Exhibit 99.1
Barnes & Noble Reports 2004 Results: Full-Year Comparable Store Sales
Increased 3.1%;
EPS In-Line with Guidance;
Issues 2005 Guidance
NEW YORK--(BUSINESS WIRE)--March 17, 2005--Barnes & Noble, Inc.
(NYSE:BKS), the world's largest bookseller, today reported sales and
earnings for the fourth quarter and for the full-year ended January
29, 2005.
2004 RESULTS
Barnes & Noble store sales were $1.4 billion for the quarter and
$4.1 billion for the year, increasing 5% and 7%, respectively, over
the prior year periods. Comparable store sales increased 1.7% for the
fourth quarter and 3.1% for the year. The company opened 32 new Barnes
& Noble stores for the year and closed 13 locations ending the year
with 666 stores.
B. Dalton sales, which comprise approximately 4% of total
bookstore sales, were $60.9 million for the quarter, a decrease of
(24%) over the prior year, and $176.5 million for the year, a decrease
of (20%) over 2003, due primarily to the closing of 41 stores. The
company operated 154 B. Dalton stores at year-end. Comparable store
sales decreased (3.2%) for the fourth quarter and decreased (2.2%) for
the year.
Fourth quarter earnings per share for retail bookstores were
$1.51, an increase of 8% over the prior year. Full-year 2004 earnings
per share for retail bookstores increased 18% to $2.07, against a 15%
increase in 2003.
Barnes & Noble.com's sales were $151.5 million and $419.8 million
for the fourth quarter and full year, respectively. Barnes &
Noble.com's fourth-quarter earnings were $0.01 per share. Full year
losses of ($0.28) per share were an 18% improvement over the prior
year, against a 39% improvement in 2003.
On November 12, 2004, Barnes & Noble, Inc. completed its tax-free
spin-off of GameStop Corp. to Barnes & Noble, Inc. stockholders. Due
to the spin-off, Barnes & Noble, Inc. is no longer consolidating
GameStop's financial results and has reflected GameStop's results on a
discontinued operations line on the company's financial statements.
Barnes & Noble, Inc.'s share of GameStop's net earnings, for the
periods prior to the spin-off, was $0.04 per share during the fourth
quarter and $0.25 per share for the full-year.
Consolidated net earnings from continuing operations for the
fourth quarter increased 7% to $112.3 million or $1.52 per share.
Consolidated net earnings for the year from continuing operations,
excluding the debt redemption charge of $14.6 million, increased 18%
to $131.7 million. Earnings per share for the year from continuing
operations, excluding the debt redemption charge of ($0.11), was $1.79
per share, compared to pro-forma earnings per share of $1.41, an
increase of 27% over the prior year.
"Barnes & Noble generated a significant amount of value for its
shareholders in 2004," said Steve Riggio, chief executive officer of
Barnes & Noble, Inc. "Using its strong free cash flow, the company
completed the Barnes & Noble.com merger and began construction on its
new 1.1 million square foot distribution center. The company redeemed
its $300 million convertible notes resulting in a reduction of
approximately 9 million dilutive shares. Barnes & Noble distributed
over $500 million of GameStop stock directly to its shareholders
through a tax-free spin-off. And most importantly, shareholder value
was enhanced by another year of double-digit earnings growth of the
core book business."
LEASE RELATED ACCOUNTING ADJUSTMENTS
In light of a recent SEC clarification, the company has
re-evaluated its lease accounting practices. Like many other companies
within the retail industry that are correcting commonly accepted lease
accounting practices, the company has changed the way it accounts for
its leases, including the accounting for tenant allowances and rent
holidays (store build-out period).
Consistent with common retail industry practice, the company had
classified tenant allowances received as a result of store openings as
a reduction in capital expenditures. The company has reclassified
tenant allowances received from a reduction of depreciation expense to
a reduction of rent expense. As a result, the company has increased
gross margins and increased depreciation expense by $34 million in
fiscal year 2004. On the balance sheet the company has increased net
property and equipment, and increased other long-term liabilities by
$223 million to reflect the aggregate amount of all unamortized tenant
allowances received. There is no earnings impact due to this
reclassification.
