<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 1, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________
Commission File Number: 1-12302
BARNES & NOBLE, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 06-1196501
- ------------------------------------------- ------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
122 Fifth Avenue, New York, NY 10011
- ------------------------------------------- ------------------------------
(Address of Principal Executive Offices) (Zip Code)
(212) 633-3300
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
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(Former Name, Former Address and Former Fiscal Year, if Changed Since
Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Number of shares of $.001 par value common stock outstanding as of May 31, 1999:
69,345,603.
<PAGE>
BARNES & NOBLE, INC. AND SUBSIDIARIES
May 1, 1999
Index to Form 10-Q
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations - For the 13 weeks ended May 1, 1999
and May 2, 1998.......................................................... 3
Consolidated Balance Sheets - May 1, 1999, May 2, 1998 and January 30, 1999.. 4
Consolidated Statements of Cash Flows - For the 13 weeks ended May 1, 1999
and May 2, 1998.......................................................... 6
Notes to Consolidated Financial Statements................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk N/A
PART II - OTHER INFORMATION............................................................
Item 6. Exhibits and Reports on Form 8-K............................................. 14
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(thousands of dollars, except per share data)
(unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
13 weeks ended
--------------------------------------------
May 1, 1999 May 2, 1998
-------------------- ------------------
<S> <C> <C>
Sales $ 718,336 656,976
Cost of sales and occupancy 525,965 484,589
------------ ------------
Gross profit 192,371 172,387
------------ ------------
Selling and administrative expenses 151,932 135,557
Depreciation and amortization 25,799 20,528
Pre-opening expenses 801 2,604
------------ ------------
Operating profit 13,839 13,698
Interest (net of interest income of $712 and $105,
respectively) and amortization of deferred
financing fees 4,742 5,750
Equity in net loss of barnesandnoble.com llc 11,544 13,603
------------ ------------
Loss before benefit for income taxes
and cumulative effect of change in
accounting principle (2,447) (5,655)
Benefit for income taxes (1,003) (2,320)
------------ ------------
Loss before cumulative effect of change in
accounting principle (1,444) (3,335)
Cumulative effect of change in accounting principle,
net of tax benefit of $3,125 (4,500) --
------------ ------------
Net Loss $ (5,944) (3,335)
============ ============
Loss per common share
Basic
Loss before cumulative effect of change in
accounting principle $ (0.02) (0.05)
Cumulative effect of change in accounting
principle $ (0.07) --
Net Loss $ (0.09) (0.05)
Diluted
Loss before cumulative effect of change in
accounting principle $ (0.02) (0.05)
Cumulative effect of change in accounting
principle $ (0.07) --
Net Loss $ (0.09) (0.05)
Weighted average common shares outstanding
Basic 68,931,000 68,101,000
Diluted 68,931,000 68,101,000
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(thousands of dollars, except per share data)
<TABLE>
<CAPTION>
May 1, May 2, January 30,
1999 1998 1999
------------- -------------- ---------------
(unaudited)
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 15,815 10,801 31,081
Receivables, net 43,226 29,452 57,523
Merchandise inventories 940,321 855,938 945,073
Prepaid expenses and other current assets 74,731 81,944 54,634
---------- ---------- ----------
Total current assets 1,074,093 978,135 1,088,311
---------- ---------- ----------
Property and equipment:
Land and land improvements 3,247 681 3,197
Buildings and leasehold improvements 389,296 352,083 383,292
Fixtures and equipment 462,936 361,663 440,488
---------- ---------- ----------
855,479 714,427 826,977
Less accumulated depreciation and amortization 339,756 261,649 316,631
---------- ---------- ----------
Net property and equipment 515,723 452,778 510,346
---------- ---------- ----------
Intangible assets, net 86,166 89,423 86,980
Investment in barnesandnoble.com llc 70,763 34,060 82,307
Other noncurrent assets 50,646 40,607 39,653
---------- ---------- ----------
Total assets $1,797,391 1,595,003 1,807,597
========== ========== ==========
</TABLE>
(Continued)
4
<PAGE>
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(thousands of dollars, except per share data)
<TABLE>
<CAPTION>
May 1, May 2, January 30,
