x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 46-0599018 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
120 Mountain View Blvd., Basking Ridge, NJ | 07920 | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of Class | Trading Symbol | Name of Exchange on which registered |
Common Stock, $0.01 par value per share | BNED | New York Stock Exchange |
Large accelerated filer | ¨ | Accelerated filer | x | ||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | ||
Emerging Growth Company | ¨ |
INDEX TO FORM 10-K | ||
Page No. | ||
• | general competitive conditions, including actions our competitors and content providers may take to grow their businesses; |
• | a decline in college enrollment or decreased funding available for students; |
• | decisions by colleges and universities to outsource their physical and/or online bookstore operations or change the operation of their bookstores; |
• | implementation of our digital strategy may not result in the expected growth in our digital sales and/or profitability; |
• | risk that digital sales growth does not exceed the rate of investment spend; |
• | the performance of our online, digital and other initiatives, integration of and deployment of, additional products and services including new digital channels, and enhancements to higher education digital products, and the inability to achieve the expected cost savings; |
• | the risk of price reduction or change in format of course materials by publishers, which could negatively impact revenues and margin; |
• | the general economic environment and consumer spending patterns; |
• | decreased consumer demand for our products, low growth or declining sales; |
• | the strategic objectives, successful integration, anticipated synergies, and/or other expected potential benefits of various acquisitions, may not be fully realized or may take longer than expected; |
• | the integration of the operations of various acquisitions into our own may also increase the risk of our internal controls being found ineffective; |
• | changes to purchase or rental terms, payment terms, return policies, the discount or margin on products or other terms with our suppliers; |
• | our ability to successfully implement our strategic initiatives including our ability to identify, compete for and execute upon additional acquisitions and strategic investments; |
• | risks associated with operation or performance of MBS Textbook Exchange, LLC’s point-of-sales systems that are sold to college bookstore customers; |
• | technological changes; |
• | risks associated with counterfeit and piracy of digital and print materials; |
• | our international operations could result in additional risks; |
• | our ability to attract and retain employees; |
• | risks associated with data privacy, information security and intellectual property; |
• | trends and challenges to our business and in the locations in which we have stores; |
• | non-renewal of managed bookstore, physical and/or online store contracts and higher-than-anticipated store closings; |
• | disruptions to our information technology systems, infrastructure and data due to computer malware, viruses, hacking and phishing attacks, resulting in harm to our business and results of operations; |
• | disruption of or interference with third party web service providers and our own proprietary technology; |
• | work stoppages or increases in labor costs; |
• | possible increases in shipping rates or interruptions in shipping service; |
• | product shortages, including decreases in the used textbook inventory supply associated with the implementation of publishers’ direct to student textbook consignment rental programs, as well as risks associated with merchandise sourced indirectly from outside the United States; |
• | changes in domestic and international laws or regulations, including U.S. tax reform, changes in tax rates, laws and regulations, as well as related guidance; |
• | enactment of laws or changes in enforcement practices which may restrict or prohibit our use of texts, emails, interest based online advertising, recurring billing or similar marketing and sales activities; |
• | the amount of our indebtedness and ability to comply with covenants applicable to any future debt financing; |
• | our ability to satisfy future capital and liquidity requirements; |
• | our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms; |
• | adverse results from litigation, governmental investigations, tax-related proceedings, or audits; |
• | changes in accounting standards; and |
• | the other risks and uncertainties detailed in the section titled “Risk Factors” in Part I - Item 1A of this Form 10-K. |
• | Course Material Sales and Rentals. Sales and rentals of course materials are a core revenue driver and our online platform and registration solutions are deeply ingrained in their partner schools’ textbook selection process. Students can access affordable course materials and affinity products, including new and used print, eTextbooks, and e-content, which are available for sale or rent. We work directly with faculty to ensure the textbooks they have chosen for their courses are available in all required formats before the start of classes. Our wholesale distribution channel enables our Retail Segment to optimize textbook sourcing so they are able to more efficiently source and distribute a comprehensive inventory of affordable course materials to customers. |
• | Inclusive Access. We offer our First Day inclusive access program, in which course materials, including e-content, are offered at a reduced price through a course materials fee, and delivered to students on or before the first day of class. We have entered into several agreements with major publishers, including Cengage Learning, McGraw-Hill Education and Pearson, to provide their e-content through First Day, or directly to campus bookstores and virtual bookstores. The seamless delivery is made possible by our First Day technology and publishers' technology integrations with campus systems. These initiatives provide students, faculty and institutions greater access to more affordable course materials. In Fiscal 2019, First Day total sales increased by 92% from the prior year. |
• | BNC OER+. BNC OER+, a turnkey solution for colleges and universities, offers advanced, affordable learning materials built on a high-quality foundation of OER courseware and enhanced with digital content that includes videos, activities and auto-graded practice assessments that faculty can easily customize to align with class objectives. BNC OER+ significantly reduces course material costs for students and enables easier implementation for faculty. BNC OER+ is delivered digitally, with |
• | eTextbooks. We have partnered with VitalSource, a global leader in building, enhancing and delivering digital content, on our digital reading platform and a broad digital catalog. |
• | General Merchandise. For our physical campus bookstores and custom store solutions, we drive general merchandise sales through both in-store and online channels and feature collegiate and athletic apparel, other custom-branded school spirit products, lifestyle products, technology products, supplies and convenience items. We continue to see significant growth in our general merchandise e-commerce sales, with year-over-year growth of 5.6% in Fiscal 2019. |
• | Cafés and Convenience Stores. At our physical campus locations, we operate 88 customized cafés, featuring Starbucks Coffee®, and 13 stand-alone convenience stores, as well as diverse grab-and-go options including organic, vegan, gluten-free and ethnic fare. These offerings increase traffic and time spent in our physical stores. |
• | Brand Partnerships. Through our unique relationship with students, colleges and universities, and our premier position on campus, we operate as a media channel for brands looking to target the college demographic, and derive revenue from these marketing share programs. We also focused on promoting lifestyle products to students and faculty by promoting various brands to connect on a much more personal level. We create strategic, integrated campaigns which include research, email, social media, display advertising, on-campus events, signage, and sampling. Our client list includes brands such as Chase, Target, Masterpass, GEICO, DirecTV, GrubHub, Shutterfly, The New York Times and Tom's of Maine. Revenue from these services have higher margin rates due to the relatively low incremental cost structure to provide these services. |
• | Wholesale Textbook Distribution. Our large inventory of used textbooks consists of approximately 300,000 textbook titles in stock, and utilizes a highly automated distribution facility that processes more than 11 million textbooks annually. |
• | Wholesale Inventory Management, Hardware and POS Software. We sell hardware and a software suite of applications that provides inventory management and point-of-sale solutions to approximately 400 college bookstores. We provide on-site installation for point-of-sale terminals and servers, and offer technical assistance through user training and our support center facility. The cost savings and ease of deployment ensure clients get the most out of their management systems and create strong customer loyalty. |
Name | Age | Position | ||
Michael P. Huseby | 64 | Chairman and Chief Executive Officer | ||
Barry Brover | 58 | Executive Vice President, Operations; Executive Vice President, Barnes & Noble College | ||
Thomas D. Donohue | 49 | Executive Vice President, Chief Financial Officer | ||
Kanuj Malhotra | 52 | Executive Vice President, Corporate Development; President, Digital Student Solutions | ||
Michael C. Miller | 47 | Executive Vice President, Corporate Strategy and General Counsel | ||
Stephen Culver | 54 | Senior Vice President, Chief Information Officer | ||
JoAnn Magill | 65 | Senior Vice President, Human Resources | ||
Seema C. Paul | 55 | Senior Vice President, Chief Accounting Officer |
• | actual or anticipated fluctuations in our operating results due to factors related to our businesses; |
• | success or failure of our business strategies, including our digital education initiative; |
• | our quarterly or annual earnings or those of other companies in our industries; |
• | our ability to obtain financing as needed; |
• | announcements by us or our competitors of significant acquisitions or dispositions; |
• | changes in accounting standards, policies, guidance, interpretations or principles; |
• | the failure of securities analysts to cover our Common Stock; |
• | changes in earnings estimates by securities analysts or our ability to meet those estimates; |
• | the operating and stock price performance of other comparable companies; |
• | investor perception of our Company and the higher education industry; |
• | overall market fluctuations; |
• | results from any material litigation or government investigation; |
• | changes in laws and regulations (including tax laws and regulations) affecting our business; |
• | changes in capital gains taxes and taxes on dividends affecting stockholders; and |
• | general economic conditions and other external factors. |
• | authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares of capital stock, making a takeover more difficult and expensive; |
• | provide that special meetings of the stockholders may be called only by or at the direction of a majority of our Board or the chairman of our Board of Directors; and |
• | require advance notice to be given by stockholders for any stockholder proposals or director nominations. |
Contract Terms to Expire During (12 months ending on or about April 30) | Number of Physical Campus Stores | |
2020 | 67 | |
2021 | 65 | |
2022 | 45 | |
2023 | 42 | |
2024 | 43 | |
2025 and later | 510 |
Item 5. | MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Fiscal Year (a) | ||||||||||||||||||||
(In thousands of dollars, except for share and per share amounts) | 2019(b) | 2018 (b) | 2017 (b) | 2016 (b) | 2015 | |||||||||||||||
STATEMENT OF OPERATIONS DATA: | ||||||||||||||||||||
Sales: | ||||||||||||||||||||
Product sales and other | $ | 1,838,760 | $ | 1,984,472 | $ | 1,641,881 | $ | 1,581,104 | $ | 1,549,005 | ||||||||||
Rental income | 195,883 | 219,145 | 232,481 | 226,925 | 223,993 | |||||||||||||||
Total sales | 2,034,643 | 2,203,617 | 1,874,362 | 1,808,029 | 1,772,998 | |||||||||||||||
Cost of sales: | ||||||||||||||||||||
Product and other cost of sales | 1,395,339 | 1,522,687 | 1,281,043 | 1,224,927 | 1,200,304 | |||||||||||||||
Rental cost of sales | 111,578 | 123,697 | 134,258 | 128,403 | 127,980 | |||||||||||||||
Total cost of sales | 1,506,917 | 1,646,384 | 1,415,301 | 1,353,330 | 1,328,284 | |||||||||||||||
Gross profit | 527,726 | 557,233 | 459,061 | 454,699 | 444,714 | |||||||||||||||
Selling and administrative expenses | 423,880 | 433,746 | 380,793 | 374,171 | 360,645 | |||||||||||||||
Depreciation and amortization expense | 65,865 | 65,586 | 53,318 | 52,690 | 50,509 | |||||||||||||||
Impairment loss (non-cash) (c) | 57,748 | 313,130 | — | 11,987 | — | |||||||||||||||
Restructuring and other charges (c) | 7,233 | 5,429 | 1,790 | 8,830 | — | |||||||||||||||
Transaction costs (d) | 654 | 2,045 | 9,605 | 2,398 | — | |||||||||||||||
Operating (loss) income | (27,654 | ) | (262,703 | ) | 13,555 | 4,623 | 33,560 | |||||||||||||
Interest expense, net | 9,780 | 10,306 | 3,464 | 1,872 | 210 | |||||||||||||||
(Loss) earnings before taxes | (37,434 | ) | (273,009 | ) | 10,091 | 2,751 | 33,350 | |||||||||||||
Income tax (benefit) expense | (13,060 | ) | (20,443 | ) | 4,730 | 2,667 | 14,218 | |||||||||||||
Net (loss) income | $ | (24,374 | ) | $ | (252,566 | ) | $ | 5,361 | $ | 84 | $ | 19,132 | ||||||||
(Loss) Earnings per common share: | ||||||||||||||||||||
Basic | $ | (0.52 | ) | $ | (5.40 | ) | $ | 0.12 | $ | — | $ | 0.33 | ||||||||
Diluted | $ | (0.52 | ) | $ | (5.40 | ) | $ | 0.11 | $ | — | $ | 0.33 | ||||||||
Weighted average common shares (thousands)(e): | ||||||||||||||||||||
Basic | 47,306 | 46,763 | 46,317 | 46,238 | 38,452 | |||||||||||||||
Diluted | 47,306 | 46,763 | 46,763 | 46,479 | 38,493 |
Fiscal Year (a) | ||||||||||||||||||||
(In thousands of dollars, except for share and per share amounts) | 2019(b) | 2018 (b) | 2017 (b) | 2016 (b) | 2015 | |||||||||||||||
OTHER OPERATING DATA: | ||||||||||||||||||||
Adjusted EBITDA (non-GAAP) (f) | $ | 104,942 | $ | 126,760 | $ | 78,268 | $ | 80,528 | $ | 84,069 | ||||||||||
Adjusted Earnings (non-GAAP) (f) | $ | 25,412 | $ | 56,949 | $ | 12,347 | $ | 15,462 | $ | 19,132 | ||||||||||
Capital expenditures | $ | 46,420 | $ | 42,809 | $ | 34,670 | $ | 50,790 | $ | 48,452 | ||||||||||
OTHER OPERATING DATA - STORE COUNT: | ||||||||||||||||||||
Number of physical stores at period end | 772 | 768 | 769 | 751 | 724 | |||||||||||||||
Number of virtual stores at period end | 676 | 676 | 712 | N/A | N/A | |||||||||||||||
Fiscal Year (a) | ||||||||||||||||||||
(In thousands of dollars, except for share and per share amounts) | 2019(b) | 2018 (b) | 2017 (b) | 2016 (b) | 2015 | |||||||||||||||
BALANCE SHEET DATA (at period end): | ||||||||||||||||||||
Total assets | $ | 946,180 | $ | 1,039,211 | $ | 1,299,832 | $ | 1,071,683 | $ | 1,090,668 | ||||||||||
Total liabilities | $ | 495,552 | $ | 571,248 | $ | 586,124 | $ | 363,297 | $ | 363,999 | ||||||||||
Short-term debt | $ | 100,000 | $ | 100,000 | $ | 100,000 | $ | — | $ | — | ||||||||||
Long-term debt | $ | 33,500 | $ | 96,400 | $ | 59,600 | $ | — | $ | — | ||||||||||
Parent company equity | $ | — | $ | — | $ | — | $ | — | $ | 726,669 | ||||||||||
Total stockholders' equity | $ | 450,628 | $ | 467,963 | $ | 713,708 | $ | 708,386 | $ | — |
(a) | Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April. “Fiscal 2019” means the 52 weeks ended April 27, 2019, “Fiscal 2018” means the 52 weeks ended April 28, 2018, “Fiscal 2017” means the 52 weeks ended April 29, 2017, “Fiscal 2016” means the 52 weeks ended April 30, 2016 and “Fiscal 2015” means the 52 weeks ended May 2, 2015. |
(b) | We acquired PaperRater on August 21, 2018. The consolidated financial statements for Fiscal 2019 include the financial results of PaperRater from the acquisition date, August 21, 2018, to April 27, 2019. |
(c) | For additional information, see Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Policies and Note 10. Supplementary Information. |
(d) | Transaction costs are costs incurred for business development and acquisitions. |
(e) | For periods prior to the Spin-Off from Barnes & Noble, Inc. on August 2, 2015 (second quarter of Fiscal 2016), basic earnings per share and weighted-average basic shares outstanding are based on the number of shares of Barnes & Noble, Inc. common stock outstanding as of the end of the period, adjusted for the distribution ratio of 0.632 shares of our Common Stock for every one share of Barnes & Noble, Inc. common stock held on the record date for the Spin-Off. Additionally, for periods prior to the Spin-Off, diluted earnings per share and weighted-average diluted shares outstanding reflect potential common shares from Barnes & Noble, Inc. equity plans in which our employees participated. Certain of our employees held restricted stock units and stock options granted by Barnes & Noble, Inc. which were considered participating securities. |
(f) | To supplement our results prepared in accordance with GAAP, we use the measure of Adjusted EBITDA and Adjusted Earnings, which are non-GAAP financial measures as defined by the Securities and Exchange Commission (the “SEC”). See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Adjusted Earnings (non-GAAP) and - Adjusted EBITDA (non-GAAP). |
Item 7. | MANAGMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | The consolidated financial statements for the 52 weeks ended April 27, 2019 include the financial results of PaperRater from the acquisition date, August 21, 2018, to April 27, 2019. |
• | The consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands from the acquisition date, August 3, 2017, to April 28, 2018. |
• | The consolidated financial statements for the 52 weeks ended April 29, 2017 include the financial results of MBS from the acquisition date, February 27, 2017, to April 29, 2017. |
Fiscal Year | ||||||||||||
Dollars in thousands | 2019 | 2018 | 2017 | |||||||||
Sales: | ||||||||||||
Product sales and other | $ | 1,838,760 | $ | 1,984,472 | $ | 1,641,881 | ||||||
Rental income | 195,883 | 219,145 | 232,481 | |||||||||
Total sales | $ | 2,034,643 | $ | 2,203,617 | $ | 1,874,362 | ||||||
Net (loss) income | $ | (24,374 | ) | $ | (252,566 | ) | $ | 5,361 | ||||
Adjusted Earnings (non-GAAP) (a) | $ | 25,412 | $ | 56,949 | $ | 12,347 | ||||||
Adjusted EBITDA (non-GAAP) (a) | ||||||||||||
Retail | $ | 89,094 | $ | 101,242 | $ | 107,524 | ||||||
Wholesale | 35,018 | 40,849 | (3,246 | ) | ||||||||
DSS | 6,169 | 7,559 | — | |||||||||
Corporate Services | (24,873 | ) | (22,166 | ) | (25,373 | ) | ||||||
Eliminations | (466 | ) | (724 | ) | (637 | ) | ||||||
Total Adjusted EBITDA (non-GAAP) | $ | 104,942 | $ | 126,760 | $ | 78,268 | ||||||
(a) | Adjusted Earnings and Adjusted EBITDA are a non-GAAP financial measures. See Adjusted Earnings (non-GAAP) and Adjusted EBITDA (non-GAAP) discussion below. |
Fiscal Year | |||||||||
2019 | 2018 | 2017 | |||||||
Sales: | |||||||||
Product sales and other | 90.4 | % | 90.1 | % | 87.6 | % | |||
Rental income | 9.6 | 9.9 | 12.4 | ||||||
Total sales | 100.0 | 100.0 | 100.0 | ||||||
Cost of sales: | |||||||||
Product and other cost of sales (a) | 75.9 | 76.7 | 78.0 | ||||||
Rental cost of sales (a) | 57.0 | 56.4 | 57.8 | ||||||
Total cost of sales | 74.1 | 74.7 | 75.5 | ||||||
Gross margin | 25.9 | 25.3 | 24.5 | ||||||
Selling and administrative expenses | 20.8 | 19.7 | 20.3 | ||||||
Depreciation and amortization expense | 3.2 | 3.0 | 2.8 | ||||||
Impairment loss (non-cash) | 2.8 | 14.2 | — | ||||||
Restructuring and other charges | 0.4 | 0.2 | 0.1 | ||||||
Transactions costs | — | 0.1 | 0.5 | ||||||
Operating (loss) income | (1.4 | )% | (11.9 | )% | 0.7 | % |
52 weeks ended, April 27, 2019 | |||||||||||||||||||||||
Dollars in thousands | Retail | Wholesale | DSS (a) | Corporate Services | Eliminations (b) | Total | |||||||||||||||||
Sales: | |||||||||||||||||||||||
Product sales and other | $ | 1,693,125 | $ | 223,374 | $ | 21,339 | $ | — | $ | (99,078 | ) | 1,838,760 | |||||||||||
Rental income | 195,883 | — | — | — | — | 195,883 | |||||||||||||||||
Total sales | 1,889,008 | 223,374 | 21,339 | — | (99,078 | ) | 2,034,643 | ||||||||||||||||
Cost of sales: | |||||||||||||||||||||||
Product and other cost of sales | 1,325,559 | 167,033 | 1,309 | — | (98,562 | ) | 1,395,339 | ||||||||||||||||
Rental cost of sales | 111,578 | — | — | — | — | 111,578 | |||||||||||||||||
Total cost of sales | 1,437,137 | 167,033 | 1,309 | — | (98,562 | ) | 1,506,917 | ||||||||||||||||
Gross profit | 451,871 | 56,341 | 20,030 | — | (516 | ) | 527,726 | ||||||||||||||||
Selling and administrative expenses | 363,230 | 21,323 | 14,504 | 24,873 | (50 | ) | 423,880 | ||||||||||||||||
Depreciation and amortization expense | 51,728 | 6,014 | 7,974 | 149 | — | 65,865 | |||||||||||||||||
Sub-Total: | $ | 36,913 | $ | 29,004 | $ | (2,448 | ) | $ | (25,022 | ) | $ | (466 | ) | 37,981 | |||||||||
Impairment loss (non-cash) | 57,748 | ||||||||||||||||||||||
Restructuring and other charges | 7,233 | ||||||||||||||||||||||
Transaction costs | 654 | ||||||||||||||||||||||
Operating loss | $ | (27,654 | ) | ||||||||||||||||||||
52 weeks ended, April 28, 2018 | |||||||||||||||||||||||
Dollars in thousands | Retail | Wholesale | DSS (a) | Corporate Services | Eliminations (b) | Total | |||||||||||||||||
Sales: | |||||||||||||||||||||||
Product sales and other | $ | 1,805,396 | $ | 258,369 | $ | 15,762 | $ | — | $ | (95,055 | ) | 1,984,472 | |||||||||||
Rental income | 219,145 | — | — | — | — | 219,145 | |||||||||||||||||
Total sales | 2,024,541 | 258,369 | 15,762 | — | (95,055 | ) | 2,203,617 | ||||||||||||||||
Cost of sales: | |||||||||||||||||||||||
Product and other cost of sales | 1,418,618 | 198,041 | 359 | — | (94,331 | ) | 1,522,687 | ||||||||||||||||
Rental cost of sales | 123,697 | — | — | — | — | 123,697 | |||||||||||||||||
Total cost of sales | 1,542,315 | 198,041 | 359 | — | (94,331 | ) | 1,646,384 | ||||||||||||||||
Gross profit | 482,226 | 60,328 | 15,403 | — | (724 | ) | 557,233 | ||||||||||||||||
Selling and administrative expenses | 380,984 | 22,752 | 7,844 | 22,166 | — | 433,746 | |||||||||||||||||
Depreciation and amortization expense | 53,955 | 6,188 | 5,253 | 190 | — | 65,586 | |||||||||||||||||
Sub-Total: | $ | 47,287 | $ | 31,388 | $ | 2,306 | $ | (22,356 | ) | $ | (724 | ) | 57,901 | ||||||||||
Impairment loss (non-cash) | 313,130 | ||||||||||||||||||||||
Restructuring and other charges | 5,429 | ||||||||||||||||||||||
Transaction costs | 2,045 | ||||||||||||||||||||||
Operating loss | $ | (262,703 | ) | ||||||||||||||||||||
(a) | We acquired PaperRater, LLC on August 21, 2018. The consolidated financial statements for the 52 weeks ended April 27, 2019 include the financial results of PaperRater in the DSS Segment from the acquisition date, August 21, 2018, to April 27, 2019. |
(b) | For additional information related to the intercompany activities and eliminations, see Part II - Item 8. Financial Statements and Supplementary Data - Note 4. Acquisitions and Note 6. Segment Reporting. |
52 weeks ended | ||||||||||
Dollars in thousands | April 27, 2019 | April 28, 2018 | % | |||||||
Product sales and other | 1,838,760 | 1,984,472 | (7.3)% | |||||||
Rental income | 195,883 | 219,145 | (10.6)% | |||||||
Total Sales | $ | 2,034,643 | $ | 2,203,617 | (7.7)% |
Sales variances | 52 weeks ended | |||
Dollars in millions | April 29, 2019 | |||
Retail Sales | ||||
New stores | $ | 54.7 | ||
Closed stores | (83.8 | ) | ||
Comparable stores (a) | (93.0 | ) | ||
Textbook rental deferral | 0.2 | |||
Service revenue (b) | (5.6 | ) | ||
Other (c) | (8.1 | ) | ||
Retail Sales subtotal: | $ | (135.6 | ) | |
Wholesale Sales | $ | (35.0 | ) | |
DSS Sales (d) | $ | 5.6 | ||
Eliminations (e) | $ | (4.0 | ) | |
Total sales variance | $ | (169.0 | ) |
(a) | Comparable store sales includes sales from physical stores that have been open for an entire fiscal year period and virtual store sales for the period, does not include sales from closed stores for all periods presented, and digital agency sales are included on a gross basis. |
(b) | Service revenue includes Promoversity, brand partnerships, shipping and handling, digital content, software, services, and revenue from other programs. |
(c) | Other includes inventory liquidation sales to third parties, marketplace sales and certain accounting adjusting items related to return reserves, agency sales and other deferred items. |
(d) | DSS revenue includes Student Brands subscription-based writing services business, which we acquired on August 3, 2017. The consolidated financial statements for the 52 weeks ended April 27, 2019 include the financial results of Student Brands in the DSS segment and the consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands from the date of acquisition on August 3, 2017. |
(e) | Eliminates Wholesale sales and service fees to Retail and Retail commissions earned from Wholesale. See Part II - Item 8. Financial Statements and Supplementary Data - Note 6. Segment Reporting for a discussion of intercompany activities and eliminations. |
