Exhibit 99.1
Barnes & Noble Reports Second Quarter Results;
Achieves Sales and Earnings Guidance;
Initiates Quarterly Cash Dividend of $0.15 Per Share
NEW YORK--(BUSINESS WIRE)--Aug. 18, 2005--Barnes & Noble, Inc. (NYSE: BKS),
the world's largest bookseller, today reported sales and earnings for the second
quarter ended July 30, 2005. In addition, the company announced that its Board
of Directors has authorized the initiation of a quarterly cash dividend of $0.15
per share for shareholders of record at the close of business on September 9,
2005, payable on September 30, 2005.
Sales for the second quarter were $1,170.8 million, an increase of 6% from
$1,100.3 million a year ago. Sales at Barnes & Noble stores were $1,028.9
million, increasing 7% over the prior year. Comparable store sales at Barnes &
Noble were 4.3% for the quarter, in line with company guidance for a mid-single
digit increase. Sales at Barnes & Noble.com increased 14% over the prior year to
$96.3 million. Sales at B. Dalton stores were $31.6 million, a decrease of (21%)
over the prior year, due primarily to store closings offset by a 0.2% comparable
store sales increase.
Net earnings for the quarter were $13.5 million, or $0.18 per share,
including a previously announced non-cash after-tax charge of $1.1 million, or
$0.02 per share, to write off unamortized deferred financing fees resulting from
the replacement of the company's $400 million credit facility with a new $850
million credit facility, and the pre-payment and cancellation of the company's
$245 million term loan. Excluding this charge, earnings were $0.20 per share in
line with guidance of $0.19 to $0.21.
Second quarter net earnings per share increased $0.06 to $0.18 versus $0.12
last year, but were impacted by the following: the write off noted above, the
2004 charge associated with calling the convertible notes, and the 2004 spin-off
of GameStop. Earnings per share from continuing operations, excluding charges,
increased 18% to $0.20 from $0.17 last year, as presented in Table A.
Included in second quarter selling and administrative expenses are pretax
charges of approximately $6.9 million for legal costs and increased accruals for
anticipated settlements of a previously reported class action suit on employee
wages and other litigation. The company believes the resulting accruals will be
sufficient to satisfy outcomes of pending litigation.
"We are pleased with our second quarter results," said Steve Riggio, chief
executive officer of Barnes & Noble, Inc. "The excitement generated by 'Harry
Potter and the Half-Blood Prince' boosted our traffic both in stores and online.
Our business is on track as we prepare for the all important second half of the
year."
SHARE REPURCHASE ACTIVITY
The company acquired approximately $90 million and $164 million of shares
under its share repurchase programs in the second quarter and year-to-date,
respectively.
"Our strong commitment to continuing to create shareholder value is
evidenced by the declaration of our first ever cash dividend. This dividend,
supported by the company's excellent free cash flow and strong balance sheet,
reflects our confidence in the future growth of Barnes & Noble," said Leonard
Riggio, chairman of Barnes & Noble, Inc.
GUIDANCE
For the third quarter, the company expects comparable store sales at Barnes
& Noble stores to be in the low-single digits. For the full year, the company
continues to expect comparable store sales to increase approximately 3%.
In the third quarter, the company expects a net loss per share of ($0.01)
to ($0.04) based on a basic share count of approximately 68.5 million, as
compared to earnings per share from continuing operations of $0.00 in the prior
year. Guidance for the third quarter includes incremental costs of approximately
($0.03) per share associated with the previously announced new distribution
center that became operational in August.
For the full year, the company continues to expect earnings per share to be
in a range of $1.94 to $1.98, based on a diluted share count of approximately
73.6 million.
As of July 30, 2005, the company operated 673 Barnes & Noble stores and 146
B. Dalton stores. During the second quarter, five Barnes & Noble stores were
opened and three were closed. Four B. Dalton stores were closed during the
quarter.
