Exhibit 99.1
Barnes & Noble Reports Preliminary Third
Quarter Financial Results: Achieves Earnings per Share Guidance
Declares Quarterly Dividend
NEW YORK--(BUSINESS WIRE)--Nov. 16, 2006--Barnes & Noble, Inc. (NYSE: BKS),
the world's largest bookseller, today reported preliminary financial results for
the third quarter ended October 28, 2006. The company also announced that its
Board of Directors declared a quarterly cash dividend of $0.15 per share for
stockholders of record at the close of business on December 8, 2006, payable on
December 29, 2006.
Sales for the third quarter increased 3% to $1.1 billion. Barnes &
Noble store sales increased 4% to $972.1 million, with comparable
store sales increasing 2.0% for the quarter. B. Dalton sales were
$20.5 million for the quarter, a 28% decrease due to store closings
and a 5.0% comparable store sales decline. Barnes & Noble.com sales
were $95.8 million for the quarter, a 0.5% comparable sales decline
compared to the prior year period.
Bestselling titles during the quarter included Dianne Setterfield's "The
Thirteenth Tale," Mitch Album's "For One More Day," Barack Obama's "The Audacity
of Hope," Lemony Snicket's "The End" and John Grisham's "The Innocent Man."
Third quarter preliminary net losses were $2.8 million or $0.04 per share,
in-line with company guidance of a loss of $0.04 to $0.08 per share. Third
quarter results include a $0.03 per share impact due to stock compensation
expense as the company has adopted Statement of Financial Accounting Standards
No. 123(R) (As Amended), "Share-Based Payment" (SFAS 123(R)), and began
expensing stock options at the beginning of fiscal year 2006.
As discussed below in more detail, the company will not be in a position to
finalize its financial results and the related financial statements until the
special committee of its Board of Directors has completed its internal review of
the company's historical option grant practices with the assistance of
independent legal counsel, and the company is able to determine what, if any,
impact the results of that investigation will have on its financial statements.
GUIDANCE
For the fourth quarter, the company expects comparable store sales at
Barnes & Noble stores to range from flat to an increase in the low
single-digits. Based on year-to-date results and current trends, the company now
expects full year comparable store sales to range from flat to a slight increase
over last year.
Barnes & Noble, Inc.'s fourth quarter earnings per share is expected to be
in a range of $1.86 to $1.96. The company continues to expect full year earnings
per share to be in a range of $2.20 to $2.30. Incorporated in the company's
fourth quarter and full year guidance are stock compensation expenses of $0.03
per share and a $0.14 per share, respectively, due to the adoption of SFAS
123(R) noted above.
As of October 28, 2006, the company operated 692 Barnes & Noble stores and
109 B. Dalton stores. During the third quarter, 11 Barnes & Noble stores were
opened and six were closed. Three B. Dalton stores were closed during the
quarter.
REVIEW OF STOCK OPTION PRACTICES
As previously announced, a special committee of Barnes & Noble's Board of
Directors is conducting an internal review of the company's historical stock
option grant practices. The committee, which has retained independent legal
counsel, is working to complete its review of the company's historical stock
option grant practices in a timely manner.
At this time, the committee and independent legal counsel have not finished
their work and have not reached any conclusions. Accordingly, the company has
not yet determined whether it will be required to record additional non-cash
stock based compensation expense related to stock option grants, and the
preliminary results, related financial statements and guidance set forth above
do not include any such additional charges and are subject to adjustment based
on the results of the internal review.
Given these circumstances, the company will not be in a position to file
its Quarterly Report on Form 10-Q for the quarter ended October 28, 2006 in a
timely manner. The company plans to become current in its periodic reports
required under the Securities Exchange Act of 1934, as amended, as soon as
practicable following the completion of the committee's review. Additionally,
the company will not purchase shares under its stock repurchase program until it
completes all required filings.
A conference call with Barnes & Noble, Inc.'s senior management will be
webcast beginning at 11:00 A.M. ET on Thursday, November 16, 2006, 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 holiday sales on or about January 4, 2007.
ABOUT BARNES & NOBLE, INC.
