Barnes & Noble.com Reports Q3 2000 Sales of $74.1 Million, Up 58% Year Over Year.Business Editors NEW YORK--(BUSINESS WIRE)--Oct. 30, 2000 Gains Market Share In Online Book Sector Gross Margin Grows to 20.1%, Up From 15.5% in Q2 2000 Barnes Barnes, former municipal borough, SE England. See Richmond upon Thames. & Noble.com (Nasdaq: BNBN) (www.bn.com) announced today results for the third quarter ended September September: see month. 30, 2000. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the third quarter were $74.1 million, an increase of 58 percent from $47.0 million for the third quarter of 1999. Sales for the nine months ended September 30, 2000 were $215.5 million, up 83 percent from $117.5 million in the corresponding period a year ago. P. The pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss for the third quarter of 2000 was ($36.9) million, or ($0.25) per share. For the nine months ended September 30, 2000, the pro forma net loss was ($104) million, or ($0.71) per share. The third quarter 2000 results are in line with the analysts' consensus 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. estimates. In the third quarter gross margin increased to 20.1 percent, from 15.5 percent in the second quarter of 2000. This significant margin improvement is the result of increased direct buying due to the opening of the company's state-of-the-art distribution center in Memphis. Also aiding the gross margin improvements was a reduction of both promotional activities and deep discounting bestsellers. Total third quarter operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , excluding depreciation and losses in equity method investees, as a percentage of sales were 64 percent, down from 72 percent in the second quarter of 2000 and 72 percent in the third quarter of 1999, reflecting leveraging of general and administrative expenses and reduced marketing spending. With the addition of more than 760,000 customers in the third quarter, customer accounts grew sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen by 14 percent, to total more than 6.3 million, from 5.5 million at the end of the second quarter. Repeat customer orders reached 71 percent at the end of the third quarter, a significant increase from 63 percent a year ago, reflecting increased customer loyalty. As of September 30, 2000, the company had $286 million in cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has and no debt. "We are pleased with our third quarter results, and we are confident that our significant sales growth and continued market share gains in the online book market are further evidence that Barnes & Noble.com is the destination of choice for more and more bookbuyers on the Web," said Steve v. t. 1. To pack or stow, as cargo in a ship's hold. See Steeve. Riggio, vice chairman of Barnes & Noble.com. "We also announced a number of initiatives during the quarter that we believe will build even more momentum for our company, notably our major integration plans with Barnes & Noble stores, our landmark agreement with Yahoo!, which has both online and in-store components, our planned acquisition of Fatbrain.com and the opening of our eBookStore. Together, these elements underscore The underscore character (_) is often used to make file, field and variable names more readable when blank spaces are not allowed. For example, NOVEL_1A.DOC, FIRST_NAME and Start_Routine. (character) underscore - _, ASCII 95. our commitment to leverage the Barnes & Noble network of retail stores and Web site as well our commitment to be the leading destination for the sale of books and intellectual property." Recent Highlights Integration with Barnes & Noble Stores Last week Barnes & Noble.com and Barnes & 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) ) announced three major integration initiatives to provide new levels of service and convenience to the tens of millions of customers who shop in Barnes & Noble stores and at Barnes & Noble.com. The initiatives are: - Internet Service Counters powered by Barnes & Noble.com will be installed in all 551 Barnes & Noble superstores. The new counters will enable customers to order any book or other product through Barnes & Noble.com at any Barnes & Noble store. - A membership loyalty program, called "Readers' Advantage," offers additional discounts and benefits in Barnes & Noble stores and at Barnes & Noble.com for a $25 annual membership fee. - Barnes & Noble.com customers may return books and music CDs purchased at Barnes & Noble.com to any Barnes & Noble store and receive merchandise store credits. Yahoo! In September, Barnes & Noble.com, Barnes & Noble, Inc. and Yahoo! Inc. (Nasdaq: YHOO YHOO Yahoo! Inc. (NASDAQ symbol) ) announced a landmark marketing relationship that leverages the online and offline resources of the three companies. Barnes & Noble.com is the premier bookseller featured throughout the Yahoo! directory The Yahoo! Directory is a web directory which rivals the Open Directory Project in size. The directory was Yahoo!'s first