Barnes & Noble Second Quarter Report: EPS Significantly Exceeds Estimates; Plans to File IPO for GameStop.Business Editors NEW YORK--(BUSINESS WIRE)--Aug. 23, 2001 Barnes Barnes, former municipal borough, SE England. See Richmond upon Thames. & Noble, Inc. (NYSE NYSE See: New York Stock Exchange :BKS BKS Barracks BKS Best Kept Secret (gaming) BKS Bildung, Kultur Und Sport (German) BKS Brookside (city) BKS Bergen Kirurgiske Sykehus (Bergen, Norway) ), the nation's largest bookseller, today reported Barnes & Noble "super" store sales for the second quarter ended August 4, 2001 were $772.5 million, up 8.3 percent from last year and represented 92 percent of total bookstore sales. Comparable store sales were up 3.0 percent, as previously reported. GameStop GameStop Corporation (NYSE: GME), headquartered in Grapevine, Texas, a suburb of Dallas, is the world's largest video game and entertainment software retailer. The company operates over 4,900 retail stores throughout Japan, U.S. (formerly Babbage's) sales were $206.8 million, up 62.6 percent from last year, while comparable store sales increased by 33.1 percent. Retail net earnings were $9.6 million or $0.15 per share for the quarter compared to $4.5 million or $0.07 per share for the prior year. The company's share of pro-forma losses at Barnes & Noble.com improved to $(11.3) million from $(15.7) million for the prior year. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: pro-forma EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. also improved significantly to $0.00 in the second quarter from $(0.11) in the prior year, exceeding consensus estimates by $0.12 per share. As a result of the strong performance of GameStop and of the present conditions in the video game marketplace, the company has decided to file a registration in the next several days for the purpose of consummating a public offering in the near future. The company anticipates using a portion of the proceeds to reduce inter-company debt and the remainder to capitalize To regard the cost of an improvement or other purchase as a capital asset for purposes of determining Income Tax liability. To calculate the net worth upon which an investment is based. To issue company stocks or bonds to finance an investment. GameStop for future growth. Information concerning prior years' monthly comparable sales for the bookstore business, as well as additional segment details, is attached to this release. Also included are comparable store sales and comparable gross margins for GameStop. On the conference call scheduled for Thursday Thursday: see week. , August 23, 2001, at 11:00 a.m., the company will issue guidance on comparable store increases for August and September September: see month. , as well as a discussion of earnings for the balance of the year. "In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the very positive trends we have experienced in the second quarter and owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de the uncertain economic conditions with which we are confronted, our earnings guidance for the year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. remains unchanged," said Leonard Leon·ard , Ray Charles Known as "Sugar Ray." Born 1956. American boxer who won the 1976 Olympic light welterweight title. He held five world titles as both a welterweight and middleweight between 1979 and 1987. Noun 1. Riggio, chairman and chief executive officer of Barnes & Noble, Inc. "The bookstore business is obviously doing quite well at this time, and the video game business is growing rapidly. However, we'd we'd 1. Contraction of we had. 2. Contraction of we should. 3. Contraction of we would. we'd have ~would like to let a few more months go by before concluding that these trends will continue." The conference call will be simulcast Simulcast is a portmanteau of "simultaneous broadcast", and refers to programs or events broadcast across more than one medium, or more than one service on the same medium, at the same time. on the Web at (www.streetfusion.com) and is accessible at (http://www.barnesandnobleinc.com/financials), where it will be archived until September Until September is a 1984 romantic drama set in France. It stars Karen Allen as an American tourist in Paris who falls in love with a married Frenchman (Thierry Lhermitte). External links 22, 2001. This press release does not constitute an offer of any securities for sale. About Barnes & Noble, Inc. Barnes & Noble, Inc. (NYSE: BKS) operates 569 Barnes & Noble and 331 B. Dalton Dalton, city (1990 pop. 21,761), seat of Whitfield co., extreme NW Ga., in the Appalachian valley; inc. 1847. It is a highly industrialized city in a farm area. bookstores, and GameStop (formerly Babbage's), is the nation's largest operator of video game and entertainment software stores with 990 stores. Barnes & Noble stores stock an authoritative selection of book titles and provide access to more than one million titles. They offer books from more than 50,000 publisher imprints with an emphasis on small, independent publishers and university presses. Barnes & Noble is one of the world's largest booksellers on the World Wide Web (http://www.bn.com), and the premiere bookseller on America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. Online's (Keyword (1) A word used in a text search. (2) A word in a text document that is used in an index to best describe the contents of the document. (3) A reserved word in a programming or command language. 1. : bn) proprietary network. Barnes & Noble.com has the largest standing inventory of any online bookseller. Barnes & Noble also publishes books under its own imprint im·print tr.v. im·print·ed, im·print·ing, im·prints 1. To produce (a mark or pattern) on a surface by pressure. 2. To produce a mark on (a surface) by pressure. 3. for exclusive sale through its retail stores and Web site. General financial information on Barnes & Noble, Inc. can be obtained via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by visiting the company's corporate Web site: http://www.barnesandnobleinc.com/financials. SAFE HARBOR Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. This press release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ." 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. costs, higher interest rates, the performance of the company's online and other initiatives, the successful integration of acquired businesses, unanticipated increases in merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain or occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal , unanticipated adverse litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called 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.
Second Quarter Summary
($ in millions, except per share amounts)
13 weeks ended 26 weeks ended
-------------------- ----------------------
August 4, July 29, August 4, July 29,
2001 2000 2001 2000
--------- --------- --------- ----------
Barnes & Noble Booksellers
Sales $ 842.7 $ 797.0 $ 1,650.6 $ 1,571.3
EBITDA 56.6 58.1 104.1 111.0
Depreciation 28.0 28.8 56.5 57.2
Goodwill amortization 0.3 0.9 0.6 1.8
Operating profit 28.3 28.4 47.0 52.0
Interest expense 4.7 7.9 10.2 14.3
Pretax earnings 23.6 20.5 36.8 37.8
Net earnings 13.8 12.0 21.5 22.1
EPS 0.21 0.19 0.33 0.35
GameStop
(formerly Babbage's Etc.)
Sales 206.8 127.3 408.2 247.3
EBITDA 5.3 (2.6) 7.2 1.8
Depreciation 4.7 2.9 9.1 4.9
Goodwill amortization 2.8 2.0 5.6 3.7
Operating loss (2.2) (7.5) (7.5) (6.8)
Interest expense 0.1 0.3 0.1 0.3
Pretax loss (2.3) (7.8) (7.6) (7.1)
Net loss before
acquisition financing
cost (1.3) (4.6) (4.4) (4.1)
EPS before acquisition
financing cost (0.02) (0.07) (0.07) (0.06)
Acquisition financing
cost (0.04) (0.05) (0.09) (0.08)
--------- --------- --------- ----------
EPS (0.06) (0.12) (0.16) (0.14)
Retail Net Earnings 9.6 4.5 10.8 13.0
Retail EPS 0.15 0.07 0.17 0.21
Investing & Other
Barnes & Noble.com (1) (11.3) (15.7) (23.5) (26.4)
Other investments (5.4) (4.5) (8.3) (8.5)
ABA legal and settlement
cost - - (4.5) -
EPS (0.15) (0.18) (0.33) (0.32)
Consolidated pro-forma
EPS (1) $ (0.00) $ (0.11) $ (0.16) $ (0.11)
Consolidated EPS, as
reported $ (0.03) $ (0.13) $ (0.20) $ (0.20)
Weighted average shares
outstanding 66,172,000 64,126,000 65,689,000 64,165,000
(1) Pro-forma results are presented for informational purposes only
and are not prepared in accordance with generally accepted
accounting principles. Such results present the net loss of
barnesandnoble.com inc., excluding stock-based compensation
and equity in net loss of equity investments including
amortization of intangibles.