Barnes & Noble, Inc. (NYSE: BKS), the world's largest bookseller and a
Fortune 500 company, operates 801 bookstores in 50 states. For the fifth 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, the results of the
internal review of the company's stock option practices and the related
inquiries by the Securities and Exchange Commission and the U.S. Department of
Justice and related stockholder derivative lawsuits, 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
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 39 weeks ended
----------------------- -----------------------
October 28, October 29, October 28, October 29,
2006 2005 2006 2005
----------------------- -----------------------
Sales $1,111,958 1,081,785 3,382,852 3,349,755
Cost of sales and
occupancy 780,933 761,808 2,363,555 2,359,117
----------- ----------- ----------- -----------
Gross profit 331,025 319,977 1,019,297 990,638
----------- ----------- ----------- -----------
Selling and
administrative
expenses 290,391 272,280 850,212 813,721
Depreciation and
amortization 41,694 43,892 123,466 130,401
Pre-opening expenses 4,501 4,161 10,486 9,270
----------- ----------- ----------- -----------
Operating profit
(loss) (5,561) (356) 35,133 37,246
Interest expense, net (894) (917) (108) (1,911)
----------- ----------- ----------- -----------
Income (loss)
before taxes and
minority interest (6,455) (1,273) 35,025 35,335
Income taxes (2,630) (519) 14,273 14,399
----------- ----------- ----------- -----------
Income (loss)
before minority
interest (3,825) (754) 20,752 20,936
Minority interest 1,053 1,081 3,043 2,764
----------- ----------- ----------- -----------
Net income (loss) $(2,772) 327 23,795 23,700
=========== =========== =========== ===========
Income (loss) per
common share:
Basic $(0.04) 0.00 0.36 0.35
Diluted $(0.04) 0.00 0.34 0.33
Weighted average
common shares
outstanding
Basic 64,947 66,819 65,254 68,288
Diluted 64,947 71,257 69,244 72,915
Percentage of sales:
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales and
occupancy 70.2% 70.4% 69.9% 70.4%
----------- ----------- ----------- -----------
Gross profit 29.8% 29.6% 30.1% 29.6%
----------- ----------- ----------- -----------
Selling and
administrative
expenses 26.1% 25.2% 25.1% 24.3%
Depreciation and
amortization 3.7% 4.1% 3.6% 3.9%
Pre-opening expenses 0.4% 0.4% 0.3% 0.3%
----------- ----------- ----------- -----------
Operating profit
(loss) -0.5% 0.0% 1.0% 1.1%
Interest expense, net -0.1% -0.1% 0.0% -0.1%
----------- ----------- ----------- -----------
Income (loss)
before taxes and
minority interest -0.6% -0.1% 1.0% 1.1%
Income taxes -0.2% 0.0% 0.4% 0.4%
----------- ----------- ----------- -----------
Income (loss)
before minority
interest -0.3% -0.1% 0.6% 0.6%
Minority interest 0.1% 0.1% 0.1% 0.1%
----------- ----------- ----------- -----------
Net income (loss) -0.2% 0.0% 0.7% 0.7%
=========== =========== =========== ===========
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share data)
- ----------------------------------------------------------------------
October 28, October 29, January 28,
2006 2005 2006
----------- ----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $19,888 23,038 372,586
Receivables, net 129,053 115,823 99,117
Merchandise inventories 1,639,013 1,563,502 1,313,997
Prepaid expenses and other
current assets 80,363 126,714 74,476
----------- ----------- -----------
Total current assets 1,868,317 1,829,077 1,860,176
----------- ----------- -----------
Property and equipment:
Land and land improvements 3,247 3,247 3,247
Buildings and leasehold
improvements 982,849 993,536 984,535
Fixtures and equipment 1,284,023 1,143,168 1,174,973
----------- ----------- -----------
2,270,119 2,139,951 2,162,755
Less accumulated depreciation
and amortization 1,464,750 1,331,551 1,356,379
----------- ----------- -----------
Net property and equipment 805,369 808,400 806,376
----------- ----------- -----------
Goodwill 260,637 264,826 263,731
Intangible assets, net 91,814 94,548 93,834
Deferred taxes 115,400 124,603 114,046
Other noncurrent assets 11,943 24,072 25,969
----------- ----------- -----------
Total assets $3,153,480 3,145,526 3,164,132
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $1,016,564 1,009,006 828,852
Accrued liabilities 530,453 536,191 683,816
----------- ----------- -----------
Total current liabilities 1,547,017 1,545,197 1,512,668
----------- ----------- -----------
Long-term debt 34,100 62,000 -
Deferred taxes 158,035 193,743 158,035
Other long-term liabilities 374,035 369,038 367,531
Minority interest 5,829 5,349 10,057
Shareholders' equity:
Common stock; $.001 par value;
300,000 shares authorized;
84,528, 81,659 and 83,370
shares issued, respectively 85 82 83
Additional paid-in capital 1,134,306 1,045,852 1,091,018
Accumulated other comprehensive
loss (8,713) (10,271) (9,085)
Retained earnings 506,474 399,553 512,594
Treasury stock, at cost,
19,520, 16,315 and 16,690
shares, respectively (597,688) (465,017) (478,769)
----------- ----------- -----------
Total shareholders' equity 1,034,464 970,199 1,115,841
----------- ----------- -----------
Commitments and contingencies - - -
----------- ----------- -----------
Total liabilities and
shareholders' equity $3,153,480 3,145,526 3,164,132
=========== =========== ===========
CONTACT: Barnes & Noble, Inc.
Media:
Mary Ellen Keating, 212-633-3323
Senior Vice President
Corporate Communications
or
Investor:
Joseph J. Lombardi, 212-633-3215
Chief Financial Officer