##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, DC
    20549
    Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal
    year ended January 2, 2011oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    000-49850
  BIG 5 SPORTING GOODS
    CORPORATION
 (Exact name of registrant as
    specified in its charter)
  Delaware

95-4388794(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)2525 East El Segundo Boulevard
    El Segundo, California(Address of Principal
    Executive Offices)

90245(Zip
    Code)   Registrants telephone number, including area code:
 (310) 536-0611
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class:

Name of Each Exchange on which Registered:Common Stock, par value $0.01 per share

The NASDAQ Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated filer o

Accelerated filer þ

Non-accelerated filero

Smaller reporting company o(Do not check if a
    smaller          
    reporting
    company)   Rule 12b-2 o þ
      Documents
    Incorporated by Reference
  Form 10-K




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 3. LEGAL PROCEEDINGSITEM 4. (REMOVED AND RESERVED)PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESPART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULESSIGNATURESINDEX TO CONSOLIDATED FINANCIAL STATEMENTSEX-23.1EX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents   Forward-Looking
    Statements
  Risk Factors
 1




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PART I
 
  ITEM 1.
    BUSINESS  General
    56-year
      Business sub-heading Form 10-K.
    Form 10-K, Form 10-Q, Form 8-K
 2




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##### Table of Contents



Expansion
    and Store Development
    Other



Stores

Stores

Number of StoresYear

California

Markets

Total

Relocated(1)(2)

Closed

at Period End2006

7


12



19


−

−

3432007

6


17



23


(3)

−

3632008

7


12



19


(1)

−

3812009

1


2



3


−

−

3842010

7


8



15


(1)

−

398
     (1)
    
    All relocated stores referred to in
    the table above were in California.(2)
    
    Three stores that were replaced by
    relocated stores opened in fiscal 2010 are expected to close in
    fiscal 2011.        Management
    Experience
    AverageNumber of

Number ofEmployees

Years With UsSenior Management

7

29Vice Presidents

10

22Buyers

17

21Store District/Regional Supervisors

42

21Store Managers

398

10
   Merchandising
   3




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##### Table of Contents



Fiscal Year2010


2009


2008


2007


2006Soft goodsAthletic and sport apparel


16.1
%


16.3
%


17.3
%


16.8
%


17.1
%Athletic and sport footwear


29.0



29.1



29.2



29.8



29.9Total soft goods


45.1



45.4



46.5



46.6



47.0Hard goods


54.9



54.6



53.5



53.4



53.0Total


100.0
%


100.0
%


100.0
%


100.0
%


100.0
%
     adidas

Everlast

Impex

Rawlings

SpaldingAsics

Fila

JanSport

Razor

SpeedoBrowning

Footjoy

K2

Reebok

TimexBushnell

Franklin

Lifetime

Remington

TitleistColeman

Head

Mizuno

Rollerblade

Under ArmourConverse

Heelys

New Balance

Russell Athletic

WilsonCrosman

Hillerich & Bradsby

Nike

Saucony

ZebcoEaston

Icon (Proform)

Prince

Shimano
      4




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store-by-store
    point-of-sale
  Advertising
          Vendor
    Relationships
    Management
    Information Systems
  point-of-sale
 5




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Distribution
    Industry
    and Competition
    Sporting Goods Superstores.
  Traditional Sporting Goods Stores.
  Specialty Sporting Goods Stores.
  Mass Merchandisers.
  Catalog and Internet-based Retailers.
    Employees
   6




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Employee
    Training
    Description
    of Service Marks and Trademarks
   
  ITEM 1A.
    RISK
    FACTORS    Risks
    Related to Our Business and Industry
  Disruptions in the overall economy and the financial
    markets may adversely impact our business and results of
    operations, as well as our lenders.
   7




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Intense
    competition in the sporting goods industry could limit our
    growth and reduce our profitability.
    
    sporting goods superstores, such as Academy Sports &
    Outdoors, Dicks Sporting Goods, The Sports Authority and
    Sport Chalet;
    traditional sporting goods stores and chains, such as Hibbett
    Sports and Modells;
    specialty sporting goods shops and pro shops, such as Bass Pro
    Shops, Cabelas, Foot Locker, Gander Mountain, Golfsmith
    and REI;
    mass merchandisers, discount stores and department stores, such
    as JC Penney, Kmart, Kohls, Sears, Target and
    Wal-Mart; and
    catalog and Internet-based retailers.    If we fail to anticipate changes in consumer preferences,
    we may experience lower net sales, higher inventory, higher
    inventory markdowns and lower margins.
   8




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Our quarterly net sales and operating results, reported
    and expected, can fluctuate substantially, which may adversely
    affect the market price of our common stock.
    Increased costs or declines in the effectiveness of print
    advertising, or a reduction in publishers of print advertising,
    could cause our operating results to suffer.
    Because our stores are concentrated in the western United
    States, we are subject to regional risks.
    If we lose key management or are unable to attract and
    retain the talent required for our business, our operating
    results could suffer.
   9




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All of our stores rely on a single distribution center.
    Any disruption or other operational difficulties at this
    distribution center could reduce our net sales or increase our
    operating costs.
    If we are unable to successfully implement our controlled
    growth strategy or manage our growing business, our future
    operating results could suffer.
      
    we may again choose to slow our expansion efforts as a result of
    challenging conditions in the retail industry and the economic
    recession overall;
    we may not be able to find suitable sites available for leasing;
    we may not be able to negotiate acceptable lease terms;
    we may not be able to hire and retain qualified store
    personnel; and
    we may not have the financial resources necessary to fund our
    expansion plans.    Our hardware and software systems are vulnerable to
    damage, theft or intrusion that could harm our business.
    
    earthquake, fire, flood and other natural disasters;
    power loss, computer systems failures, Internet and
    telecommunications or data network failures, operator
    negligence, improper operation by or supervision of employees;
    physical and electronic loss of data, security breaches,
    misappropriation, data theft and similar events; and
    computer viruses, worms, Trojan horses, intrusions, or other
    external threats. 10




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If our suppliers do not provide sufficient quantities of
    products, our net sales and profitability could suffer.
    Because many of the products that we sell are manufactured
    abroad, we may face delays, increased cost or quality control
    deficiencies in the importation of these products, which could
    reduce our net sales and profitability.
    Disruptions in transportation, including disruptions at
    shipping ports through which our products are imported, could
    prevent us from timely distribution and delivery of inventory,
    which could reduce our net sales and profitability.
   11




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Our costs may change as a result of currency exchange rate
    fluctuations or inflation in the purchase cost of merchandise
    manufactured abroad.
    Increases in transportation costs due to rising fuel
    costs, climate change regulation and other factors may
    negatively impact our operating results.
      Terrorism and the uncertainty of war may harm our
    operating results.
    Risks
    Related to Our Capital Structure
  We are leveraged, future cash flows may not be sufficient
    to meet our obligations and we might have difficulty obtaining
    more financing or refinancing our existing indebtedness on
    favorable terms.
    
    our ability to obtain financing in the future for working
    capital, capital expenditures and general corporate purposes
    might be impeded;
    we are more vulnerable to economic downturns and our ability to
    withstand competitive pressures is limited; and
    we are more vulnerable to increases in interest rates, which may
    affect our interest expense and negatively impact our operating
    results. 12




