Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 27, 2018October 30, 2021
OR
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
Commission File Number: 1-37499

BARNES & NOBLE EDUCATION, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware46-0599018
(State or Other Jurisdiction of

Incorporation or Organization)
(I.R.S. Employer

Identification No.)
120 Mountain View Blvd., Basking Ridge, NJNJ07920
(Address of Principal Executive Offices)(Zip Code)
(Registrant’s Telephone Number, Including Area Code): (908) 991-2665
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)Securities registered pursuant to Section 12(b) of the Act:
Title of ClassTrading SymbolName of Exchange on which registered
Common Stock, $0.01 par value per shareBNEDNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company”company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer¨Accelerated filerx
Large accelerated filer¨Accelerated filerx
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
Smaller reporting company¨
Emerging Growth Company¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
As of February 16, 2018, 46,914,466November 26, 2021, 51,993,048 shares of Common Stock, par value $0.01 per share, were outstanding.


EXPLANATORY NOTE


Effective with the acquisitionTable of MBS Textbook Exchange, LLC ("MBS") on February 27, 2017, we determined that we have two reportable segments: Barnes & Noble College Booksellers, LLC ("BNC") and MBS, whereas BNC was previously our only reportable segment prior to the acquisition. The condensed consolidated financial statements for the 13 and 39 weeks ended January 27, 2018 include the financial results of MBS and all material intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements for the 13 and 39 weeks ended January 28, 2017 exclude the financial results of MBS.Contents
On August 3, 2017, we acquired Student Brands, LLC ("Student Brands"), a leading direct-to-student subscription-based writing services business. The condensed consolidated financial statements for the 13 and 39 weeks ended January 27, 2018 include the financial results of Student Brands in the BNC segment from the date of acquisition, August 3, 2017, and the condensed consolidated financial statements for the 13 and 39 weeks ended January 28, 2017 exclude the financial results of Student Brands.






BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Fiscal Quarter Ended January 27, 2018October 30, 2021
Index to Form 10-Q
 
Page No.

2

Table of Contents
PART I - FINANCIAL INFORMATION
 
Item 1:    Financial Statements


BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
13 weeks ended 39 weeks ended13 weeks ended26 weeks ended
January 27,
2018
 January 28,
2017
 January 27,
2018
 January 28,
2017
October 30,
2021
October 31,
2020
October 30,
2021
October 31,
2020
Sales:       Sales:
Product sales and other$540,903
 $457,147
 $1,693,230
 $1,372,810
Product sales and other$577,329 $551,832 $805,099 $745,042 
Rental income62,488
 64,477
 152,733
 158,722
Rental income49,648 43,653 62,672 54,457 
Total sales603,391
 521,624
 1,845,963
 1,531,532
Total sales626,977 595,485 867,771 799,499 
Cost of sales:       Cost of sales:
Product and other cost of sales419,641
 366,190
 1,326,221
 1,098,682
Product and other cost of sales453,070 452,475 627,231 618,240 
Rental cost of sales37,215
 39,509
 91,936
 97,998
Rental cost of sales28,348 27,725 34,952 35,112 
Total cost of sales456,856
 405,699
 1,418,157
 1,196,680
Total cost of sales481,418 480,200 662,183 653,352 
Gross profit146,535
 115,925
 427,806
 334,852
Gross profit145,559 115,285 205,588 146,147 
Selling and administrative expenses111,974
 97,111
 326,532
 282,171
Selling and administrative expenses107,902 91,972 194,137 162,015 
Depreciation and amortization expense17,007
 13,149
 48,728
 39,057
Depreciation and amortization expense11,952 13,193 24,576 27,256 
Impairment loss (non-cash)313,130
 
 313,130
 
Restructuring and other charges
 
 5,429
 1,790
Restructuring and other charges1,116 3,387 3,739 9,058 
Transaction costs49
 467
 1,895
 2,638
Operating (loss) income(295,625) 5,198
 (267,908) 9,196
Operating income (loss)Operating income (loss)24,589 6,733 (16,864)(52,182)
Interest expense, net2,954
 679
 7,828
 1,975
Interest expense, net2,264 912 4,758 3,565 
(Loss) income before income taxes(298,579) 4,519
 (275,736) 7,221
Income (loss) before income taxesIncome (loss) before income taxes22,325 5,821 (21,622)(55,747)
Income tax (benefit) expense(15,344) 758
 (6,113) 2,087
Income tax (benefit) expense(203)(1,694)196 (16,610)
Net (loss) income$(283,235) $3,761
 $(269,623) $5,134
Net income (loss)Net income (loss)$22,528 $7,515 $(21,818)$(39,137)
       
(Loss) Earnings per share of common stock:       
Earnings (Loss) per share of common stock:Earnings (Loss) per share of common stock:
Basic$(6.04) $0.08
 $(5.77) $0.11
Basic$0.43 $0.15 $(0.42)$(0.81)
Diluted$(6.04) $0.08
 $(5.77) $0.11
Diluted$0.41 $0.15 $(0.42)$(0.81)
Weighted average shares of common stock outstanding:       Weighted average shares of common stock outstanding:
Basic46,914
 46,276
 46,712
 46,265
Basic51,666 48,804 51,570 48,608 
Diluted46,914
 46,844
 46,712
 46,716
Diluted54,568 49,428 51,570 48,608 
See accompanying notes to condensed consolidated financial statements.



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Table of Contents
BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
January 27,
2018
 January 28,
2017
 April 29,
2017
October 30,
2021
October 31,
2020
May 1,
2021
(unaudited) (unaudited) (audited) (unaudited)(unaudited)(audited)
ASSETS     ASSETS
Current assets:     Current assets:
Cash and cash equivalents$22,373
 $132,061
 $19,003
Cash and cash equivalents$10,996 $7,353 $8,024 
Receivables, net243,434
 178,825
 86,040
Receivables, net218,053 167,493 121,072 
Merchandise inventories, net614,499
 494,032
 434,064
Merchandise inventories, net370,529 457,677 281,112 
Textbook rental inventories61,427
 67,372
 52,826
Textbook rental inventories50,642 50,736 28,692 
Prepaid expenses and other current assets12,274
 8,134
 10,698
Prepaid expenses and other current assets68,965 23,762 61,933 
Total current assets954,007
 880,424
 602,631
Total current assets719,185 707,021 500,833 
Property and equipment, net110,987
 107,272
 116,613
Property and equipment, net91,875 93,130 89,172 
Operating lease right-of-use assetsOperating lease right-of-use assets252,650 286,038 240,456 
Intangible assets, net224,314
 191,628
 209,885
Intangible assets, net141,847 166,140 150,904 
Goodwill49,282
 281,346
 329,467
Goodwill4,700 4,700 4,700 
Deferred tax assets, netDeferred tax assets, net23,248 8,231 23,248 
Other noncurrent assets41,990
 39,233
 41,236
Other noncurrent assets26,010 31,734 29,105 
Total assets$1,380,580
 $1,499,903
 $1,299,832
Total assets$1,259,515 $1,296,994 $1,038,418 
LIABILITIES AND STOCKHOLDERS' EQUITY     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:     Current liabilities:
Accounts payable$488,954
 $480,378
 $192,742
Accounts payable$333,099 $314,042 $137,578 
Accrued liabilities252,202
 207,731
 120,478
Accrued liabilities122,734 134,181 92,871 
Current operating lease liabilitiesCurrent operating lease liabilities118,434 121,518 92,513 
Short-term borrowings
 
 100,000
Short-term borrowings— — 50,000 
Total current liabilities741,156
 688,109
 413,220
Total current liabilities574,267 569,741 372,962 
Long-term deferred taxes, net4,278
 22,709
 16,871
Long-term operating lease liabilitiesLong-term operating lease liabilities171,341 198,990 184,780 
Other long-term liabilities73,468
 76,196
 96,433
Other long-term liabilities51,113 48,329 52,042 
Long-term borrowings113,000
 
 59,600
Long-term borrowings183,300 99,500 127,600 
Total liabilities931,902
 787,014
 586,124
Total liabilities980,021 916,560 737,384 
Commitments and contingencies
 
 
Commitments and contingencies— — — 
Stockholders' equity:     Stockholders' equity:
Preferred stock, $0.01 par value; authorized, 5,000 shares; issued and outstanding, none
 
 
Common stock, $0.01 par value; authorized, 200,000 shares; issued, 50,028, 48,972 and 49,372 shares, respectively; outstanding, 46,914, 46,276 and 46,517 shares, respectively500
 490
 494
Preferred stock, $0.01 par value; authorized, 5,000 shares; 0 shares issued and 0 shares outstandingPreferred stock, $0.01 par value; authorized, 5,000 shares; 0 shares issued and 0 shares outstanding— — — 
Common stock, $0.01 par value; authorized, 200,000 shares; issued, 54,162, 53,316 and 53,327 shares, respectively; outstanding, 51,976, 49,064 and 51,379 shares, respectivelyCommon stock, $0.01 par value; authorized, 200,000 shares; issued, 54,162, 53,316 and 53,327 shares, respectively; outstanding, 51,976, 49,064 and 51,379 shares, respectively541 533 533 
Additional paid-in capital715,088
 706,736
 708,871
Additional paid-in capital736,886 735,647 734,257 
(Accumulated deficit) Retained earnings(237,260) 32,136
 32,363
Accumulated deficitAccumulated deficit(436,432)(321,964)(414,614)
Treasury stock, at cost(29,650) (26,473) (28,020)Treasury stock, at cost(21,501)(33,782)(19,142)
Total stockholders' equity448,678
 712,889
 713,708
Total stockholders' equity279,494 380,434 301,034 
Total liabilities and stockholders' equity$1,380,580
 $1,499,903
 $1,299,832
Total liabilities and stockholders' equity$1,259,515 $1,296,994 $1,038,418 
See accompanying notes to condensed consolidated financial statements.

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
 
39 weeks ended26 weeks ended
January 27,
2018
 January 28,
2017
October 30,
2021
October 31,
2020
Cash flows from operating activities:   Cash flows from operating activities:
Net (loss) income$(269,623) $5,134
Adjustments to reconcile net (loss) income to net cash flows from operating activities:   
Net lossNet loss$(21,818)$(39,137)
Adjustments to reconcile net loss to net cash flows from operating activities:Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization expense48,728
 39,057
Depreciation and amortization expense24,576 27,256 
Content amortization expenseContent amortization expense2,586 2,386 
Amortization of deferred financing costs1,127
 488
Amortization of deferred financing costs725 541 
Impairment loss (non-cash)313,130
 
Merchandise inventory lossMerchandise inventory loss434 — 
Deferred taxes(12,594) (7,156)Deferred taxes— (426)
Stock-based compensation expense6,223
 7,227
Stock-based compensation expense2,600 2,701 
Change in other long-term liabilities(23,252) 815
Changes in other long-term assets and liabilities, netChanges in other long-term assets and liabilities, net1,462 5,016 
Changes in operating lease right-of-use assets and liabilitiesChanges in operating lease right-of-use assets and liabilities286 6,597 
Changes in other operating assets and liabilities, net77,701
 99,437
Changes in other operating assets and liabilities, net13,291 86,452 
Net cash flows provided by operating activities141,440
 145,002
Net cash flows provided by operating activities24,142 91,386 
Cash flows from investing activities:   Cash flows from investing activities:
Purchases of property and equipment(30,101) (26,488)Purchases of property and equipment(21,264)(16,197)
Acquisition of business, net of cash acquired(58,259) (917)
Net increase in other noncurrent assets(1,479) (6,246)
Net change in other noncurrent assetsNet change in other noncurrent assets460 
Net cash flows used in investing activities(89,839) (33,651)Net cash flows used in investing activities(20,804)(16,194)
Cash flows from financing activities:   Cash flows from financing activities:
Proceeds from borrowings under Credit Agreement481,600
 116,100
Proceeds from borrowings under Credit Agreement259,720 330,800 
Repayments of borrowings under Credit Agreement(528,200) (116,100)Repayments of borrowings under Credit Agreement(254,020)(406,000)
Purchase of treasury shares(1,630) (7,858)Purchase of treasury shares(2,359)(881)
Net cash flows used in financing activities(48,230) (7,858)
Net increase in cash, cash equivalents and restricted cash3,371
 103,493
Proceeds from the exercise of stock options, netProceeds from the exercise of stock options, net37 — 
Net cash flows provided by (used in) financing activitiesNet cash flows provided by (used in) financing activities3,378 (76,081)
Net increase (decrease) in cash, cash equivalents and restricted cashNet increase (decrease) in cash, cash equivalents and restricted cash6,716 (889)
Cash, cash equivalents and restricted cash at beginning of period21,697
 30,866
Cash, cash equivalents and restricted cash at beginning of period16,814 9,008 
Cash, cash equivalents and restricted cash at end of period$25,068
 $134,359
Cash, cash equivalents and restricted cash at end of period$23,530 $8,119 
Changes in other operating assets and liabilities, net:   Changes in other operating assets and liabilities, net:
Receivables, net$(157,043) $(127,369)Receivables, net$(96,981)$(76,642)
Merchandise inventories(180,434) (181,285)Merchandise inventories(89,851)(28,738)
Textbook rental inventories(8,601) (19,612)Textbook rental inventories(21,950)(10,026)
Prepaid expenses and other current assets(1,079) (1,583)Prepaid expenses and other current assets(3,288)(7,585)
Accounts payable and accrued liabilities424,858
 429,286
Accounts payable and accrued liabilities225,361 209,443 
Changes in other operating assets and liabilities, net$77,701
 $99,437
Changes in other operating assets and liabilities, net$13,291 $86,452 
See accompanying notes to condensed consolidated financial statements.



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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Equity
(In thousands)
(unaudited)

Additional
Common StockPaid-InAccumulatedTreasury StockTotal
SharesAmountCapitalDeficitSharesAmountEquity
Balance at May 2, 2020Balance at May 2, 202052,140 $521 $732,958 $(282,827)3,842 $(32,901)$417,751 
Stock-based compensation expenseStock-based compensation expense1,521 1,521 
Vested equity awardsVested equity awards514 (5)— 
Shares repurchased for tax withholdings for vested stock awardsShares repurchased for tax withholdings for vested stock awards179 (342)(342)
Net lossNet loss(46,652)(46,652)
Balance August 1, 2020Balance August 1, 202052,654 $526 $734,474 $(329,479)4,021 $(33,243)$372,278 
Stock-based compensation expenseStock-based compensation expense1,180 1,180 
Vested equity awardsVested equity awards662 (7)— 
Shares repurchased for tax withholdings for vested stock awardsShares repurchased for tax withholdings for vested stock awards231 (539)(539)
Net incomeNet income7,515 7,515 
Balance at October 31, 2020Balance at October 31, 202053,316 $533 $735,647 $(321,964)4,252 $(33,782)$380,434 
              
   Additional        
 Common Stock Paid-In Retained Treasury Stock Total
 Shares Amount Capital Earnings Shares Amount Equity
Balance at April 30, 2016 48,645
 $486
 $699,513
 $27,002
 1,890
 $(18,615) $708,386
Additional
Common StockPaid-InAccumulatedTreasury StockTotal
SharesAmountCapitalDeficitSharesAmountEquity
Balance at May 1, 2021Balance at May 1, 202153,327 $533 $734,257 $(414,614)1,948 $(19,142)$301,034 
Stock-based compensation expense     7,227
       7,227
Stock-based compensation expense1,122 1,122 
Vested equity awards 327
 4
 (4)       
Vested equity awards338 (3)— 
Common stock repurchased         689
 (6,718) (6,718)
Shares repurchased for tax withholdings for vested stock awards         117
 (1,140) (1,140)Shares repurchased for tax withholdings for vested stock awards130 (1,215)(1,215)
Net lossNet loss(44,346)(44,346)
Balance July 31, 2021Balance July 31, 202153,665 $536 $735,376 $(458,960)2,078 $(20,357)$256,595 
Stock-based compensation expenseStock-based compensation expense1,478 1,478 
Vested equity awardsVested equity awards487 (5)— 
Shares repurchased for tax withholdings for vested stock awardsShares repurchased for tax withholdings for vested stock awards108 (1,144)(1,144)
Issuance of common stock upon exercise of stock optionsIssuance of common stock upon exercise of stock options10 — 37 37 
Net income     
 5,134
     5,134
Net income22,528 22,528 
Balance at January 28, 2017 48,972
 $490
 $706,736
 $32,136
 2,696
 $(26,473) $712,889
Balance October 30, 2021Balance October 30, 202154,162 $541 $736,886 $(436,432)2,186 $(21,501)$279,494 
              
              
   Additional        
 Common Stock Paid-In Accumulated Treasury Stock Total
 Shares Amount Capital Deficit Shares Amount Equity
Balance at April 29, 2017 49,372
 $494
 $708,871
 $32,363
 2,855
 $(28,020) $713,708
Stock-based compensation expense     6,223
       6,223
Vested equity awards 656
 6
 (6)       
Shares repurchased for tax withholdings for vested stock awards         259
 (1,630) (1,630)
Net loss       (269,623)     (269,623)
Balance at January 27, 2018 50,028
 $500
 $715,088
 $(237,260) 3,114
 $(29,650) $448,678
              
See accompanying notes to condensed consolidated financial statements.



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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 3926 weeks ended January 27, 2018October 30, 2021 and January 28, 2017October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)
Unless the context otherwise indicates, references in these Notes to the accompanying condensed consolidated financial statements to “we,” “us,” “our”, and “the Company” refer to Barnes & Noble Education or "BNED", Inc., a Delaware corporation. References to “Barnes & Noble College” or "BNC" refer to our college bookstore business operated through our subsidiary Barnes & Noble College Booksellers, LLC. References to “MBS” refer to our virtual bookstore and wholesale textbook distribution business operated through our subsidiary MBS Textbook Exchange, LLC, a Delaware corporation.LLC.
This Form 10-Q should be read in conjunction with our Audited Consolidated Financial Statements and accompanying Notes to consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended April 29, 2017,May 1, 2021, which includes consolidated financial statements for the Company for each of the three fiscal years ended April 29, 2017, April 30, 2016 andMay 1, 2021, May 2, 20152020 and April 27, 2019 (Fiscal 2017,2021, Fiscal 20162020 and Fiscal 2015,2019, respectively) and the unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the 13 weeks ended July 29, 2017 and the unaudited condensed consolidated financial statements in our Form 10-Q for the 26 weeks ended October 28, 2017.31, 2021.
Note 1. Organization
Description of Business
Barnes & Noble Education, Inc. (“BNED”) is one of the largest contract operators of physical and virtual bookstores for higher educationcollege and university campuses and K-12 institutions across the United States,States. We are also one of the largest textbook wholesalers, inventory management hardware and software providers, and a leading provider of digital education services. Through its Barnes & Noble College (“BNC”)solutions. We operate 1,445 physical, virtual, and MBS Textbook Exchange (“MBS”) subsidiaries, Barnes & Noble Education operates 1,480 physical and virtualcustom bookstores and servesserve more than 6 million students, delivering essential educational content and tools within a dynamic omnichannel retail environment. We have two reportable segments: BNC and MBS.
BNC operates 782 physical campus bookstores as of January 27, 2018, the majority of which also have school-branded e-commerce sites operated by BNC. Our campus stores are a social and academic hub through which students can access affordable course materials and affinity products, including new and used print and digital textbooks, which are available for sale or rent, emblematic apparel and gifts, trade books, computer products, school and dorm supplies, café offerings, convenience food and beverages, and graduation products. BNC product offerings also include a suite of digital content, software, and services through our LoudCloud platform, such as predictive analytics, a variety of open educational resources ("OER") courseware, and competency-based learning solutions and a learning management system. Additionally, through Student Brands, LLC, a leadingwe offer direct-to-student subscription-based writing services business, BNC offers services focused on study tools, writing help, and literary research, all centered on assisting students with the writing process.
Our MBS subsidiary operates two highly integrated businesses. The MBS Direct business is the largest contract operator of virtual bookstores for college and university campuses and private/parochial K-12 schools. MBS Direct operates 698 virtual bookstores as of January 27, 2018, offering new and used print and digital textbooks, which are available for sale or rent. Additionally, MBS Direct sells textbooks directly to students through textbooks.comSM, one of the largest e-commerce sites for new and used textbooks. MBS Wholesale is one of the largest textbook wholesalers in the country, providing a comprehensive selection of new and used textbooks at a low cost of supply to more than 3,700 physical bookstores (as of April 29, 2017) including BNC’s 782 campus bookstores.
Educational institutions increasingly are outsourcing bookstore operations, investing in data-driven analytical tools, and offering students more affordable options for textbooks and other learning tools. Given these continuing trends, we are well-positioned to capture new market share and partner with an increasing number of schools across the country. As demand for new, improved, and more affordable products and services to help students study more effectively and improve academic performance.
The strengths of our business include our ability to compete by developing new products and solutions to meet market needs, our large operating footprint with direct access to students and faculty, our well-established, deep relationships with academic partners and stable, long-term contracts and our well-recognized brands. We expect to continue to introduce scalable and advanced digital solutions focused largely on the student, expand our e-commerce capabilities and accelerate such capabilities through our recent merchandising partnership with Fanatics Retail Group Fulfillment, LLC, Inc. (“Fanatics”) and Fanatics Lids College, Inc. (“FLC”) (collectively referred to herein as the “FLC Partnership”), increase market share with new accounts, and expand our strategic opportunities through acquisitions and partnerships. We expect general merchandise sales to increase over the long term, as our product assortments continue to emphasize and reflect changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online, which we expect to be further enhanced and accelerated through the “FLC Partnership”. Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our logo and emblematic general merchandise business.
We believe the Barnes & Noble brand (licensed from our former parent) along with our subsidiary brands, BNC and MBS, are synonymous with innovation in bookselling and campus retailing, and are widely recognized and respected brands in the rapidly changing education landscape,United States. Our large college footprint, reputation, and credibility in the marketplace not only support our marketing efforts to universities, students, and faculty, but are also important to our relationship with leading publishers who rely on us as one of their primary distribution channels, and for being a trusted source for students in our direct-to-student digital solutions business.
We have 3 reportable segments: Retail, Wholesale and DSS. For additional information related to our strategies, operations and segments, see Part I - Item 1. Business in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.
Partnership with Fanatics and FLC
In December 2020, we are workingentered into the FLC Partnership. Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to evolvedrive increased value for customers and accelerate growth of our business modelgeneral merchandise business. Fanatics’ cutting-edge e-commerce and enhancetechnology expertise offers our solutions. campus stores expanded product selection, a world-class online and mobile experience, and a progressive direct-to-consumer platform. Coupled with FLC, the leading standalone brick and mortar retailer focused exclusively on licensed fan and alumni products, our campus stores have improved access to trend and sales performance data on licensees, product styles, and design treatments.
We aim to be an even stronger partnermaintain our relationships with campus partners and remain responsible for schoolsstaffing and meet customer needs by expandingmanaging the day-to-day operations of our physical and virtual bookstore service capabilities, courseware offerings and digital platform services.campus bookstores. We believe that our recent strategic actions, including the acquisition of LoudCloud, Promoversity, MBS, and Student Brands and development of courseware, have substantially enhanced our competitive position. We continue to aggressively innovate and collaboratealso work closely with our campus partners to provide solutionsensure that extend well beyond course materials sourcing and sales to include new digital services that support successful student outcomes.each campus store