Comparable Sales Trend
----------------------------------------------------------------------
2001 2000
----------- --------
"Super" Stores
--------------
February 2.9% 7.8%
March 3.6% 4.2%
April (0.2)% 9.0%
----------- --------
1st Quarter 2.3% 6.7%
May 6.2% 4.4%
June 4.2% 4.5%
July 0.7% 11.7%
----------- --------
2nd Quarter 3.0% 6.6%
August 6.7%
September 7.0%
October 2.9%
--------
3rd Quarter 5.6%
November 0.7%
December 1.3%
January 5.2%
--------
4th Quarter 2.1%
--------
Total 4.9%
========
B. Dalton Bookseller
--------------------
February (2.6)% (0.7)%
March 1.0% (7.4)%
April (4.5)% 2.5%
----------- --------
1st Quarter (1.8)% (2.5)%
May 0.5% (1.6)%
June (0.5)% (3.9)%
July (10.8)% 9.4%
----------- --------
2nd Quarter (4.9)% 0.9%
August 3.4%
September (2.3)%
October (7.8)%
--------
3rd Quarter (2.2)%
November (6.4)%
December (2.4)%
January 1.1%
--------
4th Quarter (2.6)%
--------
Total (1.7)%
========
======================================================================
GameStop
Comparable Store Sales and Gross Margin
2001
----------------------------------------------------------------------
--------- ------------
Sales Gross Margin
--------- ------------
GameStop
--------
1st Quarter 13.3% 3.9% (1)
2nd Quarter 33.1% 30.0%
----------- --------
Fiscal 2001 YTD 22.6% 16.3%
========== ========
(1) Heavy PS2 sales
======================================================================
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(thousands of dollars, except per share data)
(unaudited)
13 weeks ended
-----------------------------------
August 4, 2001 July 29, 2000
--------------- ---------------
Sales $ 1,050,018 924,330
Cost of sales and occupancy 774,696 676,263
--------------- ---------------
Gross profit 275,322 248,067
--------------- ---------------
Selling and administrative
expenses 214,691 190,712
Depreciation and amortization 36,560 34,562
Pre-opening expenses 896 1,848
--------------- ---------------
Operating profit 23,175 20,945
Interest expense, net (9,830) (13,283)
Equity in net loss of
Barnes & Noble.com (13,906) (17,940)
Other expense, net (2,328) (4,502)
--------------- ---------------
Loss before taxes (2,889) (14,780)
Income taxes (1,199) (6,134)
--------------- ---------------
Net loss $ (1,690) (8,646)
=============== ===============
Loss per common share:
Basic $ (0.03) (0.13)
Diluted $ (0.03) (0.13)
Weighted average common shares
outstanding
Basic 66,172,000 64,126,000
Diluted 66,172,000 64,126,000
Percentage of sales:
Sales 100.0% 100.0%
Cost of sales and occupancy 73.8% 73.2%
--------------- ---------------
Gross profit 26.2% 26.8%
--------------- ---------------
Selling and administrative
expenses 20.4% 20.6%
Depreciation and amortization 3.5% 3.7%
Pre-opening expenses 0.1% 0.2%
--------------- ---------------
Operating profit 2.2% 2.3%
Interest expense, net -0.9% -1.4%
Equity in net loss of
Barnes & Noble.com -1.3% -1.9%
Other expense, net -0.2% -0.5%
--------------- ---------------
Loss before taxes -0.2% -1.6%
Income taxes -0.1% -0.7%
--------------- ---------------
Net loss -0.1% -0.9%
=============== ===============
26 weeks ended
-----------------------------------
August 4, 2001 July 29, 2000
--------------- ---------------
Sales $ 2,059,655 1,818,586
Cost of sales and occupancy 1,525,282 1,330,430
--------------- ---------------
Gross profit 534,373 488,156
--------------- ---------------
Selling and administrative
expenses 424,861 371,991
Depreciation and amortization 73,283 67,567