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The
    terms of our revolving credit facility impose operating and
    financial restrictions on us, which may impair our ability to
    respond to changing business and economic
    conditions.
    Risks
    Related to Regulatory, Legislative and Legal Matters
  Current
    and future government regulation may negatively impact demand
    for our products and increase our cost of conducting
    business.
    
    laws and regulations governing the manner in which we advertise
    or sell our products;
    laws and regulations that prohibit or limit the sale, in certain
    localities, of certain products we offer, such as firearms and
    ammunition;
    laws and regulations governing the activities for which we sell
    products, such as hunting and fishing;
    laws and regulations governing consumer products, such as the
    lead and phthalate restrictions included in the federal Consumer
    Product Safety Improvement Act and similar state laws;
    labor and employment laws, such as minimum wage or living wage
    laws, other wage and hour laws and laws requiring mandatory
    health insurance for employees; and
    U.S. customs laws and regulations pertaining to proper item
    classification, quotas and payment of duties and tariffs. 13




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We may
    be subject to periodic litigation that may adversely affect our
    business and financial performance.
            The
    sale of firearms and ammunition is subject to strict regulation,
    which could affect our operating results.
   14




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Changes in accounting standards and subjective
    assumptions, estimates and judgments by management related to
    complex accounting matters could significantly affect our
    financial results.
    Risks
    Related to Investing in Our Common Stock
  The declaration of discretionary dividend payments may not
    continue.
    Our anti-takeover provisions could prevent or delay a
    change in control of our company, even if such change of control
    would be beneficial to our stockholders.
    
    a Board of Directors that is classified such that only one-third
    of directors are elected each year;
    authorization of the issuance of blank check
    preferred stock that could be issued by our Board of Directors
    to increase the number of outstanding shares and thwart a
    takeover attempt;
    limitations on the ability of stockholders to call special
    meetings of stockholders;
    prohibition of stockholder action by written consent and
    requiring all stockholder actions to be taken at a meeting of
    our stockholders; and
    establishment of advance notice requirements for nominations for
    election to the Board of Directors or for proposing matters that
    can be acted upon by stockholders at stockholder meetings.   
  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS   15




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ITEM 2.
    PROPERTIES  Properties
        Our
    Stores
    Year


Number of


Percentage of TotalState

Entered


Stores


Number of StoresCalifornia


1955



201



50.5
%Washington


1984



48



12.0Arizona


1993



34



8.5Oregon


1995



23



5.7Colorado


2001



21



5.3Utah


1997



16



4.0Nevada


1978



16



4.0New Mexico


1995



15



3.8Idaho


1994



11



2.8Texas


1995



11



2.8Oklahoma


2007



1



0.3Wyoming


2010



1



0.3Total






398



100.0
%
    
  ITEM 3.
    LEGAL
    PROCEEDINGS  No. 37-2009-00093109-CU-OE-CTL,
 16




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##### Table of Contents



No. 37-2009-00095594-CU-MC-CTL, and/or
   17




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ITEM 4.
    (REMOVED
    AND RESERVED) 18




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##### Table of Contents



PART II
 
  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    2010


2009Fiscal Period

High


Low


High


LowFirst Quarter

$
17.65


$
13.59


$
7.42


$
4.46Second Quarter

$
18.19


$
12.91


$
13.23


$
5.74Third Quarter

$
13.99


$
11.51


$
15.95


$
10.49Fourth Quarter

$
15.70


$
12.40


$
17.95


$
14.53
       Performance
    Graph
    
  *
    $100 invested on 1/1/06 in stock or 12/31/05 in index, including
    reinvestment of dividends. Indexes calculated on month-end basis. 19




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Dividend
    Policy
      Securities
    Authorized for Issuance Under Equity Compensation Plans as of
    January 2, 2011
  Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters Form 10-K.
 20




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ITEM 6.
    SELECTED
    FINANCIAL DATA  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations Form 10-K.
 Fiscal
    Year(1)2010


2009


2008


2007


2006(Dollars and shares in thousands, except per share and
    certain store data)Statement of Operations Data:Net
    sales(2)

$
896,813


$
895,542


$
864,650


$
898,292


$
876,805Cost of
    sales(3)(5)


599,101



597,792



579,165



589,150



575,577Gross
    profit(2)(5)


297,712



297,750



285,485



309,142



301,228Selling and administrative
    expense(2)(4)(6)


263,488



260,068



257,883



256,180



242,769Operating income


34,224



37,682



27,602



52,962



58,459Interest expense


2,108



2,465



5,198



6,614



7,516Income before income taxes


32,116



35,217



22,404



46,348



50,943Income taxes


11,554



13,406



8,500



18,257



20,108Net
    income(2)(5)(6)(7)

$
20,562


$
21,811


$
13,904


$
28,091


$
30,835Earnings per share:Basic

$
0.95


$
1.02


$
0.64


$
1.25


$
1.36Diluted

$
0.94


$
1.01


$
0.64


$
1.25


$
1.35Dividends per share

$
0.20


$
0.20


$
0.36


$
0.36


$
0.34Weighted-average shares of common stock outstanding:Basic


21,552



21,434



21,608



22,465



22,691Diluted


21,890



21,657



21,619



22,559



22,795Store Data:Same store sales increase
    (decrease)(8)


0.8
%


(0.6
)%


(7.0
)%


(1.0
)%


4.0
%Same store sales per square foot (in
    dollars)(9)

$
204


$
210


$
213


$
233


$
242End of period stores


398



384



381



363



343End of period same stores


380



362



339



321



305Same store sales per
    store(10)

$
2,315


$
2,373


$
2,393


$
2,625


$
2,708Other Financial Data:Depreciation and amortization

$
18,627


$
19,400


$
19,135


$
17,687


$
17,115Capital
    expenditures(11)

$
15,628


$
5,764


$
20,447


$
20,769


$
18,209Inventory
    turns(12)


2.4
x


2.6
x


2.4
x


2.3
x


2.4
xBalance Sheet Data:Cash and cash equivalents

$
5,620


$
5,765


$
9,058


$
9,741


$
5,145Working
    capital(13)

$
130,737


$
120,541


$
129,282


$
133,034


$
101,549Total assets

$
392,356


$
366,122


$
388,357


$
403,923


$
367,679Long-term debt and capital leases, less current portion

$
49,882


$
57,233


$
99,447


$
105,648


$
80,078Stockholders equity

$
150,726


$
131,861


$
111,800


$
109,155


$
100,460    (See notes on following page:)
 21




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(Notes to table on previous page)
    (1)

    
    Our fiscal year is the 52 or 53 week reporting period
    ending on the Sunday closest to the calendar year end. Fiscal
    2010, 2008, 2007 and 2006 each included 52 weeks, and
    fiscal 2009 included 53 weeks.(2)

    
    In the fourth quarter of fiscal 2010, we recorded a net pre-tax
    charge of $2.3 million reflecting a legal settlement
    accrual, of which $0.8 million was classified as a
    reduction to net sales and $1.5 million was classified as
    selling and administrative expense. This charge reduced net
    income in fiscal 2010 by $1.5 million, or $0.07 per diluted
    share.(3)

