8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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) November 18, 2004 (November 12, 2004)

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):

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

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

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

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

TABLE OF CONTENTS

EX-99.1:UNAUDITED PRO FORMA BALANCE SHEET

Item 2.01 Completion of Acquisition or Disposition of Assets.

     On October 1, 2004, the Board of Directors of Barnes & Noble, Inc. (the “Company”) approved an overall plan for the complete disposition of all of its Class B common stock in GameStop Corp. (“GameStop”), the Company’s Video Game operating segment. This disposition was completed in two steps. The first step was the sale of 6,107,338 shares of GameStop Class B common stock held by the Company to GameStop (the “Stock Sale”) for an aggregate consideration of $111,519,991.80, consisting of $37,500,000 in cash and a promissory note in the principal amount of $74,019,991.80, bearing interest at a rate of 5.5% per annum, payable when principal installments are due. The Stock Sale was completed on October 1, 2004. The second step in the disposition was the spin-off by the Company of its remaining 29,901,662 shares of GameStop’s Class B common stock (the “Spin-Off”). The Spin-Off was completed on November 12, 2004 with the distribution of 0.424876232 of a share of GameStop Class B common stock as a tax-free dividend on each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on November 2, 2004. No fractional shares were issued. Instead, fractional share interests were aggregated for sale by the Company’s transfer agent on behalf of the stockholders who would otherwise be entitled to receive a fractional share of GameStop Class B common stock. As a result of the Stock Sale and the Spin-Off, GameStop is no longer a subsidiary of the Company. The disposition of all of the Company’s stockholdings in GameStop will result in the Company presenting all historical results of operations of GameStop as discontinued operations, commencing with the Company’s reporting of results for the 13 and 52 week periods ending January 29, 2005.

Item 9.01 Financial Statements and Exhibits.

(b) Pro Forma Financial Information.

Pursuant to paragraph (b)(1) of Item 9.01 of Form 8-K, the Company is furnishing pro forma financial information as set forth in Exhibit 99.1.

(c) Exhibits.

  99.1 Barnes & Noble, Inc. and Subsidiaries unaudited Pro Forma Condensed Consolidated Balance Sheet as of July 31, 2004 and unaudited Pro Forma Condensed Consolidated Statements of Operations for the 26 weeks ended July 31, 2004 and August 2, 2003, and the 52 weeks ended January 31, 2004, February 1, 2003 and February 2, 2002.

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SIGNATURE

     Pursuant to the requirements of the Securities and 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.
Date: November 18, 2004	By:	/s/ Joseph J. Lombardi
		Joseph J. Lombardi Chief Financial Officer

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Barnes & Noble, Inc.

EXHIBIT INDEX

Exhibit Number	Description
99.1	Barnes & Noble, Inc. and Subsidiaries unaudited Pro Forma Condensed Consolidated Balance Sheet as of July 31, 2004 and unaudited Pro Forma Condensed Consolidated Statements of Operations for the 26 weeks ended July 31, 2004 and August 2, 2003, and the 52 weeks ended January 31, 2004, February 1, 2003 and February 2, 2002.

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EX-99.1

Exhibit 99.1

Pro Forma Condensed Consolidated Financial Statements

     The accompanying unaudited pro forma condensed consolidated financial information of the Company is based on and should be read in conjunction with the historical consolidated financial statements and notes thereto appearing in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2004 and the unaudited consolidated financial statements filed in the Company’s Quarterly Report on Form 10-Q for the 26 weeks ended July 31, 2004. Because GameStop has not previously been presented as a discontinued operation in the Company’s financial statements included with prior filings, the accompanying Pro Forma Condensed Consolidated Balance Sheet as of July 31, 2004 and the Pro Forma Condensed Consolidated Statements of Operations for the 26 weeks ended July 31, 2004 and August 2, 2003, and the 52 weeks ended January 31, 2004, February 1, 2003 and February 2, 2002 reflect adjustments to present GameStop as a discontinued operation. These adjustments are included in the column “Adjustments to Reflect Discontinued Operations”. In addition, the Pro Forma Condensed Consolidated Balance Sheet as of July 31, 2004 reflects adjustments to present the Stock Sale and the Spin-Off as though they occurred on that date, and the Pro Forma Condensed Consolidated Statements of Operations for the 26 weeks ended July 31, 2004 and August 2, 2003, and the 52 weeks ended January 31, 2004 reflect adjustments to present the Stock Sale and the Spin-Off as though they occurred as of February 2, 2003. These adjustments are included in the column “Adjustments to Reflect Stock Sale” or the column “Adjustments to Reflect Spin-off”, as applicable.

