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) |
August 21, 2012 |
| 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 August 21, 2012, Barnes & Noble, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended July 28, 2012 (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, 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 August 21, 2012
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/ Michael P. Huseby |
|
Michael P. Huseby |
|||
|
Chief Financial Officer |
|||
|
Date: |
August 21, 2012 |
||
Barnes & Noble, Inc.
|
Exhibit Number |
Description |
| 99.1 |
Press Release of Barnes & Noble, Inc., dated August 21, 2012 |
Exhibit 99.1
Barnes & Noble Reports Fiscal 2013 First Quarter Financial Results
Digital Content Sales Increase 46%
Bookstore Comparable Sales Increase 4.6%
Retail EBITDA Increases 88% to $75 million
NEW YORK--(BUSINESS WIRE)--August 21, 2012-- Barnes & Noble, Inc. (NYSE: BKS) today reported sales and earnings for its fiscal 2013 first quarter ended July 28, 2012.
First quarter consolidated revenues increased 2.5% to $1.5 billion as compared to the prior year. First quarter consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) was $4 million as compared to a loss of $24 million a year ago. The consolidated first quarter net loss declined 28% as compared to the prior year to $41.0 million, or $0.78 per share.
“During the first quarter, we continued to see improvement in both our rapidly growing NOOK business, which saw digital content sales increase 46% during the quarter, and at our bookstores, which continue to benefit from market consolidation and strong sales of the Fifty Shades series,” said William Lynch, Chief Executive Officer of Barnes & Noble. “The growth in comps at retail and the continued strong growth of our digital content business, as well as increased cost management focus, were drivers in the business turning from an EBITDA loss last year to slightly positive EBITDA in the first quarter of this year. As announced yesterday, we are excited to expand our award winning NOOK digital bookstore and devices beyond the U.S. market and to work with U.K. retailers to bring millions of U.K. customers the best experience in digital reading.”
First Quarter 2013 Results from Operations
Segment results for the fiscal 2013 and fiscal 2012 first quarters are as follows:
| Revenues | EBITDA | ||||||||||||||||||||||||||||||||||||||||||||
| $ in millions | Increase/(Decrease) | Increase/(Decrease) | |||||||||||||||||||||||||||||||||||||||||||
| Q1 2013 | Q1 2012 | $ | % | Q1 2013 | Q1 2012 | $ | % | ||||||||||||||||||||||||||||||||||||||
| Retail | $ | 1,119 | $ | 1,097 | $ | 22 | 2.0 | % | $ | 75 | $ | 40 | $ | 35 |
87.8 |
% | |||||||||||||||||||||||||||||
| College | 221 | 220 | 0 | 0.1 | % | (14 | ) | (12 | ) | (2 | ) | -15.0 | % | ||||||||||||||||||||||||||||||||
| NOOK | 192 | 191 | 1 | 0.3 | % | (57 | ) | (51 | ) | (6 | ) | -11.1 | % | ||||||||||||||||||||||||||||||||
| Elimination (1) | (79 | ) | (91 | ) | 12 | -13.4 | % | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||
| Total | $ | 1,454 | $ | 1,418 | $ | 35 | 2.5 | % | $ | 4 | ($24 | ) | $ | 27 |
116.3 |
% | |||||||||||||||||||||||||||||
(1) Represents the elimination of intercompany sales from NOOK to Barnes & Noble Retail and Barnes & Noble College on a sell through basis.
Retail
The Retail segment, which consists of the Barnes & Noble bookstores and BN.com businesses, had revenues of $1.1 billion for the quarter, increasing 2% over the prior year. Comparable bookstore sales increased 4.6% for the quarter, as compared to the prior year period. Comparable bookstore sales continued to benefit from the liquidation of Borders’ bookstores in fiscal 2012 and strong sales of the Fifty Shades of Grey series. Core comparable bookstore sales, which exclude sales of NOOK products, increased 7.6% for the quarter. BN.com sales continued to decline for the quarter.
Retail earnings before interest, taxes, depreciation and amortization (EBITDA) increased from $40 million to $75 million during the first quarter, an 88% increase, driven by comparable sales increases, a higher mix of higher margin core products and increased store productivity.
College
The College segment, which consists of the Barnes & Noble College bookstores business, had revenues of $221 million during this non-back-to-school rush period. Comparable College store sales decreased 2.0% for the quarter, as compared to the prior year period. 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.
College EBITDA losses increased by $2 million during the quarter from a loss of $12 million a year ago to a loss of $14 million, driven by new store expenses and investments in digital education.
NOOK
The NOOK segment, which consists of the company’s digital business (including Readers, digital content and accessories), had revenues of $192 million for the quarter, essentially flat as compared to last year. Digital content sales increased 46% for the first quarter. Digital content sales are defined to include digital books, digital newsstand, and the apps business. Device sales declined for the quarter due to lower average selling prices and production scaling issues surrounding the popular newly launched Glowlight product resulting in unmet demand.