    
    Cost of sales includes the cost of merchandise, net of discounts
    or allowances earned, freight, inventory reserves, buying,
    distribution center costs and store occupancy costs. Store
    occupancy costs include rent, amortization of leasehold
    improvements, common area maintenance, property taxes and
    insurance.(4)

    
    Selling and administrative expense includes store-related
    expense, other than store occupancy costs, as well as
    advertising, depreciation and amortization and expense
    associated with operating our corporate headquarters.(5)

    
    In the second quarter of fiscal 2008, we recorded a nonrecurring
    pre-tax charge of $1.5 million to correct an error in our
    previously recognized straight-line rent expense, substantially
    all of which related to prior periods and accumulated over a
    period of 15 years. This charge reduced net income in
    fiscal 2008 by $0.9 million, or $0.04 per diluted share. We
    have determined this charge to be immaterial to our prior
    periods consolidated financial statements.(6)

    
    In the fourth quarter of fiscal 2009, we recorded a net pre-tax
    charge of $1.0 million, which reflected a legal settlement
    accrual offset by proceeds received from the settlement of a
    lawsuit relating to credit card fees. This charge reduced net
    income in fiscal 2009 by $0.6 million, or $0.03 per diluted
    share.(7)

    
    Net income for fiscal 2010, 2009, 2008 and 2007 was impacted by
    the economic recession and continued uncertainty in the
    financial sector.(8)

    
    Same store sales for a period reflect net sales from stores
    operated throughout that period as well as the corresponding
    prior period; e.g., two comparable annual reporting periods for
    annual comparisons. Our same store sales comparisons reflect the
    economic recession and continued uncertainty in the financial
    sector, which resulted in weak same store sales since fiscal
    2007.(9)

    
    Same store sales per square foot is calculated by dividing net
    sales for same stores, as defined above, by the total square
    footage for those stores. Fiscal 2010, 2009, 2008 and 2007
    reflect the economic recession and continued uncertainty in the
    financial sector.(10)

    
    Same store sales per store is calculated by dividing net sales
    for same stores, as defined above, by total same store count.
    Fiscal 2010, 2009, 2008 and 2007 reflect the economic recession
    and continued uncertainty in the financial sector.(11)

    
    Lower capital expenditures in fiscal 2009 reflect substantially
    fewer store openings when compared with fiscal 2010, 2008, 2007
    and 2006 due to the economic recession.(12)

    
    Inventory turns equal fiscal year cost of sales divided by the
    fiscal year four-quarter weighted-average cost of merchandise
    inventory.(13)

    
    Working capital is defined as current assets less current
    liabilities. In the second quarter of fiscal 2008, we
    reclassified approximately $5.1 million of workers
    compensation reserves from accrued expenses to other long-term
    liabilities on the consolidated balance sheet as of
    December 30, 2007. Additionally, we reclassified
    approximately $2.0 million of the related deferred income
    tax assets from current deferred income tax assets to long-term
    deferred income tax assets on the consolidated balance sheet as
    of December 30, 2007. This reclassification increased
    working capital for fiscal 2008 and 2007 by $3.1 million,
    but had no effect on our previously reported consolidated
    statements of operations or consolidated statements of cash
    flows, and is not considered material to any previously reported
    consolidated financial statements. Working capital in fiscal
    2010 and 2007 was impacted by higher inventory levels at the end
    of the year associated with lower than anticipated sales for the
    fourth quarter of those fiscal years. 22




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##### Table of Contents



ITEM 7.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS  Form 10-K.
    Overview
    56-year
    Fiscal Year2010


2009


2008Big 5 Sporting Goods stores:Beginning of period


384



381



363New
    stores(1)


15



3



19Stores
    relocated(2)


(1
)






(1
)Stores closed










End of period


398



384



381New stores opened per year, net


14



3



18
     (1)
    
    Stores that are relocated are
    classified as new stores. Sales from the prior location are
    treated as sales from a closed store and thus are excluded from
    same store sales calculations.(2)
    
    Three stores that were replaced by
    relocated stores opened in fiscal 2010 are expected to close in
    fiscal 2011. 23




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##### Table of Contents



Executive
    Summary
    
    Net income for fiscal 2010 decreased 5.7% to $20.6 million,
    or $0.94 per diluted share, compared to $21.8 million, or
    $1.01 per diluted share, for fiscal 2009. The decrease was
    driven primarily by higher selling and administrative expense,
    partially offset by lower interest expense and a lower effective
    income tax rate.
    Net sales for fiscal 2010 increased 0.1% to $896.8 million.
    The increase in net sales was primarily attributable to
    increased sales from new and same stores. Net sales comparisons
    in fiscal 2010 were negatively impacted by the comparison of a
    52-week year for fiscal 2010 to a 53-week year in fiscal 2009.
    Gross profit for fiscal 2010 represented 33.2% of net sales,
    which remained unchanged compared with the prior year. Lower
    distribution costs were offset by higher store occupancy
    expense, reflecting new store openings. Merchandise margins were
    13 basis points lower than last year.
    Selling and administrative expense for fiscal 2010 increased
    1.3% to $263.5 million, or 29.4% of net sales, compared to
    $260.1 million, or 29.0% of net sales, for fiscal 2009. The
    increase was primarily attributable to higher store-related
    expense, excluding occupancy, as a result of new store openings,
    partially offset by lower advertising expense.
    Operating income for fiscal 2010 declined 9.2% to
    $34.2 million, or 3.8% of net sales, compared to
    $37.7 million, or 4.2% of net sales, for fiscal 2009. The
    lower operating income primarily reflects higher selling and
    administrative expense.  Results
    of Operations
    Fiscal Year2010(1)


2009(1)


2008(1)(Dollars in thousands)Statement of Operations Data:Net
    sales(2)

$
896,813



100.0
%

$
895,542



100.0
%

$
864,650



100.0
%Cost of
    sales(3)(4)


599,101



66.8



597,792



66.8



579,165



67.0Gross
    profit(2)(4)


297,712



33.2



297,750



33.2



285,485



33.0Selling and administrative
    expense(2)(5)(6)


263,488



29.4



260,068



29.0



257,883



29.8Operating income


34,224



3.8



37,682



4.2



27,602



3.2Interest expense


2,108



0.2



2,465



0.3



5,198



0.6Income before income taxes


32,116



3.6



35,217



3.9



22,404



2.6Income taxes


11,554



1.3



13,406



1.5



8,500



1.0Net
    income(2)(4)(6)

$
20,562



2.3
%

$
21,811



2.4
%

$
13,904



1.6
%Other Financial Data:Net sales change






0.1
%






3.6
%






(3.7
)%Same store sales
    change(7)






0.8
%






(0.6
)%






(7.0
)%Net income
    change(8)






(5.7
)%






56.9
%






(50.5
)%     (1)
    
    Fiscal 2010 and 2008 each included
    52 weeks. Fiscal 2009 included 53 weeks. 24




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##### Table of Contents



(2)
    
    In the fourth quarter of fiscal
    2010, we recorded a net pre-tax charge of $2.3 million
    reflecting a legal settlement accrual, of which
    $0.8 million was classified as a reduction to net sales and
    $1.5 million was classified as selling and administrative
    expense. This charge reduced net income in fiscal 2010 by
    $1.5 million, or $0.07 per diluted share.(3)
    
