Borders Group Confirms 2002 EPS Growth Of Over 8%; Company Reiterates 2003 EPS Guidance of 5-12% Growth.Business Editors ANN ARBOR Ann Arbor, city (1990 pop. 109,592), seat of Washtenaw co., S Mich., on the Huron River; inc. 1851. It is a research and educational center, with a large number of government and industrial research and development firms, many in high-technology fields such as , Mich.--(BUSINESS WIRE)--March 13, 2003 Borders Group Inc. (NYSE NYSE See: New York Stock Exchange :BGP (Border Gateway Protocol) The routing protocol that is used to span autonomous systems on the Internet. It is a robust, sophisticated and scalable protocol that was developed by the Internet Engineering Task Force (IETF). ) today reported an 8.3% increase in 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: annual earnings per share as the company posted final 2002 full year consolidated earnings of $1.43 per share (excluding unusual items) in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with analyst consensus estimates. Fourth quarter consolidated earnings per share were $1.39 (excluding unusual items), an increase of 3.0% over the same period in 2001. On a Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) basis, earnings per share for the full year were $1.36 (inclusive of inclusive of prep. Taking into consideration or account; including. unusual items), an increase of 28.3% over the comparable earnings per share of $1.06 in 2001. On a GAAP basis, earnings per share for the fourth quarter of $1.32 were flat with a year ago. "We are pleased to report another year of 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. growth for Borders Group and that we managed our business effectively through a challenging 2002," said Chief Executive Officer Greg GREG Great Egg Harbor National Scenic and Recreational River (US National Park Service) Josefowicz. "This year, we remain focused on initiatives to improve sales productivity in what continues to be a difficult environment and will manage the business prudently pru·dent adj. 1. Wise in handling practical matters; exercising good judgment or common sense. 2. Careful in regard to one's own interests; provident. 3. Careful about one's conduct; circumspect. on the expense and investment side." Consolidated Results As reported Feb. 13, Borders Group achieved record consolidated sales of $3.5 billion for the full year 2002, a 2.9% increase over the prior year. At a record $1.2 billion, fourth quarter consolidated sales were up 1.4% over 2001. For the fourth quarter, income on an operating basis was equal to levels of a year ago at $111.5 million, while earnings per share increased 3.0% due to a lower share base compared to last year. Gross margin as a percent of sales declined 0.7% to 32.2% due primarily to a loss of leverage in fixed 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 resulting from comparable store sales declines. Product margins as a percent of sales were flat compared to a year ago. SG&A as a percent of sales improved 0.4% to 17.0% as a result of continued disciplined cost controls across all business segments. For the year, income on an operating basis increased 7.0% to $117.0 million driven by stringent cost management, strong cash flow that reduced interest expense and a change in accounting for goodwill that was adopted at the beginning of the year. The company's overall financial position remains strong. Cash net of debt at the end of the fiscal year was $106.4 million, which is flat with a year ago. Inventory productivity also improved, as the company's investment in inventory was essentially unchanged from 2001, while consolidated sales for the year grew 2.9% and total square footage increased 6.7%. For the year, the company repurchased common stock totaling $75 million, and as a result, averaged 80.3 million weighted average shares outstanding for the fourth quarter, which is 3.0% lower than one year ago. Borders Superstores This is a list of superstores by country. Multi-national
Borders Group opened 41 new Borders stores in the U.S. in 2002, ending the year with 404 total domestic locations. As previously reported, fourth quarter sales at Borders superstores were $759 million, an increase of 2.3% over the same period in 2001. For the full year, Borders superstore su·per·store n. A very large retail store that stocks highly diversified merchandise, such as groceries, toys, and camera equipment, or a wide variety of mechandise in a specific product line, such as computers or sporting goods. sales increased 3.8% over 2001, ending fiscal 2002 at $2.3 billion. Comparable store sales for Borders declined 3.0% for the fourth quarter and declined 1.2% for the full year. In the fourth quarter, on a comparable store sales basis, category sales strength came from 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. and gifts and stationery The term for boilerplate in the Eudora mail client, starting with Version 3.0. Stationery files are stored on disk and brought into new messages or added to replies. See boilerplate. , while books were down slightly and music continued to be soft. Income, on an operating basis, in the segment improved 