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 3926 weeks ended January 27, 2018October 30, 2021 and January 28, 2017October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)



maintains unique aspects of in-store merchandising, including localized product assortments and specific styles and designs that reflect each campus’s brand. We leverage Fanatics’ e-commerce technology and expertise for the operational management of the emblematic merchandise and gift sections of our campus store websites. FLC manages in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus stores.
In December 2020, Fanatics, Inc. and Lids Holdings, Inc. jointly made a strategic equity investment in BNED. On August 3, 2017,April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, we acquired Student Brands, LLC ("Student Brands"). Student Brands operates multiple direct-to-student businesses focusedsold our logo and emblematic general merchandise inventory to FLC, which was finalized during the first quarter of Fiscal 2022. As contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products during the first quarter of Fiscal 2022. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on study tools, writing help, and literary research, all centered on assisting students with the writing process. Student Brands has a substantial and growing community of online learners, with over 20 million unique monthly users across its digital properties, which include123HelpMe.com, Bartleby.com and StudyMode.com in the United States and TrabalhosFeitos.com, Etudier.com and Monografias.com in Brazil, France and Mexico, respectively. Student Brands utilizes deep data analytics and artificial intelligence to drive its content management system, the Content Brain. The Content Brain sifts through millions of pieces of content and provides the best answer for virtually any assignment a student is tackling. Student Brands generates revenue predominantly through its subscription-based services and digital advertisements. See Note 4. Acquisitions.
Growth Drivers
The primary factors that we expect will enable us to grow our business are as follows:
Increasing market share with new accounts.
Adapting our merchandising strategy and product and service offerings.
Providing a scalable and leading digital product and solution set.
Expanding strategic opportunities through acquisitions and partnerships.
net basis. For additional information, related to the growth drivers for ourbusiness, see Part III - Item 8. Financial Statements and Supplementary Data - Note 2. Management DiscussionSummary of Significant Accounting Policies - Merchandise Inventories and Note 6. Equity and Analysis - Overview in this Form 10-Q and Part I - Item 1. Business - Overview - Growth Drivers Earnings Per Share in our Annual Report on Form 10-K for the fiscal year ended April 29, 2017.May 1, 2021.
COVID-19 Business Impact
Since the fourth quarter of Fiscal 2020, our business has been significantly negatively impacted by the COVID-19 pandemic, resulting in an unprecedented material decline in revenue. Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve. We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including the Delta variant, on enrollments, university budgets, athletics and other areas that directly affect our business operations. Although most four year schools have returned to a traditional on-campus environment for learning in the current Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and its effect on our ability to source products, including textbooks and general merchandise offerings.
The COVID-19 impact on higher education remains a fluid situation, and we are committed to supporting our campus partners through our flexible offerings and our ability to quickly pivot to ensure uninterrupted service as institutions manage the safety of their campuses. If economic conditions caused by the pandemic do not recover as currently estimated by management or market factors currently in place change, there could be a further impact on our results of operations, financial condition and cash flows from operations. We will continue to assess our operations and will continue to consider the guidance of local governments and our campus partners to how to operate our bookstores in the safest manner for our employees and customers. Please see our Part II - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
Our condensed consolidated financial statements reflect our condensed consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”). In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements of the Company contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its consolidated financial position and the results of its operations and cash flows for the periods reported. These condensed consolidated financial statements are condensed and therefore do not include all of the information and footnotes required by GAAP.
The condensed consolidated financial statements are presented on a consolidated basis for the 13 and 39 weeks ended January 27, 2018 and include the financial results of MBS (which was acquired on February 27, 2017) and Student Brands (which was acquired on August 3, 2017). All material intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements for
Our business is highly seasonal. Our quarterly results also may fluctuate depending on the 13 and 39 weeks ended January 28, 2017 excludetiming of the financialstart of the various schools' semesters, as well as shifts in our fiscal calendar dates. These shifts in timing may affect the comparability of our results of MBS and Student Brands.
across periods. Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April. Our retail business (BNC and MBS Direct) sales are generally highest in the second and third fiscal quarters, when college students generally purchase textbooks for the upcoming semesters, and lowest in the first and fourth fiscal quarters. Sales attributable to the MBS wholesale business are generally highest in our first, second and third quarter as it sells textbooks for retail distribution, which somewhat offsets the decreased first quarter sales attributable to our retail business. MBS has significantly lower operating profit or operating loss realized during the fourth quarter. Due to the seasonal nature of the business, the results of operations for the 13 and 3926 weeks ended January 27, 2018October 30, 2021 are not indicative of the results expected for the 52 weeks ending April 28, 201830, 2022 (Fiscal 2018)2022).
For certain of our retail operations, sales are generally highest in the second and third fiscal quarters, when students purchase and rent textbooks and other course materials for the typical academic year, and lowest in the first and fourth fiscal quarters. Sales attributable to our wholesale business are generally highest in our first, second and third quarters, as MBS sells textbooks and other course materials for retail distribution. Our DSS segment sales and operating profit are realized relatively consistently throughout the year.
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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 26 weeks ended October 30, 2021 and October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)

Use of Estimates
In preparing financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Restricted Cash
BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
NotesAs of October 30, 2021 and October 31, 2020, we had restricted cash of $12,534 and $766, respectively, comprised of $11,637 and $0, respectively, in prepaid and other current assets in the consolidated balance sheet related to Condensed Consolidated Financial Statements
Forsegregated funds for commission due to FLC for logo merchandise sales as per the 13FLC Partnership's merchandising agreement and 39 weeks ended January 27, 2018$897 and January 28, 2017
(Thousands of dollars, except share and per share data)
(unaudited)


$766, respectively, in other noncurrent assets in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.
Merchandise Inventories
Merchandise inventories, which consist of finished goods, are stated at the lower of cost or market. Market value of our inventory, which is all purchased finished goods, is determined based on its estimated net realizable value, which is generally the selling price less normally predictable costs of disposal and transportation. Reserves for non-returnable inventory are based on our history of liquidating non-returnable inventory.inventory, which includes certain significant assumptions, including markdowns, sales below cost, inventory aging and expected demand.
Cost is determined primarily by the retail inventory method for our BNCRetail segment and last-in first out, or “LIFO”, method for our MBSWholesale segment. Our textbook inventories, for BNCRetail and MBS,Wholesale, and trade book inventories are valued using the LIFO method and the related reserve was not material to the recorded amount of our inventories.
For our BNC segment,physical bookstores, we also estimate and accrue shortage for the period between the last physical count of inventory and the balance sheet date. Shortage rates are estimated and accrued based on historical rates and can be affected by changes in merchandise mix and changes in actual shortage trends.
The Retail Segment fulfillment order is directed first to our wholesale business before other sources of inventory are utilized. The products that we sell originate from a wide variety of domestic and international vendors. After internal sourcing, the bookstore purchases textbooks from outside suppliers and publishers.
As contemplated by the FLC Partnership merchandising agreement, we sold our logo and emblematic general merchandise inventory to FLC and received proceeds of $41,773, and recognized a merchandise inventory loss on the sale of $10,262 in cost of goods sold during the 52 weeks ended May 1, 2021 for the Retail Segment. The final inventory sale price was determined during the first quarter of Fiscal 2022, at which time, we received additional proceeds of $1,906, and recognized a merchandise inventory loss on the sale of $434 in cost of goods sold for the Retail Segment.
Textbook Rental Inventories
Physical textbooks out on rent are categorized as textbook rental inventories. At the time a rental transaction is consummated, the book is removed from merchandise inventories and moved to textbook rental inventories at cost. The cost of the book is amortized down to its estimated residual value over the rental period. The related amortization expense is included in cost of goods sold. At the end of the rental period, upon return, the book is removed from textbook rental inventories and recorded in merchandise inventories at its amortized cost.
Leases
We recognize lease assets and lease liabilities on the condensed consolidated balance sheet for all operating lease arrangements based on the present value of future lease payments as required by Accounting Standards Codification ("ASC") Topic 842, Leases. We do not recognize lease assets or lease liabilities for short-term leases (i.e., those with a term of twelve months or less). We recognize lease expense on a straight-line basis over the lease term for contracts with fixed lease payments, including those with fixed annual minimums, or over a rolling twelve-month period for leases where the annual guarantee resets at the start of each contract year, in order to best reflect the pattern of usage of the underlying leased asset. For additional information, see Note 8. Leases.
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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 26 weeks ended October 30, 2021 and October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)

Revenue Recognition and Deferred Revenue
Product sales and rentals
The majority of our revenue is derived from the sale of products through our bookstore locations, including virtual bookstores, and our bookstore affiliated e-commerce websites, and contains a single performance obligation. Revenue from sales of our products at physical locations is recognized at the point in time when control of sale. Revenue from sales ofthe products ordered throughis transferred to our websitescustomers in an amount that reflects the consideration we expect to be entitled to in exchange for the products. For additional information, see Note 3. Revenue.
Retail product revenue is recognized when the customer takes physical possession of our products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of our products by our customers. Revenue from the salecustomers for products ordered through our websites and virtual bookstores. Wholesale product revenue is recognized upon shipment of physical textbooks from our wholesaleat which point title passes and virtual bookstoresrisk of loss is recognized attransferred to the time of shipment.customer. Additional revenue is recognized for shipping charges billed to customers.customers and shipping costs are accounted for as fulfillment costs within cost of goods sold.
We rent both physical and digital textbooks. Revenue from the rental of physical textbooks, which contains a single performance obligation, is deferred and recognized over the rental period based on the passage of time commencing at the point of sale.sale, when control of the product transfers to the customer. Rental periods are typically for a single semester and are always less than one year in duration. We offer a buyout option to allow the purchase of a rented physical textbook at the end of the rental period.period if the customer desires to do so. We record the buyout purchase when the customer exercises and pays the buyout option price.price which is determined at the time of the buyout. In these instances, we would accelerate any remaining deferred rental revenue at the point of sale.
Revenue from the rental of digital textbooks, which contains a single performance obligation, is recognized at the timepoint of sale. A software feature is embedded within the content of our digital textbooks, such that upon expiration of the rental term the customer is no longer able to access the content. While the digital rental allows the customer to access digital content for a fixed period of time, once the digital content is delivered to the customer, our performance obligation is complete.
We primarilyestimate returns based on an analysis of historical experience. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded.
For sales and rentals involving third-party products, we evaluate whether we are acting as a principal or an agent. Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring them to the customer. There are significant judgments involved in determining whether we control the specified goods or services prior to transferring them to the customer including whether we have the ability to direct the use of the good or service and obtain substantially all of the remaining benefits from the good or service. For those transactions where we are the principal, we record digital textbook rentalrevenue on a gross basis, and for those transactions where we are an agent to a third-party, we record revenue on a net basis. Effective April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, logo and emblematic general merchandise sales were fulfilled by FLC. During the first quarter of Fiscal 2022, as contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in accordance with ASC 605-45-45, Reporting Revenue Grossour condensed consolidated financial statements, as compared to the recognition of logo and emblematic general merchandise sales on a Principal versus Net as an Agent.gross basis in the prior year.
We provide direct-to-studentdo not have gift card or customer loyalty programs. We do not treat any promotional offers as expenses. Sales tax collected from our customers is excluded from reported revenues. Our payment terms are generally 30 days and do not extend beyond one year.
Service and other revenue
Service and other revenue is primarily derived from DSS segment subscription-based writing services. Subscriptionservice revenues and partnership marketing services which includes promotional activities and advertisements within our physical bookstores and web properties performed on behalf of third-party customers.
Subscription-based revenue, which contains a single performance obligation, is deferred and recognized based on the passage of time over the subscription period commencing at the point of sale, when control of the service period.transfers to the customer. The majority of subscriptions sold are one month in duration.
Sales taxes collected from
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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 26 weeks ended October 30, 2021 and October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)

Partnership marketing agreements often include multiple performance obligations which are individually negotiated with our customers are excluded from reported revenues. Allcustomers. For these arrangements that contain distinct performance obligations, we allocate the transaction price based on the relative standalone selling price method by comparing the standalone selling price (“SSP”) of our sales areeach distinct performance obligation to the total value of the contract. The revenue is recognized as revenueeach performance obligation is satisfied, typically at a point in time for partnership marketing service and overtime for advertising efforts as measured based upon the passage of time for contracts that are based on a “net” basis, including sales in connectionstated period of time or the number of impressions delivered for contracts with any periodic promotions offered to customers. We do not treat any promotional offers as expenses.a fixed number of impressions.
Cost of Sales
Our cost of sales primarily includeincludes costs such as merchandise costs, textbook rental amortization, content development cost amortization, warehouse costs related to inventory management and order fulfillment, insurance, certain payroll costs, and management service agreement costs, including rent expense, related to our college and university contracts and other facility related expenses.
Selling and Administrative Expenses
Our selling and administrative expenses consist primarily of store payroll and store operating expenses. Selling and administrative expenses also include stock-basedlong-term incentive plan compensation expense and general office expenses, such as executive oversight, merchandising, procurement, field support, finance and accounting, and operating costs related to our DSS segment subscription-based services business. Shared-service costs such as human resources, benefits, training, legal, andtreasury, information technology, as well asand various other corporate level expenses and other governance functions, are not allocated to any specific reporting segment and are recorded in Corporate Services.
Evaluation of Goodwill and Other Long-Lived Assets
As of October 30, 2021, we had $0, $0 and $4,700 of goodwill on our investments incondensed consolidated balance sheet related to our digital platformRetail, Wholesale and subscription-based services.

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 39 weeks ended January 27, 2018 and January 28, 2017
(Thousands of dollars, except share and per share data)
(unaudited)


Goodwill
DSS reporting units, respectively. In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2017-04,accordance with ASC 350-10, Intangibles - Goodwill and Other, (Topic 350) to simplify the test for goodwill impairment. The revised guidance eliminated the former Step 2 of thewe complete our annual goodwill impairment test which required an entity to compute the implied fair value of its goodwill at the testing date in order to measure the amountas of the impairment charge when the fair valuefirst day of the reporting unit failed Step 1third quarter of the goodwill impairment test. Under the revised guidance, an entity would recognize an impairment charge for the amount by whicheach fiscal year, or whenever events or changes in circumstances indicate that the carrying amount of the reporting unit exceeds its fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to the reporting unit. The guidance will be applied on a prospective basis. We have early adopted this standard in the second quarter of Fiscal 2018.
value. We completed our annual goodwill impairment test with the assistance of a third-party valuation firm, as of the first day of the third quarter of Fiscal 2018. We completed the impairment evaluation process to compare the fair value of our reporting units to their respective carrying values. In performing the valuation, we used cash flows that reflected management’s forecasts and discount rates that included risk adjustments consistent with the current market conditions. We estimated the fair value of our reporting units using a weighting of fair values derived from the income approach and the market approach. Under the income approach, we calculate the fair value of the reporting unit based on the present value of estimated future cash flows. Inherent in our preparation of cash flow projections are assumptions and estimates derived from a review of our operating results, business plans, expected growth rates, cost of capital and tax rates. We also make certain forecasts about future economic conditions, interest rates, market data, and other observable trends, such as comparable store sales trends, recent changes in publisher relationships, and development of innovative digital products and services in the rapidly changing education landscape. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows. Under the market approach, we estimate the fair value based on market multiples of cash flows and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit and considering a reasonable control premium. The decline of our stock price and the corresponding reduction in our market capitalization had a significant affect on the implied control premium. As a corroborative source of information, we reconcile the estimated aggregate fair values of its reporting units to within a reasonable range of its market capitalization, which includes an assumed control premium (an adjustment reflecting an estimated fair value on a control basis), to verify the reasonableness of the fair value of its reporting units obtained through the aforementioned methods.
2021. The fair value of the MBSDSS reporting unit exceeded itswas determined to exceed the carrying value;value of the reporting unit; therefore, no goodwill impairment was recognized for the MBS segment. The carrying value of the BNC reporting unit exceeded its fair value and we recorded a goodwill impairment (non-cash impairment loss) of $313,130. As of January 27, 2018, we had $49,282 and $0 of goodwill remaining related to our MBS and BNC reporting units, respectively.recognized.
Evaluation of Other Long-Lived Assets Impairment
Our other long-lived assets include property and equipment and amortizable intangibles. As of January 27, 2018, we had $110,987 and $224,314 of property and equipment and amortizable intangible assets, net of depreciation and amortization, respectively, on our consolidated balance sheet.
We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. DuringAs of October 30, 2021, our other long-lived assets include property and equipment, operating lease right-of-use assets, amortizable intangibles, and other noncurrent assets of $91,875, $252,650, $141,847, and $26,010, respectively, on our condensed consolidated balance sheet.
Our business has been significantly negatively impacted by the third quarterongoing COVID-19 pandemic, as many schools continued to adjust their learning models and on-campus activities. Some of Fiscal 2018,the negative trends impacting our results, such as fewer students returning to campus and restrictions to attendance for athletic events, have been marginally reversed during the current Fall semester. Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve. We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including the Delta variant, on enrollments, university budgets, athletics and other areas that directly affect our business operations. Although most four year schools have returned to a traditional on-campus environment for learning in conjunction with the goodwillcurrent Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and its effect on our ability to source products, including textbooks and general merchandise offerings. We believe indicators of impairment test noted above, we evaluated certaindo not exist and the carrying amount of our long-lived assets for impairment.
and property and equipment are recoverable and the fair value of the DSS reporting unit continues to exceed the carrying value of the reporting unit resulting in no goodwill impairment during the quarter. We evaluatedwill continue to evaluate our other long-lived assets for impairment at the lowest asset group level at which individual cash flows can be identified. When evaluating long-lived assets for potential impairment, we first compared the carrying amountindicators of the asset group to the estimated future undiscounted cash flows. If the estimated future cash flows were less than the carrying amount of the asset group, an impairment loss calculation is prepared. Based on the results of the tests, an impairment loss calculation was not required as the estimated future undiscounted cash flows of the asset group exceeded the carrying amount of the asset group.
We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to calculate long-lived asset impairment losses. However, if actual results are not consistent with estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material.

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 39 weeks ended January 27, 2018 and January 28, 2017
(Thousands of dollars, except share and per share data)
(unaudited)


impairment.
Income Taxes
As of January 27, 2018,October 30, 2021, other long-term liabilities includes $54,370$25,335 related to the long-term tax payable associated with the LIFO reserve. The LIFO reserve is impacted by changes in the consumer price index ("CPI"(“CPI”) and is dependent on the inventory levels at the end of our tax year (on or about January 31st) which is in the middle of our second largest selling cycle.
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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 26 weeks ended October 30, 2021 and October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)

At the end of the most recent tax year, inventory levels within our BNC segment declined as compared to the prior year resulting in approximately$13,754approximately $745 of the LIFO reserve becoming currently payable. Given recent trends relating to the pricing and rental of textbooks, management believes that an additional portion of the remaining long-term tax payable associated with the LIFO reserve could be payable within the next twelve months. We are unable to predict future trends for CPI and inventory levels, therefore it is difficult to project with reasonable certainty how much of this liability will become payable within the next twelve months.
Note 3. Recent Accounting PronouncementsRevenue
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-01") to increase transparency and comparability by providing additional information to users of financial statements regarding an entity's leasing activities. The revised guidance seeks to achieve this objective by requiring reporting entities to recognize lease assets and lease liabilities on the balance sheet for substantially all lease arrangements. We are required to adopt this standard in the first quarter of Fiscal 2020 and early adoption is permitted. The guidance will be applied on a modified retrospective basis beginning with the earliest period presented. We are currently evaluating this standard to determine the impact of adoption on our condensed consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The standard provides companies with a single model for usesales of our products and services is recognized either at the point in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principletime when control of the guidanceproducts is that an entity should recognize revenuetransferred to depict the transfer of promised goodsour customers or over time as services to customersare provided in an amount that reflects the consideration to which the entity expectswe expect to be entitled to in exchange for those goodsthe products or services. New disclosures aboutSee Note 2. Summary of Significant Accounting Policies for additional information related to our revenue recognition policies and Note 4. Segment Reporting for a description of each segment's product and service offerings.
Disaggregation of Revenue
The following table disaggregates the nature, amount, timingrevenue associated with our major product and uncertainty of revenueservice offerings:
13 weeks ended26 weeks ended
October 30, 2021October 31, 2020October 30, 2021October 31, 2020
Retail
Product Sales (a)
$546,358 $517,837 $735,416 $659,663 
Rental Income49,648 43,653 62,672 54,457 
Service and Other Revenue (b)
12,946 15,024 21,333 21,170 
Retail Total Sales$608,952 $576,514 $819,421 $735,290 
Wholesale Sales$21,669 $36,387 $66,153 $116,681 
DSS Sales (c)
$8,279 $5,947 $16,582 $11,819 
Eliminations (d)
$(11,923)$(23,363)$(34,385)$(64,291)
Total Sales$626,977 $595,485 $867,771 $799,499 
(a)Effective April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, logo and cash flows arising from contracts with customers are also required. In 2016, the FASB issued final amendments to clarify the implementation guidance for principal versus agent considerations, identifying performance obligations and the accounting for licenses of intellectual property. In August 2015, FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which effectively delayed the adoption dateemblematic general merchandise sales were fulfilled by one year. We are required to adopt ASU 2014-09 inFLC. During the first quarter of Fiscal 2019 and early adoption is permitted. The new standard is required2022, as contemplated by the FLC Partnership's e-commerce agreement, we began to be applied retrospectively to each prior reporting period (full retrospective method) or retrospectively with the cumulative effect of initially applying the standard recognized as an adjustment to opening retained earnings at the date of initial adoption (modified retrospective method).
We are in the process of analyzing the impacts of the guidance across alltransition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue streams. This includes reviewing current accounting policies and practices to identify potential differences that would result from applying the guidance. The majority of our revenue is generated fromearned for these sales of finished products, which will continue to be recognized when control is transferred to the customer. Our assessment includes an evaluation of the impact that the guidance will have on our accounting for marketing revenue and other income streams. We are evaluating the guidance for our software license revenue, which is currently not material and is recognized over time, but may be recognized at a pointnet basis in time under the new guidance. We are continuing to evaluate our revenue streams related to our digital product offerings and subscription-based services. We do not have loyalty programs or gift cards. While our assessment of the impacts of the guidance is still in process, we believe the adoption of the guidance is not expected to have a material impact on our condensed consolidated financial statements, other thanas compared to the additional disclosure requirements. We plan to adopt the standardrecognition of logo and emblematic general merchandise sales on a gross basis in the first quarterprior year.
(b)Service and other revenue primarily relates to brand partnerships and other service revenues.
(c)DSS sales primarily relate to direct-to-student subscription-based revenue.
(d)The sales eliminations represent the elimination of Fiscal 2019 usingWholesale sales and fulfillment service fees to Retail and the modified retrospective method.elimination of Retail commissions earned from Wholesale.

Contract Assets and Contract Liabilities
Contract assets represent the sale of goods or services to a customer before we have the right to obtain consideration from the customer. Contract assets consist of unbilled amounts at the reporting date and are transferred to accounts receivable when the rights become unconditional. Contract assets (unbilled receivables) were $0 as of October 30, 2021, October 31, 2020 and May 1, 2021 on our condensed consolidated balance sheets.
Contract liabilities represent an obligation to transfer goods or services to a customer for which we have received consideration and consists of our deferred revenue liability (deferred revenue). Deferred revenue consists of the following:
advanced payments from customers related to textbook rental and subscription-based performance obligations, which are recognized ratably over the terms of the related rental or subscription periods;
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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 3926 weeks ended January 27, 2018October 30, 2021 and January 28, 2017October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)



unsatisfied performance obligations associated with partnership marketing services, which are recognized when the contracted services are provided to our partnership marketing customers; and
Note 4. Acquisitions
Student Brands, LLC
On August 3, 2017, we acquired 100%unsatisfied performance obligations associated with the premium paid for the sale of treasury shares, which are expected to be recognized over the term of the equity interestse-commerce and merchandising contracts for Fanatics and FLC, respectively.
Deferred revenue of Student Brands. Student Brands operates multiple direct-to-student businesses focused on study tools, writing help,$29,820, $32,844, and literary research, all centered on assisting students with the writing process.
We completed the purchase for cash consideration of $61,997, including cash acquired of $4,626,$13,469 is recorded in accrued liabilities and the transaction was funded from cash on-hand$4,470, $0, and availability under our existing Credit Agreement. The Student Brands operations are part of the BNC segment. The final purchase price allocation was as follows: $28,300 intangible assets, $1,593 acquired working capital and $31,782 goodwill. This acquisition$4,670 is not material to our consolidated financial statements and therefore, disclosure of pro forma financial information has not been presented. The results of operations reflect the period of ownership of the acquired business. Identified intangible assets include the following:
Type of Intangible Amount Estimated Useful Life
Content $14,500
 5
Technology 8,000
 5
Non-Compete Agreements 4,000
 3
Subscriber List 1,800
 2
Total Intangibles: $28,300
  
MBS Textbook Exchange, LLC
On February 27, 2017, we completed the purchase of all issued and outstanding units of MBS Textbook Exchange, LLC. MBS operates two highly integrated businesses, Wholesale and Direct. Refer to Note 1. Organization of this Form 10-Q for additional information about MBS. We acquired 100% of the equity interests of MBS for cash consideration of $187,862, including cash and restricted cash acquired of $1,171, and the acquisition was financed with cash from operations as well as proceeds from our existing credit facility. During the 13 weeks ended October 28, 2017, we finalized the valuation and recorded adjustments to the acquired liabilities which resulted in an increase to goodwill of $1,163. These adjustments were related to a final reconciliation of the pre-acquisition tax liability due to the seller of $888 under the purchase agreement, as well as a net $275 increase in other long-term liabilities.
liabilities on our condensed consolidated balance sheets for the periods ended October 30, 2021, October 31, 2020 and May 1, 2021, respectively. As of October 30, 2021, we expect to recognize $29,820 of the deferred revenue balance within the next 12 months. The following is a summary of consideration paid for the acquisition:table presents changes in deferred revenue associated with our contract liabilities:
26 weeks ended
October 30, 2021October 31, 2020
Deferred revenue at the beginning of period$18,139 $13,373 
Additions to deferred revenue during the period82,515 91,051 
Reductions to deferred revenue for revenue recognized during the period(66,364)(71,580)
Deferred revenue balance at the end of period$34,290 $32,844 
Cash paid to Seller or escrow $165,499
Consideration to Seller for pre-closing costs 4,657
Cash paid for Seller closing costs 4,044
Contract purchase price $174,200
Consideration for payment to settle Seller's outstanding short-term borrowings 24,437
Consideration for reimbursement of pre-acquisition tax liability to Seller 15,556
Less: Consideration to Seller for pre-closing costs (4,657)
Less: Consideration for settlement of pre-existing payable to Seller (21,674)
Total value of consideration transferred $187,862
   


BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 39 weeks ended January 27, 2018 and January 28, 2017
(Thousands of dollars, except share and per share data)
(unaudited)


The following is a summary of the fair values of the net assets acquired:
Total consideration transferred $187,862
Cash and cash equivalents $472
Accounts receivable, net 28,177
Merchandise inventory 128,431
Property and equipment 12,403
Intangible assets 21,576
Prepaid and other assets 4,748
Total assets $195,807
Accounts payable $35,383
Accrued expenses 8,799
Other long-term liabilities 13,044
Total liabilities $57,226
Net assets acquired $138,581
Goodwill $49,281
Identified intangible assets include the following:
Type of Intangible Amount Estimated Useful Life
Favorable Lease $1,076
 6.5
Trade Name 3,500
 10
Technology 1,500
 3
Book Store Relationship 13,000
 13
Direct Customer Relationship 2,000
 15
Non-Compete Agreements 500
 3
Total Intangibles: $21,576
  
