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Form 8-K BARNES & NOBLE INC For: Mar 03

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March 3, 2016 9:47 AM EST



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 8-K


CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934


Date of report (Date of earliest event reported)

March 3, 2016

BARNES & NOBLE, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

1-12302 06-1196501
(Commission File Number) (IRS Employer 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)

 
(Former Name or Former Address, if Changed Since Last Report)

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 (see General Instruction A.2. below):

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02  Results of Operations and Financial Condition

On March 3, 2016, Barnes & Noble, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended January 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.

Item 9.01  Financial Statements and Exhibits

(d)  Exhibits

99.1  Press Release of Barnes & Noble, Inc., dated March 3, 2016

SIGNATURE

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 hereunto duly authorized.

BARNES & NOBLE, INC.

(Registrant)
 
 
 

 

 

By:

/s/ Allen W. Lindstrom

Allen W. Lindstrom

Chief Financial Officer

 
 

Date:

March 3, 2016

Barnes & Noble, Inc.

EXHIBIT INDEX



Exhibit Number

Description

 
99.1

Press Release of Barnes & Noble, Inc., dated March 3, 2016

Exhibit 99.1

Barnes & Noble Reports Fiscal 2016 Third Quarter Financial Results

Core Comparable Store Sales Increase 1.3%, Marking Second Consecutive Increase

NOOK® Losses Decrease 62%

Consolidated EBITDA Increases to $169 million

NEW YORK--(BUSINESS WIRE)--March 3, 2016--Barnes & Noble, Inc. (NYSE: BKS) today reported sales and earnings for its fiscal 2016 third quarter ended January 30, 2016.

Sales for the third quarter were $1.4 billion, decreasing 1.8% as compared to a year ago. Third quarter EBITDA was $169.0 million, increasing 1.6% as compared to EBITDA of $166.4 million a year ago. Consolidated third quarter net earnings from continuing operations were $80.3 million or $1.04 per share, compared to net earnings from continuing operations of $39.0 million, or $0.45 per share, in the prior year.

“We are pleased with our bookstore sales performance and the reduction of NOOK losses during the fiscal third quarter,” said Ron Boire, Chief Executive Officer of Barnes & Noble, Inc. “Our Retail Core comparable store sales exhibited year-on-year growth, increasing 1.3% on top of a 1.7% increase a year ago, led by the continued strength of adult coloring books, as well as our Toys & Games, music and gift businesses. We are encouraged by the improved bookstore sales trends that are enabling us to close the least amount of stores since fiscal 2000 and are excited to introduce our new store concept later this year, with the opening of four new stores throughout fiscal 2017. While we still have significant work to do to improve sales at BN.com, we are encouraged by the site's improved performance during the quarter and are making investments to drive traffic and sales. I am also pleased with the progress that has been made to reduce NOOK losses. We remain committed to providing a great digital reading experience to our customers, while exploring all opportunities to further reduce losses. Moving forward, our top priorities are growing bookstore and online sales, reducing Retail and NOOK expenses and growing our membership base.”

Retail

Retail sales, which include Barnes & Noble stores and BN.com, were $1.4 billion, decreasing 1.2% due to lower online sales and store closures. Comparable store sales increased 0.2% for the quarter. Excluding NOOK products, Core comparable store sales increased 1.3% for the quarter.

Retail EBITDA was $180.2 million, decreasing $15.2 million as compared to the prior year. EBITDA declined primarily on the sales decline, increased advertising and a non-cash publishing contract impairment charge of $4 million, partially offset by prior year pension settlement charges.

NOOK

NOOK sales of $51.7 million decreased 33.3% due primarily to lower device and content sales. NOOK EBITDA losses of $11.2 million declined $17.9 million versus the prior year as the company continues to focus on cost rationalization efforts.

Return of Capital

During the quarter, the company returned over $28 million in cash to its shareholders, including $16.5 million through share repurchases and $11.5 million in dividends. The Company acquired approximately 1.8 million shares at an average price of $9.17 during the quarter under its share repurchase program.