offering. When Yahoo! changed to crawler-based listings for its main results in October 2002, the human-edited directory's significance dropped, but it is still (www.yahoo.com) and a featured merchant on Yahoo! Shopping. The Yahoo! site features Barnes & Noble.com graphic links on every search results page in the Yahoo! directory and book category pages in the Yahoo! directory. The in-store retail component of the agreement teams Barnes & Noble, Inc. and Yahoo! with Spinway Inc. to offer a free co-branded 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 service for Barnes & Noble retail customers. The service, which launched in mid-October n. 1. the middle part of October. Noun 1. mid-October - the middle part of October period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" , is promoted extensively in Barnes & Noble stores and includes the distribution of millions of ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. CDs to facilitate registrations. eBookStore In August Barnes & Noble.com opened its eBookStore, featuring Microsoft Reader Microsoft Reader is a Microsoft program for reading of e-books. The current version for desktops is 2.6.1 (Build), copyright 2000-2007, and requires Windows Vista Ultimate or Windows XP Tablet Edition - UMPC only. Version 2.1. technology for desktop PCs and laptop computers A portable computer that has a flat LCD screen and usually weighs less than eight pounds. Often called just a "laptop," it uses batteries for mobile use and AC power for charging the batteries and desktop use. Today's high-end laptops provide all the capabilities of most desktop computers. . The eBookStore is the first online retail bookstore to offer eBooks for the Microsoft Reader, and features works from more than 30 publishers. With the addition of Microsoft Reader to the eBookStore, Barnes & Noble.com is the only major e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. retailer to support three formats of eBooks: Microsoft Reader, Rocket eBook One of the first electronic books. Introduced in 1998 by NuvoMedia Inc., Palo Alto, CA, it weighed in at 22 ounces and held the equivalent of approximately 10 novels. Like a conventional book, the Rocket let you annotate in the margin, underline passages and set bookmarks. and Glassbook. In all, the eBookStore offers thousands of titles in these three formats. Fatbrain.com In September Barnes & Noble.com announced plans to acquire Fatbrain.com, Inc. (Nasdaq: FATB FATB Florida Association of Ticket Brokers ) (www.fatbrain.com), the third largest online bookseller specializing in professional and technical titles for the corporate marketplace, for $64 million in a combination of cash and stock. The transaction, which is subject to shareholder approval, has received Hart Scott Rodino Rodino may refer to:
Assuming a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. vote from shareholders of both companies, Barnes & Noble.com anticipates the transaction will close on or around November 30, 2000. Shortly thereafter, Barnes & Noble.com plans to issue forecasts that include Fatbrain.com for the fourth quarter 2000 and full year 2001. A conference call with Barnes & Noble.com's management will be simulcast on the Web at www.streetfusion.com beginning at 5 P.M. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. on Monday Monday: see week. , October October: see month. 30, 2000, and is accessible at www.bn.com\ir, where it will be archived until November 9, 2000. About Barnes & Noble.com Barnes & Noble.com is an Internet commerce company offering a comprehensive range of books and related information products. With more than five million unique visitors A count of how many different people access a Web site. For example, if a user leaves and comes back to the site five times during the measurement period, that person is counted as one unique visitor, but would count as five "user sessions. per month to its Web site, the company has the largest audience reach of any brick and mortar See bricks and mortar. company with an Internet presence. It stocks the largest in-stock selection of in-print book titles, supplemented by more than 12 million listings from its nationwide network of out-of-print, rare and used book dealers. Its college textbook textbook Informatics A treatise on a particular subject. See Bible. store offers a vast selection of new and used textbooks and its recently introduced eBookStore has established the company as a leader in the delivery of digital content and intellectual property. Barnes & Noble.com's excellence in e-commerce extends to the music business, where it was cited by Forbes Forbes , B(ertie) C(harles) 1880-1954. American publisher and businessman who founded and edited (1916-1954) Forbes magazine. His son Malcolm Stevenson Forbes .com as the No. 1 music site on the Web, for being "best-of-class A product considered to be superior within a certain category of hardware or software. It does not mean absolute best overall; for example, the best-of-class in a low-priced category may be seriously inferior to the best product on the market, which could sell for ten times as much. for anyone who wants to learn about the music they're they're Contraction of they are. they're be buying." The company's product ranges now include a full complement of information products, including DVD DVD: see digital versatile disc. DVD in full digital video disc or digital versatile disc Type of optical disc. The DVD represents the second generation of compact-disc (CD) technology. , video, software and PC games. The company's focus on information products is manifest manifest 1) adj., adv. completely obvious or evident. 