    Cost of sales includes the cost of
    merchandise, net of discounts or allowances earned, freight,
    inventory reserves, buying, distribution center costs and store
    occupancy costs. Store occupancy costs include rent,
    amortization of leasehold improvements, common area maintenance,
    property taxes and insurance.(4)
    
    In the second quarter of fiscal
    2008, we recorded a nonrecurring pre-tax charge of
    $1.5 million to correct an error in our previously
    recognized straight-line rent expense, substantially all of
    which related to prior periods and accumulated over a period of
    15 years. This charge reduced net income in fiscal 2008 by
    $0.9 million, or $0.04 per diluted share. We have
    determined this charge to be immaterial to our prior
    periods consolidated financial statements.(5)
    
    Selling and administrative expense
    includes store-related expense, other than store occupancy
    costs, as well as advertising, depreciation and amortization and
    expense associated with operating our corporate headquarters.(6)
    
    In the fourth quarter of fiscal
    2009, we recorded a net pre-tax charge of $1.0 million,
    which reflected a legal settlement accrual offset by proceeds
    received from the settlement of a lawsuit relating to credit
    card fees. This charge reduced net income in fiscal 2009 by
    $0.6 million, or $0.03 per diluted share.(7)
    
    Same store sales for a period
    reflect net sales from stores operated throughout that period as
    well as the corresponding prior period; e.g., two comparable
    annual reporting periods for annual comparisons. Same store
    sales comparisons for fiscal 2010 versus fiscal 2009 were made
    on a comparable 52-week basis, while same store sales
    comparisons for fiscal 2009 versus fiscal 2008 were made on a
    comparable 53-week basis.(8)
    
    Net income for fiscal 2010, 2009
    and 2008 reflected the impact of the economic recession, which
    weakened consumer demand and negatively impacted our net sales.  Fiscal
    2010 Compared to Fiscal 2009
  Net Sales.
  
    New store sales increased, reflecting the opening of 17 new
    stores, net of closures and relocations, since December 28,
    2008. The increase in new store sales was partially offset by a
    reduction in closed store sales.
    Same store sales increased 0.8% for the 52 weeks ended
    January 2, 2011, versus the comparable 52-week period in
    the prior year. Same store sales for a period reflect net sales
    from stores that operated throughout the period as well as the
    corresponding prior period; e.g., comparable yearly reporting
    periods for yearly comparisons.
    The extra week in fiscal 2009 negatively impacted the net sales
    comparison to fiscal 2010 by $15.8 million.
    Net sales for fiscal 2010 reflected a net pre-tax charge of
    $0.8 million for a legal settlement accrual that was
    classified as a reduction of net sales.
    While net sales for fiscal 2010 continued to be impacted by the
    economic recession, we continued to experience increased
    customer traffic into our retail stores when compared with
    fiscal 2009.    Gross Profit.
  
    Merchandise margins, which exclude buying, occupancy and
    distribution costs, decreased for fiscal 2010 by 13 basis
    points versus fiscal 2009, primarily due to shifts in product
    sales mix.
    Store occupancy costs for fiscal 2010 increased by
    $1.4 million, or 15 basis points, year over year, due
    primarily to the increase in store count.
    Distribution costs, including costs capitalized into inventory,
    decreased by $2.7 million, or 30 basis points, in
    fiscal 2010 compared to fiscal 2009. 25




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##### Table of Contents




    Net sales increased by $1.3 million in fiscal 2010 compared
    to the prior year.  Selling and Administrative Expense.
  
    Store-related expense, excluding occupancy, increased by
    $4.2 million, or 44 basis points, due primarily to
    higher labor and operating costs to support the increase in
    store count, offset by lower depreciation.
    Advertising expense for fiscal 2010 decreased by
    $0.9 million, or 11 basis points, due primarily to a
    reduction in the frequency and distribution of advertising
    circulars.
    Administrative expense for fiscal 2010 increased by
    $0.1 million, and remained unchanged as a percentage of net
    sales in comparison with the prior year. Administrative expense
    in fiscal 2010 and fiscal 2009 reflected net pre-tax charges for
    legal settlement accruals of $1.5 million and
    $1.0 million, respectively.  Interest Expense. Credit Agreement Liquidity
    and Capital Resources
  Income Taxes.
  Fiscal
    2009 Compared to Fiscal 2008
  Net Sales.
  
    The extra week in fiscal 2009 contributed $17.4 million to
    net sales.
    New store sales increased, reflecting the opening of 21 new
    stores, net of closures and relocations, since December 30,
    2007. This increase was offset by a decrease in same store sales
    of 0.6% for fiscal 2009 when compared on a 53-week basis for
    both fiscal 2009 and 2008, as well as a reduction in closed
    store sales.
    While net sales for fiscal 2009 continued to be impacted by the
    economic recession that began in fiscal 2007, we experienced
    increased customer traffic into our retail stores when compared
    with fiscal 2008.    Gross Profit.
  
    Net sales increased by $30.8 million in fiscal 2009
    compared to the prior year.
    Distribution costs decreased by $2.1 million, or
    40 basis points, in fiscal 2009 compared to fiscal 2008,
    due primarily to lower trucking expense combined with reduced
    labor expense attributable to reduced headcount. 26




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##### Table of Contents




    Merchandise margins, which exclude buying, occupancy and
    distribution costs, decreased for fiscal 2009 by 15 basis
    points versus fiscal 2008, primarily due to shifts in product
    sales mix and product cost inflation experienced during the
    first half of fiscal 2009.
    Store occupancy costs for fiscal 2009 increased by
    $3.4 million, or 10 basis points, year over year, due
    primarily to the increase in store count and higher
    depreciation. The increase in store occupancy costs was offset
    by the impact in fiscal 2008 of a second quarter nonrecurring
    pre-tax charge of $1.5 million to correct an error in our
    previously recognized straight-line rent expense (see footnote 4
    of table on page 24).  Selling and Administrative Expense.
  
    Store-related expense, excluding occupancy, increased by
    $6.4 million, or 7 basis points, due primarily to
    higher labor and operating costs to support the increase in
    store count.
    Administrative expense for fiscal 2009 increased by
    $1.9 million, primarily as a result of increased legal
    expense that included a net pre-tax charge of $1.0 million,
    which reflected a legal settlement accrual offset by proceeds
    received from the settlement of a lawsuit relating to credit
    card fees (see footnote 6 of table on page 24).
    Advertising expense for fiscal 2009 decreased by
    $6.1 million, or 89 basis points, due primarily to a
    reduction in the frequency and distribution of advertising
    circulars, as well as lower printing costs.
    The decrease in selling and administrative expense as a
    percentage of net sales for fiscal 2009 compared to fiscal 2008
    was a result of higher net sales in fiscal 2009.  Interest Expense.
  Income Taxes.
  Liquidity
    and Capital Resources
     27




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##### Table of Contents



Fiscal Year2010


2009


2008(Dollars in thousands)Total cash provided by (used in):Operating activities

$
29,867


$
54,087


$
39,503Investing activities


(15,624
)


(5,764
)


(20,400
)Financing activities


(14,388
)


(51,616
)


(19,786
)Net decrease in cash and cash equivalents

$
(145
)