Outlook

For fiscal year 2016, the company continues to expect comparable store sales to be approximately flat with the prior year. Excluding NOOK products, Core comparable store sales are expected to increase approximately 1%. The company also expects full fiscal year EBITDA losses in the NOOK segment to decline versus the prior year.

Conference Call

A conference call with Barnes & Noble, Inc.’s senior management will be webcast beginning at 10:00 A.M. ET on Thursday, March 3, 2016, and is accessible at www.barnesandnobleinc.com/webcasts.

Barnes & Noble, Inc. will report fiscal 2016 year-end earnings on or about June 23, 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.

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.

             
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
                       
13 weeks ended 13 weeks ended 39 weeks ended 39 weeks ended
January 30, 2016   January 31, 2015 January 30, 2016   January 31, 2015
 
Sales $ 1,413,947 $ 1,440,132 $ 3,287,160 $ 3,387,029
Cost of sales and occupancy   922,292     934,348     2,225,621     2,260,912  
Gross profit   491,655     505,784     1,061,539     1,126,117  
Selling and administrative expenses 322,652 339,432 885,063 911,079
Depreciation and amortization   35,147     35,271     103,864     109,950  
Operating profit 133,856 131,081 72,612 105,088
Interest expense, net   1,976     3,521     7,233     14,723  
Income before taxes 131,880 127,560 65,379 90,365
Income taxes   51,618     88,583     20,071     54,474  
Net income from continuing operations 80,262 38,977 45,308 35,891
Income (loss) from discontinued operations   -     33,191     (39,146 )   20,126  
Net income $ 80,262   $ 72,168   $ 6,162   $ 56,017  
 
Basic income (loss) per common share:
Income from continuing operations $ 1.04 $ 0.45 $ 0.48 $ 0.27
Income (loss) from discontinued operations   -     0.51     (0.54 )   0.32  
Basic income (loss) per common share $ 1.04   $ 0.96   $ (0.06 ) $ 0.58  
 
Diluted income (loss) per common share:
Income from continuing operations $ 1.04 $ 0.45 $ 0.48 $ 0.27
Income (loss) from discontinued operations   -     0.51     (0.54 )   0.32  
Diluted income (loss) per common share $ 1.04   $ 0.96   $ (0.06 ) $ 0.58  
 
Weighted average common shares outstanding:
Basic 74,856 61,589 71,987 60,056
Diluted 74,924 61,711 72,124 60,128
 
Dividends declared per common share $ 0.15 $ - $ 0.45 $ -
 
Percentage of sales:
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales and occupancy   65.2 %   64.9 %   67.7 %   66.8 %
Gross profit   34.8 %   35.1 %   32.3 %   33.2 %
Selling and administrative expenses 22.8 % 23.6 % 26.9 % 26.9 %
Depreciation and amortization   2.5 %   2.4 %   3.2 %   3.2 %
Operating profit 9.5 % 9.1 % 2.2 % 3.1 %
Interest expense, net   0.1 %   0.2 %   0.2 %   0.4 %
Income before taxes 9.3 % 8.9 % 2.0 % 2.7 %
Income taxes   3.7 %   6.2 %   0.6 %   1.6 %
Net income from continuing operations 5.7 % 2.7 % 1.4 % 1.1 %
Income (loss) from discontinued operations   0.0 %   2.3 %   -1.2 %   0.6 %
Net income 5.7 % 5.0 % 0.2 % 1.7 %
 
             
BARNES & NOBLE, INC. AND SUBSIDIARIES
Segment Information
(In thousands)
(Unaudited)
                           
 
13 weeks ended 13 weeks ended 39 weeks ended 39 weeks ended
January 30, 2016   January 31, 2015 January 30, 2016   January 31, 2015
 
Sales    
Retail $ 1,378,887 $ 1,395,917 $ 3,178,590 $ 3,238,883
NOOK 51,737 77,509 149,568 211,402
Elimination   (16,677 )   (33,294 )   (40,998 )   (63,256 )
Total $ 1,413,947   $ 1,440,132   $ 3,287,160   $ 3,387,029  
 
