EX-99.1 2 a5211352ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Barnes & Noble Reports Second Quarter Financial Results: Achieves Earnings per Share Guidance; Declares Quarterly Dividend NEW YORK--(BUSINESS WIRE)--Aug. 17, 2006--Barnes & Noble, Inc. (NYSE: BKS), the world's largest bookseller, today reported sales and earnings for the second quarter ended July 29, 2006. In addition, the company also announced that its Board of Directors declared a quarterly cash dividend of $0.15 per share for stockholders of record at the close of business on September 8, 2006, payable on September 29, 2006. Sales for the second quarter decreased 1% to $1.2 billion largely due to last year's record breaking sales of "Harry Potter and the Half-Blood Prince." Barnes & Noble store sales of $1.0 billion were flat compared to a year ago, with comparable store sales decreasing 2.6% for the quarter. B. Dalton sales were $21.9 million for the quarter, a 31% decrease compared to the prior year due to store closings and a 9.1% comparable store sales decline. Sales at Barnes & Noble.com were $82.7 million, a decline of 14% compared to the prior year period. Bestselling titles during the quarter included Kim Edwards' "The Memory Keeper's Daughter," Al Gore's "An Inconvenient Truth," Fannie Flagg's "Can't Wait to Get to Heaven" and Anderson Cooper's "Dispatches from the Edge." Second quarter net earnings were $16.6 million or $0.24 per share, in-line with company guidance of $0.22 to $0.26 per share. Second quarter results include a $0.04 per share impact due to stock compensation expense as the company has adopted Statement of Financial Accounting Standards No. 123R (As Amended), "Share-Based Payment," and began expensing stock options at the beginning of fiscal year 2006. The company acquired approximately 677,000 shares for $26 million and approximately 2.8 million shares for $119 million under its share repurchase program in the second quarter and year-to-date, respectively. GUIDANCE For the third quarter, the company expects comparable store sales at Barnes & Noble stores to range from flat to an increase in the low-single digits. The company continues to expect full year comparable store sales to increase in the low single digits. Barnes & Noble, Inc.'s third quarter loss per share is expected to be in a range of $0.04 to $0.08, which includes stock compensation expense of $0.04 per share. The company continues to expect full year earnings per share to be in a range of $2.20 to $2.30, which includes stock compensation expense of $0.15 per share. As of July 29, 2006, the company operated 687 Barnes & Noble stores and 112 B. Dalton stores. During the second quarter, four Barnes & Noble stores were opened and one was closed. One B. Dalton store was closed during the quarter. A conference call with Barnes & Noble, Inc.'s senior management will be webcast beginning at 10:00 A.M. ET on Thursday, August 17, 2006, and is accessible at www.barnesandnobleinc.com/webcasts. The call will also be archived at www.earnings.com for one year. Barnes & Noble, Inc. will report third quarter earnings on or about November 16, 2006. ABOUT BARNES & NOBLE, INC. Barnes & Noble, Inc. (NYSE: BKS), the world's largest bookseller and a Fortune 500 company, operates 799 bookstores in 50 states. For the fifth year in a row, the company is the nation's top retail brand for quality, according to the EquiTrend(R) Brand Study by Harris Interactive(R). Barnes & Noble conducts its online business through Barnes & Noble.com (www.bn.com), one of the Web's largest e-commerce sites and the number one online bookseller for quality among e-commerce companies, according to the latest EquiTrend survey. General information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the company's corporate Web site: http://www.barnesandnobleinc.com. SAFE HARBOR This press release contains "forward-looking statements." Barnes & Noble is including this statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. These forward-looking statements are based on currently available information and represent the beliefs of the management of the company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks include, but are not limited to, general economic and market conditions, decreased consumer demand for the company's products, possible disruptions in the company's computer or telephone systems, 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 and other initiatives, the successful integration of acquired businesses, the successful and timely completion and integration of the company's new New Jersey distribution center, unanticipated increases in merchandise or occupancy costs, unanticipated adverse litigation results or effects, product shortages, and other factors which may be outside of the company's control. Please refer to the company's annual, quarterly and periodic reports on file with the SEC for a more detailed discussion of these and other risks that could cause