Exhibit 99.1
Barnes & Noble Reports Third Quarter Earnings In-Line with Guidance; Affirms
Full-Year Guidance; Completes Spin-Off of GameStop
NEW YORK--(BUSINESS WIRE)--Nov. 15, 2004--Barnes & Noble, Inc.
(NYSE: BKS), the world's largest bookseller, today reported sales and
earnings for the third quarter ended October 30, 2004.
THIRD QUARTER RESULTS
Barnes & Noble store sales were $894.9 million for the quarter, an
increase of 4% over the prior year. Third quarter comparable store
sales increased 0.9%. The company opened nine new Barnes & Noble
stores and closed three locations ending the quarter with 663 stores.
B. Dalton sales, which comprise approximately 3% of total
bookstore sales, were $35.9 million for the quarter, a decrease of
(19%) over the prior year, due primarily to store closings. The
company closed seven stores ending the quarter with 176 stores. Third
quarter comparable store sales decreased (3.3)%.
Earnings for the bookstore business were $0.09 per share in the
third quarter, versus guidance of $0.08 to $0.10 per share. Bookstore
earnings were $0.10 per share in the year-ago period. Year-to-date
earnings per share for the bookstore business were $0.59 compared to
$0.24 for the same period last year.
"We are encouraged that we were able to achieve our sales goal for
the third quarter in light of the challenging sales comparisons from
last year," said Steve Riggio, chief executive officer of Barnes &
Noble, Inc. "Sales of DVD, juvenile and cafe products were especially
encouraging while sales of bestsellers were soft owing to the
difficult comparisons against last year's strong sales of bestselling
books."
Barnes & Noble.com's third quarter sales on a pro-forma basis
decreased 8% to $91.8 million, resulting in a net loss of ($6.4)
million, or ($0.09) per share, versus guidance of ($0.08) to ($0.09)
per share. In the year-ago period, net loss was ($0.11) per share on a
pro-forma basis, as if Barnes & Noble.com was 100% owned in the prior
year.
Earlier today, GameStop reported sales of $416.7 million for the
quarter, an increase of 28% over the prior year period. Third quarter
comparable store sales increased 11.8%. Barnes & Noble's portion of
GameStop's third quarter earnings is based on a 59% ownership
interest. Barnes & Noble's share of net earnings was $7.2 million, or
$0.10 per share, for the quarter, versus guidance of $0.08 to $0.09
per share. Barnes & Noble's share of net earnings was $0.09 per share
in the year-ago period.
Consolidated net earnings for the third quarter were $7.6 million,
or $0.10 per share, versus guidance of $0.07 to $0.11 per share. In
the year-ago period, consolidated net earnings was $0.08 per share on
a pro-forma basis, as if Barnes & Noble.com was 100% owned in the
prior year.
GUIDANCE
The company reaffirms previously announced guidance for the fourth
quarter and the full year. Consolidated earnings per share guidance is
projected to be between $1.51 and $1.56 for the fourth quarter and
$1.96 and $2.04 for the full year, excluding the second quarter debt
redemption charge.
Excluding GameStop, full-year earnings for the bookselling segment
is expected to grow approximately 30%, ranging from $1.78 to $1.84 per
share, versus $1.41 per share on a pro-forma basis last year.
GAMESTOP SPIN-OFF
The company also noted that Friday, November 12, 2004 was the
distribution date for the spin-off of GameStop, the nation's largest
video-game and entertainment software specialty retailer. Today is the
first day that Barnes & Noble and GameStop (NYSE: GME) and (NYSE:
GME.B) will trade only as separate public companies.
A conference call with Barnes & Noble, Inc.'s senior management
will be webcast beginning at 11:00 A.M. ET on Monday, November 15,
2004, and is accessible at www.barnesandnobleinc.com/financials. The
call will also be archived at www.fulldisclosure.com for one year.
Barnes & Noble, Inc. will report holiday sales on January 6, 2005.
ABOUT BARNES & NOBLE, INC.
