Borders Group Second Quarter 2004 Results Exceed EPS Expectations; Management Raises Full-Year 2004 EPS Guidance To $1.72-$1.77.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. -- 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 second quarter of 2004, which ended July July: see month. 25. 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 were $0.11 per share, which is $0.05 above consolidated earnings per share of $0.06 cents a year ago, and is $0.03 above the high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. of the company's previously issued guidance of $0.06 to $0.08 per share. Borders Group consolidated sales for the period were $847.1 million, representing an increase of 2.4% over second quarter 2003. Second quarter performance was driven primarily by book sales that were stronger than anticipated despite the expected challenging comparison to a year ago when the fifth book in the Harry Potter A potter is someone who makes pottery. Potter may also refer to: People
Second quarter comparable store sales for Borders superstores This is a list of superstores by country. Multi-national
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 management guidance at -7.3%. Total sales in the company's International segment grew to $104.3 million, which represents an 18.3% increase over the prior year, slightly better than expected. "Borders Group is pleased to have delivered sales and earnings growth in what was, as anticipated, a challenging second quarter on the top line relative to 2003," said Borders Group Chief Executive Officer Greg GREG Great Egg Harbor National Scenic and Recreational River (US National Park Service) Josefowicz. "As we look to the back half of the year, we remain focused on executing our plan to strengthen comparable store sales, deliver 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. targets and enhance shareholder value through a combination of 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. and cash dividends. We are also pleased to have completed the acquisition of Paperchase Products Limited and the licensing agreement with Seattle's Best Coffee Seattle's Best Coffee is a specialty coffee retailer and wholesaler based in Seattle, Washington, USA. It became part of Starbucks Corporation on July 14, 2003. Its international division is owned by FOCUS Brands, Inc. during the quarter. By leveraging these strong brands, we will continue to enhance our product offering to customers while remaining focused on our core strength in bookselling Book´sell`ing n. 1. The employment of selling books. ." Consolidated Results--Q2 2004 --Consolidated sales totaled $847.1 million, which is up 2.4% from a year ago, driven by new store growth 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. and International segments. --At $8.5 million, net income improved by 88.9% over last year's $4.5 million, as profit margins rose, driven primarily by increased gross margins. --Gross margin as a percent of sales increased to 26.4% from 25.6%, resulting in large part from higher bestseller discounts last year related to the Harry Potter book. --As expected, SG&A as a percent of sales increased to 24.4% from 24.3% driven by adverse sales leverage resulting from challenging sales comparisons described above. --Inventory productivity improved as the company's investment in inventory increased 1.3% compared to last year, while consolidated sales increased by 2.4% and total square footage increased 4%. --The company's financial position remains strong. Debt net of cash was $5.1 million, slightly higher than levels of a year ago. --The company repurchased 1.8 million shares of its common stock, totaling $41.6 million for the quarter. On a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. basis, Borders Group has repurchased 3.9 million shares totaling $91.7 million. Borders Superstores--Q2 2004 --Segment sales totaled $592.8 million, which is up 4.0% over the same period last year, helped in part by sales of bestsellers like Bill Clinton's "My Life" as well as new store growth. --Better than anticipated sales and stronger gross margins led to net income of $16.1 million, up from $10.6 million a year ago. --Books, on a same-store sales Same-store sales is a business term which refers to the revenue generated by one of a retail chain's specific outlets during a certain period of time (often a fiscal quarter or a particular shopping season), compared to an identical period in the past, usually in the previous year. basis, approximated the total Borders comparable store sales result. Multimedia (music and 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. combined) sales were slightly positive on a comparable store sales basis, driven by strong DVD sales. --Borders opened two new domestic superstores, and as of the end of the second quarter, operates 450 total domestic Borders superstores. International--Q2 2004 --Total sales increased by 18.3% to $104.3 million, driven by new store growth, comparable store sales increases and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency exchange rates. Excluding the impact of foreign currency translation, total International sales would have increased 7.9%. --Net loss in the segment