Fiscal 2019 | Fiscal 2018 | |||||||||||
Physical | Virtual | Physical | Virtual | |||||||||
Number of stores at beginning of period | 768 | 676 | 769 | 712 | ||||||||
Opened | 35 | 33 | 33 | 21 | ||||||||
Closed | 31 | 33 | 34 | 57 | ||||||||
Number of stores at end of period | 772 | 676 | 768 | 676 | ||||||||
Comparable Store Sales variances for Retail | 52 weeks ended | ||||||
Dollars in millions | April 27, 2019 | ||||||
Textbooks (Course Materials) | $ | (97.9 | ) | (8.0 | )% | ||
General Merchandise | 8.7 | 1.5 | % | ||||
Trade Books | (3.8 | ) | (8.2 | )% | |||
Total Comparable Store Sales | $ | (93.0 | ) | (5.1 | )% |
52 weeks ended | 52 weeks ended | |||||||||||
Dollars in thousands | April 27, 2019 | % of Related Sales | April 28, 2018 | % of Related Sales | ||||||||
Product and other cost of sales | $ | 1,325,559 | 78.3% | $ | 1,418,618 | 78.6% | ||||||
Rental cost of sales | 111,578 | 57.0% | 123,697 | 56.4% | ||||||||
Total Cost of Sales | $ | 1,437,137 | 76.1% | $ | 1,542,315 | 76.2% |
52 weeks ended | 52 weeks ended | |||||||||||
Dollars in thousands | April 27, 2019 | % of Related Sales | April 28, 2018 | % of Related Sales | ||||||||
Product and other gross margin | $ | 367,566 | 21.7% | $ | 386,778 | 21.4% | ||||||
Rental gross margin | 84,305 | 43.0% | 95,448 | 43.6% | ||||||||
Gross Margin | $ | 451,871 | 23.9% | $ | 482,226 | 23.8% |
• | Product and other gross margin increased (30 basis points), driven primarily by a favorable sales mix (105 basis points), partially offset by higher costs related to our college and university contracts (50 basis points) resulting from contract renewals and new store contracts and lower course material margin rates (30 basis points). |
• | Rental gross margin decreased (60 basis points), driven primarily by higher costs related to our college and university contracts (125 basis points) resulting from contract renewals and new store contracts, and an unfavorable rental mix (25 basis points), partially offset by higher rental margin rates (90 basis points). |
52 weeks ended | 52 weeks ended | |||||||||||
Dollars in thousands | April 27, 2019 | % of Sales | April 28, 2018 | % of Sales | ||||||||
Selling and Administrative Expenses | $ | 423,880 | 20.8% | $ | 433,746 | 19.7% |
52 weeks ended | 52 weeks ended | |||||||||||
Dollars in thousands | April 27, 2019 | % of Sales | April 28, 2018 | % of Sales | ||||||||
Depreciation and Amortization Expense | $ | 65,865 | 3.2% | $ | 65,586 | 3.0% |
52 weeks ended | 52 weeks ended | |||||||||||
Dollars in thousands | April 27, 2019 | % of Sales | April 28, 2018 | % of Sales | ||||||||
Operating Loss | $ | (27,654 | ) | (1.4)% | $ | (262,703 | ) | (11.9)% |
52 weeks ended | ||||||||
Dollars in thousands | April 27, 2019 | April 28, 2018 | ||||||
Interest Expense, Net | $ | 9,780 | $ | 10,306 |
52 weeks ended | 52 weeks ended | |||||||||||
Dollars in thousands | April 27, 2019 | Effective Rate | April 28, 2018 | Effective Rate | ||||||||
Income Tax (Benefit) Expense | $ | (13,060 | ) | 34.9% | $ | (20,443 | ) | 7.5% |
52 weeks ended | ||||||||
Dollars in thousands | April 27, 2019 | April 28, 2018 | ||||||
Net Loss | $ | (24,374 | ) | $ | (252,566 | ) |
52 weeks ended, April 28, 2018 | |||||||||||||||||||||||
Dollars in thousands | Retail (a) | Wholesale (a) | DSS (b) | Corporate Services | Eliminations (c) | Total | |||||||||||||||||
Sales: | |||||||||||||||||||||||
Product sales and other | $ | 1,805,396 | $ | 258,369 | $ | 15,762 | $ | — | $ | (95,055 | ) | $ | 1,984,472 | ||||||||||
Rental income | 219,145 | — | — | — | — | 219,145 | |||||||||||||||||
Total sales | 2,024,541 | 258,369 | 15,762 | — | (95,055 | ) | 2,203,617 | ||||||||||||||||
Cost of sales: | |||||||||||||||||||||||
Product and other cost of sales | 1,418,618 | 198,041 | 359 | — | (94,331 | ) | 1,522,687 | ||||||||||||||||
Rental cost of sales | 123,697 | — | — | — | — | 123,697 | |||||||||||||||||
Total cost of sales | 1,542,315 | 198,041 | 359 | — | (94,331 | ) | 1,646,384 | ||||||||||||||||
Gross profit | 482,226 | 60,328 | 15,403 | — | (724 | ) | 557,233 | ||||||||||||||||
Selling and administrative expenses | 380,984 | 22,752 | 7,844 | 22,166 | — | 433,746 | |||||||||||||||||
Depreciation and amortization expense | 53,955 | 6,188 | 5,253 | 190 | — | 65,586 | |||||||||||||||||
Sub-Total: | $ | 47,287 | $ | 31,388 | $ | 2,306 | $ | (22,356 | ) | $ | (724 | ) | 57,901 | ||||||||||
Impairment loss (non-cash) | 313,130 | ||||||||||||||||||||||
Restructuring and other charges | 5,429 | ||||||||||||||||||||||
Transaction costs | 2,045 | ||||||||||||||||||||||
Operating loss | $ | (262,703 | ) | ||||||||||||||||||||
52 weeks ended, April 29, 2017 | |||||||||||||||||||||||
Dollars in thousands | Retail (a) | Wholesale (a) | DSS (b) | Corporate Services | Eliminations (c) | Total | |||||||||||||||||
Sales: | |||||||||||||||||||||||
Product sales and other | $ | 1,633,090 | $ | 14,758 | $ | — | $ | — | $ | (5,967 | ) | $ | 1,641,881 | ||||||||||
Rental income | 232,481 | — | — | — | — | 232,481 | |||||||||||||||||
Total sales | 1,865,571 | 14,758 | — | — | (5,967 | ) | 1,874,362 | ||||||||||||||||
Cost of sales: | |||||||||||||||||||||||
Product and other cost of sales | 1,272,018 | 14,355 | — | — | (5,330 | ) | 1,281,043 | ||||||||||||||||
Rental cost of sales | 134,258 | — | — | — | — | 134,258 | |||||||||||||||||
Total cost of sales | 1,406,276 | 14,355 | — | — | (5,330 | ) | 1,415,301 | ||||||||||||||||
Gross profit | 459,295 | 403 | — | — | (637 | ) | 459,061 | ||||||||||||||||
Selling and administrative expenses | 351,771 | 3,649 | — | 25,373 | — | 380,793 | |||||||||||||||||
Depreciation and amortization expense | 52,102 | 1,024 | — | 192 | — | 53,318 | |||||||||||||||||
Sub-Total: | $ | 55,422 | $ | (4,270 | ) | $ | — | $ | (25,565 | ) | $ | (637 | ) | 24,950 | |||||||||
Impairment loss (non-cash) | — | ||||||||||||||||||||||
Restructuring and other charges | 1,790 | ||||||||||||||||||||||
Transaction costs | 9,605 | ||||||||||||||||||||||
Operating income | $ | 13,555 | |||||||||||||||||||||
(a) | We acquired MBS Textbook Exchange, LLC on February 27, 2017. The consolidated financial statements for the 52 weeks ended April 29, 2017 include the financial results of MBS's retail virtual bookstore business and wholesale business from the acquisition date, February 27, 2017, to April 29, 2017. |
(b) | We acquired Student Brands, LLC on August 3, 2017. The consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands from the acquisition date, August 3, 2017, to April 28, 2018. |
(c) | For additional information related to the intercompany activities and eliminations, see Part II - Item 8. Financial Statements and Supplementary Data - Note 6. Segment Reporting. |
52 weeks ended | ||||||||||
Dollars in thousands | April 28, 2018 | April 29, 2017 | % | |||||||
Product sales and other | $ | 1,984,472 | $ | 1,641,881 | 20.9% | |||||
Rental income | 219,145 | 232,481 | (5.7)% | |||||||
Total Sales | $ | 2,203,617 | $ | 1,874,362 | 17.6% |
Sales variances | 52 weeks ended | |||
Dollars in millions | April 28, 2018 | |||
Retail Sales | ||||
New stores | $ | 69.3 | ||
Closed stores | 0.7 | |||
Comparable physical stores | (69.8 | ) | ||
Virtual stores (a) | 145.2 | |||
Textbook rental deferral | 0.5 | |||
Service revenue (b) | 12.9 | |||
Other (c) | 0.2 | |||
Retail Sales subtotal: | $ | 159.0 | ||
Wholesale Sales (a) | $ | 243.6 | ||
DSS Sales (d) | $ | 15.8 | ||
Eliminations (e) | $ | (89.1 | ) | |
Total sales variance | $ | 329.3 |
(a) | The variances represents the virtual bookstores and wholesale business for the full year in Fiscal 2018 compared to the partial period in Fiscal 2017 from the MBS acquisition date, February 27, 2017, to April 29, 2017. |
(b) | Service revenue includes Promoversity, brand partnerships, shipping and handling, LoudCloud digital content, software, and services, and revenue from other programs. |
(c) | Other includes inventory liquidation sales to third parties, marketplace sales, and certain accounting adjusting items related to return reserves, agency sales and other deferred items. |
(d) | DSS revenue includes Student Brands, LLC subscription-based writing services business. The consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands, LLC from the date of acquisition, August 3, 2017. |
(e) | Eliminates Wholesale sales and service fees to Retail and Retail commissions earned from Wholesale. See Part II - Item 8. Financial Statements and Supplementary Data - Note 6. Segment Reporting for a discussion of intercompany activities and eliminations. |
Fiscal 2018 | Fiscal 2017 | |||||||||||
Physical | Virtual | Physical | Virtual | |||||||||
Number of stores at beginning of period | 769 | 712 | 751 | 700 | ||||||||
Opened | 33 | 21 | 38 | 15 | ||||||||
Closed | 34 | 57 | 20 | 3 | ||||||||
Number of stores at end of period | 768 | 676 | 769 | 712 | ||||||||
Comparable Store Sales variances for Physical Bookstores | 52 weeks ended | ||||||
Dollars in millions | April 28, 2018 | ||||||
Textbooks (Course Materials) | $ | (65.6 | ) | (5.9 | )% | ||
General Merchandise | 1.2 | 0.2 | % | ||||
Trade Books | (5.4 | ) | (10.4 | )% | |||
Total Comparable Store Sales | $ | (69.8 | ) | (4.1 | )% |
52 weeks ended | 52 weeks ended | |||||||||||
Dollars in thousands | April 28, 2018 | % of Related Sales | April 29, 2017 | % of Related Sales | ||||||||
Product and other cost of sales | $ | 1,418,618 | 78.6% | $ | 1,272,018 | 77.9% | ||||||
Rental cost of sales | 123,697 | 56.4% | 134,258 | 57.8% | ||||||||
Total Cost of Sales | $ | 1,542,315 | 76.2% | $ | 1,406,276 | 75.4% |
52 weeks ended | 52 weeks ended | |||||||||||
Dollars in thousands | April 28, 2018 | % of Related Sales | April 29, 2017 | % of Related Sales | ||||||||
Product and other gross margin | $ | 386,778 | 21.4% | $ | 361,072 | 22.1% | ||||||
Rental gross margin | 95,448 | 43.6% | 98,223 | 42.2% | ||||||||
Gross Margin | $ | 482,226 | 23.8% | $ | 459,295 | 24.6% |
• | Product and other gross margin decreased (70 basis points) due to lower margin rates (295 basis points), specifically for general merchandise and used textbooks, which were impacted by publisher price decreases and lower sales of underutilized inventory to third parties compared to the prior year due to inventory transfers to Wholesale, partially offset by lower costs related to our college and university contracts (130 basis points) and a favorable sales mix (95 basis points). |
• | Rental gross margin increased (135 basis points), driven primarily by higher rental margin rates (90 basis points), lower costs related to our college and university contracts (40 basis points), and favorable sales mix (5 basis points). |
52 weeks ended | 52 weeks ended | |||||||||||
Dollars in thousands | April 28, 2018 | % of Sales | April 29, 2017 | % of Sales | ||||||||
Selling and Administrative Expenses | $ | 433,746 | 19.7% | $ | 380,793 | 20.3% |
52 weeks ended | 52 weeks ended | |||||||||||
Dollars in thousands | April 28, 2018 | % of Sales | April 29, 2017 | % of Sales | ||||||||
Depreciation and Amortization Expense | $ | 65,586 | 3.0% | $ | 53,318 | 2.8% |
52 weeks ended | 52 weeks ended | |||||||||||
Dollars in thousands | April 28, 2018 | % of Sales | April 29, 2017 | % of Sales | ||||||||
Operating (Loss) Income | $ | (262,703 | ) | (11.9)% | $ | 13,555 | 0.7% |
52 weeks ended | ||||||||
Dollars in thousands | April 28, 2018 | April 29, 2017 | ||||||
Interest Expense, Net | $ | 10,306 | $ | 3,464 |
52 weeks ended | 52 weeks ended | |||||||||||
Dollars in thousands | April 28, 2018 | Effective Rate | April 29, 2017 | Effective Rate | ||||||||
Income Tax (Benefit) Expense | $ | (20,443 | ) | 7.5% | $ | 4,730 | 46.9% |
52 weeks ended | ||||||||
Dollars in thousands | April 28, 2018 | April 29, 2017 | ||||||
Net (Loss) Income | $ | (252,566 | ) | $ | 5,361 |
Dollars in thousands | Fiscal 2019 | Fiscal 2018 | Fiscal 2017 | |||||||||
Net (loss) income | $ | (24,374 | ) | $ | (252,566 | ) | $ | 5,361 | ||||
Reconciling items, after-tax (below) | 49,786 | 309,515 | 6,986 | |||||||||
Adjusted Earnings (non-GAAP) | $ | 25,412 | $ | 56,949 | $ | 12,347 | ||||||
Reconciling items, pre-tax | ||||||||||||
Impairment loss (non-cash) (a) | $ | 57,748 | $ | 313,130 | $ | — | ||||||
Inventory valuation amortization (non-cash) (b) | — | 3,273 | — | |||||||||
Content amortization (non-cash) (c) | 1,096 | — | — | |||||||||
Restructuring and other charges (a) | 7,233 | 5,429 | 1,790 | |||||||||
Transaction costs (a) | 654 | 2,045 | 9,605 | |||||||||
Reconciling items, pre-tax | 66,731 | 323,877 | 11,395 | |||||||||
Less: Pro forma income tax impact (d) | 16,945 | 14,362 | 4,409 | |||||||||
Reconciling items, after-tax | $ | 49,786 | $ | 309,515 | $ | 6,986 |
(a) | See Management Discussion and Analysis - Results of Operations discussion above. |
(b) | For the 52 weeks ended April 28, 2018, gross margin excludes $3.3 million of incremental cost of sales related to amortization of the Wholesale inventory fair value adjustment related to the MBS acquisition in February 2017. |
(c) | For the 52 weeks ended April 27, 2019, earnings are adjusted for amortization expense (non-cash) related to content development costs which are included in cost of goods sold. |
(d) | Represents the income tax effects of the non-GAAP items. |
Dollars in thousands | Fiscal 2019 | Fiscal 2018 | Fiscal 2017 | |||||||||
Net (loss) income | $ | (24,374 | ) | $ | (252,566 | ) | $ | 5,361 | ||||
Add: | ||||||||||||
Depreciation and amortization expense | 65,865 | 65,586 | 53,318 | |||||||||
Content amortization (non-cash) (a) | 1,096 | — | ||||||||||
Interest expense, net | 9,780 | 10,306 | 3,464 | |||||||||
Income tax (benefit) expense | (13,060 | ) | (20,443 | ) | 4,730 | |||||||
Impairment loss (non-cash) (b) | 57,748 | 313,130 | — | |||||||||
Inventory valuation amortization (non-cash) (c) | — | 3,273 | — | |||||||||
Restructuring and other charges (b) | 7,233 | 5,429 | 1,790 | |||||||||
Transaction costs (b) | 654 | 2,045 | 9,605 | |||||||||
Adjusted EBITDA (non-GAAP) | $ | 104,942 | $ | 126,760 | $ | 78,268 |
(a) | For the 52 weeks ended April 27, 2019, earnings are adjusted for amortization expense (non-cash) related to content development costs which are included in cost of goods sold. |
(b) | See Management Discussion and Analysis - Results of Operations discussion above. |
(c) | For the 52 weeks ended April 28, 2018, gross margin excludes $3.3 million of incremental cost of sales related to amortization of the Wholesale inventory fair value adjustment related to the MBS acquisition in February 2017. |
Adjusted EBITDA - by Segment | FISCAL YEAR 2019 | |||||||||||||||||||||||
Dollars in thousands | Retail | Wholesale | DSS | Corporate Services | Eliminations (a) | Total Fiscal 2019 | ||||||||||||||||||
Sales | $ | 1,889,008 | $ | 223,374 | $ | 21,339 | $ | — | $ | (99,078 | ) | $ | 2,034,643 | |||||||||||
Cost of sales (a) | (1,436,684 | ) | (167,033 | ) | (666 | ) | — | 98,562 | (1,505,821 | ) | ||||||||||||||
Gross profit | 452,324 | 56,341 | 20,673 | — | (516 | ) | 528,822 | |||||||||||||||||
Selling and administrative expenses | 363,230 | 21,323 | 14,504 | 24,873 | (50 | ) | 423,880 | |||||||||||||||||
Adjusted EBITDA (non-GAAP) | $ | 89,094 | $ | 35,018 | $ | 6,169 | $ | (24,873 | ) | $ | (466 | ) | $ | 104,942 | ||||||||||
Adjusted EBITDA - by Segment | FISCAL YEAR 2018 | |||||||||||||||||||||||
Dollars in thousands | Retail | Wholesale | DSS | Corporate Services | Eliminations (a) | Total Fiscal 2018 | ||||||||||||||||||
Sales | $ | 2,024,541 | $ | 258,369 | $ | 15,762 | $ | — | $ | (95,055 | ) | $ | 2,203,617 | |||||||||||
Cost of sales (b) | (1,542,315 | ) | (194,768 | ) | (359 | ) | — | 94,331 | (1,643,111 | ) | ||||||||||||||
Gross profit | 482,226 | 63,601 | 15,403 | — | (724 | ) | 560,506 | |||||||||||||||||
Selling and administrative expenses | 380,984 | 22,752 | 7,844 | 22,166 | — | 433,746 | ||||||||||||||||||
Adjusted EBITDA (non-GAAP) | $ | 101,242 | $ | 40,849 | $ | 7,559 | $ | (22,166 | ) | $ | (724 | ) | $ | 126,760 | ||||||||||
Adjusted EBITDA - by Segment | FISCAL YEAR 2017 | |||||||||||||||||||||||
Dollars in thousands | Retail | Wholesale | DSS | Corporate Services | Eliminations (a) | Total Fiscal 2017 | ||||||||||||||||||
Sales | $ | 1,865,571 | $ | 14,758 | $ | — | $ | — | $ | (5,967 | ) | $ | 1,874,362 | |||||||||||
Cost of sales | (1,406,276 | ) | (14,355 | ) | — | — | 5,330 | (1,415,301 | ) | |||||||||||||||
Gross profit | 459,295 | 403 | — | — | (637 | ) | 459,061 | |||||||||||||||||
Selling and administrative expenses | 351,771 | 3,649 | — | 25,373 | — | 380,793 | ||||||||||||||||||
Adjusted EBITDA (non-GAAP) | $ | 107,524 | $ | (3,246 | ) | $ | — | $ | (25,373 | ) | $ | (637 | ) | $ | 78,268 | |||||||||
(b) | For the 52 weeks ended April 28, 2018, gross margin excludes $3.3 million of incremental cost of sales related to amortization of the Wholesale inventory fair value adjustment related to the MBS acquisition in February 2017. See Management Discussion and Analysis - Results of Operations discussion above. |
Dollars in thousands | Fiscal 2019 | Fiscal 2018 | Fiscal 2017 | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | $ | 16,869 | $ | 21,697 | $ | 30,866 | ||||||
Net cash flows provided by operating activities | 120,817 | 60,042 | 67,986 | |||||||||
Net cash flows used in investing activities | (54,646 | ) | (100,032 | ) | (224,438 | ) | ||||||
Net cash flows (used in) provided by financing activities | (68,272 | ) | 35,162 | 147,283 | ||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 14,768 | $ | 16,869 | $ | 21,697 |
Payments Due by Period | ||||||||||||||||||||
Total | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | ||||||||||||||||
Credit Facility (a) | $ | 33.5 | $ | 33.5 | $ | — | $ | — | $ | — | ||||||||||
FILO Facility (a) | 250.0 | 100.0 | 150.0 | — | — | |||||||||||||||
School management contract and other lease obligations (b) | 766.9 | 138.5 | 254.1 | 213.2 | 161.1 | |||||||||||||||
Purchase obligations (c) | 6.1 | 4.3 | 1.8 | — | — | |||||||||||||||
Other long-term liabilities reflected on the balance sheet under GAAP (d) (e) | — | — | — | — | — | |||||||||||||||
Total | $ | 1,056.5 | $ | 276.3 | $ | 405.9 | $ | 213.2 | $ | 161.1 |
(a) | As of April 27, 2019, we had a total of $133.5 million of outstanding borrowings under the Credit Facility and FILO Facility. Excludes interest which is generally at a base rate of LIBOR, plus a variable rate. See Financing Arrangements discussion above for information about future borrowings and payments under the FILO Credit Facility. |
(b) | Our contracts with colleges and universities are typically five years with renewal options, but can range from one to 15 years, and are typically cancelable by either party without penalty with 90 to120 days' notice. Annual projections are based on current minimum guarantee amounts. In approximately 72% of our contracts with colleges and universities that include minimum guarantees, the minimum guaranteed amounts adjust annually to equal less than the prior year's commission earned. Excludes obligations under store leases for property insurance and real estate taxes, which totaled approximately 1.8% of the minimum rent payments under those leases. |
(c) | Includes information technology contracts. |
(d) | Other long-term liabilities excludes $32.8 million of tax liabilities related to the long-term tax payable associated with the |
(e) | Other long-term liabilities excludes expected payments related to employee benefit plans. See Part II - Item 8. Financial Statements and Supplementary Data — Note 12. Employee Benefit Plans. |
FINANCIAL STATEMENT INDEX | |||
Page No. | |||
52 weeks ended | 52 weeks ended | 52 weeks ended | ||||||||||
April 27, 2019 | April 28, 2018 | April 29, 2017 | ||||||||||
Sales: | ||||||||||||
Product sales and other | $ | 1,838,760 | $ | 1,984,472 | $ | 1,641,881 | ||||||
Rental income | 195,883 | 219,145 | 232,481 | |||||||||
Total sales | 2,034,643 | 2,203,617 | 1,874,362 | |||||||||
Cost of sales: | ||||||||||||
Product and other cost of sales | 1,395,339 | 1,522,687 | 1,281,043 | |||||||||
Rental cost of sales | 111,578 | 123,697 | 134,258 | |||||||||
Total cost of sales | 1,506,917 | 1,646,384 | 1,415,301 | |||||||||
Gross profit | 527,726 | 557,233 | 459,061 | |||||||||
Selling and administrative expenses | 423,880 | 433,746 | 380,793 | |||||||||
Depreciation and amortization expense | 65,865 | 65,586 | 53,318 | |||||||||
Impairment loss (non-cash) | 57,748 | 313,130 | — | |||||||||
Restructuring and other charges | 7,233 | 5,429 | 1,790 | |||||||||
Transaction costs | 654 | 2,045 | 9,605 | |||||||||
Operating (loss) income | (27,654 | ) | (262,703 | ) | 13,555 | |||||||
Interest expense, net | 9,780 | 10,306 | 3,464 | |||||||||
Income (loss) before income taxes | (37,434 | ) | (273,009 | ) | 10,091 | |||||||
Income tax (benefit) expense | (13,060 | ) | (20,443 | ) | 4,730 | |||||||
Net (loss) income | $ | (24,374 | ) | $ | (252,566 | ) | $ | 5,361 | ||||
(Loss) Earnings per share of Common Stock | ||||||||||||
Basic | $ | (0.52 | ) | $ | (5.40 | ) | $ | 0.12 | ||||
Diluted | $ | (0.52 | ) | $ | (5.40 | ) | $ | 0.11 | ||||
Weighted average shares of Common Stock outstanding: | ||||||||||||
Basic | 47,306 | 46,763 | 46,317 | |||||||||
Diluted | 47,306 | 46,763 | 46,763 |
As of | ||||||||
April 27, 2019 | April 28, 2018 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 14,013 | $ | 16,126 | ||||
Receivables, net | 98,246 | 100,060 | ||||||
Merchandise inventories, net | 420,322 | 443,559 | ||||||
Textbook rental inventories | 47,001 | 47,779 | ||||||
Prepaid expenses and other current assets | 11,778 | 11,847 | ||||||
Total current assets | 591,360 | 619,371 | ||||||
Property and equipment, net | 109,777 | 111,287 | ||||||
Intangible assets, net | 194,978 | 219,129 | ||||||
Goodwill | 4,700 | 49,282 | ||||||
Deferred tax assets, net | 2,425 | — | ||||||
Other noncurrent assets | 42,940 | 40,142 | ||||||
Total assets | $ | 946,180 | $ | 1,039,211 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 186,818 | $ | 187,909 | ||||
Accrued liabilities | 121,720 | 125,556 | ||||||
Short-term borrowings | 100,000 | 100,000 | ||||||
Total current liabilities | 408,538 | 413,465 | ||||||
Long-term deferred taxes, net | — | 2,106 | ||||||
Other long-term liabilities | 53,514 | 59,277 | ||||||
Long-term borrowings | 33,500 | 96,400 | ||||||
Total liabilities | 495,552 | 571,248 | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders' equity: | ||||||||
Preferred stock, $0.01 par value; authorized, 5,000 shares; issued and outstanding, none | — | — | ||||||
Common stock, $0.01 par value; authorized, 200,000 shares; issued, 51,030 and 50,032 shares, respectively; outstanding, 47,563 and 46,917 shares, respectively | 510 | 501 | ||||||
Additional paid-in capital | 726,331 | 717,323 | ||||||
Accumulated deficit | (244,577 | ) | (220,203 | ) | ||||
Treasury stock, at cost | (31,636 | ) | (29,658 | ) | ||||
Total stockholders' equity | 450,628 | 467,963 | ||||||
Total liabilities and stockholders' equity | $ | 946,180 | $ | 1,039,211 |
52 weeks ended | 52 weeks ended | 52 weeks ended | ||||||||||
April 27, 2019 | April 28, 2018 | April 29, 2017 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net (loss) income | $ | (24,374 | ) | $ | (252,566 | ) | $ | 5,361 | ||||
Adjustments to reconcile net (loss) income to net cash flows from operating activities: | ||||||||||||
Depreciation and amortization expense | 65,865 | 65,586 | 53,318 | |||||||||
Content amortization expense | 1,096 | — | — | |||||||||
Amortization of deferred financing costs | 1,550 | 1,502 | 792 | |||||||||
Impairment loss (non-cash) | 57,748 | 313,130 | — | |||||||||
Deferred taxes | (4,531 | ) | (14,765 | ) | (11,961 | ) | ||||||
Stock-based compensation expense | 9,017 | 8,459 | 9,366 | |||||||||
Changes in other long-term liabilities and other | (6,314 | ) | (36,823 | ) | 14,235 | |||||||
Changes in other operating assets and liabilities, net | 20,760 | (24,481 | ) | (3,125 | ) | |||||||
Net cash flows provided by operating activities | 120,817 | 60,042 | 67,986 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property and equipment | (46,420 | ) | (42,809 | ) | (34,670 | ) | ||||||
Acquisition of business, net of cash and restricted cash acquired | (10,000 | ) | (58,259 | ) | (186,720 | ) | ||||||
Changes in other noncurrent assets and other | 1,774 | 1,036 | (3,048 | ) | ||||||||
Net cash flows used in investing activities | (54,646 | ) | (100,032 | ) | (224,438 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from borrowings under Credit Agreement | 521,200 | 674,500 | 312,700 | |||||||||
Repayments of borrowings under Credit Agreement | (584,100 | ) | (637,700 | ) | (153,100 | ) | ||||||
Payment of deferred financing costs | (3,395 | ) | — | (2,912 | ) | |||||||
Purchase of treasury shares | (1,977 | ) | (1,638 | ) | (9,405 | ) | ||||||
Net cash flows (used in) provided by financing activities | (68,272 | ) | 35,162 | 147,283 | ||||||||
Net decrease in cash, cash equivalents, and restricted cash | (2,101 | ) | (4,828 | ) | (9,169 | ) | ||||||
Cash, cash equivalents, and restricted cash at beginning of period | 16,869 | 21,697 | 30,866 | |||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 14,768 | $ | 16,869 | $ | 21,697 | ||||||
Changes in other operating assets and liabilities, net: | ||||||||||||