1999 1998 1999
------------- -------------- ---------------
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C> <C>
Current liabilities:
Accounts payable $ 439,520 429,832 498,237
Accrued liabilities 225,076 206,794 274,085
---------- ---------- ----------
Total current liabilities 664,596 636,626 772,322
---------- ---------- ----------
Long-term debt 340,000 358,600 249,100
Deferred income taxes 32,449 -- 32,449
Other long-term liabilities 78,108 65,381 74,937
Shareholders' equity:
Common stock; $.001 par value; 300,000,000
shares authorized; 69,092,730, 68,235,489
and 68,759,111 shares issued and outstanding,
respectively 69 68 69
Additional paid-in capital 532,910 474,836 523,517
Retained earnings 149,259 59,492 155,203
---------- ---------- ----------
Total shareholders' equity 682,238 534,396 678,789
---------- ---------- ----------
-- -- --
Commitments and contingencies ---------- ---------- ----------
Total liabilities and shareholders' equity $1,797,391 1,595,003 1,807,597
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(thousands of dollars)
(unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
13 weeks ended
-------------------------------------------
May 1, 1999 May 2, 1998
------------------- ------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (5,944) (3,335)
Adjustments to reconcile net loss to net cash flows from
operating activities:
Depreciation and amortization 25,892 20,615
Loss on disposal of property and equipment 548 --
Increase in other long-term liabilities for scheduled
rent increases in long-term leases 3,304 3,564
Culmulative effect of change in accounting principle, net of tax 4,500 --
Equity in net loss of barnesandnoble.com llc 11,544 13,603
Changes in operating assets and liabilities, net (113,407) (78,570)
--------- ---------
Net cash flows from operating activities (73,563) (44,123)
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (30,910) (15,145)
Investment in barnesandnoble.com llc (22,853)
Net decrease (increase) in other noncurrent assets (11,086) 449
--------- ---------
Net cash flows from investing activities (41,996) (37,549)
--------- ---------
Cash flows from financing activities:
Net increase in revolving credit facility 90,900 73,800
Proceeds from exercise of common stock options including related
tax benefits 9,393 5,976
--------- ---------
Net cash flows from financing activities 100,293 79,776
--------- ---------
Net decrease in cash and cash equivalents (15,266) (1,896)
Cash and cash equivalents at beginning of period 31,081 12,697
--------- ---------
Cash and cash equivalents at end of period $ 15,815 10,801
========= =========
Changes in operating assets and liabilities, net:
Receivables, net $ 14,297 14,059
Merchandise inventories 4,752 (4,356)
Prepaid expenses and other current assets (27,722) (24,367)
Accounts payable and accrued liabilities (104,734) (63,906)
--------- ---------
Changes in operating assets and liabilities, net $(113,407) (78,570)
========= =========
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 5,091 5,171
Income taxes $ 28,450 14,918
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
BARNES & NOBLE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the 13 weeks ended May 1, 1999 and May 2, 1998
(thousands of dollars, except per share data)
(unaudited)
The unaudited consolidated financial statements include the accounts of Barnes &
Noble, Inc. and its wholly owned subsidiaries (collectively, the Company).
In the opinion of the Company's management, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly its consolidated
financial position as of May 1, 1999 and the results of its operations and its
cash flows for the 13 weeks then ended. These consolidated financial statements
are condensed and therefore do not include all of the information and footnotes
required by generally accepted accounting principles. The consolidated financial
statements should be read in conjunction with the Company's annual report on
Form 10-K for the 52 weeks ended January 30, 1999 (fiscal 1998). The Company
follows the same accounting policies in preparation of interim reports.
Due to the seasonal nature of the business, the results of operations for the 13
weeks ended May 1, 1999 are not indicative of the results to be expected for the
52 weeks ending January 29, 2000.
(1) Merchandise Inventories
Merchandise inventories are stated at the lower of cost or market. Cost is
determined using the retail inventory method on the first-in, first-out (FIFO)
basis for 86%, 84% and 86% of the Company's merchandise inventories as of May 1,
1999, May 2, 1998 and January 30, 1999, respectively. The remaining merchandise
inventories are valued on the last-in, first-out (LIFO) method.