$
(3,293
)

$
(683
)
       Operating Activities.
  Investing Activities.
 28




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##### Table of Contents



Fiscal Year2010


2009


2008(Dollars in thousands)New stores

$
9,773


$
2,227


$
10,344Store-related remodels


3,888



2,575



4,744Distribution center


1,487



384



708Computer hardware, software and other


480



578



4,651Total

$
15,628


$
5,764


$
20,447
     Financing Activities.
    build-up
       29




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##### Table of Contents



Credit Agreement.
         30




---



##### Table of Contents



LIBO Rate

Base RateLevel

Average Daily Excess Availability

Applicable Margin

Applicable MarginI

Greater than 50% of the Loan Cap


2.00
%


1.00
%II

Less than or equal to 50% of the Loan Cap


2.25
%


1.25
%
                  31




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##### Table of Contents



Fiscal Year2010


2009(Dollars in thousands)Fiscal year-end balance

$
48,313


$
54,955Average interest rate


2.05
%


2.22
%Maximum outstanding during the year

$
94,687


$
114,543Average outstanding during the year

$
59,996


$
83,627
   Future Capital Requirements.
          Off-Balance Sheet Arrangements and Contractual
    Obligations.
 32




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##### Table of Contents



Properties Lease
    Commitments Financial Statements and
    Supplementary Data Form 10-K.
    Payments Due by PeriodLess ThanTotal


1 Year


1-3 Years


3-5 Years


After 5 Years(In thousands)Capital lease obligations

$
3,751


$
2,069


$
1,345


$
337


$
Lease commitments:Operating lease commitments


323,769



61,998



111,445



80,213



70,113Other occupancy costs


69,378



12,985



23,557



17,222



15,614Other liabilities


8,735



2,472



2,734



1,471



2,058Revolving credit facility


48,313











48,313



Letters of credit


800



800











Total

$
454,746


$
80,324


$
139,081


$
147,556


$
87,785
   point-of-sale
              Critical
    Accounting Estimates
  Financial Statements and Supplementary Data Form 10-K.
 33




---



##### Table of Contents



Valuation
    of Merchandise Inventories, Net
  first-in,
        Valuation
    of Long-Lived Assets
     34




---



##### Table of Contents



Property, Plant, and Equipment
        Self-Insurance
    Liabilities
      Seasonality
    and Impact of Inflation
      Recently
    Issued Accounting Updates
  Financial Statements and Supplementary Data Form 10-K.
 35




---



##### Table of Contents



Forward-Looking
    Statements
  Risk Factors
 
  ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   
  ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Form 10-K page F-1.
  
 ITEM 9.
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
    AND FINANCIAL DISCLOSURE   36




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##### Table of Contents



ITEM 9A.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rule 13a-15(f)
      Internal Control  Integrated
    Framework
  Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15(f)
 37




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control  Integrated
    Framework Managements Annual Report
    on Internal Control Over Financial Reporting.
        Internal Control  Integrated Framework
        38




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##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION   39




---



##### Table of Contents



PART III
 
  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE   
  ITEM 11.
    EXECUTIVE
    COMPENSATION    
 ITEM 12.
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT AND RELATED STOCKHOLDER MATTERS    
 ITEM 13.
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE   
  ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   40




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##### Table of Contents



PART IV
 
  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES      page F-1
    page F-1
    page E-1 Regulation S-K.
 41




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##### Table of Contents



SIGNATURES
    BIG 5 SPORTING GOODS CORPORATION,
    By:
    /s/  Steven
    G. Miller   Chairman of the Board of Directors,
 President, Chief Executive Officer and
 Director of the Company
    Signatures

Title

Date/s/  Steven
    G. Miller      Steven
    G. Miller

Chairman of the Board of Directors, President, Chief Executive
    Officer and Director of the Company (Principal Executive Officer)

March 2, 2011/s/  Barry
    D. Emerson      Barry
    D. Emerson

Senior Vice President, Chief Financial Officer and Treasurer
    (Principal Financial and Accounting Officer)

March 2, 2011/s/  Sandra
    N. Bane      Sandra
    N. Bane

Director of the Company

March 2, 2011/s/  G.
    Michael Brown      G.
    Michael Brown

Director of the Company

March 2, 2011/s/  Jennifer
    Holden Dunbar      Jennifer
    Holden Dunbar

Director of the Company

March 2, 2011/s/  David
    R. Jessick      David
    R. Jessick

Director of the Company

March 2, 2011/s/  Michael
    D. Miller      Michael
    D. Miller

Director of the Company

March 2, 2011  42




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
 
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Index to Consolidated Financial Statements

F-1Report of Independent Registered Public
    Accounting Firm

F-2Consolidated Balance Sheets at January 2,
    2011 and January 3, 2010

F-3Consolidated Statements of Operations for the
    fiscal years ended January 2, 2011, January 3, 2010
    and December 28, 2008

F-4Consolidated Statements of Stockholders
    Equity for the fiscal years ended January 2, 2011,
    January 3, 2010 and December 28, 2008

F-5Consolidated Statements of Cash Flows for the
    fiscal years ended January 2, 2011, January 3, 2010
    and December 28, 2008

F-6Notes to Consolidated Financial Statements

F-7Consolidated Financial Statement Schedule:

ScheduleValuation and Qualifying Accounts as of
    January 2, 2011, January 3, 2010 and December 28,
    2008

II  F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM            Internal Control  Integrated Framework
      F-2




---



##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATIONCONSOLIDATED BALANCE SHEETS (In
    thousands, except share amounts)
  January 2,


January 3,2011


2010ASSETSCurrent assets:Cash and cash equivalents

$
5,620


$
5,765Accounts receivable, net of allowances of $201 and $223,
    respectively


15,000



13,398Merchandise inventories, net


254,217



230,911Prepaid expenses


7,588



9,683Deferred income taxes


9,447



7,723Total current assets


291,872



267,480Property and equipment, net


81,333



81,817Deferred income taxes


12,396



11,327Other assets, net of accumulated amortization of $69 and $346,
    respectively


2,322



1,065Goodwill


4,433



4,433Total assets

$
392,356


$
366,122LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
94,818


$
85,721Accrued expenses


64,392



59,314Current portion of capital lease obligations


1,925



1,904Total current liabilities


161,135



146,939Deferred rent, less current portion


24,349



23,832Capital lease obligations, less current portion


1,569



2,278Long-term debt


48,313



54,955Other long-term liabilities


6,264



6,257Total liabilities


241,630



234,261Commitments and contingenciesStockholders equity:Common stock, $0.01 par value, authorized
    50,000,000 shares; issued 23,315,832 and
    23,050,061 shares, respectively; outstanding 21,832,537 and
    21,566,766 shares, respectively


233



230Additional paid-in capital


97,910



95,259Retained earnings


73,949



57,738Less: Treasury stock, at cost; 1,483,295 shares


(21,366
)


(21,366
)Total stockholders equity


150,726



131,861Total liabilities and stockholders equity

$
392,356


$
366,122    F-3




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATIONCONSOLIDATED STATEMENTS OF
    OPERATIONS (In
    thousands, except per share data)
  Year EndedJanuary 2,