In addition, consistent with common industry practice, the company
had recognized the straight line expense for leases beginning on the
commencement date of the lease, which had the effect of excluding the
construction period of its stores from the calculation of the period
over which it expenses rent. In order to correct the straight line
rent expense to include the store build-out period, the company has
decreased net income on an after-tax basis for fiscal year 2004 by
$472,000, or $0.01 per share. The company has reduced net income for
prior fiscal years by an aggregate amount of $18.6 million, $17.9
million of which relates to periods prior to fiscal year 2001. This
change is expected to be immaterial to fiscal year 2005 annual
earnings.
These adjustments will have no impact on cash flows, revenues and
comparable store sales.
GUIDANCE FOR 2005
For the first quarter, the company expects comparable store sales
at Barnes & Noble stores to be in the low single digits, and for the
full year comparable store sales are expected to increase
approximately 3%. Sales at Barnes & Noble.com are expected to increase
at similar levels.
Barnes & Noble, Inc.'s first quarter earnings per share are
expected to be in a range of $0.11 to $0.13, and for the full year
earnings per share are expected to be in a range of $1.94 to $1.98.
Included in the company's guidance are expense redundancies
related to the conversion and transition plan for the company's new
distribution center. The company has forecast a $0.08 per share impact
for the costs associated with these redundancies. Excluding these
costs, the company's 2005 earnings per share guidance reflects an
increase of 13% to 15%.
The company has decided to adopt Statement of Financial Accounting
Standards No. 123 (Revised 2004), "Share-Based Payment," and begin
expensing stock options as of the beginning of fiscal year 2005. As a
result of this accounting change, the company expects to realize
additional expenses of approximately $0.04 per share in the first
quarter and $0.14 per share for the full year. For comparative
purposes, the charge for adopting SFAS 123R has not been incorporated
into guidance.
A conference call with Barnes & Noble, Inc.'s senior management
will be webcast beginning at 11 A.M. ET on Thursday, March 17, 2005,
and is accessible at www.barnesandnobleinc.com/webcasts. The call will
be archived at www.fulldisclosure.com for one year.
Barnes & Noble, Inc. will report first-quarter earnings on or
about May 19, 2005.
ABOUT BARNES & NOBLE, INC.
Barnes & Noble, Inc. (NYSE: BKS), the world's largest bookseller
and a Fortune 500 company, operates 820 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 1,100 new titles a
year and has an active list of over 5,000 titles.
General information on Barnes & Noble, Inc. can be obtained via
the Internet by visiting the company's corporate Web site:
http://www.barnesandnobleinc.com.
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,
the successful and timely completion and integration of the company's
new New Jersey distribution center, 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
Fourth Quarter Summary
($ in millions, except per share amounts)
13 weeks ended 52 weeks ended
--------------- ---------------
January January January January
29, 31, 29, 31,
2005 2004 2005 2004
--------------- ---------------
Sales
Barnes & Noble Bookstores $1,521 1,454 4,454 4,221
Barnes & Noble.com (a) 152 133 420 151
------- ------- ------- -------
Total Book operating segment 1,673 1,587 4,874 4,372
Operating profit (loss)
Barnes & Noble Bookstores 204 194 279 233
Barnes & Noble.com (a) - (5) (35) (7)
------- ------- ------- -------
Total Book operating segment 204 189 244 226
Depreciation and amortization
Barnes & Noble Bookstores 40 39 158 160
Barnes & Noble.com (a) 5 6 24 7
------- ------- ------- -------
Total Book operating segment 45 45 182 167
EBITDA (Operating profit (loss) +
depreciation and amortization)
Barnes & Noble Bookstores 244 233 437 393
Barnes & Noble.com (a) 5 1 (11) -
------- ------- ------- -------
Total Book operating segment 249 234 426 393
EPS
Barnes & Noble Bookstores 1.51 1.40 2.07 1.75
Barnes & Noble.com (a) 0.01 (0.05) (0.28) (0.18)
------- ------- ------- -------
Total Book operating segment 1.52 1.35 1.79 1.57
Debt redemption charge (b) - - (0.11) -
------- ------- ------- -------
EPS from continuing operations 1.52 1.35 1.68 1.57
Discontinued operations - GameStop 0.04 0.30 0.25 0.50
------- ------- ------- -------
Consolidated GAAP EPS $1.56 1.65 1.93 2.07
------- ------- ------- -------
Weighted average shares
outstanding 73,960 79,514 75,696 77,105
(a) Results for Barnes & Noble.com have been accounted for under the
equity method through September 15, 2003, and consolidated
thereafter.
