Form 8-K BARNES & NOBLE INC For: Jun 22

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

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CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 22, 2016

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BARNES & NOBLE, INC.

(Exact name of registrant as specified in its charter)

 

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Registrant’s telephone number, including area code: (212) 633-3300

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Not Applicable

(Former name or former address, if changed since last report)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

 

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Item 2.02.

Results of Operations and Financial Condition

On June 22, 2016, Barnes & Noble, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full year ended April 30, 2016 (the “Press Release”).  A copy of the Press Release is attached hereto as Exhibit 99.1.

The information in this Form 8-K and the Exhibit attached hereto pertaining to the Company’s financial results shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Use of Non-GAAP Financial Information

To supplement the Company’s consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), in the Press Release attached hereto as Exhibit 99.1, the Company uses the non-GAAP financial measure of EBITDA (defined by the Company as earnings before interest, taxes, depreciation and amortization).

The Company’s management reviews this non-GAAP measure internally to evaluate the Company’s performance and manage its operations.  The Company believes that the inclusion of EBITDA results provide investors useful and important information regarding the Company’s operating results.  The non-GAAP measure included in the Press Release attached hereto as Exhibit 99.1 has been reconciled to the comparable GAAP measure as required under SEC rules regarding the use of non-GAAP financial measures. The Company urges investors to carefully review the GAAP financial information included as part of the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and quarterly earnings releases.

(d) Exhibits:

 

 

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.,
Date: June 22, 2016	By:	/s/ Allen W. Lindstrom
		Name: Allen W. Lindstrom
		Title:   Chief Financial Officer

 

 

Barnes & Noble, Inc.

EXHIBIT INDEX

Barnes & Noble Reports Fiscal 2016 Year-End Financial Results

Full-Year Comparable Store Sales are Flat – In-Line with Guidance

Core Comparable Store Sales Increase 0.4%

Company to Host Investor Day to Discuss Long-Term Objectives

New York, NY (June 22, 2016)—Barnes & Noble, Inc. (NYSE: BKS) today reported sales and earnings for its fiscal 2016 fourth quarter and full-year ended April 30, 2016.

Retail sales, which include Barnes & Noble stores and BN.com, were $850 million for the quarter and $4.0 billion for the full year, decreasing 2.2% and 1.9%, respectively.  Comparable store sales declined 0.8% for the quarter and were flat for the full year, in-line with Company guidance.  “Core” comparable store sales, which exclude sales of NOOK products, declined 0.8% for the quarter, while increasing 0.4% for the full year, slightly below expectations of an approximate 1% increase.  Sales for both the quarter and the year were also impacted by store closures and lower online sales.

NOOK sales, which include digital content, devices and accessories, were $42.0 million for the quarter and $191.5 million for the full year, decreasing 20.0% and 27.4%, respectively, due primarily to lower device and content sales.

Consolidated sales were $877 million for the quarter and $4.16 billion for the year, decreasing 3.7% and 3.1%, respectively, as compared to the prior year.

Retail incurred an operating loss of $34.9 million for the quarter and an operating profit of $113.3 million for the year.  NOOK generated an operating loss of $23.1 million for the quarter and $98.6 million for the year.

The consolidated fourth quarter net loss from continuing operations was $30.6 million, or $0.42 per share, compared to a loss from continuing operations of $3.0 million, or $0.12 per share, in the prior year.  Fiscal 2016 consolidated net earnings from continuing operations were $14.7 million, or $0.05 per share, compared to net earnings from continuing operations of $32.9 million, or $0.15 per share, in the prior year.

For the fourth quarter, Retail incurred an EBITDA loss of $11.1 million, which includes a previously disclosed $20.9 million pension settlement charge related to the termination of the Company’s pension plan.  Excluding this charge, Retail EBITDA would have been $9.8 million during the quarter, a decline of $23.3 million versus the prior year, primarily on lower sales, increased promotional activity and higher store wages and benefit costs.