Note 5. 4. Segment Reporting
We identifiedhave 3 reportable segments: Retail, Wholesale and DSS. Additionally, unallocated shared-service costs, which include various corporate level expenses and other governance functions, continue to be presented as “Corporate Services”.
We identify our segments based onin accordance with the way our business is managed (focusing on the financial information distributed) and the manner in which our chief operating decision maker allocates resources and assesses financial performance. EffectiveThe following summarizes the three segments. For additional information about each segment's operations, see Part I - Item 1. Business in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.
Retail
The Retail Segment operates 1,445 college, university, and K-12 school bookstores, comprised of 794 physical bookstores and 651 virtual bookstores. Our bookstores typically operate under agreements with the acquisitioncollege, university, or K-12 schools to be the official bookstore and the exclusive seller of MBS on February 27, 2017, wecourse materials and supplies, including physical and digital products. The majority of the physical campus bookstores have determined thatschool-branded e-commerce sites which we operate two reportable segments: BNCindependently or along with our merchant partners, and MBS. Priorwhich offer students access to affordable course materials and affinity products, including emblematic apparel and gifts. The Retail Segment also offers inclusive access programs, in which course materials are offered at a reduced price through a fee charged by the acquisitioninstitution or included in tuition, and delivered to students on or before the first day of MBS, BNC was our only reportable segment. Our international operations are not materialclass. Additionally, the Retail Segment offers a suite of digital content and the majorityservices to colleges and universities, including a variety of open educational resource-based courseware.
Wholesale
The Wholesale Segment is comprised of our revenuewholesale textbook business and total assets are within the United States. For a descriptionis one of the BNClargest textbook wholesalers in the country. The Wholesale Segment centrally sources, sells, and MBS businesses, refer to Note 1. Organization of this Form 10-Q.
The condensed consolidated financial statements for the 13 and 39 weeks ended January 27, 2018 include the financial results of MBS and all material intercompany accounts and transactions have been eliminated in consolidation. The eliminations are primarily related to the following intercompany activities:
BNC purchasesdistributes new and used textbooks from MBS for distribution at BNC'sto approximately 3,200 physical bookstores (including our Retail Segment's 794 physical bookstores) and sources and distributes new and used textbooks to our 651 virtual bookstores. Additionally, the Wholesale Segment sells hardware and a software suite of applications that provides inventory management and point-of-sale solutions to approximately 400 college bookstores. We eliminate
DSS
The Digital Student Solutions (“DSS”) Segment includes direct-to-student products and services to assist students to study more effectively and improve academic performance. The DSS Segment is comprised of the net sales from MBSoperations of Student Brands, LLC, a leading direct-to-student subscription-based writing services business, and the intercompany profit in ending inventory,bartleby®, a direct-to-student subscription-based offering providing textbook solutions, expert questions and answers, writing and tutoring.
MBS pays commissions to BNC for certain textbooks it sells to MBS that cannot be returned to suppliers or used in their stores. The commission is based on the volume
13

Table of textbooks sold to MBS and with respect to the textbook requirements of certain distance learning programs that MBS fulfills on BNC's behalf.Contents


BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 3926 weeks ended January 27, 2018October 30, 2021 and January 28, 2017October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)



Corporate Services represents unallocated shared-service costs which include corporate level expenses and other governance functions, including executive functions, such as accounting, legal, treasury, information technology, and human resources.
Intercompany Eliminations
SalesThe eliminations are primarily related to the following intercompany activities:
The sales eliminations represent the elimination of MBSWholesale sales and fulfillment service fees to BNCRetail and the elimination of BNCRetail commissions earned from MBS. CostWholesale, and
These cost of sales eliminations represent (i) the recognition of intercompany profit for BNCRetail inventory that was purchased from MBSWholesale in a prior period that was subsequently sold to external customers during the current period and the elimination of Wholesale service fees charged for fulfillment of inventory for virtual store sales, net of (ii) the elimination of intercompany profit for MBSWholesale inventory purchases by BNCRetail that remain in ending inventory at the end of the current period. Gross margin eliminations reflect
Our international operations are not material and the net impactmajority of the sales eliminationsrevenue and cost of sales eliminations.total assets are within the United States.
Summarized financial information for our reportable segments is reported below:
13 weeks ended26 weeks ended
October 30, 2021October 31, 2020October 30, 2021October 31, 2020
Sales:
Retail$608,952 $576,514 $819,421 $735,290 
Wholesale21,669 36,387 66,153 116,681 
DSS8,279 5,947 16,582 11,819 
Elimination(11,923)(23,363)(34,385)(64,291)
Total Sales$626,977 $595,485 $867,771 $799,499 
Gross Profit
Retail (a)
$128,825 $95,512 $176,968 $111,647 
Wholesale5,620 10,714 16,025 27,471 
DSS6,906 4,662 13,936 9,408 
Elimination4,208 4,397 (1,341)(2,379)
Total Gross Profit$145,559 $115,285 $205,588 $146,147 
Depreciation and Amortization
Retail$8,669 $9,985 $18,076 $20,555 
Wholesale1,364 1,322 2,664 2,617 
DSS1,902 1,855 3,801 4,020 
Corporate Services17 31 35 64 
Total Depreciation and Amortization$11,952 $13,193 $24,576 $27,256 
Operating Income (Loss)
Retail$29,596 $7,072 $(1,760)$(47,744)
Wholesale(131)5,246 4,983 16,917 
DSS(2,301)(2,196)(3,617)(3,651)
Corporate Services(6,868)(7,844)(15,226)(15,396)
Elimination4,293 4,455 (1,244)(2,308)
Total Operating Income (Loss)$24,589 $6,733 $(16,864)$(52,182)
14

 13 weeks ended 39 weeks ended
 January 27,
2018
 January 28,
2017
 January 27, 2018 January 28, 2017
Sales:       
BNC$506,460
 $521,624
 $1,518,224
 $1,531,532
MBS138,927
 
 413,579
 
Elimination(41,996) 
 (85,840) 
Total Sales$603,391
 $521,624
 $1,845,963
 $1,531,532
        
Gross Profit       
BNC$117,413
 $115,925
 $337,875
 $334,852
MBS34,949
 
 95,713
 
Elimination(5,827) 
 (5,782) 
Total Gross Profit$146,535
 $115,925
 $427,806
 $334,852
        
Depreciation and Amortization       
BNC$15,411
 $13,149
 $43,879
 $39,057
MBS1,596
 
 4,849
 
Total Depreciation and Amortization$17,007
 $13,149
 $48,728
 $39,057
        
Operating (Loss) Income       
BNC (a),(b),(c)
$(308,954) $5,198
 $(310,004) $9,196
MBS19,156
 
 47,878
 
Elimination(5,827) 
 (5,782) 
Total Operating (Loss) Income$(295,625) $5,198
 $(267,908) $9,196
        
The following is a reconciliation of segment Operating (Loss) Income to consolidated (Loss) Income Before Income Taxes:       
Total Operating (Loss) Income$(295,625) $5,198
 $(267,908) $9,196
Interest Expense, net(2,954) (679) (7,828) (1,975)
Total (Loss) Income Before Income Taxes$(298,579) $4,519
 $(275,736) $7,221
        
Table of Contents
(a) During the 39 weeks ended January 27, 2018, we recognized expenses totaling approximately $5,361 related to the resignation of Mr. Max J. Roberts as Chief Executive Officer of the Company and the appointment of Mr. Michael P. Huseby to the position of Chief Executive Officer and Chairman of the Board, both effective as of September 19, 2017. For additional information, refer to Note 9. Supplemental Information - Restructuring and Other Charges in this Form 10-Q.
(b) On August 3, 2017, we acquired Student Brands, LLC, a leading direct-to-student subscription-based writing services business. The condensed consolidated financial statements for the 13 and 39 weeks ended January 27, 2018 include the financial results of Student Brands in the BNC segment from the date of acquisition, August 3, 2017, and the condensed consolidated financial statements for the 13 and 39 weeks ended January 28, 2017 exclude the financial results of Student Brands.


BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 3926 weeks ended January 27, 2018October 30, 2021 and January 28, 2017October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)



13 weeks ended26 weeks ended
Reconciliation of segment Operating Income (Loss) to consolidated Income (Loss) Before Income Taxes:October 30, 2021October 31, 2020October 30, 2021October 31, 2020
Total Operating Income (Loss)$24,589 $6,733 $(16,864)$(52,182)
Interest Expense, net2,264 912 4,758 3,565 
Income (Loss) Before Income Taxes$22,325 $5,821 $(21,622)$(55,747)
(c)
(a)    For the 26 weeks ended October 30, 2021, gross margin includes a merchandise inventory loss of $434 in the Retail Segment. See Note 2. Summary of Significant Accounting Policies - Merchandise Inventories.
During the 13 weeks ended January 27, 2018, we completed our annual goodwill impairment test. Based on the results of the impairment test, the carrying value of the BNC reporting unit exceeded its fair value and we recorded a goodwill impairment (non-cash impairment loss) of $313,130 for the BNC segment. For additional information, see Note 2. Summary of Significant Accounting Policies in this Form 10-Q.
Note 6. 5. Equity and Earnings Per Share
Equity
During the 26 weeks ended October 30, 2021, our shareholders approved an amendment to the Equity Incentive Plan to increase the number of shares available for issuance by an additional 3,000,000 shares of our Common Stock, for an aggregate total of 13,409,345 shares.
Share Repurchases
On December 14, 2015, our Board of Directors authorized a stock repurchase program of up to $50,000, in the aggregate, of our outstanding Common Stock. The stock repurchase program is carried out at the direction of management (which may include a plan under Rule 10b5-1 of the Securities Exchange Act of 1934). The stock repurchase program may be suspended, terminated, or modified at any time. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes. During the 3926 weeks ended January 27, 2018,October 30, 2021, we did not repurchase shares of our common stock. AsCommon Stock under the program and as of January 27, 2018,October 30, 2021, approximately $26,669 remains available under the stock repurchase program.
During the 3926 weeks ended January 27, 2018,October 30, 2021, we also repurchased 259238,170 shares of our Common Stock outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.
Earnings Per Share
Basic EPS is computed based upon the weighted average number of common shares outstanding for the year. Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year. We include participating securities (unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents) in the computation of EPS pursuant to the two-class method. Our participating securities consist solely of unvested restricted stock awards, which have contractual participation rights equivalent to those of stockholders of unrestricted common stock. The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. During the 13 and 39 weeks ended January 27, 2018,October 30, 2021 and October 31, 2020, average shares of 2,844523,447 and 2,4771,932,628 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively. During the 13 and 3926 weeks ended January 28, 2017,October 30, 2021 and October 31, 2020, average shares of 3393,771,594 and 3952,849,291 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively.

15

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 3926 weeks ended January 27, 2018October 30, 2021 and January 28, 2017October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)



The following is a reconciliation of the basic and diluted lossearnings per share calculation:
13 weeks ended26 weeks ended
13 weeks ended 39 weeks ended
January 27,
2018
 January 28,
2017
 January 27,
2018
 January 28,
2017
Numerator for basic and diluted earnings per share:       
Net (loss) income$(283,235) $3,761
 $(269,623) $5,134
(shares in thousands)(shares in thousands)October 30, 2021October 31, 2020October 30, 2021October 31, 2020
Numerator for basic earnings per share:Numerator for basic earnings per share:
Net income (loss) available to common shareholdersNet income (loss) available to common shareholders$22,528 $7,515 $(21,818)$(39,137)
Less allocation of earnings to participating securities
 (1) 
 (3)Less allocation of earnings to participating securities(64)(6)— — 
Net (loss) income available to common shareholders$(283,235) $3,760
 $(269,623) $5,131
Net income (loss) available to common shareholdersNet income (loss) available to common shareholders$22,464 $7,509 $(21,818)$(39,137)
       
Numerator for diluted earnings per share:       Numerator for diluted earnings per share:
Net (loss) income available to common shareholders$(283,235) $3,760
 $(269,623) $5,131
Net income (loss) available to common shareholdersNet income (loss) available to common shareholders$22,464 $7,509 $(21,818)$(39,137)
Allocation of earnings to participating securities
 1
 
 3
Allocation of earnings to participating securities64 — — 
Less diluted allocation of earnings to participating securities
 (1) 
 (3)Less diluted allocation of earnings to participating securities(61)(6)— — 
Net (loss) income available to common shareholders$(283,235) $3,760
 $(269,623) $5,131
Net income (loss) available to common shareholdersNet income (loss) available to common shareholders$22,467 $7,509 $(21,818)$(39,137)
       
Denominator for basic earnings per share:       Denominator for basic earnings per share:
Basic weighted average shares of Common Stock46,914
 46,276
 46,712
 46,265
Basic weighted average shares of Common Stock51,666 48,804 51,570 48,608 
       
Denominator for diluted earnings per share:       Denominator for diluted earnings per share:
Basic weighted average shares of Common Stock46,914
 46,276
 46,712
 46,265
Basic weighted average shares of Common Stock51,666 48,804 51,570 48,608 
Average dilutive restricted stock units
 512
 
 397
Average dilutive restricted stock units611 235 — — 
Average dilutive performance shares
 52
 
 33
Average dilutive performance shares— — — — 
Average dilutive restricted shares
 4
 
 21
Average dilutive restricted shares126 18 — — 
Average dilutive performance share units
 
 
 
Average dilutive performance share units255 224 — — 
Average dilutive options
 
 
 
Average dilutive stock optionsAverage dilutive stock options1,910 147 — — 
Diluted weighted average shares of Common Stock46,914
 46,844
 46,712
 46,716
Diluted weighted average shares of Common Stock54,568 49,428 51,570 48,608 
       
(Loss) Earnings per share of Common Stock:       
Earnings (Loss) per share of Common Stock:Earnings (Loss) per share of Common Stock:
Basic$(6.04) $0.08
 $(5.77) $0.11
Basic$0.43 $0.15 $(0.42)$(0.81)
Diluted$(6.04) $0.08
 $(5.77) $0.11
Diluted$0.41 $0.15 $(0.42)$(0.81)
Note 7. 6. Fair Values of Financial InstrumentsValue Measurements
In accordance with ASC No. 820, Fair Value Measurements and Disclosures, the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
These tiers include:
Level 1—Observable inputs that reflect quoted prices in active markets
Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable
Level 3—Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions
Our financial instruments include cash and cash equivalents, receivables, accrued liabilities and accounts payable. The fair values of cash and cash equivalents, receivables, accrued liabilities and accounts payable approximates their carrying values

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 39 weeks ended January 27, 2018 and January 28, 2017
(Thousands of dollars, except share and per share data)
(unaudited)


because of the short-term nature of these instruments, which are all considered Level 1. The fair value of short-term and long-term debt approximates its carrying value.
Non-Financial Assets
Our non-financial assets include goodwill, property and equipment, operating lease right-of-use assets, and intangible assets. Such assets are reported at their carrying values and are not subject to recurring fair value measurements. We review our
16

Table of Contents

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 26 weeks ended October 30, 2021 and October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)

long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets.
0Non-Financial Liabilities
We granted phantom share units as long-term incentive awards which are settled in cash based on the fair market value of a share of common stock of the Company at each vesting date. The fair value of the liability for the cash-settled phantom share unit awards will be remeasured at the end of each reporting period through settlement to reflect current risk-free rate and volatility assumptions. As of October 30, 2021, we recorded a liability of $3,474 (Level 2 input) which is reflected in accrued liabilities ($2,345) and other long-term liabilities ($1,129) on the condensed consolidated balance sheet. As of October 31, 2020, we recorded a liability of $224 (Level 2 input) which is reflected in accrued liabilities $130 and other long-term liabilities $94 on the condensed consolidated balance sheet. For additional information, see Note 8. 10. Long-Term Incentive Plan Compensation Expense.
Note 7. Credit Facility
On August 3, 2015, we and certain of our subsidiaries, entered intoWe have a credit agreement (the “Credit Agreement”), amended March 31, 2021 and March 1, 2019, under which the lenders committed to provide us with a five-year5 year asset-backed revolving credit facility in an aggregate committed principal amount of $400,000 (the “Credit Facility”). The Company has effective from the date of the amendment. We have the option to request an increase in commitments under the Credit Facility of up to $100,000, subject to certain restrictions.
On February 27, 2017, in connection with the acquisition of MBS, we amended Proceeds from the Credit Agreement with our current lenders to add a new $100,000Facility are used for general corporate purposes, including seasonal working capital needs. The agreement includes an incremental first in, last out seasonal loan facility (the “FILO Facility”) increasingfor a $100,000 incremental facility maintaining the maximum availability under the Credit Agreement at $500,000. On March 31, 2021, we were granted a waiver to $500,000.the condition to the current draw under the FILO Facility.
For additional information including interest terms and covenant requirements related to the Credit Facility, refer to Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity in our Annual Report on Form 10-K for the fiscal year ended April 29, 2017.May 1, 2021.
During the 3926 weeks ended January 27, 2018,October 30, 2021, we borrowed $481,600$259,720 and repaid $528,200$254,020 under the Credit Agreement. The net totalAgreement, with $183,300 of outstanding borrowings of $113,000 as of January 27, 2018 isOctober 30, 2021, comprised entirely of borrowings under the Credit Facility. During the 26 weeks ended October 31, 2020, we borrowed $330,800 and repaid $406,000 under the Credit Agreement, with $99,500 of outstanding borrowings as of October 31, 2020, comprised entirely of borrowings under the Credit Facility. As of January 27, 2018,both October 30, 2021 and October 31, 2020, we have issued $4,759 in letters of credit under the Credit Facility.
Note 8. Leases
We recognize lease assets and lease liabilities on the condensed consolidated balance sheets for substantially all lease arrangements as required by FASB ASC 842, Leases (Topic 842). Our portfolio of leases consists of operating leases comprised of operations agreements which grant us the right to operate on-campus bookstores at colleges and universities; real estate leases for office and warehouse operations; and vehicle leases. We do not have finance leases or short-term leases (i.e., those with a term of twelve months or less).
We recognize a right of use ("ROU") asset and lease liability in our condensed consolidated balance sheets for leases with a term greater than twelve months. Options to extend or terminate a lease are included in the determination of the ROU asset and lease liability when it is reasonably certain that such options will be exercised. Our lease terms generally range from one year to fifteen years and a number of agreements contain minimum annual guarantees, many of which are adjusted at the start of each contract year based on the actual sales activity of the leased premises for the most recently completed contract year.
Payment terms are based on the fixed rates explicit in the lease, including minimum annual guarantees, and/or variable rates based on: i) a percentage of revenues or sales arising at the relevant premises ("variable commissions"), and/or ii) operating expenses, such as common area charges, real estate taxes and insurance. For contracts with fixed lease payments, including those with minimum annual guarantees, we recognize lease expense on a straight-line basis over the lease term or over the contract year in order to best reflect the pattern of usage of the underlying leased asset and our minimum obligations arising from these types of leases. Our lease agreements do not contain any material residual value guarantees, material restrictions or covenants.
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Table of Contents

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 26 weeks ended October 30, 2021 and October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)

We used our incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable. We utilized an estimated collateralized incremental borrowing rate as of the effective date or the commencement date of the lease, whichever is later.
The following table summarizes lease expense:
13 weeks ended26 weeks ended
October 30, 2021October 31, 2020October 30, 2021October 31, 2020
Variable lease expense$30,738 $27,275 $42,440 $34,682 
Operating lease expense48,990 49,635 65,363 59,431 
Net lease expense$79,728 $76,910 $107,803 $94,113 
The increase in lease expense is primarily due to higher sales for contracts based on a percentage of revenue during the 26 weeks ended October 30, 2021 and the impact of the timing and reduction of minimum contractual guarantees due to temporary store closings due to the COVID pandemic during the 26 weeks ended October 31, 2020.
The following table summarizes our minimum fixed lease obligations, excluding variable commissions, as of October 30, 2021:
As of
October 30, 2021
Remainder of Fiscal 2022$91,979 
Fiscal 202353,262 
Fiscal 202443,624 
Fiscal 202539,912 
Fiscal 202628,939 
Thereafter72,832 
Total lease payments330,548 
Less: imputed interest(40,773)
Operating lease liabilities at period end$289,775 
Future lease payment obligations related to leases that were entered into, but did not commence as of October 30, 2021, were not material.
The following summarizes additional information related to our operating leases:
As of
October 30, 2021October 31, 2020
Weighted average remaining lease term (in years)5.3 years5.5 years
Weighted average discount rate4.6 %4.5 %
Supplemental cash flow information:
Cash payments for lease liabilities within operating activities$64,103 $53,667 
ROU assets obtained in exchange for lease liabilities from initial recognition$77,811 $110,834 
Note 9. Supplementary Information
Restructuring and other charges
Restructuring
In Fiscal 2016, we implemented a plan to restructure our digital education operations which was completed in the first quarter of Fiscal 2017, and was primarily comprised of costs related to employee matters. We recorded restructuring costs of $68 and $1,790 during the 39 weeks ended January 27, 2018 and January 28, 2017, respectively.
Other Charges
On July 19, 2017, Mr. Max J. Roberts resigned as Chief Executive Officer of the Company and Mr. Michael P. Huseby was appointed to the position of Chief Executive Officer and Chairman of the Board, both effective as of September 19, 2017. Pursuant to the terms of the Retirement Letter Agreement, Mr. Roberts received an aggregate payment of approximately $4,424, comprised of salary, bonus and benefits. In addition, the Company paid Mr. Roberts and Mr. Huseby a one-time cash transition payment of approximately $562 and $250, respectively, at the time of the transition. During the 39 weeks ended January 27, 2018, we recognized expenses totaling approximately $5,361, which is comprised of the severance and transition payments. For additional information, see the Form 8-K dated July 19, 2017, filed with the SEC on July 20, 2017.
Note 10. Barnes & Noble, Inc. Transactions
Our History with Barnes & Noble, Inc.
On August 2, 2015, we completed the legal separation from Barnes & Noble, Inc. ("Spin-Off") at which time we began to operate as an independent publicly-traded company. In connection with the separation from Barnes & Noble, we entered into a Separation and Distribution Agreement with Barnes & Noble which governs the relationship between the parties after the separation and allocates between the parties various assets, liabilities, rights and obligations following the separation, including inventory purchases, employee benefits, intellectual property, information technology, insurance and tax-related assets and liabilities. The agreements also describe Barnes & Noble’s future commitments to provide us with certain transition services following the Spin-Off. For information about our history with Barnes & Noble, Inc., see Part II - Item 8. Financial Statements and Supplementary Data - Note 10. Barnes & Noble, Inc. Transactions in our Annual Report on Form 10-K for the year ended April 29, 2017.
Summary of Transactions with Barnes & Noble, Inc.
During the 13 and 26 weeks ended January 27, 2018October 30, 2021, we recognized restructuring and January 28, 2017, we were billed $5,465other charges totaling $1,116 and $7,356,$3,739, respectively, comprised primarily of $418 and $1,968, respectively, for purchasesseverance and other employee termination and benefit costs associated with elimination of inventory and direct costs incurred under the agreements discussed above which arevarious positions as part of cost reduction objectives ($754 is included as cost of sales, and selling and administrative expensesin accrued liabilities in the condensed consolidated statementbalance sheet as of operations.October 30, 2021), $698 and $1,771, respectively, for costs