was $2.6 million compared to a net loss of $3.6 million for the same period a year ago. --As of the close of the second quarter, Borders operates a total of 37 overseas Borders superstores and 36 Books etc. stores in the U.K. Waldenbooks--Q2 2004 --Waldenbooks generated sales of $150.0 million, which is down from $168.7 million for the same period one year ago. Total store square footage is down from a year ago by 6.7% due to store closures. --Net income for the segment decreased to $1.6 million, compared to $2.6 million a year ago due to the decline in comparable store sales. Non-Operating Adjustments --All net income and earnings per share figures reported for the second quarter include the impact of non-operating adjustments. In the second quarter, these adjustments amounted to 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. net income of $0.1 million. This total is comprised of after-tax income of $1.7 million resulting from the deconsolidation of certain variable interest entities, which was offset by after-tax charges totaling $1.6 million related to a Books etc. store closure and asset write-offs resulting from store remodels. Q3 2004 Outlook --Comparable stores sales at Borders are expected to be flat to up slightly. --Waldenbooks' comparable store sales are expected to be flat to down slightly. --Total International segment sales, including newly acquired Paperchase Products Limited, are expected to increase 20% to 25% for the period. --Management projects consolidated earnings for the third quarter to range from $0.01 to $0.03 per share. This compares to consolidated earnings per share of $0.01 for the same period last year. Full-Year 2004 Outlook --Management is increasing consolidated earnings per share guidance for the full-year 2004 to a range of $1.72 to $1.77, representing growth of 13% to 16% over 2003. Previous management guidance for the year was $1.70 to $1.75 earnings per share. --Comparable store sales for Borders superstores are expected to increase in the low single digits. --Waldenbooks' comparable store sales are expected to be flat to down slightly. --Total sales for the International segment, including the newly acquired Paperchase Products Limited, are expected to increase 20% to 25% over 2003. --Full-year earnings per share estimates include the impact of non-operating adjustments projected for the year to be an after-tax charge of $0.04 to $0.06 per share. Next Financial Release/Conference Call Borders Group will issue third quarter 2004 results after market close Nov. 16 with a conference call to follow Nov. 17 at 8 a.m. Eastern. About Borders Group Headquartered in Ann Arbor, Mich., Borders Group is a leading global retailer of books, music and movies with more than 1,200 stores worldwide. More detailed information on the company is available at www.bordersgroupinc.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 "projected," "expected," "estimates," "look," "continuing," "plans," "guidance," "will," "may," "intends," "anticipates," 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), its plans relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc store openings and closings and its intentions with respect to dividend payments and share repurchases. 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 under-performing stores or other unusual items; an unexpected increase in competition; 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 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 ; 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 rate. Exhibit 99.1 to the company's Form 10-Q Form 10-Q See 10-Q. for the fiscal quarter ended April 25, 2004 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 July 25, 2004 Quarter Ended July 27, 2003
---------------------------- ----------------------------
Operating Adjustments GAAP Operating Adjustments GAAP
Basis (1) (1) Basis Basis (2) (2) Basis
---------------------------- ----------------------------
Borders $592.8 $ - $592.8 $570.0 $ - $570.0
Waldenbooks 150.0 - 150.0 168.7 - 168.7
International 104.3 - 104.3 88.2 - 88.2
--------- -------- ------- --------- ------- -------
Total sales 847.1 - 847.1 826.9 - 826.9
Other revenue
(3) 6.3 - 6.3 7.5 - 7.5
--------- -------- ------- --------- ------- -------
Total revenue 853.4 - 853.4 834.4 - 834.4
Cost of goods
sold,
including
occupancy
costs 628.9 0.9 629.8 620.8 0.5 621.3
Inventory
writedowns - - - - 0.5 0.5
--------- -------- ------- --------- ------- -------
Gross margin 224.5 (0.9) 223.6 213.6 (1.0) 212.6
Selling,
general and
administrative
expenses 207.8 (1.3) 206.5 200.5 - 200.5
Pre-opening
expense 1.0 - 1.0 1.7 - 1.7
Asset
impairments
and other
writedowns - 0.2 0.2 - 0.6 0.6
--------- -------- ------- --------- ------- -------
Operating
income (loss) 15.7 0.2 15.9 11.4 (1.6) 9.8
Interest
expense 2.4 - 2.4 2.6 - 2.6
--------- -------- ------- --------- ------- -------
Income (loss)
before income
taxes 13.3 0.2 13.5 8.8 (1.6) 7.2
Income tax
provision
(benefit) 4.9 0.1 5.0 3.3 (0.6) 2.7
--------- -------- ------- --------- ------- -------
Net income
(loss) $ 8.4 $ 0.1 $ 8.5 $ 5.5 $ (1.0) $ 4.5
========= ======== ======= ========= ======= =======
EPS $ 0.11 $ - $ 0.11 $ 0.07 $(0.01) $ 0.06
Weighted avg.