Barnes & Noble, Inc. (NYSE: BKS), the world's largest bookseller
and a Fortune 500 company, operates 839 bookstores in 50 states. For
the third year in a row, the company is the nation's top retail brand
for quality, according to the EquiTrend(R) Brand Study by Harris
Interactive(R). Barnes & Noble conducts its online business through
Barnes & Noble.com (www.bn.com), one of the Web's largest e-commerce
sites and the number-one brand among e-commerce companies, according
to the latest EquiTrend survey. In addition to its retail operations,
Barnes & Noble is one of the largest book publishers in the world. Its
subsidiary, Sterling Publishing, publishes over 1,300 new titles a
year and has an active list of over 6,000 titles.
General financial information on Barnes & Noble, Inc. can be
obtained via the Internet by visiting the company's corporate Web
site: http://www.barnesandnobleinc.com/financials.
SAFE HARBOR
This press release contains "forward-looking statements." Barnes &
Noble is including this statement for the express purpose of availing
itself of the protections of the safe harbor provided by the Private
Securities Litigation Reform Act of 1995 with respect to all such
forward-looking statements. These forward-looking statements are based
on currently available information and represent the beliefs of the
management of the company. These statements are subject to risks and
uncertainties that could cause actual results to differ materially.
These risks include, but are not limited to, general economic and
market conditions, decreased consumer demand for the company's
products, possible disruptions in the company's computer or telephone
systems, possible work stoppages or increases in labor costs, possible
increases in shipping rates or interruptions in shipping service,
effects of competition, possible disruptions or delays in the opening
of new stores or the inability to obtain suitable sites for new
stores, higher than anticipated store closing or relocation costs,
higher interest rates, the performance of the company's online and
other initiatives, the successful integration of acquired businesses,
unanticipated increases in merchandise or occupancy costs,
unanticipated adverse litigation results or effects, product
shortages, and other factors which may be outside of the company's
control. Please refer to the company's annual, quarterly and periodic
reports on file with the SEC for a more detailed discussion of these
and other risks that could cause results to differ materially.
BARNES & NOBLE, INC. AND SUBSIDIARIES
Third Quarter Summary
($ in millions, except per share amounts)
13 weeks ended 39 weeks ended
----------------- -----------------
October November October November
30, 1, 30, 1,
2004 2003 2004 2003
--------- -------- ------- --------
Sales
Barnes & Noble Bookstores $950 926 2,933 2,768
Barnes & Noble.com (a) 92 18 268 18
--------- -------- ------- --------
Total Book operating segment 1,042 944 3,201 2,786
GameStop
Total Video Game operating
segment 417 326 1,134 953
--------- -------- ------- --------
Total sales 1,459 1,270 4,335 3,739
--------- -------- ------- --------
Operating profit (loss)
Barnes & Noble Bookstores 12 15 75 39
Barnes & Noble.com (a) (11) (2) (34) (2)
--------- -------- ------- --------
Total Book operating segment 1 13 41 37
GameStop
Total Video Game operating
segment 20 18 43 40
--------- -------- ------- --------
Total operating profit 21 31 84 77
--------- -------- ------- --------
Depreciation and amortization
Barnes & Noble Bookstores 32 32 93 97
Barnes & Noble.com (a) 6 1 19 1
--------- -------- ------- --------
Total Book operating segment 38 33 112 98
GameStop
Total Video Game operating
segment 9 8 26 21
--------- -------- ------- --------
Total depreciation and
amortization 47 41 138 119
--------- -------- ------- --------
EBITDA (Operating profit (loss) +
depreciation and amortization)
Barnes & Noble Bookstores 44 47 168 136
Barnes & Noble.com (a) (5) (1) (15) (1)
--------- -------- ------- --------
Total Book operating segment 39 46 153 135
GameStop
Total Video Game operating
segment (b) 18 16 43 38
--------- -------- ------- --------
Total EBITDA 57 62 196 173
--------- -------- ------- --------
EPS
Barnes & Noble Bookstores 0.09 0.10 0.59 0.24
Barnes & Noble.com (c) (0.09) (0.05) (0.31) (0.15)
--------- -------- ------- --------
Total Book operating segment - 0.05 0.28 0.09
GameStop
Total Video Game operating
segment (b) 0.10 0.09 0.22 0.22
--------- -------- ------- --------
Consolidated before debt
redemption charge 0.10 0.14 0.50 0.31
Debt redemption charge (d) - - (0.12) -
--------- -------- ------- --------
Consolidated GAAP EPS 0.10 0.14 0.38 0.31
--------- -------- ------- --------
Weighted average shares
outstanding 72,049 68,704 71,273 67,075
(a) Barnes & Noble.com has been consolidated since September 15,
2003.