10% for the fourth quarter to $72.5 million. For the full year, income on an operating basis increased 19% to $101.8 million. International During the year, the company opened eight new overseas Borders locations, ending 2002 with a total of 30 international Borders stores and 37 Books etc. stores in the U.K. International segment sales for the fourth quarter, as reported on Feb. 13, were $113 million in the fourth quarter -- a 29.7% increase -- and were $315 million for the year, an increase of 25.1% over 2001. For the fourth quarter, on an operating basis, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become increased 21% to $12.0 million and income improved 11% to $3.9 million. For the year, on an operating basis, EBITDA increased 20% to $11.8 million while the loss increased to $9.6 million. Waldenbooks As previously stated, Waldenbooks generated fourth quarter sales of $349 million, down 7.1% from a year ago. Full year sales in the Waldenbooks segment were $852 million, a decrease of 5.5% from 2001. Comparable store sales at Waldenbooks declined 6.1% for the fourth quarter and 3.2% for the full year. Income, on an operating basis, in the segment declined 11% in the fourth quarter to $44.9 million and declined 3.0% for the full year to $44.7 million. Borders Group closed 53 under-performing Waldenbooks stores in 2002, ending the fiscal year with 778 locations. Unusual Items All earnings figures exclude the impact of unusual items unless otherwise noted. Unusual items in the fourth quarter of 2002 primarily include store closure costs and asset impairments of certain under-performing mall mall: see shopping center. (World-Wide Web) mall - A collection of World-Wide Web documents featuring commercial products and services, usually served by one particualr Internet access provider. stores. Partially offsetting these costs is an insurance reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. related primarily to the loss of the Borders store at the World Trade Center, as well as certain real estate and other recoveries. In-line with previous estimates, the net impact of these items resulted in an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charge in the fourth quarter of $5.3 million or 7 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . Unusual items in 2001 primarily include the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → and inventory resulting from the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of a fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. center as well as store asset impairments net of insurance recoveries. 2003 Outlook In 2003, Borders Group plans to open 35-40 new Borders domestic stores and 6-8 international locations, while the company will close approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 40-50 Waldenbooks stores. To date, first quarter comparable store sales for Borders and Waldenbooks reflect a continuation continuation - continuation passing style of fourth quarter 2002 results, plus the added impact of weather disruptions. Full year 2003 comparable store sales are expected to range from slightly positive to slightly negative for Borders and to decline in the low single digits for Waldenbooks. Total sales in the international segment are expected to increase in the high teens on a percent basis. Based on a continuation of current sales trends, it is anticipated that first quarter consolidated earnings per share will be approximately break even. Despite the challenging sales environment expected for the first half of the year, management remains comfortable with its previously issued consolidated earnings estimate for the full year of $1.50 to $1.60 per share, which represents annual earnings per share growth of 5-12%. As projected earlier, the company expects sales momentum to pick up as the year progresses, beginning with the June June: see month. release of the fifth book in the Harry Potter A potter is someone who makes pottery. Potter may also refer to: People
All 2003 earnings projections exclude the impact, if any, of unusual items, which management cannot project at this time. In addition, management is assessing the impact, if any, on 2003 projected earnings attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to FASB's Emerging Issues Task Force 02-16 (accounting by a customer for certain consideration received from a vendor). These projections exclude any such impact. Borders Group will release first quarter 2003 results May 20 after market close with a conference call to follow May 21 at 8 a.m. Eastern. About Borders Group Borders Group is a leading global retailer of books, music, video and other information and entertainment items with stores in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , United Kingdom, Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. , New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. , Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). and the commonwealth of Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. . A FORTUNE 500 company headquartered in Ann Arbor, Mich., Borders Group employs 32,000 worldwide and operates over 405 Borders domestic superstores, 31 international Borders stores, 37 Books etc. locations and approximately 775 Waldenbooks stores. Teamed with Amazon.com (Amazon.com, Seattle, WA, www.amazon.com) The largest online shopping site and one of the most widely known e-commerce sites on the Web. Founded by Jeff Bezos in 1995, it had 11 employees by year's end. Within four years, it had more than 1,600 employees and four million customers. , the company also offers online shopping through Borders.com (www.borders.com) and Waldenbooks.com (www.waldenbooks.com). More detailed information on the company is available at www.bordersgroupinc.com. Information on Borders stores is available through www.bordersstores.com. 