NOOK EBITDA losses increased by $6 million, from a loss of $51 million to a loss of $57 million, as a result of product markdowns on the recently announced NOOK price adjustments, as well as continued investments in the NOOK business.
Newco Formation
On April 30 th , the company announced that it has formed a strategic partnership with Microsoft to form a new subsidiary, Newco, which is comprised of the company’s NOOK digital and College businesses. The company continues to be actively engaged in the formation of Newco and is in the process of implementing the work necessary to complete the Microsoft transaction. The company expects the Microsoft transaction to close this Fall.
Fiscal 2012 Segment Information
On June 19, 2012, the company announced that it completed an evaluation of its reporting segments, and reported fourth quarter and full year results for a new NOOK operating segment. At the end of this release, the company is providing segment information for all four quarters of fiscal 2012.
Conference Call
A conference call with Barnes & Noble, Inc.’s senior management will be webcast beginning at 10:00 A.M. ET on Tuesday, August 21, 2012, and is accessible at www.barnesandnobleinc.com/webcasts .
Barnes & Noble, Inc. will report fiscal 2013 second quarter earnings on or about November 20, 2012.
About Barnes & Noble, Inc.
Barnes & Noble, Inc. (NYSE:BKS), the leading retailer of content, digital media and educational products, operates 689 bookstores in 50 states. Barnes & Noble College Booksellers, LLC, a wholly-owned subsidiary of Barnes & Noble, also operates 667 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 2.5 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. Barnes & Noble is proud to be named a J.D. Power and Associated 2012 Customer Service Champion and is only one of 50 U.S. companies so named. Barnes & Noble.com is ranked the number one online retailer in customer satisfaction in the book, music and video category and a Top 10 online retailer overall in customer satisfaction according to ForeSee E-Retail Satisfaction Index (Spring Top 100 Edition).
General information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the company's corporate website: www.barnesandnobleinc.com .
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, possible risks that inventory in channels of distribution may be larger than able to be sold, possible risk that returns from consumers or channels of distribution may be greater than estimated, 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, the potential adverse impact on the business resulting from the review of a potential separation of the NOOK digital business, the risk that the transactions contemplated by the partnership with Microsoft to form Newco, including with respect to any spin-off, split-off or other disposition by Barnes & Noble of its interest in Newco, are not able to be implemented on the terms contemplated or in the anticipated timeframe, or at all, the risk that the transactions do not achieve the expected benefits for the parties including the risk that Newco’s applications are not commercially successful or that the expected distribution of those applications is not achieved, the risk that the separation of the NOOK digital and College businesses or any subsequent spin-off, split-off or other disposition by Barnes & Noble of its interest in Newco results in adverse impacts on Company or Newco (including as a result of termination of agreements and other adverse impacts), the potential impact on Barnes & Noble’s retail business of the separation, the potential tax consequences for Barnes & Noble and its shareholders of a subsequent spin-off, split-off or other disposition by Barnes & Noble of its interest in Newco, the risk that the international expansion contemplated by the relationship is not successful or is delayed, the risk that Newco is not able to perform its obligations under the commercial agreement, including with respect to the development of applications and international expansion, and the consequences thereof, the costs and disruptions arising out of any such separation of the NOOK digital and College businesses, the risk that Barnes & Noble may not recoup its investments in the NOOK digital business as part of any separation transaction, the risks, difficulties, and uncertainties that may result from the separation of businesses that were previously co-mingled including necessary ongoing relationships, and potential for adverse customer impacts 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. Our forward looking statements relating to international expansion are also subject to the following risks, among others that may affect the introduction, success and timing of the NOOK e-reader and content in countries outside the United States: we may not be successful in reaching agreements with international companies, the terms of agreements that we reach may not be advantageous to us, our NOOK device may require technological changes to comply with applicable laws, and marketplace acceptance and other companies have already entered the marketplace with products that have achieved some customer acceptance.