(b) Based on Barnes & Noble, Inc.'s percentage ownership interest
in GameStop, approximately 63%.
(c) Results accounted for under the equity method through
September 15, 2003, and consolidated thereafter.
(d) One-time charge of $14.6 million associated with the
redemption of the convertible notes.
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(thousands of dollars, except per share data)
13 weeks ended 39 weeks ended
---------------------- -----------------------
October November October November
30, 1, 30, 1,
2004 2003 2004 2003
----------- ----------- ------------- -------------
Sales $1,459,014 1,270,072 4,334,889 3,738,920
Cost of sales
and occupancy 1,065,346 921,823 3,162,898 2,753,053
----------- ----------- ------------- -------------
Gross profit 393,668 348,249 1,171,991 985,867
----------- ----------- ------------- -------------
Selling and
administrative
expenses 323,608 273,063 942,610 782,920
Depreciation and
amortization 46,927 40,492 137,644 118,778
Pre-opening
expenses 2,384 3,186 7,637 7,146
----------- ----------- ------------- -------------
Operating
profit 20,749 31,508 84,100 77,023
Interest
expense, net (2,249) (5,430) (10,105) (14,783)
Debt redemption
charge - - (14,582) -
Equity in net
loss of Barnes
& Noble.com - (3,935) - (14,311)
----------- ----------- ------------- -------------
Income
before
taxes and
minority
interest 18,500 22,143 59,413 47,929
Income taxes 7,185 8,914 23,528 19,292
----------- ----------- ------------- -------------
Income
before
minority
interest 11,315 13,229 35,885 28,637
Minority
interest (3,673) (3,057) (7,892) (6,827)
----------- ----------- ------------- -------------
Net income 7,642 10,172 27,993 21,810
=========== =========== ============= =============
Income per
common share:
Basic $0.11 0.15 0.41 0.33
Diluted $0.10 0.14 0.38 0.31
Weighted average
common shares
outstanding
Basic 69,443,000 66,664,000 68,727,000 65,461,000
Diluted 72,049,000 68,704,000 71,273,000 67,075,000
Percentage of
sales:
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales
and occupancy 73.0% 72.6% 73.0% 73.6%
----------- ----------- ------------- -------------
Gross profit 27.0% 27.4% 27.0% 26.4%
----------- ----------- ------------- -------------
Selling and
administrative
expenses 22.2% 21.5% 21.7% 20.9%
Depreciation and
amortization 3.2% 3.2% 3.2% 3.2%
Pre-opening
expenses 0.2% 0.2% 0.2% 0.2%
----------- ----------- ------------- -------------
Operating
profit 1.4% 2.5% 1.9% 2.1%
Interest
expense, net -0.1% -0.4% -0.2% -0.4%
Debt redemption
charge 0.0% 0.0% -0.4% 0.0%
Equity in net
loss of Barnes
& Noble.com 0.0% -0.30% 0.0% -0.4%
----------- ----------- ------------- -------------
Income
before
taxes and
minority
interest 1.3% 1.7% 1.4% 1.3%
Income taxes 0.5% 0.7% 0.5% 0.5%
----------- ----------- ------------- -------------
Income
before
minority
interest 0.8% 1.0% 0.8% 0.8%
Minority
interest -0.3% -0.2% -0.2% -0.2%
----------- ----------- ------------- -------------
Net income 0.5% 0.8% 0.6% 0.6%
=========== =========== ============= =============
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(thousands of dollars, except per share data)
- ----------------------------------------------------------------------
October November January
30, 2004 1, 2003 31, 2004
---------------------------------
ASSETS
Current assets:
Cash and cash equivalents $185,871 136,671 487,200
Receivables, net 83,413 74,428 60,529
Merchandise inventories 1,810,561 1,920,266 1,526,156
Prepaid expenses and other current
assets 99,439 111,777 119,604
----------- ---------- ----------
Total current assets 2,179,284 2,243,142 2,193,489
----------- ---------- ----------
Property and equipment:
Land and land improvements 5,247 3,247 3,247
Buildings and leasehold
improvements 567,194 517,541 533,272
Fixtures and equipment 1,239,576 1,176,290 1,141,317
----------- ---------- ----------
1,812,017 1,697,078 1,677,836
Less accumulated depreciation and
amortization 1,104,069 1,034,071 991,187