If substantially all of the merchandise inventories currently valued at LIFO
costs were valued at current costs, merchandise inventories would remain
unchanged as of May 1, 1999 and January 30, 1999, and would have increased
approximately $4,352 as of May 2, 1998.
(2) Reclassifications
Certain prior period amounts have been reclassified to conform to the current
period presentation, including the Company's investment in barnesandnoble.com
llc (barnesandnoble.com) which has been presented in the accompanying
consolidated financial statements under the equity method as of the beginning of
fiscal 1998.
(3) Income Taxes
The tax provisions for the periods ended May 1, 1999 and May 2, 1998 are based
upon management's estimate of the Company's annualized effective tax rate.
(4) Change in Accounting Principle
In April 1998, the Accounting Standards Executive Committee issued Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities" (SOP 98-5). SOP
98-5 requires an entity to expense all start-up activities (as defined) as
incurred. The Company has historically amortized costs associated with the
opening of new stores over the respective store's first 12 months of operations.
In accordance with SOP 98-5, the Company recorded a one-
7
<PAGE>
BARNES & NOBLE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the 13 weeks ended May 1, 1999 and May 2, 1998
(thousands of dollars, except per share data)
(unaudited)
time non-cash charge reflecting the cumulative effect of a change in accounting
principle, in the amount of $4,500 after taxes, representing such start-up costs
capitalized as of the beginning of fiscal year 1999. The effect of the change on
operating results for the 13 weeks ended May 1, 1999 was an increase in
operating profit of $1.5 million and a decrease in net income of $3.6 million or
$.05 per share. The Company will, on a prospective basis, expense all such
start-up costs as incurred.
(5) Subsequent Events
barnesandnoble.com Initial Public Offering
On May 25, 1999, barnesandnoble.com completed an initial public offering of
28.75 million shares of Class A Common Stock, raising a total of approximately
$485 million after commissions and expenses. As a result, the Company and
Bertelsmann AG (Bertelsmann) will each retain a 40% interest in
barnesandnoble.com. Under the terms of the November 12, 1998 joint venture
agreement (the "Agreement") between the Company and Bertelsmann, on May 28, 1999
Bertelsmann contributed an additional $50 million to barnesandnoble.com.
Additionally, the terms of the Agreement provide that the Company is
entitled to receive an additional $25 million payment from Bertelsmann due to
the value of the initial public offering by barnesandnoble.com. The Company will
recognize a gain of approximately $25 million ($14.8 million after taxes, or
$0.21 per share) in the second quarter to reflect the Bertelsmann payment. The
Company will continue to account for its investment in barnesandnoble.com under
the equity method.
Termination of Ingram Book Group Acquisition
On June 2, 1999, Barnes & Noble, Inc. and the Ingram Book Group (Ingram)
announced their agreement to terminate Barnes & Noble's planned acquisition of
Ingram. Barnes & Noble's application before the Federal Trade Commission (FTC)
for the purchase was formally withdrawn. As a result, the Company will expense
acquisition costs of approximately $5 million ($3 million after taxes or $0.04
per share) in the second quarter. These costs relate primarily to legal,
accounting and other transaction related costs incurred in connection with the
proposed acquisition of Ingram.
Partial Divestiture of Chapters Inc. Investment
On June 2, 1999, the Company entered into an agreement to sell 1,000,000 shares
of its holdings in Chapters Inc. (Chapters) via a secondary offering. Upon
completion of the offering, the Company will retain a seven percent interest in
Chapters. As a result of this transaction, the company will record a pretax gain
of approximately $10.7 million ($6.3 million after taxes or $0.09 per share) in
the second quarter. Prior to the above transaction, the investment in Chapters
was accounted for under the equity method. On a prospective basis, the Company
will be required to account for its remaining investment under the provisions of
Statement of Financial Accounting Standards No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" and it will be considered an
available-for-sale investment.
8
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The primary sources of the Company's cash are net cash flows from operating
activities, funds available under its senior credit facility and short-term
vendor financing.
