Current Report


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 8-K


CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934


Date of report (Date of earliest event reported)

December 1, 2011

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

Delaware
(State or Other Jurisdiction of Incorporation)

1-12302 06-1196501
(Commission File Number) (IRS Employer Identification No.)

122 Fifth Avenue, New York, NY   10011
(Address of Principal Executive Offices)   (Zip Code)

(212) 633-3300
(Registrant’s Telephone Number, Including Area Code)

 
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 2.02  Results of Operations and Financial Condition

On December 1, 2011, Barnes & Noble, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended October 29, 2011 (the “Press Release”).  A copy of the Press Release is attached hereto as Exhibit 99.1.

The information in this Form 8-K and the Exhibit attached hereto pertaining to the Company’s financial results shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Use of Non-GAAP Financial Information

To supplement the Company’s consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), in the press release attached hereto as Exhibit 99.1 the Company uses the non-GAAP financial measure of EBITDA (defined by the Company as earnings before interest, taxes, depreciation and amortization).

The Company’s management reviews this non-GAAP measure internally to evaluate the Company’s performance and manage its operations.  The Company believes that the inclusion of EBITDA results provides investors useful and important information regarding the Company’s operating results. The non-GAAP measure included in the press release attached hereto as Exhibit 99.1 has been reconciled to the comparable GAAP measure as required under SEC rules regarding the use of non-GAAP financial measures.  The Company urges investors to carefully review the GAAP financial information included as part of the Company’s Annual Report on Form 10-K/A, Quarterly Reports on Form 10-Q, and quarterly earnings releases.


Item 9.01  Financial Statements and Exhibits

(d)  Exhibits

99.1  Press Release of Barnes & Noble, Inc., dated December 1, 2011


SIGNATURE

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 hereunto duly authorized.


BARNES & NOBLE, INC.

(Registrant)
 
 
 

 

 

By:

/s/ Allen Lindstrom

Allen Lindstrom

Interim Chief Financial Officer

 
 

Date:

December 1, 2011


Barnes & Noble, Inc.

EXHIBIT INDEX



Exhibit Number

Description

 
99.1

Press Release of Barnes & Noble, Inc., dated December 1, 2011

Exhibit 99.1

Barnes & Noble Reports Fiscal 2012 Second Quarter Financial Results

EBITDA Increases 21% over the Prior Year

Comparable Store Sales Increase 10.9% over the Three Day Holiday Weekend

NOOK Tablet™ Becomes Fastest Selling NOOK™ Product

NEW YORK--(BUSINESS WIRE)--December 1, 2011-- Barnes & Noble, Inc. (NYSE: BKS) today reported sales and earnings for its second quarter ended October 29, 2011.

SECOND QUARTER SALES

Total sales decreased 0.6% as compared to the prior year, from $1.90 billion to $1.89 billion. Barnes & Noble store (“Retail”) sales decreased 1% from $931 million to $918 million, with comparable sales decreasing 0.6%. Physical book sales declined, offset by increases in NOOK products and were positively affected by the liquidation of the remaining Borders stores. Comparable store sales improved each month throughout the quarter.

Barnes & Noble College (“College”) sales declined 4% from $797 million to $768 million, due to a shift from selling new and used textbooks to lower priced, higher margin textbook rentals. Comparable store sales increased 0.4%. College comparable store sales reflect the retail selling price of a new or used textbook when rented, rather than solely the rental fee received and amortized over the rental period.

BN.com sales increased 17% over the prior year, from $177 million to $206 million. Comparable sales increased 38%, on top of a 59% increase a year ago. This increase was driven by continued growth of digital content sales and purchases of award winning NOOK™ devices. BN.com comparable sales reflect the actual selling price for eBooks sold under the agency model rather than solely the commission received.

SECOND QUARTER EARNINGS

Earnings before interest, taxes, depreciation and amortization (EBITDA) grew 21% over the prior year, from $46 million to $56 million.

Retail EBITDA grew from $1.3 million to $21.0 million, benefiting from higher product margins this year. In addition, the prior year included $10 million of litigation and proxy contest costs. College EBITDA declined slightly from $95.3 million to $93.9 million. BN.com EBITDA losses increased from $50.2 million to $58.9 million, driven by planned product markdowns on the recently announced NOOK price adjustments, as well as higher advertising production costs.

Total company net loss was $6.6 million for the quarter, or $0.17 per share, as compared to a net loss of $12.6 million last year, or $0.22 per share. Included in the current quarter is a $0.06 loss per share related to the company’s preferred stock dividend, in accordance with ASC 260, Earnings per Share. The dividend is deducted from earnings available to common shareholders in the earnings per share calculation and does not impact the company’s results of operations.