common shares 78.4 78.4 78.4 78.5 78.5 78.5
Comparable Store Sales
-------------------------
Borders (0.8%) 1.7%
Waldenbooks (7.3%) 3.7%
Sales and Earnings Summary (As Percentage of Total Sales)
--------------------------- ---------------------------
Quarter Ended July 25, 2004 Quarter Ended July 27, 2003
--------------------------- ---------------------------
Operating Adjustments GAAP Operating Adjustments GAAP
Basis (1) (1) Basis Basis (2) (2) Basis
--------------------------- ---------------------------
Borders 70.0 % - % 70.0 % 68.9 % - % 68.9 %
Waldenbooks 17.7 - 17.7 20.4 - 20.4
International 12.3 - 12.3 10.7 - 10.7
--------- ---------- ------ --------- ---------- ------
Total sales 100.0 - 100.0 100.0 - 100.0
Other revenue
(3) 0.7 - 0.7 0.9 - 0.9
--------- ---------- ------ --------- ---------- ------
Total revenue 100.7 - 100.7 100.9 - 100.9
Cost of goods
sold,
including
occupancy
costs 74.2 0.1 74.3 75.1 0.1 75.2
Inventory
writedowns - - - - 0.1 0.1
--------- ---------- ------ --------- ---------- ------
Gross margin 26.5 (0.1) 26.4 25.8 (0.2) 25.6
Selling,
general and
administrative
expenses 24.5 (0.1) 24.4 24.3 - 24.3
Pre-opening
expense 0.1 - 0.1 0.2 - 0.2
Asset
impairments
and other
writedowns - - - - 0.1 0.1
--------- ---------- ------ --------- ---------- ------
Operating
income (loss) 1.9 - 1.9 1.3 (0.3) 1.0
Interest
expense 0.3 - 0.3 0.3 - 0.3
--------- ---------- ------ --------- ---------- ------
Income (loss)
before income
taxes 1.6 - 1.6 1.0 (0.3) 0.7
Income tax
provision
(benefit) 0.6 - 0.6 0.4 (0.2) 0.2
--------- ---------- ------ --------- ---------- ------
Net income
(loss) 1.0 % - % 1.0 % 0.6 % (0.1)% 0.5 %
========= ========== ====== ========= ========== ======
(1) Results from fiscal 2004 were impacted by a number of non-
operating items primarily consisting of income resulting from the
deconsolidation of certain variable interest entities pursuant to
the provisions of FIN 46. Partially offsetting this income are
store closure costs and disposals of fixed assets resulting from
the remodel program. 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 fiscal 2003 were impacted by a number of non-
operating items, primarily consisting of store closure costs of
certain under-performing stores. Partially offsetting these costs
is an insurance reimbursement related to the loss of the Borders
store at the Word 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.
Certain reclassifications have been made to conform to current
presentation.