Gross Profit
Retail $ 474,595 $ 481,760 $ 1,009,598 $ 1,040,953
NOOK   17,060     24,024     51,941     85,164  
Total $ 491,655   $ 505,784   $ 1,061,539   $ 1,126,117  
 
Selling and Administrative Expenses
Retail $ 294,438 $ 286,371 $ 783,353 $ 756,362
NOOK   28,214     53,061     101,710     154,717  
Total $ 322,652   $ 339,432   $ 885,063   $ 911,079  
 
EBITDA
Retail $ 180,157 $ 195,389 $ 226,245 $ 284,591
NOOK   (11,154 )   (29,037 )   (49,769 )   (69,553 )
Total $ 169,003   $ 166,352   $ 176,476   $ 215,038  
 
Net Income (Loss)
EBITDA $ 169,003 $ 166,352 $ 176,476 $ 215,038
Depreciation and amortization (35,147 ) (35,271 ) (103,864 ) (109,950 )
Interest expense, net (1,976 ) (3,521 ) (7,233 ) (14,723 )
Income taxes (51,618 ) (88,583 ) (20,071 ) (54,474 )
Income (loss) from discontinued operations   -     33,191     (39,146 )   20,126  
Total $ 80,262   $ 72,168   $ 6,162   $ 56,017  
 
 
 
Percentage of sales:
 
Gross Margin
Retail 34.4 % 34.5 % 31.8 % 32.1 %
NOOK   48.7 %   54.3 %   47.8 %   57.5 %
Total 34.8 % 35.1 % 32.3 % 33.2 %
 
Selling and Administrative Expenses
Retail 21.4 % 20.5 % 24.6 % 23.4 %
NOOK   80.5 %   120.0 %   93.7 %   104.4 %
Total 22.8 % 23.6 % 26.9 % 26.9 %
 
       
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
             
January 30, 2016 January 31, 2015
 
ASSETS
Current assets:
Cash and cash equivalents $ 63,557 $ 152,062
Receivables, net 69,364 73,286
Merchandise inventories 1,043,930 1,031,376
Prepaid expenses and other current assets 66,674 66,683
Short-term deferred taxes 117,816 121,845
Current assets of discontinued operations   -     922,346  
Total current assets 1,361,341 2,367,598
 
Property and equipment:
Land and land improvements 2,541 2,541
Buildings and leasehold improvements 1,047,357 1,064,874
Fixtures and equipment   1,571,457     1,692,275  
2,621,355 2,759,690
Less accumulated depreciation and amortization   2,314,176     2,410,361  
Net property and equipment   307,179     349,329  
 
Goodwill 215,197 219,119
Intangible assets, net 311,066 316,297
Other noncurrent assets 11,637 9,795
Noncurrent assets of discontinued operations   -     614,105  
Total assets $ 2,206,420   $ 3,876,243  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 576,958 $ 595,947
Accrued liabilities 334,314 374,248
Gift card liabilities 384,915 390,102
Current liabilities of discontinued operations   -     673,903  
Total current liabilities   1,296,187     2,034,200  
 
Long-term debt - -
Deferred taxes 134,105 144,088
Other long-term liabilities 138,668 155,334
Noncurrent liabilities of discontinued operations - 132,068
 
Redeemable Preferred Shares - 195,744
 
Shareholders' equity:
Common stock; $0.001 par value; 300,000 shares authorized;
110,740 and 97,485 shares issued, respectively 111 97
Additional paid-in capital 1,734,898 1,924,130
Accumulated other comprehensive loss (16,533 ) (17,184 )
Retained earnings 17,629 381,190
Treasury stock, at cost, 36,797 and 34,580 shares, respectively   (1,098,645 )   (1,073,424 )

 

 

 

Total shareholders' equity   637,460     1,214,809  
Commitments and contingencies   -     -  
Total liabilities and shareholders' equity $ 2,206,420   $ 3,876,243  
 