January 3,


December 28,2011


2010


2008Net sales

$
896,813


$
895,542


$
864,650Cost of sales


599,101



597,792



579,165Gross profit


297,712



297,750



285,485Selling and administrative expense


263,488



260,068



257,883Operating income


34,224



37,682



27,602Interest expense


2,108



2,465



5,198Income before income taxes


32,116



35,217



22,404Income taxes


11,554



13,406



8,500Net income

$
20,562


$
21,811


$
13,904Earnings per share:Basic

$
0.95


$
1.02


$
0.64Diluted

$
0.94


$
1.01


$
0.64Dividends per share

$
0.20


$
0.20


$
0.36Weighted-average shares of common stock outstanding:Basic


21,552



21,434



21,608Diluted


21,890



21,657



21,619    F-4




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATIONCONSOLIDATED STATEMENTS OF
    STOCKHOLDERS EQUITY (In
    thousands, except share amounts)
  Additional





TreasuryCommon Stock


Paid-In


Retained


Stock,Shares


Amount


Capital


Earnings


At Cost


TotalBalance at December 30, 2007


22,012,691


$
228


$
90,851


$
34,137


$
(16,061
)

$
109,155Net income














13,904







13,904Dividends on common stock ($0.36 per share)














(7,809
)






(7,809
)Issuance of nonvested share awards


109,100



2



(2
)










Share-based compensation










1,898











1,898Tax deficiency from share-based awards activity










(43
)










(43
)Purchases of treasury stock


(600,999
)














(5,305
)


(5,305
)Balance at December 28, 2008


21,520,792



230



92,704



40,232



(21,366
)


111,800Net income














21,811







21,811Dividends on common stock ($0.20 per share)














(4,305
)






(4,305
)Issuance of nonvested share awards


12,000



















Exercise of stock options


42,775







425











425Share-based compensation










2,139











2,139Tax benefit from share-based awards activity










38











38Forfeiture of nonvested share awards


(1,100
)


















Retirement of common stock for payment of withholding tax


(7,701
)






(47
)










(47
)Balance at January 3, 2010


21,566,766



230



95,259



57,738



(21,366
)


131,861Net income














20,562







20,562Dividends on common stock ($0.20 per share)














(4,351
)






(4,351
)Issuance of nonvested share awards


172,000



2



(2
)










Exercise of stock options


104,175



1



756











757Share-based compensation










1,727











1,727Tax benefit from share-based awards activity










313











313Forfeiture of nonvested share awards


(1,300
)


















Retirement of common stock for payment of withholding tax


(9,104
)






(143
)










(143
)Balance at January 2, 2011


21,832,537


$
233


$
97,910


$
73,949


$
(21,366
)

$
150,726    F-5




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATIONCONSOLIDATED STATEMENTS OF CASH
    FLOWS (In
    thousands)
  Year EndedJanuary 2,


January 3,


December 28,2011


2010


2008Cash flows from operating activities:Net income

$
20,562


$
21,811


$
13,904Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation and amortization


18,627



19,400



19,135Share-based compensation


1,727



2,139



1,898Excess tax benefit related to share-based awards


(327
)


(43
)


Amortization of debt issuance costs


135



53



52Deferred income taxes


(2,793
)


2,684



(865
)Loss (gain) on disposal of property and equipment


18



(59
)


33Changes in operating assets and liabilities:Accounts receivable, net


(1,602
)


3,213



(1,684
)Merchandise inventories, net


(23,306
)


2,051



19,672Prepaid expenses and other assets


2,008



(1,441
)


(1,285
)Accounts payable


10,070



1,564



(6,972
)Accrued expenses and other long-term liabilities


4,748



2,715



(4,385
)Net cash provided by operating activities


29,867



54,087



39,503Cash flows from investing activities:Purchases of property and equipment


(15,628
)


(5,764
)


(20,447
)Proceeds from disposal of property and equipment


4







47Net cash used in investing activities


(15,624
)


(5,764
)


(20,400
)Cash flows from financing activities:Principal borrowings under new revolving credit facility


109,919







Principal payments under new revolving credit facility


(61,606
)






Net principal payments under previous revolving credit facility
    and book overdraft


(55,946
)


(45,458
)


(4,949
)Debt issuance costs


(1,305
)






Principal payments under capital lease obligations


(2,065
)


(2,284
)


(1,751
)Proceeds from exercise of stock options


757



425



Excess tax benefit related to share-based awards


327



43



Purchases of treasury stock










(5,305
)Tax withholding payments for share-based compensation


(143
)


(47
)


Dividends paid


(4,326
)


(4,295
)


(7,781
)Net cash used in financing activities


(14,388
)


(51,616
)


(19,786
)Net decrease in cash and cash equivalents


(145
)


(3,293
)


(683
)Cash and cash equivalents at beginning of year


5,765



9,058



9,741Cash and cash equivalents at end of year

$
5,620


$
5,765


$
9,058Supplemental disclosures of non-cash investing and financing
    activities:Property and equipment acquired under capital leases

$
1,381


$
1,930


$
2,825Property and equipment purchases accrued

$
1,470


$
310


$
634Stock awards vested and issued to employees

$
456


$
182


$
Supplemental disclosures of cash flow information:Interest paid

$
1,882


$
2,706


$
6,082Income taxes paid

$
15,384


$
11,231


$
11,522    F-6




---



##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATIONNOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
  (1)
    Description
    of Business    (2)
    Summary
    of Significant Accounting Policies  Consolidation
    Reporting
    Period
  52-53 week
  Recently
    Issued Accounting Updates
    Use of
    Estimates
    Segment
    Reporting
  Segment Reporting
 F-7




---



##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
    Fiscal Year2010


2009


2008(In thousands)Hard goods

$
491,106


$
487,178


$
461,489Athletic and sport apparel


143,994



145,325



149,480Athletic and sport footwear


259,889



259,989



251,212Other sales


1,824



3,050



2,469Net sales

$
896,813


$
895,542


$
864,650
   Adjustment
    Earnings
    Per Share
  Earnings Per Share
  Revenue
    Recognition
      Revenue Recognition
   F-8




---



##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
  Cost of
    Sales
    Selling
    and Administrative Expense
    Vendor
    Allowances
    Advertising
    Costs
    Share-Based
    Compensation
  Compensation  Stock
    Compensation
  Pre-opening
    Costs
    Cash and
    Cash Equivalents
   F-9




---



##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
  Accounts
    Receivable
    Valuation
    of Merchandise Inventories, Net
  first-in,
        Prepaid
    Expenses
    Property
    and Equipment, Net
    Land

IndefiniteBuildings

20 yearsLeasehold improvements

Shorter of estimated useful life or term of leaseFurniture and equipment

3 - 10 years
     Goodwill
  Intangibles  Goodwill and Other
 F-10




---



##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
    Valuation
    of Long-Lived Assets
    Property, Plant, and Equipment
      Leases
    and Deferred Rent
  Leases
  point-of-sale
       F-11




---



##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
  Asset
    Retirement Obligations
  Asset
    Retirement and Environmental Obligations
    Self-Insurance
    Liabilities
    Income
    Taxes
  Income Taxes
   F-12




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
    Concentration
    of Risk
             F-13




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
  (3)
    Property
    and Equipment, Net    January 2,