2) n. a written list of goods in a shipment. MANIFEST, com. law. A written instrument containing a true account of the cargo of a ship or commercial vessel. 2. in its recently launched Barnes & Noble University, a distance learning forum offering free classes. Ranging from "Introduction to Programming" to "Introduction to XML XML in full Extensible Markup Language. Markup language developed to be a simplified and more structural version of SGML. It incorporates features of HTML (e.g., hypertext linking), but is designed to overcome some of HTML's limitations. " to "The Night Sky: An Introduction to Astronomy astronomy, branch of science that studies the motions and natures of celestial bodies, such as planets, stars, and galaxies; more generally, the study of matter and energy in the universe at large. "" to "Walking through Shakespeare," Barnes & Noble University has quickly established itself as a leading Internet hub for learning and community. 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 release may contain 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. regarding expectations of the company. These statements are based on the beliefs of the management of the company as well as assumptions made by and information currently available to the management of the company. Such statements reflect the current views of the company with respect to future events, the outcome of which is subject to certain risks, including among others general economic and market conditions, changes in product demand, the growth rate of Internet usage and e-commerce, possible disruptions in the company's computer or telephone systems, possible increases in shipping rates or interruptions in shipping service, effects of competition, the level and volatility of interest rates, changes in tax and other governmental rules and regulations applicable to the company and other factors, risks and uncertainties more specifically set forth in the company's public filings with the Securities and Exchange Commission. The forward-looking statements herein speak only as of the date of this release. The company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement included in this release to reflect any changes in the company's expectations or any changes in events, conditions, or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or on which any such statement is based. Should one or more of these risks or uncertainties materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. , or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein.
barnesandnoble.com inc.
Consolidated Statements of Operations
(thousands of dollars, except per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
---------------------------- --------------------------
2000 1999 2000 1999 (1)
----------- ------------- ------------ -----------
Net sales (2) $ 74,073 $ 46,999 $ 215,476 $ 117,494
Cost of sales 59,221 38,959 179,273 94,458
----------- ------------ ------------ -----------
Gross profit 14,852 8,040 36,203 23,036
----------- ------------ ------------ -----------
Operating expenses:
Marketing and
sales (2) 31,048 24,050 90,555 64,033
Technology and
web site
development 10,723 5,251 26,665 12,819
General and
administrative 5,598 4,749 17,999 12,246
Depreciation
and amortization 9,236 3,780 23,980 10,246
Stock based
compensation __ __ 11,740 __
Equity in net
loss of equity
investments
including
amortization of 11,090 __ 21,872 __
intangibles ----------- ---------- ----------- -----------
Total operating
expenses 67,695 37,830 192,811 99,344
----------- ---------- ----------- -----------
Operating loss (52,843) (29,790) (156,608) (76,308)
Interest income,
net 4,814 7,913 19,010 12,259
----------- ---------- ----------- ------------
Net loss $(48,029) $ (21,877) $(137,598) $(64,049)
=========== =========== =========== ============
Basic and
diluted loss
per common
share ($0.33) ($0.15) ($0.94) ($0.50)
Average shares
(diluted - if
converted)(3) 146,118 143,972 145,644 128,555
Pro forma results: (4)
Proforma net loss,
excluding stock
based compensation
and acquisition
and investment related
costs, including
amortization of
intangibles and
equity in net
loss of equity
investments $(36,939) $ (21,877) $ (103,986) $ (64,049)
Pro forma basic
and diluted net
loss per common
share ($0.25) ($0.15) ($0.71) ($0.50)
Average shares
(diluted - if
converted) (3) 146,118 143,972 145,644 128,555
barnesandnoble.com inc.