Receivables, net | $ | 1,814 | $ | (13,670 | ) | $ | (6,407 | ) | ||||
Merchandise inventories | 23,237 | (9,495 | ) | 6,197 | ||||||||
Textbook rental inventories | 778 | 5,047 | (4,150 | ) | ||||||||
Prepaid expenses and other current assets | 69 | (2,648 | ) | (2,834 | ) | |||||||
Accounts payable and accrued liabilities | (5,138 | ) | (3,715 | ) | 4,069 | |||||||
Changes in other operating assets and liabilities, net | $ | 20,760 | $ | (24,481 | ) | $ | (3,125 | ) | ||||
Supplemental cash flow information: | ||||||||||||
Cash paid during the period for: | ||||||||||||
Interest paid | $ | 8,589 | $ | 8,035 | $ | 2,082 | ||||||
Income taxes paid (net of refunds) | $ | 10,277 | $ | 25,549 | $ | 1,473 |
Additional | ||||||||||||||||||||||||
Common Stock | Paid-In | Accumulated | Treasury Stock | Total | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | Shares | Amount | Equity | ||||||||||||||||||
Balance at April 29, 2017 | 49,372 | $ | 494 | $ | 708,871 | $ | 32,363 | 2,855 | $ | (28,020 | ) | $ | 713,708 | |||||||||||
Stock-based compensation expense | 8,459 | 8,459 | ||||||||||||||||||||||
Vested equity awards | 660 | 7 | (7 | ) | — | |||||||||||||||||||
Shares repurchased for tax withholdings for vested stock awards | 260 | (1,638 | ) | (1,638 | ) | |||||||||||||||||||
Net loss | (252,566 | ) | (252,566 | ) | ||||||||||||||||||||
Balance at April 28, 2018 | 50,032 | $ | 501 | $ | 717,323 | $ | (220,203 | ) | 3,115 | $ | (29,658 | ) | $ | 467,963 | ||||||||||
Stock-based compensation expense | 9,017 | 9,017 | ||||||||||||||||||||||
Vested equity awards | 998 | 9 | (9 | ) | — | |||||||||||||||||||
Shares repurchased for tax withholdings for vested stock awards | 352 | (1,978 | ) | (1,978 | ) | |||||||||||||||||||
Net loss | (24,374 | ) | (24,374 | ) | ||||||||||||||||||||
Balance at April 27, 2019 | 51,030 | $ | 510 | $ | 726,331 | $ | (244,577 | ) | 3,467 | $ | (31,636 | ) | $ | 450,628 |
• | The consolidated financial statements for the 52 weeks ended April 27, 2019 include the financial results of PaperRater from the acquisition date, August 21, 2018, to April 27, 2019. |
• | The consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands from the acquisition date, August 3, 2017, to April 28, 2018. |
• | The consolidated financial statements for the 52 weeks ended April 29, 2017 include the financial results of MBS from the acquisition date, February 27, 2017, to April 29, 2017. |
As of | ||||||||
April 27, 2019 | April 28, 2018 | |||||||
Trade accounts | $ | 74,311 | $ | 67,634 | ||||
Advances for book buybacks | 6,339 | 9,554 | ||||||
Credit/debit card receivables | 4,173 | 3,824 | ||||||
Other receivables | 13,423 | 19,048 | ||||||
Total receivables, net | $ | 98,246 | $ | 100,060 |
As of | ||||||||||
Useful Life | April 27, 2019 | April 28, 2018 | ||||||||
Property and equipment: | ||||||||||
Leasehold improvements | (a) | $ | 148,015 | $ | 148,413 | |||||
Machinery, equipment and display fixtures | 3 - 5 | 240,171 | 237,823 | |||||||
Computer hardware and capitalized software costs | (b) | 136,267 | 123,575 | |||||||
Office furniture and other | 2 - 7 | 59,327 | 54,477 | |||||||
Content development costs | 3 - 5 | 11,593 | 514 | |||||||
Construction in progress | 5,499 | 6,546 | ||||||||
Total property and equipment | 600,872 | 571,348 | ||||||||
Less accumulated depreciation and amortization | 491,095 | 460,061 | ||||||||
Total property and equipment, net | $ | 109,777 | $ | 111,287 |
(a) | Leasehold improvements are capitalized and depreciated over the shorter of the lease term or the useful life of the improvements, ranging from one to 15 years. |
(b) | System costs are capitalized and amortized over their estimated useful lives, from the date the systems become operational. Purchased software is generally amortized over a period of between 2 - 5 years. |
Type of Intangible | Amount | Estimated Useful Life | ||||
Content | $ | 14,500 | 5 | |||
Technology | 8,000 | 5 | ||||
Non-Compete Agreements | 4,000 | 3 | ||||
Subscriber List | 1,800 | 2 | ||||
Total Intangibles: | $ | 28,300 |
Cash paid to Seller or escrow | $ | 165,499 | ||
Consideration to Seller for pre-closing costs | 4,657 | |||
Cash paid for Seller closing costs | 4,044 | |||
Contract purchase price | $ | 174,200 | ||
Consideration for payment to settle Seller's outstanding short-term borrowings | 24,437 | |||
Consideration for reimbursement of pre-acquisition tax liability to Seller | 15,556 | |||
Less: Consideration to Seller for pre-closing costs | (4,657 | ) | ||
Less: Consideration for settlement of pre-existing payable to Seller | (21,674 | ) | ||
Total value of consideration transferred | $ | 187,862 | ||
Total estimated consideration transferred | $ | 187,862 | ||
Cash and cash equivalents | $ | 472 | ||
Accounts receivable, net | 28,177 | |||
Merchandise inventory | 128,431 | |||
Property and equipment | 12,403 | |||
Intangible assets | 21,576 | |||
Prepaid and other assets | 4,748 | |||
Total assets | $ | 195,807 | ||
Accounts payable | $ | 35,383 | ||
Accrued expenses | 8,799 | |||
Other long-term liabilities | 13,045 | |||
Total liabilities | $ | 57,227 | ||
Net assets to be acquired | $ | 138,580 | ||
Goodwill | $ | 49,282 |
Type of Intangible | Amount | Estimated Useful Life | ||||
Favorable Lease | $ | 1,076 | 6.5 | |||
Trade Name | 3,500 | 10 | ||||
Technology | 1,500 | 3 | ||||
Book Store Relationship | 13,000 | 13 | ||||
Direct Customer Relationship | 2,000 | 15 | ||||
Non-Compete Agreements | 500 | 3 | ||||
Total Intangibles: | $ | 21,576 |
Pro forma consolidated income statement | |||
52 weeks ended | |||
April 29, 2017 | |||
Sales | $ | 2,247,825 | |
Net income | $ | 32,055 |
52 weeks ended | ||||||||||||
April 27, 2019 | April 28, 2018 | April 29, 2017 | ||||||||||
Retail | ||||||||||||
Product Sales | $ | 1,646,917 | $ | 1,753,528 | $ | 1,594,116 | ||||||
Rental Income | 195,883 | 219,145 | 232,481 | |||||||||
Service and Other Revenue (a) | 46,208 | 51,868 | 38,974 | |||||||||
Retail Total Sales | $ | 1,889,008 | $ | 2,024,541 | $ | 1,865,571 | ||||||
Wholesale Sales | $ | 223,374 | $ | 258,369 | $ | 14,758 | ||||||
DSS Sales (b) | $ | 21,339 | $ | 15,762 | $ | — | ||||||
Eliminations (c) | $ | (99,078 | ) | $ | (95,055 | ) | $ | (5,967 | ) | |||
Total Sales | $ | 2,034,643 | $ | 2,203,617 | $ | 1,874,362 |
(a) | Service and other revenue primarily relates to brand partnerships and other service revenues. |
(b) | DSS sales primarily relate to direct-to-student subscription-based revenue. |
(c) | The sales eliminations represent the elimination of Wholesale sales and fulfillment service fees to Retail and the elimination of Retail commissions earned from Wholesale. |
Fiscal Year Ended | ||||
April 27, 2019 | ||||
Deferred revenue at the beginning of period | $ | 20,144 | ||
Additions to deferred revenue during the period | 212,424 | |||
Reductions to deferred revenue for revenue recognized during the period | (212,150 | ) | ||
Deferred revenue balance at the end of period | $ | 20,418 |
• | The sales eliminations represent the elimination of Wholesale sales and fulfillment service fees to Retail and the elimination of Retail commissions earned from Wholesale, and |
• | These cost of sales eliminations represent (i) the recognition of intercompany profit for Retail inventory that was purchased from Wholesale in a prior period that was subsequently sold to external customers during the current period and the elimination of Wholesale service fees charged for fulfillment of inventory for virtual store sales, net of (ii) the elimination of intercompany profit for Wholesale inventory purchases by Retail that remain in ending inventory at the end of the current period. |
As of | ||||||||
April 27, 2019 | April 28, 2018 | |||||||
Total Assets | ||||||||
Retail (includes goodwill of $0 and $20,538, respectively) | $ | 707,975 | $ | 771,140 | ||||
Wholesale (includes goodwill of $0 and $28,743, respectively) | 191,976 | 235,760 | ||||||
DSS (includes goodwill of $4,700 and $0, respectively) | 40,543 | 28,564 | ||||||
Corporate Services | 5,686 | 3,747 | ||||||
Total Assets | $ | 946,180 | $ | 1,039,211 | ||||
52 weeks ended | ||||||||||||
April 27, 2019 | April 28, 2018 | April 29, 2017 | ||||||||||
Capital Expenditures | ||||||||||||
Retail | $ | 33,008 | $ | 38,598 | $ | 34,536 | ||||||
Wholesale | 1,824 | 1,559 | 117 | |||||||||
DSS (a) | 11,444 | 2,620 | — | |||||||||
Corporate Services | 144 | 32 | 17 | |||||||||
Total Capital Expenditures | $ | 46,420 | $ | 42,809 | $ | 34,670 | ||||||
52 weeks ended | ||||||||||||
April 27, 2019(a) | April 28, 2018(b) | April 29, 2017(c) | ||||||||||
Sales: | ||||||||||||
Retail | $ | 1,889,008 | $ | 2,024,541 | $ | 1,865,571 | ||||||
Wholesale | 223,374 | 258,369 | 14,758 | |||||||||
DSS | 21,339 | 15,762 | — | |||||||||
Eliminations | (99,078 | ) | (95,055 | ) | (5,967 | ) | ||||||
Total Sales | $ | 2,034,643 | $ | 2,203,617 | $ | 1,874,362 | ||||||
Gross Profit | ||||||||||||
Retail | $ | 451,871 | $ | 482,226 | $ | 459,295 | ||||||
Wholesale | 56,341 | 60,328 | 403 | |||||||||
DSS | 20,030 | 15,403 | — | |||||||||
Eliminations | (516 | ) | (724 | ) | (637 | ) | ||||||
Total Gross Profit | $ | 527,726 | $ | 557,233 | $ | 459,061 | ||||||
Depreciation and Amortization | ||||||||||||
Retail | $ | 51,728 | $ | 53,955 | $ | 52,102 | ||||||
Wholesale | 6,014 | 6,188 | 1,024 | |||||||||
DSS | 7,974 | 5,253 | — | |||||||||
Corporate Services | 149 | 190 | 192 | |||||||||
Total Depreciation and Amortization | $ | 65,865 | $ | 65,586 | $ | 53,318 | ||||||
Operating (Loss) Income | ||||||||||||
Retail (d) | $ | 3,751 | $ | (265,843 | ) | $ | 53,316 | |||||
Wholesale (d) | (2,131 | ) | 31,388 | (11,237 | ) | |||||||
DSS | (3,345 | ) | 226 | — | ||||||||
Corporate Services | (25,463 | ) | (27,750 | ) | (27,887 | ) | ||||||
Eliminations | (466 | ) | (724 | ) | (637 | ) | ||||||
Total Operating (Loss) Income (d) | $ | (27,654 | ) | $ | (262,703 | ) | $ | 13,555 | ||||
The following is a reconciliation of segment Operating Income to consolidated Income Before Income Taxes | ||||||||||||
Total Operating (Loss) Income | $ | (27,654 | ) | $ | (262,703 | ) | $ | 13,555 | ||||
Interest Expense, net | (9,780 | ) | (10,306 | ) | (3,464 | ) | ||||||
Total (Loss) Income Before Income Taxes | $ | (37,434 | ) | $ | (273,009 | ) | $ | 10,091 | ||||
(a) | We acquired PaperRater on August 21, 2018. The consolidated financial statements for the 52 weeks ended April 27, 2019 include the financial results of PaperRater from the acquisition date, August 21, 2018, to April 27, 2019. |
(b) | We acquired Student Brands, LLC on August 3, 2017. The consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands from the acquisition date, August 3, 2017, to April 28, 2018. |
(c) | We acquired MBS Textbook Exchange, LLC on February 27, 2017. The consolidated financial statements for the 52 weeks ended April 29, 2017 include the financial results of MBS from the acquisition date, February 27, 2017, to April 29, 2017. |
(d) | In Fiscal 2019, we recorded goodwill impairment (non-cash impairment loss) of $20,538 and $28,744 in our Retail and Wholesale Segments, respectively. |
(shares in thousands) | Fiscal 2019 | Fiscal 2018 | Fiscal 2017 | ||||||||
Numerator for basic earnings per share: | |||||||||||
Net (loss) income | $ | (24,374 | ) | $ | (252,566 | ) | $ | 5,361 | |||
Less allocation of earnings to participating securities | — | — | (3 | ) | |||||||
Net (loss) income available to common shareholders | $ | (24,374 | ) | $ | (252,566 | ) | $ | 5,358 | |||
Numerator for diluted earnings per share: | |||||||||||
Net (loss) income available to common shareholders | $ | (24,374 | ) | $ | (252,566 | ) | $ | 5,358 | |||
Allocation of earnings to participating securities | — | — | 3 | ||||||||
Less diluted allocation of earnings to participating securities | — | — | (3 | ) | |||||||
Net (loss) income available to common shareholders | $ | (24,374 | ) | $ | (252,566 | ) | $ | 5,358 | |||
Denominator for basic earnings per share: | |||||||||||
Basic weighted average shares of Common Stock | 47,306 | 46,763 | 46,317 | ||||||||
Denominator for diluted earnings per share: | |||||||||||
Basic weighted average shares of Common Stock | 47,306 | 46,763 | 46,317 | ||||||||
Average dilutive restricted stock units | — | — | 389 | ||||||||
Average dilutive performance shares | — | — | 40 | ||||||||
Average dilutive restricted shares | — | — | 17 | ||||||||
Average dilutive performance share units | — | — | — | ||||||||
Average dilutive options | — | — | — | ||||||||
Diluted weighted average shares of Common Stock | 47,306 | 46,763 | 46,763 | ||||||||
(Loss) Earnings per share of Common Stock: | |||||||||||
Basic | $ | (0.52 | ) | $ | (5.40 | ) | $ | 0.12 | |||
Diluted | $ | (0.52 | ) | $ | (5.40 | ) | $ | 0.11 |
As of April 27, 2019 | ||||||||||||||
Amortizable intangible assets | Remaining Life | Gross Carrying Amount | Accumulated Amortization | Total | ||||||||||
Customer relationships | 1 - 15 | $ | 271,800 | $ | (101,781 | ) | $ | 170,019 | ||||||
Content | 3 - 4 | 19,400 | (5,728 | ) | 13,672 | |||||||||
Technology (a) | 1 - 3 | 9,500 | (3,883 | ) | 5,617 | |||||||||
Other (b) | 1 - 9 | 9,831 | (4,161 | ) | 5,670 | |||||||||
$ | 310,531 | $ | (115,553 | ) | $ | 194,978 |
(a) | See Impairment Loss (non-cash) discussion above. |
(b) | Other consists of recognized intangibles for non-compete agreements, trade names, and favorable leasehold interests. |
As of April 28, 2018 | ||||||||||||||
Amortizable intangible assets | Remaining Life | Gross Carrying Amount | Accumulated Amortization | Total | ||||||||||
Customer relationships | 1 - 16 | $ | 272,419 | $ | (89,767 | ) | $ | 182,652 | ||||||
Content | 4 | 14,500 | (2,175 | ) | 12,325 | |||||||||
Technology | 2 - 8 | 20,100 | (4,080 | ) | 16,020 | |||||||||
Other (a) | 1 - 9 | 10,853 | (2,721 | ) | 8,132 | |||||||||
$ | 317,872 | $ | (98,743 | ) | $ | 219,129 |
(a) | Other consists of recognized intangibles for non-compete agreements, trade names and favorable leasehold interests. |
Aggregate Amortization Expense: | |||
For the 52 weeks ended April 27, 2019 | $ | 21,314 | |
For the 52 weeks ended April 28, 2018 | $ | 19,056 | |
For the 52 weeks ended April 29, 2017 | $ | 12,095 | |
Estimated Amortization Expense: (Fiscal Year) | |||
2020 | $ | 19,524 | |
2021 | $ | 17,744 | |
2022 | $ | 17,410 | |
2023 | $ | 14,032 | |
2024 | $ | 12,102 | |
After 2024 | $ | 114,166 |
Balance at April 29, 2017 | $ | 329,467 | ||
Goodwill related to Student Brands acquisition | 31,782 | |||
Goodwill related to MBS measurement period adjustment | 1,163 | |||
Impairment loss (non-cash) (a) | (313,130 | ) | ||
Balance at April 29, 2018 | $ | 49,282 | ||
Goodwill related to PaperRater acquisition | 4,700 | |||
Impairment loss (non-cash) (a) | (49,282 | ) | ||
Balance at April 27, 2019 | $ | 4,700 |
(a) | See Impairment Loss (non-cash) discussion above. |
Restricted Stock Awards | Restricted Stock Units | Performance Shares | Performance Share Units | |||||||||||||||||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | |||||||||||||||||||||
Balance, April 30, 2016 | 46,080 | $ | 13.02 | 1,241,467 | $ | 11.10 | — | $ | — | — | $ | — | ||||||||||||||||
Granted | 12,371 | $ | 9.70 | 1,207,070 | $ | 9.70 | 406,078 | $ | 9.52 | — | $ | — | ||||||||||||||||
Vested | (46,080 | ) | $ | 13.02 | (680,489 | ) | $ | 9.72 | — | $ | — | — | $ | — | ||||||||||||||
Forfeited | — | $ | — | (36,425 | ) | $ | 9.69 | — | $ | — | — | $ | — | |||||||||||||||
Balance, April 29, 2017 | 12,371 | $ | 9.70 | 1,731,623 | $ | 10.70 | 406,078 | $ | 9.52 | — | $ | — | ||||||||||||||||
Granted | 19,704 | $ | 6.09 | 1,640,926 | $ | 5.88 | — | $ | — | 537,756 | $ | 7.90 | ||||||||||||||||
Vested | (12,371 | ) | $ | 9.70 | (697,370 | ) | $ | 10.93 | — | $ | — | — | $ | — | ||||||||||||||
Forfeited (a) | — | $ | — | (355,055 | ) | $ | 9.04 | (120,142 | ) | $ | 9.52 | — | $ | — | ||||||||||||||
Balance, April 28, 2018 | 19,704 | $ | 6.09 | 2,320,124 | $ | 7.47 | 285,936 | $ | 9.52 | 537,756 | $ | 7.90 | ||||||||||||||||
Granted | 21,506 | $ | 5.58 | 1,443,746 | $ | 5.58 | — | $ | — | 385,171 | $ | 4.18 | ||||||||||||||||
Vested | (19,704 | ) | $ | 6.09 | (1,056,486 | ) | $ | 8.31 | — | $ | — | — | $ | — | ||||||||||||||
Forfeited (a) | — | $ | — | (355,067 | ) | $ | 6.23 | (60,425 | ) | $ | 9.52 | (157,028 | ) | $ | 6.83 | |||||||||||||
Balance, April 27, 2019 | 21,506 | $ | 5.58 | 2,352,317 | $ | 6.12 | 225,511 | $ | 9.52 | 765,899 | $ | 6.25 | ||||||||||||||||
Fiscal 2019 | Fiscal 2018 | Fiscal 2017 | |||||||||
Restricted Stock Expense | $ | 110 | $ | 120 | $ | 280 | |||||
Restricted Stock Units Expense | 7,846 | 8,370 | 8,431 | ||||||||
Performance Shares Expense (a) | 87 | (218 | ) | 655 | |||||||
Performance Share Units Expense (a) | 974 | 187 | — | ||||||||
Stock-Based Compensation Expense | $ | 9,017 | $ | 8,459 | $ | 9,366 |
(a) | Stock-based compensation expense reflects cumulative adjustments to reflect changes to the expected level of achievement of the respective grants. |
Fiscal 2019 | Fiscal 2018 | Fiscal 2017 | ||||||||||
Current: | ||||||||||||
Federal (a) | $ | (6,494 | ) | $ | (8,089 | ) | $ | 14,872 | ||||
State | (2,035 | ) | 2,410 | 1,819 | ||||||||
Total Current | (8,529 | ) | (5,679 | ) | 16,691 | |||||||
Deferred: | ||||||||||||
Federal (a) | (3,681 | ) | (13,250 | ) | (9,238 | ) | ||||||
State | (850 | ) | (1,514 | ) | (2,723 | ) | ||||||
Total Deferred | (4,531 | ) | (14,764 | ) | (11,961 | ) | ||||||
Total | $ | (13,060 | ) | $ | (20,443 | ) | $ | 4,730 |
(a) | For Fiscal 2018, the income tax benefit was caused largely by the revaluation due to the change in the U.S. corporate income tax rate from 35% to 21% as described above. |
Fiscal 2019 | Fiscal 2018 | Fiscal 2017 | |||||||
Federal statutory income tax rate (a) | 21.0 | % | 34.1 | % | 35.0 | % | |||
State income taxes, net of federal income tax benefit | 6.3 | (0.3 | ) | (5.8 | ) | ||||
Permanent book / tax differences | (3.9 | ) | (0.7 | ) | 25.5 | ||||
Goodwill impairment | — | (34.2 | ) | — | |||||
Provisional remeasurement due to Tax Legislation | 10.4 | 7.5 | — | ||||||
Credits | 0.3 | 0.2 | (5.5 | ) | |||||
Other, net | 0.8 | 0.9 | (2.3 | ) | |||||
Effective income tax rate | 34.9 | % | 7.5 | % | 46.9 | % |
(a) | Due to the Act, we applied a U.S. statutory federal income tax rate of 33.9% for earnings between April 30, 2017 and January 27, 2018, and 21% for earnings between January 28, 2018 and April 28, 2018. The result is an effective statutory rate of 34.1% for Fiscal 2018. |
As of | ||||||||
April 27, 2019 | April 28, 2018 | |||||||
Deferred tax assets: | ||||||||
Estimated accrued liabilities | $ | 10,972 | $ | 9,375 | ||||
Inventory | 2,969 | 8,256 | ||||||
Stock-based compensation | 1,738 | 1,374 | ||||||
Insurance liability | 518 | 474 | ||||||
Lease transactions | 982 | 1,095 | ||||||
Property and equipment | — | 2,803 | ||||||
Tax credits | 402 | 220 | ||||||
Goodwill | 19,903 | 9,105 | ||||||
Net operating losses | 4,928 | 5,834 | ||||||
Other | 8,253 | 4,356 | ||||||
Gross deferred tax assets | 50,665 | 42,892 | ||||||
Valuation allowance | (1,194 | ) | (932 | ) | ||||
Net deferred tax assets | 49,471 | 41,960 | ||||||
Deferred tax liabilities: | ||||||||
Intangible asset amortization | (40,790 | ) | (44,066 | ) | ||||
Property and equipment | (6,256 | ) | — | |||||
Gross deferred tax liabilities | (47,046 | ) | (44,066 | ) | ||||
Net deferred tax asset (liabilities) | $ | 2,425 | $ | (2,106 | ) |
Balance at April 30, 2016 | $ | 21 | |
Additions for tax positions of the current period | 40 | ||
Additions for tax positions of prior periods | 25 | ||
Reductions due to settlements | — | ||
Other reductions for tax positions of prior periods | — | ||
Balance at April 29, 2017 | $ | 86 | |
Additions for tax positions of the current period | 25 | ||
Additions for tax positions of prior periods | 2 | ||
Reductions due to settlements | — | ||
Other reductions for tax positions of prior periods | (16 | ) | |
Balance at April 28, 2018 | $ | 97 | |
Additions for tax positions of the current period | — | ||
Additions for tax positions of prior periods | — | ||
Reductions due to settlements | — | ||
Other reductions for tax positions of prior periods | (6 | ) | |
Balance at April 27, 2019 | $ | 91 | |
Fiscal 2019 | Fiscal 2018 | Fiscal 2017 | ||||||||||
Minimum contract expense | $ | 169,131 | $ | 170,351 | $ | 165,980 | ||||||
Percentage contract expense | 73,368 | 80,630 | 87,843 | |||||||||
Total expense | $ | 242,499 | $ | 250,981 | $ | 253,823 |
Fiscal Year | |||
2020 | $ | 138,523 | |
2021 | 133,741 | ||
2022 | 120,327 | ||
2023 | 113,518 | ||
2024 | 99,693 | ||
After 2024 | 161,090 | ||
Total | $ | 766,892 |
Less Than 1 Year | $ | 4,262 | |
1-3 Years | 1,819 | ||
3-5 Years | 32 | ||
Total | $ | 6,113 |
Fiscal 2019 Quarterly Period Ended | July 28, 2018 | October 27, 2018 | January 26, 2019 | April 27, 2019 | Fiscal Year 2019 | |||||||||||||||
Sales | $ | 337,484 | $ | 814,766 | $ | 548,008 | $ | 334,385 | $ | 2,034,643 | ||||||||||
Gross profit | $ | 66,610 | $ | 210,760 | $ | 132,953 | $ | 117,403 | $ | 527,726 | ||||||||||
Net (loss) income | $ | (38,622 | ) | $ | 59,697 | $ | 769 | $ | (46,218 | ) | $ | (24,374 | ) | |||||||
Basic (loss) earnings per common share: | ||||||||||||||||||||
Net (loss) income | $ | (0.82 | ) | $ | 1.26 | $ | 0.02 | $ | (0.97 | ) | $ | (0.52 | ) | |||||||
Diluted (loss) earnings per common share: | ||||||||||||||||||||
Net (loss) income | $ | (0.82 | ) | $ | 1.25 | $ | 0.02 | $ | (0.97 | ) | $ | (0.52 | ) |
Fiscal 2018 Quarterly Period Ended | July 29, 2017 | October 28, 2017 (a) | January 27, 2018 | April 28, 2018 | Fiscal Year 2018 | |||||||||||||||
Sales | $ | 355,711 | $ | 886,861 | $ | 603,391 | $ | 357,654 | $ | 2,203,617 | ||||||||||
Gross profit | $ | 65,200 | $ | 216,700 | $ | 146,999 | $ | 128,334 | $ | 557,233 | ||||||||||
Net (loss) income | $ | (34,783 | ) | $ | 48,395 | $ | (283,235 | ) | $ | 17,057 | $ | (252,566 | ) | |||||||
Basic (loss) earnings per common share: | ||||||||||||||||||||
Net (loss) income | $ | (0.75 | ) | $ | 1.04 | $ | (6.04 | ) | $ | 0.36 | $ | (5.40 | ) | |||||||
Diluted (loss) earnings per common share: | ||||||||||||||||||||
Net (loss) income | $ | (0.75 | ) | $ | 1.03 | $ | (6.04 | ) | $ | 0.36 | $ | (5.40 | ) |
(a) | We acquired Student Brands, LLC on August 3, 2017. The consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands from the acquisition date, August 3, 2017, to April 28, 2018. |
Balance at beginning of period | Charge (recovery) to costs and expenses | Write-offs | Balance at end of period | |||||||||||||
Allowance for Doubtful Accounts | ||||||||||||||||
April 27, 2019 | $ | 2,083 | $ | 2,670 | $ | (2,618 | ) | $ | 2,135 | |||||||
April 28, 2018 | $ | 2,259 | $ | 3,518 | $ | (3,694 | ) | $ | 2,083 | |||||||
April 29, 2017 | $ | 2,320 | $ | 3,459 | $ | (3,520 | ) | $ | 2,259 | |||||||
Balance at beginning of period | Addition Charged to Costs | Deductions | Balance at end of period | |||||||||||||
Sales Returns Reserves | ||||||||||||||||
April 27, 2019 | $ | 5,229 | $ | 197,799 | $ | (197,746 | ) | $ | 5,282 | |||||||
April 28, 2018 | $ | 6,817 | $ | 170,469 | $ | (172,057 | ) | $ | 5,229 | |||||||
April 29, 2017 | $ | 757 | $ | 155,486 | $ | (149,426 | ) | $ | 6,817 |
Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities in column (a)) | |||||||
(a) | (b) | (c) | ||||||||
Equity compensation plans approved by security holders | 3,365,233 | $ | 6.38 | 4,073,234 | ||||||
Equity compensation plans not approved by security holders | N/A | N/A | N/A | |||||||
Total | 3,365,233 | $ | 6.38 | 4,073,234 |
1. | Consolidated Financial Statements of Barnes & Noble Education, Inc.: |
2. | Financial Statement Schedules of Barnes & Noble Education, Inc.: |
3. | Exhibits: |
Exhibit Number | Exhibit Description | |
Plan of acquisition, reorganization, arrangement, liquidation or succession. | ||
Articles of Incorporation and By-Laws. | ||
Material contracts. | ||
Other. | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
BARNES & NOBLE EDUCATION, INC. | ||
(Registrant) | ||
By: | /s/ Michael P. Huseby | |
Michael P. Huseby | ||
Chairman and Chief Executive Officer | ||
Date: June 25, 2019 |
Name | Title | Date | ||
/s/ Michael P. Huseby | Chairman and Chief Executive Officer and Director (Principal Executive Officer) | June 25, 2019 | ||
Michael P. Huseby | ||||
/s/ Thomas D. Donohue | Chief Financial Officer (Principal Financial Officer) | June 25, 2019 | ||
Thomas D. Donohue | ||||
/s/ Seema C. Paul | Chief Accounting Officer (Principal Accounting Officer) | June 25, 2019 | ||
Seema C. Paul | ||||
/s/ Emily C. Chiu | Director | June 25, 2019 | ||
Emily C. Chiu | ||||
/s/ Daniel A. DeMatteo | Director | June 25, 2019 | ||
Daniel A. DeMatteo | ||||
/s/ David G. Golden | Director | June 25, 2019 | ||
David G. Golden | ||||
/s/ John R. Ryan | Director | June 25, 2019 | ||
John R. Ryan | ||||
/s/ Jerry Sue Thornton | Director | June 25, 2019 | ||
Jerry Sue Thornton | ||||
/s/ David A. Wilson | Director | June 25, 2019 | ||
David A. Wilson |
BARNES & NOBLE, INC. | |
By | /s/ Peter M. Herpich |
Name: | Peter M. Herpich |
Title: | Vice President, Corporate Controller and Principal Accounting Officer |
BARNES & NOBLE EDUCATION, INC. | |
By | /s/ Michael P. Huseby |
Name: | Michael P. Huseby |
Title: | Chief Executive Officer |
Effective Date of Change: | June 19, 2019 |
Job Title: | EVP, Operations—Barnes & Noble Education, Inc. (the “Company”) EVP, Barnes & Noble College Booksellers, LLC |