(b) One-time charge of $14.6 million associated with the redemption of
the convertible notes on June 28, 2004.
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(thousands of dollars, except per share data)
- ----------------------------------------------------------------------
13 weeks ended 52 weeks ended
----------------------- -----------------------
January 29, January 31, January 29, January 31,
2005 2004 2005 2004
----------------------- -----------------------
Sales $1,672,772 1,586,715 4,873,595 4,372,177
Cost of sales and
occupancy(a)(b) 1,126,963 1,076,559 3,386,619 3,060,462
----------- ----------- ----------- -----------
Gross profit 545,809 510,156 1,486,976 1,311,715
----------- ----------- ----------- -----------
Selling and
administrative
expenses 295,630 275,096 1,052,345 910,448
Depreciation and
amortization(a) 44,601 45,040 181,553 166,825
Pre-opening expenses(b) 1,868 1,460 8,862 8,668
----------- ----------- ----------- -----------
Operating profit 203,710 188,560 244,216 225,774
Interest expense, net (670) (5,513) (11,028) (20,944)
Debt redemption charge - - (14,582) -
Equity in net loss of
Barnes & Noble.com - - - (14,311)
----------- ----------- ----------- -----------
Income before taxes
and minority
interest 203,040 183,047 218,606 190,519
Income taxes 87,667 75,810 94,001 78,779
----------- ----------- ----------- -----------
Income before
minority interest 115,373 107,237 124,605 111,740
Minority interest (3,076) (2,390) (1,230) (536)
----------- ----------- ----------- -----------
Income from
continuing
operations 112,297 104,847 123,375 111,204
Income from
discontinued
operations (net of
income tax) 3,331 25,343 20,001 40,571
----------- ----------- ----------- -----------
Net income $115,628 130,190 143,376 151,775
=========== =========== =========== ===========
Basic income per common
share:
Income from
continuing
operations $1.60 1.55 1.79 1.69
Income from
discontinued
operations $0.05 0.38 0.29 0.61
----------- ----------- ----------- -----------
Net income $1.65 1.93 2.08 2.30
=========== =========== =========== ===========
Diluted income per
common share:
Income from
continuing
operations $1.52 1.35 1.68 1.57
Income from
discontinued
operations 0.04 0.30 0.25 0.50
----------- ----------- ----------- -----------
Net income $1.56 1.65 1.93 2.07
=========== =========== =========== ===========
Weighted average common
shares outstanding
Basic 69,894,000 67,575,000 69,018,000 65,989,000
Diluted 73,960,000 79,514,000 75,696,000 77,105,000
Percentage of sales:
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales and
occupancy 67.4% 67.8% 69.5% 70.0%
----------- ----------- ----------- -----------
Gross profit 32.6% 32.2% 30.5% 30.0%
----------- ----------- ----------- -----------
Selling and
administrative
expenses 17.7% 17.3% 21.6% 20.8%
Depreciation and
amortization 2.7% 2.8% 3.7% 3.8%
Pre-opening expenses 0.1% 0.1% 0.2% 0.2%
----------- ----------- ----------- -----------
Operating profit 12.2% 11.9% 5.0% 5.2%
Interest expense, net 0.0% -0.3% -0.2% -0.5%
Debt redemption charge 0.0% 0.0% -0.3% 0.0%
Equity in net loss of
Barnes & Noble.com 0.0% 0.0% 0.0% -0.3%
----------- ----------- ----------- -----------
Income before taxes
and minority
interest 12.1% 11.5% 4.5% 4.4%
Income taxes 5.2% 4.8% 1.9% 1.8%
----------- ----------- ----------- -----------
Income before
minority interest 6.9% 6.8% 2.6% 2.6%
Minority interest -0.2% -0.2% 0.0% 0.0%
----------- ----------- ----------- -----------
Income from
continuing
operations 6.7% 6.6% 2.5% 2.5%
=========== =========== =========== ===========
(a) Reflects the reclassification of tenant allowances from a
reduction in depreciation expense to a reduction in occupancy
expense for all periods.
(b) Reflects the reclassification and restatement of rent holiday
(store build-out period) to reduce occupancy expense and increase
pre-opening expense for all periods.