The Company's cash and cash equivalents were $15.8 million as of May 1, 1999
compared with $10.8 million as of May 2, 1998. During the 13 weeks ended May 1,
1999, consolidated earnings before interest, taxes, depreciation and
amortization (EBITDA) increased $7.5 million to $28.1 million from $20.6 million
for the 13 weeks ended May 2, 1998. For the first quarter, EBITDA in the retail
business increased $5.4 million to $39.6 million from $34.2 million during the
comparable prior year period, reflecting higher gross margins and improving
expense leverage (primarily in Barnes & Noble store operating, rental and
pre-opening costs).
Merchandise inventories increased $84.4 million, or 9.9% to $940.3 million as of
May 1, 1999, compared with $855.9 million as of May 2, 1998. The increase
supported the Company's 9.3% sales growth, the opening of 51 Barnes & Noble
stores over the last twelve months and the strategic increase in the
distribution center standing inventory to over 750,000 in-stock titles. The
inventory expansion allowed the Company to increase its title offerings for both
online and in-store customers.
The Company's investing activities consist principally of capital expenditures
for new store construction, system enhancements and store relocations/remodels.
Capital expenditures totaled $30.9 million and $15.1 million during the 13 weeks
ended May 1, 1999 and May 2, 1998, respectively. The increase was due primarily
to the accelerated implementation of the Company's proprietary point-of-sale
system (BookMaster).
The ratio of debt to equity was 0.50:1.00 as of May 1, 1999, compared with
0.67:1.00 as of May 2, 1998. This significant improvement during a period of
continuing growth is the result of the Company's expanded gross margin, improved
operating leverage and strong emphasis on working capital management.
Total debt decreased 5.2% to $340.0 million as of May 1, 1999 from $358.6
million as of May 2, 1998. Average borrowings under the Company's senior credit
facility were $328.7 million and $347.7 million during the 13 weeks ended May 1,
1999 and May 2, 1998, respectively, and peaked at $377.6 million and $380.8
million during the same periods. The reduced average borrowings, which were
accomplished during a period of 9.3% sales growth and 9.9% increase in
merchandise inventories, reflect the Company's commitment to working capital
management and expense controls.
Based upon the Company's current operating levels and expansion plans,
management believes net cash flows from operating activities and the capacity
under its $850.0 million senior credit facility will be sufficient to meet the
Company's working capital and debt service requirements and support the
development of its short- and long-term strategies for at least the next twelve
months.
The Company did not declare or pay any cash dividends during the 13-week periods
ended May 1, 1999 and May 2, 1998.
9
<PAGE>
Year 2000
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. The Company's computer
equipment, software and devices with embedded technology that are date-sensitive
may recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in other normal business activities.
In 1997 the Company began assessing how it may be impacted by the Year 2000
issue and has formulated and commenced implementation of a comprehensive plan to
address all known aspects of the issue.
The Company's plan encompasses the following areas: (1) information systems that
utilize date/time oriented software (IT systems), (2) computer chips,
processors, and controllers, (non-IT systems) and (3) vendors and customers. The
Company is in various stages of implementation which include remediation,
testing and implementation.
To date, approximately 85% of the Company's administrative support IT systems
have at least completed the remediation phase. Of this amount, approximately 80%
have completed the testing and remediation phase and 20% have been replaced or
upgraded. All remaining Year 2000 compliance efforts for administrative IT
functions are expected to be completed by the second quarter of fiscal 1999.
Approximately 90% of non-IT systems have completed the remediation, testing and
implementation phases with no material replacements necessary.
The Company has been obtaining information from major vendors, suppliers, and
service providers to determine if their systems will be Year 2000 compliant.
There has been no indication from these sources that their systems will not be
sufficiently Year 2000 compliant or that their failure to be Year 2000 compliant
will cause a significant disruption in the operations of the Company. The
Company is developing contingency plans to identify alternative sources which
are Year 2000 compliant in the event the current parties suffer significant
disruption as a result of Year 2000 compliance failures.