Reports to: | Mike Huseby, Chairman & CEO |
Salary: | $610,000/Annualized |
Annual Incentive Plan: | The bonus target for your position is 100% of your base salary. Your bonus percentage will be subject to proration between the time spent in your current role and your new role through the end of the fiscal year. |
Equity: | Subject to approval by the Compensation Committee, you will be eligible to receive an equity grant under our annual long-term incentive program as part of the annual process. Additional details will be shared after approval. |
Severance Benefits: | In the event (a) your employment is terminated by the Company without Cause or (b) you voluntarily terminate your employment for Good Reason, the Company shall (i) pay you an amount equal to one times the sum of your then annual Base Salary and your target annual bonus for the year of termination (the “Severance Amount”), and (ii) provide you continued health care coverage at the Company’s cost pursuant to the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) if you elect COBRA coverage until the earlier of when you are no longer eligible for COBRA coverage or twelve (12) months following your date of termination (the “COBRA Benefits); provided that (x) you execute and deliver to the Company, and do not revoke, a release of all claims against the Company substantially in the form attached hereto as Exhibit A (“Release”) and (y) you have not materially breached as of the date of such termination any provisions of this letter or any other agreement between you and the Company |
Change of Control: | If at any time during your employment (i) there is a Change of Control (as defined below) and (ii) your employment is terminated by the Company without Cause or you voluntarily terminate your employment for Good Reason, in either case, within 90 days preceding or two years following the Change of Control, then the Company shall (A) pay you an amount equal to two times the sum of (i) your then Annual Base Salary, and (ii) your target annual bonus for the year of termination (or, if higher, as in effect immediately prior to the Change of Control) (“Change of Control Amount”), and (B) provide you the COBRA Benefits, less all applicable withholding and other applicable taxes and deductions. (A) The Change of Control Amount and the COBRA Benefits are subject to you executing and delivering to the Company (and not revoking) the Release within 60 days following your termination date, (B) the Change of Control Amount shall be paid to you in cash in a single lump sum within 30 days after the date your employment terminates (or, if later, when the Release becomes irrevocable) and (C) the COBRA Benefits will be provided on a monthly basis. In the event that it is determined that the aggregate amount of the payments and benefits that could be considered “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (collectively, with the regulations and other guidance promulgated thereunder, the “Code”; and such payments and benefits, the “Parachute Payments”) that, but for this paragraph would be payable to you under this Agreement or any other plan, policy, or arrangement of the Company or Barnes & Noble Education, Inc. or any affiliate, exceeds the greatest amount of Parachute Payments that could be paid to you without giving rise to |
AGREED AND ACCEPTED: /s/ Barry Brover Barry Brover | DATE June 19, 2019 |
Signature: | Date: |
Position: | Executive Vice President, Corporate Development and President, Digital Student Solutions |
Reports to: | Michael Huseby, Executive Chairman and Chief Executive Officer |
Transfer Date: | Upon the effectiveness of the spin-off of Barnes & Noble Education, Inc. from Barnes & Noble, Inc. |
Base Salary: | $523,400 annually |
Incentive Compensation: | Eligible to participate in our Incentive Compensation Plan. The target level annual bonus payment for your position is 100% of your base salary. Payments under the plan are based upon achievement of measurable objectives as defined by the Company each fiscal year. The fiscal year period is defined as May 1st to April 30th. |
Equity: | Subject to approval by the Compensation Committee, you will be eligible to participate in our annual long-term incentive program. Additional details will be shared after approval. |
Benefits: | Eligible to participate in the Company’s health and welfare programs. |
Liability Insurance: | Shall be indemnified and advanced expenses for third party claims and covered under D&O insurance policies on the same terms and conditions as are provided to other executive officers. |
Severance Benefits: | Should your employment terminate for any reason including “Good Reason” as defined below, but excluding your voluntary termination, death or disability or termination for “Cause” as defined below, the Company shall (i) pay you an amount equal to one (1) times the sum of (a) one year’s salary and (b) your target annual bonus for the year of termination (“Severance Amount”), and (ii) provide you continued health care coverage at the Company’s cost pursuant to the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) if you elect COBRA coverage until the earlier of when you are no longer eligible for COBRA coverage or twelve (12) months following your date of termination (the “COBRA Benefits”); provided that (x) you execute and deliver to the |
Change of Control: | If at any time during your employment (i) there is a Change of Control (as defined below) and (ii) your employment is terminated by the Company without Cause or you voluntarily terminate your employment for Good Reason, in either case, within 90 days preceding or two years following the Change of Control or the remainder of the current Renewal Term (as defined in the Employment Agreement), as applicable, then the Company shall (A) pay you an amount equal to two times the sum of (i) your then Annual Base Salary, and (ii) your target annual bonus for the year of termination (or, if higher, as in effect immediately prior to the Change of Control) (“Change of Control Amount”), and (B) provide you the COBRA Benefits, less all applicable withholding and other applicable taxes and deductions. (A) The Change of Control Amount and the COBRA Benefits are subject to you executing and delivering to the Company (and not revoking) the Release within 60 days following your termination date, (B) the Change of Control Amount shall be paid to you in cash in a single lump sum within 30 days after the date your employment terminates (or, if later, when the Release becomes irrevocable) and (C) the COBRA Benefits will be provided on a monthly basis. In the event that it is determined that the aggregate amount of the payments and benefits that could be considered “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (collectively, with the regulations and other guidance promulgated thereunder, the “Code”; and such payments and benefits, the “Parachute Payments”) that, but for this paragraph would be payable to you under this Agreement or any other plan, policy, or arrangement of the Company or Barnes & Noble Education, Inc. or any |
/s/ Kanuj Malhotra Kanuj Malhotra | June 19, 2019 Date |
Job Title: | Chief Legal Officer & EVP, Corporate Strategy |
Department/Location: | Legal Department – Basking Ridge, NJ & NYC |
Reports to: | Mike Huseby, Chairman and Chief Executive Officer |
Starting Date: | April 24, 2017 |
Base Salary: | $500,000 annualized |
Incentive Compensation: | Eligible to participate in our FY18 Incentive Compensation Plan. The bonus target level for your position is 60% of your base salary for the 2019 fiscal year and 85% of your base salary for the 2020 fiscal year and thereafter. Payments under that plan are based upon achievement of measurable objectives as defined by the Company each fiscal year. The fiscal year period is defined as May 1st to April 30th. Guarantee of at least 100% of target bonus to be paid 1st year. Specific details to follow. |
Benefits: | Eligible to participate in the Company’s health and welfare programs. |
Severance: | Should your employment terminate for any reason including “Good Reason” as defined below, but excluding your voluntary termination, death or disability or termination for “Cause” as defined below, the Company shall (i) pay you an amount equal to one (1) times the sum of (a) one year’s salary and (b) your target annual bonus for the year of termination (“Severance Amount”), and (ii) provide you continued health care coverage at the Company’s cost pursuant to the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) if you elect COBRA coverage until the earlier of when you are no longer eligible for COBRA coverage or twelve (12) months following your date of termination (the “COBRA Benefits”); provided that (x) you execute and deliver to the Company, and do not revoke, a release of all claims against the Company substantially in the form attached hereto as Exhibit A (“Release”) and (y) you have not materially breached as of the date of such termination any provisions of this letter or your Agreement Regarding Certain Terms and |
Change of Control: | If at any time during your employment (i) there is a Change of Control (as defined below) and (ii) your employment is terminated by the Company without Cause or you voluntarily terminate your employment for Good Reason, in either case, within 90 days preceding or two years following the Change of Control or the remainder of the current Renewal Term (as defined in the Employment Agreement), as applicable, then the Company shall (A) pay you an amount equal to two times the sum of (i) your then Annual Base Salary, and (ii) your target annual bonus for the year of termination (or, if higher, as in effect immediately prior to the Change of Control) (“Change of Control Amount”), and (B) provide you the COBRA Benefits, less all applicable withholding and other applicable taxes and deductions. (A) The Change of Control Amount and the COBRA Benefits are subject to you executing and delivering to the Company (and not revoking) the Release within 60 days following your termination date, (B) the Change of Control Amount shall be paid to you in cash in a single lump sum within 30 days after the date your employment terminates (or, if later, when the Release becomes irrevocable) and (C) the COBRA Benefits will be provided on a monthly basis. In the event that it is determined that the aggregate amount of the payments and benefits that could be considered “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (collectively, with the regulations and other guidance promulgated thereunder, the “Code”; and such payments and benefits, the “Parachute Payments”) that, but for this paragraph would be payable to you under this Agreement or any other plan, policy, or arrangement of the Company or Barnes & Noble Education, Inc. or any affiliate, exceeds the greatest amount of Parachute Payments that could be paid to you without giving rise to any liability for any excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the aggregate amount of Parachute Payments payable to you shall not exceed the amount that |
/s/ Michael C. Miller Signature | June 19, 2019 Date |
Job Title: | EVP, Chief Financial Officer, Barnes & Noble Education, Inc. and its affiliates (the “Company”) |
Reports to: | Mike Huseby, Chairman & CEO |
Salary: | $500,000/Annualized |
Annual Incentive Plan: | The bonus target for your position is 60% of your base salary for the 2019 fiscal year and 85% of your base salary for the 2020 fiscal year and thereafter. Your bonus percentage will be subject to proration between the time spent in your current role and your new role through the end of the fiscal year. |
Equity: | Subject to approval by the Compensation Committee, you will be eligible to receive an equity grant under our annual long-term incentive program as part of the annual process. Additional details will be shared after approval. |
Severance: | If (a) your employment is terminated by the Company without Cause or (b) you voluntarily terminate your employment for Good Reason, the Company shall (i) pay you an amount equal to one (1) times the sum of (a) one year’s salary and (b) your target annual bonus for the year of termination (“Severance Amount”), and (ii) provide you continued health care coverage at the Company’s cost pursuant to the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) if you elect COBRA coverage until the earlier of when you are no longer eligible for COBRA coverage or twelve (12) months following your date of termination (the “COBRA Benefits”); provided that (x) you execute and deliver to the Company, and do not revoke, a release of all claims against the Company substantially in the form attached hereto as Exhibit A (“Release”) and (y) you have not materially breached as of the date of such termination any provisions of this letter or your Agreement Regarding Certain Terms and Conditions of Employment (the “Agreement”) and do not materially breach such provisions at any time during the Relevant Period (as defined in the Agreement). The Company’s obligation to make such payment shall be cancelled upon the occurrence of any such material breach and, in the event such payment has already been made, you shall repay to the Company such payment within 30 days after demand therefor; provided, however, such repayment shall not be required if the Company shall have materially breached this offer letter or the Agreement prior to the time of your breach. The Severance Amount shall be paid in cash in a single |
Change of Control: | If at any time during your employment (i) there is a Change of Control (as defined below) and (ii) your employment is terminated by the Company without Cause or you voluntarily terminate your employment for Good Reason, in either case, within 90 days preceding or two years following the Change of Control or the remainder of the current Renewal Term (as defined in the Employment Agreement), as applicable, then the Company shall (A) pay you an amount equal to two times the sum of (i) your then Annual Base Salary, and (ii) your target annual bonus for the year of termination (or, if higher, as in effect immediately prior to the Change of Control) (“Change of Control Amount”), and (B) provide you the COBRA Benefits, less all applicable withholding and other applicable taxes and deductions. (A) The Change of Control Amount and the COBRA Benefits are subject to you executing and delivering to the Company (and not revoking) the Release within 60 days following your termination date, (B) the Change of Control Amount shall be paid to you in cash in a single lump sum within 30 days after the date your employment terminates (or, if later, when the Release becomes irrevocable) and (C) the COBRA Benefits will be provided on a monthly basis. In the event that it is determined that the aggregate amount of the payments and benefits that could be considered “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (collectively, with the regulations and other guidance promulgated thereunder, the “Code”; and such payments and benefits, the “Parachute Payments”) that, but for this paragraph would be payable to you under this Agreement or any other plan, policy, or arrangement of the Company or Barnes & Noble Education, Inc. or any affiliate, exceeds the greatest amount of Parachute Payments that could be paid to you without giving rise to any liability for any excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the aggregate amount of Parachute Payments payable to you shall not exceed the amount that produces the greatest after-tax benefit to you after taking into account any Excise Tax to be payable by you. Any reduction in Parachute Payments pursuant to the immediately preceding sentence shall be made in the following order: (1) cash payments that do not constitute deferred compensation within the meaning of Section 409A of the Code, (2) welfare or in-kind benefits, (3) equity compensation awards and (4) cash payments that do constitute deferred compensation; in each case, such reductions shall be made in the manner that maximizes the present value to you of all such payments. For the avoidance of doubt, the amounts payable to you under this paragraph shall be in lieu of any amounts payable to you under the previous paragraph (Severance). |
AGREED AND ACCEPTED /s/ Thomas Donohue Thomas Donohue | Date June 19, 2019 |
1. | B&N Education, LLC, a Delaware limited liability company |
2. | Barnes & Noble College Booksellers, LLC, a Delaware limited liability company |
3. | BNED Digital Holdings, LLC, a Delaware limited liability company |
4. | BNED LoudCloud, LLC, a Delaware limited liability company |
5. | BNED MBS Holdings, LLC, a Delaware limited liability company |
6. | Cram LLC, a Delaware limited liability company |
7. | Educate Ahora LLC, a Delaware limited liability company |
8. | Edúcate Ahora México, S. de R.L. de C.V., a Mexican company |
9. | Etudier Facile LLC, a Delaware limited liability company |
10. | LoudCloud Systems Private Limited, an Indian subsidiary |
11. | MBS Automation LLC, a Delaware limited liability company |
12. | MBS Direct, LLC, a Delaware limited liability company |
13. | MBS Internet, LLC, a Delaware limited liability company |
14. | MBS Service Company LLC, a Delaware limited liability company |
15. | MBS Textbook Exchange, LLC, a Delaware limited liability company |
16. | Promoversity LLC, a Delaware limited liability company |
17. | Student Brands, LLC, a Delaware limited liability company |
18. | Study Mode LLC, a California limited liability company |
19. | Studymode Technologies Private Limited, an Indian company |
20. | TextbookCenter LLC, a Delaware limited liability company |
21. | Trabalhos Feitos, LLC, a Delaware limited liability company |
22. | TXTB.com LLC, a Delaware limited liability company |
23. | Worldwide Knowledge LLC, a Delaware limited liability company |
(i) | Registration Statement (Form S-8 No. 333-227515), which relates to the Barnes & Noble Education, Inc. Amended and Restated Equity Incentive Plan, |
(ii) | Registration Statement (Form S-8 No.333-206893) and Registration Statement (Form S-8 No. 333-213673) each of which relates to the Barnes & Noble Education, Inc. Equity Incentive Plan; |
1. | I have reviewed this Annual Report on Form 10-K of Barnes & Noble Education, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Michael P. Huseby | |||
Michael P. Huseby | ||||
Chairman & Chief Executive Officer | ||||
Barnes & Noble Education, Inc. |
1. | I have reviewed this Annual Report on Form 10-K of Barnes & Noble Education, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Thomas D. Donohue | |||
Thomas D. Donohue | ||||
Executive Vice President, Chief Financial Officer | ||||
Barnes & Noble Education, Inc. |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Michael P. Huseby | ||
Michael P. Huseby | ||
Chairman & Chief Executive Officer Barnes & Noble Education, Inc. | ||
June 25, 2019 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Thomas D. Donohue | ||
Thomas D. Donohue | ||
Executive Vice President, Chief Financial Officer Barnes & Noble Education, Inc. | ||
June 25, 2019 |
Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Apr. 27, 2019 |
Jun. 07, 2019 |
Oct. 27, 2018 |
|
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Apr. 27, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | Barnes & Noble Education, Inc. | ||
Entity Central Index Key | 0001634117 | ||
Current Fiscal Year End Date | --04-27 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Small Business | false | ||
Entity Common Stock, Shares Outstanding | 47,562,947 | ||
Entity Public Float | $ 275 |
Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
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Apr. 27, 2019 |
Apr. 28, 2018 |
Apr. 29, 2017 |
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Sales: | |||
Product sales and other | $ 1,838,760 | $ 1,984,472 | $ 1,641,881 |
Rental income | 195,883 | 219,145 | 232,481 |
Revenues | 2,034,643 | 2,203,617 | 1,874,362 |
Product and other cost of sales | 1,395,339 | 1,522,687 | 1,281,043 |
Rental cost of sales | 111,578 | 123,697 | 134,258 |
Cost of Goods and Services Sold | 1,506,917 | 1,646,384 | 1,415,301 |
Gross profit | 527,726 | 557,233 | 459,061 |
Selling and administrative expenses | 423,880 | 433,746 | 380,793 |
Depreciation and amortization expense | 65,865 | 65,586 | 53,318 |
Impairment loss (non-cash) | 57,748 | 313,130 | 0 |
Restructuring and other charges | 7,233 | 5,429 | 1,790 |
Transaction costs | 654 | 2,045 | 9,605 |
Operating income | (27,654) | (262,703) | 13,555 |
Interest expense, net | 9,780 | 10,306 | 3,464 |
Income before income taxes | (37,434) | (273,009) | 10,091 |
Income tax expense | (13,060) | (20,443) | 4,730 |
Net income (loss) | $ (24,374) | $ (252,566) | $ 5,361 |
Earnings per share of common stock | |||
Earnings Per Share, Basic | $ (0.52) | $ (5.40) | $ 0.12 |
Earnings Per Share, Diluted | $ (0.52) | $ (5.40) | $ 0.11 |
Weighted average common shares outstanding | |||
Basic | 47,306 | 46,763 | 46,317 |
Diluted | 47,306 | 46,763 | 46,763 |
Consolidated Balance Sheet Parenthetical (Parentheticals) - $ / shares |
Apr. 27, 2019 |
Apr. 28, 2018 |
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Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock, Shares, Issued | 51,030,000 | 50,032,000 |
Common Stock, Shares, Outstanding | 47,562,947 | 46,917,000 |
Organization (Notes) |
12 Months Ended |
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Apr. 27, 2019 | |
Organization | Note 1. Organization Description of Business Barnes & Noble Education, Inc. (“BNED”) is one of the largest contract operators of physical and virtual bookstores for college and university campuses and K-12 institutions across the United States. We are also one of the largest textbook wholesalers, inventory management hardware and software providers, and a leading provider of digital education solutions. We operate 1,448 physical, virtual, and custom bookstores and serve more than 6 million students, delivering essential educational content and tools within a dynamic omni channel retail environment. Additionally, we offer direct-to-student products and services to help students study more effectively and improve academic performance. The Barnes & Noble and MBS brands are virtually synonymous with bookselling, and, we believe, are widely recognized and respected brands in the United States. Our large college footprint, reputation, and credibility in the marketplace not only support our marketing efforts to universities, students, and faculty, but are also important for leading publishers who rely on us as one of their primary distribution channels, and for being a trusted source for students in our direct-to-student digital solutions business. The strengths of our business includes our ability to compete by developing new products and solutions to meet market needs, our large footprint with direct access to students and faculty, our well-established, deep relationships with partners and stable, long-term contracts and our well-recognized brands. We expect to continue to grow our business by introducing scalable and advanced digital solutions focused largely on the student, increasing market share with new accounts, and expanding our strategic opportunities through acquisitions and partnerships. Prior to the fourth quarter of fiscal year 2019, we had three reportable segments: BNC, MBS, and Digital Student Solutions (“DSS”). During the fourth quarter of fiscal year 2019, in an effort to streamline our retail go-to-market strategy, reinforce our company branding, and more efficiently focus our product development efforts, we realigned our business and sales organization into the following three reportable segments: Retail, Wholesale and DSS. The Retail Segment combines the operations of the former BNC segment with MBS Direct (from the former MBS segment), the Wholesale Segment is comprised of the MBS wholesale business (from the former MBS segment), and the DSS Segment remains unchanged. Additionally, unallocated shared-service costs, which include various corporate level expenses and other governance functions, continue to be presented as “Corporate Services”. For additional information related to our strategies, operations and segments, see Part I - Item 1. Business and Part II - Item 8. Financial Statements and Supplementary Data - Note 6. Segment Reporting. |
Summary of Significant Accounting Policies (Notes) |
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Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation Our consolidated financial statements reflect our consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”). In the opinion of the Company’s management, the accompanying consolidated financial statements of the Company contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its consolidated financial position and the results of its operations and cash flows for the periods reported. Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April. The fiscal year periods for each of the last three fiscal years consisted of the 52 weeks ended April 27, 2019 (“Fiscal 2019”), 52 weeks ended April 28, 2018 (“Fiscal 2018”), and 52 weeks ended April 29, 2017 (“Fiscal 2017”). For certain of our retail operations, sales are generally highest in the second and third fiscal quarters, when students purchase and rent textbooks and other course materials for the typical academic year, and lowest in the first and fourth fiscal quarters. Sales attributable to our wholesale business are generally highest in our first and third quarter, as it sells textbooks and other course materials for retail distribution. Our DSS sales and operating profit are realized relatively consistently throughout the year. Our quarterly results also may fluctuate depending on the timing of the start of the various school’s semesters, as well as shifts in fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods. Consolidation The results of operations reflected in our consolidated financial statements are presented on a consolidated basis. All material intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements include acquisitions effective their respective acquisition date.