     The accompanying unaudited pro forma condensed consolidated financial information includes all material adjustments necessary to reflect, on a pro forma basis, GameStop as a discontinued operation, and the impact of the Stock Sale and the Spin-Off, and have been presented for illustrative purposes only. They are not necessarily indicative of the future financial position or future results of operations of the Company, or of the financial position or results of operations of the Company that would have actually occurred had the transaction been in effect as of the date or for the periods presented.

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BARNES & NOBLE, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheets
As of July 31, 2004
(thousands of dollars, except per share data)
(unaudited)

				Adjustments to								Adjustments to
				Reflect Discontinued			Adjustments to					Reflect Spin-Off
	Historical			Operations (A)			Reflect Stock Sale					(D)			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	182,607			(159,747	)		25,100		(B	)		—		$	47,960
Receivables, net		71,022			(6,564	)		37,500		(B	)		—			101,958
Merchandise inventories		1,512,242			(184,059	)		—					—			1,328,183
Prepaid expenses and other current assets		129,445			(22,245	)		—					—			107,200
Current assets of discontinued operations		—			372,615			(37,500	)	(B	)		(335,115	)		—
Total current assets		1,895,316			—			25,100					(335,115	)		1,585,301
Property and equipment:
Land and land improvements		5,247			(2,000	)		—					—			3,247
Buildings and leasehold improvements		545,476			(79,285	)		—					—			466,191
Fixtures and equipment		1,204,692			(162,761	)		—					—			1,041,931
		1,755,415			(244,046	)		—					—			1,511,369
Less accumulated depreciation and amortization		1,064,720			(110,535	)		—					—			954,185
Net property and equipment		690,695			(133,511	)		—					—			557,184
Goodwill		597,867			(338,859	)		—					—			259,008
Intangible assets, net		100,663			—			—					—			100,663
Other noncurrent assets		69,529			(1,698	)		36,520		(B	)		—			104,351
Noncurrent assets of discontinued operations		—			474,068			—					(474,068	)		—
Total assets	$	3,354,070			—			61,620					(809,183	)	$	2,606,507
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	790,931			(143,022	)		—					—		$	647,909
Accrued liabilities		502,554			(73,460	)		23,196		(C	)		—			452,290
Current liabilities of discontinued operations		—			216,482			37,500		(B	)		(253,982	)		—
Total current liabilities		1,293,485			—			60,696					(253,982	)		1,100,199
Long-term debt		257,400			—			(12,400	)	(B	)		—			245,000
Deferred income taxes		169,879			(82,313	)		12,791		(C	)		—			100,357
Other long-term liabilities		108,352			(3,319	)		—					—			105,033
Noncurrent liabilities of discontinued operations		—			85,632			36,520		(B	)
								(21,544	)	(C	)		(100,608	)		—
Minority interest		208,820			(205,226	)		—					—			3,594
Minority interest in discontinued operations		—			205,226			—					(205,226	)		—
Shareholders’ equity:
Common stock; $.001 par value; 300,000,000 shares authorized; 78,302,017 shares issued		78			—			—					—			78
Additional paid-in capital		958,627			—			—					—			958,627
Accumulated other comprehensive loss		(8,872	)		—			—					(125	)		(8,997	)
Retained earnings		562,324			—			(14,443	)	(C	)		(249,242	)		298,639
Treasury stock, at cost, 9,007,700 shares		(196,023	)		—			—					—			(196,023	)
Total shareholders’ equity		1,316,134			—			(14,443	)				(249,367	)		1,052,324
Commitments and contingencies		—			—			—					—			—
Total liabilities and shareholders’ equity	$	3,354,070			—			61,620					(809,183	)	$	2,606,507

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BARNES & NOBLE, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statements of Operations
26 weeks ended July 31, 2004
(thousands of dollars, except per share data)
(unaudited)

				Adjustments to
				Reflect Discontinued			Adjustments to
	Historical			Operations			Reflect Stock Sale				Pro Forma
Sales	$	2,875,875			(717,329	)		—			$	2,158,546
Cost of sales and occupancy		2,097,552			(553,499	)		—				1,544,053
Gross profit		778,323			(163,830	)		—				614,493
Selling and administrative expenses		619,000			(121,946	)		—				497,054
Depreciation and amortization		90,718			(16,841	)		—				73,877
Pre-opening expenses		5,253			(1,726	)		—				3,527
Operating profit		63,352			(23,317	)		—				40,035
Interest income (expense), net		(7,856	)		347			670	(E	)		(7,533	)
Debt redemption charge		(14,582	)		—			—				(14,582	)
Income before taxes and minority interest		40,914			(23,664	)		670				17,920
Income taxes		16,342			(9,312	)		273	(F	)		7,303
Income before minority interest		24,572			(14,352	)		397				10,617
Minority interest		(4,219	)		5,253			—				1,034
Income from continuing operations	$	20,353			(9,099	)		397			$	11,651
Income from continuing operations per common share:
Basic	$	0.30									$	0.17
Diluted	$	0.28									$	0.16
Weighted average common shares outstanding
Basic		68,369,000										68,369,000
Diluted		70,884,000										70,884,000

