EX-99.1 2 ex99-18k04212008.htm BORDERS GROUP, INC. 2007 QUARTERLY SALES AND EARNINGS SUMMARY AND CONDENSED CONSOLIDATED BALANCE SHEETS ex99-18k04212008.htm

Borders Group, Inc.
                  
(dollars in millions, except per share amounts)
        
                   
2007 Quarterly Sales and Earnings Summary
              
                   
   
Quarter Ended May 5, 2007
                   
   
Operating
  
Adjustments
  
GAAP
  
   
Basis (1)
      
(1)
    
Basis
  
                     
Domestic Borders Superstores
   $ 615.0     $ -     $ 615.0  
Waldenbooks Specialty Retail
     108.1       -       108.1  
International
     69.2       -       69.2  
   Total sales
     792.3       -       792.3  
Other revenue
     6.4       -       6.4  
   Total revenue
     798.7       -       798.7  
Cost of goods sold, including occupancy costs
     609.3       4.5       613.8  
   Gross margin
     189.4       (4.5 )     184.9  
Selling, general and administrative expenses
     221.5       1.3       222.8  
Pre-opening expense
     1.3       -       1.3  
Asset impairments and other writedowns
     -       0.9       0.9  
   Operating income (loss)
     (33.4 )     (6.7 )     (40.1 )
Interest expense
     9.3       -       9.3  
   Income (loss) before income taxes
     (42.7 )     (6.7 )     (49.4 )
Income taxes
     (18.7 )     (1.6 )     (20.3 )
   Net income (loss) from continuing operations
   $ (24.0 )   $ (5.1 )   $ (29.1 )
Loss on continuing operations of discontinued operations (net of tax)
     (5.9 )     0.5       (5.4 )
Loss on disposal of discontinued operations (net of tax)
     -       (1.4 )     (1.4 )
   Loss from discontinued operations (net of tax)
     (5.9 )     (0.9 )     (6.8 )
   Net Income (loss)
   $ (29.9 )   $ (6.0 )   $ (35.9 )
                         
                         
                         
Basic EPS from continuing operations
   $ (0.41 )   $ (0.09 )   $ (0.50 )
Basic EPS from discontinued operations
   $ (0.10 )   $ (0.01 )   $ (0.11 )
Basic EPS including discontinued operations
   $ (0.51 )   $ (0.10 )   $ (0.61 )
Basic Weighted avg. common shares
     58.6       58.6     $ 58.6  
                         
                         
                         
                         
   
Quarter Ended August 4, 2007
  
                         
   
Operating
  
Adjustments
  
GAAP
  
   
Basis (1)
      
(1)
    
Basis
  
                         
Domestic Borders Superstores
   $ 658.6     $ -     $ 658.6  
Waldenbooks Specialty Retail
     116.7       -       116.7  
International
     77.4       -       77.4  
   Total sales
     852.7       -       852.7  
Other revenue
     8.8       -       8.8  
   Total revenue
     861.5       -       861.5  
Cost of goods sold, including occupancy costs
     647.4       0.9       648.3  
   Gross margin
     214.1       (0.9 )     213.2  
Selling, general and administrative expenses
     224.9       8.4       233.3  
Pre-opening expense
     1.7       -       1.7  
Asset impairments and other writedowns
     -       0.4       0.4  
   Operating income (loss)
     (12.5 )     (9.7 )     (22.2 )
Interest expense
     10.9       -       10.9  
   Income (loss) before income taxes
     (23.4 )     (9.7 )     (33.1 )
Income taxes
     (11.0 )     (2.7 )     (13.7 )
   Net income (loss) from continuing operations
   $ (12.4 )   $ (7.0 )   $ (19.4 )
Loss on continuing operations of discontinued operations (net of tax)
     (2.9 )     (2.0 )     (4.9 )
Loss on disposal of discontinued operations (net of tax)
     -       (0.8 )     (0.8 )
   Loss from discontinued operations (net of tax)
     (2.9 )     (2.8 )     (5.7 )
   Net Income (loss)
   $ (15.3 )   $ (9.8 )   $ (25.1 )
                         
                         
                         
Basic EPS from continuing operations
   $ (0.21 )   $ (0.12 )   $ (0.33 )
Basic EPS from discontinued operations
   $ (0.05 )   $ (0.05 )   $ (0.10 )
Basic EPS including discontinued operations
   $ (0.26 )   $ (0.17 )   $ (0.43 )
Basic Weighted avg. common shares
     58.8       58.8     $ 58.8  
                         