BARNES & NOBLE LAUNCHES NOOK Tablet™

On November 7, 2011, Barnes & Noble launched NOOK Tablet, the company’s fastest and lightest tablet with the best in entertainment. msnbc.com cited the product as a “terrific tablet,” The Associated Press called it “really impressive” and Forrester Research Inc. called it a “wow product”. In the first few weeks of launch, NOOK Tablet has become the fastest selling NOOK product in the company’s history.

Concurrent with the launch of NOOK Tablet, the company also announced enhancements and new low prices for NOOK Color™ and NOOK Simple Touch™, retailing at $199 and $99, respectively.

The newly updated NOOK Simple Touch continues to earn high praise from leading tech review outlets. CNET, PCMag and Laptop Magazine rank it among their top-rated touch eReaders with all three naming it “Editor’s Choice” and this week, PC World rated NOOK Simple Touch the #1 eReader (11/29/11).

The consolidated NOOK business across all of the company’s segments, including sales of digital content, device hardware and related accessories, increased 85% in the second quarter to $220 million, on a comparable sales basis.

“The launch of NOOK Tablet, combined with the product enhancements to NOOK Color and $99 NOOK Simple Touch, represents the highest-quality portfolio of digital reading products on the market at incredible values,” said William Lynch, chief executive officer of Barnes & Noble, Inc. “We expect to sell millions of devices during our third quarter, adding to the millions of current NOOK customers. This growing base of customers buying digital content from Barnes & Noble will continue to position us as one of the fastest growing companies in this exploding digital content market, and we project this will generate significant returns on our investments for years to come.”

HOLIDAY RESULTS TO DATE

Over the three-day holiday weekend, comparable store sales increased 10.9% at Barnes & Noble stores, on top of 17% comparable store growth last year. “Based on early sales and traffic results in stores we are encouraged by our prospects for this upcoming holiday,” added William Lynch.

FULL YEAR GUIDANCE

The company expects full year EBITDA to be at the lower end of the previously issued range of $210 million to $250 million. Although the company has seen and continues to expect increases in retail earnings from plan, it plans to invest more heavily in customer acquisition activities to fuel NOOK digital growth. These investments primarily include promotional activity and advertising for NOOK products, as well as technology costs related to developing other opportunities.

CONFERENCE CALL

A conference call with Barnes & Noble, Inc.’s senior management will be webcast beginning at 10:00 A.M. ET on Thursday, December 1, 2011, and is accessible at www.barnesandnobleinc.com/webcasts .

Barnes & Noble, Inc. will report holiday sales on or about January 5, 2012.


ABOUT BARNES & NOBLE, INC.

Barnes & Noble, Inc. (NYSE:BKS), the world's largest bookseller and a Fortune 500 company, operates 703 bookstores in 50 states. Barnes & Noble College Booksellers, LLC, a wholly-owned subsidiary of Barnes & Noble, also operates 637 college bookstores serving over 4.6 million students and faculty members at colleges and universities across the United States. Barnes & Noble conducts its online business through BN.com ( www.bn.com ), one of the Web's largest e-commerce sites, which also features more than two million titles in its NOOK Bookstore™ ( www.bn.com/ebooks ). Through Barnes & Noble’s NOOK™ eReading product offering, customers can buy and read digital books and content on the widest range of platforms, including NOOK devices, partner company products, and the most popular mobile and computing devices using free NOOK software.

General information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the company's corporate website: www.barnesandnobleinc.com .

NOOK®, NOOK Tablet™, NOOK Simple Touch ™, NOOK 1st Edition™, NOOK 1st Edition Wi-Fi™, NOOK Color™, Reader’s Tablet™, PagePerfect™, Best-Text™, Fast Page™, NOOK Books™, NOOK Store™, NOOK Bookstore™, NOOK Newsstand™, NOOK Magazines™, VividView™, ArticleView™, NOOK Newspapers™, NOOK Comics™, NOOK Cloud™, NOOK Apps™, FREE NOOK Reading Apps™, PubIt!™, NOOK Discover™, NOOK Kids™, Read and Play™, Read to Me™, Read and Record™, NOOK Digital Shop™, Read In Store™, More In Store™, NOOK Friends™, LendMe®, NOOK Library™, NOOK Boutiques™, The Barnes & Noble Promise™, NOOK Books en español™, NOOK Study™, Free Friday™, Lifetime Library™ and Read What You Love. Anywhere You Like™ are trademarks of Barnes & Noble, Inc. Other trademarks referenced in this release are the property of their respective owners.

Follow Barnes & Noble on Twitter ( www.bn.com/twitter ), Facebook ( http://www.facebook.com/barnesandnoble ) and YouTube ( http://www.youtube.com/user/bnstudio ).

FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) and information relating to Barnes & Noble that are based on the beliefs of the management of Barnes & Noble as well as assumptions made by and information currently available to the management of Barnes & Noble. When used in this communication, the words "anticipate," "believe," "estimate," "expect," "intend," "plan," "will" and similar expressions, as they relate to Barnes & Noble or the management of Barnes & Noble, identify forward-looking statements.

Such statements reflect the current views of Barnes & Noble with respect to future events, the outcome of which is subject to certain risks, including, among others, the general economic environment and consumer spending patterns, decreased consumer demand for Barnes & Noble's products, low growth or declining sales and net income due to various factors, risk that international expansion will not be successfully achieved or may be achieved later than expected, possible disruptions in Barnes & Noble's computer systems, telephone systems or supply chain, possible risks associated with data privacy, information security and intellectual property, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, the risk that the expected sales lift from Borders’ store closures is not achieved in whole or part, the risk that digital sales growth is less than expectations and the risk that it does not exceed the rate of investment spend, higher-than-anticipated store closing or relocation costs, higher interest rates, the performance of Barnes & Noble's online, digital and other initiatives, the performance and successful integration of acquired businesses, the success of Barnes & Noble's strategic investments, unanticipated increases in merchandise, component or occupancy costs, unanticipated adverse litigation results or effects, product and component shortages, and other factors which may be outside of Barnes & Noble's control, including those factors discussed in detail in Item 1A, "Risk Factors," in Barnes & Noble's Annual Report on Form 10-K and Form 10-K/A, and in Barnes & Noble's other filings made hereafter from time to time with the SEC.

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 Barnes & Noble or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. Barnes & Noble undertakes 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 communication.


BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
                           
                 
13 weeks ended 13 weeks ended 26 weeks ended 26 weeks ended
October 29, 2011   October 30, 2010 October 29, 2011   October 30, 2010
 
Sales $ 1,891,961 1,904,146 $ 3,310,365

 

3,299,989
Cost of sales and occupancy   1,420,297   1,454,026     2,451,143     2,498,169  
Gross profit   471,664   450,120     859,222     801,820  
Selling and administrative expenses 415,632 403,822 826,750 786,231
Depreciation and amortization   57,755   56,777     113,427     113,681  
Operating loss (1,723 ) (10,479 ) (80,955 ) (98,092 )
Interest expense, net   8,460   12,791     17,901     26,053  
Loss before taxes (10,183 ) (23,270 ) (98,856 ) (124,145 )
Income taxes   (3,620 ) (10,690 )   (35,687 )   (49,023 )
Net loss (6,563 ) (12,580 ) (63,169 ) (75,122 )
Net loss attributable to noncontrolling interests   -   12     -     37  
Net loss attributable to Barnes & Noble, Inc. $ (6,563 ) (12,568 ) $ (63,169 )

 

(75,085 )
 
 
Basic loss per common share:
Loss attributable to Barnes & Noble, Inc. available $ (0.17 ) (0.22 ) $ (1.16 )

 

(1.34 )
for common shareholders
 
Diluted loss per common share:
Loss attributable to Barnes & Noble, Inc. available $ (0.17 ) (0.22 ) $ (1.16 )

 

(1.34 )
for common shareholders
 
Weighted average common shares outstanding
Basic 57,261 56,708 57,207 56,239
Diluted 57,261 56,708 57,207 56,239
 
Dividends declared per common share $ - 0.25 $ -

 

0.50
 
Percentage of sales:
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales and occupancy   75.1 % 76.4 %   74.0 %   75.7 %
Gross profit   24.9 % 23.6 %   26.0 %   24.3 %
Selling and administrative expenses 22.0 % 21.2 % 25.0 % 23.8 %
Depreciation and amortization   3.1 % 3.0 %   3.4 %   3.4 %
Operating loss -0.1 % -0.6 % -2.4 % -3.0 %
Interest expense, net   0.4 % 0.7 %   0.5 %   0.8 %
Loss before taxes -0.5 % -1.2 % -3.0 % -3.8 %
Income taxes   -0.2 % -0.6 %   -1.1 %   -1.5 %
Net loss -0.3 % -0.7 % -1.9 % -2.3 %
 
 

BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
               
         
October 29, 2011 October 30, 2010
ASSETS
Current assets:
Cash and cash equivalents $ 23,633

 

30,163
Receivables, net 240,600 185,253
Merchandise inventories 1,836,740 1,761,118
Prepaid expenses and other current assets   180,352     126,326  
Total current assets   2,281,325     2,102,860  
 