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. Statement This 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. within the meaning of 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. One can identify these forward-looking statements by the use of words such as "projects," "expects," "planning," "guidance," "will," "may," "potential," "likely," "intends," "anticipates," "estimates" and other words of similar meaning. One can also identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address matters such as the company's future financial performance (including sales and earnings guidance). These statements are subject to risks and uncertainties that could cause actual results and plans to differ materially from those included in the company's forward-looking statements. These risks and uncertainties include, but are not limited to, consumer demand for the company's products, particularly during the holiday season, which is believed to be related to general economic and geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. conditions, weather, changes in accounting rules and other factors; asset impairments relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc under-performing stores or other unusual items; an unexpected increase in competition; the timing and amount of insurance recoveries relating to the former Borders store at the World Trade Center; uninsured losses from risks such as terrorism terrorism, the threat or use of violence, often against the civilian population, to achieve political or social ends, to intimidate opponents, or to publicize grievances. , earthquakes Earthquakes See also geology. bathyseism an earthquake occurring at very deep levels of the earth. bradyseism the slow upward and downward motion of the earth’s crust. — bradyseismic, adj. , or floods By Chronology Note:This is in reverse chronological order. 2000s
When a person begins a civil lawsuit, the person enters into a process called litigation. expenses or results; unanticipated work stoppages or increased labor costs; higher than anticipated 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; the performance of the company's strategic initiatives, including international expansion; the stability and capacity of the company's information systems; and changes in foreign currency exchange rates. Exhibit 99.1 to the company's Form 10-Q Form 10-Q See 10-Q. Report for the quarter ended Oct. 27, 2002 filed with the Securities and Exchange Commission sets forth a more detailed discussion of these and other risk factors that could cause actual results and plans to differ materially from those included in the forward-looking statements, and that discussion is incorporated herein by reference. The company does not undertake any obligation to update forward-looking statements.
Borders Group, Inc. Financial Statements
(dollars in millions, except per share amounts)
Sales and Earnings Summary
Quarter Ended January 26, Quarter Ended January 27,
2003 2002
-------------------------- --------------------------
Unusual Unusual
Operating Items GAAP Operating Items GAAP
Basis (1) (1) Basis Basis (2) (2) Basis
Borders $759.1 $- $759.1 $741.8 $- $741.8
Waldenbooks 349.3 - 349.3 375.9 - 375.9
International 112.6 - 112.6 86.8 - 86.8
--------- ------- -------- --------- ------- --------
Total sales 1,221.0 - 1,221.0 1,204.5 - 1,204.5
Other revenue (3) 6.8 - 6.8 6.4 - 6.4
--------- ------- -------- --------- ------- --------
Total revenue 1,227.8 - 1,227.8 1,210.9 - 1,210.9
Cost of goods
sold, including
occupancy costs 835.0 (2.2) 832.8 814.8 (2.0) 812.8
Fulfillment
center and other
inventory
writedowns - 1.8 1.8 - (2.6) (2.6)
--------- ------- -------- --------- ------- --------
Gross margin 392.8 0.4 393.2 396.1 4.6 400.7
Selling,
general and
administrative
expenses 206.2 (6.5) 199.7 209.6 (1.0) 208.6
Pre-opening
expense 2.2 - 2.2 1.5 - 1.5
Asset impairments
and other
writedowns 0.6 14.3 14.9 - 9.5 9.5
Goodwill
amortization - - - 0.7 - 0.7
--------- ------- -------- --------- ------- --------
Operating income 183.8 (7.4) 176.4 184.3 (3.9) 180.4
Interest expense 3.9 - 3.9 2.9 - 2.9
--------- ------- -------- --------- ------- --------
Income before
income taxes 179.9 (7.4) 172.5 181.4 (3.9) 177.5
Income taxes 68.4 (2.1) 66.3 69.7 (1.5) 68.2
--------- ------- -------- --------- ------- --------
Net Income $111.5 $(5.3) $106.2 $111.7 $(2.4) $109.3
========= ======= ======== ========= ======= ========
EPS $1.39 $(0.07) $1.32 $1.35 $(0.03) $1.32
Weighted avg.