Borders Group, Inc. Financial Statements
(dollars in millions, except per share amounts)
Sales and Earnings Summary
------------------------------
Six Months Ended July 25, 2004
------------------------------
Operating Adjustments GAAP
Basis (1) (1) Basis
------------------------------
Borders $1,170.1 $ - $1,170.1
Waldenbooks 300.8 - 300.8
International 207.0 - 207.0
--------- ---------- ---------
Total sales 1,677.9 - 1,677.9
Other revenue (3) 13.6 - 13.6
--------- ---------- ---------
Total revenue 1,691.5 - 1,691.5
Cost of goods sold, including occupancy
costs 1,256.1 0.9 1,257.0
Inventory writedowns - 0.1 0.1
--------- ---------- ---------
Gross margin 435.4 (1.0) 434.4
Selling, general and administrative
expenses 411.2 (1.7) 409.5
Pre-opening expense 2.0 (0.3) 1.7
Asset impairments and other writedowns - 0.6 0.6
--------- ---------- ---------
Operating income (loss) 22.2 0.4 22.6
Interest expense 4.3 - 4.3
--------- ---------- ---------
Income (loss) before income taxes 17.9 0.4 18.3
Income tax provision (benefit) 6.6 0.2 6.8
--------- ---------- ---------
Net income (loss) $ 11.3 $ 0.2 $ 11.5
========= ========== =========
EPS $ 0.15 $ - $ 0.15
Weighted avg. common shares 79.1 79.1 79.1
Comparable Store Sales
--------------------------------------------------
Borders 1.7%
Waldenbooks (1.3%)
Borders Group, Inc. Financial Statements
(dollars in millions, except per share amounts)
Sales and Earnings Summary
------------------------------
Six Months Ended July 27, 2003
------------------------------
Operating Adjustments GAAP
Basis (2) (2) Basis
------------------------------
Borders $1,091.5 $ - $1,091.5
Waldenbooks 319.0 - 319.0
International 167.8 - 167.8
--------- ---------- ---------
Total sales 1,578.3 - 1,578.3
Other revenue (3) 14.7 - 14.7
--------- ---------- ---------
Total revenue 1,593.0 - 1,593.0
Cost of goods sold, including occupancy
costs 1,190.4 0.5 1,190.9
Inventory writedowns - 0.5 0.5
--------- ---------- ---------
Gross margin 402.6 (1.0) 401.6
Selling, general and administrative
expenses 393.5 - 393.5
Pre-opening expense 3.2 - 3.2
Asset impairments and other writedowns - 0.6 0.6
--------- ---------- ---------
Operating income (loss) 5.9 (1.6) 4.3
Interest expense 4.8 - 4.8
--------- ---------- ---------
Income (loss) before income taxes 1.1 (1.6) (0.5)
Income tax provision (benefit) 0.4 (0.6) (0.2)
--------- ---------- ---------
Net income (loss) $ 0.7 $ (1.0) $ (0.3)
========= ========== =========
EPS $ 0.01 $ (0.01) $ -
Weighted avg. common shares 77.9 77.9 77.9
Comparable Store Sales
------------------------------------------------
Borders (1.7%)
Waldenbooks (2.6%)
Sales and Earnings Summary (As Percentage of Total Sales)
-------------------------------
Six Months Ended July 25, 2004
-------------------------------
Operating Adjustments GAAP
(1)
Basis (1) Basis
-------------------------------
Borders 69.7 % - % 69.7 %
Waldenbooks 17.9 - 17.9
International 12.4 - 12.4
----------- ----------- -------
Total sales 100.0 - 100.0
Other revenue (3) 0.8 - 0.8
----------- ----------- -------
Total revenue 100.8 - 100.8
Cost of goods sold, including
occupancy costs 74.9 - 74.9
Inventory writedowns - - -
----------- ----------- -------
Gross margin 25.9 - 25.9
Selling, general and administrative
expenses 24.4 - 24.4
Pre-opening expense 0.1 - 0.1
Asset impairments and other writedowns - - -
----------- ----------- -------
Operating income (loss) 1.4 - 1.4
Interest expense 0.3 - 0.3
----------- ----------- -------
Income (loss) before income taxes 1.1 - 1.1
Income tax provision (benefit) 0.4 - 0.4
----------- ----------- -------
Net income (loss) 0.7 % - % 0.7 %
=========== =========== =======
Sales and Earnings Summary (As Percentage of Total Sales)
------------------------------
Six Months Ended July 27, 2003
------------------------------
Operating Adjustments GAAP
Basis (2) (2) Basis
(2)
------------------------------
Borders 69.2 % - % 69.2 %
Waldenbooks 20.2 - 20.2
International 10.6 - 10.6
--------- ------------- ------
Total sales 100.0 - 100.0
Other revenue (3) 0.9 - 0.9
--------- ------------- ------
Total revenue 100.9 - 100.9
Cost of goods sold, including occupancy
costs 75.5 - 75.5
Inventory writedowns - - -
--------- ------------- ------
Gross margin 25.4 - 25.4
Selling, general and administrative
expenses 24.9 - 24.9
Pre-opening expense 0.2 - 0.2
Asset impairments and other writedowns - - -
--------- ------------- ------
Operating income (loss) 0.3 - 0.3
Interest expense 0.3 - 0.3
--------- ------------- ------
Income (loss) before income taxes - - -
Income tax provision (benefit) - - -
--------- ------------- ------
Net income (loss) - % - % - %
========= ============= ======
(1) Results from fiscal 2004 were impacted by a number of
non-operating items primarily consisting of income resulting from
the deconsolidation of certain variable interest entities pursuant
to the provisions of FIN 46 and an insurance reimbursement related
to the loss of the Borders store at the World Trade Center.