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BARNES & NOBLE, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statements of Operations
26 weeks ended August 2, 2003
(thousands of dollars, except per share data)
(unaudited)

				Adjustments to
				Reflect Discontinued			Adjustments to
	Historical			Operations			Reflect Stock Sale				Pro Forma
Sales	$	2,468,848			(627,415	)		—			$	1,841,433
Cost of sales and occupancy		1,831,230			(493,812	)		—				1,337,418
Gross profit		637,618			(133,603	)		—				504,015
Selling and administrative expenses		509,857			(97,512	)		—				412,345
Depreciation and amortization		78,286			(13,089	)		—				65,197
Pre-opening expenses		3,960			(1,487	)		—				2,473
Operating profit		45,515			(21,515	)		—				24,000
Interest income (expense), net		(9,353	)		586			1,617	(E	)		(8,322	)
Equity in net loss of Barnes & Noble.com		(10,376	)		—			—				(10,376	)
Income before taxes and minority interest		25,786			(22,101	)		1,617				5,302
Income taxes		10,379			(8,907	)		651	(F	)		2,123
Income before minority interest		15,407			(13,194	)		966				3,179
Minority interest		(3,770	)		4,833			—				1,063
Income from continuing operations	$	11,637			(8,361	)		966			$	4,242
Income from continuing operations per common share:
Basic	$	0.18									$	0.07
Diluted	$	0.17									$	0.06
Weighted average common shares outstanding
Basic		64,859,000										64,859,000
Diluted		66,260,000										66,260,000

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BARNES & NOBLE, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statements of Operations
52 weeks ended January 31, 2004
(thousands of dollars, except per share data)
(unaudited)

				Adjustments to
				Reflect Discontinued			Adjustments to
	Historical			Operations			Reflect Stock Sale				Pro Forma
Sales	$	5,951,015			(1,578,838	)		—			$	4,372,177
Cost of sales and occupancy		4,323,767			(1,228,502	)		—				3,095,265
Gross profit		1,627,248			(350,336	)		—				1,276,912
Selling and administrative expenses		1,124,551			(214,104	)		—				910,447
Depreciation and amortization		163,629			(28,947	)		—				134,682
Pre-opening expenses		8,778			(2,901	)		—				5,877
Operating profit		330,290			(104,384	)		—				225,906
Interest income (expense), net		(20,140	)		804			2,632	(E	)		(18,312	)
Equity in net loss of Barnes & Noble.com		(14,311	)		—			—				(14,311	)
Income before taxes and minority interest		295,839			(105,188	)		2,632				193,283
Income taxes		120,554			(41,722	)		1,073	(F	)		79,905
Income before minority interest		175,285			(63,466	)		1,559				113,378
Minority interest		(23,432	)		22,895			—				(537	)
Income from continuing operations	$	151,853			(40,571	)		1,559			$	112,841
Income from continuing operations per common share:
Basic	$	2.30									$	1.71
Diluted	$	2.07									$	1.60
Weighted average common shares outstanding
Basic		65,989,000										65,989,000
Diluted		77,105,000										77,105,000

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BARNES & NOBLE, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statements of Operations
52 weeks ended February 1, 2003
(thousands of dollars, except per share data)
(unaudited)

				Adjustments to
				Reflect Discontinued
	Historical			Operations			Pro Forma
Sales	$	5,269,335			(1,352,791	)	$	3,916,544
Cost of sales and occupancy		3,847,482			(1,084,564	)		2,762,918
Gross profit		1,421,853			(268,227	)		1,153,626
Selling and administrative expenses		973,495			(156,899	)		816,596
Depreciation and amortization		148,691			(22,553	)		126,138
Pre-opening expenses		10,227			(1,704	)		8,523
Impairment charge		25,328			—			25,328
Operating profit		264,112			(87,071	)		177,041
Interest income (expense), net		(21,506	)		630			(22,136	)
Equity in net loss of Barnes & Noble.com		(26,795	)		—			(26,795	)
Other expense		(16,498	)		—			(16,498	)
Income before taxes and minority interest		199,313			(87,701	)		111,612
Income taxes		80,223			(35,297	)		44,926
Income before minority interest		119,090			(52,404	)		66,686
Minority interest		(19,142	)		19,142			—
Income from continuing operations	$	99,948			(33,262	)		66,686
Income from continuing operations per common share:
Basic	$	1.51					$	1.00
Diluted	$	1.39					$	0.97
Weighted average common shares outstanding
Basic		66,362,000						66,362,000
Diluted		77,680,000						77,680,000