                         
                         
                         
   
Quarter Ended November 3, 2007
                         
   
Operating
  
Adjustments
  
GAAP
  
   
Basis (1)
      
(1)
    
Basis
  
                         
Domestic Borders Superstores
   $ 615.8     $ -     $ 615.8  
Waldenbooks Specialty Retail
     109.7       -       109.7  
International
     79.7       -       79.7  
   Total sales
     805.2       -       805.2  
Other revenue
     8.4       -       8.4  
   Total revenue
     813.6       -       813.6  
Cost of goods sold, including occupancy costs
     636.2       1.2       637.4  
   Gross margin
     177.4       (1.2 )     176.2  
Selling, general and administrative expenses
     227.9       1.5       229.4  
Pre-opening expense
     1.6       -       1.6  
Asset impairments and other writedowns
     -       1.4       1.4  
   Operating income (loss)
     (52.1 )     (4.1 )     (56.2 )
Interest expense
     12.3       -       12.3  
   Income (loss) before income taxes
     (64.4 )     (4.1 )     (68.5 )
Income taxes
     (25.3 )     (1.5 )     (26.8 )
   Net income (loss) from continuing operations
   $ (39.1 )   $ (2.6 )   $ (41.7 )
Loss on continuing operations of discontinued operations (net of tax)
     (2.9 )     -       (2.9 )
Loss on disposal of discontinued operations (net of tax)
     -       (116.5 )     (116.5 )
   Loss from discontinued operations (net of tax)
     (2.9 )     (116.5 )     (119.4 )
   Net Income (loss)
   $ (42.0 )   $ (119.1 )   $ (161.1 )
                         
                         
                         
Basic EPS from continuing operations
   $ (0.66 )   $ (0.05 )   $ (0.71 )
Basic EPS from discontinued operations
   $ (0.05 )   $ (1.98 )   $ (2.03 )
Basic EPS including discontinued operations
   $ (0.71 )   $ (2.03 )   $ (2.74 )
Basic Weighted avg. common shares
     58.8       58.8     $ 58.8  
                         
                         
                         
                         
   
Quarter Ended February 2, 2008
                         
   
Operating
  
Adjustments
  
GAAP
  
   
Basis (1)
      
(1)
 
  
Basis
  
                         
Domestic Borders Superstores
   $ 957.8     $ -     $ 957.8  
Waldenbooks Specialty Retail
     228.3       -       228.3  
International
     138.5       -       138.5  
   Total sales
     1,324.6       -       1,324.6  
Other revenue
     22.5       -       22.5  
   Total revenue
     1,347.1       -       1,347.1  
Cost of goods sold, including occupancy costs
     932.3       6.5       938.8  
   Gross margin
     414.8       (6.5 )     408.3  
Selling, general and administrative expenses
     268.1       2.5       270.6  
Pre-opening expense
     2.2       -       2.2  
Asset impairments and other writedowns
     -       10.4       10.4  
   Operating income (loss)
     144.5       (19.4 )     125.1  
Interest expense
     10.4       -       10.4  
   Income (loss) before income taxes
     134.1       (19.4 )     114.7  
Income taxes
     49.4       (6.4 )     43.0  
   Net income (loss) from continuing operations
   $ 84.7     $ (13.0 )   $ 71.7  
Loss on continuing operations of discontinued operations (net of tax)
     -       -       -  
Loss on disposal of discontinued operations (net of tax)
     -       (7.0 )     (7.0 )
   Loss from discontinued operations (net of tax)
     -       (7.0 )     (7.0 )
   Net Income (loss)
   $ 84.7     $ (20.0 )   $ 64.7  
                         
                         
                         
Diluted EPS from continuing operations
   $ 1.44     $ (0.22 )   $ 1.22  
Diluted EPS from discontinued operations
   $ -     $ (0.12 )   $ (0.12 )
Diluted EPS including discontinued operations
   $ 1.44     $ (0.34 )   $ 1.10  
Diluted Weighted avg. common shares
     58.8       58.8     $ 58.8  
                         
                         
                         
                         
   
Year Ended February 2, 2008
  
                         
   
Operating
  
Adjustments
  
GAAP
  
   
Basis (1)
      
(1)
    
