BKS Barnes and Noble Inc

Barnes & Noble, Inc. (NYSE: BKS) today reported sales and earnings for its fiscal 2019 fourth quarter and full-year ended April 27, 2019.

Total sales were $755 million for the quarter and $3.6 billion for the full year, decreasing 3.9% and 3.0% from the prior year periods, respectively. Comparable store sales declined 2.3% for the fourth quarter and 1.9% for the full year.

The consolidated fourth quarter net loss was $18.7 million, or $0.26 per share, compared to a loss of $21.1 million, or $0.29 per share, in the prior year. Fiscal 2019 net earnings were $3.8 million, or $0.05 per share, compared to a net loss of $125.5 million, or $1.73 per share, in the prior year.

Excluding non-recurring or unusual charges in all periods, consolidated EBITDA was $4.6 million in the fourth quarter, as compared to $6.7 million a year ago, and $147.2 million for fiscal 2019, as compared to $145.4 million a year ago. The company reduced expenses by $50.4 million during fiscal 2019, excluding non-recurring or unusual charges.

In light of the Company’s announcement on June 7, 2019 that it has entered into an agreement to be acquired by funds advised by Elliott Advisors (UK) Limited, the Company will not host a conference call to discuss the results.

About Barnes & Noble, Inc.

Barnes & Noble, Inc. (NYSE: BKS) is the nation’s largest retail bookseller, and a leading retailer of content, digital media and educational products. The Company operates 627 Barnes & Noble bookstores in 50 states, and one of the Web’s premier e-commerce sites, BN.com (www.bn.com). The Nook Digital business offers a lineup of popular NOOK® tablets and eReaders and an expansive collection of digital reading and entertainment content through the NOOK Store®. The NOOK Store (www.nook.com) features digital books, periodicals and comics, and offers the ability to enjoy content across a wide array of popular devices through Free NOOK Reading Apps™ available for Android™, iOS® and Windows®.

General information on Barnes & Noble, Inc. can be obtained by visiting the Company's corporate website at www.barnesandnobleinc.com.

BKS – Financial

Forward-Looking Statements

This press release contains certain forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) and information relating to Barnes & Noble that are based on the beliefs of the management of Barnes & Noble as well as assumptions made by and information currently available to the management of Barnes & Noble. When used in this communication, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “will,” “forecasts,” “projections,” and similar expressions, as they relate to Barnes & Noble or the management of Barnes & Noble, identify forward-looking statements.

Such statements reflect the current views of Barnes & Noble with respect to future events, the outcome of which is subject to certain risks, including, among others, the inability to complete the proposed transaction with affiliates of Elliott Associates, L.P. and Elliott International, L.P. in a timely manner or at all; the risk that such proposed transaction could have an adverse effect on the Company’s business; general economic environment and consumer spending patterns, decreased consumer demand for Barnes & Noble’s products, low growth or declining sales and net income due to various factors, including store closings, higher-than-anticipated or increasing costs, including with respect to store closings, relocation, occupancy (including in connection with lease renewals) and labor costs, the effects of competition, the risk of insufficient access to financing to implement future business initiatives, risks associated with data privacy and information security, risks associated with Barnes & Noble’s supply chain, including possible delays and disruptions and increases in shipping rates, various risks associated with the digital business, including the possible loss of customers, declines in digital content sales, risks and costs associated with ongoing efforts to rationalize the digital business, risks associated with the eCommerce business, including the possible loss of eCommerce customers and declines in eCommerce sales, the risk that financial and operational forecasts and projections are not achieved, the performance of Barnes & Noble’s initiatives including but not limited to new store concepts and eCommerce initiatives, unanticipated adverse litigation results or effects, potential infringement of Barnes & Noble’s intellectual property by third parties or by Barnes & Noble of the intellectual property of third parties, and other factors, including those factors discussed in detail in Item 1A, “Risk Factors,” in Barnes & Noble’s Annual Report on Form 10-K for the fiscal year ended April 27, 2019, and in Barnes & Noble’s other filings made hereafter from time to time with the SEC.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to Barnes & Noble or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. Barnes & Noble undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this communication.

  BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)                   13 weeks ended 13 weeks ended 52 weeks ended 52 weeks ended April 27, 2019 April 28, 2018 April 27, 2019 April 28, 2018   Sales $ 755,433 $ 786,076 $ 3,552,745 $ 3,662,280 Cost of sales and occupancy   533,190     557,075     2,479,725     2,551,077   Gross profit   222,243     229,001     1,073,020     1,111,203   Selling and administrative expenses 219,256 230,042 936,745 997,286 Depreciation and amortization 22,724 24,498 97,679 106,340 Asset impairments   -     -     22,067     135,435   Operating income (loss) (19,737 ) (25,539 ) 16,529 (127,858 ) Interest expense, net   3,391     2,583     13,447     9,837   Income (loss) before taxes (23,128 ) (28,122 ) 3,082 (137,695 ) Income tax benefit   (4,399 )   (7,050 )   (687 )   (12,215 ) Net income (loss) $ (18,729 ) $ (21,072 ) $ 3,769   $ (125,480 )   Income (loss) per common share:         Basic $ (0.26 ) $ (0.29 ) $ 0.05   $ (1.73 ) Diluted $ (0.26 ) $ (0.29 ) $ 0.05   $ (1.73 )   Weighted average common shares outstanding: Basic

73,033

72,653 72,919 72,588 Diluted

73,033

72,653 73,124 72,588   Dividends declared per common share $ 0.15 $ 0.15 $ 0.60 $ 0.60   Percentage of sales: Sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales and occupancy   70.6 %   70.9 %   69.8 %   69.7 % Gross profit   29.4 %   29.1 %   30.2 %   30.3 % Selling and administrative expenses 29.0 % 29.3 % 26.4 % 27.2 % Depreciation and amortization 3.0 % 3.1 % 2.7 % 2.9 % Asset impairments   0.0 %   0.0 %   0.6 %   3.7 % Operating income (loss) -2.6 % -3.2 % 0.5 % -3.5 % Interest expense, net   0.4 %   0.3 %   0.4 %   0.3 % Income (loss) before taxes -3.1 % -3.6 % 0.1 % -3.8 % Income tax benefit   -0.6 %   -0.9 %   0.0 %   -0.3 % Net income (loss) -2.5 % -2.7 % 0.1 % -3.4 %   BARNES & NOBLE, INC. AND SUBSIDIARIES Segment Information (In thousands) (Unaudited)                   13 weeks ended 13 weeks ended 52 weeks ended 52 weeks ended April 27, 2019 April 28, 2018 April 27, 2019 April 28, 2018   Sales   Retail $ 738,494 $ 765,452 $ 3,481,949 $ 3,575,614 NOOK 20,731 25,093 92,136 111,487 Elimination   (3,792 )   (4,469 )   (21,340 )   (24,821 ) Total $ 755,433   $ 786,076   $ 3,552,745   $ 3,662,280     Gross Profit Retail $ 210,870 $ 216,310 $ 1,028,341 $ 1,054,195 NOOK   11,373     12,691     44,679     57,008   Total $ 222,243   $ 229,001   $ 1,073,020   $ 1,111,203     Selling and Administrative Expenses Retail $ 210,001 $ 218,494 $ 895,485 $ 943,820 NOOK   9,255     11,548     41,260     53,466   Total $ 219,256   $ 230,042   $ 936,745   $ 997,286     Asset Impairments Retail $ - $ - $ 22,067 $ 135,435 NOOK   -     -     -     -   Total $ -   $ -   $ 22,067   $ 135,435     EBITDA   Retail $ 869 $ (2,184 ) $ 110,789 $ (25,060 ) NOOK   2,118     1,143     3,419     3,542   Total $ 2,987   $ (1,041 ) $ 114,208   $ (21,518 )   Depreciation and Amortization Retail $ (20,374 ) $ (21,843 ) $ (87,887 ) $ (94,334 ) NOOK   (2,350 )   (2,655 )   (9,792 )   (12,006 ) Total $ (22,724 ) $ (24,498 ) $ (97,679 ) $ (106,340 )   Operating Income (Loss) Retail $ (19,505 ) $ (24,027 ) $ 22,902 $ (119,394 ) NOOK   (232 )   (1,512 )   (6,373 )   (8,464 ) Total $ (19,737 ) $ (25,539 ) $ 16,529   $ (127,858 )  