The Company estimates that total costs to implement its Year 2000 plan will be
between $4.0 and $6.0 million of which $2.4 million has already been incurred,
including $1.2 million relating to the purchase of new software and hardware
modifications, and $1.2 relating to Year 2000 consultants. The estimated total
includes direct costs for systems enhancements which would have been implemented
in the ordinary course of business but whose acquisition has been accelerated to
ensure compliance by the Year 2000. The estimate excludes costs for scheduled
system upgrades which have not been accelerated due to Year 2000 issues.
The implementation of the Company's proprietary point-of-sale system
(BookMaster), which began in 1996, is continuing and is expected to be completed
in the second quarter of fiscal 1999. BookMaster, which is Year 2000 compliant,
is an inventory management system with integrated point-of-sale features that
utilizes a proprietary data-warehouse-based just-in-time replenishment system.
It enhances communications and real-time access to the Company's network of
stores, distribution center, and wholesalers. The BookMaster system has been
installed in approximately 65% of all Barnes & Noble stores. By the end of the
second quarter of fiscal 1999 all existing Barnes & Noble and B. Dalton stores
will either be utilizing the BookMaster system or will receive Year 2000
upgrades to their existing point-of-sale systems.
10
<PAGE>
Should some of the Company's systems not be available due to Year 2000 problems,
in a reasonably likely worst case scenario, the Company may experience
significant delays in its ability to perform certain functions. However, the
Company does not expect an impairment in its ability to execute critical
functions.
Results of Operations
13 weeks ended May 1, 1999 compared with the 13 weeks ended May 2, 1998
Sales
During the 13 weeks ended May 1, 1999, the Company's sales grew 9.3% to $718.3
million from $657.0 million during the 13 weeks ended May 2, 1998. During the
first quarter, Barnes & Noble store sales rose 12.7% to $621.0 million from
$551.0 million during the same period a year ago. As a percentage of total
sales, Barnes & Noble store sales represented 86.4% of consolidated sales during
the first quarter of 1999, up from 83.9% during the same period last year.
During the first quarter, the 12.7% increase in Barnes & Noble store sales
resulted from a same store sales gain of 5.4% coupled with 51 new stores opened
since May 2, 1998 which contributed a 12.4% increase in square footage.
Management attributed the strong same store sales performance to, among other
things, an increase in the number of stores eligible for inclusion in the same
store sales base. The number of comparable Barnes & Noble stores, as a
percentage of total Barnes & Noble stores, increased to 88.3% as of May 1, 1999
compared with 85.5% as of May 2, 1998.
During the first quarter, B. Dalton sales, which represented 13.1% of total
sales in comparison with 15.3% during 1998, declined 6.0% primarily as a result
of store closings and an 8.6% reduction in its square footage since May 2, 1998.
In addition, B. Dalton's same store sales were flat during the first quarter.
During the first quarter, the Company opened three Barnes & Noble stores and
closed two, bringing its total number of Barnes & Noble stores to 521 with 11.9
million square feet. The Company closed 23 B. Dalton stores, ending the period
with 466 B. Dalton stores and 1.8 million square feet. As of May 1, 1999 the
Company operated 987 stores in fifty states and the District of Columbia.
Cost of Sales and Occupancy
During the 13 weeks ended May 1, 1999, cost of sales and occupancy increased
$41.4 million, or 8.5%, to $526.0 million from $484.6 million during the 13
weeks ended May 2, 1998. As a percentage of sales, cost of sales and occupancy
decreased to 73.2% during the first quarter from 73.8% during the same period
one year ago reflecting improved leverage on occupancy costs, more favorable
sales mix and better shrinkage control.
Selling and Administrative Expenses
Selling and administrative expenses increased $16.3 million to $151.9 million
during the 13 weeks ended May 1, 1999 from $135.6 million during the 13 weeks
ended May 2, 1998. During the first quarter, selling and administrative expenses
increased as a percentage of sales to 21.2% from 20.6% during the prior year
period. The increase was primarily attributable to Year 2000 consulting fees,
the revised benefit plan for part-time employees and expenses related to the
installation of the BookMaster system.
11
<PAGE>
Depreciation and Amortization
During the first quarter, depreciation and amortization increased $5.3 million,
or 25.7%, to $25.8 million from $20.5 million during the same period last year,
as a result of the depreciation on the 51 new Barnes & Noble stores opened since
May 2, 1998.