Property and equipment:
Land and land improvements 8,617 8,617
Buildings and leasehold improvements 1,220,869 1,210,233
Fixtures and equipment   1,725,135     1,638,652  
2,954,621 2,857,502
Less accumulated depreciation and amortization   2,280,551     2,101,057  
Net property and equipment   674,070     756,445  
 
Goodwill 521,899 526,327
Intangible assets, net 574,964 573,789
Other noncurrent assets   55,794     59,845  
Total assets $ 4,108,052  

 

4,019,266  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,461,981

 

1,318,744
Accrued liabilities 724,136 608,301
Short-term note payable   -     100,000  
Total current liabilities   2,186,117     2,027,045  
 
Long-term debt 274,900 376,900
Long-term deferred taxes 275,868 310,712
Other long-term liabilities 418,923 481,426
 
Redeemable Preferred Shares; $.001 par value; 5,000 191,681 -
shares authorized; 204 and zero shares issued, respectively
 
Shareholders' equity:
Common stock; $.001 par value; 300,000 shares
authorized; 90,856 and 90,231 shares issued, respectively 91 90
Additional paid-in capital 1,331,983 1,313,678
Accumulated other comprehensive loss (11,630 ) (13,212 )
Retained earnings 495,830 576,277
Treasury stock, at cost, 33,527 and 33,360 shares, respectively   (1,055,711 )   (1,053,650 )
Total shareholders' equity   760,563     823,183  
Commitments and contingencies   -     -  
Total liabilities and shareholders' equity $ 4,108,052  

 

4,019,266  
 
 

BARNES & NOBLE, INC. AND SUBSIDIARIES
Segment Information
(In thousands)
                             
                   
13 weeks ended 13 weeks ended 26 weeks ended 26 weeks ended
October 29, 2011 October 30, 2010 October 29, 2011 October 30, 2010
 
Sales
Barnes & Noble Retail $ 917,576

 

930,793 $ 1,918,141

 

1,957,062
Barnes & Noble College 768,463 796,650 988,254 1,021,512
Barnes & Noble.com   205,922     176,703     403,970     321,415  
Total $ 1,891,961     1,904,146   $ 3,310,365     3,299,989  
 
Gross Profit
Barnes & Noble Retail $ 273,069

 

269,714 $ 567,935

 

565,385
Barnes & Noble College 167,588 169,150 218,744 219,847
Barnes & Noble.com   31,007     11,256     72,543     16,588  
Total $ 471,664     450,120   $ 859,222     801,820  
 
Selling and Administrative Expenses
Barnes & Noble Retail $ 252,052

 

268,449 $ 501,400

 

538,599
Barnes & Noble College 73,684 73,869 135,642 134,099
Barnes & Noble.com   89,896     61,504     189,708     113,533  
Total $ 415,632     403,822   $ 826,750     786,231  
 
EBITDA
Barnes & Noble Retail $ 21,017

 

1,265 $ 66,535

 

26,786
Barnes & Noble College 93,904 95,281 83,102 85,748
Barnes & Noble.com   (58,889 )   (50,248 )   (117,165 )   (96,945 )
Total $ 56,032     46,298   $ 32,472     15,589  
 
Net Income (Loss)
EBITDA $ 56,032 46,298 $ 32,472 15,589
Depreciation and Amortization (57,755 ) (56,777 ) (113,427 ) (113,681 )
Interest Expense, net (8,460 ) (12,791 ) (17,901 ) (26,053 )
Income Taxes   3,620     10,690     35,687     49,023  
Total $ (6,563 )   (12,580 ) $ (63,169 )   (75,122 )
 
 
 
Percentage of sales:
 
Gross Margin
Barnes & Noble Retail 29.8 % 29.0 % 29.6 % 28.9 %
Barnes & Noble College 21.8 % 21.2 % 22.1 % 21.5 %
Barnes & Noble.com   15.1 %   6.4 %   18.0 %   5.2 %
Total 24.9 % 23.6 % 26.0 % 24.3 %
 
Selling and Administrative Expenses
Barnes & Noble Retail 27.5 % 28.8 % 26.1 % 27.5 %
Barnes & Noble College 9.6 % 9.3 % 13.7 % 13.1 %
Barnes & Noble.com   43.7 %   34.8 %   47.0 %   35.3 %
Total 22.0 % 21.2 % 25.0 % 23.8 %

CONTACT:
Media Contact:
Barnes & Noble, Inc.
Mary Ellen Keating, 212-633-3323
Senior Vice President
Corporate Communications
mkeating@bn.com
or
Investor Contacts:
Barnes & Noble, Inc.
Allen W. Lindstrom, 212-633-3340
Interim Chief Financial Officer
alindstrom@bn.com
or
Barnes & Noble, Inc.
Andy Milevoj, 212-633-3489
Director of Investor Relations
amilevoj@bn.com