Partially offsetting this income are store closure costs and
disposals of fixed assets resulting from the remodel program.
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 fiscal 2003 were impacted by a number of
non-operating items, primarily consisting of store closure costs
of certain under-performing stores. Partially offsetting these
costs is an insurance reimbursement related to the loss of the
Borders store at the Word 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.
Certain reclassifications have been made to conform to current
presentation.
Borders Group, Inc. Financial Statements
Condensed Consolidated Balance Sheets
(dollars in millions)
July 25, July 27, January 25,
2004 2003 2004
------------ ----------- -------------
Assets
Cash and cash equivalents $ 180.8 $ 177.3 $ 378.8
Inventory 1,229.7 1,214.4 1,235.6
Other current assets 110.5 98.6 98.3
Property and equipment, net 530.3 552.7 577.7
Other assets and deferred
charges 80.5 92.2 71.5
Goodwill 132.6 96.1 104.3
------------ ----------- -------------
Total assets $2,264.4 $2,231.3 $2,466.2
============ =========== =============
Liabilities, Minority Interest
and Stockholders' Equity
Short-term borrowings and
current portion of long-term
debt $ 129.8 $ 124.5 $ 141.2
Accounts payable 547.2 604.3 595.9
Other current liabilities 343.9 339.8 427.0
Long-term debt 56.1 50.0 57.2
Long-term capital lease
obligations - 19.0 -
Other long-term liabilities 97.2 85.4 90.2
------------ ----------- -------------
Total liabilities 1,174.2 1,223.0 1,311.5
Minority interest 1.4 - 1.7
Total stockholders' equity 1,088.8 1,008.3 1,153.0
------------ ----------- -------------
Total liabilities,
minority interest and
stockholders' equity $2,264.4 $2,231.3 $2,466.2
============ =========== =============
Store Activity Summary
----------------- -----------------
Quarter Ended Six Months Ended
----------------- -----------------
July 25, July 27, July 25, July 27,
2004 2003 2004 2003
-------- -------- -------- --------
Borders Superstores
Beginning number of stores 448 412 445 404
Openings 2 8 6 16
Closings - - (1) -
-------- -------- -------- --------
Ending number of stores 450 420 450 420
======== ======== ======== ========
Ending square footage (in millions) 11.4 10.7 11.4 10.7
======== ======== ======== ========
Waldenbooks Stores
Beginning number of stores 712 774 716 778
Openings 1 2 2 4
Closings (2) (17) (7) (23)
-------- -------- -------- --------
Ending number of stores 711 759 711 759
======== ======== ======== ========
Ending square footage (in millions) 2.8 3.0 2.8 3.0
======== ======== ======== ========
Borders International Stores
Beginning number of stores 37 33 37 30
Openings - 2 - 5
-------- -------- -------- --------
Ending number of stores 37 35 37 35
======== ======== ======== ========
Ending square footage (in millions) 1.0 0.9 1.0 0.9
======== ======== ======== ========
Borders Group, Inc. Segment Financial Information
(dollars in millions, except per share amounts)
Quarter Ended July 25, 2004 Quarter Ended July 27, 2003