Net Income (Loss)

Operating income (loss) $ (19,737 ) $ (25,539 ) $ 16,529 $ (127,858 ) Interest expense, net (3,391 ) (2,583 ) (13,447 ) (9,837 ) Income tax benefit   4,399     7,050     687     12,215   Total $ (18,729 ) $ (21,072 ) $ 3,769   $ (125,480 )       Percentage of sales:   Gross Margin Retail 28.6 % 28.3 % 29.5 % 29.5 % NOOK   67.1 %   61.5 %   63.1 %   65.8 % Total 29.4 % 29.1 % 30.2 % 30.3 %   Selling and Administrative Expenses Retail 28.4 % 28.5 % 25.7 % 26.4 % NOOK   54.6 %   56.0 %   58.3 %   61.7 % Total 29.0 % 29.3 % 26.4 % 27.2 %   Asset Impairments Retail 0.0 % 0.0 % 0.6 % 3.8 % NOOK   0.0 %   0.0 %   0.0 %   0.0 % Total 0.0 % 0.0 % 0.6 % 3.7 %   EBITDA   Retail 0.1 % -0.3 % 3.2 % -0.7 % NOOK   12.5 %   5.5 %   4.8 %   4.1 % Total 0.4 % -0.1 % 3.2 % -0.6 %   Depreciation and Amortization Retail 2.8 % 2.9 % 2.5 % 2.6 % NOOK   13.9 %   12.9 %   13.8 %   13.9 % Total 3.0 % 3.1 % 2.7 % 2.9 %   Operating Income (Loss) Retail -2.6 % -3.1 % 0.7 % -3.3 % NOOK   -1.4 %   -7.3 %   -9.0 %   -9.8 % Total -2.6 % -3.2 % 0.5 % -3.5 %   BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands) (Unaudited)           April 27, 2019 April 28, 2018   ASSETS Current assets: Cash and cash equivalents $ 9,443 $ 10,769 Receivables, net 61,247 64,562 Merchandise inventories, net 923,714 958,196 Prepaid expenses and other current assets   69,807     65,153   Total current assets   1,064,211     1,098,680     Property and equipment: Land and land improvements 2,541 2,541 Buildings and leasehold improvements 1,096,778 1,080,952 Fixtures and equipment   1,552,613     1,523,485   2,651,932 2,606,978 Less accumulated depreciation and amortization   2,395,142     2,351,454   Net property and equipment   256,790     255,524     Goodwill 70,030 71,593 Intangible assets, net 303,736 309,649 Other non-current assets   10,867     14,122   Total assets $ 1,705,634   $ 1,749,568     LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 418,948 $ 458,896 Accrued liabilities 268,143 260,209 Gift card liabilities   215,459     323,465   Total current liabilities   902,550     1,042,570     Long-term debt 203,800 158,700 Deferred taxes 70,261 52,044 Other long-term liabilities 84,526 84,271   Shareholders' equity: Common stock; $0.001 par value; 300,000 shares authorized; 112,782 and 112,238 shares issued, respectively 112 112 Additional paid-in capital 1,753,530 1,749,555 Accumulated other comprehensive income 298 276 Retained earnings (186,823 ) (216,236 ) Treasury stock, at cost, 39,745 and 39,585 shares, respectively   (1,122,620 )   (1,121,724 ) Total Barnes & Noble, Inc. shareholders' equity   444,497     411,983   Commitments and contingencies   -     -   Total liabilities and shareholders' equity $ 1,705,634   $ 1,749,568     BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated Statement of Cash Flows (In thousands) (Unaudited)               52 weeks ended 52 weeks ended April 27, 2019 April 28, 2018   Cash flows from operating activities: Net income (loss) $ 3,769 $ (125,480 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation and amortization (including amortization of deferred financing fees) 99,649 108,293 Stock-based compensation expense 3,975 6,865 Impairment charges 22,067 135,435 Deferred taxes 766 (30,865 ) Loss on disposal of property and equipment 782 730 Net decrease in other long-term liabilities (1,772 ) (15,094 ) Net (increase) decrease in other non-current assets 5,617 (4,962 ) Changes in operating assets and liabilities, net   (28,863 )   (37,816 ) Net cash flows provided by operating activities   105,990     37,106   Cash flows from investing activities: Purchases of property and equipment   (113,731 )   (87,651 ) Net cash flows used in investing activities   (113,731 )   (87,651 ) Cash flows from financing activities: Proceeds from credit facility 1,218,274 1,173,317 Payments on credit facility (1,173,174 ) (1,079,517 ) Cash dividends paid (32,874 ) (43,638 ) Purchase of treasury stock related to stock-based compensation (896 )