Pre-opening expenses 1,721 3,331
--------------- ---------------
Operating profit 34,508 45,267
Interest expense, net (21,107) (23,056)
Equity in net loss of
Barnes & Noble.com (28,221) (35,538)
Other expense, net (7,713) (8,536)
--------------- ---------------
Loss before taxes (22,533) (21,863)
Income taxes (9,351) (9,073)
--------------- ---------------
Net loss $ (13,182) (12,790)
=============== ===============
Loss per common share:
Basic $ (0.20) (0.20)
Diluted $ (0.20) (0.20)
Weighted average common shares
outstanding
Basic 65,689,000 64,165,000
Diluted 65,689,000 64,165,000
Percentage of sales:
Sales 100.0% 100.0%
Cost of sales and occupancy 74.1% 73.2%
--------------- ---------------
Gross profit 25.9% 26.8%
--------------- ---------------
Selling and administrative expenses 20.6% 20.5%
Depreciation and amortization 3.6% 3.7%
Pre-opening expenses 0.1% 0.2%
--------------- ---------------
Operating profit 1.6% 2.5%
Interest expense, net -1.0% -1.3%
Equity in net loss of
Barnes & Noble.com -1.4% -2.0%
Other expense, net -0.4% -0.5%
--------------- ---------------
Loss before taxes -1.2% -1.2%
Income taxes -0.5% -0.5%
--------------- ---------------
Net loss -0.7% -0.7%
=============== ===============
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(thousands of dollars, except per share data)
August 4, 2001 July 29, 2000 February 3, 2001
--------------- ---------------- -----------------
(unaudited)
ASSETS
Current assets:
Cash and cash
equivalents $ 26,107 33,294 26,003
Receivables, net 83,466 68,950 84,505
Merchandise
inventories 1,267,082 1,121,094 1,238,618
Prepaid expenses and
other current assets 103,686 70,046 106,127
-------- ------- -------
Total current
assets 1,480,341 1,293,384 1,455,253
---------- ---------- ---------
Property and equipment:
Land and land
improvements 3,247 3,247 3,247
Buildings and leasehold
improvements 446,545 434,381 436,289
Fixtures and equipment 725,998 625,523 682,444
-------- -------- -------
1,175,790 1,063,151 1,121,980
Less accumulated
depreciation and
amortization 626,937 492,632 555,760
-------- -------- -------
Net property and
equipment 548,853 570,519 566,220
-------- -------- -------
Intangible assets,
net 351,606 423,794 359,192
Investment in Barnes &
Noble.com 108,374 204,993 136,595
Other noncurrent assets 46,688 61,117 40,216
------- ------- -------
Total assets $2,535,862 2,553,807 2,557,476
=========== ========== =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 626,409 578,193 582,075
Accrued liabilities 255,563 214,431 353,000
-------- -------- -------
Total current
liabilities 881,972 792,624 935,075
-------- -------- -------
Long-term debt 676,300 745,000 666,900
Deferred income taxes 72,622 122,220 74,289
Other long-term
liabilities 100,485 92,522 103,535
Shareholders' equity:
Common stock; $.001
par value;
300,000,000 shares
authorized; 72,326,161,
69,696,902 and
70,549,176 shares
issued, respectively 72 70 71
Additional paid-in
capital 715,459 656,963 673,122
Accumulated other
comprehensive loss (8,224) (5,126) (5,874)
Retained earnings 214,553 266,911 227,735
Treasury stock, at
cost, 5,504,700
shares (117,377) (117,377) (117,377)
--------- --------- ---------
Total shareholders'
equity 804,482 801,441 777,677
--------- --------- ---------
Commitments and
contingencies - - -
Total liabilities
and shareholders'
equity $2,535,862 2,553,807 2,557,476
=========== ========== ==========
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