----------- ---------- ----------
Net property and equipment 707,948 663,007 686,649
----------- ---------- ----------
Goodwill 600,632 572,206 509,244
Intangible assets, net 98,783 46,856 94,574
Other noncurrent assets 69,436 23,256 23,338
----------- ---------- ----------
Total assets $3,656,083 3,548,467 3,507,294
=========== ========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,075,802 1,162,014 858,068
Accrued liabilities 530,640 457,951 583,773
----------- ---------- ----------
Total current liabilities 1,606,442 1,619,965 1,441,841
----------- ---------- ----------
Long-term debt 245,000 311,600 300,000
Deferred income taxes 143,550 119,893 170,066
Other long-term liabilities 126,448 198,085 108,441
Minority interest 213,835 201,365 227,287
Shareholders' equity:
Common stock; $.001 par value;
300,000,000 shares authorized;
78,672,574, 76,100,493 and
76,854,856 shares issued,
respectively 79 76 77
Additional paid-in capital 969,976 884,645 914,319
Accumulated other comprehensive
loss (8,484) (10,961) (8,579)
Retained earnings 555,260 413,460 543,503
Treasury stock, at cost,
9,007,700, 8,807,700 and
8,807,700 shares, respectively (196,023) (189,661) (189,661)
----------- ---------- ----------
Total shareholders' equity 1,320,808 1,097,559 1,259,659
----------- ---------- ----------
Commitments and contingencies - - -
----------- ---------- ----------
Total liabilities and
shareholders' equity $3,656,083 3,548,467 3,507,294
=========== ========== ==========
BARNES & NOBLE, INC. AND SUBSIDIARIES
Third Quarter Summary
Pro Forma as if the Company Owned 100% of Barnes & Noble.com at the
Beginning of Fiscal 2003
($ in millions, except per share amounts)
13 weeks ended 39 weeks ended
----------------- -----------------
October November October November
30, 1, 30, 1,
2004 2003 2004 2003
--------- -------- ------- --------
Sales
Barnes & Noble Bookstores $950 926 2,933 2,768
Barnes & Noble.com (a) 92 99 268 275
-------- -------- ------- --------
Total Book operating segment 1,042 1,025 3,201 3,043
GameStop
Total Video Game operating
segment 417 326 1,134 953
-------- -------- ------- --------
Total sales 1,459 1,351 4,335 3,996
-------- -------- ------- --------
Operating profit (loss)
Barnes & Noble Bookstores 12 15 75 39
Barnes & Noble.com (a) (11) (12) (34) (41)
-------- -------- ------- --------
Total Book operating segment 1 3 41 (2)
GameStop
Total Video Game operating
segment 20 18 43 40
-------- -------- ------- --------
Total operating profit 21 21 84 38
-------- -------- ------- --------
Depreciation and amortization
Barnes & Noble Bookstores 32 32 93 97
Barnes & Noble.com (a) 6 6 19 20
-------- -------- ------- --------
Total Book operating segment 38 38 112 117
GameStop
Total Video Game operating
segment 9 8 26 21
-------- -------- ------- --------
Total depreciation and
amortization 47 46 138 138
-------- -------- ------- --------
EBITDA (Operating profit (loss) +
depreciation and amortization)
Barnes & Noble Bookstores 44 47 168 136
Barnes & Noble.com (a) (5) (6) (15) (21)
-------- -------- ------- --------
Total Book operating segment 39 41 153 115
GameStop
Total Video Game operating
segment (b) 18 16 43 38
-------- -------- ------- --------
Total EBITDA 57 57 196 153
-------- -------- ------- --------
EPS
Barnes & Noble Bookstores 0.09 0.10 0.59 0.24
Barnes & Noble.com (a) (0.09) (0.11) (0.31) (0.36)
-------- -------- ------- --------
Total Book operating segment - (0.01) 0.28 (0.12)
GameStop
Total Video Game operating
segment (b) 0.10 0.09 0.22 0.22
-------- -------- ------- --------
Consolidated before debt
redemption charge 0.10 0.08 0.50 0.10
Debt redemption charge (c) - - (0.12) -
-------- -------- ------- --------
Consolidated GAAP EPS 0.10 0.08 0.38 0.10
-------- -------- ------- --------
Weighted average shares
outstanding 72,049 68,704 71,273 67,075
(a) For pro forma purposes only, the company has included 100% of
the results of Barnes & Noble.com for all periods presented.