----------------------------- -----------------------------
Operating Adjustments GAAP Operating Adjustments GAAP
Basis (2) (2) Basis Basis (3) (3) Basis
--------- ----------- ------- --------- ----------- -------
BORDERS
-------------
Sales $592.8 $ - $592.8 $570.0 $ - $570.0
EBITDA (1) 40.6 1.3 41.9 34.5 (0.4) 34.1
Depreciation
expense 16.8 - 16.8 17.4 - 17.4
Interest
income (1.1) - (1.1) (0.4) - (0.4)
Income taxes 9.6 0.5 10.1 6.7 (0.2) 6.5
Net income 15.3 0.8 16.1 10.8 (0.2) 10.6
Net income
per share $ 0.20 $ 0.01 $ 0.21 $ 0.14 $ - $ 0.14
WALDENBOOKS
-------------
Sales $150.0 $ - $150.0 $168.7 $ - $168.7
EBITDA (1) (4.0) (0.2) (4.2) 0.1 (1.2) 0.1
Depreciation
expense 3.4 - 3.4 4.0 - 4.0
Interest
income (10.3) - (10.3) (9.3) - (9.3)
Income taxes 1.2 (0.1) 1.1 2.0 (0.4) 1.6
Net income 1.7 (0.1) 1.6 3.4 (0.8) 2.6
Net income
per share $ 0.02 $ - $ 0.02 $ 0.04 $ (0.01) $ 0.03
INTERNATIONAL
-------------
Sales $104.3 $ - $104.3 $ 88.2 $ - $ 88.2
EBITDA (1) 4.0 (0.9) 3.1 1.8 - 1.8
Depreciation
expense 3.2 - 3.2 3.0 - 3.0
Interest
expense 4.3 - 4.3 4.7 - 4.7
Income taxes (1.5) (0.3) (1.8) (2.3) - (2.3)
Net loss (2.0) (0.6) (2.6) (3.6) - (3.6)
Net loss per
share $(0.02) $ (0.01) $(0.03) $(0.04) $ - $(0.04)
CORPORATE (4)
-------------
EBITDA (1) $ (1.5) $ - $ (1.5) $(0.6) $ - $ (0.6)
Interest
expense 9.5 - 9.5 7.6 - 7.6
Income taxes (4.4) - (4.4) (3.1) - (3.1)
Net loss (6.6) - (6.6) (5.1) - (5.1)
Net loss per
share $(0.09) $ - $(0.09) $(0.07) $ - $(0.07)
CONSOLIDATED
-------------
Sales $847.1 $ - $847.1 $826.9 $ - $826.9
EBITDA (1) 39.1 0.2 39.3 35.8 (1.6) 34.2
Depreciation
expense 23.4 - 23.4 24.4 - 24.4
Interest
expense 2.4 - 2.4 2.6 - 2.6
Income taxes 4.9 0.1 5.0 3.3 (0.6) 2.7
Net income 8.4 0.1 8.5 5.5 (1.0) 4.5
Net income
per share $ 0.11 $ - $ 0.11 $ 0.07 $ (0.01) $ 0.06
(1) EBITDA is operating income (loss) before depreciation. 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) 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) Results from fiscal 2004 were impacted by a number of
non-operating items primarily consisting of income resulting from
the deconsolidation of certain variable interest entities pursuant
to the provisions of FIN 46. Partially offsetting this income are
store closure costs and disposals of fixed assets resulting from
the remodel program. Therefore, solely for analytical purposes and
as an aid to better understand underlying trends, operating basis
data are presented excluding these items.
(3) Results from fiscal 2003 were impacted by a number of
non-operating items, primarily consisting of store closure costs
of certain under-performing stores. Partially offsetting these
costs is an insurance reimbursement related to the loss of the
Borders store at the Word Trade Center. Therefore, solely for
analytical purposes and as an aid to better understand underlying
trends, operating basis data are presented excluding these items.
(4) The Corporate segment includes interest expense, various corporate
governance costs and corporate incentive costs.