common shares
(000's) 80,272 80,272 80,272 82,880 82,880 82,880
Comparable Store Sales
----------------------
Borders (3.0%) 3.3%
Waldenbooks (6.1%) 1.9%
Sales and Earnings Summary (As Percentage of Total Sales)
Quarter Ended January 26, Quarter Ended January 27,
2003 2002
-------------------------- --------------------------
Unusual Unusual
Operating Items GAAP Operating Items GAAP
Basis (1) (1) Basis Basis (2) (2) Basis
Borders 62.2% -% 62.2% 61.6% -% 61.6%
Waldenbooks 28.6 - 28.6 31.2 - 31.2
International 9.2 - 9.2 7.2 - 7.2
--------- ------- -------- --------- ------- --------
Total sales 100.0 - 100.0 100.0 - 100.0
Other revenue (3) 0.6 - 0.6 0.5 - 0.5
--------- ------- -------- --------- ------- --------
Total revenue 100.6 - 100.6 100.5 - 100.5
Cost of goods
sold, including
occupancy costs 68.4 (0.2) 68.2 67.6 (0.2) 67.4
Fulfillment
center and other
inventory
writedowns - 0.1 0.1 - (0.2) (0.2)
--------- ------- -------- --------- ------- --------
Gross margin 32.2 0.1 32.3 32.9 0.4 33.3
Selling, general
and
administrative
expenses 17.0 (0.5) 16.5 17.4 (0.1) 17.3
Pre-opening
expense 0.2 - 0.2 0.1 - 0.1
Asset impairments
and other
writedowns - 1.2 1.2 - 0.8 0.8
Goodwill
amortization - - - 0.1 - 0.1
--------- ------- -------- --------- ------- --------
Operating income 15.0 (0.6) 14.4 15.3 (0.3) 15.0
Interest expense 0.3 - 0.3 0.2 - 0.2
--------- ------- -------- --------- ------- --------
Income before
income taxes 14.7 (0.6) 14.1 15.1 (0.3) 14.8
Income taxes 5.6 (0.2) 5.4 5.8 (0.1) 5.7
--------- ------- -------- --------- ------- --------
Net Income 9.1% (0.4)% 8.7% 9.3% (0.2)% 9.1%
========= ======= ======== ========= ======= ========
(1) Results from 2002 were impacted by a number of unusual items,
primarily consisting of store closure costs and asset impairments
of certain under-performing mall stores. Partially offsetting
these costs is an insurance reimbursement related to the loss of
the Borders store at the World Trade Center, as well as certain
real estate and other recoveries. Therefore, solely for analytical
purposes and as an aid to better understand underlying trends,
operating basis data are presented excluding these items.
(2) Results from 2001 were impacted by a number of unusual items,
primarily consisting of store closure costs and asset impairments
of certain under-performing mall stores. Partially offsetting
these costs is an insurance reimbursement related to the loss of
the Borders store at the World Trade Center, as well as income
relating to the adjustment of Fulfillment center inventory
writedown reserves established in the first quarter of 2001.
Therefore, solely for analytical purposes and as an aid to better
understand underlying trends, operating basis data are presented
excluding these items.
(3) Other revenues include gross income received primarily from the
Waldenbooks Preferred Reader membership program.
Borders Group, Inc. Financial Statements
(dollars in millions, except per share amounts)
Sales and Earnings Summary
-------------------------- --------------------------
Year Ended January 26, Year Ended January 27,
2003 2002
-------------------------- --------------------------
Unusual Unusual
Operating Items GAAP Operating Items GAAP
Basis (1) (1) Basis Basis (2) (2) Basis
Borders $2319.0 $- $2319.0 $2234.1 $- $2234.1
Waldenbooks 852.2 - 852.2 902.1 - 902.1
International 314.9 - 314.9 251.7 - 251.7
--------- ------- -------- --------- ------- --------
Total sales 3,486.1 - 3,486.1 3,387.9 - 3,387.9
Other revenue
(3) 26.9 - 26.9 25.3 - 25.3
--------- ------- -------- --------- ------- --------
Total revenue 3,513.0 - 3,513.0 3,413.2 - 3,413.2
Cost of goods
sold, including
occupancy costs 2,552.5 (2.2) 2,550.3 2,466.5 (2.0) 2,464.5
Fulfillment
center and
other inventory
writedowns - 1.8 1.8 - 10.1 10.1
--------- ------- -------- --------- ------- --------
Gross margin 960.5 0.4 960.9 946.7 (8.1) 938.6
Selling,
general and
administrative
expenses 751.7 (6.5) 745.2 745.8 (1.0) 744.8
Legal settlement
expense - - - - 2.4 2.4
Pre-opening
expense 6.9 - 6.9 6.3 - 6.3
Asset
impairments
and other
writedowns 0.6 14.3 14.9 - 25.4 25.4
Goodwill
amortization - - - 2.7 - 2.7
--------- ------- -------- --------- ------- --------
Operating
income 201.3 (7.4) 193.9 191.9 (34.9) 157.0
Interest expense 12.6 - 12.6 14.4 - 14.4
--------- ------- -------- --------- ------- --------
Income before
income taxes 188.7 (7.4) 181.3 177.5 (34.9) 142.6
Income taxes 71.7 (2.1) 69.6 68.2 (13.0) 55.2
--------- ------- -------- --------- ------- --------
Net Income $117.0 $(5.3) $111.7 $109.3 $(21.9) $87.4
========= ======= ======== ========= ======= ========
EPS $1.43 $(0.07) $1.36 $1.32 $(0.26) $1.06
Weighted avg.