For the full year, Retail generated EBITDA of $215.2 million, inclusive of $35.2 million of charges, including the $20.9 million pension charge noted above, a $10.5 million executive severance charge related to the Barnes & Noble College spin-off and a $3.8 million publishing contract impairment.  Excluding these charges, Retail EBITDA would have been $250.4 million for the year, declining $67.3 million primarily on lower sales, increased advertising, higher store wages and expense deleverage.

Fourth quarter NOOK EBITDA losses were $14.9 million, which included approximately $4.0 million of expenses incurred to further rationalize the cost structure of the business.  These expenses include transitional costs to outsource certain technology functions, consulting fees, Retail integration costs, and expenses to exit the U.K., apps and video businesses.  Excluding these items, NOOK EBITDA losses would have been consistent with the third quarter.

Full year NOOK EBITDA losses were $64.7 million this year as compared to $83.9 million a year ago, a 23% decrease as the Company continues to focus on cost rationalization efforts.

 

 

Barnes & Noble, Inc.	Page 2
June 22, 2016

 

 

On a consolidated basis, the fourth quarter EBITDA loss was $26.0 million, which includes the $20.9 million pension settlement charge. Excluding the charge, the fourth quarter consolidated EBITDA loss would have been $5.1 million.  For the full year, consolidated EBITDA was $150.5 million, which includes the $35.2 million of charges noted above.  Excluding the charges, consolidated EBITDA would have been $185.7 million for the full year.

Excluding the charges noted above, the consolidated fourth quarter net loss from continuing operations would have been $17.8 million, or $0.24 per share, and fiscal 2016 consolidated net earnings from continuing operations would have been $36.2 million, or $0.35 per share.

 

Return of Capital

During the quarter, the Company returned $21.5 million in cash to its shareholders, including $11.3 million in dividends and $10.2 million through share repurchases.  The Company acquired approximately 964,000 shares at an average price of $10.61 during the quarter under its share repurchase program.

Outlook

“As we look ahead to fiscal 2017 and beyond, we are focusing on executing a number of initiatives to grow bookstore and online sales, reduce Retail and NOOK expenses and grow our Membership base,” said Ron Boire, Chief Executive Officer of Barnes & Noble, Inc.  “We believe our marketing, merchandising and Membership initiatives will lead to increased traffic and conversion in our stores.  We are also excited about our plans to open four new concept stores opening later this year, beginning with the first store opening this October in Eastchester, NY.  We look forward to discussing these initiatives at our Investor Day.”

For fiscal year 2017, the Company expects comparable bookstore sales to be approximately flat to an increase of approximately 1%. The Company also expects full year consolidated EBITDA to be in a range of $200 million to $250 million, with Retail EBITDA of $240 million to $280 million and NOOK EBITDA losses declining to a range of $30 million to $40 million, including previously announced transitional costs.

Investor Day Webcast

The Company’s senior management will host an investor conference beginning at 9:00 A.M. ET on Thursday, June 23, 2016 to discuss the Company's financial results, business strategy and longer-term outlook. The webcast of this investor conference can be accessed on Barnes & Noble, Inc.'s corporate website at www.barnesandnobleinc.com/webcasts.

Barnes & Noble, Inc. will report fiscal 2017 first quarter results on or about September 8, 2016.

About Barnes & Noble, Inc.

Barnes & Noble, Inc. (NYSE: BKS) is a Fortune 500 company, the nation’s largest retail bookseller, and a leading retailer of content, digital media and educational products. The Company operates 640 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 (www.nook.com) tablets and eReaders and an expansive collection of digital reading and entertainment content through the NOOK Store^®. The NOOK Store features more than 4 million digital books in the US plus periodicals, comics, apps, movies and TV shows, 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.

 

 

Barnes & Noble, Inc.	Page  3
June 22, 2016

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 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 and the digital business not being able to perform its obligations under the Samsung commercial agreement and the consequences thereof, the risk that financial and operational forecasts and projections are not achieved, the performance of Barnes & Noble’s initiatives including but not limited to its new store concept and e-commerce 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 May 2, 2015, 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.

