Borders Group Meets Raised 2nd Quarter Estimates, Earning 4 Cents Per Share; Company Increases Full-Year EPS Guidance to Range of $1.45 to $1.49.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)--Aug. 22, 2002 Borders Group (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 results for the second quarter of 2002, which ended July July: see month. 28. 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: earnings for the quarter were 4 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. , at the high end of updated guidance management issued July 16, and improved over breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations earnings for the same period in 2001. The company also announced an increase in full-year earnings guidance to a range of $1.45 to $1.49 per share. Second quarter comparable store sales in the 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. segment were also 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 the company's updated estimates at -1.0%. The Waldenbooks segment generated comparable store sales of -0.6% for the second quarter, as expected. The International segment was also on-target, generating a 23.7% sales increase in the second quarter. "Second quarter performance generally mirrored our first quarter experience," said Borders Group Chairman, President and Chief Executive Officer Greg GREG Great Egg Harbor National Scenic and Recreational River (US National Park Service) Josefowicz. "Through disciplined expense management, the company was able to offset modest sales and deliver high-side earnings." Consolidated Results Borders Group achieved second quarter consolidated sales of $763.6 million, an increase of 3.2% over the prior year. Net income for the second quarter was $3.4 million, compared to net income of $0.1 million the prior year. Gross margin as a percent of sales for the second quarter was equal to the same period last year at 25.2%, as lower distribution costs distribution costs distribute npl → Vertriebskosten pl and improved inventory shrink shrink Vox populi noun A psychiatrist results offset increased 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 . SG&A as a percent of sales improved to 24.0% from 24.3% for the same period last year due to disciplined cost controls across all business segments. Borders Group's overall financial position remained solid due to strong cash flow as debt net of cash, which was $93.0 million at the end of the second quarter, decreased by $119.2 million compared to a year ago. The company has repurchased 3.1 million shares of its common stock since the beginning of the year, totaling $56.7 million. Borders Superstores This is a list of superstores by country. Multi-national
At $529.6 million, second quarter sales at Borders superstores were up 3.6% over a year ago. Second quarter net income in the segment improved by 40% over last year to $11.8 million. Borders Group opened seven new domestic Borders superstores in the second quarter, bringing the total store count to 376 U.S. locations. International The International segment performed as expected with second quarter sales of $65.7 million, which is up 23.7% over last year. At $1.1 million, the segment's 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 loss increased slightly over the prior year, primarily due to the dilutive impact of new stores including eight locations opened in 2001 and one opened to date this year. At the close of the second quarter, Borders Group operated 23 International Borders superstores and 36 Books etc. locations. Waldenbooks Waldenbooks achieved second quarter sales of $168.3 million. Net loss improved to $0.8 million compared to a net loss of $1.0 million in the second quarter of last year. The company closed nine under-performing Waldenbooks stores in the second quarter, ending the period with 811 locations nationwide. Financial Statement Certification Borders Group confirmed that its chief executive and chief financial officers intend to certify cer·ti·fy v. cer·ti·fied, cer·ti·fy·ing, cer·ti·fies v.tr. 1. a. To confirm formally as true, accurate, or genuine. b. the company's financial statements in compliance with applicable rules by the Sept. 11 deadline set for companies with similar fiscal periods. 