common shares
(000's) 82,033 82,033 82,033 82,724 82,724 82,724
Comparable Store Sales
--------------------------
Borders (1.2%) 2.0
Waldenbooks (3.2%) (1.6%)
Sales and Earnings Summary (As Percentage of Total Sales)
-------------------------- --------------------------
Year Ended January 26, Year Ended January 27,
2003 2002
-------------------------- --------------------------
Unusual Unusual
Operating Items GAAP Operating Items GAAP
Basis (1) (1) Basis Basis (2) (2) Basis
Borders 66.5% -% 66.5% 66.0% -% 66.0%
Waldenbooks 24.5 - 24.4 26.6 - 26.6
International 9.0 - 9.0 7.4 - 7.4
--------- ------- -------- --------- ------- --------
Total sales 100.0 - 100.0 100.0 - 100.0
Other revenue
(3) 0.8 - 0.8 0.7 - 0.7
--------- ------- -------- --------- ------- --------
Total revenue 100.8 - 100.8 100.7 - 100.7
Cost of goods
sold, including
occupancy costs 73.2 (0.1) 73.1 72.8 (0.1) 72.7
Fulfillment
center and
other inventory
writedowns - 0.1 0.1 - 0.3 0.3
--------- ------- -------- --------- ------- --------
Gross margin 27.6 - 27.6 27.9 (0.2) 27.7
Selling,
general and
administrative
expenses 21.6 (0.2) 21.4 22.0 - 22.0
Legal settlement
expense - - - - 0.1 0.1
Pre-opening
expense 0.2 - 0.2 0.2 - 0.2
Asset
impairments
and other
writedowns - 0.4 0.4 - 0.7 0.7
Goodwill
amortization - - - 0.1 - 0.1
--------- ------- -------- --------- ------- --------
Operating
income 5.8 (0.2) 5.6 5.6 (1.0) 4.6
Interest expense 0.4 - 0.4 0.4 - 0.4
--------- ------- -------- --------- ------- --------
Income before
income taxes 5.4 (0.2) 5.2 5.2 (1.0) 4.2
Income taxes 2.0 - 2.0 2.0 (0.4) 1.6
--------- ------- -------- --------- ------- --------
Net Income 3.4% (0.2)% 3.2% 3.2% (0.6)% 2.6%
========= ======= ======== ========= ======= ========
(1) Results from 2002 were impacted by a number of unusual items,
primarily consisting of store closure costs and asset impairments
of certain under-performing mall stores. Partially offsetting
these costs is an insurance reimbursement related to the loss of
the Borders store at the World Trade Center, as well as certain
real estate and other recoveries. Therefore, solely for analytical
purposes and as an aid to better understand underlying trends,
operating basis data are presented excluding these items.
(2) Results from 2001 were impacted by a number of unusual items,
primarily consisting of Fulfillment center fixed asset and
inventory writedowns as a result of the Company's agreement with
Ingram Book Group, store closure costs, asset impairments of
certain under-performing mall stores, and legal settlement expense
relating to the ABA lawsuit. Partially offsetting these costs is
an insurance reimbursement related to the loss of the Borders
store at the World Trade Center. Therefore, solely for analytical
purposes and as an aid to better understand underlying trends,
operating basis data are presented excluding these items.