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(thousands of dollars, except per share data)
- ----------------------------------------------------------------------
January January
29, 2005 31, 2004
----------- ----------
ASSETS
Current assets:
Cash and cash equivalents $535,652 282,295
Receivables, net 74,640 50,966
Barnes & Noble.com receivable - -
Merchandise inventories 1,274,578 1,289,807
Prepaid expenses and other current assets 88,379 103,929
Current assets of discontinued operations - 459,996
----------- ----------
Total current assets 1,973,249 2,186,993
----------- ----------
Property and equipment:
Land and land improvements 3,247 3,247
Buildings and leasehold improvements(a) 940,616 873,706
Fixtures and equipment 1,081,966 1,001,557
----------- ----------
2,025,829 1,878,510
Less accumulated depreciation and
amortization 1,221,169 1,070,934
----------- ----------
Net property and equipment 804,660 807,576
----------- ----------
Goodwill 268,379 175,776
Intangible assets, net 97,538 94,574
Deferred taxes 169,585 126,230
Other noncurrent assets 37,710 22,023
Noncurrent assets of discontinued operations - 438,815
----------- ----------
Total assets $3,351,121 3,851,987
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $745,073 639,939
Accrued liabilities 584,493 524,116
Current liabilities of discontinued
operations - 271,292
----------- ----------
Total current liabilities 1,329,566 1,435,347
----------- ----------
Long-term debt 245,000 300,000
Deferred income taxes 239,352 265,402
Other long-term liabilities(a) 362,319 361,931
Noncurrent liabilities of discontinued
operations - 228,418
Minority interest 8,942 19,815
Shareholders' equity:
Common stock; $.001 par value; 300,000,000
shares authorized; 79,276,057 and 76,854,856
shares issued, respectively 79 77
Additional paid-in capital 983,837 914,319
Accumulated other comprehensive loss (9,857) (8,579)
Retained earnings 387,906 524,918
Treasury stock, at cost, 9,007,700
and 8,807,700 shares, respectively (196,023) (189,661)
----------- ----------
Total shareholders' equity 1,165,942 1,241,074
----------- ----------
Commitments and contingencies - -
----------- ----------
Total liabilities and shareholders' equity $3,351,121 3,851,987
=========== ==========
(a) Reflects the reclassification of tenant allowances for all
periods.
BARNES & NOBLE, INC. AND SUBSIDIARIES
Fourth Quarter Summary
Pro Forma as if the Company Owned 100% of Barnes & Noble.com
at the Beginning of Fiscal 2003
($ in millions, except per share amounts)
13 weeks ended 52 weeks ended
--------------- ---------------
January January January January
29, 31, 29, 31,
2005 2004 2005 2004
--------------- ---------------
Sales
Barnes & Noble Bookstores $1,521 1,454 4,454 4,221
Barnes & Noble.com (a) 152 152 420 428
------- ------- ------- -------
Total Book operating segment 1,673 1,606 4,874 4,649
Operating profit (loss)
Barnes & Noble Bookstores 204 194 279 233
Barnes & Noble.com (a) - (3) (35) (44)
------- ------- ------- -------
Total Book operating segment 204 191 244 189
Depreciation and amortization
Barnes & Noble Bookstores 40 39 158 160
Barnes & Noble.com (a) 5 6 24 25
------- ------- ------- -------
Total Book operating segment 45 45 182 185
EBITDA (Operating profit (loss) +
depreciation and amortization)
Barnes & Noble Bookstores 244 233 437 393
Barnes & Noble.com (a) 5 3 (11) (19)
------- ------- ------- -------
Total Book operating segment 249 236 426 374
EPS
Barnes & Noble Bookstores 1.51 1.40 2.07 1.75
Barnes & Noble.com (a) 0.01 (0.02) (0.28) (0.34)
------- ------- ------- -------
Total Book operating segment 1.52 1.38 1.79 1.41
Debt redemption charge (b) - - (0.11) -
------- ------- ------- -------
EPS from continuing operations 1.52 1.38 1.68 1.41
Discontinued operations - GameStop 0.04 0.30 0.25 0.50
------- ------- ------- -------
Consolidated GAAP EPS $1.56 1.68 1.93 1.91
------- ------- ------- -------
Weighted average shares
outstanding 73,960 79,514 75,696 77,105
(a) For pro forma purposes only, the company has included 100% of the
results of Barnes & Noble.com for all periods.