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 | ||||||
| July 28, 2012 | July 30, 2011 | ||||||
| Sales | $ | 1,453,507 | 1,418,404 | ||||
| Cost of sales and occupancy | 1,039,619 | 1,030,846 | |||||
| Gross profit | 413,888 | 387,558 | |||||
| Selling and administrative expenses | 410,055 | 411,118 | |||||
| Depreciation and amortization | 58,035 | 55,671 | |||||
| Operating loss | (54,202 | ) | (79,231 | ) | |||
| Interest expense, net | 8,941 | 9,442 | |||||
| Loss before taxes | (63,143 | ) | (88,673 | ) | |||
| Income taxes | (22,163 | ) | (32,067 | ) | |||
| Net loss | $ | (40,980 | ) | (56,606 | ) | ||
| Loss per common share: | |||||||
| Basic | $ | (0.78 | ) | (0.99 | ) | ||
| Diluted | $ | (0.78 | ) | (0.99 | ) | ||
| Weighted average common shares outstanding | |||||||
| Basic | 58,021 | 57,153 | |||||
| Diluted | 58,021 | 57,153 | |||||
| Percentage of sales: | |||||||
| Sales | 100.0 | % | 100.0 | % | |||
| Cost of sales and occupancy | 71.5 | % | 72.7 | % | |||
| Gross profit | 28.5 | % | 27.3 | % | |||
| Selling and administrative expenses | 28.2 | % | 29.0 | % | |||
| Depreciation and amortization | 4.0 | % | 3.9 | % | |||
| Operating loss | -3.7 | % | -5.6 | % | |||
| Interest expense, net | 0.6 | % | 0.7 | % | |||
| Loss before taxes | -4.3 | % | -6.3 | % | |||
| Income taxes | -1.5 | % | -2.3 | % | |||
| Net loss | -2.8 | % | -4.0 | % | |||
| BARNES & NOBLE, INC. AND SUBSIDIARIES | ||||||||
| Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| July 28, 2012 | July 30, 2011 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 20,221 | $ | 22,353 | ||||
| Receivables, net | 144,297 | 156,543 | ||||||
| Merchandise inventories | 1,947,422 | 1,814,436 | ||||||
| Prepaid expenses and other current assets | 192,316 | 156,632 | ||||||
| Total current assets | 2,304,256 | 2,149,964 | ||||||
| Property and equipment: | ||||||||
| Land and land improvements | 2,541 | 8,617 | ||||||
| Buildings and leasehold improvements | 1,200,928 | 1,208,454 | ||||||
| Fixtures and equipment | 1,804,193 | 1,690,529 | ||||||
| 3,007,662 | 2,907,600 | |||||||
| Less accumulated depreciation and amortization | 2,410,984 | 2,228,562 | ||||||
| Net property and equipment | 596,678 | 679,038 | ||||||
| Goodwill | 518,578 | 523,006 | ||||||
| Intangible assets, net | 562,522 | 563,034 | ||||||
| Other noncurrent assets | 62,650 | 56,615 | ||||||
| Total assets | $ | 4,044,684 | $ | 3,971,657 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,387,004 | $ | 1,275,708 | ||||
| Accrued liabilities | 474,467 | 403,667 | ||||||
| Gift card liabilities | 312,855 | 301,249 | ||||||
| Total current liabilities | 2,174,326 | 1,980,624 | ||||||
| Long-term debt | 302,800 | 509,600 | ||||||
| Long-term deferred taxes | 268,410 | 279,716 | ||||||
| Other long-term liabilities | 397,415 | 434,334 | ||||||
| Redeemable Preferred Shares; $.001 par value; 5,000 | 192,589 | - | ||||||
| shares authorized; 204 and zero shares issued, respectively | ||||||||
| Shareholders' equity: | ||||||||
| Common stock; $.001 par value; 300,000 shares | ||||||||
| authorized; 91,833 and 90,641 shares issued, respectively | 92 | 91 | ||||||
| Additional paid-in capital | 1,347,990 | 1,327,948 | ||||||
| Accumulated other comprehensive loss | (16,635 | ) | (11,630 | ) | ||||
| Retained earnings | 436,336 | 505,773 | ||||||
| Treasury stock, at cost, 33,743 and 33,453 shares, respectively | (1,058,639 | ) | (1,054,799 | ) | ||||
| Total shareholders' equity | 709,144 | 767,383 | ||||||
| Commitments and contingencies | - | - | ||||||
| Total liabilities and shareholders' equity | $ | 4,044,684 | $ | 3,971,657 | ||||
| BARNES & NOBLE, INC. AND SUBSIDIARIES | |||||||
| Loss Per Share | |||||||
| (In thousands, except per share data) | |||||||
| 13 weeks ended | |||||||
| July 28, 2012 | July 30, 2011 | ||||||
| Numerator for basic loss per share: | |||||||
| Loss attributable to Barnes & Noble, Inc. | $ | (40,980 | ) | (56,606 | ) | ||
| Preferred stock dividends | (3,942 | ) | - | ||||
| Accretion of dividends on preferred stock | (316 | ) | - | ||||
| Net loss available to common shareholders | $ | (45,238 | ) | (56,606 | ) | ||
| Numerator for diluted loss per share: | |||||||
| Net loss available to common shareholders | $ | (45,238 | ) | (56,606 | ) | ||
| Denominator for basic and diluted loss per share: | |||||||
| Basic weighted average common shares | 58,021 | 57,153 | |||||
| Loss per common share | |||||||
| Basic | $ | (0.78 | ) | (0.99 | ) | ||
| Diluted | $ | (0.78 | ) | (0.99 | ) | ||
CONTACT:
Barnes & Noble, Inc.
Media:
Mary
Ellen Keating, 212-633-3323
Senior Vice President
Corporate
Communications
mkeating@bn.com
or
Investors:
Andy
Milevoj, 212-633-3489
Vice President, Investor Relations
amilevoj@bn.com