A conference call with Barnes & Noble, Inc.'s senior management will be
webcast beginning at 11:00 A.M. ET on Thursday, August 18, 2005, and is
accessible at www.barnesandnobleinc.com/webcasts. The call will also be archived
at www.earnings.com for one year.
Barnes & Noble, Inc. will report third quarter earnings on or about
November 17, 2005.
ABOUT BARNES & NOBLE, INC.
Barnes & Noble, Inc. (NYSE:BKS - News), the world's largest bookseller and
a Fortune 500 company, operates 819 bookstores in 50 states. For the fourth 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 online bookseller for quality among
e-commerce companies, according to the latest EquiTrend survey.
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
Consolidated Statements of Operations
(In thousands, except per share data)
13 weeks ended 26 weeks ended
----------------------- ---------------------
July 30, July 31, July 30, July 31,
2005 2004 2005 2004
Restated Restated
(a) (b) (a) (b)
------------ ---------- ---------- ----------
Sales $1,170,800 1,100,349 2,267,970 2,158,546
Cost of sales and
occupancy 826,401 775,719 1,596,220 1,526,133
------------ ---------- ---------- ----------
Gross profit 344,399 324,630 671,750 632,413
------------ ---------- ---------- ----------
Selling and
administrative expenses 276,471 252,620 542,530 497,054
Depreciation and
amortization 43,198 45,812 86,509 90,737
Pre-opening expenses 2,662 2,247 5,109 4,895
------------ ---------- ---------- ----------
Operating profit 22,068 23,951 37,602 39,727
Interest expense, net (665) (3,706) (994) (8,203)
Debt redemption charge - (14,582) - (14,582)
------------ ---------- ---------- ----------
Income before taxes
and minority
interest 21,403 5,663 36,608 16,942
Income taxes 8,722 2,308 14,918 6,895
------------ ---------- ---------- ----------
Income before
minority interest 12,681 3,355 21,690 10,047
Minority interest 786 496 1,683 1,034
------------ ---------- ---------- ----------
Income from
continuing
operations 13,467 3,851 23,373 11,081
Income from discontinued
operations (net of
income tax) - 4,883 - 9,098
------------ ---------- ---------- ----------
Net income $13,467 8,734 23,373 20,179
============ ========== ========== ==========
Basic income per common
share:
Income from
continuing
operations $0.20 0.06 0.34 0.17
Income from
discontinued
operations - 0.07 - 0.13
------------ ---------- ---------- ----------
Net income $0.20 0.13 0.34 0.30
============ ========== ========== ==========
Diluted income per
common share:
Income from
continuing
operations $0.18 0.05 0.32 0.16
Income from
discontinued
operations - 0.07 - 0.12
------------ ---------- ---------- ----------
Net income $0.18 0.12 0.32 0.28
============ ========== ========== ==========
Weighted average common
shares outstanding
Basic 68,323 68,591 69,023 68,369
Diluted 73,087 71,052 73,743 70,884
Percentage of sales:
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales and
occupancy 70.6% 70.5% 70.4% 70.7%
------------ ---------- ---------- ----------
Gross profit 29.4% 29.5% 29.6% 29.3%
------------ ---------- ---------- ----------
Selling and
administrative expenses 23.6% 23.0% 23.9% 23.0%
Depreciation and
amortization 3.7% 4.2% 3.8% 4.2%
Pre-opening expenses 0.2% 0.2% 0.2% 0.2%
------------ ---------- ---------- ----------
Operating profit 1.9% 2.2% 1.7% 1.8%
Interest expense, net -0.1% -0.3% 0.0% -0.4%
Debt redemption charge 0.0% -1.3% 0.0% -0.7%
------------ ---------- ---------- ----------
Income before taxes
and minority
interest 1.8% 0.5% 1.6% 0.8%
Income taxes 0.7% 0.2% 0.7% 0.3%
------------ ---------- ---------- ----------
Income before
minority interest 1.1% 0.3% 1.0% 0.5%
Minority interest 0.1% 0.0% 0.1% 0.0%
------------ ---------- ---------- ----------
Income from
continuing
operations 1.2% 0.3% 1.0% 0.5%
============ ========== ========== ==========
(a) Restated to reflect certain adjustments relating to lease
accounting.