January 3,2011


2010(In thousands)Land

$
186


$
186Building


434



434Leasehold improvements


107,449



97,753Furniture and equipment


122,438



119,026230,507



217,399Accumulated depreciation and amortization


(152,218
)


(136,209
)78,289



81,190Assets not placed into service


3,044



627Property and equipment, net

$
81,333


$
81,817
     (4)
    Fair
    Value Measurements    (5)
    Accrued
    Expenses    January 2,


January 3,2011


2010(In thousands)Payroll and related expense

$
18,920


$
18,472Sales tax


10,359



10,379Occupancy costs


8,573



7,634Advertising


6,603



6,202Other


19,937



16,627Accrued expenses

$
64,392


$
59,314
   (6)
    Lease
    Commitments   F-14




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
    Year EndedJanuary 2,


January 3,


December 28,2011


2010


2008(In thousands)Rent expense

$
55,732


$
54,901


$
52,699Contingent rent


1,423



1,149



818Total rent expense

$
57,155


$
56,050


$
53,517
       Capital


OperatingYear Ending:

Leases


Leases


Total(In thousands)2011

$
2,069


$
61,998


$
64,0672012


866



57,994



58,8602013


479



53,451



53,9302014


266



45,691



45,9572015


71



34,522



34,593Thereafter






70,113



70,113Total minimum lease payments


3,751


$
323,769


$
327,520Imputed interest


(257
)Present value of minimum lease payments

$
3,494
     (7)
    Long-Term
    Debt     F-15




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
          LIBO Rate

Base RateLevel

Average Daily Excess Availability

Applicable Margin

Applicable MarginI

Greater than 50% of the Loan Cap


2.00
%


1.00
%II

Less than or equal to 50% of the Loan Cap


2.25
%


1.25
%
        F-16




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
                     F-17




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
    January 2,


January 3,2011


2010(In thousands)LIBO rate

$
34,000


$
44,000Prime lending rate


14,313



10,955Total borrowings

$
48,313


$
54,955
   (8)
    Income
    Taxes    Current


Deferred


Total(In thousands)2010:Federal

$
11,747


$
(2,216
)

$
9,531State


2,600



(577
)


2,023$
14,347


$
(2,793
)

$
11,5542009:Federal

$
9,376


$
2,336


$
11,712State


1,384



310



1,694$
10,760


$
2,646


$
13,4062008:Federal

$
6,937


$
(67
)

$
6,870State


2,428



(798
)


1,630$
9,365


$
(865
)

$
8,500
     Year EndedJanuary 2,


January 3,


December 28,2011


2010


2008(In thousands)Tax expense at statutory rate

$
11,240


$
12,326


$
7,842State taxes, net of federal benefit


1,485



1,651



1,087Tax credits and other


(1,171
)


(571
)


(429
)$
11,554


$
13,406


$
8,500
  F-18




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
    January 2,


January 3,2011


2010(In thousands)Deferred tax assets:Deferred rent

$
11,000


$
10,453Share-based compensation


3,580



3,127Inventory


1,151



1,010Accrued legal fees


951



Other


10,028



9,595Deferred tax assets


26,710



24,185Deferred tax liabilities  basis difference in fixed
    assets


(4,867
)


(5,135
)Net deferred tax assets

$
21,843


$
19,050
         (9)
    Earnings
    Per Share  Earnings Per Share
 F-19




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
    Year EndedJanuary 2,


January 3,


December 28,2011


2010


2008(In thousands, except per share data)Net income

$
20,562


$
21,811


$
13,904Weighted-average shares of common stock outstanding:Basic


21,552



21,434



21,608Dilutive effect of common stock equivalents arising from share
    option and nonvested share awards


338



223



11Diluted


21,890



21,657



21,619Basic earnings per share

$
0.95


$
1.02


$
0.64Diluted earnings per share

$
0.94


$
1.01


$
0.64
       (10)
    Employee
    Benefit Plans    (11)
    Related
    Party Transactions     F-20




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
    (12)
    Commitments
    and Contingencies  No. 37-2009-00093109-CU-OE-CTL,
  No. 37-2009-00095594-CU-MC-CTL, and/or
 F-21




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
        (13)
    Share-Based
    Compensation Plans  2002
    Stock Incentive Plan
   F-22




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
    2007
    Equity and Performance Incentive Plan
  Compensation  Stock Compensation
   F-23




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
  Share
    Option Awards
    Year EndedJanuary 2,


January 3,


December 28,2011


2010


2008Risk-free interest rate


2.4%



2.3%



2.8%Expected term


6.50 years



6.50 years



6.18 yearsExpected volatility


55.2%



55.2%



45.9%Expected dividend yield


1.54%



4.07%



4.02%
         Weighted-AverageWeighted-


RemainingAverage


Contractual


AggregateExercise


Life


IntrinsicShares


Price


(In Years)


ValueOutstanding at January 3, 2010


1,909,375


$
13.90Granted


12,000



13.00Exercised


(104,175
)


7.26Forfeited or Expired


(21,650
)


15.99Outstanding at January 2, 2011


1,795,550


$
14.25



5.77


$
7,536,463Exercisable at January 2, 2011


1,213,325


$
17.86



4.75


$
2,395,826Vested and Expected to Vest at January 2, 2011


1,782,081


$
14.32



5.75


$
7,405,573
      F-24




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
    Nonvested
    Share Awards
    Weighted-Average Grant-Shares


Date Fair ValueBalance at January 3, 2010


92,925


$
8.60Granted


172,000



15.52Vested


(29,875
)


8.45Forfeited


(1,300
)


12.71Balance at January 2, 2011


233,750


$
13.69
        F-25




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (continued)
  (14)
    Selected
    Quarterly Financial Data 
    (unaudited)  Fiscal
    2010
  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(1)(2)(In thousands, except per share data)Net sales

$
218,521


$
219,828


$
231,753


$
226,711Gross profit

$
71,550


$
72,966


$
77,416


$
75,780Net income

$
5,033


$
4,752


$
6,823


$
3,954Net income per share (basic)

$
0.23


$
0.22


$
0.32


$
0.18Net income per share (diluted)

$
0.23


$
0.22


$
0.31


$
0.18
   Fiscal
    2009
  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(1)(3)(In thousands, except per share data)Net sales

$
210,291


$
216,040


$
231,582


$
237,629Gross profit

$
67,072


$
71,331


$
78,509


$
80,839Net income

$
2,760


$
4,655


$
8,011


$
6,386Net income per share (basic)

$
0.13


$
0.22


$
0.37


$
0.30Net income per share (diluted)

$
0.13


$
0.22


$
0.37


$
0.29
     (1)
    
    The fourth quarter of fiscal 2010
    included 13 weeks, compared with the fourth quarter of
    fiscal 2009 which included 14 weeks.(2)
    
    In the fourth quarter of fiscal
    2010, the Company recorded a net pre-tax charge of
    $2.3 million, reflecting a legal settlement accrual, of
    which $0.8 million was classified as a reduction to net
    sales and $1.5 million was classified as selling and
    administrative expense. This charge reduced net income in fiscal
    2010 by $1.5 million, or $0.07 per diluted share.(3)
    