Basis
  
                         
Domestic Borders Superstores
   $ 2,847.2     $ -     $ 2,847.2  
Waldenbooks Specialty Retail
     562.8       -       562.8  
International
     364.8       -       364.8  
   Total sales
     3,774.8       -       3,774.8  
Other revenue
     46.1       -       46.1  
   Total revenue
     3,820.9       -       3,820.9  
Cost of goods sold, including occupancy costs
     2,825.2       13.1       2,838.3  
   Gross margin
     995.7       (13.1 )     982.6  
Selling, general and administrative expenses
     942.4       13.7       956.1  
Pre-opening expense
     6.8       -       6.8  
Asset impairments and other writedowns
     -       13.1       13.1  
   Operating income (loss)
     46.5       (39.9 )     6.6  
Interest expense
     42.9       -       42.9  
   Income (loss) before income taxes
     3.6       (39.9 )     (36.3 )
Income taxes
     (5.6 )     (12.2 )     (17.8 )
   Net income (loss) from continuing operations
   $ 9.2     $ (27.7 )   $ (18.5 )
Loss on continuing operations of discontinued operations (net of tax)
     (11.7 )     (1.5 )     (13.2 )
Loss on disposal of discontinued operations (net of tax)
     -       (125.7 )     (125.7 )
   Loss from discontinued operations (net of tax)
     (11.7 )     (127.2 )     (138.9 )
   Net Income (loss)
   $ (2.5 )   $ (154.9 )   $ (157.4 )
                         
                         
                         
Basic EPS from continuing operations
   $ 0.16     $ (0.47 )   $ (0.31 )
Basic EPS from discontinued operations
   $ (0.20 )   $ (2.17 )   $ (2.37 )
Basic EPS including discontinued operations
   $ (0.04 )   $ (2.64 )   $ (2.68 )
Basic Weighted avg. common shares
     58.7       58.7     $ 58.7  
                         
                         
The results of Borders Ireland Limited, Books etc., and UK Superstores are reported as discontinued operations for all periods presented.
                         
(1) Results from 2007 were impacted by a number of non-operating items, including asset impairments, a legal settlement, store closure costs, executive severance costs, write-offs related to the Company’s music reduction initiative and professional fees related to international strategic alternatives in Asia Pacific. Therefore, solely for analytical purposes
and as an aid to better understand underlying trends, operating basis data are presented excluding these items.

 
 
 

 
 
 

Borders Group, Inc.
                        
(dollars in millions)
                        
Condensed Consolidated Balance Sheets
                        
                         
   
Fiscal Period Ended
  
   
May 5,
    
August 4,
    
November 3,
    
February 2,
  
   
2007
    
2007
    
2007
    
2008
  
Assets
                        
Cash and cash equivalents
   $ 79.0     $ 71.3     $ 65.5     $ 61.0  
Inventory
     1,429.6       1,338.8       1,650.0       1,327.2  
Other current assets
     106.3       116.3       123.7       117.8  
Current assets of discontinued operations
     141.2       134.6       -       -  
Property and equipment, net
     610.6       628.1       650.7       638.8  
Other assets and deferred charges
     122.4       122.6       132.4       117.4  
Goodwill
     40.3       40.3       40.3       40.5  
Noncurrent assets of discontinued operations
     127.2       129.9       -       -  
   Total assets
   $ 2,656.6     $ 2,581.9     $ 2,662.6     $ 2,302.7  
                                 
Liabilities and Stockholders' Equity
                                
Short-term borrowings and current portion of long-term debt
   $ 677.0     $ 691.0     $ 793.2     $ 548.6  
Accounts payable
     532.8       461.2       782.3       550.3  
Other current liabilities
     333.9       329.2       326.3       368.9  
Current liabilities of discontinued operations
     127.8       130.1       -       -  
Long-term debt
     5.2       5.1       5.3       5.4  
Other long-term liabilities
     321.6       332.8       340.3       350.4  
Noncurrent liabilities of discontinued operations
     55.0       56.1       -       -  
   Total liabilities
     2,053.3       2,005.5       2,247.4       1,823.6  
Minority interest
     1.9       2.1       2.2       2.2  
    Total stockholders' equity
     601.4       574.3       413.0       476.9  
Total liabilities, minority interest and stockholders' equity
   $ 2,656.6     $ 2,581.9     $ 2,662.6     $ 2,302.7  
                                 
                                 
Certain reclassifications have been made to conform to current year presentation.