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 3926 weeks ended January 27, 2018October 30, 2021 and January 28, 2017October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)



associated with professional service costs for restructuring, process improvements, development and integration associated with the FLC Partnership, shareholder activist activities, and liabilities for a facility closure.
During the 3913 and 26 weeks ended January 27, 2018October 31, 2020, we recognized restructuring and January 28, 2017, we were billed $20,488other charges totaling $3,387 and $23,497,$9,058, respectively, comprised primarily of $1,075 and $4,471, respectively, for purchasesseverance and other employee termination and benefit costs associated with elimination of inventory and direct costs incurred under the agreements discussed above which are includedvarious positions as part of cost of sales, and selling and administrative expenses in the condensed consolidated statement of operations.
As of January 27, 2018 and January 28, 2017, amounts due to Barnes & Noble, Inc. for book purchases and direct costs incurred under the agreements discussed above of $6,723 and $7,445 werereduction objectives, ($7,092 is included in accounts payableaccrued liabilities in the condensed consolidated balance sheets, respectively.sheet as of October 31, 2020), $2,312 and $4,587, respectively, for costs associated with professional service costs for restructuring, process improvements, the financial advisor strategic review process, shareholder activist activities, and liabilities for a facility closure.
Note 11. Related Party Transactions10. Long-Term Incentive Plan Compensation Expense
Prior toWe recognize compensation expense for restricted stock awards and performance share awards ratably over the acquisition of MBS on February 27, 2017, MBS was considered a related-party as it was majority-owned by Leonard Riggio, who is a principal owner holding a substantial percentage of shares of our Common Stock, and other membersrequisite service period of the Riggio family.
Prior to the acquisition (as discussed in Note 4. Acquisitions of this Form 10Q), we had a long-term supply agreement (“Supply Agreement”) with MBS, underaward, which and subject to availability and competitive terms and conditions, we purchased new and used printed textbooksis generally three years. We recognize compensation expense for a given academic term from MBS prior to buying them from other suppliers, other than in connection with student buy-back programs. During the 13 and 39 weeks ended January 28, 2017, total net purchases from MBS were $22,044 and $92,083, respectively. Additionally, the Supply Agreement provided that we could sell to MBS certain textbooks that we could not return to suppliers or use in our stores. MBS paid us commissionsthese awards based on the volumenumber of awards expected to vest, which includes an estimated average forfeiture rate. We calculate the fair value of these textbooks sold to MBS eachawards based on the closing stock price on the date the award was granted. For those awards with market conditions, we have determined the grant date fair value using the Monte Carlo simulation model and compensation expense is recognized ratably over the requisite service period regardless of whether the market condition is satisfied.
For stock options granted with an "at market" exercise price, we determined the grant fair value using the Black-Scholes model and for stock options granted with "a premium" exercise price, we determined the grant date fair value using the Monte Carlo simulation model. The fair value models for stock options use assumptions that include the risk-free interest rate, expected volatility, expected dividend yield and expected term of the options.
During the 26 weeks ended October 30, 2021, we granted the following awards:
47,216 restricted stock units ("RSU") awards and 35,412 restricted stock ("RS") awards with a one year and with respectvesting period to the textbook requirementsBoard of certain distance learning programsDirectors ("BOD") members for annual compensation.
809,282 restricted stock units ("RSU") awards to employees with a three year vesting period.
322,495 stock options with an exercise price of $10.80 per stock option, which was the fair market value on the date of grant (Stock Option Grant #1) and 348,723 stock options with an exercise price of $13.30 per stock option, which was above the fair market value on the date of grant, (Stock Option Grant #2) granted to employees. The stock options are exercisable in four equal annual installments commencing one year after the date of grant and have a ten year term. Holders are not entitled to receive dividends (if any) prior to vesting and exercise of the options. The following summarizes the stock option fair value assumptions:
Stock Option Grant #1Stock Option Grant #2
Exercise Price$10.80 $13.30 
Valuation method utilizedBlack-ScholesMonte Carlo
Risk-free interest rate0.94 %0.94 %
Expected option term6.2 years10.0 years
Company volatility74 %74 %
Dividend yield— %— %
Grant date fair value per award$7.10 $6.73 
The risk-free interest rate is based on United States Treasury yields in effect at the date of grant for periods corresponding to the expected stock option term. For Stock Option Grant #1, we are permitted to use the simplified approach to estimate the expected term of the stock options, which typically assumes exercise occurs at the mid-point between the end of the vesting period and the expiration date. The simplified approach is not allowed for premium-priced options (Stock Option Grant #2), which were estimated using a stock price multiple, as there is no option exercise history which to base an early exercise option. The expected stock option term represents the weighted average period of time that MBS fulfilledstock options granted are expected to be outstanding, based on our behalf. Duringvesting schedules and the 13 and 39
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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 26 weeks ended January 28, 2017, MBS paid us $2,152October 30, 2021 and $6,077, respectively,October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)

contractual term of the stock options. Volatility is based on the historical volatility of the Company’s common stock over a period of time corresponding to the expected stock option term.
183,348 phantom share units granted to employees. Each phantom share represents the economic equivalent to one share of the Company's common stock and will be settled in cash based on the fair market value of a share of common stock at each vesting date in an amount not to exceed $32.40 per share. The phantom shares vest and will be settled in three equal installments commencing one year after the date of grant. The fair value of the phantom shares was determined using the closing stock price on the date of the award less the fair value of the call option which was estimated using the Black-Scholes model. The average fair value on the date of grant was $8.50 per phantom share using risk-free rates ranging from 0.08%-0.53% for the three tranches and annual volatility ranging from 78%-92% for the three tranches. The fair value of the liability for the cash-settled phantom share unit awards will be remeasured at the end of each reporting period through settlement to reflect current risk-free rate and volatility assumptions. As of October 30, 2021, we recorded a liability of $3,474 (Level 2 input) related to these commissions. In addition, the Supply Agreement contained restrictive covenants that limited our ability to become a used textbook wholesalerphantom share units grants which is reflected in accrued liabilities and placed certain limitationsother long-term liabilities on MBS’s business activities. We also previously entered into an agreement with MBS pursuant to which MBS purchased books, which have no resale value for a flat rate per box, from us. During the 13 and 39 weeks ended January 28, 2017, total sales to MBS under this program were $88 and $253, respectively. Total outstanding amounts payable to MBS for all arrangements net of any amounts due was $45,581 as of January 28, 2017.
Subsequent to the acquisition, the condensed consolidated financial statements include the accounts of MBSbalance sheet.
We recognized compensation expense for long-term incentive plan awards in selling and all material intercompany accounts and transactions have been eliminated in consolidation.administrative expenses as follows:
MBS leases its main warehouse and distribution facility located in Columbia, Missouri from MBS Realty Partners L.P. which is majority-owned by Leonard Riggio, with the remaining ownership by other sellers of MBS. The lease was originally entered into in 1991 and included a renewal option which extended the lease through September 1, 2023. Based upon a valuation performed
13 weeks ended26 weeks ended
October 30, 2021October 31, 2020October 30,
2021
October 31,
2020
Stock-based awards
Restricted stock expense$119 $20 $207 $50 
Restricted stock units expense931 976 1,661 2,335 
Performance share units expense29 73 63 205 
Stock option expense399 111 669 111 
Sub-total stock-based awards:$1,478 $1,180 $2,600 $2,701 
Cash settled awards
Phantom share units expense$2,452 $224 $4,924 $224 
Total compensation expense for long-term incentive awards$3,930 $1,404 $7,524 $2,925 
Total unrecognized compensation cost related to unvested awards as of the acquisition date, the leaseOctober 30, 2021 was determined$21,487 and is expected to be favorable fromrecognized over a lessee perspective with below market rent. For additional information, see Note 4. Acquisitionsweighted-average period of this Form 10Q. Rent payments to MBS Realty Partners L.P. were approximately $345 and $1,035 during the 13 and 39 weeks ended January 27, 2018, respectively.2.8 years.
Note 12. 11. Employee Benefit Plans
BNC
BNC has aWe sponsor defined contribution planplans for itsthe benefit of substantially all of the employees ("Savings Plan").of BNC is responsible for employer contributions to the Savings Plan and to fund the contributions directly. Total contributions charged to employee benefit expenses for this plan was $887 and $919 during the 13 weeks ended January 27, 2018 and January 28, 2017, respectively, and $3,096 and $3,159 during the 39 weeks ended January 27, 2018 and January 28, 2017, respectively.
MBS
DSS. MBS maintains a defined contribution and profit sharing plan ("Profit Sharing Plan") covering substantially all full-time employees of MBS. MBS transfers employee contributions to the account balances of their employees and isFor all plans, we are responsible to fund the employer contributions directly. Total employee benefit expensesexpense for the Profit Sharing Planthese plans was $638$1,004 and $2,193$0 during the 13 and 39 weeks ended January 27, 2018,October 30, 2021 and October 31, 2020, respectively. Total employee benefit expense for these plans was $1,048 and $0 during the 26 weeks ended October 30, 2021 and October 31, 2020, respectively.

Effective April 2020, due to the significant impact as a result of COVID-19 related campus store closures, we temporarily suspended employer matching contributions into our 401(k) plans. The matching contributions were reinstated effective July 25, 2021.
Note 12. Income Taxes
We recorded an income tax benefit of $(203) on pre-tax income of $22,325 during the 13 weeks ended October 30, 2021, which represented an effective income tax rate of (0.9)% and an income tax benefit of $(1,694) on pre-tax income of $5,821 during the 13 weeks ended October 31, 2020, which represented an effective income tax rate of (29.1)%.
We recorded income tax expense of $196 on a pre-tax loss of $(21,622) during the 26 weeks ended October 30, 2021, which represented an effective income tax rate of (0.9)%% and an income tax benefit of $(16,610) on a pre-tax loss of $(55,747) during the 26 weeks ended October 31, 2020, which represented an effective income tax rate of 29.8%.
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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 3926 weeks ended January 27, 2018October 30, 2021 and January 28, 2017October 31, 2020
(Thousands of dollars, except share and per share data)
(unaudited)



Note 13. Stock-Based Compensation
We recognize compensation expense for awards ratably overIn assessing the requisite service periodrealizability of the award, whichdeferred tax assets, management considered whether it is generally three years. We recognize compensation expense based on the number of awards expected to vest using an estimated average forfeiture rate. We calculate the fair value of stock-based awards based on the closing price on the date the award was granted.
During the 39 weeks ended January 27, 2018, we granted the following awards:
537,756 performance share units ("PSU") awards to employeesmore likely than not that will only vest based upon the achievement of pre-established performance goals related to Adjusted EBITDA and new business achieved measured over a period of time. The PSU awards will vest based on company performance during Fiscal 2018 - Fiscal 2019 with one additional year of time-based vesting. The number of PSU awards that will vest range from 0%-150%some or all of the target award based on actual performance.
1,562,110 restricted stock units ("RSU") awards were granted to employees with a three year vesting period in accordance with the Equity Incentive Plan;
78,816 RSU awardsdeferred tax assets would be realized. As of October 30, 2021, we determined that it was more likely than not that we would not realize certain deferred tax assets and 19,704 restricted stock ("RS") awards were granted toour tax rate for the current Board of Directors ("BOD") members for annual compensation with a onefiscal year vesting period in accordance with the Equity Incentive Plan.
reflects this determination. We recognized stock-based compensation expense for equity-based awards in selling and administrative expenses as follows:
��13 weeks ended 39 weeks ended
 January 27,
2018
 January 28,
2017
 January 27,
2018
 January 28,
2017
Restricted stock expense$30
 $30
 $90
 $250
Restricted stock units expense (a)
2,237
 2,622
 6,277
 6,500
Performance shares expense (b)
58
 117
 (275) 477
Performance share units expense (b)
(255) 
 131
 
Stock-based compensation expense$2,070
 $2,769
 $6,223
 $7,227
(a) The stock-based compensation expense for the RSUs reflect the forfeiture adjustment for unvested shares relatedwill continue to the CEO transition. See Note 9. Supplementary Information - Restructuring and Other Charges ofevaluate this Form 10-Q for additional information.
(b) The performance shares and PSUs expenses reflect a cumulative adjustment to reflect changes to the expected level of achievement of the respective grants.
Total unrecognized compensation cost related to unvested awards as of January 27, 2018 was $15,180 and is expected to be recognized over a weighted-average period of 2.1 years. Approximately $847 of the unrecognized compensation cost is related to performance shares and performance share units, which is subject to attaining the stated performance metrics.
Note 14. Income Taxes
We recorded an income tax benefit of $(15,344) on a pre-tax loss of $(298,579) during the 13 weeks ended January 27, 2018, which represented an effective income tax rate of 5.1% and an income tax expense of $758 on pre-tax income of $4,519 during the 13 weeks ended January 28, 2017, which represented an effective income tax rate of 16.8%.
We recorded an income tax benefit of $(6,113) on a pre-tax loss of $(275,736) during the 39 weeks ended January 27, 2018, which represented an effective income tax rate of 2.2% and an income tax expense of $2,087 on pre-tax income of $7,221 during the 39 weeks ended January 28, 2017, which represented an effective income tax rate of 28.9%. position.
The effective tax ratesrate for the 13 and 3926 weeks ended January 27, 2018 are significantlyOctober 30, 2021 is lower as compared to the comparable prior year periodscomparable period due to the tax benefit of U.S. Tax Reform, partially offset by permanent differences, which in this quarter includes the nondeductible portionassessment of the goodwill impairment.
Management expects nondeductible compensation expense for the current fiscal year to be significantly lower compared torealization of deferred tax assets and loss carrybacks recorded in the prior fiscal year as components of our executive compensation program now qualify as deductible under Section 162(m) of the Internal Revenue Code. In addition, our income tax provision for the preceding two fiscal years reflected certain non-recurring

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the 13 and 39 weeks ended January 27, 2018 and January 28, 2017
(Thousands of dollars, except share and per share data)
(unaudited)


tax benefits arising from the Spin-Off. Management does not expect any similar non-recurring tax benefits associated with the Spin-Off to impact our effective tax rate either in the current fiscal year or in future fiscal year.
Impact of U.S. Tax Reform
The Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate from 35% to 21% and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, among other provisions. As of January 27, 2018, we had not completed the accounting for the tax effects of enactment of the Act; however, as described below, we have made a reasonable estimate of the effects on existing deferred tax balances and the one-time transition tax in accordance with SAB 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (SAB 118). These amounts are provisional and subject to change within the measurement period proscribed by SAB 118 which is not to extend beyond one year from the enactment date. The most significant impact of the legislation for the Company was a $21,126 reduction of the value of the our net deferred (which represents future tax liabilities) and long-term tax liabilities as a result of lowering the U.S. corporate income tax rate from 35% to 21%. We have provisionally recorded a liability associated with the one-time transition tax, however, such amount is not material.
Note 15. 13. Legal Proceedings
We are involved in a variety of claims, suits, investigations and proceedings that arise from time to time in the ordinary course of our business, including actions with respect to contracts, intellectual property, taxation, employment, benefits, personal injuries and other matters. The results of these proceedings in the ordinary course of business are not expected to have a material adverse effect on our condensed consolidated financial position, results of operations, or cash flows.


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


Unless the context otherwise indicates, references to “we,” “us,” “our” and “the Company” refer to Barnes & Noble Education, Inc. or “BNED”, a Delaware corporation. References to “Barnes & Noble College” or "BNC"“BNC” refer to our college bookstore business operated through our subsidiary Barnes & Noble College Booksellers, LLC. References to “MBS” refer to our virtual bookstore and wholesale textbook distribution business operated through our subsidiary MBS Textbook Exchange, LLC, a Delaware corporation.LLC.
Overview
Description of businessBusiness
Barnes & Noble Education, Inc. (“BNED”) is one of the largest contract operators of physical and virtual bookstores for higher educationcollege and university campuses and K-12 institutions across the United States,States. We are also one of the largest textbook wholesalers, inventory management hardware and software providers, and a leading provider of digital education services. Through its Barnes & Noble College (“BNC”)solutions. We operate 1,445 physical, virtual, and MBS Textbook Exchange (“MBS”) subsidiaries, Barnes & Noble Education operates 1,480 physical and virtualcustom bookstores and servesserve more than 6 million students, delivering essential educational content and tools within a dynamic omnichannel retail environment. Additionally, we offer direct-to-student products and services to help students study more effectively and improve academic performance.
The strengths of our business include our ability to compete by developing new products and solutions to meet market needs, our large operating footprint with direct access to students and faculty, our well-established, deep relationships with academic partners and stable, long-term contracts and our well-recognized brands. We expect to continue to introduce scalable and advanced digital solutions focused largely on the student, expand our e-commerce capabilities and accelerate such capabilities through our recent merchandising partnership with Fanatics Retail Group Fulfillment, LLC, Inc. (“Fanatics”) and Fanatics Lids College, Inc. (“FLC”) (collectively referred to herein as the “FLC Partnership”), increase market share with new accounts, and expand our strategic opportunities through acquisitions and partnerships.
We expect general merchandise sales to increase over the long term, as our product assortments continue to emphasize and reflect changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online, which we expect to be further enhanced and accelerated through the FLC Partnership. Through LoudCloud, itsthis partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital education platform, marketing tools to drive increased value for customers and accelerate growth of our logo and emblematic general merchandise business.
We believe the Barnes & Noble Education brand (licensed from our former parent) along with our subsidiary brands, BNC and MBS, are synonymous with innovation in bookselling and campus retailing, and are widely recognized and respected brands in the United States. Our large college footprint, reputation, and credibility in the marketplace not only support our marketing efforts to universities, students, and faculty, but are also important to our relationship with leading publishers who rely on us as one of their primary distribution channels, and for being a trusted source for students in our direct-to-student digital solutions business.
For additional information related to our business, see Part I - Item 1. Business in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.
Partnership with Fanatics and FLC
In December 2020, we entered into the FLC Partnership. Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our general merchandise business. Fanatics’ cutting-edge e-commerce and technology expertise offers our campus stores expanded product selection, a world-class online and mobile experience, and a progressive direct-to-consumer platform. Coupled with FLC, the leading standalone brick and mortar retailer focused exclusively on licensed fan and alumni products, our campus stores have improved access to trend and sales performance data on licensees, product styles, and design treatments.
We maintain our relationships with campus partners and remain responsible for staffing and managing the day-to-day operations of our campus bookstores. We also work closely with our campus partners to ensure that each campus store maintains unique aspects of in-store merchandising, including localized product assortments and specific styles and designs that reflect each campus’s brand. We leverage Fanatics’ e-commerce technology and expertise for the operational management of the emblematic merchandise and gift sections of our campus store websites. FLC manages in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus stores.
In December 2020, Fanatics, Inc. and Lids Holdings, Inc. jointly made a strategic equity investment in BNED. On April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, we sold our logo and emblematic general merchandise inventory to FLC, which was finalized during the first quarter of Fiscal 2022. As contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products during the first quarter of Fiscal 2022. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed
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consolidated financial statements, as compared to the recognition of logo and emblematic general merchandise sales on a gross basis in the prior year. For additional information, see Item 1. Financial Statements - Note 2. Summary of Significant Accounting Policies - Merchandise Inventories.
COVID-19 Business Impact
Our business experienced an unprecedented and significant negative impact as a result of COVID-19 related campus store closures. Beginning in March 2020, colleges and universities nationwide began to close their campuses in light of safety concerns and as a result of local and state issued stay-at-home orders. By mid-March, during our Fiscal 2020 fourth quarter, we closed the majority of our physical campus stores to protect the health and safety of our customers and employees.
While our campus stores were closed, we continued to serve institutions and students through our campus websites, providing free shipping on all orders and an expanded digital content offering to provide immediate access to course materials to students at our campuses that closed due to COVID-19. We developed and implemented plans to safely reopen our campus stores based on national, state and local guidelines, as well as the campus policies set by the school administration.
Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve. We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including the Delta variant, on enrollments, university budgets, athletics and other areas that directly affect our business operations. Although most four year schools have returned to a traditional on-campus environment for learning in the current Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and the effect on our ability to source products, including textbooks and general merchandise offerings. We will continue to assess our operations and will continue to consider the guidance of local governments and our campus partners to determine how to operate our bookstores in the safest manner for our employees and customers. If economic conditions caused by the pandemic do not recover as currently estimated by management or market factors currently in place change, there could be a further impact on our results of operations, financial condition and cash flows from operations. For additional information, see Part I - Item 1. Business in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.
Segments
We have three reportable segments: Retail, Wholesale and DSS. Additionally, unallocated shared-service costs, which include various corporate level expenses and other governance functions, continue to be presented as “Corporate Services”.
We identify our segments in accordance with the way our business is managed (focusing on the financial information distributed) and the manner in which our chief operating decision maker allocates resources and assesses financial performance. The following summarizes the three segments. For additional information about each segment's operations, see Part I - Item 1. Business in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.
Retail Segment
The Retail Segment operates 1,445 college, university, and K-12 school bookstores, comprised of 794 physical bookstores and 651 virtual bookstores. Our bookstores typically operate under agreements with the college, university, or K-12 schools to be the official bookstore and the exclusive seller of course materials and supplies, including physical and digital products. The majority of the physical campus bookstores have school-branded e-commerce sites which we operate independently or along with our merchant partners, and which offer students access to affordable course materials and affinity products, including emblematic apparel and gifts. The Retail Segment also offers inclusive access programs, in which course materials are offered at a reduced price through a fee charged by the institution or included in tuition, and delivered to students on or before the first day of class. Additionally, the Retail Segment offers a suite of digital software, content and services that include predictive analytics,to colleges and universities, including a variety of open educational resources ("OER") courseware, competency-based solutions,resource-based courseware.
Wholesale Segment
The Wholesale Segment is comprised of our wholesale textbook business and is one of the largest textbook wholesalers in the country. The Wholesale Segment centrally sources, sells, and distributes new and used textbooks to approximately 3,200 physical bookstores (including our Retail Segment's 794 physical bookstores) and sources and distributes new and used textbooks to our 651 virtual bookstores. Additionally, the Wholesale Segment sells hardware and a learningsoftware suite of applications that provides inventory management system. Additionally, throughand point-of-sale solutions to approximately 400 college bookstores.
DSS Segment
The Digital Student Solutions (“DSS”) Segment includes direct-to-student products and services to assist students to study more effectively and improve academic performance. The DSS Segment is comprised of the operations of Student Brands, LLC, a leading direct-to-student subscription-based writing services business, BNC offers services focusedand bartleby®, a direct-to-student subscription-based offering providing textbook solutions, expert questions and answers, writing and tutoring.
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Corporate Services represents unallocated shared-service costs which include corporate level expenses and other governance functions, including executive functions, such as accounting, legal, treasury, information technology, and human resources.
Seasonality
Our business is highly seasonal. Our quarterly results also may fluctuate depending on study tools, writing help, and literary research, all centered on assisting students with the writing process.
We believetiming of the start of the various schools' semesters, as well as shifts in our product offerings and services for students, faculty and administrators enable a more personalized learning experience, which improves student success rates and retention. We strive to befiscal calendar dates. These shifts in timing may affect the first stop for students, educators and administrators by offering the most comprehensive resources available with our flexible physical and/or virtual bookstore options. The strengthscomparability of our business includeresults across periods. Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April.
For our large footprint with well-recognized brand; our ability to meet students’ affordability needs; our comprehensive suite of course materials; our well-established, deep relationships with partners; direct access toretail operations, sales are generally highest in the second and third fiscal quarters, when students generally purchase and faculty; integrated systems with our customers; and stable, long-term contracts. We expect to continue to grow our business by increasing market share with new accounts, introducing scalable and advanced digital solutions and expanding our strategic opportunities through acquisitions and partnerships.
Educational institutions increasingly are outsourcing bookstore operations, investing in data-driven analytical tools, and offering students more affordable options forrent textbooks and other learning tools. Given these continuing trends, we are well-positioned to capture new market share and partner with an increasing number of schools across the country. As demand for new, improved, and more affordable products and services increase in the rapidly changing education landscape, we are working to evolve our business model and enhance our solutions. We aim to be an even stronger partner for schools and meet customer needs by expanding our physical and virtual bookstore service capabilities, courseware offerings and digital platform services. We have begun to offer the distribution of e-content via our First Day™, our inclusive access program, in which course materials are included in the cost of tuition and delivered to students digitally or through their Barnes & Noble College campus bookstore. We believe that our strategic actions, including the acquisition of LoudCloud, Promoversity, MBS, and Student Brands (discussed below) and development of courseware, have substantially enhanced our competitive position. We continue to aggressively innovate and collaborate with our partners to provide solutions that extend well beyond course materials sourcing and sales to include new digital services that support successful student outcomes. See Fiscal Year 2018 Highlights below for a discussion of recent activities to enhance our product offerings and services.
For additional information related to our business, see Part I - Item 1. Business in our Annual Report on Form 10-K for the year ended April 29, 2017.
Fiscal Year 2018 Highlights
McGraw-Hill Education - In February 2018, we expanded our relationship with McGraw-Hill Education with two new initiatives to provide students, faculty and institutions greater access to more affordable course materials. The companies will partner on two initiatives: the distribution of McGraw-Hill Education e-content through our First Day™, our inclusive access program, in which course materials are included in the cost of tuition and delivered to students digitally or through their Barnes & Noble College campus bookstore, and the distribution of McGraw-Hill Education's new rental titles through our channels. MBS will act as a distributor for rental textbooks offered through McGraw-Hill Education's newly announced rental program. The program includes more than 250 titles, with plans for all future titles. Through its centrally located, advanced distribution center, MBS will offer a seamless integration of McGraw-Hill Education's rental program, providing a single point of entry for the rental titles and centralized administration and distribution to more than 3,700 stores.
Pearson - In February 2018, we announcement that we entered an agreement with Pearson to offer Pearson content through our inclusive access models at our 1,480 physical and virtual campus bookstores nationwide, serving more than 6 million students and their faculty. This collaboration provides students with affordable access to high-quality course materials, including MyLab™

and Mastering™, Revel™ and eTexts, on the first day of class. The seamless delivery is made possible by BNED’s First Day™ inclusive access program and Pearson’s technology integrations with campus systems.
Kentucky Community and Technical College System ("KCTCS") - This Fall, more than 1,000 KCTCS students used BNED Courseware in their classes. Three colleges in the KCTCS took part in our digital courseware program, as part of an ongoing KCTCS effort to provide students with more affordable course materials. BNED Courseware is digital course content that includes videos, activities and auto-graded practice assessments that faculty can easily personalize to align with class objectives. BNED Courseware was offered through First Day™. The First Day program, offered to the entire KCTCS system, ensures students have their course materials on the first day of class.
The Princeton Review -In November 2017, we entered into a strategic partnership with The Princeton Review. The partnership allows us to further expand our end-to-end offerings and fulfill the full breadth of student education needs by offering The Princeton Review's products and services to our network of more than 6 million students.
Portland State University ("PSU") - In October 2017, we announced our strategic partnership with PSU to co-develop a degree planning solution. Using insights generated by PSU's reTHINK initiative and leveraging our analytics platform, the solution will ultimately help more students graduate on time with better pathways to employment and provide the university with long-term demand planning tools.
Eastern Gateway Community College ("EGCC") - In August 2017, we announced that we signed a multi-year contract with EGCC to provide a full suite of solutions, including bookstore operations, an institution-wide learning management system (LMS), LoudSight, our predictive analytics offering, and digital courseware to the students, faculty and advisors of EGCC.
Acquisition of Student Brands, LLC - On August 3, 2017, we acquired Student Brands. Student Brands is an education technology company that operates multiple direct-to-student businesses focused on study tools, writing help, and literary research, all centered on assisting students with the writing process. Student Brands generates revenue predominantly through its subscription-based services and digital advertisements. Student Brands has over 20 million unique monthly users across its digital properties, which include123HelpMe.com, Bartleby.com and StudyMode.com in the United States and TrabalhosFeitos.com, Etudier.com and Monografias.com in Brazil, France and Mexico, respectively.
Unizin, Ltd. ("Unizin")- In May 2017, we entered into an agreement with Unizin to provide its 22 member universities with LoudCloud's predictive analytics solution, LoudSight. As a result, faculty and advisors will have access to a customized solution that helps educators identify, monitor, and support at-risk students, with the goal of improving student success rates and retention.
Integration of MBS Textbook Exchange, LLC. ("MBS") - Prior to the end of Fiscal 2017, in February 2017, we completed the purchase of all issued and outstanding units of MBS, which operates two highly integrated businesses, Wholesale and Direct. We continue our efforts to integrate the operations of MBS to achieve our strategic objectives and anticipated synergies.
Segments
We have two reportable segments: BNC and MBS.
BNC operates 782 physical campus bookstores as of January 27, 2018, the majority of which also have school-branded e-commerce sites operated by BNC, and BNC also includes our digital education operations and subscription-based writing services business. Our campus stores are a social and academic hub through which students can access affordable course materials, and affinity products, including newlowest in the first and used printfourth fiscal quarters. Sales attributable to our wholesale business are generally highest in our first, second and digital textbooks, which are available for sale or rent, emblematic apparel and gifts, trade books, computer products, school and dorm supplies, café offerings, convenience food and beverages, and graduation products. BNC product offerings also include a suite of digital content, software, and services through our LoudCloud platform, suchthird quarter, as predictive analytics, a variety of open educational resources ("OER") courseware, and competency-based learning solutions and a learning management system. Additionally, through Student Brands, BNC offers services focused on study tools, writing help, and literary research, all centered on assisting students with the writing process. During the 39 weeks ended January 27, 2018, BNC opened 30 stores, with estimated annual first year sales of $61.0 million.
Our MBS subsidiary operates two highly integrated businesses. The MBS Direct business is the largest contract operator of virtual bookstores for college and university campuses and private/parochial K-12 schools. MBS Direct operates 698 virtual bookstores as of January 27, 2018, offering new and used print and digital textbooks, which are available for sale or rent. Additionally, MBS Directit sells textbooks directly to students through textbooks.comSM, one ofand other course materials for retail distribution. For our DSS segment, or direct-to-student business, sales and operating profit are realized relatively consistently throughout the largest e-commerce sites for new and used textbooks. MBS Wholesale is one of the largest textbook wholesalers in the country, providing a comprehensive selection of new and used textbooks at a low cost of supply to more than 3,700 physical bookstores (as of April 29, 2017), including BNC’s 782 campus bookstores. During the 39 weeks ended January 27, 2018, MBS Direct opened 19 stores, with estimated annual first year sales of $5.7 million.
For additional information related to product and platform offerings for BNC and MBS, see Part I - Item 1. Business in our Annual Report on Form 10-K for the year ended April 29, 2017.