results to differ materially. BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share data) ------------------------------------------------ --------------------- 13 weeks ended 26 weeks ended ---------------------- --------------------- July 29, July 30, July 29, July 30, 2006 2005 2006 2005 ----------- ---------- ---------- ---------- Sales $1,156,159 1,170,800 2,270,894 2,267,970 Cost of sales and occupancy 806,637 827,490 1,582,622 1,597,309 ----------- ---------- ---------- ---------- Gross profit 349,522 343,310 688,272 670,661 ----------- ---------- ---------- ---------- Selling and administrative expenses 278,679 275,382 559,821 541,441 Depreciation and amortization 41,217 43,198 81,772 86,509 Pre-opening expenses 2,705 2,662 5,985 5,109 ----------- ---------- ---------- ---------- Operating profit 26,921 22,068 40,694 37,602 Interest income (expense), net (724) (665) 786 (994) ----------- ---------- ---------- ---------- Income before taxes and minority interest 26,197 21,403 41,480 36,608 Income taxes 10,675 8,722 16,903 14,918 ----------- ---------- ---------- ---------- Income before minority interest 15,522 12,681 24,577 21,690 Minority interest 1,054 786 1,990 1,683 ----------- ---------- ---------- ---------- Net income $ 16,576 13,467 26,567 23,373 =========== ========== ========== ========== Income per common share: Basic $ 0.25 0.20 0.41 0.34 Diluted $ 0.24 0.18 0.38 0.32 Weighted average common shares outstanding Basic 65,070 68,323 65,408 69,023 Diluted 68,895 73,087 69,499 73,743 Percentage of sales: Sales 100.0% 100.0% 100.0% 100.0% Cost of sales and occupancy 69.8% 70.7% 69.7% 70.4% ---------- ---------- ---------- ---------- Gross profit 30.2% 29.3% 30.3% 29.6% ---------- ---------- ---------- ---------- Selling and administrative expenses 24.1% 23.5% 24.7% 23.9% Depreciation and amortization 3.6% 3.7% 3.6% 3.8% Pre-opening expenses 0.2% 0.2% 0.3% 0.2% ---------- ---------- ---------- ---------- Operating profit 2.3% 1.9% 1.8% 1.7% Interest expense, net -0.1% -0.1% 0.0% 0.0% ---------- ---------- ---------- ---------- Income before taxes and minority interest 2.3% 1.8% 1.8% 1.6% Income taxes 0.9% 0.7% 0.7% 0.7% ---------- ---------- ---------- ---------- Income before minority interest 1.3% 1.1% 1.1% 1.0% Minority interest 0.1% 0.1% 0.1% 0.1% ---------- ---------- ---------- ---------- Net income 1.4% 1.2% 1.2% 1.0% ========== ========== ========== ========== BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except per share data) ---------------------------------------------------------------------- July 29, July 30, January 28, 2006 2005 2006 ----------- ---------- ---------- ASSETS Current assets: Cash and cash equivalents $ 21,776 21,315 372,586 Receivables, net 131,371 112,114 99,117 Merchandise inventories 1,375,900 1,336,174 1,313,997 Prepaid expenses and other current assets 85,400 102,443 74,476 ----------- ---------- ---------- Total current assets 1,614,447 1,572,046 1,860,176 ----------- ---------- ---------- Property and equipment: Land and land improvements 3,247 3,247 3,247 Buildings and leasehold improvements 973,391 976,579 984,535 Fixtures and equipment 1,245,443 1,121,202 1,174,973 ----------- ---------- ---------- 2,222,081 2,101,028 2,162,755 Less accumulated depreciation and amortization 1,428,320 1,293,732 1,356,379 ----------- ---------- ---------- Net property and equipment 793,761 807,296 806,376 ----------- ---------- ---------- Goodwill 261,678 265,901 263,731 Intangible assets, net 92,470 95,351 93,834 Deferred taxes 114,949 124,152 114,046 Other noncurrent assets 25,478 36,861 25,969 ----------- ---------- ---------- Total assets $2,902,783 2,901,607 3,164,132 =========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 755,500 760,806 828,852 Accrued liabilities 524,463 475,987 683,816 ----------- ---------- ---------- Total current liabilities 1,279,963 1,236,793 1,512,668 ----------- ---------- ---------- Long-term debt 41,000 9,000 - Deferred income taxes 158,035 193,743 158,035 Other long-term liabilities 378,195 379,134 367,531 Minority interest 7,094 6,442 10,057 Shareholders' equity: Common stock; $.001 par value; 300,000 shares authorized; 84,335, 81,377 and 83,370 shares issued, respectively 84 81 83 Additional paid-in capital 1,125,715 1,037,321 1,091,018 Accumulated other comprehensive loss (8,826) (10,347) (9,085) Retained earnings 519,211 409,507 512,594 Treasury stock, at cost, 19,520, 13,503 and 16,690 shares, respectively (597,688) (360,067) (478,769) ----------- ---------- ---------- Total shareholders' equity 1,038,496 1,076,495 1,115,841 ----------- ---------- ---------- Commitments and contingencies - - - ----------- ---------- ---------- Total liabilities and shareholders' equity $2,902,783 2,901,607 3,164,132 =========== ========== ========== CONTACT: Barnes & Noble, Inc. Media: Mary Ellen Keating Senior Vice President Corporate Communications 212-633-3323 or Investor: Joseph J. Lombardi Chief Financial Officer 212-633-3215