Borders Group Reports Q1 Results; Board of Directors Authorizes $150 Million Stock Repurchase Program; Q2 and Full Year Outlook In-Line with Analyst Consensus.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)--May 20, 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 results for the fiscal first quarter of 2003, which ended April 27. 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: sales were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. even with the prior year at $751.4 million while the company posted a net loss of $4.8 million or $0.06 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. for the period. "We remain focused on managing our business from an expense and investment standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the within a challenging sales environment," said Borders Group Chief Executive Officer Greg GREG Great Egg Harbor National Scenic and Recreational River (US National Park Service) Josefowicz. "While we don't don't 1. Contraction of do not. 2. Nonstandard Contraction of does not. n. A statement of what should not be done: a list of the dos and don'ts. envision a dramatic sales recovery, today's trends reflect a modest improvement from the first quarter that we expect will build throughout the remainder of the year." Consolidated Results Borders Group achieved consolidated sales of $751.4 million for the first quarter, flat with the prior year. For the first quarter, the company recorded a net loss of $4.8 million, compared to net income of $3.9 million in 2002. Gross margin as a percent of sales declined in the first quarter to 25.1% from 26.5% due 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 for the period compared to a year ago. SG&A as a percent of sales increased to 25.6% from 25.2% in the first quarter as expense controls could not offset the impact of comparable store sales declines. The company's balance sheet remains strong. Inventory productivity was maintained despite the sales weakness as the company's investment in inventory was down slightly from 2002, while consolidated sales for the quarter remained flat and total square footage increased 7.4%. For the fiscal year to date, the company has repurchased stock totaling $17.2 million. Borders Superstores This is a list of superstores by country. Multi-national
Borders Group opened eight new Borders stores in the U.S. during the first quarter, ending the period with 412 total domestic locations. First quarter sales at Borders superstores were $521.5 million, an increase of 0.6% over the same period in 2002. Comparable store sales for Borders declined 5.0% for the first quarter resulting from reduced customer traffic, which affected all product categories. Stronger performing categories included 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. . Net income declined 57.1% for the first quarter to $4.8 million. International During the first quarter, the company opened three new overseas Borders locations, ending the period with a total of 33 International Borders stores and 36 Books etc. stores in the U.K. Total International segment sales for the first quarter were $79.6 million -- a 25.9% increase -- which benefited from a weaker U.S. dollar. For the quarter, 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 (see "Segment Financial Information" attached) increased by $0.7 million to $0.3 million. The net loss declined to $4.2 million due to improving gross margin and SG&A ratios. Waldenbooks Waldenbooks generated first quarter sales of $150.3 million, down 11.6% from a year ago. Comparable store sales at Waldenbooks declined 8.8% for the first quarter. Net income in the segment declined 64.3% for the period to $0.5 million. Borders Group closed six under-performing Waldenbooks stores in the first quarter, ending the period with 774 locations. Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. Program As part of its ongoing strategy to drive shareholder value, the Borders Group Board of Directors has increased the level of authorization The right or permission to use a system resource; the process of granting access. See access control. for company stock repurchases. Under the revised authorization, the company will have available up to $150.0 million plus proceeds and tax benefits from stock option exercises for the purchase of common stock. Purchases will be made primarily through open market transactions, subject to market conditions and trading. FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation 02-16 Net loss for the first quarter of 2003 includes the impact of a $0.3 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge taken to comply with the Financial Accounting Standards Board's (FASB) Emerging Issues Task Force Consensus No. 02-16 "Accounting by a Customer (Including a Reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. ) for Certain Consideration Received from a Vendor." To further conform, Borders Group has reclassified certain SG&A items to gross margin for the current year and similarly reclassified the prior year on the attached tables. Outlook Management expects improvement in sales trends continuing through the end of the year, driven in part by 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
Borders Group will release second quarter 2003 results Aug. 21 after market close with a conference call to follow Aug. 22 at 8 a.m. Eastern. About Borders Group Borders Group (NYSE:BGP) is a leading global retailer of books, music and movies. Headquartered in Ann Arbor, Mich., the company employs 32,000 people worldwide and operates 412 Borders domestic superstores; 33 international Borders stores located primarily in the U.K. and the Pacific Rim Pacific Rim, term used to describe the nations bordering the Pacific Ocean and the island countries situated in it. In the post–World War II era, the Pacific Rim has become an increasingly important and interconnected economic region. ; 36 Books etc. stores throughout Great Britain Great Britain, officially United Kingdom of Great Britain and Northern Ireland, constitutional monarchy (2005 est. pop. 60,441,000), 94,226 sq mi (244,044 sq km), on the British Isles, off W Europe. The country is often referred to simply as Britain. ; and approximately 774 Waldenbooks stores in malls across 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. . 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, title selection, events and locations 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," "continuing," "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, and other factors; changes in accounting rules; 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-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. Annual Report for the fiscal year ended Jan. 26, 2003 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
---------------------
April 27, April 28,
2003 2002
---------- ----------
Borders $521.5 $518.5
Waldenbooks 150.3 170.0
International 79.6 63.2
---------- ----------
Total sales 751.4 751.7
Other revenue 6.8 6.5
---------- ----------
Total revenue 758.2 758.2
Cost of goods sold, including occupancy costs 569.6 559.4
---------- ----------
Gross margin 188.6 198.8
Selling, general and administrative expenses 192.6 189.3
Pre-opening expense 1.5 0.8
---------- ----------
Operating income (loss) (5.5) 8.7
Interest expense 2.2 2.4
---------- ----------
Income (loss) before taxes (7.7) 6.3
Income taxes (2.9) 2.4
---------- ----------
Net income (loss) $(4.8) $3.9
========== ==========
Earnings (loss) per share $(0.06) $0.05
Weighted avg. common shares (in millions) 78.4 84.1
Comparable Store Sales
----------------------
Borders (5.0%) (0.4%)
Waldenbooks (8.8%) (0.2%)
Certain reclassifications, including those resulting from EITF 02-16,
have been made to the prior period to conform to current presentation.
Sales and Earnings Summary (As Percentage of Total Sales)
Quarter Ended
---------------------
April 27, April 28,
2003 2002
---------- ----------
Borders 69.4% 69.0%
Waldenbooks 20.0 22.6
International 10.6 8.4
---------- ----------
Total sales 100.0 100.0
Other revenue 0.9 0.9
---------- ----------
Total revenue 100.9 100.9
Cost of goods sold, including occupancy costs 75.8 74.4
---------- ----------
Gross margin 25.1 26.5
Selling, general and administrative expenses 25.6 25.2
Pre-opening expense 0.2 0.1
---------- ----------
Operating income (loss) (0.7) 1.2
Interest expense 0.3 0.4
---------- ----------
Income (loss) before taxes (1.0) 0.8
Income taxes (0.4) 0.3
---------- ----------
Net income (loss) (0.6)% 0.5%
========== ==========
Certain reclassifications, including those resulting from EITF 02-16,
have been made to the prior period to conform to current presentation.