Use of Estimates In preparing financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Reclassifications Effective in the fourth quarter of Fiscal 2019, we have three reportable segments: Retail, Wholesale, and DSS, as described in Part II - Item 8. Financial Statements and Supplementary Data - Note 6. Segment Reporting. Prior to the fourth quarter of Fiscal 2019, BNC, MBS and DSS were previously our only reportable segments. Prior periods presented reflect the segment changes. Cash and Cash Equivalents We consider all short-term, highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Restricted Cash Restricted cash of $755 and $742 is included in other noncurrent assets in the consolidated balance sheet as of April 27, 2019 and April 29, 2018, respectively. These funds are amounts held in trust for future distributions related to employee benefit plans. Accounts Receivable Receivables represent customer, private and public institutional and government billings (colleges, universities and other financial aid providers), credit/debit card receivables, advances for book buybacks, advertising and other receivables due within one year. Components of accounts receivables are as follows:
Accounts receivable are presented on our consolidated balance sheets net of allowances. An allowance for doubtful accounts is determined through an analysis of the aging of accounts receivable and assessments of collectability based on historical trends, the financial condition of our customers and an evaluation of economic conditions. We write-off uncollectible trade receivables once collection efforts have been exhausted and record bad debt expenses related to textbook rentals that are not returned and we are unable to successfully charge the customer. Allowance for doubtful accounts were $2,135, and $2,083 for Fiscal 2019 and Fiscal 2018, respectively. Merchandise Inventories Merchandise inventories, which consist of finished goods, are stated at the lower of cost or market. Market value of our inventory, which is all purchased finished goods, is determined based on its estimated net realizable value, which is generally the selling price less normally predictable costs of disposal and transportation. Reserves for non-returnable inventory are based on our history of liquidating non-returnable inventory. Cost is determined primarily by the retail inventory method for our Retail segment and last-in first out, or “LIFO”, method for our Wholesale segment. Our textbook inventories, for Retail and Wholesale, and trade book inventories are valued using the LIFO method and the related reserve was not material to the recorded amount of our inventories. There were no LIFO adjustments in Fiscal 2019, Fiscal 2018 and Fiscal 2017. For our physical bookstores, we also estimate and accrue shortage for the period between the last physical count of inventory and the balance sheet date. Shortage rates are estimated and accrued based on historical rates and can be affected by changes in merchandise mix and changes in actual shortage trends. The Retail Segment fulfillment order is directed first to our wholesale business before other sources of inventory are utilized. The products that we sell originate from a wide variety of domestic and international vendors. After internal sourcing, the bookstore purchases textbooks from outside suppliers and publishers. The Retail Segments four largest suppliers, excluding the supply sourced from our Wholesale Segment, accounted for approximately 37.4% of our merchandise purchased during the 52 weeks ended April 27, 2019. For our Wholesale Segment, the four largest suppliers, excluding textbooks purchased from students at our Retail Segment's bookstores, accounted for approximately 34.0% of merchandise purchases during the 52 weeks ended April 27, 2019. Textbook Rental Inventories Physical textbooks out on rent are categorized as textbook rental inventories. At the time a rental transaction is consummated, the book is removed from merchandise inventories and moved to textbook rental inventories at cost. The cost of the book is amortized down to its estimated residual value over the rental period. The related amortization expense is included in cost of goods sold. At the end of the rental period, upon return, the book is removed from textbook rental inventories and recorded in merchandise inventories at its amortized cost. Property and Equipment Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over estimated useful lives. Maintenance and repairs are expensed as incurred, however major maintenance and remodeling costs are capitalized if they extend the useful life of the asset. We had $44,550, $46,531, and$41,224 of depreciation expense for Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Content development costs are primarily related to bartleby.com textbook solutions which was launched in Fiscal 2019. Content amortization is computed using the straight-line method over estimated useful lives. Amortization of content development costs is recorded to cost of goods sold. We had $1,096, $0 and $0 of content amortization expense for Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Components of property and equipment are as follows:
Other Long-Lived Assets Our other long-lived assets include property and equipment and amortizable intangibles. We had $194,978 and $219,129 of amortizable intangible assets, net of amortization, as of April 27, 2019 and April 28, 2018, respectively. These amortizable intangible assets relate primarily to our customer and bookstore relationships with our colleges and university clients, and technology acquired. For additional information related to amortizable intangibles, see Part II - Item 8. Financial Statements and Supplementary Data - Note 10. Supplementary Information - Intangible Assets. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and consider market participants in accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. During the fourth quarter of Fiscal 2019, in conjunction with the change to reporting segments and the interim goodwill impairment test noted below, as well as operational changes in certain long-lived asset groups, we evaluated certain of our long-lived assets for impairment and recognized an impairment loss of $8,466, comprised of $8,138 of intangible assets, primarily acquired technology, and $328 of property and equipment related to our LoudCloud and Promoversity operations. These long-lived assets were not recoverable and had a de minimis fair value, as determined using the relief-from-royalty and income approaches (Level 3 input), resulting in a non-cash impairment charge for the full carrying value of those long-lived assets. See Part II - Item 8. Financial Statements and Supplementary Data - Note 10. Supplementary Information - Intangible Assets. In addition, in conjunction with the fourth quarter goodwill impairment test noted below, we evaluated certain of our other long-lived assets associated with our Retail and Wholesale segments for impairment. We evaluated the long-lived assets of these reporting units for impairment at the lowest asset group level for which individual cash flows can be identified. When evaluating long-lived assets for potential impairment, we first compared the carrying amount of the asset group to the estimated future undiscounted cash flows. The impairment loss calculation compares the carrying amount of the assets to the fair value based on estimated discounted future cash flows. If required, an impairment loss is recorded for that portion of the asset’s carrying value in excess of fair value. Based on the results of the tests, an impairment loss calculation was not required as the estimated future undiscounted cash flows of the identified asset groups exceeded the carrying amount of the respective asset group. Impairment losses related to school contracts included in selling and administrative expenses totaled $0, $0, and $23 during Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Goodwill The costs in excess of net assets of businesses acquired are carried as goodwill in the accompanying consolidated balance sheets. We completed our annual goodwill impairment test with the assistance of a third-party valuation firm, as of the first day of the third quarter of Fiscal 2019 for our reporting units as they existed at that date. Based on the quantitative test performed, the fair value of the MBS and DSS reporting units (as they existed at that date) exceeded their carrying values; therefore, no goodwill impairment was recognized for these reporting units. While the carrying value of the BNC reporting unit (as it existed at that date) exceeded its fair value, there was no goodwill allocated to the reporting unit as of the Fiscal 2019 annual goodwill impairment test date. During the fourth quarter of Fiscal 2019, due to the change in our reporting segments, we determined that there had been a change to our previous MBS and BNC reporting units. See Part II - Item 8. Financial Statements and Supplementary Data - Note 6. Segment Reporting. We performed an interim qualitative assessment related to the MBS reporting unit prior to the change in reporting segments. Qualitative factors that we consider as part of our assessment include a change in our weighted cost of capital, industry and market conditions, macroeconomic conditions and financial performance of our businesses. After assessing these events and circumstances, we determined that it was not more likely than not that the fair value of the MBS reporting unit was less than its carrying value. We then reassigned the assets and liabilities, including goodwill, from the former MBS reporting unit to the new Retail and Wholesale reporting units. Using the assistance of a third-party valuation firm, we assessed the relative fair value of the $49,282 total goodwill associated with the MBS reporting unit (as it existed at that date) and allocated $20,538 of goodwill to the Retail Segment and $28,744 of goodwill to the Wholesale Segment. Upon reallocating the goodwill, we performed an interim quantitative assessment using the income approach (Level 3 inputs) and determined that the revised carrying values of the Retail and Wholesale reporting units exceeded their respective fair values. After confirming that the long-lived assets of the respective reporting units were recoverable, we recognized a total goodwill impairment (non-cash impairment loss) of $49,282 in Fiscal 2019, consisting of the full carrying value of the goodwill allocated to Retail and Wholesale reporting units. In Fiscal 2018, the carrying value of the BNC reporting unit (as it existed at that date) exceeded its fair value and we recognized a goodwill impairment (non-cash impairment loss) of $313,130. As of April 27, 2019, we had $0, $0 and $4,700 of goodwill on our consolidated balance sheets related to our Retail, Wholesale, and DSS reporting units, respectively. As of April 28, 2018, we had $49,282, $0 and $0 of goodwill on our consolidated balance sheets remaining related to our MBS, BNC and DSS reporting units (as they existed at that date), respectively. Application of the goodwill impairment test requires judgment, including: the identification of reporting units; assignment of assets and liabilities to reporting units; assignment of goodwill to reporting units; and the determination of the fair value of each reporting unit. In performing the valuation, we used cash flows that reflected management’s forecasts and discount rates that included risk adjustments consistent with the current market conditions. We estimated the fair value of our reporting units using a weighting of fair values derived from the income approach and the market approach. Under the income approach, we calculate the fair value of the reporting unit based on the present value of estimated future cash flows. Inherent in our preparation of cash flow projections are assumptions and estimates derived from a review of our operating results, business plans, expected growth rates, cost of capital and tax rates. We also make certain forecasts about future economic conditions, interest rates, market data, and other observable trends, such as comparable store sales trends, recent changes in publisher relationships, and development of innovative digital products and services in the rapidly changing education landscape. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows. Under the market approach, we estimate the fair value based on market multiples of cash flows and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit and considering a reasonable control premium. Refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates for a discussion of key assumptions used in our testing. Revenue Recognition and Deferred Revenue Product sales and rentals The majority of our revenue relates to the sales of products through our bookstore locations, including virtual bookstores, and our bookstore affiliated ecommerce websites, and contains a single performance obligation. Revenue from sales of our products is recognized at the point in time when control of the products is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for the products. For additional information, see Part II - Item 8. Financial Statements and Supplementary Data - Note 5. Revenue. Retail product revenue is recognized when the customer takes physical possession of our products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of our products by our customers for products ordered through our websites and virtual bookstores. Wholesale product revenue is recognized upon shipment of physical textbooks at which point title passes and risk of loss is transferred to the customer. Additional revenue is recognized for shipping charges billed to customers and shipping costs are accounted for as fulfillment costs within cost of goods sold. Revenue from the rental of physical textbooks, which contains a single performance obligation, is deferred and recognized over the rental period based on the passage of time commencing at the point of sale, when control of the product transfers to the customer. Rental periods are typically for a single semester and are always less than one year in duration. We offer a buyout option to allow the purchase of a rented physical textbook at the end of the rental period if the customer desires to do so. We record the buyout purchase when the customer exercises and pays the buyout option price which is determined at the time of the buyout. In these instances, we accelerate any remaining deferred rental revenue at the point of sale. Revenue from the rental of digital textbooks, which contains a single performance obligation, is recognized at the point of sale. A software feature is embedded within the content of our digital textbooks, such that upon expiration of the rental term the customer is no longer able to access the content. While the digital rental allows the customer to access digital content for a fixed period of time, once the digital content is delivered to the customer, our performance obligation is complete. We estimate returns based on an analysis of historical experience. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded. For sales and rentals involving third-party products, we evaluate whether we are acting as a principal or an agent. Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring them to the customer. There are significant judgments involved in determining whether we control the specified goods or services prior to transferring them to the customer including whether we have the ability to direct the use of the good or service and obtain substantially all of the remaining benefits from the good or service. For those transactions where we are the principal, we record revenue on a gross basis, and for those transactions where we are an agent to a third-party, we record revenue on a net basis. We do not have gift card or customer loyalty programs. We do not treat any promotional offers as expenses. Sales tax collected from our customers is excluded from reported revenues. Our payment terms are generally 30 days and do not extend beyond one year. Service and other revenue Service and other revenue primarily relates to direct-to-student subscription-based writing service revenues and partnership marketing services which includes promotional activities and advertisements within our physical bookstores and web properties performed on behalf of third-party customers. Subscription-based revenue, which contains a single performance obligation, is deferred and recognized based on the passage of time over the subscription period commencing at the point of sale, when control of the service transfers to the customer. The majority of subscriptions sold are one month in duration. Partnership marketing agreements often include multiple performance obligations which are individually negotiated with our customers. For these arrangements that contain distinct performance obligations, we allocate the transaction price based on the relative standalone selling price method by comparing the standalone selling price (“SSP”) of each distinct performance obligation to the total value of the contract. The revenue is recognized as each performance obligation is satisfied, typically at a point in time for partnership marketing service and overtime for advertising efforts as measured based upon the passage of time for contracts that are based on a stated period of time or the number of impressions delivered for contracts with a fixed number of impressions. Cost of Sales Our cost of sales primarily include costs such as merchandise costs, textbook rental amortization, content development cost amortization, warehouse costs related to inventory management and order fulfillment, insurance, certain payroll costs, and management service agreement costs, including rent expense, related to our college and university contracts and other facility related expenses. Selling and Administrative Expenses Our selling and administrative expenses consist primarily of store payroll and store operating expenses. Selling and administrative expenses also include stock-based compensation and general office expenses, such as merchandising, procurement, field support, finance and accounting, and operating costs related to our direct-to-student subscription-based writing services business. Shared-service costs such as human resources, legal, treasury, information technology, and various other corporate level expenses and other governance functions, are not allocated to any specific reporting segment and are recorded in Corporate Services. Stock-Based Compensation We have granted awards in accordance with the Barnes & Noble Education Inc. Equity Incentive Plan (the “Equity Incentive Plan”). Types of equity awards that can be granted under the Equity Incentive Plan include options, restricted stock (“RS”), restricted stock units (“RSU”), performance shares (“PS”) and performance share units (“PSU”). We have not granted options under the Equity Incentive Plan. See Part II - Item 8. Financial Statements and Supplementary Data - Note 13. Stock-Based Compensation for a further discussion of our stock-based incentive plan. We recognize compensation expense for awards ratably over the requisite service period of the award, which is generally three years. We recognize compensation expense based on the number of awards expected to vest using an estimated average forfeiture rate. We calculate the fair value of stock-based awards based on the closing price on the date the award was granted for awards with only performance or service conditions. For those awards with market conditions, we have determined the grant date fair value using the Monte Carlo simulation model. Advertising Costs The costs of advertising are expensed as incurred during the year pursuant to ASC No. 720-35, Advertising Costs. Advertising costs charged to selling and administrative expenses were $10,636, $10,691, and $7,437 during Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Income Taxes The provision for income taxes includes federal, state and local income taxes currently payable and those deferred because of temporary differences between the financial statement and tax basis of assets and liabilities. The deferred tax assets and liabilities are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse. We regularly review deferred tax assets for recoverability and establish a valuation allowance, if determined to be necessary. For additional information, see Part II - Item 8. Financial Statements and Supplementary Data - Note 14. Income Taxes. As of April 27, 2019, other long-term liabilities includes $32,847 related to the long-term tax payable associated with the LIFO reserve. The LIFO reserve is impacted by changes in the consumer price index (“CPI”) and is dependent on the inventory levels at the end of our tax year (on or about January 31st) which is in the middle of our second largest selling cycle. At the end of the most recent tax year, inventory levels declined as compared to the prior year resulting in approximately $7,260 of the LIFO reserve becoming currently payable. Given recent trends relating to the pricing and rental of textbooks, management believes that an additional portion of the remaining long-term tax payable associated with the LIFO reserve could be payable within the next twelve months. We are unable to predict future trends for CPI and inventory levels, therefore it is difficult to project with reasonable certainty how much of this liability will become payable within the next twelve months. Earnings Per Common Share Basic earnings per share represent net earnings to common stockholders divided by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of our stock based compensation. See Part II - Item 8. Financial Statements and Supplementary Data - Note 7. Equity and Earnings Per Share for further information regarding the calculation of basic and diluted earnings per common share. |
Recent Accounting Pronouncements (Notes) |
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Recent Accounting Pronouncements | Note 3. Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which requires an entity (customer) in a hosting arrangement that is a service contract to follow the guidance to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The ASU requires upfront implementation costs incurred in a cloud computing arrangement (or hosting arrangement) that is a service contract to be amortized to hosting expense over the term of the arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. We are required to adopt this standard in the first quarter of Fiscal 2021 and early adoption is permitted. The guidance may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are currently evaluating this standard to determine the impact of adoption on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-01”) to increase transparency and comparability by providing additional information to users of financial statements regarding an entity's leasing activities. The revised guidance seeks to achieve this objective by requiring reporting entities to recognize lease assets and lease liabilities on the balance sheet for substantially all lease arrangements. We will adopt this standard in the first quarter of Fiscal 2020 using a modified retrospective basis applied as of the period of adoption (i.e., on the effective date), with no restatement of prior periods, and we will elect the package of practical expedients permitted under the transition guidance. Although we have not yet finalized our evaluation of the guidance, we believe the most significant impact will be the recognition of right of use assets and liabilities on our consolidated balance sheet. We expect our lease obligations and right-of-use assets to be reported on the consolidated balance sheets for leases designated as operating leases to be in the range of $255,000 to $315,000 upon final adoption. We have collected relevant data for all of our leases and are currently in the process of validating lease data and updating processes and internal controls to meet the accounting, reporting and disclosure requirements. |
