions in their financial statements.

On June 29, 2005, the company said it continued to expect net product sales for FY05 to be approximately $124 million, a 5% increase. Firearms sales are expected to increase by approximately 11% over '04 levels. Income for FY05 is expected to be between $5.1 million and $5.9 million, or 14¢ and 17¢ per fully diluted share, compared $1.4 million, or 4¢ per fully diluted share in FY04, not including adjustments related to APB 25, and the early adoption of SFAS 123(R).

Although the company is still calculating the precise effect of the adoption of SFAS 123(R), it expects that its early adoption will result in a reduction in net income of $1.0- $1.2 million, or 3¢-4¢ per diluted share, for FY04 and $400,00 $600,000, or 1¢-2¢ per diluted share for FY05.

Golf Galaxy Soars On First Day Of Trading

Golf Galaxy commenced its IPO of 3,950,000 shares of its common stock at $14.00 per share. Golf Galaxy has granted the underwriters an option to purchase up to an additional 592,500 shares at the initial public offering price to cover over-allotments, if any. By 2:30, the price was $18.50.


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Sporting goods industry

Big 5 Sporting Goods Inc.
Cabela's Inc.
Audit Committee
Golf Galaxy
Columbia Sportswear Company

financial statements
net income
same-store sales
operating margin
Golf Galaxy

Comp Gains
Steven Miller
Dennis Highby
Trim Columbia
Tim Boyle

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