2002 Outlook Borders Group has increased estimated consolidated earnings per share for the full year by a penny to a range of $1.45 to $1.49. The increase is based on management's projection projection, in psychology: see defense mechanism. See rear-projection TV, front-projection TV and LCD panel. (theory) projection - In domain theory, a function, f, which is (a) idempotent, i.e. that continued gross margin and expense management will make this range achievable even if the current soft sales environment continues throughout the second half of the year. "We are comfortable increasing full-year guidance on the basis of effective cost control and the impact of our share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. . Yet, we continue to remain focused on driving sales through a number of traffic and transaction building initiatives. These include, among others, expanded product assortment assortment /as·sort·ment/ (ah-sort´ment) the random distribution of nonhomologous chromosomes to daughter cells in metaphase of the first meiotic division. as·sort·ment n. available through Title Sleuth, as well as the debut of express in-store pick up for online customers, which is an evolution of our ongoing alliance 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. ," Josefowicz said. Based on expectations that third quarter comparable store sales will be in the range of flat to 1% at Borders superstores and will be flat to -1% at Waldenbooks, management now projects a third quarter consolidated loss of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 2 to 3 cents per share. This compares to a 4-cents-per-share loss in the third quarter of 2001. Borders Group projects that its International segment will increase third quarter sales by approximately 20%. For the fourth quarter of 2002, Borders Group estimates consolidated earnings of approximately $1.41 to $1.45 per share, with flat comparable store sales in the Borders superstore segment. Waldenbooks is expected to generate negative comparable store sales in the low single digits. The International segment is anticipated to increase sales by approximately 20% for the period. Next Financial Release/Conference Call Borders Group will issue third quarter results after market close Nov. 21 followed by a conference call at 8 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy , Nov. 22. About Borders Group, Inc. Borders Group, Inc. 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 376 Borders domestic superstores, 23 international Borders stores, 36 Books etc. locations and approximately 811 Waldenbooks stores. Teamed with Amazon.com, the company also offers online shopping through Borders.com (www.borders.com). More detailed information for journalists is available at www.bgimediacenter.com. Financial data is hosted on www.bordersgroupinc.com and 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," "guidance," "will," "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 conditions, weather and other factors; an unexpected increase in competition; the timing and amount of insurance recoveries relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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 April 28, 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 Six Months Ended
----------------- ---------------------
July July
28, 29, July 28, July 29,
2002 2001 2002 2001
-------- -------- ---------- ----------
Borders $ 529.6 $ 511.1 $ 1,048.1 $ 1,011.7
Waldenbooks 168.3 175.6 338.3 352.4
International 65.7 53.1 128.9 105.6
-------- -------- ---------- ----------
Total sales 763.6 739.8 1,515.3 1,469.7
Cost of goods sold, including
occupancy costs 571.0 553.7 1,131.9 1,098.8
-------- -------- ---------- ----------
Gross margin 192.6 186.1 383.4 370.9
Selling, general and
administrative expenses 183.6 179.9 364.9 358.3
Pre-opening expense 1.0 1.5 1.8 2.3
Goodwill amortization - 0.6 - 1.3
-------- -------- ---------- ----------
Operating income 8.0 4.1 16.7 9.0
Interest expense 2.5 4.0 4.9 8.0
-------- -------- ---------- ----------
Income before income taxes 5.5 0.1 11.8 1.0
Income taxes 2.1 - 4.5 0.3
-------- -------- ---------- ----------
Income excluding unusual
items
One-time charge $ 3.4 $ 0.1 $ 7.3 $ 0.7
======== ======== ========== ==========
Unusual items, net of taxes - - - 19.5
-------- -------- ---------- ----------
Net income (loss) $ 3.4 $ 0.1 $ 7.3 $ (18.8)
======== ======== ========== ==========
EPS excluding unusual items $ 0.04 $ - $ 0.09 $ 0.01
EPS $ 0.04 $ - $ 0.09 $(0.23)
Weighted avg. common shares
(000's) 83,139 82,994 83,615 82,173
Comparable Store Sales
-------------------------------
Borders (1.0%) 2.0% (0.8%) 2.0%
Waldenbooks (0.6%) (5.5%) (0.4%) (3.8)%