(b) One-time charge of $14.6 million associated with the redemption of
the convertible notes on June 28, 2004.
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 52 weeks ended
----------------------- -----------------------
January 29, January 31, January 29, January 31,
2005 2004 2005 2004
----------------------- -----------------------
Sales $1,672,772 1,606,011 4,873,595 4,649,000
Cost of sales and
occupancy(a)(b) 1,126,963 1,091,404 3,386,619 3,276,713
----------- ----------- ----------- -----------
Gross profit 545,809 514,607 1,486,976 1,372,287
----------- ----------- ----------- -----------
Selling and
administrative
expenses 295,630 277,269 1,052,345 989,155
Depreciation and
amortization(a) 44,601 44,806 181,553 185,293
Pre-opening expenses(b) 1,868 1,460 8,862 8,668
----------- ----------- ----------- -----------
Operating profit 203,710 191,072 244,216 189,171
Interest expense, net (670) (5,486) (11,028) (20,817)
Debt redemption charge - - (14,582) -
----------- ----------- ----------- -----------
Income before taxes
and minority
interest 203,040 185,586 218,606 168,354
Income taxes 87,667 76,359 94,001 69,001
----------- ----------- ----------- -----------
Income before
minority interest 115,373 109,227 124,605 99,353
Minority interest (3,076) (2,391) (1,230) (537)
----------- ----------- ----------- -----------
Income from
continuing
operations 112,297 106,836 123,375 98,816
Income from
discontinued
operations (net of
income tax) 3,331 25,343 20,001 40,571
----------- ----------- ----------- -----------
Net income $115,628 132,179 143,376 139,387
=========== =========== =========== ===========
Basic income per common
share:
Income from
continuing
operations $1.60 1.58 1.79 1.50
Income from
discontinued
operations 0.05 0.38 0.29 0.61
----------- ----------- ----------- -----------
Net income $1.65 1.96 2.08 2.11
=========== =========== =========== ===========
Diluted income per
common share:
Income from
continuing
operations $1.52 1.38 1.68 1.41
Income from
discontinued
operations 0.04 0.30 0.25 0.50
----------- ----------- ----------- -----------
Net income $1.56 1.68 1.93 1.91
=========== =========== =========== ===========
Weighted average common
shares outstanding
Basic 69,894,000 67,575,000 69,018,000 65,989,000
Diluted 73,960,000 79,514,000 75,696,000 77,105,000
Percentage of sales:
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales and
occupancy 67.4% 68.0% 69.5% 70.5%
----------- ----------- ----------- -----------
Gross profit 32.6% 32.0% 30.5% 29.5%
----------- ----------- ----------- -----------
Selling and
administrative
expenses 17.7% 17.3% 21.6% 21.3%
Depreciation and
amortization 2.7% 2.8% 3.7% 4.0%
Pre-opening expenses 0.1% 0.1% 0.2% 0.2%
----------- ----------- ----------- -----------
Operating profit 12.2% 11.9% 5.0% 4.1%
Interest expense, net 0.0% -0.3% -0.2% -0.4%
Debt redemption charge 0.0% 0.0% -0.3% 0.0%
----------- ----------- ----------- -----------
Income before taxes
and minority
interest 12.1% 11.6% 4.5% 3.6%
Income taxes 5.2% 4.8% 1.9% 1.5%
----------- ----------- ----------- -----------
Income before
minority interest 6.9% 6.8% 2.6% 2.1%
Minority interest -0.2% -0.1% 0.0% 0.0%
----------- ----------- ----------- -----------
Income from
continuing
operations 6.7% 6.7% 2.5% 2.1%
=========== =========== =========== ===========
(a) Reflects the reclassification of tenant allowances from a
reduction in depreciation expense to a reduction in occupancy
expense for all periods.
(b) Reflects the reclassification and restatement of rent holiday
(store build-out period) to reduce occupancy expense and increase
pre-opening expense for all periods.
CONTACT: Barnes & Noble, Inc.
Media:
Mary Ellen Keating, 212-633-3323
Senior Vice President
Corporate Communications
or
Investors:
Joseph J. Lombardi, 212-633-3215
Chief Financial Officer