Borders Group, Inc. Financial Statements
(dollars in millions)
Condensed Consolidated Balance Sheets
April 27, April 28, January 26,
2003 2002 2003
----------- ----------- -------------
ASSETS
Cash and cash equivalents $136.4 $60.1 $269.1
Inventory 1,189.5 1,194.0 1,183.3
Other current assets 99.0 55.9 88.9
Property and equipment, net 543.7 526.7 553.8
Other assets and deferred
charges 92.3 116.4 76.6
Goodwill 95.1 90.4 96.5
----------- ----------- -------------
Total assets $2,156.0 $2,043.5 $2,268.2
=========== =========== =============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Short-term debt $116.7 $86.9 $112.7
Accounts payable 574.3 611.7 565.4
Other current liabilities 300.3 251.9 409.5
Long-term debt 50.0 - 50.0
Long-term capital lease and
financing obligations 19.0 51.0 19.0
Other long-term liabilities 82.4 74.4 81.0
----------- ----------- -------------
Total liabilities 1,142.7 1,075.9 1,237.6
Total stockholders' equity 1,013.3 967.6 1,030.6
----------- ----------- -------------
Total liabilities and
stockholders' equity $2,156.0 $2,043.5 $2,268.2
=========== =========== =============
Store Activity Summary
Quarter Ended Year Ended
------------------- -----------
April 27, April 28, January 26,
2003 2002 2003
--------- --------- -----------
Borders Superstores
Beginning number of stores 404 363 363
Openings
8 6 41
Closings - - -
--------- --------- -----------
Ending number of stores 412 369 404
========= ========= ===========
Ending square footage (in millions) 10.6 9.7 10.4
Walden Stores
Beginning number of stores 778 827 827
Openings 2 - 4
Closings (6) (7) (53)
--------- --------- -----------
Ending number of stores 774 820 778
========= ========= ===========
Ending square footage (in millions) 3.0 3.2 3.1
Borders International Superstores
Beginning number of stores 30 22 22
Openings
3 - 8
Closings - - -
--------- --------- -----------
Ending number of stores 33 22 30
========= ========= ===========
Ending square footage (in millions) 0.9 0.6 0.8
Borders Group, Inc. Segment Financial Information
(dollars in millions, except per share amounts)
Quarter Ended
-----------------------------
April 27, April 28,
2003 2002 Change
---------- ---------- -------
Borders
-------
Sales $521.5 $518.5 1%
EBITDA (1) 24.3 34.6 -30%
Depreciation expense 17.3 16.4 5%
Operating income 7.0 18.2 -62%
Net income 4.8 11.2 -57%
Net income per share $0.06 $0.13 -54%
Waldenbooks
-----------
Sales $150.3 $170.0 -12%
EBITDA (1) (4.4) (1.7) -159%
Depreciation expense 4.1 4.5 -9%
Operating loss (8.5) (6.2) -37%
Net income 0.5 1.4 -64%
Net income per share $0.01 $0.02 -50%
International
-------------
Sales $79.6 $63.2 26%
EBITDA (1) 0.3 (0.4) 175%
Depreciation expense 2.8 2.3 22%
Operating loss (2.5) (2.7) 7%
Net loss (4.2) (4.7) 11%
Net loss per share $(0.05) $(0.05) 0%
Corporate (2)
-------------
EBITDA (1) (1.5) (0.6) -150%
Operating loss (1.5) (0.6) -150%
Net loss (5.9) (4.0) -48%
Net loss per share $(0.08) $(0.05) -60%
Consolidated
------------
Sales $751.4 $751.7 0%
EBITDA (1) 18.7 31.9 -41%
Depreciation expense 24.2 23.2 4%
Operating income (loss) (5.5) 8.7 -163%
Net income (loss) (4.8) 3.9 -223%
Net income (loss) per share $(0.06) $0.05 -220%
(1) EBITDA is operating income (loss) before depreciation and
amortization. EBITDA is not a Generally Accepted Accounting
Principles (GAAP) measurement, but is being included, as we
believe it is a commonly used measure of operating performance in
the retail industry. EBITDA is provided to enhance an investor's
understanding of our operating results. It should not be construed
as an alternative to operating income (loss) from operations as an
indicator of operating performance or as an alternative to cash
flows from operating activities as a measure of liquidity as
determined in accordance with GAAP. All companies do not calculate
EBITDA in the same manner. As a result, EBITDA as reported may not
be comparable to EBITDA as reported by other companies.
(2) The Corporate segment includes unallocated interest expense,
various corporate governance costs and corporate incentive costs.
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