Pre-opening Expenses
Pre-opening expenses decreased $1.8 million, or 69.2%, to $0.8 million during
the 13 weeks ended May 1, 1999 from $2.6 million for the 13 weeks ended May 2,
1998, primarily as a result of the first quarter adoption of Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities" (SOP 98-5). SOP
98-5 requires an entity to expense all start-up activities (as defined) as
incurred. The Company has historically amortized costs associated with the
opening of new stores over the respective store's first 12 months of operations.
Operating Profit
The Company's consolidated operating profit increased to $13.8 million during
the 13 weeks ended May 1, 1999 from $13.7 million during the 13 weeks ended May
2, 1998.
Interest Expense, Net and Amortization of Deferred Financing Fees
Net interest expense and amortization of deferred financing fees decreased to
$4.7 million during the 13 weeks ended May 1, 1999 from $5.8 million during the
13 weeks ended May 2, 1998. Interest expense decreased due to a combination of
both lower average borrowings and declining interest rates.
Benefit for Income Taxes
The benefit for income taxes during the 13 weeks ended May 1, 1999 was $1.0
million compared with $2.3 million during the 13 weeks ended May 2, 1998. Tax
benefits were based upon management's estimate of the Company's annualized
effective tax rates.
Net Loss
As a result of the factors discussed above, the Company reported a consolidated
net loss of ($5.9) million during the 13 weeks ended May 1, 1999, compared with
a net loss of ($3.3) million during the 13 weeks ended May 2, 1998. For the
first quarter of 1999, the net loss per common share was ($0.09) per share
(based on 68.9 million shares) compared with ($0.05) per share (based on 68.1
million shares) for the corresponding prior-year period. The consolidated first
quarter net loss reflects the Company's 50% share in barnesandnoble.com's net
losses of ($6.8) million or ($0.10) per share and the cumulative effect of a
change in accounting principle of ($4.5) million, net of tax, or ($0.07) per
share during the first quarter of 1999, compared with 100% of
barnesandnoble.com's net losses of ($8.0) million or ($0.12) per share, in the
first quarter of 1998. Excluding barnesandnoble.com and the change in accounting
principle, the retail business net income increased 14.4% to $5.4 million or
$0.08 per share for the 13 weeks ended May 1, 1999 compared to $4.7 million or
$0.07 per share during 13 weeks ended May 2, 1998.
12
<PAGE>
Forward-Looking Statements
This report may contain certain forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) and information
relating to the Company that are based on the beliefs of the management of the
Company as well as assumptions made by and information currently available to
the management of the Company. When used in this report, the words "anticipate,"
"believe," "estimate," "expect," "intend," "plan" and similar expressions, as
they relate to the Company or the management of the Company, identify
forward-looking statements. Such statements reflect the current views of the
Company with respect to future events, the outcome of which is subject to
certain risks, including among others general economic and market conditions,
decreased consumer demand for the Company's products, possible disruptions in
the Company's computer or telephone systems, increased or unanticipated costs or
effects associated with year 2000 compliance by the Company or its service or
supply providers, possible work stoppages, or increases in labor costs, possible
increases in shipping rates or interruptions in shipping service, effects of
competition, possible disruptions or delays in the opening of new stores or the
inability to obtain suitable sites for new stores, higher than anticipated store
closing or relocation costs, higher interest rates, the performance of the
Company's online initiatives such as barnesandnoble.com, unanticipated increases
in merchandise or occupancy costs, and other factors which may be outside of the
Company's control. 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 therein as anticipated,
believed, estimated, expected, intended or planned. Subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the cautionary statements in
this paragraph.
13
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit filed with this Form 10-Q:
Exhibit 27 : Financial Data Schedule
(b) No report on Form 8-K was filed by the registrant
during the fiscal quarter for which this report is filed.
14
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BARNES & NOBLE, INC.
(Registrant)
Date: June 11, 1999 By: /s/ Michael Archbold
--------------------
Michael Archbold
Vice President, Treasurer
(Chief Accounting Officer)
15
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<PERIOD-END> MAY-1-1999
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0
0
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