Borders Group, Inc. Segment Financial Information
(dollars in millions, except per share amounts)
Six Months Ended July 25, 2004
-------------------------------
Operating Adjustments GAAP
Basis (2) (2) Basis
--------- ----------- ---------
BORDERS
--------------------------------------
Sales $1,170.1 $ - $1,170.1
EBITDA (1) 72.2 2.4 74.6
Depreciation expense 34.1 - 34.1
Interest income (2.9) - (2.9)
Income taxes 15.9 0.9 16.8
Net income 25.1 1.5 26.6
Net income per share $ 0.32 $ 0.02 $ 0.34
WALDENBOOKS
--------------------------------------
Sales $ 300.8 $ - $ 300.8
EBITDA (1) (5.7) (0.7) (6.4)
Depreciation expense 6.9 - 6.9
Interest income (20.8) - (20.8)
Income taxes 3.3 (0.3) 3.0
Net income 4.9 (0.4) 4.5
Net income per share $ 0.07 $(0.01) $ 0.06
INTERNATIONAL
--------------------------------------
Sales $ 207.0 $ - $ 207.0
EBITDA (1) 6.6 (0.9) 5.7
Depreciation expense 6.6 - 6.6
Interest expense 9.0 - 9.0
Income taxes (3.8) (0.3) (4.1)
Net loss (5.2) (0.6) (5.8)
Net loss per share $ (0.06) $(0.01) $ (0.07)
CORPORATE (4)
--------------------------------------
EBITDA (1) $ (3.3) $ (0.4) $ (3.7)
Interest expense 19.0 - 19.0
Income taxes (8.8) (0.1) (8.9)
Net loss (13.5) (0.3) (13.8)
Net loss per share $ (0.18) $ - $ (0.18)
CONSOLIDATED
--------------------------------------
Sales $1,677.9 $ - $1,677.9
EBITDA (1) 69.8 0.4 70.2
Depreciation expense 47.6 - 47.6
Interest expense 4.3 - 4.3
Income taxes 6.6 0.2 6.8
Net income 11.3 0.2 11.5
Net income per share $ 0.15 $ - $ 0.15
Six Months Ended July 27, 2003
-------------------------------
Operating Adjustments GAAP
Basis (3) (3) Basis
--------- ----------- ---------
BORDERS
---------------------------------------
Sales $1,091.5 $ - $1,091.5
EBITDA (1) 58.8 (0.4) 58.4
Depreciation expense 34.7 - 34.7
Interest income (1.3) - (1.3)
Income taxes 9.8 (0.2) 9.6
Net income 15.6 (0.2) 15.4
Net income per share $ 0.20 $ - $ 0.20
WALDENBOOKS
---------------------------------------
Sales $ 319.0 $ - $ 319.0
EBITDA (1) (4.3) (1.2) (5.5)
Depreciation expense 8.1 - 8.1
Interest income (18.6) - (18.6)
Income taxes 2.3 (0.4) 1.9
Net income 3.9 (0.8) 3.1
Net income per share $ 0.05 $(0.01) $ 0.04
INTERNATIONAL
---------------------------------------
Sales $ 167.8 $ - $ 167.8
EBITDA (1) 2.1 - 2.1
Depreciation expense 5.8 - 5.8
Interest expense 9.3 - 9.3
Income taxes (5.2) - (5.2)
Net loss (7.8) - (7.8)
Net loss per share $ (0.10) $ - $ (0.10)
CORPORATE (4)
---------------------------------------
EBITDA (1) $ (2.1) $ - $ (2.1)
Interest expense 15.4 - 15.4
Income taxes (6.5) - (6.5)
Net loss (11.0) - (11.0)
Net loss per share $ (0.14) $ - $ (0.14)
CONSOLIDATED
---------------------------------------
Sales $1,578.3 $ - $1,578.3
EBITDA (1) 54.5 (1.6) 52.9
Depreciation expense 48.6 - 48.6
Interest expense 4.8 - 4.8
Income taxes 0.4 (0.6) (0.2)
Net income 0.7 (1.0) (0.3)
Net income per share $ 0.01 $(0.01) $ -
(1) EBITDA is operating income (loss) before depreciation. 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) 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) Results from fiscal 2004 were impacted by a number of
non-operating items primarily consisting of income resulting from
the deconsolidation of certain variable interest entities pursuant
to the provisions of FIN 46 and an insurance reimbursement related
to the loss of the Borders store at the World Trade Center.
Partially offsetting this income are store closure costs and
disposals of fixed assets resulting from the remodel program.
Therefore, solely for analytical purposes and as an aid to better
understand underlying trends, operating basis data are presented
excluding these items.
(3) Results from fiscal 2003 were impacted by a number of
non-operating items, primarily consisting of store closure costs
of certain under-performing stores. Partially offsetting these
costs is an insurance reimbursement related to the loss of the
Borders store at the Word Trade Center. Therefore, solely for
analytical purposes and as an aid to better understand underlying
trends, operating basis data are presented excluding these items.
(4) The Corporate segment includes interest expense, various corporate
governance costs and corporate incentive costs.
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