    In the fourth quarter of fiscal
    2009, the Company recorded a net pre-tax charge of
    $1.0 million, which reflected a legal settlement accrual
    offset by proceeds received from the settlement of a lawsuit
    relating to credit card fees. This charge reduced net income in
    fiscal 2009 by $0.6 million, or $0.03 per diluted share.  (15)
    Subsequent
    Event   F-26




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATIONSCHEDULE II  VALUATION AND
    QUALIFYING ACCOUNTS
    (In thousands)
  Balance at


Charged to





Balance atBeginning of


Costs and





End ofPeriod


Expenses


Deductions


PeriodJanuary 2, 2011Allowance for doubtful receivables

$
223


$
22


$
(44
)

$
201Allowance for sales returns


1,395



93







1,488Inventory reserves


4,645



5,547



(5,585
)


4,607January 3, 2010Allowance for doubtful receivables

$
305


$
21


$
(103
)

$
223Allowance for sales returns


1,423



(28
)






1,395Inventory reserves


4,434



3,786



(3,576
)


4,645December 28, 2008Allowance for doubtful receivables

$
405


$
130


$
(230
)

$
305Allowance for sales returns


1,496



(73
)






1,423Inventory reserves


4,713



4, 890



(5,169
)


4,434  II




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##### Table of Contents



BIG 5
    SPORTING GOODS CORPORATION
    EXHIBIT INDEX
  ExhibitNumber

Exhibit Description3
.1

Amended and Restated Certificate of Incorporation of Big 5
    Sporting Goods
    Corporation.(1)3
.2

Amended and Restated
    Bylaws.(1)4
.1

Specimen of Common Stock
    Certificate.(2)10
.1

2002 Stock Incentive
    Plan.(3)10
.2

Form of Amended and Restated Employment Agreement between Robert
    W. Miller and Big 5 Sporting Goods
    Corporation.(3)10
.3

Second Amended and Restated Employment Agreement, dated as of
    December 31, 2008, between Steven G. Miller and Big 5 Sporting
    Goods
    Corporation.(12)10
.4

Amended and Restated Indemnification Implementation Agreement
    between Big 5 Corp. (successor to United Merchandising Corp.)
    and Thrifty PayLess Holdings, Inc. dated as of April 20,
    1994.(1)10
.5

Agreement and Release among Pacific Enterprises, Thrifty PayLess
    Holdings, Inc., Thrifty PayLess, Inc., Thrifty and Big 5 Corp.
    (successor to United Merchandising Corp.) dated as of March 11,
    1994.(1)10
.6

Form of Indemnification
    Agreement.(1)10
.7

Form of Indemnification Letter
    Agreement.(2)10
.8

Credit Agreement, dated as of October 18, 2010, among Big 5
    Corp., Big 5 Services Corp. and Big 5 Sporting Goods
    Corporation, Wells Fargo Bank, National Association, as
    Administrative Agent and Collateral Agent and Swingline Lender,
    the Lenders named therein, and Bank of America, N.A. as
    Documentation
    Agent.(5)10
.9

Security Agreement, dated as of October 18, 2010, among Big 5
    Corp., Big 5 Services Corp. and Big 5 Sporting Goods Corporation
    and Wells Fargo Bank, National Association, as Collateral
    Agent.(5)10
.10

Guaranty, dated as of October 18, 2010, by Big 5 Sporting Goods
    Corporation in favor of Wells Fargo Bank, National Association,
    as Administrative Agent and Collateral Agent for the Lenders
    described
    therein.(5)10
.11

Lease dated as of April 14, 2004 by and between Pannatoni
    Development Company, LLC and Big 5
    Corp.(6)10
.12

Form of Big 5 Sporting Goods Corporation Stock Option Grant
    Notice and Stock Option Agreement for use with Steven G. Miller
    with the 2002 Stock Incentive
    Plan.(7)10
.13

Form of Big 5 Sporting Goods Corporation Stock Option Grant
    Notice and Stock Option Agreement for use with 2002 Stock
    Incentive
    Plan.(7)10
.14

Employment Offer Letter dated August 15, 2005 between Barry D.
    Emerson and Big 5
    Corp.(8)10
.15

Severance Agreement dated as of August 9, 2006 between Barry D.
    Emerson and Big 5
    Corp.(9)10
.16

Big 5 Sporting Goods Corporation 2007 Equity and Performance
    Incentive
    Plan.(10)10
.17

Form of Big 5 Sporting Goods Corporation Stock Option Grant
    Notice and Stock Option Agreement for use with 2007 Equity and
    Performance Incentive
    Plan.(10)10
.18

Form of Big 5 Sporting Goods Corporation Restricted Stock Grant
    Notice and Restricted Stock Agreement for use with 2007 Equity
    and Performance Incentive
    Plan.(11)14
.1

Code of Business Conduct and Ethics.
    (4)21
.1

Subsidiaries of Big 5 Sporting Goods
    Corporation.(7)23
.1

Consent of Independent Registered Public Accounting Firm,
    Deloitte & Touche
    LLP.(13)31
.1

Rule 13a-14(a) Certification of Chief Executive Officer.
    (13)31
.2

Rule 13a-14(a) Certification of Chief Financial
    Officer.(13)32
.1

Section 1350 Certification of Chief Executive
    Officer.(13)32
.2

Section 1350 Certification of Chief Financial
    Officer.(13)     (1)

    
    Incorporated by reference to the Annual Report on
    Form 10-K
    filed by Big 5 Sporting Goods Corporation on March 31, 2003. E-1




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##### Table of Contents



(2)

    
    Incorporated by reference to Amendment No. 4 to the
    Registration Statement on Form
    S-1 filed by
    Big 5 Sporting Goods Corporation on June 24, 2002.(3)

    
    Incorporated by reference to Amendment No. 2 to the
    Registration Statement on Form
    S-1 filed by
    Big 5 Sporting Goods Corporation on June 5, 2002.(4)

    
    Incorporated by reference to the Annual Report on
    Form 10-K
    filed by Big 5 Sporting Goods Corporation on March 12, 2004.(5)

    
    Incorporated by reference to the Quarterly Report on
    Form 10-Q
    filed by Big 5 Sporting Goods Corporation on November 3,
    2010.(6)

    
    Incorporated by reference to the Quarterly Report on
    Form 10-Q
    filed by Big 5 Sporting Goods Corporation on August 6, 2004.(7)

    
    Incorporated by reference to the Annual Report on
    Form 10-K
    filed by Big 5 Sporting Goods Corporation on September 6,
    2005.(8)

    
    Incorporated by reference to the Annual Report on
    Form 10-K
    filed by Big 5 Sporting Goods Corporation on March 16, 2006.(9)

    
    Incorporated by reference to the Quarterly Report on
    Form 10-Q
    filed by Big 5 Sporting Goods Corporation on August 11,
    2006.(10)

    
    Incorporated by reference to the Current Report on
    Form 8-K
    filed by Big 5 Sporting Goods Corporation on June 25, 2007.(11)

    
    Incorporated by reference to the Annual Report on
    Form 10-K
    filed by Big 5 Sporting Goods Corporation on March 10, 2008.(12)

    
    Incorporated by reference to the Current Report on
    Form 8-K
    filed by Big 5 Sporting Goods Corporation on January 6,
    2009.(13)

    
    Filed herewith. E-2