Sales and Earnings Summary (As Percentage of Sales)
(excluding unusual items)
Six Months
Quarter Ended Ended
------------- -------------
July July July July
28, 29, 28, 29,
2002 2001 2002 2001
------ ------ ------ ------
Borders 69.4% 69.1% 69.2% 68.8%
Waldenbooks 22.0 23.7 22.3 24.0
International 8.6 7.2 8.5 7.2
------ ------ ------ ------
Total sales 100.0 100.0 100.0 100.0
Cost of goods sold, including occupancy
costs 74.8 74.8 74.7 74.8
------ ------ ------ ------
Gross margin 25.2 25.2 25.3 25.2
Selling, general and administrative
expenses 24.0 24.3 24.1 24.4
Pre-opening expense 0.1 0.2 0.1 0.1
Goodwill amortization - 0.1 - 0.1
------ ------ ------ ------
Operating income 1.1 0.6 1.1 0.6
Interest expense 0.4 0.6 0.3 0.5
------ ------ ------ ------
Income before income taxes 0.7 - 0.8 0.1
Income taxes 0.3 - 0.3 -
Income excluding unusual items
------ ------ ------ ------
0.4% 0.0% 0.5% 0.1%
====== ====== ====== ======
Borders Group, Inc. Financial Statements
(dollars in millions)
Condensed Consolidated Balance Sheets
July 28, July 29,
2002 2001
---------- ----------
ASSETS
Cash and cash equivalents $ 53.1 $ 59.8
Inventory 1,212.7 1,143.4
Other current assets 85.8 99.6
Property and equipment, net 544.5 532.4
Other assets and deferred charges 121.3 57.1
Goodwill, net of accumulated amortization 94.2 90.5
---------- ----------
Total assets $ 2,111.6 $ 1,982.8
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $ 146.1 $ 272.0
Accounts payable 598.1 515.2
Other current liabilities 300.4 267.2
Long-term capital lease obligations 52.1 14.0
Other long-term liabilities 77.2 71.5
---------- ----------
Total liabilities 1,173.9 1,139.9
Total stockholders' equity 937.7 842.9
---------- ----------
Total liabilities and stockholders' equity $ 2,111.6 $ 1,982.8
========== ==========
Store Activity Summary
Quarter Ended Six Months Ended
July July July July
28, 29, 28, 29,
2002 2001 2002 2001
------ ------ ------ ------
Borders Superstores
Beginning number of stores 369 339 363 335
Openings 7 6 13 10
------ ------ ------ ------
Ending number of stores 376 345 376 345
------ ------ ------ ------
------ ------ ------ ------
Ending square footage (in 9.8 9.0 9.8 9.0
millions)
------ ------ ------ ------
------ ------ ------ ------
Walden Mall Bookstores
Beginning number of stores 820 862 827 869
Openings -- -- -- 4
Closings (9) (7) (16) (18)
------ ------ ------ ------
Ending number of stores 811 855 811 855
------ ------ ------ ------
------ ------ ------ ------
Ending square footage (in 3.2 3.4 3.2 3.4
millions)
------ ------ ------ ------
------ ------ ------ ------
Borders International Superstores
Beginning number of stores 22 15 22 14
Openings 1 2 1 3
------ ------ ------ ------
Ending number of stores 23 17 23 17
------ ------ ------ ------
------ ------ ------ ------
Ending square footage (in
millions) 0.6 0.5 0.6 0.5
------ ------ ------ ------
------ ------ ------ ------
Borders Group, Inc. Segment Financial Information
(dollars in millions, except per share amounts)
(excluding unusual items)
Quarter Ended Six Months Ended
July July July July
28, 29, 28, 29,
2002 2001 Change 2002 2001 Change
------- ------- ------- ------- ------- -------
EBITDA
-----------------------
Borders $ 36.0 $ 32.5 11% $ 70.6 $ 65.0 9%
Waldenbooks (4.4) (3.7) -19% (6.1) (7.5) 19%
International (1.1) (1.0) -10% (1.5) (1.1) -36%
Other 0.7 (0.9) 178% 0.1 (1.9) 105%
------- ------- ------- ------- ------- -------
Total $ 31.2 $ 26.9 16% $ 63.1 $ 54.5 16%
======= ======= ======= ======= ======= =======
EBITDA Per Share
-----------------------
Borders $ 0.43 $ 0.39 $ 0.84 $ 0.79
Waldenbooks (0.05) (0.05) (0.07) (0.09)
International (0.01) (0.01) (0.02) (0.01)
Other 0.01 (0.01) - (0.03)
------- ------- ------- -------
Total $ 0.38 $ 0.32 $ 0.75 $ 0.66
======= ======= ======= =======
Net Income (Loss)
-----------------------
Borders $ 11.8 $ 8.4 40% $ 23.0 $ 17.0 35%
Waldenbooks (0.8) (1.0) 20% 0.6 (2.2) 127%
International (5.2) (4.4) -18% (9.9) (7.9) -25%
Other (2.4) (2.9) 17% (6.4) (6.2) -3%
------- ------- ------- ------- ------- -------
Total $ 3.4 $ 0.1 3300% $ 7.3 $ 0.7 943%
======= ======= ======= ======= ======= =======
Earnings (Loss) Per
Share
-----------------------
Borders $ 0.15 $ 0.10 $ 0.28 $ 0.21
Waldenbooks (0.01) (0.01) 0.01 (0.03)
International (0.07) (0.05) (0.12) (0.09)
Other (0.03) (0.04) (0.08) (0.08)
------- ------- ------- -------
Total $ 0.04 $ - $ 0.09 $ 0.01
======= ======= ======= =======
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