(653

)

Cash dividends paid for long-term incentive awards (490 )

(188

) Payment of amended credit facility related fees   (4,425 )  

-

 

Net cash flows provided by financing activities   6,415     49,321   Net decrease in cash and cash equivalents (1,326 ) (1,224 ) Cash and cash equivalents at beginning of period   10,769     11,993   Cash and cash equivalents at end of period $ 9,443   $ 10,769     Changes in operating assets and liabilities, net: Receivables, net $ 3,315 $ 2,732 Merchandise inventories, net 34,482 (11,287 ) Prepaid expenses and other current assets (5,751 ) 37,096 Accounts payable, accrued liabilities and gift card liabilities   (60,909 )   (66,357 ) Changes in operating assets and liabilities, net $ (28,863 ) $ (37,816 )   BARNES & NOBLE, INC. AND SUBSIDIARIES Non-GAAP Reconciliation (In millions) (Unaudited)           Fiscal 2019   Fiscal 2018   EBITDA   EBITDA $ 114 $ (21 ) Legal and deal related costs 11 - Asset impairments (b) 22 135 Severance - 16 Strategic initiatives (c)   -     15   Adjusted EBITDA (a) $ 147   $ 145    

Operating income (loss)

EBITDA $ 114 $ (21 ) Depreciation and amortization   (98 )   (106 ) Operating income (loss) $ 16   $ (127 )     13 weeks ended 13 weeks ended April 27, 2019 April 28, 2018 EBITDA   EBITDA $ 3 $ (1 ) Legal and deal related costs 2 - Severance - 6 Strategic initiatives (c)   -     2   Adjusted EBITDA (a) $ 5   $ 7     Operating loss EBITDA $ 3 $ (1 ) Depreciation and amortization   (23 )   (25 ) Operating loss $ (20 ) $ (26 )           (a) Excludes any unusual or non-recurring items.   (b) Fiscal 2018 includes goodwill and store impairment charges.   (c) Costs associated with strategic initiatives, including strategic consulting and markdowns to clear certain non-returnable inventories.

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Media:Mary Ellen KeatingSenior Vice PresidentCorporate CommunicationsBarnes & Noble, Inc.(212) 633-3323mkeating@bn.comInvestors:Andy MilevojVice PresidentInvestor Relations and Corporate FinanceBarnes & Noble, Inc.(212) 633-3489amilevoj@bn.com