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Business Combination Disclosure [Text Block] | Note 4. Acquisitions Acquisitions PaperRater On August 21, 2018, we acquired the assets of PaperRater in the DSS Segment. PaperRater is a leading website that offers students a suite of writing services aimed at improving multiple facets of writing. PaperRater's services include plagiarism detection, grammar feedback, and an AI-based writing score predictor, and are highly complementary to Student Brands' existing writing service offerings. PaperRater adds millions of pieces of content, from essays and dissertations to personal narratives and speeches, to our growing digital content library. We completed the purchase for cash consideration of $10,000 and the transaction was funded from cash on-hand and availability under our existing Credit Agreement. The final purchase price was allocated primarily as follows: $5,300 intangible assets (primarily content with an estimated useful life of 5 years) and $4,700 goodwill. This acquisition is not material to our consolidated financial statements and therefore, disclosure of pro forma financial information has not been presented. The results of operations reflect the period of ownership of the acquired business. Student Brands, LLC On August 3, 2017, we acquired 100% of the equity interests of Student Brands in the DSS Segment. Student Brands operates multiple direct-to-student businesses focused on study tools and writing help, all centered on assisting students with the writing process. We completed the purchase for cash consideration of $61,997, including cash acquired of $4,626, and the transaction was funded from cash on-hand and availability under our existing Credit Agreement. The final purchase price allocation was as follows: $28,300 intangible assets, $1,593 acquired working capital and $31,782 goodwill. This acquisition is not material to our consolidated financial statements and therefore, disclosure of pro forma financial information has not been presented. The results of operations reflect the period of ownership of the acquired business. Identified intangible assets include the following:
MBS Textbook Exchange, LLC On February 27, 2017, we completed the purchase of all issued and outstanding units of MBS Textbook Exchange, LLC. We acquired 100% of the equity interests of MBS for cash consideration of $187,862, including cash and restricted cash acquired of $1,171, and the acquisition was financed with cash from operations, as well as proceeds from our existing credit facility. During the third quarter of Fiscal 2018, we finalized the valuation and recorded adjustments to the acquired liabilities which resulted in an increase to goodwill of $1,163. These adjustments were related to a final reconciliation of the pre-acquisition tax liability due to the seller of $888 under the purchase agreement, as well as a net $275 increase in other long-term liabilities. The following is a summary of consideration paid for the acquisition:
The following is a summary of the fair values of the net assets acquired:
Identified intangible assets include the following:
See Part II - Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Pronouncements for information related to subsequent goodwill impairment evaluations. The consolidated financial statements for the 52 weeks ended April 29, 2017 include the financial results of MBS from the acquisition date, February 27, 2017, to April 29, 2017, including sales of $34,091 and net loss of $(2,630). As the acquisition was material to our consolidated financial statements, the following represents the pro forma consolidated income statement as if MBS had been included in the consolidated results for the entire fiscal year for Fiscal 2017:
These amounts have been calculated after applying our accounting policies and adjusting the results of MBS to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied on May 1, 2016, and includes the elimination of all significant intercompany accounts and transactions, together with the consequential tax effects. Promoversity In June 2016, we completed the purchase of substantially all of the assets of Promoversity, a custom merchandise supplier and e-commerce storefront solution serving the collegiate bookstore business and its customers. The acquisition enables us to customize our e-commerce offerings and drive on-campus apparel sales. The acquisition purchase price was $1,417, including working capital, and was financed with cash from operations. The purchase price was allocated primarily as follows: $741 intangible assets (with a 5 year amortization period), $441 goodwill, $221 net current assets, and $500 future performance-based obligations. This acquisition is not material to our consolidated financial statements and therefore, disclosure of pro forma financial information has not been presented. The results of operations reflect the period of ownership of the acquired business. |
Revenue Revenue (Notes) |
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Revenue from Contract with Customer [Text Block] | Note 5. Revenue In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). The standard provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. We have analyzed the impacts of the guidance across all of our revenue streams and have adopted the standard using the modified retrospective method effective with the first quarter of Fiscal 2019. Financial results for reporting periods beginning after April 28, 2018 are presented in accordance with Topic 606, while comparative period information continues to reflect our historic accounting under the accounting standards in effect for those periods. There was no cumulative change to retained earnings as a result of adopting the guidance. We reclassified the product return asset of $2,610 from Merchandise Inventories, Net to Prepaid Expenses and Other Current Assets on the consolidated balance sheets for the period ended April 28, 2018. See Part II - Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Pronouncements for additional information related to our revenue recognition policies and Part II - Item 8. Financial Statements and Supplementary Data - Note 6. Segment Reporting for a description of each segments product and service offerings. Disaggregation of Revenue The following table disaggregates the revenue associated with our major product and service offerings.
Contract Assets and Contract Liabilities Contract assets represent the sale of goods or services to a customer before we have the right to obtain consideration from the customer. Contract assets consist of unbilled amounts at the reporting date and are transferred to accounts receivable when the rights become unconditional. Contract assets (Unbilled Receivables) were $0 as of both April 27, 2019 and April 28, 2018 on our consolidated balance sheets. Contract liabilities represent an obligation to transfer goods or services to a customer for which we have received consideration and consists of our deferred revenue liability (Deferred Revenue). Deferred revenue primarily consists of advanced payments from customers related to textbook rental and subscription-based performance obligations that have not yet been satisfied, as well as unsatisfied performance obligations associated with partnership marketing services. Deferred revenue is recognized ratably over the terms of the related rental or subscription periods, or when the contracted services are provided to our partnership marketing customers. Deferred revenue of $20,418 and $20,144 is recorded within Accrued Liabilities on our consolidated balance sheets for the periods ended April 27, 2019 and April 28, 2018, respectively. The following table presents changes in contract liabilities during the fiscal year ended April 27, 2019:
As of April 27, 2019, we expect to recognize $20,418 of the deferred revenue balance within in the next 12 months. |
Segment Reporting (Notes) |
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Segment Reporting | Note 6. Segment Reporting Prior to the fourth quarter of Fiscal 2019, we had three reportable segments: BNC, MBS, and DSS. During the fourth quarter of Fiscal 2019, in an effort to streamline our retail go-to-market strategy, reinforce our company branding, and more efficiently focus our product development efforts, we realigned our business and sales organization into the following three reportable segments: Retail, Wholesale and DSS. The Retail Segment combines the operations of the former BNC segment with MBS Direct (from the former MBS segment), the Wholesale Segment is comprised of the MBS wholesale business (from the former MBS segment), and the DSS Segment remains unchanged. Additionally, unallocated shared-service costs, which include various corporate level expenses and other governance functions, continue to be presented as “Corporate Services”. We identify our segments in accordance with the way our business is managed (focusing on the financial information distributed) and the manner in which our chief operating decision maker allocates resources and assesses financial performance. The following summarizes the three segments. For additional information about this segments operations, see Part I - Item 1. Business. Retail Segment The Retail Segment operates 1,448 college, university, and K-12 school bookstores, comprised of 772 physical bookstores and 676 virtual bookstores. Our bookstores typically operate under agreements with the college, university, or K-12 schools to be the official bookstore and the exclusive seller of course materials and supplies, including physical and digital products. The majority of the physical campus bookstores have school-branded e-commerce sites which we operate and which offer students access to affordable course materials and affinity products, including emblematic apparel and gifts. The Retail Segment also offers inclusive access programs, in which course materials, including e-content, are offered at a reduced price through a course materials fee, and delivered to students on or before the first day of class. Additionally, the Retail Segment offers a suite of digital content and services to colleges and universities, including a variety of open educational resource-based courseware. Wholesale Segment The Wholesale Segment is comprised of our wholesale textbook business and is one of the largest textbook wholesalers in the country. The Wholesale Segment centrally sources, sells, and distributes new and used textbooks to approximately 3,500 physical bookstores, including our Retail Segment's 772 physical bookstores. Our Wholesale business also sources and distributes new and used textbooks to our 676 virtual bookstores. Additionally, the Wholesale Segment sells hardware and a software suite of applications that provides inventory management and point-of-sale solutions to approximately 400 college bookstores. DSS Segment The Digital Student Solutions (“DSS”) Segment includes direct-to-student products and services to assist students to study more effectively and improve academic performance. The DSS Segment is comprised of the operations of Student Brands, LLC, a leading direct-to-student subscription-based writing services business, and bartleby, a direct-to-student subscription-based offering providing textbook solutions, expert questions and answers, tutoring and test prep services. Corporate Services Corporate Services represents unallocated shared-service costs which include corporate level expenses and other governance functions, including executive functions, such as accounting, legal, treasury, information technology, and human resources. Eliminations The eliminations are primarily related to the following intercompany activities:
Our international operations are not material and the majority of the revenue and total assets are within the United States.
(a) Primarily comprised of content development costs for bartleby.com textbook solutions which was launched in Fiscal 2019. Summarized financial information for our reportable segments is reported below:
In Fiscal 2018, we recorded a goodwill impairment (non-cash impairment loss) of $313,130 in our Retail Segment (prior BNC segment) based on the results of our annual goodwill impairment test. |
Equity and Earnings Per Share (Notes) |
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Equity and Earnings Per Share [Text Block] | Note 7. Equity and Earnings Per Share Equity Our authorized capital stock consists of 200,000,000 shares of common stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share. As of April 27, 2019, 47,562,947 shares of our common stock and 0 shares of our preferred stock were issued and outstanding. Our common stock trades on the NYSE under the symbol “BNED”. The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. Holders of shares of our common stock do not have cumulative voting rights in the election of directors. The holders of our common stock will be entitled to share ratably in our assets legally available for distribution to our stockholders, subject to the prior distribution rights of preferred stock, if any, then outstanding. The holders of our common stock do not have preemptive rights or preferential rights to subscribe for shares of our capital stock. We have reserved 10,409,345 shares of common stock for future grants in accordance with the Barnes & Noble Education Inc. Equity Incentive Plan. See Part II - Item 8. Financial Statements and Supplementary Data - Note 13. Stock-Based Compensation. Share Repurchases On December 14, 2015, our Board of Directors authorized a stock repurchase program of up to $50,000, in the aggregate, of our outstanding common stock. The stock repurchase program is carried out at the direction of management (which includes a plan under Rule 10b5-1 of the Securities Exchange Act of 1934). The stock repurchase program may be suspended, terminated, or modified at any time. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes. During the 52 weeks ended April 27, 2019 and April 28, 2018, we did not purchase shares under the stock repurchase program. During the 52 weeks ended April 29, 2017, we repurchased 688,948 shares for approximately $6,718 at a weighted average cost per share of $10.10. As of April 27, 2019, approximately $26,669 remains available under the stock repurchase program. During the 52 weeks ended April 27, 2019, April 28, 2018 and April 29, 2017, we also repurchased 351,043 shares, 260,531 shares and 276,292 shares of our common stock in connection with employee tax withholding obligations for vested stock awards, respectively. Dividends We paid no dividends to common stockholders during Fiscal 2019, Fiscal 2018 and Fiscal 2017. We do not intend to pay dividends on our common stock in the foreseeable future. Earnings Per Share Basic EPS is computed based upon the weighted average number of common shares outstanding for the year. Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year. We include participating securities (unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents) in the computation of EPS pursuant to the two-class method. Our participating securities consist solely of unvested restricted stock awards, which have contractual participation rights equivalent to those of stockholders of unrestricted common stock. The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. During the Fiscal 2019, Fiscal 2018 and Fiscal 2017, average shares of 2,939,089, 2,494,799 and 375,457 were excluded from the diluted earnings per share calculation using the two-class method as their inclusion would have been antidilutive, respectively. The following is a reconciliation of the basic and diluted earnings per share calculation:
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Fair Values of Financial Instruments (Notes) |
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Fair Values of Financial Instruments | Note 8. Fair Values of Financial Instruments In accordance with ASC No. 820, Fair Value Measurements and Disclosures, the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1—Observable inputs that reflect quoted prices in active markets Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable Level 3—Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions Our financial instruments include cash and cash equivalents, receivables, accrued liabilities and accounts payable. The fair values of cash and cash equivalents, receivables, accrued liabilities and accounts payable approximates their carrying values because of the short-term nature of these instruments, which are all considered Level 1. The fair value of short-term and long-term debt approximates its carrying value. For nonrecurring fair value measurements associated with impairment testing performed during Fiscal 2019, refer to Part II - Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Policies - Other Long-lived Assets and Note 2. Summary of Significant Accounting Policies - Goodwill where we determined the fair value of impaired assets using Level 3 inputs. |
Credit Facility (Notes) |
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Credit Facility | Note 9. Credit Facility On March 1, 2019, we entered into an amendment to extend our original credit agreement (the “Credit Agreement”) that was entered on August 3, 2015 with Bank of America, N.A., as administrative agent, collateral agent and swing line lender, and other lenders, from time to time party thereto, under which the lenders committed to provide us with a five-year asset-backed revolving credit facility in an aggregate committed principal amount of $400,000 (the “Credit Facility”) effective from the date of the amendment. We have the option to request an increase in commitments under the Credit Facility of up to $100,000, subject to certain restrictions. Proceeds from the Credit Facility are used for general corporate purposes, including seasonal working capital needs. The March 1, 2019 amendment included an extension to the maturity date of the incremental first in, last out seasonal loan facility (the “FILO Facility”) that was entered into on February 27, 2017. The FILO Facility remains a $100,000 incremental facility maintaining the maximum availability under the Credit Agreement at $500,000. As of April 27, 2019, we had outstanding borrowings of $33,500 and $100,000 under the Credit Facility and FILO Facility, respectively. As of April 28, 2018, we had outstanding borrowings of $96,400 and $100,000 under the Credit Facility and FILO Facility, respectively. During the 52 weeks ended April 27, 2019, we borrowed $521,200 and repaid $584,100 under the Credit Agreement, and had a net total of $133,500 of outstanding borrowings as of April 27, 2019. As of both April 27, 2019 and April 28, 2018, we issued $4,759 in letters of credit under the Credit Facility, respectively. During Fiscal 2018, we borrowed $674,500 and repaid $637,700 under the Credit Facility. During Fiscal 2017, we borrowed $312,700 and repaid $153,100 under the Credit Agreement. During Fiscal 2019, we incurred debt issuance costs totaling $3,395 related to the March 1, 2019 Credit Facility amendment and recorded a write-off of $118 of existing unamortized debt issuance costs. During Fiscal 2017, we incurred debt issuance costs totaling $2,912 related to the FILO Facility. The debt issuance costs have been deferred and are presented as an asset which is subsequently amortized ratably over the term of the Credit Agreement. The Credit Facility is secured by substantially all of the inventory, accounts receivable and related assets of the borrowers under the Credit Facility, but excluding the equity interests in us and our subsidiaries, intellectual property, equipment and certain other property. Interest under the Credit Facility accrues, at our election, at a LIBOR or alternate base rate, plus, in each case, an applicable interest rate margin, which is determined by reference to the level of excess availability under the Credit Facility. Loans will initially bear interest at LIBOR plus 1.750% per annum, in the case of LIBOR borrowings, or at the alternate base rate plus 0.750% per annum, in the alternative, and thereafter the interest rate will fluctuate between LIBOR plus 1.750% per annum and LIBOR plus 1.250% per annum (or between the alternate base rate plus 0.750% per annum and the alternate base rate plus 0.250% per annum), based upon the excess availability under the Credit Facility at such time. Loans under the FILO Facility will bear interest at a rate equal to the LIBOR rate, plus 2.750%. The FILO Facility will be available solely during the draw period each year, from April 1 through July 31. We are required to borrow 100% of the aggregate commitments under the FILO Facility on April 1 of each year, and the loans must be repaid in full (including interest and fees) on July 31 of each year. The commitments under the FILO Facility were amended as part of the March 1, 2019 amendment to the Credit Facility and will decrease from $100,000 to $75,000 on August 1, 2019, from $75,000 to $50,000 on August 1, 2020 and from $50,000 to $25,000 on August 1, 2021. We will pay a commitment fee of 0.375% on the daily unused portion of the FILO Facility. The Credit Facility contains customary negative covenants, which limit our ability to incur additional indebtedness, create liens, make investments, make restricted payments or specified payments and merge or acquire assets, among other things. In addition, if excess availability under the Credit Facility were to fall below certain specified levels, certain additional covenants (including fixed charge coverage ratio requirements) would be triggered, and the lenders would have the right to assume dominion and control over the Company's cash. The Credit Facility contains customary events of default, including payment defaults, material breaches of representations and warranties, covenant defaults, default on other material indebtedness, customary ERISA events of default, bankruptcy and insolvency, material judgments, invalidity of liens on collateral, change of control or cessation of business. The Credit Facility also contains customary affirmative covenants and representations and warranties. We are in compliance with all covenants, representations and warranties under the Credit Facility as of April 27, 2019. We believe that our future cash from operations, access to borrowings under the Credit Facility, FILO Facility and short-term vendor financing will provide adequate resources to fund our operating and financing needs for the foreseeable future. Our future capital requirements will depend on many factors, including, but not limited to, the economy and the outlook for and pace of sustainable growth in our markets, the levels at which we maintain inventory, the number and timing of new store openings, and any potential acquisitions of other brands or companies including digital properties. To the extent that available funds are insufficient to fund our future activities, we may need to raise additional funds through public or private financing of debt or equity. Our access to, and the availability of, financing in the future will be impacted by many factors, including the liquidity of the overall capital markets and the current state of the economy. There can be no assurances that we will have access to capital markets on acceptable terms. |
Supplementary Information Supplementary Information (Notes) |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary Information [Text Block] | Note 10. Supplementary Information Impairment Loss (non-cash) During the 52 weeks ended April 27, 2019, we recorded an impairment loss (non-cash) of $57,748, comprised of $49,282 of goodwill and $8,466 of long-lived assets. During the 52 weeks ended April 28, 2018, we recorded an impairment loss (non-cash) of $313,130 related to goodwill. For information, see Part II - Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Policies. Restructuring and Other Charges Restructuring During the 52 weeks ended April 27, 2019, we recognized expenses totaling $4,554, which is comprised of severance and transition payments related to senior management changes, and other employee termination and benefit costs. Mr. Patrick Maloney resigned as Executive Vice President, Operations of the Company and President, BNC effective as of April 27, 2019, resulting in $2,500 of severance and transition payments. For additional information, see the Form 8-K dated December 13, 2018, filed with the SEC on December 18, 2018. Additionally, as part of the our cost reduction objectives, various positions were eliminated, resulting in approximately $2,054 in employee termination costs. During the 52 weeks ended April 28, 2018, we recognized expenses totaling $5,429, which is primarily comprised of severance and transition payments, as well as related expenses, resulting from the resignation of Mr. Max J. Roberts as Chief Executive Officer of the Company. Mr. Michael P. Huseby was appointed to the position of Chief Executive Officer and Chairman of the Board, both effective as of September 19, 2017. For additional information, see the Form 8-K dated July 19, 2017, filed with the SEC on July 20, 2017. Other Charges During the 52 weeks ended April 27, 2019, we recognized other charges totaling $2,679, primarily comprised of $2,274 in an actuarial loss for a retirement benefit plan (non-cash), $281 related to additional liabilities for a facility closure, and a write-off of $118 of existing unamortized debt issuance costs. Intangible Assets Amortizable intangible assets as of April 27, 2019 and April 28, 2018 are as follows:
All amortizable intangible assets are being amortized over their useful life on a straight-line basis.