year.
Trends, Competition and Other FactorsBusiness Conditions Affecting Our Business
The market for educational materials is undergoing unprecedented change. As tuition and other costs rise, colleges and universities face increasing pressure to attract and retain students and provide them with innovative, affordable educational content and tools that support their educational development. Current trends, competition and other factors affecting our business include:
Overall Economic Environment, College Enrollment and Consumer Spending Patterns: Patterns.Our business is affected by the impact of the COVID-19 pandemic, the overall economic environment, funding levels at colleges and universities, by changes in enrollments at colleges and universities, and spending on textbookscourse materials and general merchandise.
Impact of the COVID-19 Pandemic: The COVID-19 pandemic has materially and adversely impacted certain segments of the U.S. economy, with legislative and regulatory responses including unprecedented monetary and fiscal policy actions across all sectors, and there is significant uncertainty as to timing of stabilization and recovery, including the ability to gain adequate herd-immunity levels through vaccine programs and their resilience to future virus variants. Many colleges and K-12 schools were required to cease in-person classes in an attempt to limit the spread of the COVID-19 virus and ensure the safety of their students. Although many academic institutions have reopened, some are providing alternatives to traditional in-person instruction, including online and hybrid learning options and significantly reduced classroom sizes. Additionally, our business, like many others has been affected by the challenging labor market and the ability to recruit employees.
Economic Environment: Retail general merchandise sales are subject to short-term fluctuations driven by the broader retail environment. The broader macro-economic global supply chain issues may also impact our ability to source school supplies and general merchandise sold in our campus bookstores, including technology-related products and emblematic clothing.
Enrollment Trends: The growth of our business depends on our ability to attract new studentscustomers and to increase the level of engagement by existing students. Forour current student customers. We continue to see downward enrollment trends and shrinking resources from state and federal government for colleges and universities. Enrollment trends, specifically at community colleges, generally correlate with changes in the 39 weeks ended January 27, 2018, our comparable store sales wereeconomy and unemployment factors, e.g. low unemployment tends to lead to low enrollment and higher unemployment rates tend to lead to higher enrollment trends, as students generally enroll to obtain skills that are in demand in the workforce. Enrollment trends have been negatively impacted overall by COVID-19 concerns at physical campuses. A significant reduction in U.S. economic activity and increased unemployment could lead to decreased enrollment and consumer spending. Additionally, enrollment trends are impacted by lower average selling pricesthe dip in the United States birth rate resulting in fewer students at the traditional 18-24 year-old college age. Online degree program enrollments continue to grow, even in the face of declining overall higher education enrollment.
Increased Use of Online and Digital Platforms as Companions or Alternatives to Printed Course Materials. Students and faculty can now choose from a wider variety of educational content and tools than ever before, delivered across both print and digital platforms.
Increasing Costs Associated with Defending Against Security Breaches and Other Data Loss, Including Cyber-Attacks. We are increasingly dependent upon information technology systems, infrastructure and data. Cyber-attacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. We continue to invest in data protection and information technology to prevent or minimize these risks and, to date, we have not experienced any material service interruptions and are not aware of any material breaches.
24

Distribution Network Evolving. The way course materials driven by lower publisher prices resultingare distributed and consumed is changing significantly, a trend that is expected to continue. The market for course materials, including textbooks and supplemental materials, is intensely competitive and subject to rapid change.
Disintermediation. We are experiencing growing competition from a shift to lower cost optionsalternative media and more affordable solutions, including digital. Additionally, comparable store sales declined foralternative sources of textbooks due to lower community college enrollment, increased consumer purchases directly from publishers and other online providers,course materials. In addition to the official physical or virtual campus bookstore, course materials are also sold through off-campus bookstores, e-commerce outlets, digital platform companies, publishers, including Cengage, Pearson and general weakness inMcGraw Hill, bypassing the retail environment.
bookstore distribution channel by selling or renting directly to students and educational institutions, and student-to-student transactions over the Internet.
Supply Chain and Inventory: Inventory. Since the demand for used and new textbooks has historically been greater than the available supply, our financial results are highly dependent upon MBS Wholesale’s ability to build its textbook inventory from suppliers in advance of the selling season. Recently, the impact of fewer students on campus due to COVID-19 has significantly impacted our on-campus buyback programs which supplies Wholesale’s used textbook inventory for future selling periods. Some textbook publishers have begun to supply textbooks onpursuant to consignment or rental programs which could impact used textbook supplies in the future. In February 2018, BNED signed an agreement with McGraw-Hill Education, in which MBS would act asAdditionally, Wholesale is a national distributor for rental textbooks offered through McGraw-Hill Education's newly announcedand Pearson Education’s consignment rental program.program, both of which are relatively nascent. The program includes more than 250 titles, with plans for all future titles. See Fiscal Year 2018 Highlights above for additional information.
broader macro-economic global supply chain issues may also impact our ability to source school supplies and general merchandise sold in our campus bookstores, including technology-related products and emblematic clothing.
Demand for Digital Offerings: Over the longer-term, we anticipate significant new opportunities for our digital product offerings. Through our LoudCloud platform, we address the growing demand for alternative forms of educational materials and learning tools.Price Competition. In addition to the competition in the services we provide to our acquisitioncustomers, our textbook and other course materials business faces significant price competition. Students purchase textbooks and other course materials from multiple providers, are highly price sensitive, and can easily shift spending from one provider or format to another.
A Large Number of Student Brands offers additional digital direct-to-student services, centered on assisting students withTraditional Campus Bookstores Have Yet to be Outsourced.
Outsourcing Trends. We continue to see the writing process. See Fiscal Year 2018 Highlights abovetrend towards outsourcing in the campus bookstore market and also continue to see a variety of business models being pursued for additional information.
the provision of course materials (such as inclusive access programs and publisher subscription models) and general merchandise.
New and Existing Bookstore Contracts: Contracts.We expect awards of new accounts resulting in new physical and virtual store openings will continue to be an important driver of future growth in our business. We also expect to continue to successfully renew our current contracts on favorable terms.
Campus Bookstore Outsourcing: We continue to see increasing trends towards outsourcing in the campus bookstore market, including virtualthat certain less profitable or essential bookstores and online marketplace websites. We also continue to see a variety of business models being pursued for the provision of textbooks, course materials and general merchandise. Contract costs, which arewe operate may close. Such stores could be included in costcontracts for stores we operate that may be deemed non-essential; and such stores could be operated by others or independently by schools. The scope of sales, and primarily consistany such store closures remains uncertain, although we are not aware, at this time, of the paymentsany significant volume of stores which we makeoperate that are likely to the colleges and universities to operate their official bookstores (management service agreement costs), including rent expense,close or have generally increased as a percentageinformed us of sales as a result of increased competition for renewals and new store contracts. We continue to work on evolving our business model and enhance our solutions, as well as enforce our contract exclusivity, to combat increased competition.
upcoming closures.
Course Materials Market: In addition to the competition in the services we provide to our customers, our textbook business faces significant price competition. Many students purchase from multiple textbook providers, are highly price sensitive and can easily shift spending from one provider or format to another. SomeFor additional discussion of our competitors have adopted, and may continue to adopt, aggressive pricing policies and devote substantial resources to marketing, website and systems development. As we expand our textbook rental offerings, students have been shifting away from higher priced textbook purchases to lower priced rental options, which has resulted in lower textbook sales and increasing rental income.
Retail Environment: BNC general merchandise sales, which are subject to short-term fluctuations driven by the broader retail environment, continue to increase over the long term as our product assortments continue to emphasize and reflect the changing consumer trends and we evolve our presentation concepts and merchandising of products in stores and online.
For additional information related toother factors affecting our business,seePart I - Item 1. Business - Trends and Other Factors Affecting Our Business in our Annual Report on Form 10-K for the year ended April 29, 2017.May 1, 2021.
Elements of Results of Operations
Our condensed consolidated financial statements reflect our condensed consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”). On February 27, 2017, we acquired MBS Textbook Exchange, LLC and on August 3, 2017 we acquired Student Brands, LLC. The results of operations for the 13 and 39 weeks ended January 27, 2018 include thereflected in our consolidated financial results of both MBS and Student Brands and allstatements are presented on a consolidated basis. All material intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the 13 and 39 weeks ended January 28, 2017 exclude the financial results of MBS and Student Brands.
Our sales are primarily derived from the sale of course materials, which include new, used and useddigital textbooks, and digital textbooks. Our rental income is primarily derived from the rental of physical and digital textbooks. Atat college and university bookstores which we operate, we sell high margin general merchandise, including emblematic apparel and gifts, trade books, computer products, school and dorm supplies, convenience

and café items and graduation products. Our rental income is primarily derived from the rental of physical textbooks. We also derive revenue from other sources, such as sales related toof inventory management, hardware and point-of-sale software, and direct-to-student subscription-based writingservices, and other services.
Our cost of sales primarily includeincludes costs such as merchandise costs, textbook rental amortization, payroll costs, as well ascontent development cost amortization, warehouse costs related to inventory management and order fulfillment, insurance, certain payroll costs, and management service agreement costs, including rent expense, related to our college and university contracts and other facility related expenses.
Our selling and administrative expenses consist primarily of store payroll and store operating expenses. Selling and administrative expenses also include stock-basedlong-term incentive plan compensation expense and general office expenses, such as executive oversight,
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merchandising, procurement, field support, finance and accounting, and operating costs related to our direct-to-student subscription-based services business. Shared-service costs such as human resources, benefits, training, legal, andtreasury, information technology, and various other corporate level expenses and other governance functions, are not allocated to any specific reporting segment and are recorded in Corporate Services as well as our investmentsdiscussed in our digital platform and subscription-based writing services.
the Overview - Segments discussion above.
Results of Operations - Summary
 13 weeks ended26 weeks ended
Dollars in thousandsOctober 30,
2021
October 31,
2020
October 30,
2021
October 31,
2020
Sales:
Product sales and other$577,329 $551,832 $805,099 $745,042 
Rental income49,648 43,653 62,672 54,457 
Total sales$626,977 $595,485 $867,771 $799,499 
Net income (loss)$22,528 $7,515 $(21,818)$(39,137)
Adjusted Earnings (non-GAAP) (a)
$24,955 $11,075 $(15,059)$(30,641)
Adjusted EBITDA (non-GAAP) (a)
Retail$39,444 $18,324 $19,822 $(22,316)
Wholesale1,233 6,568 7,647 19,534 
DSS807 689 2,499 2,353 
Corporate Services(6,809)(5,501)(14,253)(10,745)
Elimination4,293 4,455 (1,244)(2,308)
Total Adjusted EBITDA (non-GAAP)$38,968 $24,535 $14,471 $(13,482)
 13 weeks ended 39 weeks ended
Dollars in thousandsJanuary 27, 2018 January 28, 2017 January 27, 2018 January 28, 2017
Sales:       
Product sales and other$540,903
 $457,147
 $1,693,230
 $1,372,810
Rental income62,488
 64,477
 152,733
 158,722
Total sales$603,391
 $521,624
 $1,845,963
 $1,531,532
        
Net (loss) income$(283,235) $3,761
 $(269,623) $5,134
        
Adjusted Earnings (non-GAAP) (a)
$19,644
 $4,047
 $39,781
 $7,848
        
Adjusted EBITDA (non-GAAP) (a)
       
BNC$19,636
 $18,814
 $54,329
 $52,681
MBS20,752
 
 56,000
 
Elimination(5,827) 
 (5,782) 
Total Adjusted EBITDA (non-GAAP)$34,561
 $18,814
 $104,547
 $52,681
        
(a)Adjusted Earnings and Adjusted EBITDA are non-GAAP financial measures. See Adjusted Earnings (non-GAAP) and Adjusted EBITDA (non-GAAP) discussion below.
(a)
Adjusted Earnings and Adjusted EBITDA are a non-GAAP financial measures. See Adjusted Earnings (non-GAAP) and Adjusted EBITDA (non-GAAP) discussion below.
Store Count
The following table sets forth, for the periods indicated, the percentage relationship that certain items bear to total sales:
 13 weeks ended26 weeks ended
October 30,
2021
October 31,
2020
October 30,
2021
October 31,
2020
Sales:
Product sales and other92.1 %92.7 %92.8 %93.2 %
Rental income7.9 7.3 7.2 6.8 
Total sales100.0 100.0 100.0 100.0 
Cost of sales:
Product and other cost of sales (a)
78.5 82.0 77.9 83.0 
Rental cost of sales (a)
57.1 63.5 55.8 64.5 
Total cost of sales76.8 80.6 76.3 81.7 
Gross margin23.2 19.4 23.7 18.3 
Selling and administrative expenses17.2 15.4 22.4 20.3 
Depreciation and amortization expense1.9 2.2 2.8 3.4 
Restructuring and other charges0.2 0.6 0.4 1.1 
Operating income (loss)3.9 %1.2 %(1.9)%(6.5)%
(a)Represents the percentage these costs bear to the related sales, instead of total sales.

 13 weeks ended January 27, 2018 13 weeks ended January 28, 2017
Number of Stores:BNC Stores MBS Direct Stores BNC Stores
Opened6
 5
 2
Closed1
 13
 3
Opened at end of period782
 698
 770
      
Comparable store sales (a)
(6.2)% N/A
 (5.3)%
26

 39 weeks ended January 27, 2018 39 weeks ended January 28, 2017
Number of Stores:BNC Stores MBS Direct Stores BNC Stores
Opened30
 19
 36
Closed17
 33
 17
Opened at end of period782
 698
 770
      
Comparable store sales (a)
(4.7)% N/A
 (4.0)%
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(a)For BNC, effective for the first quarter of Fiscal 2017, comparable store sales includes sales from stores that have been open for an entire fiscal year period, does not include sales from closed stores for all periods presented, and digital agency

Results of Operations - 13 and 26 weeks ended October 30, 2021 compared with the 13 and 26 weeks ended October 31, 2020
13 weeks ended October 30, 2021
Dollars in thousandsRetailWholesaleDSSCorporate ServicesEliminationsTotal
Sales:
Product sales and other$559,304 $21,669 $8,279 $— $(11,923)$577,329 
Rental income49,648 — — — — 49,648 
Total sales608,952 21,669 8,279 — (11,923)626,977 
Cost of sales:
Product and other cost of sales451,779 16,049 1,373 — (16,131)453,070 
Rental cost of sales28,348 — — — — 28,348 
Total cost of sales480,127 16,049 1,373 — (16,131)481,418 
Gross profit128,825 5,620 6,906 — 4,208 145,559 
Selling and administrative expenses89,486 4,387 7,305 6,809 (85)107,902 
Depreciation and amortization expense8,669 1,364 1,902 17 — 11,952 
Sub-Total:$30,670 $(131)$(2,301)$(6,826)$4,293 25,705 
Restructuring and other charges1,116 
Operating income$24,589 
13 weeks ended October 31, 2020
Dollars in thousandsRetailWholesaleDSSCorporate ServicesEliminationsTotal
Sales:
Product sales and other$532,861 $36,387 $5,947 $— $(23,363)$551,832 
Rental income43,653 — — — — 43,653 
Total sales576,514 36,387 5,947 — (23,363)595,485 
Cost of sales:
Product and other cost of sales453,277 25,673 1,285 — (27,760)452,475 
Rental cost of sales27,725 — — — — 27,725 
Total cost of sales481,002 25,673 1,285 — (27,760)480,200 
Gross profit95,512 10,714 4,662 — 4,397 115,285 
Selling and administrative expenses77,380 4,146 5,003 5,501 (58)91,972 
Depreciation and amortization expense9,985 1,322 1,855 31 — 13,193 
Sub-Total:$8,147 $5,246 $(2,196)$(5,532)$4,455 10,120 
Restructuring and other charges3,387 
Operating income$6,733 


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26 weeks ended October 30, 2021
Dollars in thousandsRetailWholesaleDSSCorporate ServicesEliminationsTotal
Sales:
Product sales and other$756,749 $66,153 $16,582 $— $(34,385)$805,099 
Rental income62,672 — — — — 62,672 
Total sales819,421 66,153 16,582 — (34,385)867,771 
Cost of sales:
Product and other cost of sales607,501 50,128 2,646 — (33,044)627,231 
Rental cost of sales34,952 — — — — 34,952 
Total cost of sales642,453 50,128 2,646 — (33,044)662,183 
Gross profit176,968 16,025 13,936 — (1,341)205,588 
Selling and administrative expenses157,851 8,378 13,752 14,253 (97)194,137 
Depreciation and amortization expense18,076 2,664 3,801 35 — 24,576 
Sub-Total:$1,041 $4,983 $(3,617)$(14,288)$(1,244)(13,125)
Restructuring and other charges3,739 
Operating loss$(16,864)

26 weeks ended, October 31, 2020
Dollars in thousandsRetailWholesaleDSSCorporate ServicesEliminationsTotal
Sales:
Product sales and other$680,833 $116,681 $11,819 $— $(64,291)$745,042 
Rental income54,457 — — — — 54,457 
Total sales735,290 116,681 11,819 — (64,291)799,499 
Cost of sales:
Product and other cost of sales588,531 89,210 2,411 — (61,912)618,240 
Rental cost of sales35,112 — — — — 35,112 
Total cost of sales623,643 89,210 2,411 — (61,912)653,352 
Gross profit111,647 27,471 9,408 — (2,379)146,147 
Selling and administrative expenses134,365 7,937 9,039 10,745 (71)162,015 
Depreciation and amortization expense20,555 2,617 4,020 64 — 27,256 
Sub-Total:$(43,273)$16,917 $(3,651)$(10,809)$(2,308)(43,124)
Restructuring and other charges9,058 
Operating loss$(52,182)

Sales
The following table summarizes our sales for the 13 and 26 weeks ended October 30, 2021 and October 31, 2020:
 13 weeks ended26 weeks ended
Dollars in thousandsOctober 30, 2021October 31, 2020%October 30, 2021October 31, 2020%
Product sales and other$577,329 $551,832 4.6%$805,099 $745,042 8.1%
Rental income49,648 43,653 13.7%62,672 54,457 15.1%
Total Sales$626,977 $595,485 5.3%$867,771 $799,499 8.5%
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Sales increased by $31.5 million, or 5.3%, to $627.0 million during the 13 weeks ended October 30, 2021 from $595.5 million during the 13 weeks ended October 31, 2020. Sales increased by $68.3 million, or 8.5%, to $867.8 million during the 26 weeks ended October 30, 2021 from $799.5 million during the 26 weeks ended October 31, 2020. The sales increase is primarily related to the impact from re-opening stores that had temporarily closed due to the COVID-19 pandemic in the prior year. The components of the variances for the 13 and 26 week periods are reflected in the table below.
Sales variances13 weeks ended26 weeks ended
Dollars in millionsOctober 30, 2021October 31, 2020October 30, 2021October 31, 2020
Retail Sales
New stores$26.3 $27.6 $36.6 $35.4 
Closed stores(7.9)(16.4)(12.5)(21.9)
Comparable stores (a)
14.0 (196.5)58.6 (302.7)
Textbook rental deferral3.2 16.4 3.4 10.1 
Service revenue (b)
(2.1)1.0 0.1 (3.7)
Other (c)
(1.1)2.7 (2.1)1.7 
Retail sales subtotal:$32.4 $(165.2)$84.1 $(281.1)
Wholesale Sales$(14.7)$(3.8)$(50.5)$4.2 
DSS Sales$2.3 $0.7 $4.8 $1.2 
Eliminations (d)
$11.5 $(8.4)$29.9 $(16.7)
Total sales variance:$31.5 $(176.7)$68.3 $(292.4)
(a)    Effective April 2021, as contemplated by the FLC Partnership's merchandising agreement, logo and emblematic general merchandise sales were fulfilled by FLC. During the first quarter of Fiscal 2022, as contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic general merchandise sales on a gross basis in the prior year period. For Comparable Store Sales details, see below.
(b)    Service revenue includes brand partnerships, shipping and handling, and revenue from other programs.
(c)    Other includes inventory liquidation sales to third parties, marketplace sales and certain accounting adjusting items related to return reserves, and other deferred items.
(d)    Eliminates Wholesale sales and service fees to Retail and Retail commissions earned from Wholesale. See discussion of intercompany activities and eliminations below.
Retail
Retail sales increased by $32.4 million, or 5.6%, to $608.9 million during the 13 weeks ended October 30, 2021 from $576.5 million during the 13 weeks ended October 31, 2020. Retail sales increased by $84.1 million, or 11.4%, to $819.4 million during the 26 weeks ended October 30, 2021 from $735.3 million during the 26 weeks ended October 31, 2020. Retail added 76new stores and closed 48 stores during the 26 weeks ended October 30, 2021, ending the period with a total of 1,445 stores.
 13 weeks ended26 weeks ended
October 30, 2021October 31, 2020October 30, 2021October 31, 2020
Number of Stores:PhysicalVirtualPhysicalVirtualPhysicalVirtualPhysicalVirtual
Number of stores at beginning of period784 645 772 670 769 648 772 647 
Opened11 12 11 41 35 29 51 
Closed10 16 32 33 27 
Number of stores at end of period794 651 768 671 794 651 768 671 
Product and other sales for Retail for the 13 weeks ended October 30, 2021 increased by $26.4 million, or 5.0% to $559.3 million from $532.9 million during the 13 weeks ended October 31, 2020. Product and other sales for Retail for the 26 weeks ended October 30, 2021 increased by $75.9 million, or 11.2% to $756.7 million from $680.8 million during the 26 weeks ended October 31, 2020. The sales increase is primarily related to the impact from re-opening stores that had temporarily closed due to the COVID-19 pandemic in the prior year.
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Product and other sales are impacted by comparable store sales (as noted in the chart below), new store openings and store closings, as well as the impact from the COVID-19 pandemic. Comparable textbook sales remained essentially flat, as compared to a 19% decline a year ago, as enrollment declines were mitigated by the growth of First Day (our inclusive access program). Revenue for First Day programs grew 80% to $96 million during the quarter. Comparable general merchandise sales increased 78.3%, as compared to a 52.0% decline a year ago, benefiting greatly from the return to an on campus learning experience and the resumption of many activities and events. Sales for general merchandise, including on-campus cafe and convenience products, and trade merchandise have increased compared to the prior year, when sales were impacted by the temporary store closings due to the COVID-19 pandemic, as well as the impact of fewer students returning to campus, as many schools implemented a remote learning model and curtailed on-campus classes and activities.
Sales were impacted by overall enrollment declines in higher education. Although most four year schools have returned to a traditional on-campus environment for learning in the current Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings. While many big-conferences resumed their sport activities, other on campus events, such as Parent's Weekends or Alumni events, continue to be either eliminated or severely restricted, which further impacted the company’s general merchandise business. First Day (our inclusive access program), digital and eTextbook revenue increased, due to a shift to lower cost options and more affordable solutions, including digital offerings.
To supplement the Total Sales table presented above in accordance with generally accepted accounting principles (“GAAP”), the Company uses the non-GAAP financial measure of Retail Gross Comparable Store Sales. Retail Gross Comparable Store Sales (non-GAAP) includes sales from physical and virtual stores that have been open for an entire fiscal year period and does not include sales from closed stores for all periods presented. As contemplated by the FLC Partnership's merchandising agreement and e-commerce agreement, we began to transition the fulfillment of logo and emblematic general merchandise sales to FLC and Fanatics. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic sales on a gross basis in the prior year period. For Retail Gross Comparable Store Sales (non-GAAP), sales for logo and emblematic general merchandise fulfilled by FLC, Fanatics and digital agency sales are included on a gross basis. We believe the current comparable store salesRetail Gross Comparable Store Sales (non-GAAP) calculation method better reflects the manner in which management views comparable sales, as well as the seasonal nature of our business. Prior year comparable store sales have been updated to exclude store inventory sales to MBS, which are reflected as intercompany inventory transfers since the acquisition.