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Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

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Segment Information

(In thousands)

(Unaudited)

 

		13 weeks ended				13 weeks ended				52 weeks ended				52 weeks ended
		April 30, 2016				May 2, 2015				April 30, 2016				May 2, 2015
Sales
Retail		$	850,024			$	869,360			$	4,028,614			$	4,108,243
NOOK			41,952				52,431				191,520				263,833
Elimination			(15,292	)			(11,712	)			(56,290	)			(74,968	)
Total		$	876,684			$	910,079			$	4,163,844			$	4,297,108
Gross Profit
Retail		$	248,807			$	268,444			$	1,258,405			$	1,309,397
NOOK			16,951				31,363				68,892				116,527
Total		$	265,758			$	299,807			$	1,327,297			$	1,425,924
Selling and Administrative Expenses
Retail		$	259,868			$	235,307			$	1,043,221			$	991,669
NOOK			31,847				45,679				133,557				200,396
Total		$	291,715			$	280,986			$	1,176,778			$	1,192,065
EBITDA
Retail		$	(11,061	)		$	33,137			$	215,184			$	317,728
NOOK			(14,896	)			(14,316	)			(64,665	)			(83,869	)
Total		$	(25,957	)		$	18,821			$	150,519			$	233,859
Depreciation and Amortization
Retail		$	(23,809	)		$	(24,420	)		$	(101,888	)		$	(104,373	)
NOOK			(8,190	)			(9,295	)			(33,975	)			(39,292	)
Total		$	(31,999	)		$	(33,715	)		$	(135,863	)		$	(143,665	)
Operating Profit (Loss)
Retail		$	(34,870	)		$	8,717			$	113,296			$	213,355
NOOK			(23,086	)			(23,611	)			(98,640	)			(123,161	)
Total		$	(57,956	)		$	(14,894	)		$	14,656			$	90,194
Net Income (Loss)
Operating profit (loss)		$	(57,956	)		$	(14,894	)		$	14,656			$	90,194
Interest expense, net			(1,537	)			(2,955	)			(8,770	)			(17,678	)
Income taxes			28,885				14,830				8,814				(39,644	)
Income (loss) from discontinued operations			-				(16,402	)			(39,146	)			3,724
Total		$	(30,608	)		$	(19,421	)		$	(24,446	)		$	36,596
Percentage of sales:
Gross Margin
Retail			29.3	%			30.9	%			31.2	%			31.9	%
NOOK			63.6	%			77.0	%			50.9	%			61.7	%
Total			30.3	%			32.9	%			31.9	%			33.2	%
Selling and Administrative Expenses
Retail			30.6	%			27.1	%			25.9	%			24.1	%
NOOK			119.5	%			112.2	%			98.8	%			106.1	%
Total			33.3	%			30.9	%			28.3	%			27.7	%
EBITDA
Retail			-1.3	%			3.8	%			5.3	%			7.7	%
NOOK			-55.9	%			-35.2	%			-47.8	%			-44.4	%
Total			-3.0	%			2.1	%			3.6	%			5.4	%
Depreciation and Amortization
Retail			-2.8	%			-2.8	%			-2.5	%			-2.5	%
NOOK			-30.7	%			-22.8	%			-25.1	%			-20.8	%
Total			-3.7	%			-3.7	%			-3.3	%			-3.3	%
Operating Profit (Loss)
Retail			-4.1	%			1.0	%			2.8	%			5.2	%
NOOK			-86.6	%			-58.0	%			-72.9	%			-65.2	%
Total			-6.6	%			-1.6	%			0.4	%			2.1	%

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BARNES & NOBLE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

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BARNES & NOBLE, INC. AND SUBSIDIARIES

Earnings (Loss) Per Share

(In thousands, except per share data)

(Unaudited)

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Forward Looking Statement Non-GAAP Reconciliation

(In millions)

(Unaudited)