For additional information about intangible assets, see Part II - Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Policies and Note 4. Acquisitions. Goodwill The following table details the changes in carrying value of goodwill (including foreign currency translation):
As of April 27, 2019, goodwill of approximately $79,578 was deductible for federal income tax purposes. For additional information related to goodwill, see Part II - Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Policies and Note 4. Acquisitions. |
Related Party Transactions Related Party Transctions (Notes) |
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Apr. 27, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | Note 11. Related Party Transactions MBS Textbook Exchange, LLC Prior to the acquisition of MBS on February 27, 2017, MBS was considered a related-party as it was majority-owned by Leonard Riggio, who is a principal owner holding substantial shares of our common stock, and other members of the Riggio family. See Part II - Item 8. Financial Statements and Supplementary Data - Note 4. Acquisitions. Prior to the acquisition, we had a long-term supply agreement (“Supply Agreement”) with MBS, under which and subject to availability and competitive terms and conditions, we purchased new and used printed textbooks for a given academic term from MBS prior to buying them from other suppliers, other than in connection with student buy-back programs. Prior to the acquisition on February 27, 2017, total purchases from MBS were $92,956 (amount prior to returns which occurred subsequent to the February 27, 2017 acquisition date) for Fiscal 2017. Additionally, the Supply Agreement provided that we could sell to MBS certain textbooks that we could not return to suppliers or use in our stores. MBS paid us commissions based on the volume of these textbooks sold to MBS each year and with respect to the textbook requirements of certain distance learning programs that MBS fulfilled on our behalf. Prior to the acquisition on February 27, 2017, MBS paid us $7,376 related to these commissions in Fiscal 2017. In addition, the Supply Agreement contains restrictive covenants that limited our ability to become a used textbook wholesaler and that place certain limitations on MBS’s business activities. We also previously entered into an agreement with MBS pursuant to which MBS purchased books from us, which have no resale value for a flat rate per box. Prior to the acquisition on February 27, 2017, total sales to MBS under this program were $339 for Fiscal 2017. Subsequent to the acquisition, the consolidated financial statements include the accounts of MBS and all material intercompany accounts and transactions have been eliminated in consolidation. MBS leases its main warehouse and distribution facility located in Columbia, Missouri from MBS Realty Partners L.P. which is majority-owned by Leonard Riggio, with the remaining ownership by other sellers of MBS. The lease was originally entered into in 1991 and included a renewal option which extended the lease through September 1, 2023. Based upon a valuation performed as of the acquisition date, the lease was determined to be favorable from a lessee perspective with below market rent. Rent payments to MBS Realty Partners L.P. were approximately $1,380 in both Fiscal 2019 and Fiscal 2018. See Part II - Item 8. Financial Statements and Supplementary Data - Note 4. Acquisitions. |
Employees' Defined Contribution Plan (Notes) |
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Employees' Defined Contribution Plan | Note 12. Employee Benefit Plans We sponsor defined contribution plans for the benefit of substantially all of the employees of BNC and DSS. MBS maintains a profit sharing plan covering substantially all full-time employees of MBS. For all plans, we are responsible to fund the employer contributions directly. Total employee benefit expense for these plans was $6,702, $7,196, and $4,828 during Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. |
Stock-Based Compensation Stock-Based Compensation (Notes) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Note 13. Stock-Based Compensation We have reserved 10,409,345 shares of our common stock for future grants in accordance with the Barnes & Noble Education Inc. Equity Incentive Plan. Types of equity awards that can be granted under the Equity Incentive Plan include options, restricted stock (“RS”), restricted stock units (“RSU”), performance shares (“PS”) and performance share units (“PSU”). We have not granted options under the Equity Incentive Plan. A RS award is an award of common stock that is subject to certain restrictions during a specified period. Restricted stock awards are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the shares before the restricted shares vest. Shares of unvested restricted stock have the same voting rights as common stock, are entitled to receive dividends and other distributions thereon (although payment may be deferred until the shares have vested) and are considered to be currently issued and outstanding. Restricted stock awards will have a minimum vesting period of one year. A RSU is a grant valued in terms of our common stock, but no stock is issued at the time of grant. Each restricted stock unit may be redeemed for one share of our common stock once vested. Restricted stock units are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the units except in very limited circumstances and with the consent of the compensation committee. Shares associated with unvested restricted stock units have no voting rights but are entitled to receive dividends and other distributions thereon (although payment may be deferred until the units have vested). Restricted stock units generally vest over a period of three years, but will have a minimum vesting period of one year. PS awards and PSU awards were granted to employees. Each PS and PSU may be redeemed for one share of our common stock once vested and are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the PS or PSU awards except in very limited circumstances and with the consent of the compensation committee. Shares of unvested PSU awards have no voting rights but are entitled to receive dividends and other distributions thereon (although payment may be deferred until the shares or units, as the case may be, have vested). The PS and PSU awards will only vest based upon the achievement of pre-established performance goals related to Adjusted EBITDA, segment revenue, new business, and/or total shareholder return performance achieved over a period of time. The PS and PSU awards will vest based on company performance and/or market conditions during the subsequent two year period with one additional year of time-based vesting. The number of PS and PSU awards that will vest range from 0%-150% of the target award based on actual performance. We recognize compensation expense for awards ratably over the requisite service period of the award, which is generally three years. We recognize compensation expense based on the number of awards expected to vest using an estimated average forfeiture rate. We calculate the fair value of stock-based awards based on the closing price on the date the award was granted. For those awards with market conditions, we have determined the grant date fair value using the Monte Carlo simulation model. Stock-Based Compensation Activity The following table presents a summary of awards activity related to our current Equity Incentive Plan:
(a) The PS and PSUs forfeitures reflect a cumulative adjustment to reflect changes to the expected level of achievement of the respective grants. Total fair value of vested share awards since the inception of the Equity Incentive Plan is $27,364. |
Income Taxes Income Taxes (Notes) |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Text Block] | Note 14. Income Taxes For Fiscal 2019, Fiscal 2018 and Fiscal 2017, we had no material revenue or expense in jurisdictions outside the United States. Impact of U.S. Tax Reform The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduces the U.S. federal corporate income tax rate from 35% to 21% and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, among other provisions. In accordance with SAB 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (SAB 118), we completed our accounting for the tax effects of the enactment of the Act within the provisional period as of April 27, 2019. We recorded measurement period adjustments during Fiscal 2019 to reduce our net deferred tax liability by $3,911, which primarily related to the acceleration of certain deductions as permitted by the U.S. tax code. The most significant impact of the legislation for the Company was a $20,425 reduction of the value of our net deferred (which represents future tax liabilities) and long-term tax liabilities as a result of lowering the U.S. corporate income tax rate from 35% to 21%, which was recorded in Fiscal 2018. We also recorded a liability associated with the one-time transition tax, however, such amount is not material. Income tax (benefits) provisions for Fiscal 2019, Fiscal 2018 and Fiscal 2017 are as follows:
Reconciliation between the effective income tax rate and the federal statutory income tax rate is as follows:
The effective tax rate for Fiscal 2019 is significantly higher as compared to the comparable prior year period due to the tax benefit of revaluing deferred tax liabilities recorded in the prior year period and permanent differences, partially offset by the reduced federal tax rate because of the Act. One percentage point on our Fiscal 2019 effective tax rate is approximately $374. The permanent book / tax differences are principally comprised of non-deductible compensation, non-deductible meals and entertainment costs, and federal income tax credits. We account for income taxes using the asset and liability method. Deferred taxes are recorded based on differences between the financial statement basis and tax basis of assets and liabilities and available tax loss and credit carryforwards. The significant components of our deferred taxes consisted of the following:
As of April 27, 2019, we had $91 of unrecognized tax benefits, all of which, if recognized, would affect our effective tax rate. We do not believe that it is reasonably possible that these unrecognized tax benefits will decrease in the next twelve months. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Our policy is to recognize interest and penalties related to income tax matters in income tax expense. As of April 27, 2019 and April 28, 2018, we had accrued $4 and $5, respectively, for net interest and penalties. The change in the amount accrued for net interest and penalties includes $1 in reductions for net interest and penalties recognized in income tax expense in our Fiscal 2019 consolidated statement of operations. In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized. In evaluating the our ability to utilize our deferred tax assets, we considered all available evidence, both positive and negative, in determining future taxable income on a jurisdiction by jurisdiction basis. We have recorded a valuation allowance of $1,194 and $932 for April 27, 2019 and April 28, 2018, respectively. As of April 27, 2019, and based on our tax year ended January 2019, we had state net operating loss carryforwards (“NOLs”) of approximately $81,786 that are available to offset taxable income in our respective taxing jurisdiction beginning in the current period and that expire beginning in 2030. We had net state tax credit carryforwards totaling $509, which expire beginning in 2021. As of April 27, 2019, we recorded $200 of foreign withholding tax related to repatriations of earnings from certain foreign subsidiaries. If additional earnings in these foreign subsidiaries were repatriated in the future, additional income and withholding tax expense would be incurred. Additional income and withholding tax expense on any future repatriated earnings is estimated to be less than $100. We are subject to U.S. federal income tax, as well as income tax in jurisdictions of each state having an income tax. The tax years that remain subject to examination are primarily Fiscal 2013 and forward. Some earlier years remain open for a small minority of states. We retain an income tax liability for periods prior to the Spin-Off from Barnes & Noble, Inc. only for returns filed on a stand-alone basis. |
Legal Proceedings (Notes) |
12 Months Ended |
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Apr. 27, 2019 | |
Legal Proceedings | Note 15. Legal Proceedings We are involved in a variety of claims, suits, investigations and proceedings that arise from time to time in the ordinary course of our business, including actions with respect to contracts, intellectual property, taxation, employment, benefits, personal injuries and other matters. The results of these proceedings in the ordinary course of business are not expected to have a material adverse effect on our consolidated financial position, results of operations, or cash flows. |
Commitments and Contingencies Commitments and Contingencies (Notes) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Text Block] | Note 16. Commitments and Contingencies We generally operate our physical bookstores pursuant to multi-year school management contracts under which a school designates us to operate the official school physical bookstore on campus and we provide the school with regular payments that represent a percentage of store sales and, in some cases, include a minimum fixed guaranteed payment. We account for these service agreements for our physical bookstores under lease accounting. We provide for minimum contract expense over the contract terms on a straight-line basis. The excess of such minimum contract expense over actual contract payments (net of school allowances) is reflected in other long-term liabilities and accrued liabilities in the consolidated balance sheets. The expense related to our college and university contracts for physical bookstores, including rent expense, and other facility costs in the consolidated statements of operations are as follows:
Our physical bookstore management contracts with colleges and universities are typically five years with renewal options and are typically cancelable by either party without penalty with 90 to120 days' notice. The annual projections below are based on current minimum guarantee amounts. In approximately 72% of our physical bookstore management contracts with colleges and universities that include minimum guarantees, the minimum guaranteed amounts adjust annually to equal less than the prior year's commission earned. As of April 27, 2019, future minimum annual obligations required under our physical bookstore management contracts with colleges and universities and other facility costs are as follows:
Purchase obligations, which includes information technology contracts and inventory purchase commitments, as of April 27, 2019 are as follows:
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Selected Quarterly Financial Information (Unaudited) Selected Quarterly Financial Information (Unaudited) (Notes) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information [Text Block] | Note 17. Selected Quarterly Financial Information (Unaudited) A summary of quarterly financial information for Fiscal 2019 and Fiscal 2018 is as follows:
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Schedule II Valuation and Qualifying Accounts Schedule II Valuation and Qualifying Accounts (Notes) |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEC Schedule, 12-09, Schedule of Valuation and Qualifying Accounts Disclosure [Text Block] | Schedule II—Valuation and Qualifying Accounts Barnes & Noble Education, Inc. Receivables Valuation and Qualifying Accounts (In thousands) For the 52 week periods ended April 27, 2019, April 28, 2018, and April 29, 2017:
All other schedules are omitted because the conditions requiring their filing do not exist, or because the required information is provided in the consolidated financial statements, including the notes thereto. |
Summary of Significant Accounting Policies (Policies) |
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Basis of Presentation | Basis of Presentation Our consolidated financial statements reflect our consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”). In the opinion of the Company’s management, the accompanying consolidated financial statements of the Company contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its consolidated financial position and the results of its operations and cash flows for the periods reported. Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April. The fiscal year periods for each of the last three fiscal years consisted of the 52 weeks ended April 27, 2019 (“Fiscal 2019”), 52 weeks ended April 28, 2018 (“Fiscal 2018”), and 52 weeks ended April 29, 2017 (“Fiscal 2017”). For certain of our retail operations, sales are generally highest in the second and third fiscal quarters, when students purchase and rent textbooks and other course materials for the typical academic year, and lowest in the first and fourth fiscal quarters. Sales attributable to our wholesale business are generally highest in our first and third quarter, as it sells textbooks and other course materials for retail distribution. Our DSS sales and operating profit are realized relatively consistently throughout the year. Our quarterly results also may fluctuate depending on the timing of the start of the various school’s semesters, as well as shifts in fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods. Consolidation The results of operations reflected in our consolidated financial statements are presented on a consolidated basis. All material intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements include acquisitions effective their respective acquisition date.
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Use of Estimates | Use of Estimates In preparing financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
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Reclassification, Policy [Policy Text Block] | Reclassifications Effective in the fourth quarter of Fiscal 2019, we have three reportable segments: Retail, Wholesale, and DSS, as described in Part II - Item 8. Financial Statements and Supplementary Data - Note 6. Segment Reporting. Prior to the fourth quarter of Fiscal 2019, BNC, MBS and DSS were previously our only reportable segments. Prior periods presented reflect the segment changes. |
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Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents We consider all short-term, highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. |
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Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | Restricted Cash Restricted cash of $755 and $742 is included in other noncurrent assets in the consolidated balance sheet as of April 27, 2019 and April 29, 2018, respectively. These funds are amounts held in trust for future distributions related to employee benefit plans. |
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Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block] | Accounts Receivable Receivables represent customer, private and public institutional and government billings (colleges, universities and other financial aid providers), credit/debit card receivables, advances for book buybacks, advertising and other receivables due within one year. Components of accounts receivables are as follows:
Accounts receivable are presented on our consolidated balance sheets net of allowances. An allowance for doubtful accounts is determined through an analysis of the aging of accounts receivable and assessments of collectability based on historical trends, the financial condition of our customers and an evaluation of economic conditions. We write-off uncollectible trade receivables once collection efforts have been exhausted and record bad debt expenses related to textbook rentals that are not returned and we are unable to successfully charge the customer. Allowance for doubtful accounts were $2,135, and $2,083 for Fiscal 2019 and Fiscal 2018, respectively. |
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Merchandise Inventories | Merchandise Inventories Merchandise inventories, which consist of finished goods, are stated at the lower of cost or market. Market value of our inventory, which is all purchased finished goods, is determined based on its estimated net realizable value, which is generally the selling price less normally predictable costs of disposal and transportation. Reserves for non-returnable inventory are based on our history of liquidating non-returnable inventory. Cost is determined primarily by the retail inventory method for our Retail segment and last-in first out, or “LIFO”, method for our Wholesale segment. Our textbook inventories, for Retail and Wholesale, and trade book inventories are valued using the LIFO method and the related reserve was not material to the recorded amount of our inventories. There were no LIFO adjustments in Fiscal 2019, Fiscal 2018 and Fiscal 2017. For our physical bookstores, we also estimate and accrue shortage for the period between the last physical count of inventory and the balance sheet date. Shortage rates are estimated and accrued based on historical rates and can be affected by changes in merchandise mix and changes in actual shortage trends. The Retail Segment fulfillment order is directed first to our wholesale business before other sources of inventory are utilized. The products that we sell originate from a wide variety of domestic and international vendors. After internal sourcing, the bookstore purchases textbooks from outside suppliers and publishers. The Retail Segments four largest suppliers, excluding the supply sourced from our Wholesale Segment, accounted for approximately 37.4% of our merchandise purchased during the 52 weeks ended April 27, 2019. For our Wholesale Segment, the four largest suppliers, excluding textbooks purchased from students at our Retail Segment's bookstores, accounted for approximately 34.0% of merchandise purchases during the 52 weeks ended April 27, 2019. |
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Textbook Rentals Inventories | Textbook Rental Inventories Physical textbooks out on rent are categorized as textbook rental inventories. At the time a rental transaction is consummated, the book is removed from merchandise inventories and moved to textbook rental inventories at cost. The cost of the book is amortized down to its estimated residual value over the rental period. The related amortization expense is included in cost of goods sold. At the end of the rental period, upon return, the book is removed from textbook rental inventories and recorded in merchandise inventories at its amortized cost. |
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Property, Plant and Equipment, Planned Major Maintenance Activities, Policy [Policy Text Block] | Property and Equipment Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over estimated useful lives. Maintenance and repairs are expensed as incurred, however major maintenance and remodeling costs are capitalized if they extend the useful life of the asset. We had $44,550, $46,531, and$41,224 of depreciation expense for Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Content development costs are primarily related to bartleby.com textbook solutions which was launched in Fiscal 2019. Content amortization is computed using the straight-line method over estimated useful lives. Amortization of content development costs is recorded to cost of goods sold. We had $1,096, $0 and $0 of content amortization expense for Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. Components of property and equipment are as follows:
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Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Other Long-Lived Assets Our other long-lived assets include property and equipment and amortizable intangibles. We had $194,978 and $219,129 of amortizable intangible assets, net of amortization, as of April 27, 2019 and April 28, 2018, respectively. These amortizable intangible assets relate primarily to our customer and bookstore relationships with our colleges and university clients, and technology acquired. For additional information related to amortizable intangibles, see Part II - Item 8. Financial Statements and Supplementary Data - Note 10. Supplementary Information - Intangible Assets. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and consider market participants in accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. During the fourth quarter of Fiscal 2019, in conjunction with the change to reporting segments and the interim goodwill impairment test noted below, as well as operational changes in certain long-lived asset groups, we evaluated certain of our long-lived assets for impairment and recognized an impairment loss of $8,466, comprised of $8,138 of intangible assets, primarily acquired technology, and $328 of property and equipment related to our LoudCloud and Promoversity operations. These long-lived assets were not recoverable and had a de minimis fair value, as determined using the relief-from-royalty and income approaches (Level 3 input), resulting in a non-cash impairment charge for the full carrying value of those long-lived assets. See Part II - Item 8. Financial Statements and Supplementary Data - Note 10. Supplementary Information - Intangible Assets. In addition, in conjunction with the fourth quarter goodwill impairment test noted below, we evaluated certain of our other long-lived assets associated with our Retail and Wholesale segments for impairment. We evaluated the long-lived assets of these reporting units for impairment at the lowest asset group level for which individual cash flows can be identified. When evaluating long-lived assets for potential impairment, we first compared the carrying amount of the asset group to the estimated future undiscounted cash flows. The impairment loss calculation compares the carrying amount of the assets to the fair value based on estimated discounted future cash flows. If required, an impairment loss is recorded for that portion of the asset’s carrying value in excess of fair value. Based on the results of the tests, an impairment loss calculation was not required as the estimated future undiscounted cash flows of the identified asset groups exceeded the carrying amount of the respective asset group. Impairment losses related to school contracts included in selling and administrative expenses totaled $0, $0, and $23 during Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. |
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Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] | Goodwill The costs in excess of net assets of businesses acquired are carried as goodwill in the accompanying consolidated balance sheets. We completed our annual goodwill impairment test with the assistance of a third-party valuation firm, as of the first day of the third quarter of Fiscal 2019 for our reporting units as they existed at that date. Based on the quantitative test performed, the fair value of the MBS and DSS reporting units (as they existed at that date) exceeded their carrying values; therefore, no goodwill impairment was recognized for these reporting units. While the carrying value of the BNC reporting unit (as it existed at that date) exceeded its fair value, there was no goodwill allocated to the reporting unit as of the Fiscal 2019 annual goodwill impairment test date. During the fourth quarter of Fiscal 2019, due to the change in our reporting segments, we determined that there had been a change to our previous MBS and BNC reporting units. See Part II - Item 8. Financial Statements and Supplementary Data - Note 6. Segment Reporting. We performed an interim qualitative assessment related to the MBS reporting unit prior to the change in reporting segments. Qualitative factors that we consider as part of our assessment include a change in our weighted cost of capital, industry and market conditions, macroeconomic conditions and financial performance of our businesses. After assessing these events and circumstances, we determined that it was not more likely than not that the fair value of the MBS reporting unit was less than its carrying value. We then reassigned the assets and liabilities, including goodwill, from the former MBS reporting unit to the new Retail and Wholesale reporting units. Using the assistance of a third-party valuation firm, we assessed the relative fair value of the $49,282 total goodwill associated with the MBS reporting unit (as it existed at that date) and allocated $20,538 of goodwill to the Retail Segment and $28,744 of goodwill to the Wholesale Segment. Upon reallocating the goodwill, we performed an interim quantitative assessment using the income approach (Level 3 inputs) and determined that the revised carrying values of the Retail and Wholesale reporting units exceeded their respective fair values. After confirming that the long-lived assets of the respective reporting units were recoverable, we recognized a total goodwill impairment (non-cash impairment loss) of $49,282 in Fiscal 2019, consisting of the full carrying value of the goodwill allocated to Retail and Wholesale reporting units. In Fiscal 2018, the carrying value of the BNC reporting unit (as it existed at that date) exceeded its fair value and we recognized a goodwill impairment (non-cash impairment loss) of $313,130. As of April 27, 2019, we had $0, $0 and $4,700 of goodwill on our consolidated balance sheets related to our Retail, Wholesale, and DSS reporting units, respectively. As of April 28, 2018, we had $49,282, $0 and $0 of goodwill on our consolidated balance sheets remaining related to our MBS, BNC and DSS reporting units (as they existed at that date), respectively. Application of the goodwill impairment test requires judgment, including: the identification of reporting units; assignment of assets and liabilities to reporting units; assignment of goodwill to reporting units; and the determination of the fair value of each reporting unit. In performing the valuation, we used cash flows that reflected management’s forecasts and discount rates that included risk adjustments consistent with the current market conditions. We estimated the fair value of our reporting units using a weighting of fair values derived from the income approach and the market approach. Under the income approach, we calculate the fair value of the reporting unit based on the present value of estimated future cash flows. Inherent in our preparation of cash flow projections are assumptions and estimates derived from a review of our operating results, business plans, expected growth rates, cost of capital and tax rates. We also make certain forecasts about future economic conditions, interest rates, market data, and other observable trends, such as comparable store sales trends, recent changes in publisher relationships, and development of innovative digital products and services in the rapidly changing education landscape. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows. Under the market approach, we estimate the fair value based on market multiples of cash flows and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit and considering a reasonable control premium. Refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates for a discussion of key assumptions used in our testing. |