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BARNES & NOBLE, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statements of Operations
52 weeks ended February 2, 2002
(thousands of dollars, except per share data)
(unaudited)

				Adjustments to
				Reflect Discontinued
	Historical			Operations			Pro Forma
Sales	$	4,870,390			(1,121,398	)	$	3,748,992
Cost of sales and occupancy		3,559,201			(920,354	)		2,638,847
Gross profit		1,311,189			(201,044	)		1,110,145
Selling and administrative expenses		905,117			(136,102	)		769,015
Legal settlement expense		4,500			—			4,500
Depreciation and amortization		147,826			(30,297	)		117,529
Pre-opening expenses		7,959			(558	)		7,401
Operating profit		245,787			(34,087	)		211,700
Interest expense, net		(36,334	)		(19,452	)		(16,882	)
Equity in net loss of Barnes & Noble.com		(88,378	)		—			(88,378	)
Other expense		(11,730	)		—			(11,730	)
Income before taxes and minority interest		109,345			(14,635	)		94,710
Income taxes		45,378			(6,074	)		39,304
Income before minority interest		63,967			(8,561	)		55,406
Minority interest		—			—			—
Income from continuing operations	$	63,967			(8,561	)	$	55,406
Income from continuing operations per common share:
Basic	$	0.96					$	0.83
Diluted	$	0.94					$	0.80
Weighted average common shares outstanding
Basic		66,393,000						66,393,000
Diluted		77,839,000						77,839,000

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Adjustments to the July 31, 2004 Pro Forma Condensed Consolidated Balance Sheet of Barnes & Noble, Inc.

(A)	To reflect GameStop as a discontinued operation, including the reclassification of deferred income taxes and minority interest related to the Company’s investment in GameStop.
(B)	To reflect the Company’s sale of 6.1 million shares of GameStop Class B common Stock to GameStop in a combination of cash and an interest bearing note as if the transaction occurred on July 31, 2004, as follows (in millions);

Cash paid by GameStop to the Company on the date of the Stock Sale, representing an increase in Cash and a decrease in current assets of discontinued operations	$	37.5
Cash used to pay down revolving credit facility of the Company		(12.4	)
Net adjustment to Cash	$	25.1
Portion of the note receivable presented as current, representing an increase in receivables, net and an increase in current liabilities of discontinued operations	$	37.5
Portion of the note receivable presented as long-term, representing an increase in other noncurrent assets and an increase in noncurrent liabilities of discontinued operations		36.5
Note receivable by the Company (payable by GameStop) on the date of the Stock Sale	$	74.0

(C) To reflect the income tax adjustment related to the Stock Sale, as follows (in millions);

Current tax liability related to Stock Sale	$	23.2
Deferred tax adjustment related to the utilization of net operating loss in connection with the Stock Sale		12.7
Deferred tax adjustment (decrease in noncurrent liabilities of discontinued operations) related to the Stock Sale		(21.5	)
Total net tax adjustment related to Stock Sale	$	14.4

(D) To reflect the Spin-Off of GameStop and the related charge to shareholders’ equity of the Company in the amount of the net book value of GameStop (the discontinued operation) as reflected in the historical financial statements of the Company, as follows (in millions);

	Net Book Value Relating to Discontinued Operation
	Before Stock Sale			Impact of Stock Sale			After Stock Sale
Current assets	$	372.6		$	(37.5	)	$	335.1
Noncurrent assets		474.1			—			474.1
Current liabilities		(216.5	)		(37.5	)		(254.0	)
Noncurrent liabilities		(85.6	)		(36.5	)		(122.1	)
Minority interest		(205.2	)		—			(205.2	)
Net book value	$	339.4		$	(111.5	)		227.9
Deferred tax adjustment (decrease in noncurrent liabilities of discontinued operation) related to Stock Sale - from C above								21.5
Net book value of GameStop distributed to shareholders in tax free Spin-Off							$	249.4

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Adjustments to Pro Forma Condensed Consolidated Statements of Operations of Barnes & Noble, Inc.

(E)	Interest income on note receivable from GameStop based on a rate of 5.5% per annum, as prescribed in the promissory note, and adjusted downward for scheduled pay downs of principal on the note receivable. No interest expense reduction has been assumed for the application of any of the proceeds to pay down debt outstanding during the periods presented.
(F)	Tax effect on interest income at the Company’s historical effective rate of 40.75%.

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