The following table sets forth,Retail Gross Comparable Store Sales (non-GAAP) variances for the periods indicated, the percentage relationship that certain items bear to total sales:
 13 weeks ended 39 weeks ended
 January 27, 2018 January 28, 2017 January 27, 2018 January 28, 2017
Sales:       
Product sales and other89.6 % 87.6% 91.7 % 89.6%
Rental income10.4
 12.4
 8.3
 10.4
Total sales100.0
 100.0
 100.0
 100.0
Cost of sales:       
Product and other cost of sales (a)
77.6
 80.1
 78.3
 80.0
Rental cost of sales (a)
59.6
 61.3
 60.2
 61.7
Total cost of sales75.7
 77.8
 76.8
 78.1
Gross margin24.3
 22.2
 23.2
 21.9
Selling and administrative expenses18.6
 18.6
 17.7
 18.4
Depreciation and amortization expense2.8
 2.5
 2.6
 2.6
Impairment loss (non-cash)51.9
 
 17.0
 
Restructuring and other charges
 
 0.3
 0.1
Transaction costs
 0.1
 0.1
 0.2
Operating (loss) income(49.0)% 1.0% (14.5)% 0.6%
(a)Represents the percentage these costs bear to the related sales, instead of total sales.

Results of Operations - 13 and 39 weeks ended January 27, 2018 compared with the 13 and 39 weeks ended January 28, 2017
 13 weeks ended, January 27, 2018 13 weeks ended
Dollars in thousands
BNC(a)
 
MBS (b)
 Eliminations 
January 27,
2018
(a),(b)
 January 28, 2017
Sales:         
Product sales and other$445,642
 $137,257
 $(41,996) $540,903
 $457,147
Rental income60,818
 1,670
   62,488
 64,477
Total sales506,460
 138,927
 (41,996) 603,391
 521,624
Cost of sales:         
Product and other cost of sales352,742
 103,068
 (36,169) 419,641
 366,190
Rental cost of sales36,305
 910
 
 37,215
 39,509
Total cost of sales389,047
 103,978
 (36,169) 456,856
 405,699
Gross profit117,413
 34,949
 (5,827) 146,535
 115,925
Selling and administrative expenses97,777
 14,197
 
 111,974
 97,111
Depreciation and amortization expense15,411
 1,596
 
 17,007
 13,149
Impairment loss (non-cash)313,130
 
 
 313,130
  
Restructuring and other charges
 
 
 
 
Transaction costs49
 
 
 49
 467
Operating (loss) income$(308,954) $19,156
 $(5,827) $(295,625) $5,198
          
 39 weeks ended, January 27, 2018 39 weeks ended
Dollars in thousandsBNC(a) MBS (b) Eliminations January 27,
2018 (a),(b)
 January 28, 2017
Sales:         
Product sales and other$1,369,770
 $409,300
 $(85,840) $1,693,230
 $1,372,810
Rental income148,454
 4,279
 
 152,733
 158,722
Total sales1,518,224
 413,579
 (85,840) 1,845,963
 1,531,532
Cost of sales:         
Product and other cost of sales1,090,756
 315,523
 (80,058) 1,326,221
 1,098,682
Rental cost of sales89,593
 2,343
 
 91,936
 97,998
Total cost of sales1,180,349
 317,866
 (80,058) 1,418,157
 1,196,680
Gross profit337,875
 95,713
 (5,782) 427,806
 334,852
Selling and administrative expenses283,546
 42,986
 
 326,532
 282,171
Depreciation and amortization expense43,879
 4,849
 
 48,728
 39,057
Impairment loss (non-cash)313,130
 
 
 313,130
 
Restructuring and other charges5,429
 
 
 5,429
 1,790
Transaction costs1,895
 
 
 1,895
 2,638
Operating (loss) income$(310,004) $47,878
 $(5,782) $(267,908) $9,196
          
(a)
On August 3, 2017, we acquired Student Brands, LLC. The condensed consolidated financial statements for the 13 and 39 weeks ended January 27, 2018 include the financial results of Student Brands in the BNC segment from the date of acquisition, August 3, 2017, and the condensed consolidated financial statements for the 13 and 39 weeks ended January 28, 2017 exclude the financial results of Student Brands.
(b)
On February 27, 2017, we acquired MBS. The results of operations for the 13 and 39 weeks ended January 27, 2018 include the financial results of MBS and all material intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the 13 and 39 weeks ended January 28, 2017 exclude the financial results of MBS.

Sales
The following table summarizes our salesRetail by category for the 13 and 3926 week periods are as follows:
Retail Gross Comparable Store Sales (non-GAAP) variances
13 weeks ended26 weeks ended
Dollars in millionsOctober 30, 2021October 31, 2020October 30, 2021October 31, 2020
Textbooks (Course Materials)$(0.5)(0.1)%$(101.6)(19.0)%$22.9 4.1 %$(112.5)(17.5)%
General Merchandise72.7 78.3 %(97.2)(52.0)%121.5 90.6 %(184.8)(58.6)%
Trade Books1.3 33.8 %(6.3)(62.3)%3.2 60.7 %(14.0)(73.2)%
Total Retail Gross Comparable Store Sales (non-GAAP)$73.5 13.2 %$(205.1)(28.1)%$147.6 21.0 %$(311.3)(31.8)%
Rental income for Retail for the 13 weeks ended January 27, 2018 and January 28, 2017:
 13 weeks ended 39 weeks ended
Dollars in thousandsJanuary 27, 2018 January 28, 2017 % January 27, 2018 January 28, 2017 %
Product sales and other$540,903
 $457,147
 18.3% $1,693,230
 $1,372,810
 23.3%
Rental income62,488
 64,477
 (3.1)% 152,733
 158,722
 (3.8)%
Total Sales$603,391
 $521,624
 15.7% $1,845,963
 $1,531,532
 20.5%
Our salesOctober 30, 2021 increased $81.7by $6.0 million, or 15.7%,13.7% to $603.4$49.6 million from $43.7 million during the 13 weeks ended January 27, 2018October 31, 2020. Rental income for Retail for the 26 weeks ended October 30, 2021 increased by $8.2 million, or 15.1% to $62.7 million from $521.6$54.5 million during the 26 weeks ended October 31, 2020. Rental income is impacted by comparable store sales, new store openings and store closings. The increase in rental income is primarily due to increased rental activity due to the temporary store closings due the COVID-19 pandemic in the prior year discussed above.
Wholesale
Wholesale sales decreased by $14.7 million, or 40.5% to $21.7 million during the 13 weeks ended January 28, 2017. Our sales increased $314.4 million, or 20.5%, to $1,846.0October 30, 2021 from $36.4 million during the 3913 weeks ended January 27, 2018 from $1,531.5October 31, 2020. Wholesale sales decreased by $50.5 million, or 43.3% to $66.2 million during the 3926 weeks ended January 28, 2017.October 30, 2021 from $116.7 million during the 26 weeks ended October 31, 2020. The decrease is primarily due to lower gross sales impacted by the COVID-19 pandemic, including supply constraints resulting from the lack of on campus textbook buyback opportunities during the prior fiscal year, a decrease in customer demand resulting from a shift in buying patterns from physical textbooks to digital products, and lower demand from other third-party clients, partially offset by a lower returns and allowances. During the prior year period, the Wholesale operations assumed direct-to-student fulfillment of course material orders for the Retail Segment campus bookstores that were not fully operational due to COVID-19 campus store closures, whereas the sales shifted back to the physical bookstores in the current period.
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DSS
DSS total sales increased by $2.3 million, or 39.2% to $8.3 million during the 13 weeks ended October 30, 2021 from $6.0 million during the 13 weeks ended October 31, 2020. DSS total sales increased by $4.8 million, or 40.3% to $16.6 million during the 26 weeks ended October 30, 2021 from $11.8 million during the 26 weeks ended October 31, 2020. Sales increased primarily due to the acquisition of MBS and Student Brands, partially offset by BNC comparable sales declines primarily due to lower student enrollment, specifically in two-year community colleges, increased consumer purchases directly from publishers and other online providers, and general weakness in the retail environment. The components of the variances for the 13 and 39 week periods are reflected in the table below.
Sales variances 13 weeks ended 39 weeks ended
Dollars in millions January 27, 2018 January 28, 2017 January 27, 2018 January 28, 2017
MBS Sales (a)
        
Wholesale $92.2
 $
 $232.2
 $
Direct 46.7
 
 181.4
 
MBS Sales subtotal: $138.9
 $
 $413.6
 $
BNC Sales        
New stores $14.1
 $34.2
 $55.8
 $92.7
Closed stores (2.2) (8.0) (9.7) (20.6)
Comparable stores (31.3) (27.3) (69.9) (59.8)
Textbook rental deferral 2.6
 2.3
 6.2
 0.1
Service revenue (b)
 6.7
 0.9
 13.1
 3.3
Other (c)
 (5.1) 1.1
 (8.8) 2.5
BNC Sales subtotal: $(15.2) $3.2
 $(13.3) $18.2
Eliminations (d)
 $(42.0) $
 $(85.9) $
Total sales variance $81.7
 $3.2
 $314.4
 $18.2
(a)Represents sales for MBS for the 13 and 39 weeks ended January 27, 2018. MBS’s business is highly seasonal. For MBS’s retail operations (virtual bookstores), a major portion of sales and operating profit are realized during the second and third quarters, when students generally purchase and rent textbooks for the upcoming semesters. For MBS’s wholesale business, a major portion of sales and operating profit is realized during the first, second and third fiscal quarters, as it sells textbooks for retail distribution, which somewhat offsets the decreased first quarter sales attributable to our retail business. MBS has significantly lower operating profit or operating loss realized during the fourth quarter.
(b)Service revenue includes Student Brands, brand partnerships, Promoversity, LoudCloud, shipping and handling and revenue from other programs.
(c)Other includes certain adjusting items related to return reserves and other deferred items.
(d)
Eliminates MBS sales to BNC and BNC commissions earned from MBS. See Part I - Item 1. Financial Statements - Note 5. Segment Reporting of this Form 10-Q for a discussion of intercompany activities and eliminations.
Rental income for BNC for the 13 and 39 weeks ended January 27, 2018 decreased by $3.7 million, or 5.7%, and $10.3 million, or 6.5%, respectively. For the 13 and 39 weeks ended January 27, 2018, rental income for BNC was impacted by an increase in the recognition of our previously deferred rental revenue of $2.6 million and $6.2 million, respectively, and decreased rental activity. Excluding the impact of the deferred revenue, rental income decreased by $6.3 million, or 7.5% and $16.5 million, or 7.5%, respectively.
BNC added 30 new stores and closed 17 stores during the 39 weeks ended January 27, 2018, ending the period with a total of 782 stores.

Comparable store sales variances for BNC by category for the 13 and 39 week periods are as follows:
Comparable Store Sales variances-BNC 13 weeks ended 39 weeks ended
Dollars in millions January 27, 2018 January 28, 2017 January 27, 2018 January 28, 2017
Textbooks $(26.3) (7.2)% $(25.4) (6.7)% $(62.8) (6.1)% $(55.3) (5.3)%
General Merchandise (3.5) (2.8)% (0.5) (0.5)% (3.3) (0.8)% (1.2) (0.3)%
Trade Books (1.5) (11.9)% (1.2) (8.3)% (3.8) (9.5)% (2.7) (6.2)%
Other 
  % (0.2) (86.7)% 
  % (0.6) (88.3)%
Total Comparable Store Sales $(31.3) (6.2)% $(27.3) (5.3)% $(69.9) (4.7)% $(59.8) (4.0)%
Comparable store sales for BNC decreased for the 13 and 39 week sales periods. Comparable store sales were impacted primarily by lower average selling prices of course materials driven by lower publisher prices resulting from a shift to lower cost options and more affordable solutions, including digital. Comparable store sales were also impacted by the timing of the spring back-to-school rush season which extended past the close of our fiscal third quarter and lower student enrollment, specifically in two-year community colleges, increased consumer purchases directly from publishers and other online providers, and other recent negative retail trends. The components of the variances are reflected in the table above.
Textbook revenue for BNC for the 13 and 39 weeks ended January 27, 2018 decreased primarily due to lower new and used textbook sales and rentals as discussed above, while eTextbook revenue increased. General merchandise sales for BNC decreased for the 13 weeks ended January 27, 2018 primarily due to a decrease in school supplies, computer and convenience product sales, and emblematic apparel, partially offset by higher graduation products sales. General merchandise sales for BNC decreased for the 39 weeks ended January 27, 2018 primarily due to a decrease in school supplies, and computer and convenience product sales, partially offset by higher emblematic apparel and graduation productssubscription sales.
Cost of Sales and Gross Margin
Our cost of sales decreased as a percentage of sales to 75.7%76.8% during the 13 weeks ended January 27, 2018October 30, 2021 compared to 77.8%80.6% during the 13 weeks ended January 28, 2017.October 31, 2020. Our gross margin increased by $30.6$30.3 million, or 26.4%26.3%, to $146.5$145.6 million, or 24.3%23.2% of sales, during the 13 weeks ended January 27, 2018October 30, 2021 from $115.9$115.3 million, or 22.2%19.4% of sales during the 13 weeks ended January 28, 2017.October 31, 2020.
Our cost of sales decreased as a percentage of sales to 76.8%76.3% during the 3926 weeks ended January 27, 2018October 30, 2021 compared to 78.1%81.7% during the 3926 weeks ended January 28, 2017.October 31, 2020. Our gross margin increased by $93.0$59.4 million, or 27.8%40.7%, to $427.8$205.6 million, or 23.2%23.7% of sales, during the 3926 weeks ended January 27, 2018October 30, 2021 from $334.9$146.1 million, or 21.9%18.3% of sales during the 3926 weeks ended January 28, 2017.
Intercompany Eliminations
October 31, 2020. During the 13 and 3926 weeks ended January 27, 2018, our sales eliminations were $42.0October 30, 2021, we recognized a merchandise inventory loss of $0.4 million and $85.9 million, respectively. These sales eliminations represent the elimination of MBS sales to BNC and the elimination of BNC commissions earned from MBS.
During the 13 and 39 weeks ended January 27, 2018, thein cost of sales eliminations were $36.2 million and $80.1 million, respectively. These costgoods sold in the Retail Segment discussed below. For additional information, see Item 1. Financial Statements - Note 2. Summary of sales eliminations represent (i) the recognition of intercompany profit for BNC inventory that was purchased from MBS in a prior period that was subsequently sold to external customers during the current period, net of (ii) the elimination of intercompany profit for MBS inventory purchases by BNC that remain in ending inventory at the end of the current period.Significant Accounting Policies - Merchandise Inventories.
The $5.8 million of gross margin elimination reflects the net impact of the sales eliminations and cost of sales eliminations during both the 13 and 39 weeks ended January 27, 2018.
MBS
The cost of sales and gross margin for MBS was $104.0 million or 74.8% of sales and $35.0 million or 25.2% of sales, respectively, during the 13 weeks ended January 27, 2018. The cost of sales and gross margin for MBS was $317.9 million or 76.9% of sales and $95.7 million or 23.1% of sales, respectively, during the 39 weeks ended January 27, 2018. The MBS gross margin as a percentage of sales is impacted by the seasonality of their business. For MBS’s retail operations (virtual bookstores), a major portion of sales and operating profit are realized during the second and third quarters, when students generally purchase and rent textbooks for the upcoming semesters. For MBS’s wholesale business, a major portion of sales and operating profit is realized during the first, second and third fiscal quarters, as it sells textbooks for retail distribution, which somewhat offsets the decreased first quarter sales attributable to our retail business. For the 13 and 39 weeks ended January 27, 2018, the margin impact was primarily due to certain fixed warehouse facility and operation costs. For the 39 weeks ended January 27, 2018, the margin was also impacted by the incremental cost of sales of $3.3 million related to recording MBS inventory at fair value as

of the acquisition date. The non-cash fair value inventory adjustment of $3.7 million for MBS was recognized over six months from the date of acquisition and was allocated based on monthly sales. Excluding the $3.3 million inventory fair value amortization, cost of sales and gross margin for MBS was $314.6 million or 76.1% of sales and $99.0 million or 23.9% of sales, respectively, during the 39 weeks ended January 27, 2018.
BNCRetail
The following table summarizes the BNCRetail cost of sales for the 13 and 3926 weeks ended January 27, 2018October 30, 2021 and January 28, 2017:October 31, 2020: 
13 weeks ended 39 weeks ended13 weeks ended26 weeks ended
Dollars in thousandsJanuary 27, 2018 % of
Related Sales
 January 28, 2017 % of
Related Sales
 January 27, 2018 
% of
Related Sales
 January 28, 2017 
% of
Related Sales
Dollars in thousandsOctober 30, 2021% of
Related Sales
October 31, 2020% of
Related Sales
October 30, 2021% of
Related Sales
October 31, 2020% of
Related Sales
Product and other cost of sales$352,742
 79.2% $366,190
 80.1% $1,090,756
 79.6% $1,098,682
 80.0%Product and other cost of sales$451,779 80.8%$453,277 85.1%$607,501 80.3%$588,531 86.4%
Rental cost of sales36,305
 59.7% 39,509
 61.3% 89,593
 60.4% 97,998
 61.7%Rental cost of sales28,348 57.1%27,725 63.5%34,952 55.8%35,112 64.5%
Total Cost of Sales$389,047
 76.8% $405,699
 77.8% $1,180,349
 77.7% $1,196,680
 78.1%Total Cost of Sales$480,127 78.8%$481,002 83.4%$642,453 78.4%$623,643 84.8%
The following table summarizes the BNCRetail gross margin for the 13 and 3926 weeks ended January 27, 2018October 30, 2021 and January 28, 2017:October 31, 2020:
13 weeks ended 39 weeks ended 13 weeks ended26 weeks ended
Dollars in thousandsJanuary 27, 2018 % of
Related Sales
 January 28, 2017 % of
Related Sales
 January 27, 2018 
% of
Related Sales
 January 28, 2017 
% of
Related Sales
Dollars in thousandsOctober 30, 2021% of
Related Sales
October 31, 2020% of
Related Sales
October 30, 2021% of
Related Sales
October 31, 2020% of
Related Sales
Product and other gross margin$92,900
 20.8% $90,957
 19.9% $279,014
 20.4% $274,128
 20.0%Product and other gross margin$107,525 19.2%$79,584 14.9%$149,248 19.7%$92,302 13.6%
Rental gross margin24,513
 40.3% 24,968
 38.7% 58,861
 39.6% 60,724
 38.3%Rental gross margin21,300 42.9%15,928 36.5%27,720 44.2%19,345 35.5%
Gross Margin$117,413
 23.2% $115,925
 22.2% $337,875
 22.3% $334,852
 21.9%Gross Margin$128,825 21.2%$95,512 16.6%$176,968 21.6%$111,647 15.2%
For the 13 weeks ended January 27, 2018,October 30, 2021, the BNCRetail gross margin as a percentage of sales increased as discussed below:
Product and other gross margin increased (90(430 basis points), driven primarily by higha favorable sales mix (400 basis points) due to higher general merchandise sales, lower contract costs as a percentage of sales related to our college and university contracts (25 basis points) resulting from contract renewals and new store contracts, and higher margin Student Brands subscription service revenue earned (125rates (5 basis points) due to lower inventory reserves and lower markdowns.
Rental gross margin increased (640 basis points), driven primarily by higher rental margin rates (595 basis points) and lower contract costs as a percentage of sales related to our college and university contracts (285 basis points), partially offset by an unfavorable rental mix (240 basis points).
For the 26 weeks ended October 30, 2021, the Retail gross margin as a percentage of sales increased as discussed below:
Product and other gross margin increased (610 basis points), driven primarily by a favorable sales mix (475 basis points) due to higher general merchandise sales, higher margin rates (20(130 basis points) relateddue to decreased markdowns on textbooks,lower inventory reserves and lower markdowns, and lower contract costs as a percentage of sales related to our college and university contracts (5 basis points) resulting from contract renewals and new store contracts. This increase wascontracts, partially offset by an unfavorable sales mix (60inventory merchandise loss of $0.4 million (5 basis points) resulting from a decrease in higher margin used textbooksrelated to the final sale of our logo and emblematic general merchandise as a percentageinventory below
31

Table of sales.Contents
cost to FLC.
Rental gross margin increased (160(870 basis points), driven primarily by higher rental margin rates (185(590 basis points) and lower contract costs as a percentage of sales related to our college and university contracts (15(470 basis points) resulting from contract renewals and new store contracts,, partially offset by an unfavorable rental mix (40(190 basis points).
ForWholesale
The cost of sales and gross margin for Wholesale were $16.1 million, or 74.1% of sales, and $5.6 million, or 25.9% of sales, respectively, during the 3913 weeks ended January 27, 2018, the BNCOctober 30, 2021. The cost of sales and gross margin as a percentagefor Wholesale was $25.7 million or 70.6% of sales increased as discussed below:
Product and other$10.7 million or 29.4% of sales, respectively, during the 13 weeks ended October 31, 2020. The gross margin rate decreased during the 13 weeks ended October 30, 2021 primarily due to higher markdowns, partially offset by a favorable sales mix.
The cost of sales and gross margin for Wholesale were $50.1 million, or 75.8% of sales, and $16.0 million, or 24.2% of sales, respectively, during the 26 weeks ended October 30, 2021. The cost of sales and gross margin for Wholesale was $89.2 million or 76.5% of sales and $27.5 million or 23.5% of sales, respectively, during the 26 weeks ended October 31, 2020. The gross margin rate increased (40 basis points),during the 26 weeks ended October 30, 2021 primarily due to a favorable sales mix and lower markdowns, partially offset by the unfavorable impact of returns and allowances.
DSS
The gross margin for the DSS segment was $6.9 million, or 83.4% of sales, during the 13 weeks ended October 30, 2021 and $4.7 million, or 78.4% of sales, during the 13 weeks ended October 31, 2020. The gross margin for the DSS segment was $13.9 million, or 84.0% of sales, during the 26 weeks ended October 30, 2021 and $9.4 million, or 79.6% of sales, during the 26 weeks ended October 31, 2020. The high gross margins are driven primarily by Student Brandshigh margin subscription service revenue earned (75 basis points) and higher margin rates (15 basis points) related to decreased markdowns on textbooks. This increase was partially offset by an unfavorable sales mix (30 basis points) resulting from a decrease in higher margin used textbooks as a percentage of sales and lower costs related to our college and university contracts (15 basis points) resulting from contract renewals and new store contracts.earned.
Rental gross margin increased (130 basis points), driven primarily by higher rental margin rates (190 basis points), partially offset by higher costs related to our college and university contracts (15 basis points) resulting from contract renewals and new store contracts and an unfavorable rental mix (35 basis points).
Selling and Administrative Expenses
 13 weeks ended 39 weeks ended
Dollars in thousandsJanuary 27, 2018 % of
Sales
 January 28, 2017 % of
Sales
 January 27, 2018 % of
Sales
 January 28, 2017 % of
Sales
Total Selling and Administrative Expenses$111,974
 18.6% $97,111
 18.6% $326,532
 17.7% $282,171
 18.4%
Intercompany Eliminations
During the 13 weeks ended January 27, 2018,October 30, 2021 and October 31, 2020, our sales eliminations were $(11.9) million and $(23.4) million, respectively. During the 26 weeks ended October 30, 2021 and October 31, 2020, our sales eliminations were $(34.4) million and $(64.3) million, respectively. These sales eliminations represent the elimination of Wholesale sales and fulfillment service fees to Retail and the elimination of Retail commissions earned from Wholesale.
During the 13 weeks ended October 30, 2021 and October 31, 2020, the cost of sales eliminations were $(16.1) million and $(27.8) million, respectively. During the 26 weeks ended October 30, 2021 and October 31, 2020, the cost of sales eliminations were $(33.0) million and $(61.9) million, respectively. These cost of sales eliminations represent (i) the recognition of intercompany profit for Retail inventory that was purchased from Wholesale in a prior period that was subsequently sold to external customers during the current period and the elimination of Wholesale service fees charged for fulfillment of inventory for virtual store sales, net of (ii) the elimination of intercompany profit for Wholesale inventory purchases by Retail that remain in ending inventory at the end of the current period.
During the 13 weeks ended October 30, 2021 and October 31, 2020, the gross margin eliminations were $4.2 million and $4.4 million, respectively. During the 26 weeks ended October 30, 2021 and October 31, 2020, the gross margin eliminations were $(1.3) million and $(2.4) million, respectively. The gross margin eliminations reflect the net impact of the sales eliminations and cost of sales eliminations during the above mentioned reporting periods.
Selling and Administrative Expenses
13 weeks ended26 weeks ended
Dollars in thousandsOctober 30, 2021% of
Sales
October 31, 2020% of
Sales
October 30, 2021% of
Sales
October 31, 2020% of
Sales
Total Selling and Administrative Expenses$107,902 17.2%$91,972 15.4%$194,137 22.4%$162,015 20.3%
During the 13 weeks ended October 30, 2021, selling and administrative expenses increased by $14.9$15.9 million, or 15.3%17.3%, to $112.0$107.9 million from $97.1$92.0 million during the 13 weeks ended January 28, 2017.October 31, 2020. During the 3926 weeks ended January 27, 2018,October 30, 2021, selling and administrative expenses increased by $44.4$32.1 million, or 15.7%19.8%, to $326.5$194.1 million from $282.2$162.0 million during the 39