Consolidated Statements of Operations (continued)
(thousands of dollars, except per share data)
(unaudited)
Three months ended Nine months ended
Sept. 30, Sept. 30,
-------------------------- ----------------------
2000 1999 2000 1999
---------- ---------- --------- ---------
(1)
Percent of sales:
Gross margin 20.1% 17.1% 16.8% 19.6%
Operating expenses
Marketing and sales 41.9 51.2 42.0 54.5
Technology and
web site development 14.5 11.2 12.4 10.9
General and
administrative 7.6 10.1 8.4 10.4
Depreciation and
amortization 12.5 8.0 11.1 8.7
Stock based
compensatio - - 5.4 -
Equity in net
loss of equity
investments including
amortization
of intangibles 15.0 - 10.2 -
----------- ----------- ---------- -----------
Total operating
expenses 91.5 80.5 89.5 84.5
----------- ----------- ----------- -----------
Operating loss (71.3) (63.4) (72.7) (64.9)
Interest income, net 6.5 16.8 8.8 10.4
----------- ----------- ----------- -----------
Net loss (64.8)% (46.6)% (63.9)% (54.5)%
=========== =========== =========== ===========
(1) Pro forma consolidated statement of operations includes the
consolidated results of barnesandnoble.com inc. and
barnesandnoble.com llc as if the two companies were consolidated
as of the earliest period presented.
(2) In accordance with the Emerging Issues Task Force Issue No. 00-14,
"Accounting for Certain Sales Incentives" ("EITF 00-14"), expenses
related to coupon redemptions, formerly classified as marketing
and sales expense, are now recorded as a reduction of sales. EITF
00-14 requires the implementation of this change effective within
all reporting periods beginning in the first fiscal quarter
beginning after May 18, 2000, and also requires all prior periods
to be reclassified to reflect this modification.
(3) Includes the conversion of outstanding membership units of
barnesandnoble.com llc converted into outstanding shares of
barnesandnoble.com inc. for all periods presented.
(4) Pro forma results for the three month and nine month periods ended
September 30, 2000 and 1999 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 charges of $11,090, $0,
$33,612 and $0 for the three month periods ended September 30,
2000 and 1999 and the nine month periods ended September 30, 2000
and 1999, respectively, related to stock based compensation and
acquisition and investment related costs, including amortization
of intangibles and equity in net loss of equity investments.
barnesandnoble.com inc.
Consolidated Balance Sheets
(thousands of dollars, except share and per share data)
September 30, December 31,
2000 1999
-------------- ----------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 24,052 $ 247,403
Marketable securities 190,373 230,644
Receivables, net 17,738 15,520
Merchandise inventories 39,507 3,886
Prepaid expenses and other
current assets 15,696 8,161
---------------- ---------------
Total current assets 287,366 505,614
---------------- ---------------
Fixed assets, net 147,977 97,854
Long term marketable securities 71,852 71,852
Other non-current assets 48,121 4,198
---------------- ---------------
Total assets $ 555,316 $679,518
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,642 $ 19,204
Accrued liabilities 48,242 39,627
Due to affiliate 20,907 17,109
---------------- ---------------
Total current liabilities 70,791 75,940
---------------- ---------------
Minority interest 384,450 482,896
Stockholders' equity:
Preferred Stock: $0.01 par
value; 50,000,000 shares
authorized; none issued
and outstanding -- --
Common Stock Series A; $0.001
par value; 750,000,000
shares authorized; 31,268,591
and 29,347,067 shares issued
and outstanding, respectively 31 29
Common Stock Series B; $0.001
par value; 1,000 shares
authorized; 1 and 1 shares
issued and outstanding,
respectively -- --
Common Stock Series C; $0.001
par value; 1,000 shares authorized;
1 and 1 shares issued and outstanding,
respectively -- --
Paid-in capital 142,753 134,452
Accumulated deficit (42,709) (13,799)(1)
---------------- ---------------
Total stockholders' equity 100,075 120,682
--------------- ---------------
Commitments and
contingencies
Total liabilities
and stockholders' equity $555,316 $679,518
================ ===============
(1) Represents accumulated deficit of barnesandnoble.com inc. since
the Company's initial public offering on May 25, 1999.
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