(b) Based on Barnes & Noble, Inc.'s percentage ownership
interest in GameStop, approximately 63%.
(c) One-time charge of $14.6 million associated with the
redemption of the convertible notes.
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Pro Forma as if the Company Owned 100% of Barnes & Noble.com at the
Beginning of Fiscal 2003
(thousands of dollars, except per share data)
- -------------------------------------------------------------------
13 weeks ended 39 weeks ended
---------------------- -----------------------
October November October November
30, 1, 30, 1,
2004 2003 2004 2003
----------- ----------- ------------- -------------
Sales $1,459,014 1,351,708 4,334,889 3,996,447
Cost of sales
and occupancy 1,065,346 984,916 3,162,898 2,954,459
------------- ----------- ------------ -------------
Gross profit 393,668 366,792 1,171,991 1,041,988
------------- ----------- ------------ -------------
Selling and
administrative
expenses 323,608 297,013 942,610 859,454
Depreciation
and
amortization 46,927 45,496 137,644 137,479
Pre-opening
expenses 2,384 3,186 7,637 7,146
------------- ----------- ------------ -------------
Operating
profit 20,749 21,097 84,100 37,909
Interest
expense, net (2,249) (5,416) (10,105) (14,683)
Debt redemption
charge - - (14,582) -
------------- ----------- ------------ -------------
Income
before
taxes and
minority
interest 18,500 15,681 59,413 23,226
Income taxes 7,185 6,072 23,528 8,965
------------- ----------- ------------ -------------
Income
before
minority
interest 11,315 9,609 35,885 14,261
Minority
interest (3,673) (3,057) (7,892) (6,827)
------------- ----------- ------------ -------------
Net income 7,642 6,552 27,993 7,434
============= =========== ============ =============
Income per
common share:
Basic $0.11 0.10 0.41 0.11
Diluted $0.10 0.08 0.38 0.10
Weighted
average common
shares
outstanding
Basic 69,443,000 66,664,000 68,727,000 65,461,000
Diluted 72,049,000 68,704,000 71,273,000 67,075,000
Percentage of
sales:
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales
and occupancy 73.0% 72.9% 73.0% 73.9%
------------- ----------- ------------ -------------
Gross profit 27.0% 27.1% 27.0% 26.1%
------------- ----------- ------------ -------------
Selling and
administrative
expenses 22.2% 22.0% 21.7% 21.5%
Depreciation
and
amortization 3.2% 3.4% 3.2% 3.4%
Pre-opening
expenses 0.2% 0.2% 0.2% 0.2%
------------- ----------- ------------ -------------
Operating
profit 1.4% 1.6% 1.9% 0.9%
Interest
expense, net -0.1% -0.4% -0.2% -0.3%
Debt redemption
charge 0.0% 0.0% -0.4% 0.0%
------------- ----------- ------------ -------------
Income
before
taxes and
minority
interest 1.3% 1.2% 1.3% 0.6%
Income taxes 0.5% 0.5% 0.5% 0.2%
------------- ----------- ------------ -------------
Income
before
minority
interest 0.8% 0.7% 0.8% 0.4%
Minority
interest -0.3% -0.2% -0.2% -0.2%
------------- ----------- ------------ -------------
Net income 0.5% 0.5% 0.6% 0.2%
============= =========== ============ =============
CONTACT: Barnes & Noble, Inc.
Media Contact:
Mary Ellen Keating
Senior Vice President
Corporate Communications
212-633-3323
or
Investor Contact:
Joseph J. Lombardi
Chief Financial Officer
212-633-3215