26 weeks ended January 28, 2017. October 31, 2020. The variances by segment are discussed by segment below.
The increase for the 13 and 39 weeks was primarily due to thein selling and administrative expenses for MBS of $14.2 million and $43.0 million, respectively (which includes a $1.7 million and $5.1 million selling and administrative expense allocationis primarily related to the impact from BNC for shared corporate overhead,re-opening stores that had temporarily closed due to the COVID-19 pandemic in the prior year. Additionally, during the 13 and 3926 weeks ended January 27, 2018, respectively).October 30, 2021, long-term incentive compensation expense increased by $2.5 million and $4.6 million, respectively, primarily related to cash-settled phantom share unit awards which are remeasured at the end of each reporting period to reflect current assumptions, including changes in the our common stock price.
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Retail
During the 13 weeks ended January 27, 2018, BNC'sOctober 30, 2021, Retail selling and administrative expenses increased by $0.7$12.1 million, or 0.7%15.6%, to $97.8$89.5 million from $97.1 million.$77.4 million during the 13 weeks ended October 31, 2020. This increase was primarily due to a $10.2 million increase in stores payroll and operating expenses including comparable stores, virtual stores and new/closed stores payroll and operating expenses, a $1.3 million increase in corporate payroll, infrastructure and product development costs and $0.6 million increase in incentive plan compensation expense related to phantom share awards as discussed above. The payroll increase is primarily related to the impact from re-opening stores that had temporarily closed due to the COVID-19 pandemic in the prior year.
During the 26 weeks ended October 30, 2021, Retail selling and administrative expenses increased by $23.5 million, or 17.5%, to $157.9 million from $134.4 million during the 26 weeks ended October 31, 2020. This increase was primarily due to a $22.3 million increase in stores payroll and operating expenses including comparable stores, virtual stores and new/closed stores payroll and operating expenses, a $1.1 million increase in incentive plan compensation expense related to phantom share awards as discussed above, and a $0.1 million increase in corporate payroll, infrastructure and product development costs. The payroll increase is primarily related to the impact from re-opening stores that had temporarily closed due to the COVID-19 pandemic in the prior year.
Wholesale
Wholesale selling and administrative expenses increased by $0.3 million, or 5.8%, to $4.4 million from $4.1 million during the 13 weeks ended October 31, 2020. Wholesale selling and administrative expenses increased by $0.5 million, or 5.6%, to $8.4 million from $7.9 million during the 26 weeks ended October 31, 2020. The increase in selling and administrative expenses was primarily driven by higher incentive plan compensation expense related to phantom share awards, as discussed above.
DSS
During the 13 weeks ended October 30, 2021, DSS selling and administrative expenses increased by $2.3 million, or 46.0%, to $7.3 million from $5.0 million during the 13 weeks ended October 31, 2020. During the 26 weeks ended October 30, 2021, DSS selling and administrative expenses increased by $4.7 million, or 52.1%, to $13.8 million from $9.0 million during the 26 weeks ended October 31, 2020. The increase in costs was primarily driven by higher operating costs invested in the business associated with higher product development and sales costs aimed at increasing revenue, and higher incentive plan compensation expense related to phantom share awards, as discussed above.
Corporate Services
During the 13 weeks ended October 30, 2021, Corporate Services' selling and administrative expenses increased by $1.3 million, or 23.8%, to $6.8 million from $5.5 million during the 13 weeks ended October 31, 2020. The increase was primarily due to a $0.7higher incentive plan compensation expense related to phantom share awards of $1.6 million, increase in new store payroll and operating expenses (net of closed stores), as a result of a $11.9 million increase in new store sales (net of closed stores), a $2.1 million increase in Student Brands expenses, and a $0.9 million increase in corporate overhead, including digital expenses. These increases werediscussed above, partially offset by a $1.7 millionlower operating costs of shared corporate overhead costs allocated to MBS and a $1.3 million decrease in comparable store payroll and operating expenses.$0.3 million.
During the 3926 weeks ended January 27, 2018, BNC'sOctober 30, 2021, Corporate Services' selling and administrative expenses increased by $1.4$3.5 million, or 0.5%32.6%, to $283.5$14.3 million from $282.2 million.$10.8 million during the 26 weeks ended October 31, 2020. The increase was primarily due a $4.3to higher incentive plan compensation expense related to phantom share awards of $3.0 million, increase in new store payrollas discussed above, and higher operating expenses (net of closed stores), as a result of a $46.1 million increase in new store sales (net of closed stores), a $4.1 million increase in Student Brands expenses, and a $2.8 million increase in corporate overhead, including digital expenses. These increases were partially offset by a $5.1 million of shared corporate overhead costs allocated to MBS and a $4.7 million decrease in comparable store payroll and operating expenses.$0.5 million.
Depreciation and Amortization Expense
13 weeks ended 39 weeks ended13 weeks ended26 weeks ended
Dollars in thousandsJanuary 27, 2018 % of
Sales
 January 28, 2017 % of
Sales
 January 27, 2018 % of
Sales
 January 28, 2017 % of
Sales
Dollars in thousandsOctober 30, 2021% of
Sales
October 31, 2020% of
Sales
October 30, 2021% of
Sales
October 31, 2020% of
Sales
Total Depreciation and Amortization Expense$17,007
 2.8% $13,149
 2.5% $48,728
 2.6% $39,057
 2.6%Total Depreciation and Amortization Expense$11,952 1.9%$13,193 2.2%$24,576 2.8%$27,256 3.4%
Depreciation and amortization expense increaseddecreased by $3.9$1.2 million, or 29.3%9.4%, to $17.0$12.0 million during the 13 weeks ended January 27, 2018October 30, 2021 from $13.1$13.2 million during the 13 weeks ended January 28, 2017.October 31, 2020. Depreciation and amortization expense increaseddecreased by $9.7$2.7 million, or 24.8%9.8%, to $48.7$24.6 million during the 3926 weeks ended January 27, 2018October 30, 2021 from $39.1$27.3 million during the 3926 weeks ended January 28, 2017. This increaseOctober 31, 2020.The decrease was primarily attributable to incremental depreciationlower depreciable assets and amortization expense resulting fromintangibles due to the acquisitions of MBS and Student Brands associated with the property and equipment and identified intangibles recorded at fair value as of the respective acquisition dates and additional capital expenditures for BNC.
Impairmentstore impairment loss (non-cash)
We completed our annual goodwill impairment test as of the first day ofrecognized during the third quarter of Fiscal 2018. In performing the valuation, we used cash flows that reflected management’s forecasts and discount rates that included risk adjustments consistent with the current market conditions. We estimated the fair value of our reporting units using a weighting of fair values derived from the income approach and the market approach. Based on the results of the test, the carrying value of the BNC reporting unit exceeded its fair value and we recorded a goodwill impairment (non-cash impairment loss) of $313.1 million. For information, see Part I - Item 1. Financial Statements - Note 2. Summary of Significant Accounting Policies in this Form 10-Q.2021.
Restructuring and other charges
Restructuring
In Fiscal 2016, in our BNC segment, we implemented a plan to restructure our digital education operations and we announced a reduction in staff and closure of the facilities in Mountain View, California, and Redmond, Washington, which was completed during the first quarter of Fiscal 2017. We recorded restructuring costs of $0.07 million and $1.8 million during the 39 weeks ended January 27, 2018 and January 28, 2017, respectively.
Other Charges
On July 19, 2017, Mr. Max J. Roberts resigned as Chief Executive Officer of the Company and Mr. Michael P. Huseby was appointed to the position of Chief Executive Officer and Chairman of the Board, both effective as of September 19, 2017. During the 39 weeks ended January 27, 2018, we recognized expenses totaling approximately $5.4 million, which is comprised of the severance and transition payments as well as related expenses. For additional information, see Part I - Item 1. Financial Statements - Note 9. Supplementary Information in this Form 10-Q or the Form 8-K dated July 19, 2017, filed with the SEC on July 20, 2017.
Transaction Costs
Transaction costs were $0.05 million and $1.9 million during the 13 and 3926 weeks ended January 27, 2018 compared to $0.5October 30, 2021, we recognized restructuring and other charges totaling $1.1 million and $2.6$3.7 million, duringrespectively, comprised primarily of $0.4 million and $2.0 million, respectively, for severance and other
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employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives, $0.7 million and $1.7 million, respectively, for costs associated with professional service costs for restructuring, process improvements, development and integration associated with the FLC Partnership, shareholder activist activities, and liabilities for a facility closure.
During the 13 and 3926 weeks ended January 28, 2017, respectively. We incur transactionOctober 31, 2020, we recognized restructuring and other charges totaling $3.4 million and $9.1 million, respectively, comprised primarily of $1.1 million and $4.5 million, respectively, for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives, $2.3 million and $4.6 million, respectively, for costs associated with professional service costs for business developmentrestructuring, process improvements, shareholder activist activities, and acquisitions as discussed above. For additional information related to our recent acquisitions, see Part I - Item 1. Financial Statements - Note 4. Acquisitions in this Form 10-Q.

liabilities for a facility closure.
Operating Income (Loss) Income
13 weeks ended 39 weeks ended13 weeks ended26 weeks ended
Dollars in thousandsJanuary 27, 2018 % of
Sales
 January 28, 2017 % of
Sales
 January 27, 2018 % of
Sales
 January 28, 2017 % of
Sales
Dollars in thousandsOctober 30, 2021% of
Sales
October 31, 2020% of
Sales
October 30, 2021% of
Sales
October 31, 2020% of
Sales
Total Operating (Loss) Income$(295,625) (49.0)% $5,198
 1.0% $(267,908) (14.5)% $9,196
 0.6%
Total Operating Income (Loss)Total Operating Income (Loss)$24,589 3.9%$6,733 1.2%$(16,864)(1.9)%$(52,182)(6.5)%
Our operating lossincome was $295.6$24.6 million during the 13 weeks ended January 27, 2018October 30, 2021, compared to operating income of $5.2$6.7 million during the 13 weeks ended January 28, 2017. ThisOctober 31, 2020. The increase wasin operating income is due to the matters discussed above. For the 13 weeks ended January 27, 2018,October 30, 2021, excluding the $313.1$1.1 million of goodwill impairmentrestructuring and transaction costs of $0.05 million,other charges discussed above, operating income was $17.6$25.7 million (or 2.9%4.1% of sales). For the 13 weeks ended January 28, 2017,October 31, 2020, excluding the transaction costs$3.4 million of $0.5 million,restructuring and other charges, discussed above, operating income was $5.7$10.1 million (or 1.1%1.7% of sales) during the 13 weeks ended January 28, 2017..
Our operating loss was $268.0$(16.9) million during the 3926 weeks ended January 27, 2018October 30, 2021, compared to an operating incomeloss of $9.2$(52.2) million during the 3926 weeks ended January 28, 2017. This increase wasOctober 31, 2020. The decrease in operating loss is due to the matters discussed above. For the 3926 weeks ended January 27, 2018,October 30, 2021, excluding the $313.1$0.4 million of goodwill impairment,merchandise inventory loss and the $3.3$3.7 million of incremental cost of sales related to amortization of the MBS inventory fair value adjustment, the restructuring and other charges of $5.4 million and transaction costs of $1.9 million, all discussed above, operating loss was $55.8$(12.7) million (or 3.0%(1.5)% of sales). For the 3926 weeks ended January 28, 2017,October 31, 2020, excluding the transaction costs$9.1 million of $2.6 million and restructuring costs and other charges, of $1.8 million, discussed above, operating incomeloss was $13.6$(43.1) million (or 0.9%(5.4)% of sales) during the 39 weeks ended January 28, 2017..
Interest Expense, Net
13 weeks ended 39 weeks ended 13 weeks ended26 weeks ended
Dollars in thousandsJanuary 27, 2018 January 28, 2017 January 27, 2018 January 28, 2017Dollars in thousandsOctober 30, 2021October 31, 2020October 30, 2021October 31, 2020
Interest Expense, Net$2,954
 $679
 $7,828
 $1,975
Interest Expense, Net$2,264 $912 $4,758 $3,565 
Net interest expense increased by $2.3$1.4 million, or 148.4%, to $3.0$2.3 million during the 13 weeks ended January 27, 2018October 30, 2021 from $0.7$0.9 million during the 13 weeks ended January 28, 2017.October 31, 2020. Net interest expense increased by $5.9$1.2 million, or 33.5%, to $7.8$4.8 million during the 3913 weeks ended January 27, 2018October 30, 2021 from $2.0$3.6 million during the 3913 weeks ended January 28, 2017.October 31, 2020. The increase was primarily due to increasedhigher borrowings undercompared to the Credit Facility and the FILO Facility (which was entered into during Fiscal 2017).prior year.
Income Tax (Benefit) Expense
13 weeks ended 39 weeks ended 13 weeks ended26 weeks ended
Dollars in thousandsJanuary 27, 2018 Effective Rate January 28, 2017 Effective Rate January 27, 2018 Effective Rate January 28, 2017 Effective RateDollars in thousandsOctober 30, 2021Effective RateOctober 31, 2020Effective RateOctober 30, 2021Effective RateOctober 31, 2020Effective Rate
Income Tax (Benefit) Expense$(15,344) 5.1% $758
 16.8% $(6,113) 2.2% $2,087
 28.9%Income Tax (Benefit) Expense$(203)(0.9)%$(1,694)(29.1)%$196 (0.9)%$(16,610)29.8%
We recorded an income tax benefit of $(15.3)$(0.2) million on a pre-tax lossincome of $(298.6)$22.3 million of during the 13 weeks ended January 27, 2018,October 30, 2021, which represented an effective income tax rate of 5.1%(0.9)% and we recorded an income tax expensebenefit of $0.7$(1.7) million on a pre-tax income of $4.5$5.8 million during the 13 weeks ended January 28, 2017,October 31, 2020, which represented an effective income tax rate of 16.8%(29.1)%.
We recorded an income tax benefitexpense of $(6.1)$0.2 million on a pre-tax loss of $(275.7)$(21.6) million of during the 3926 weeks ended January 27, 2018,October 30, 2021, which represented an effective income tax rate of 2.2%(0.9)% and we recorded an income tax expensebenefit of $2.1$(16.6) million on a pre-tax incomeloss of $7.2$(55.7) million during the 3926 weeks ended January 28, 2017,October 31, 2020, which represented an effective income tax rate of 28.9%29.8%.
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The effective tax ratesrate for the 13 and 3926 weeks ended January 27, 2018 are significantlyOctober 30, 2021 is lower as compared to the comparable prior year periods due to the tax benefit of U.S. Tax Reform, partially offset by permanent differences, which in this quarter includes the nondeductible portionassessment of the goodwill impairment.
Management expects nondeductible compensation expense for the current fiscal year to be significantly lower compared torealization of deferred tax assets and loss carrybacks recorded in the prior fiscal year as components of our executive compensation program now qualify as deductible under Section 162(m) of the Internal Revenue Code. In addition, our income tax provision for the preceding two fiscal years reflected certain non-recurring tax benefits arising from the Spin-Off. Management does not expect any similar non-recurring tax benefits associated with the Spin-Off to impact our effective tax rate either in the current fiscal year or in future fiscal year.
Impact of U.S. Tax ReformNet Income (Loss)
The Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate from 35% to 21% and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, among other provisions. As of January 27, 2018, we had not completed the accounting for the tax
 13 weeks ended26 weeks ended
Dollars in thousandsOctober 30, 2021October 31, 2020October 30, 2021October 31, 2020
Net income (loss)$22,528 $7,515 $(21,818)$(39,137)

effects of enactment of the Act; however, as described below, we have made a reasonable estimate of the effects on existing deferred tax balances and the one-time transition tax in accordance with SAB 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (SAB 118). These amounts are provisional and subject to change within the measurement period proscribed by SAB 118 which is not to extend beyond one year from the enactment date. The most significant impact of the legislation for the Company was a $21.1 million reduction of the value of the our net deferred (which represents future tax liabilities) and long-term tax liabilities as a result of lowering the U.S. corporate income tax rate from 35% to 21%. We have provisionally recorded a liability associated with the one-time transition tax, however, such amount is not material.
Net (Loss) Income
 13 weeks ended 39 weeks ended
Dollars in thousandsJanuary 27, 2018 January 28, 2017 January 27, 2018 January 28, 2017
Net (Loss) Income$(283,235) $3,761
 $(269,623) $5,134
As a result of the factors discussed above, we reported net loss of $(283.2)income was $22.5 million during the 13 weeks ended January 27, 2018,October 30, 2021, compared with a net income of $3.8$7.5 million during the 13 weeks ended January 28, 2017. Adjusted Earnings (non-GAAP) is $19.6 million during the 13 weeks ended January 27, 2018, compared with $4.0 million during the 13 weeks ended January 28, 2017. See Adjusted Earnings (non-GAAP) discussion below.
October 31, 2020. As a result of the factors discussed above, we reportednet loss was $(21.8) million during the 26 weeks ended October 30, 2021, compared with net loss of $(269.6)$(39.1) million during the 3926 weeks ended January 27, 2018, compared with a net income of $5.1 million during the 39 weeks ended January 28, 2017. October 31, 2020.
Adjusted Earnings (non-GAAP) is $39.8$25.0 million during the 3913 weeks ended January 27, 2018,October 30, 2021, compared with $7.8$11.1 million during the 3913 weeks ended January 28, 2017. See October 31, 2020. Adjusted Earnings (non-GAAP) is $(15.1) million during the 26 weeks ended October 30, 2021, compared with $(30.6) million during the 26 weeks ended October 31, 2020. See Adjusted Earnings (non-GAAP) discussion below.
Use of Non-GAAP Measures - Adjusted Earnings, and Adjusted EBITDA and Free Cash Flow
To supplement our results prepared in accordance with GAAP,generally accepted accounting principles (“GAAP”), we use the measure of Adjusted Earnings, Adjusted EBITDA, and Adjusted Earnings,Free Cash Flow, which are non-GAAP financial measures under Securities and Exchange Commission (the “SEC”) regulations. We define Adjusted Earnings as net income adjusted for certain reconciling items that are subtracted from or added to net income. We define Adjusted EBITDA as net income plus (1) depreciation and amortization; (2) interest expense and (3) income taxes, (4) as adjusted for additional items that are subtracted from or added to net income. We define Free Cash Flow as Adjusted Earnings as net income as adjusted for additional items that are subtracted from or added to net income.EBITDA less capital expenditures, cash interest and cash taxes.
To properly and prudently evaluate our business, we encourage you to review our condensed consolidated financial statements included elsewhere in this Form 10-Q,10-K, the reconciliation of Adjusted EBITDAEarnings to net income and the reconciliation of Adjusted EarningsEBITDA to net income, the most directly comparable financial measure presented in accordance with GAAP, set forth in the tables below. All of the items included in the reconciliations below are either (i) non-cash items or (ii) items that management does not consider in assessing our on-going operating performance.
These non-GAAP financial measures are not intended as substitutes for and should not be considered superior to measures of financial performance prepared in accordance with GAAP. In addition, our use of these non-GAAP financial measures may be different from similarly named measures used by other companies, limiting their usefulness for comparison purposes. These non-GAAP financial measures should not be considered as alternatives to net income as an indicator of our performance or any other measures of performance derived in accordance with GAAP.
We review these Non-GAAPnon-GAAP financial measures as internal measures to evaluate our performance and manage our operations. We believe that these measures are useful performance measures which are used by us to facilitate a comparison of our on-going operating performance on a consistent basis from period-to-period. We believe that these Non-GAAPnon-GAAP financial measures provide for a more complete understanding of factors and trends affecting our business than measures under GAAP can provide alone, as it excludesthey exclude certain items that do not reflect the ordinary earnings of our operations. Our Board of Directors and management also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected performance, for evaluating on a quarterly and annual basis actual results against such expectations, and as a measure for performance incentive plans. We believe that the inclusion of Adjusted EBITDAEarnings and Adjusted EarningsEBITDA results provides investors useful and important information regarding our operating results. We believe that Free Cash Flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements and assists investors in their understanding of our operating profitability and liquidity as we manage the business to maximize margin and cash flow.

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Table of Contents
Adjusted Earnings (non-GAAP)
 13 weeks ended26 weeks ended
Dollars in thousandsOctober 30, 2021October 31, 2020October 30, 2021October 31, 2020
Net income (loss)$22,528 $7,515 $(21,818)$(39,137)
Reconciling items, after-tax (below)
2,427 3,560 6,759 8,496 
Adjusted Earnings (non-GAAP)$24,955 $11,075 $(15,059)$(30,641)
Reconciling items, pre-tax
Merchandise inventory loss (a)
$— $— 434 — 
Content amortization (non-cash)
1,311 1,222 2,586 2,386 
Restructuring and other charges (a)
1,116 3,387 3,739 9,058 
Reconciling items, pre-tax2,427 4,609 6,759 11,444 
Less: Pro forma income tax impact (a)(b)
— 1,049 — 2,948 
Reconciling items, after-tax$2,427 $3,560 $6,759 $8,496 
 13 weeks ended 39 weeks ended
Dollars in thousandsJanuary 27, 2018 January 28, 2017 January 27, 2018 January 28, 2017
Net (loss) income$(283,235) $3,761
 $(269,623) $5,134
Reconciling items, after-tax (below)
302,879
 286
 309,404
 2,714
Adjusted Earnings (non-GAAP) (a)
$19,644
 $4,047
 $39,781
 $7,848
        
Reconciling items, pre-tax       
Impairment loss (non-cash) (a)
$313,130
 $
 $313,130
 $
Inventory valuation amortization (MBS) (non-cash) (a)

 
 3,273
 
Restructuring and other charges (a)

 
 5,429
 1,790
Transaction costs (a)
49
 467
 1,895
 2,638
Reconciling items, pre-tax313,179
 467
 323,727
 4,428
Less: Pro forma income tax impact (b)
10,300
 181
 14,323
 1,714
Reconciling items, after-tax$302,879
 $286
 $309,404
 $2,714
(a)
See Management Discussion and Analysis - Results of Operations discussion above.
(b)Represents the income tax effects of the non-GAAP items.