(3) Other revenues include gross income received primarily from the
Waldenbooks Preferred Reader membership program.
Borders Group, Inc. Financial Statements
Condensed Consolidated Balance Sheets
------------ ------------
January 26, January 27,
2003 2002
------------ ------------
ASSETS
Cash and cash equivalents $269.1 $190.2
Inventory 1,183.3 1,178.8
Other current assets 88.9 73.1
Property and equipment, net 553.8 529.4
Other assets and deferred charges 76.6 119.1
Goodwill 96.5 88.7
------------ ------------
Total assets $2,268.2 $2,179.3
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $112.7 $83.3
Accounts payable 565.4 638.2
Other current liabilities 409.5 385.2
Long-term debt 50.0 -
Long-term capital lease and financing
obligations 19.0 49.7
Other long-term liabilities 81.0 73.0
------------ ------------
Total liabilities 1,237.6 1,229.4
Total stockholders' equity 1,030.6 949.9
------------ ------------
Total liabilities and stockholders' equity $2,268.2 $2,179.3
============ ============
Store Activity Summary
Quarter Ended Year Ended
----------------------- -------------------------
January 26, January 27, January 26, January 27,
2003 2002 2003 2002
----------- ----------- ------------ ------------
Borders Superstores
Beginning number of
stores 391 355 363 335
Openings 13 8 41 29
Closings - - - (1)
----------- ----------- ------------ ------------
Ending number of
stores 404 363 404 363
=========== =========== ============ ============
Ending square footage
(in millions) 10.4 9.5 10.4 9.5
=========== =========== ============ ============
Walden Stores
Beginning number
of stores 809 856 827 869
Openings 1 - 4 11
Closings (32) (29) (53) (53)
----------- ----------- ------------ ------------
Ending number of
stores 778 827 778 827
=========== =========== ============ ============
Ending square footage
(in millions) 3.1 3.3 3.1 3.3
=========== =========== ============ ============
Borders International
Stores
Beginning number
of stores 29 19 22 14
Openings 1 3 8 8
Closings - - - -
----------- ----------- ------------ ------------
Ending number of
stores 30 22 30 22
=========== =========== ============ ============
Ending square footage
(in millions) 0.8 0.6 0.8 0.6
=========== =========== ============ ============
Borders Group, Inc. Segment Financial Information
(dollars in millions, except per share amounts)
(excluding unusual items)
Quarter Ended Year Ended
---------------------------- ---------------------------
January 26, January 27, January 26, January 27,
2003 2002 2003 2002
Operating Operating Operating Operating
Basis Basis Change Basis Basis Change
--------- ---------- ------- --------- --------- -------
EBITDA
------
Borders $135.9 $127.8 6% $234.8 $217.1 8%
Waldenbooks 69.5 79.8 -13% 58.3 67.1 -13%
International 12.0 9.9 21% 11.8 9.8 20%
Other (6.2) (6.1) -2% (6.5) (5.9) -10%
--------- ---------- --------- ---------
Total $211.2 $211.4 0% $298.4 $288.1 4%
========= ========== ========= =========
EBITDA Per Share
----------------
Borders $1.69 $1.54 $2.86 $2.62
Waldenbooks 0.87 0.96 0.71 0.81
International 0.15 0.12 0.15 0.12
Other (0.08) (0.07) (0.08) (0.07)
--------- ---------- --------- ---------
Total $2.63 $2.55 $3.64 $3.48
========= ========== ========= =========
Net Income (Loss)
-----------------
Borders $72.5 $65.7 10% $101.8 $85.9 19%
Waldenbooks 44.9 50.3 -11% 44.7 46.2 -3%
International 3.9 3.5 11% (9.6) (7.5) -28%
Other (9.8) (7.8) -26% (19.9) (15.3) -30%
--------- ---------- --------- ---------
Total $111.5 $111.7 0% $117.0 $109.3 7%
========= ========== ========= =========
Earnings (Loss)
Per Share
--------------
Borders $0.90 $0.79 $1.24 $1.04
Waldenbooks 0.56 0.61 0.55 0.56
International 0.05 0.04 (0.12) (0.09)
Other (0.12) (0.09) (0.24) (0.19)
--------- ---------- --------- ---------
Total $1.39 $1.35 $1.43 $1.32
========= ========== ========= =========
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