(b) Reflects the change in the reporting period used to consolidate
the results of Barnes & Noble.com.
BARNES & NOBLE, INC. AND
SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share
data)
July 30, July 31, January 29,
2005 2004 2005
Restated
(a)(b)
----------- ---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $21,315 22,860 535,652
Receivables, net 112,114 84,530 91,501
Merchandise inventories 1,336,174 1,311,745 1,274,578
Prepaid expenses and other
current assets 102,443 112,059 85,140
Current assets of discontinued
operations - 372,616 -
----------- ---------- ----------
Total current assets 1,572,046 1,903,810 1,986,871
Property and equipment:
Land and land improvements 3,247 3,247 3,247
Buildings and leasehold
improvements 976,579 883,650 940,616
Fixtures and equipment 1,121,202 1,041,931 1,081,966
----------- ---------- ----------
2,101,028 1,928,828 2,025,829
Less accumulated depreciation
and amortization 1,293,732 1,146,274 1,221,169
----------- ---------- ----------
Net property and equipment 807,296 782,554 804,660
----------- ---------- ----------
Goodwill 265,901 262,067 268,379
Intangible assets, net 95,351 100,663 97,538
Deferred taxes 124,152 138,917 123,231
Other noncurrent assets 36,861 14,839 37,710
Noncurrent assets of discontinued
operations - 478,320 -
----------- ---------- ----------
Total assets $2,901,607 3,681,170 3,318,389
=========== ========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $760,806 647,909 745,073
Accrued liabilities 475,987 413,571 580,509
Current liabilities of
discontinued operations - 216,435 -
----------- ---------- ----------
Total current liabilities 1,236,793 1,277,915 1,325,582
Long-term debt 9,000 257,400 245,000
Deferred income taxes 193,743 170,458 193,743
Other long-term liabilities 379,134 382,529 379,180
Noncurrent liabilities of
discontinued operations - 291,899 -
Minority interest 6,442 3,594 8,942
Shareholders' equity:
Common stock; $.001 par value;
300,000 shares authorized;
81,337, 78,302 and 79,276
shares issued, respectively 81 78 79
Additional paid-in capital 1,037,321 958,627 985,609
Accumulated other comprehensive
loss (10,347) (8,872) (9,857)
Retained earnings 409,507 543,565 386,134
Treasury stock, at cost, 13,503,
9,008 and 9,008 shares,
respectively (360,067) (196,023) (196,023)
----------- ---------- ----------
Total shareholders' equity 1,076,495 1,297,375 1,165,942
----------- ---------- ----------
Commitments and contingencies - - -
----------- ---------- ----------
Total liabilities and
shareholders' equity $2,901,607 3,681,170 3,318,389
=========== ========== ==========
(a) Restated to reflect certain adjustments relating to lease
accounting.
(b) Reflects the change in the reporting period used to consolidate
the results of Barnes & Noble.com.
Table A
BARNES & NOBLE, INC. AND SUBSIDIARIES
Second Quarter EPS Reconciliation
Second Quarter
------------------
2005 2004
--------- --------
GAAP EPS $0.18 0.12
Add: 2005 write off of fees 0.02 -
Add: 2004 convertible debt redemption charge - 0.12
Less: Share of GameStop's net earnings prior to
the spin-off - (0.07)
--------- --------
EPS from continuing operations, excluding other
charges $0.20 0.17
========= ========
CONTACT: Barnes & Noble, Inc.
Media:
Mary Ellen Keating
Senior Vice President Corporate Communications
212-633-3323
or
Investor:
Joseph J. Lombardi
Chief Financial Officer
212-633-3215