(a)     See Management Discussion and Analysis and Results of Operations discussion above.
(b)    Represents the income tax effects of the non-GAAP items.
Adjusted EBITDA (non-GAAP)
 13 weeks ended26 weeks ended
Dollars in thousandsOctober 30, 2021October 31, 2020October 30, 2021October 31, 2020
Net income (loss)$22,528 $7,515 $(21,818)$(39,137)
Add:
Depreciation and amortization expense11,952 13,193 24,576 27,256 
Interest expense, net2,264 912 4,758 3,565 
Income tax (benefit) expense(203)(1,694)196 (16,610)
Merchandise inventory loss (a)
— — 434 — 
Content amortization (non-cash)
1,311 1,222 2,586 2,386 
Restructuring and other charges (a)
1,116 3,387 3,739 9,058 
Adjusted EBITDA (non-GAAP) (a)
$38,968 $24,535 $14,471 $(13,482)
 13 weeks ended 39 weeks ended
Dollars in thousandsJanuary 27, 2018 January 28, 2017 January 27, 2018 January 28, 2017
Net (loss) income$(283,235) $3,761
 $(269,623) $5,134
Add:       
Depreciation and amortization expense17,007
 13,149
 48,728
 39,057
Interest expense, net2,954
 679
 7,828
 1,975
Income tax expense(15,344) 758
 (6,113) 2,087
Impairment loss (non-cash) (a)
313,130
 
 313,130
 
Inventory valuation amortization (MBS) (non-cash) (a)

 
 3,273
 
Restructuring and other charges (a)

 
 5,429
 1,790
Transaction costs (a)
49
 467
 1,895
 2,638
Adjusted EBITDA (non-GAAP) (a)
$34,561
 $18,814
 $104,547
 $52,681
(a)     See Management Discussion and Analysis and Results of Operations discussion above.
(a)
See Management Discussion and Analysis - Results of Operations discussion above.
The following is Adjusted EBITDA by segment for the 13 and 3926 weeks ended January 27, 2018. PriorOctober 30, 2021 and October 31, 2020.
Adjusted EBITDA - by Segment13 weeks ended October 30, 2021
Dollars in thousandsRetailWholesaleDSSCorporate Services
Elimination(b)
Total
Sales$608,952 $21,669 $8,279 $— $(11,923)$626,977 
Cost of sales (a)
480,022 16,049 167 — (16,131)480,107 
Gross profit128,930 5,620 8,112 — 4,208 $146,870 
Selling and administrative expenses89,486 4,387 7,305 6,809 (85)107,902 
Adjusted EBITDA (non-GAAP)$39,444 $1,233 $807 $(6,809)$4,293 $38,968 

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Adjusted EBITDA - by Segment13 weeks ended October 31, 2020
Dollars in thousandsRetailWholesaleDSSCorporate Services
Elimination(b)
Total
Sales$576,514 $36,387 $5,947 $— $(23,363)$595,485 
Cost of sales (a)
480,810 25,673 255 — (27,760)478,978 
Gross profit95,704 10,714 5,692 — 4,397 116,507 
Selling and administrative expenses77,380 4,146 5,003 5,501 (58)91,972 
Adjusted EBITDA (non-GAAP)$18,324 $6,568 $689 $(5,501)$4,455 $24,535 


Adjusted EBITDA - by Segment26 weeks ended October 30, 2021
Dollars in thousandsRetailWholesaleDSSCorporate Services
Elimination(b)
Total
Sales$819,421 $66,153 $16,582 $— $(34,385)$867,771 
Cost of sales (a)
641,748 50,128 331 — (33,044)659,163 
Gross profit177,673 16,025 16,251 — (1,341)$208,608 
Selling and administrative expenses157,851 8,378 13,752 14,253 (97)194,137 
Adjusted EBITDA (non-GAAP)$19,822 $7,647 $2,499 $(14,253)$(1,244)$14,471 

Adjusted EBITDA - by Segment26 weeks ended October 31, 2020
Dollars in thousandsRetailWholesaleDSSCorporate Services
Elimination(b)
Total
Sales$735,290 $116,681 $11,819 $— $(64,291)$799,499 
Cost of sales (a)
623,241 89,210 427 — 61,912 774,790 
Gross profit112,049 27,471 11,392 — (2,379)$148,533 
Selling and administrative expenses134,365 7,937 9,039 10,745 (71)162,015 
Adjusted EBITDA (non-GAAP)$(22,316)$19,534 $2,353 $(10,745)$(2,308)$(13,482)

(a) For the 13 and 26 weeks ended October 30, 2021, the Retail Segment gross margin excludes $0.1 million and $0.3 million, respectively, of amortization expense (non-cash) related to content development costs. Additionally, for the 26 weeks ended October 30, 2021, gross margin excludes a merchandise inventory loss of $0.4 million in the Retail Segment related to the acquisitionsale of MBS on February 27, 2017, we had only one reportable segment.our logo and emblematic general merchandise inventory below cost to FLC. For the 13 and 26 weeks ended October 31, 2020, the Retail Segment gross margin excludes $0.2 million and $0.4 million, respectively, of amortization expense (non-cash) related to content development costs.
For the 13 and 26 weeks ended October 30, 2021, the DSS Segment gross margin excludes $1.2 million and $2.3 million, respectively, of amortization expense (non-cash) related to content development costs. For the 13 and 26 weeks ended October 31, 2020, the DSS Segment gross margin excludes $1.0 million and $2.0 million, respectively of amortization expense (non-cash) related to content development costs.
Adjusted EBITDA - by Segment 13 weeks ended, January 27, 2018
Dollars in thousands BNC MBS 
Elimination (a)
 Total
Sales $506,460
 $138,927
 $(41,996) $603,391
Cost of sales 389,047
 103,978
 (36,169) 456,856
Gross profit 117,413
 34,949
 (5,827) 146,535
Selling and administrative expenses 97,777
 14,197
 
 111,974
Adjusted EBITDA (non-GAAP) $19,636
 $20,752
 $(5,827) $34,561


Adjusted EBITDA - by Segment 39 weeks ended, January 27, 2018
Dollars in thousands BNC MBS 
Elimination (a)
 Total
Sales $1,518,224
 $413,579
 $(85,840) $1,845,963
Cost of sales (MBS excludes $3,273 related to inventory fair value amortization) (a)
 1,180,349
 314,593
 (80,058) 1,414,884
Gross profit 337,875
 98,986
 (5,782) 431,079
Selling and administrative expenses 283,546
 42,986
 
 326,532
Adjusted EBITDA (non-GAAP) $54,329
 $56,000
 $(5,782) $104,547
(a)(b)    See Management Discussion and Analysis -and Results of Operations discussion above.

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Liquidity and Capital Resources
Our primary sources of cash are net cash flows from operating activities, funds available under our credit agreement and short-term vendor financing. As of January 27, 2018, we had a total of $113.0 million of outstanding borrowings under the Credit Agreement. See Financing Arrangements discussion below.
Sources and Uses ofFree Cash Flow (non-GAAP)
13 weeks ended26 weeks ended
Dollars in thousandsOctober 30, 2021October 31, 2020October 30, 2021October 31, 2020
Adjusted EBITDA (non-GAAP)$38,968 $24,535 $14,471 $(13,482)
Less:
Capital expenditures (a)
9,894 9,142 21,264 16,197 
Cash interest1,980 1,240 3,662 3,200 
Cash taxes(8,032)85 (7,778)6,022 
Free Cash Flow (non-GAAP)$35,126 $14,068 $(2,677)$(38,901)
  39 weeks ended
Dollars in thousands January 27, 2018 January 28, 2017
Cash, cash equivalents, and restricted cash at beginning of period $21,697
 $30,866
Net cash flows provided by operating activities 141,440
 145,002
Net cash flows used in investing activities (89,839) (33,651)
Net cash flows used in financing activities (48,230) (7,858)
Cash, cash equivalents, and restricted cash at end of period $25,068
 $134,359
Cash Flow from Operating Activities
Our business is highly seasonal. For our retail operations (BNC(a) Purchases of property and MBS Direct), cash flows from operating activitiesequipment are typically a source of cash in the second and third fiscal quarters, when students generally purchase and rent textbooks for the upcoming semesters. For MBS Wholesale, cash flows from operating activities are typically a source of cash in the second and fourth fiscal quarters,also referred to as payments are received from the summer and winter selling season when they sell textbooks for retail distribution. For both BNC and MBS, cash flows from operating activities are typically a use of cash in the fourth fiscal quarter, when sales volumes are materially lower than the other quarters. Our quarterly cash flows also may fluctuate depending on the timing of the start of the various schools' semesters, as well as shifts in our fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods.
Cash flows provided by operating activities during the 39 weeks ended January 27, 2018 were $141.4 million compared to $145.0 million during the 39 weeks ended January 28, 2017. This decrease of $3.6 million was primarily due to changes in working capital (including cash income tax payment), and changes in other long-term liabilities and deferred tax balances (primarily driven by the December 22, 2017 enactment of the U.S. Tax Cuts and Jobs Act).
Cash Flow from Investing Activities
expenditures. Our investing activities consist principally of capital expenditures for contractual capital investments associated with renewing existing contracts, new store construction, digital initiatives and enhancements to internal systems and our website. The following table provides the components of total purchases of property and equipment:
Cash
Capital Expenditures13 weeks ended26 weeks ended
Dollars in thousandsOctober 30, 2021October 31, 2020October 30, 2021October 31, 2020
Physical store capital expenditures$3,587 $2,825 $7,480 $5,962 
Product and system development3,856 2,901 7,480 5,226 
Content development costs1,865 1,752 4,712 2,828 
Other586 1,664 1,592 2,181 
Total Capital Expenditures$9,894 $9,142 $21,264 $16,197 
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Liquidity and Capital Resources
Our primary sources of cash are net cash flows used in investingfrom operating activities, during the 39 weeks ended January 27, 2018 were $(89.8) million compared to $(33.7) million during the 39 weeks ended January 28, 2017. The increase is primarily due to the acquisition of Student Brands for $57.4 million (cash consideration of $62.0 million, including cash acquired of $4.6 million) during the 39 weeks ended January 27, 2018, higher capital expenditures primarily for MBS and contractual capital investments associated with renewing existing contracts, and new store construction for BNC, offset by lower deferred contract costs related tofunds available under our bookstore contracts. Capital expenditures totaled $30.1 million and $26.5 million during the 39 weeks ended January 27, 2018 and January 28, 2017, respectively.

Cash Flow from Financing Activities
Cash flows used in financing activities during the 39 weeks ended January 27, 2018 were $(48.2) million compared $(7.9) million during the 39 weeks ended January 28, 2017. This net change of $40.3 is primarily due to increased net borrowings under the credit agreement and short-term vendor financing. As of $46.6October 30, 2021, we had $183.3 million (primarily to fund recent acquisitions), and decreased payments for Common Stock repurchased of $6.2 million during the 39 weeks ended January 27, 2018.
Financing Arrangements
On August 3, 2015, we and certain of our subsidiaries, entered into a credit agreement (the “Credit Agreement”) under which the lenders committed to provide a five-year asset-backed revolving credit facility in an aggregate committed principal amount of $400.0 million (the “Credit Facility”). The Company has the option to request an increase in commitments under the Credit Facility of up to $100.0 million, subject to certain restrictions. On February 27, 2017, in connection with the acquisition of MBS, we amended our existing Credit Agreement to add a new $100 million incremental first in, last out seasonal loan facility (the “FILO Facility”).
During the 39 weeks ended January 27, 2018, we borrowed $481.6 million and repaid $528.2 million under the Credit Agreement. Net total outstanding borrowings of $113.0 million as of January 27, 2018 is comprised entirely of outstanding borrowings under the Credit Facility. AsAgreement. See Financing Arrangements discussion below.
COVID-19 Business Impact
Our business experienced an unprecedented and significant negative impact as a result of January 27, 2018,COVID-19 related campus store closures. Beginning in March 2020, colleges and universities nationwide began to close their campuses in light of safety concerns and as a result of local and state issued stay-at-home orders. By mid-March, during our Fiscal 2020 fourth quarter, we closed the majority of our physical campus stores to protect the health and safety of our customers and employees.
While our campus stores were closed, we continued to serve institutions and students through our campus websites, providing free shipping on all orders and an expanded digital content offering to provide immediate access to course materials to students at our campuses that closed due to COVID-19. We developed and implemented plans to safely reopen our campus stores based on national, state and local guidelines, as well as the campus policies set by the school administration.
Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve. We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including the Delta variant, on enrollments, university budgets, athletics and other areas that directly affect our business operations. Although most four year schools have issued $4.8 millionreturned to a traditional on-campus environment for learning in lettersthe current Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of credit under the facility. Duringimpact of the 39 weeks ended January 28, 2017, we borrowedCOVID-19 pandemic, including on enrollments at community colleges and repaid $116.1 million underby international students, the Credit Facility.
continuation of remote and hybrid class offerings, and the effect on our ability to source products, including textbooks and general merchandise offerings. We will continue to assess our operations and will continue to consider the guidance of local governments and our campus partners to determine how to operate our bookstores in the safest manner for our employees and customers. If economic conditions caused by the pandemic do not recover as currently estimated by management or market factors currently in place change, there could be a further impact on our results of operations, financial condition and cash flows from operations. For additional information, including interest terms and covenant requirements related to the Credit Facility and FILO Facility, refer to see Part III - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources1. Business in our Annual Report on Form 10-K for the fiscal year ended April 29, 2017.May 1, 2021.
We believe that our future cash from operations, access to borrowings under the Credit AgreementFacility, FILO Facility and short-term vendor financing will provide adequate resources to fund our operating and financing needs for the foreseeable future. Our future capital requirements will depend on many factors, including, but not limited to, the economy and the outlook for and pace of sustainable growth in our markets, the levels at which we maintain inventory, the number and timing of new store openings, and any potential acquisitions of other brands or companies including digital properties. To the extent that available funds are insufficient to fund our future activities, we may need to raise additional funds through public or private financing of debt or equity. Our access to, and the availability of, financing in the future will be impacted by many factors, including the liquidity of the overall capital markets and the current state of the economy. There can be no assurances that we will have access to capital markets on acceptable terms.
Sources and Uses of Cash Flow
 26 weeks ended
Dollars in thousandsOctober 30, 2021October 31, 2020
Cash, cash equivalents, and restricted cash at beginning of period$16,814 $9,008 
Net cash flows provided by operating activities24,142 91,386 
Net cash flows used in investing activities(20,804)(16,194)
Net cash flows provided by (used in) financing activities3,378 (76,081)
Cash, cash equivalents, and restricted cash at end of period$23,530 $8,119 
As of October 30, 2021 and October 31, 2020, we had restricted cash of $12.5 million and $0.8 million, respectively, comprised of $11.6 million and $0, respectively, in prepaid and other current assets in the consolidated balance sheet related to segregated funds for commission due to FLC for logo merchandise sales as per the FLC Partnership's merchandising agreement and $0.9 million and $0.8 million, respectively, in other noncurrent assets in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.
Cash Flow from Operating Activities
Our business is highly seasonal. For our retail operations, cash flows from operating activities are typically a source of cash in the second and third fiscal quarters, when students generally purchase and rent textbooks and other course materials for the upcoming semesters based on the typical academic semester. For our wholesale operations, cash flows from operating activities
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are typically a source of cash in the second and fourth fiscal quarters, as payments are received from the summer and winter selling season when they sell textbooks and other course materials for retail distribution. For both retail and wholesale, cash flows from operating activities are typically a use of cash in the fourth fiscal quarter, when sales volumes are materially lower than the other quarters. For our DSS segment, cash flows are not seasonal as cash flows from operating activities are typically consistent throughout the year. Our quarterly cash flows also may fluctuate depending on the timing of the start of the various school’s semesters, as well as shifts in our fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods.
Cash flows provided by operating activities during the 26 weeks ended October 30, 2021 were $24.1 million compared to $91.4 million during the 26 weeks ended October 31, 2020. This decrease in cash used in operating activities of $67.3 million was primarily due to changes in working capital, including higher accounts receivables and higher inventory purchases, partially offset by higher earnings of $17.3 million in the current year period compared to the prior year period and lower tax payments of $13.8 million compared to the prior year period as discussed below. Our operations were highly impacted by COVID-19 related campus store closures in the prior year period, resulting in lower operating costs and lower inventory purchases.
Cash Flow from Investing Activities
Cash flows used in investing activities during the 26 weeks ended October 30, 2021 were $(20.8) million compared to $(16.2) million during the 26 weeks ended October 31, 2020. The increase in cash used in investing activities is primarily due to higher capital expenditures and contractual capital investments associated with content development, digital initiatives, enhancements to internal systems and websites, renewing existing contracts and new store construction. Capital expenditures totaled $21.3 million and $16.2 million during the 26 weeks ended October 30, 2021 and October 31, 2020, respectively.
Cash Flow from Financing Activities
Cash flows provided by financing activities during the 26 weeks ended October 30, 2021 were $3.4 million compared to cash flows used in financing activities of $(76.1) million during the 26 weeks ended October 31, 2020. This net change of $79.5 million is primarily due to higher net borrowings under the credit agreement.
Financing Arrangements
We have a credit agreement (the “Credit Agreement”), amended March 31, 2021 and March 1, 2019, under which the lenders committed to provide us with a 5-year asset-backed revolving credit facility in an aggregate committed principal amount of $400 million (the “Credit Facility”). We have the option to request an increase in commitments under the Credit Facility of up to $100 million, subject to certain restrictions. Proceeds from the Credit Facility are used for general corporate purposes, including seasonal working capital needs. The agreement includes an incremental first in, last out seasonal loan facility (the “FILO Facility”) for a $100 million incremental facility maintaining the maximum availability under the Credit Agreement at $500 million. On March 31, 2021, we were granted a waiver to the availability test condition to the current draw under the FILO Facility.
During the 26 weeks ended October 30, 2021, we borrowed $259.7 million and repaid $254.0 million under the Credit Agreement, with $183.3 million of outstanding borrowings as of October 30, 2021, comprised entirely of borrowings under the Credit Facility. During the 26 weeks ended October 31, 2020, we borrowed $330.8 million and repaid $406.0 million under the Credit Agreement, with $99.5 million of outstanding borrowings as of October 31, 2020, comprised entirely of outstanding borrowings under the Credit Facility. As of both October 30, 2021 and October 31, 2020, we have issued $4.8 million in letters of credit under the Credit Facility.
For additional information including interest terms and covenant requirements related to the Credit Facility and FILO Facility, refer to Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.
Income Tax Implications on Liquidity
As of January 27, 2018,October 30, 2021, other long-term liabilities includes $54.4$25.3 million related to the long-term tax payable associated with the LIFO reserve. The LIFO reserve is impacted by changes in the consumer price index ("CPI") and is dependent on the inventory levels at the end of our tax year (on or about January 31st) which is in the middle of our second largest selling cycle. At the end of the most recent tax year, inventory levels within our BNC segment declined as compared to the prior year resulting in approximately $13.8$0.7 million of the income taxes associated with the LIFO reserve becoming currently payable. Given recent trends relating to the pricing and rental of textbooks, management believes that an additional portion of the remaining long-term tax payable associated with the LIFO reserve could bebecome payable within the next twelve months. We are unable to predict future trends for CPI and inventory levels, therefore it is difficult to project with reasonable certainty how much of this liability will become payable within the next twelve months.
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We have filed our federal income tax returns for the tax year ended January 2021, as well claims for refunds for cash taxes paid in prior years. We received a $7.8 million refund in the second quarter of Fiscal 2022 and expect to receive an additional refunds of approximately $22.6 million.
Share Repurchases
On December 14, 2015, our Board of Directors authorized a stock repurchase program of up to $50 million, in the aggregate, of our outstanding Common Stock. The stock repurchase program is carried out at the direction of management (which may include a plan under Rule 10b5-1 of the Securities Exchange Act of 1934). The stock repurchase program may be suspended, terminated, or modified at any time. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes. During the 3913 weeks ended January 27, 2018,October 30, 2021, we did not repurchase any of our Common Stock.Stock under the stock repurchase program. As of January 27, 2018,October 30, 2021, approximately $26.7 million remains available under the stock repurchase program.
During the 26 weeks ended October 30, 2021, we repurchased 238,170 shares of our Common Stock outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.
Contractual Obligations
Our projected contractual obligations are consistent with amounts disclosed in Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources in our Annual Report on Form 10-K for the fiscal year ended April 29, 2017.May 1, 2021.
Off-Balance Sheet Arrangements
As of January 27, 2018,October 30, 2021, we have no off-balance sheet arrangements as defined in Item 303 of Regulation S-K.
Critical Accounting Policies
With the exception of the Evaluation of Goodwill Impairment discussion, ourOur policies regarding the use of estimates and other critical accounting policies are consistent with the disclosures in Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the fiscal year ended April 29, 2017. For current information related to our Evaluation of Goodwill Impairment, see Part I - ItemMay 1, 2021.

1. Financial Statements - Note 2. Summary of Significant Accounting Policies in this Form 10-Q.
Recent Accounting Pronouncements
See Item 1. Financial Statements — Note 3. Recent Accounting Pronouncements of this Form 10-Q for information related to new accounting pronouncements.
Disclosure Regarding Forward-Looking Statements
This quarterly report on Form 10-Q contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and information relating to us and our business that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this communication, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “will,” “forecasts,” “projections,” and similar expressions, as they relate to us or our management, identify forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
Such statements reflect our current views with respect to future events, the outcome of which is subject to certain risks, including, among others:
risks associated with COVID-19 and the governmental responses to it, including its impacts across our businesses on demand and operations, as well as on the operations of our suppliers and other business partners, and the effectiveness of our actions taken in response to these risks;
general competitive conditions, including actions our competitors and content providers may take to grow their businesses;
a decline in college enrollment or decreased funding available for students;
decisions by colleges and universities to outsource their physical and/or online bookstore operations or change the operation of their bookstores;
the general economic environment and consumer spending patterns;
decreased consumer demand for our products, low growth or declining sales;
the strategic objectives, successful integration, anticipated synergies, and/or other expected potential benefits of various acquisitions, including MBS Textbook Exchange, LLC and Student Brands, LLC, may not be fully realized or may take longer than expected;
the integration of MBS Textbook Exchange, LLC’s operations into our own may also increase the risk of our internal controls being found ineffective;
implementation of our digital strategy may not result in the expected growth in our digital sales and/or profitability;
risk that digital sales growth does not exceed the rate of investment spend;
the performance of our online, digital and other initiatives, integration of and deployment of, additional products and services including new digital channels, and enhancements to higher education digital products, and the inability to achieve the expected cost savings;
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the risk of price reduction or change in format of course materials by publishers, which could negatively impact revenues and margin;
the general economic environment and consumer spending patterns;
decreased consumer demand for our products, low growth or declining sales;
the strategic objectives, successful integration, anticipated synergies, and/or other expected potential benefits of various acquisitions, may not be fully realized or may take longer than expected;
the integration of the operations of various acquisitions into our own may also increase the risk of our internal controls being found ineffective;
changes to purchase or rental terms, payment terms, return policies, the discount or margin on products or other terms with our suppliers;
our ability to successfully implement our strategic initiatives including our ability to identify, compete for and execute upon additional acquisitions and strategic investments;
risks associated with operation or performance of MBS Textbook Exchange, LLC’s point-of-sales systems that are sold to college bookstore customers;
changes to purchase or rental general terms, payment terms, return policies, the discount or margin on products or other terms with our suppliers;
technological changes;
risks associated with counterfeit and piracy of digital and print materials;
our international operations could result in additional risks;
our ability to attract and retain employees;
the risk of price reduction or change in format of course materials by publishers, which could negatively impact revenues and margin;

risks associated with data privacy, information security and intellectual property;
trends and challenges to our business and in the locations in which we have stores;
non-renewal of managed bookstore, physical and/or online store contracts and higher-than-anticipated store closings;
disruptions to our information technology systems, infrastructure and data due to computer malware, viruses, hacking and phishing attacks, resulting in harm to our business and results of operations;
disruption of or interference with third party web service providers and our own proprietary technology;
work stoppages or increases in labor costs;
possible increases in shipping rates or interruptions in shipping service;
product shortages, including decreases in the used textbook inventory supply associated with the implementation of publishers’ digital offerings and direct to student textbook consignment rental programs, as well as the risks associated with merchandise sourced indirectlythe impacts that public health crises may have on the ability of our suppliers to manufacture or source products, particularly from outside of the United States;
changes in domestic and international laws or regulations, including U.S. tax reform, changes in tax rates, laws and regulations, as well as related guidance;
enactment of laws or changes in enforcement practices which may restrict or prohibit our use of texts, emails, interest based online advertising, recurring billing or similar marketing and sales activities;
the amount of our indebtedness and ability to comply with covenants applicable to any future debt financing;
our ability to satisfy future capital and liquidity requirements;
our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms;
adverse results from litigation, governmental investigations, tax-related proceedings, or audits;
changes in accounting standards; and
the other risks and uncertainties detailed in the section titled “Risk Factors” in Part I - Item 1A in our Annual Report on Form 10-K for the fiscal year ended April 29, 2017.
May 1, 2021.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Form 10-Q. 
Item 3:    Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to the items discussed in Part II - Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the fiscal year ended April 29, 2017.May 1, 2021.
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Item 4:    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation (as required under Rules 13a-15(b) and 15d-15(b) under the Exchange Act) was performed under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.
Management has not identified any changes in the Company’s internal control over financial reporting that occurred during the second quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting other than changes in controls that may be required as a result of the integration of MBS Textbook Exchange, LLC into the Company's internal controls.reporting.

PART II - OTHER INFORMATION
 
Item 1.    Legal Proceedings
We are involved in a variety of claims, suits, investigations and proceedings that arise from time to time in the ordinary course of our business, including actions with respect to contracts, intellectual property, taxation, employment, benefits, personal injuries and other matters. We record a liability when we believe that it is both probable that a loss has been incurred and the amount of loss can be reasonably estimated. Based on our current knowledge, we do not believe that there is a reasonable possibility that the final outcome of any pending or threatened legal proceedings to which we or any of our subsidiaries are a party, either individually or in the aggregate, will have a material adverse effect on our future financial results. However, legal matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control. As such, there can be no assurance that the final outcome of these matters will not materially and adversely affect our business, financial condition, results of operations or cash flows.
Item 1A. Risk Factors
There have been no material changes during the 3926 weeks ended January 27, 2018October 30, 2021 to the risk factors discussed in Part I - Item1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended April 29, 2017.May 1, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information as of January 27, 2018October 30, 2021 with respect to shares of Common Stock we purchased during the thirdsecond quarter of Fiscal 2018:2022:
PeriodTotal Number of Shares Purchased Average Price Paid per Share (a) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
October 29, 2017 - November 25, 2017
 $
 
 $26,669,324
November 26, 2017 - December 30, 2017
 $
 
 $26,669,324
December 31, 2017 - January 27, 2018
 $
 
 $26,669,324
 
 $
 
 

(a)PeriodThis amount representsTotal Number of Shares PurchasedAverage Price Paid per Share (a)Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares That May Yet Be Purchased Under the average price paid per common share. This price includes a per share commission paid for all repurchases.Plans or Programs
August 1, 2021 - August 28, 2021— $— — $26,669,324 
August 29, 2021 - October 2, 2021— $— — $26,669,324 
October 3, 2021 - October 30, 2021— $— — $26,669,324 
— $— — 
(a)     This amount represents the average price paid per common share. This price includes a per share commission paid for all repurchases.
On December 14, 2015, our Board of Directors authorized a stock repurchase program of up to $50 million, in the aggregate, of our outstanding Common Stock. The stock repurchase program is carried out at the direction of management (which may include a plan under Rule 10b5-1 of the Securities Exchange Act of 1934). The stock repurchase program may be suspended, terminated, or modified at any time. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes. During the 3926 weeks ended January 27, 2018,October 30, 2021, we did not repurchase any shares of our Common Stock.Stock under the program.
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During the 3926 weeks ended January 27, 2018,October 30, 2021, we also repurchased 259,348238,170 shares of our Common Stock outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.

Item 5. Other Information
None

Item 6.    Exhibits
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
BARNES & NOBLE EDUCATION, INC.
(Registrant)
By:
/S/ BARRY BROVER
Barry Brover
Chief Financial Officer
(principal financial officer)
By:
/S/ SEEMA PAUL
Seema Paul
Chief Accounting Officer
(principal accounting officer)
March 1, 2018


EXHIBIT INDEX
By:
31.1/S/ THOMAS D. DONOHUE
Thomas D. Donohue
(principal financial officer)
By:
/S/ SEEMA C. PAUL
Seema C. Paul
Chief Accounting Officer
101.INSXBRL Instance Document
(principal accounting officer)
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document

November 30, 2021



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