           
BARNES & NOBLE, INC. AND SUBSIDIARIES
Earnings (Loss) Per Share
(In thousands, except per share data)
(Unaudited)
                     
 
13 weeks ended 13 weeks ended 39 weeks ended 39 weeks ended
January 30, 2016 January 31, 2015 January 30, 2016 January 31, 2015
Numerator for basic income (loss) per share:
Net income from continuing operations attributable to Barnes & Noble, Inc. $ 80,262 $ 38,977 $ 45,308 $ 35,891
Inducement fee paid upon conversion of Series J preferred stock - - (3,657 ) -
Preferred stock dividends - (3,942 ) - (11,825 )
Preferred stock dividends paid in shares - - (1,783 ) -
Accretion of dividends on preferred stock - (5,507 ) (4,204 ) (7,024 )
Less allocation of dividends to participating securities (307 ) - (999 ) -
Less allocation of undistributed earnings to participating securities   (1,871 )   (1,591 )   -     (995 )
Net income from continuing operations available to common shareholders 78,084 27,937 34,665 16,047
Net income (loss) from discontinued operations attributable to Barnes & Noble, Inc. - 33,191 (39,146 ) 20,126
Less allocation of undistributed earnings to participating securities   -     (1,788 )   -     (1,175 )
Net income (loss) from discontinued operations available to common shareholders   -     31,403     (39,146 )   18,951  
Net income (loss) available to common shareholders $ 78,084   $ 59,340   $ (4,481 ) $ 34,998  
 
Numerator for diluted income (loss) per share:
Net income from continuing operations available to common shareholders $ 78,084 $ 27,937 $ 34,665 $ 16,047
Preferred stock dividends (a) - - - -
Accretion of dividends on preferred stock (a) - - - -
Allocation of undistributed earnings to participating securities 1,871 1,591 - 995
Less diluted allocation of undistributed earnings to participating securities   (1,869 )   (1,588 )   -     (994 )
Net income from continuing operations available to common shareholders 78,086 27,940 34,665 16,048
Net income (loss) from discontinued operations available to common shareholders - 31,403 (39,146 ) 18,951
Allocation of undistributed earnings to participating securities - 1,788 - 1,175
Less diluted allocation of undistributed earnings to participating securities   -     (1,785 )   -     (1,174 )
Net income (loss) from discontinued operations available to common shareholders   -     31,406     (39,146 )   18,952  
Net income (loss) available to common shareholders $ 78,086   $ 59,346   $ (4,481 ) $ 35,000  
 
Denominator for basic income (loss) per share:
Basic weighted average common shares 74,856 61,589 71,987 60,056
 
Denominator for diluted income (loss) per share:
Basic weighted average common shares 74,856 61,589 71,987 60,056
Preferred shares (a) - - - -
Average dilutive options 68 122 136 72
Average dilutive non-participating securities   -     -     1     -  
Diluted weighted average common shares   74,924     61,711     72,124     60,128  
 
Basic income (loss) per common share:
Income from continuing operations 1.04 0.45 0.48 0.27
Income (loss) from discontinued operations   -     0.51     (0.54 )   0.32  
Basic income (loss) per common share   1.04     0.96     (0.06 )   0.58  
 
Diluted income (loss) per common share:
Income from continuing operations 1.04 0.45 0.48 0.27
Income (loss) from discontinued operations   -     0.51     (0.54 )   0.32  
Diluted income (loss) per common share   1.04     0.96     (0.06 )   0.58  
 
(a) Although the Company was in a net income position during the 13 weeks ended January 31, 2015 and the 39 weeks ended January 30, 2016 and January 31, 2015, the dilutive effect of the Company’s convertible preferred shares were excluded from the calculation of income per share using the two-class method because the effect would be antidilutive.

CONTACT:
Media:
Barnes & Noble, Inc.
Mary Ellen Keating, (212) 633-3323
Senior Vice President
Corporate Communications
[email protected]
or
Investor:
Barnes & Noble, Inc.
Andy Milevoj, (212) 633-3489
Vice President, Investor Relations
[email protected]


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