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Revenue Recognition | Revenue Recognition and Deferred Revenue Product sales and rentals The majority of our revenue relates to the sales of products through our bookstore locations, including virtual bookstores, and our bookstore affiliated ecommerce websites, and contains a single performance obligation. Revenue from sales of our products is recognized at the point in time when control of the products is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for the products. For additional information, see Part II - Item 8. Financial Statements and Supplementary Data - Note 5. Revenue. Retail product revenue is recognized when the customer takes physical possession of our products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of our products by our customers for products ordered through our websites and virtual bookstores. Wholesale product revenue is recognized upon shipment of physical textbooks at which point title passes and risk of loss is transferred to the customer. Additional revenue is recognized for shipping charges billed to customers and shipping costs are accounted for as fulfillment costs within cost of goods sold. Revenue from the rental of physical textbooks, which contains a single performance obligation, is deferred and recognized over the rental period based on the passage of time commencing at the point of sale, when control of the product transfers to the customer. Rental periods are typically for a single semester and are always less than one year in duration. We offer a buyout option to allow the purchase of a rented physical textbook at the end of the rental period if the customer desires to do so. We record the buyout purchase when the customer exercises and pays the buyout option price which is determined at the time of the buyout. In these instances, we accelerate any remaining deferred rental revenue at the point of sale. Revenue from the rental of digital textbooks, which contains a single performance obligation, is recognized at the point of sale. A software feature is embedded within the content of our digital textbooks, such that upon expiration of the rental term the customer is no longer able to access the content. While the digital rental allows the customer to access digital content for a fixed period of time, once the digital content is delivered to the customer, our performance obligation is complete. We estimate returns based on an analysis of historical experience. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded. For sales and rentals involving third-party products, we evaluate whether we are acting as a principal or an agent. Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring them to the customer. There are significant judgments involved in determining whether we control the specified goods or services prior to transferring them to the customer including whether we have the ability to direct the use of the good or service and obtain substantially all of the remaining benefits from the good or service. For those transactions where we are the principal, we record revenue on a gross basis, and for those transactions where we are an agent to a third-party, we record revenue on a net basis. We do not have gift card or customer loyalty programs. We do not treat any promotional offers as expenses. Sales tax collected from our customers is excluded from reported revenues. Our payment terms are generally 30 days and do not extend beyond one year. Service and other revenue Service and other revenue primarily relates to direct-to-student subscription-based writing service revenues and partnership marketing services which includes promotional activities and advertisements within our physical bookstores and web properties performed on behalf of third-party customers. Subscription-based revenue, which contains a single performance obligation, is deferred and recognized based on the passage of time over the subscription period commencing at the point of sale, when control of the service transfers to the customer. The majority of subscriptions sold are one month in duration. Partnership marketing agreements often include multiple performance obligations which are individually negotiated with our customers. For these arrangements that contain distinct performance obligations, we allocate the transaction price based on the relative standalone selling price method by comparing the standalone selling price (“SSP”) of each distinct performance obligation to the total value of the contract. The revenue is recognized as each performance obligation is satisfied, typically at a point in time for partnership marketing service and overtime for advertising efforts as measured based upon the passage of time for contracts that are based on a stated period of time or the number of impressions delivered for contracts with a fixed number of impressions. |
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Cost of Sales, Policy [Policy Text Block] | Cost of Sales Our cost of sales primarily include costs such as merchandise costs, textbook rental amortization, content development cost amortization, warehouse costs related to inventory management and order fulfillment, insurance, certain payroll costs, and management service agreement costs, including rent expense, related to our college and university contracts and other facility related expenses. |
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Selling, General and Administrative Expenses, Policy [Policy Text Block] | Selling and Administrative Expenses Our selling and administrative expenses consist primarily of store payroll and store operating expenses. Selling and administrative expenses also include stock-based compensation and general office expenses, such as merchandising, procurement, field support, finance and accounting, and operating costs related to our direct-to-student subscription-based writing services business. Shared-service costs such as human resources, legal, treasury, information technology, and various other corporate level expenses and other governance functions, are not allocated to any specific reporting segment and are recorded in Corporate Services. |
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Advertising Costs, Policy [Policy Text Block] | Advertising Costs The costs of advertising are expensed as incurred during the year pursuant to ASC No. 720-35, Advertising Costs. Advertising costs charged to selling and administrative expenses were $10,636, $10,691, and $7,437 during Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively. |
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Income Tax, Policy [Policy Text Block] | Income Taxes The provision for income taxes includes federal, state and local income taxes currently payable and those deferred because of temporary differences between the financial statement and tax basis of assets and liabilities. The deferred tax assets and liabilities are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse. We regularly review deferred tax assets for recoverability and establish a valuation allowance, if determined to be necessary. For additional information, see Part II - Item 8. Financial Statements and Supplementary Data - Note 14. Income Taxes. As of April 27, 2019, other long-term liabilities includes $32,847 related to the long-term tax payable associated with the LIFO reserve. The LIFO reserve is impacted by changes in the consumer price index (“CPI”) and is dependent on the inventory levels at the end of our tax year (on or about January 31st) which is in the middle of our second largest selling cycle. At the end of the most recent tax year, inventory levels declined as compared to the prior year resulting in approximately $7,260 of the LIFO reserve becoming currently payable. Given recent trends relating to the pricing and rental of textbooks, management believes that an additional portion of the remaining long-term tax payable associated with the LIFO reserve could be payable within the next twelve months. We are unable to predict future trends for CPI and inventory levels, therefore it is difficult to project with reasonable certainty how much of this liability will become payable within the next twelve months. For Fiscal 2019, Fiscal 2018 and Fiscal 2017, we had no material revenue or expense in jurisdictions outside the United States. Impact of U.S. Tax Reform The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduces the U.S. federal corporate income tax rate from 35% to 21% and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, among other provisions. In accordance with SAB 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (SAB 118), we completed our accounting for the tax effects of the enactment of the Act within the provisional period as of April 27, 2019. We recorded measurement period adjustments during Fiscal 2019 to reduce our net deferred tax liability by $3,911, which primarily related to the acceleration of certain deductions as permitted by the U.S. tax code. The most significant impact of the legislation for the Company was a $20,425 reduction of the value of our net deferred (which represents future tax liabilities) and long-term tax liabilities as a result of lowering the U.S. corporate income tax rate from 35% to 21%, which was recorded in Fiscal 2018. We also recorded a liability associated with the one-time transition tax, however, such amount is not material. |
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Segment Reporting, Policy [Policy Text Block] | Prior to the fourth quarter of Fiscal 2019, we had three reportable segments: BNC, MBS, and DSS. During the fourth quarter of Fiscal 2019, in an effort to streamline our retail go-to-market strategy, reinforce our company branding, and more efficiently focus our product development efforts, we realigned our business and sales organization into the following three reportable segments: Retail, Wholesale and DSS. The Retail Segment combines the operations of the former BNC segment with MBS Direct (from the former MBS segment), the Wholesale Segment is comprised of the MBS wholesale business (from the former MBS segment), and the DSS Segment remains unchanged. Additionally, unallocated shared-service costs, which include various corporate level expenses and other governance functions, continue to be presented as “Corporate Services”. We identify our segments in accordance with the way our business is managed (focusing on the financial information distributed) and the manner in which our chief operating decision maker allocates resources and assesses financial performance. The following summarizes the three segments. For additional information about this segments operations, see Part I - Item 1. Business. Retail Segment The Retail Segment operates 1,448 college, university, and K-12 school bookstores, comprised of 772 physical bookstores and 676 virtual bookstores. Our bookstores typically operate under agreements with the college, university, or K-12 schools to be the official bookstore and the exclusive seller of course materials and supplies, including physical and digital products. The majority of the physical campus bookstores have school-branded e-commerce sites which we operate and which offer students access to affordable course materials and affinity products, including emblematic apparel and gifts. The Retail Segment also offers inclusive access programs, in which course materials, including e-content, are offered at a reduced price through a course materials fee, and delivered to students on or before the first day of class. Additionally, the Retail Segment offers a suite of digital content and services to colleges and universities, including a variety of open educational resource-based courseware. Wholesale Segment The Wholesale Segment is comprised of our wholesale textbook business and is one of the largest textbook wholesalers in the country. The Wholesale Segment centrally sources, sells, and distributes new and used textbooks to approximately 3,500 physical bookstores, including our Retail Segment's 772 physical bookstores. Our Wholesale business also sources and distributes new and used textbooks to our 676 virtual bookstores. Additionally, the Wholesale Segment sells hardware and a software suite of applications that provides inventory management and point-of-sale solutions to approximately 400 college bookstores. DSS Segment The Digital Student Solutions (“DSS”) Segment includes direct-to-student products and services to assist students to study more effectively and improve academic performance. The DSS Segment is comprised of the operations of Student Brands, LLC, a leading direct-to-student subscription-based writing services business, and bartleby, a direct-to-student subscription-based offering providing textbook solutions, expert questions and answers, tutoring and test prep services. Corporate Services Corporate Services represents unallocated shared-service costs which include corporate level expenses and other governance functions, including executive functions, such as accounting, legal, treasury, information technology, and human resources. Eliminations The eliminations are primarily related to the following intercompany activities:
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Share Repurchase [Policy Text Block] | Share Repurchases On December 14, 2015, our Board of Directors authorized a stock repurchase program of up to $50,000, in the aggregate, of our outstanding common stock. The stock repurchase program is carried out at the direction of management (which includes a plan under Rule 10b5-1 of the Securities Exchange Act of 1934). The stock repurchase program may be suspended, terminated, or modified at any time. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes. |
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Dividend [Policy Text Block] | Dividends We paid no dividends to common stockholders during Fiscal 2019, Fiscal 2018 and Fiscal 2017. We do not intend to pay dividends on our common stock in the foreseeable future. |
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Net Earnings (Loss) Per Share | Earnings Per Common Share Basic earnings per share represent net earnings to common stockholders divided by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of our stock based compensation. See Part II - Item 8. Financial Statements and Supplementary Data - Note 7. Equity and Earnings Per Share for further information regarding the calculation of basic and diluted earnings per common share. Earnings Per Share Basic EPS is computed based upon the weighted average number of common shares outstanding for the year. Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year. We include participating securities (unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents) in the computation of EPS pursuant to the two-class method. Our participating securities consist solely of unvested restricted stock awards, which have contractual participation rights equivalent to those of stockholders of unrestricted common stock. The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. During the Fiscal 2019, Fiscal 2018 and Fiscal 2017, average shares of 2,939,089, 2,494,799 and 375,457 were excluded from the diluted earnings per share calculation using the two-class method as their inclusion would have been antidilutive, respectively. |
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Fair Values of Financial Instruments | In accordance with ASC No. 820, Fair Value Measurements and Disclosures, the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1—Observable inputs that reflect quoted prices in active markets Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable Level 3—Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions Our financial instruments include cash and cash equivalents, receivables, accrued liabilities and accounts payable. The fair values of cash and cash equivalents, receivables, accrued liabilities and accounts payable approximates their carrying values because of the short-term nature of these instruments, which are all considered Level 1. The fair value of short-term and long-term debt approximates its carrying value. For nonrecurring fair value measurements associated with impairment testing performed during Fiscal 2019, refer to Part II - Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Policies - Other Long-lived Assets and Note 2. Summary of Significant Accounting Policies - Goodwill where we determined the fair value of impaired assets using Level 3 inputs. |
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Debt, Policy [Policy Text Block] | The debt issuance costs have been deferred and are presented as an asset which is subsequently amortized ratably over the term of the Credit Agreement. |
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Intangible Assets, Finite-Lived, Policy [Policy Text Block] | All amortizable intangible assets are being amortized over their useful life on a straight-line basis. |
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Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | We have reserved 10,409,345 shares of our common stock for future grants in accordance with the Barnes & Noble Education Inc. Equity Incentive Plan. Types of equity awards that can be granted under the Equity Incentive Plan include options, restricted stock (“RS”), restricted stock units (“RSU”), performance shares (“PS”) and performance share units (“PSU”). We have not granted options under the Equity Incentive Plan. A RS award is an award of common stock that is subject to certain restrictions during a specified period. Restricted stock awards are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the shares before the restricted shares vest. Shares of unvested restricted stock have the same voting rights as common stock, are entitled to receive dividends and other distributions thereon (although payment may be deferred until the shares have vested) and are considered to be currently issued and outstanding. Restricted stock awards will have a minimum vesting period of one year. A RSU is a grant valued in terms of our common stock, but no stock is issued at the time of grant. Each restricted stock unit may be redeemed for one share of our common stock once vested. Restricted stock units are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the units except in very limited circumstances and with the consent of the compensation committee. Shares associated with unvested restricted stock units have no voting rights but are entitled to receive dividends and other distributions thereon (although payment may be deferred until the units have vested). Restricted stock units generally vest over a period of three years, but will have a minimum vesting period of one year. PS awards and PSU awards were granted to employees. Each PS and PSU may be redeemed for one share of our common stock once vested and are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the PS or PSU awards except in very limited circumstances and with the consent of the compensation committee. Shares of unvested PSU awards have no voting rights but are entitled to receive dividends and other distributions thereon (although payment may be deferred until the shares or units, as the case may be, have vested). The PS and PSU awards will only vest based upon the achievement of pre-established performance goals related to Adjusted EBITDA, segment revenue, new business, and/or total shareholder return performance achieved over a period of time. The PS and PSU awards will vest based on company performance and/or market conditions during the subsequent two year period with one additional year of time-based vesting. The number of PS and PSU awards that will vest range from 0%-150% of the target award based on actual performance. We recognize compensation expense for awards ratably over the requisite service period of the award, which is generally three years. We recognize compensation expense based on the number of awards expected to vest using an estimated average forfeiture rate. We calculate the fair value of stock-based awards based on the closing price on the date the award was granted. For those awards with market conditions, we have determined the grant date fair value using the Monte Carlo simulation model. |
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Commitments and Contingencies, Policy [Policy Text Block] | We generally operate our physical bookstores pursuant to multi-year school management contracts under which a school designates us to operate the official school physical bookstore on campus and we provide the school with regular payments that represent a percentage of store sales and, in some cases, include a minimum fixed guaranteed payment. We account for these service agreements for our physical bookstores under lease accounting. We provide for minimum contract expense over the contract terms on a straight-line basis. The excess of such minimum contract expense over actual contract payments (net of school allowances) is reflected in other long-term liabilities and accrued liabilities in the consolidated balance sheets. |
Segment Reporting Segment Reporting (Policies) |
12 Months Ended | ||||||||
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Apr. 27, 2019 | |||||||||
Segment Reporting [Abstract] | |||||||||
Segment Reporting, Policy [Policy Text Block] | Prior to the fourth quarter of Fiscal 2019, we had three reportable segments: BNC, MBS, and DSS. During the fourth quarter of Fiscal 2019, in an effort to streamline our retail go-to-market strategy, reinforce our company branding, and more efficiently focus our product development efforts, we realigned our business and sales organization into the following three reportable segments: Retail, Wholesale and DSS. The Retail Segment combines the operations of the former BNC segment with MBS Direct (from the former MBS segment), the Wholesale Segment is comprised of the MBS wholesale business (from the former MBS segment), and the DSS Segment remains unchanged. Additionally, unallocated shared-service costs, which include various corporate level expenses and other governance functions, continue to be presented as “Corporate Services”. We identify our segments in accordance with the way our business is managed (focusing on the financial information distributed) and the manner in which our chief operating decision maker allocates resources and assesses financial performance. The following summarizes the three segments. For additional information about this segments operations, see Part I - Item 1. Business. Retail Segment The Retail Segment operates 1,448 college, university, and K-12 school bookstores, comprised of 772 physical bookstores and 676 virtual bookstores. Our bookstores typically operate under agreements with the college, university, or K-12 schools to be the official bookstore and the exclusive seller of course materials and supplies, including physical and digital products. The majority of the physical campus bookstores have school-branded e-commerce sites which we operate and which offer students access to affordable course materials and affinity products, including emblematic apparel and gifts. The Retail Segment also offers inclusive access programs, in which course materials, including e-content, are offered at a reduced price through a course materials fee, and delivered to students on or before the first day of class. Additionally, the Retail Segment offers a suite of digital content and services to colleges and universities, including a variety of open educational resource-based courseware. Wholesale Segment The Wholesale Segment is comprised of our wholesale textbook business and is one of the largest textbook wholesalers in the country. The Wholesale Segment centrally sources, sells, and distributes new and used textbooks to approximately 3,500 physical bookstores, including our Retail Segment's 772 physical bookstores. Our Wholesale business also sources and distributes new and used textbooks to our 676 virtual bookstores. Additionally, the Wholesale Segment sells hardware and a software suite of applications that provides inventory management and point-of-sale solutions to approximately 400 college bookstores. DSS Segment The Digital Student Solutions (“DSS”) Segment includes direct-to-student products and services to assist students to study more effectively and improve academic performance. The DSS Segment is comprised of the operations of Student Brands, LLC, a leading direct-to-student subscription-based writing services business, and bartleby, a direct-to-student subscription-based offering providing textbook solutions, expert questions and answers, tutoring and test prep services. Corporate Services Corporate Services represents unallocated shared-service costs which include corporate level expenses and other governance functions, including executive functions, such as accounting, legal, treasury, information technology, and human resources. Eliminations The eliminations are primarily related to the following intercompany activities:
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Equity and Earnings Per Share Equity and Earnings Per Share (Policies) |
12 Months Ended |
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Apr. 27, 2019 | |
Earnings Per Share [Abstract] | |
Share Repurchase [Policy Text Block] | Share Repurchases On December 14, 2015, our Board of Directors authorized a stock repurchase program of up to $50,000, in the aggregate, of our outstanding common stock. The stock repurchase program is carried out at the direction of management (which includes a plan under Rule 10b5-1 of the Securities Exchange Act of 1934). The stock repurchase program may be suspended, terminated, or modified at any time. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes. |
Dividend [Policy Text Block] | Dividends We paid no dividends to common stockholders during Fiscal 2019, Fiscal 2018 and Fiscal 2017. We do not intend to pay dividends on our common stock in the foreseeable future. |
Earnings Per Share, Policy [Policy Text Block] | Earnings Per Common Share Basic earnings per share represent net earnings to common stockholders divided by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of our stock based compensation. See Part II - Item 8. Financial Statements and Supplementary Data - Note 7. Equity and Earnings Per Share for further information regarding the calculation of basic and diluted earnings per common share. Earnings Per Share Basic EPS is computed based upon the weighted average number of common shares outstanding for the year. Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year. We include participating securities (unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents) in the computation of EPS pursuant to the two-class method. Our participating securities consist solely of unvested restricted stock awards, which have contractual participation rights equivalent to those of stockholders of unrestricted common stock. The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. During the Fiscal 2019, Fiscal 2018 and Fiscal 2017, average shares of 2,939,089, 2,494,799 and 375,457 were excluded from the diluted earnings per share calculation using the two-class method as their inclusion would have been antidilutive, respectively. |
Fair Values of Financial Instruments Fair Value of Financial Instruments (Policies) |
12 Months Ended |
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Apr. 27, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement, Policy [Policy Text Block] | In accordance with ASC No. 820, Fair Value Measurements and Disclosures, the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1—Observable inputs that reflect quoted prices in active markets Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable Level 3—Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions Our financial instruments include cash and cash equivalents, receivables, accrued liabilities and accounts payable. The fair values of cash and cash equivalents, receivables, accrued liabilities and accounts payable approximates their carrying values because of the short-term nature of these instruments, which are all considered Level 1. The fair value of short-term and long-term debt approximates its carrying value. For nonrecurring fair value measurements associated with impairment testing performed during Fiscal 2019, refer to Part II - Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Policies - Other Long-lived Assets and Note 2. Summary of Significant Accounting Policies - Goodwill where we determined the fair value of impaired assets using Level 3 inputs. |
Credit Facility Credit Facility (Policies) |
12 Months Ended |
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Apr. 27, 2019 | |
Debt Disclosure [Abstract] | |
Debt, Policy [Policy Text Block] | The debt issuance costs have been deferred and are presented as an asset which is subsequently amortized ratably over the term of the Credit Agreement. |
Stock-Based Compensation Stock-Based Compensation (Policies) |
12 Months Ended |
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Apr. 27, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | We have reserved 10,409,345 shares of our common stock for future grants in accordance with the Barnes & Noble Education Inc. Equity Incentive Plan. Types of equity awards that can be granted under the Equity Incentive Plan include options, restricted stock (“RS”), restricted stock units (“RSU”), performance shares (“PS”) and performance share units (“PSU”). We have not granted options under the Equity Incentive Plan. A RS award is an award of common stock that is subject to certain restrictions during a specified period. Restricted stock awards are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the shares before the restricted shares vest. Shares of unvested restricted stock have the same voting rights as common stock, are entitled to receive dividends and other distributions thereon (although payment may be deferred until the shares have vested) and are considered to be currently issued and outstanding. Restricted stock awards will have a minimum vesting period of one year. A RSU is a grant valued in terms of our common stock, but no stock is issued at the time of grant. Each restricted stock unit may be redeemed for one share of our common stock once vested. Restricted stock units are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the units except in very limited circumstances and with the consent of the compensation committee. Shares associated with unvested restricted stock units have no voting rights but are entitled to receive dividends and other distributions thereon (although payment may be deferred until the units have vested). Restricted stock units generally vest over a period of three years, but will have a minimum vesting period of one year. PS awards and PSU awards were granted to employees. Each PS and PSU may be redeemed for one share of our common stock once vested and are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the PS or PSU awards except in very limited circumstances and with the consent of the compensation committee. Shares of unvested PSU awards have no voting rights but are entitled to receive dividends and other distributions thereon (although payment may be deferred until the shares or units, as the case may be, have vested). The PS and PSU awards will only vest based upon the achievement of pre-established performance goals related to Adjusted EBITDA, segment revenue, new business, and/or total shareholder return performance achieved over a period of time. The PS and PSU awards will vest based on company performance and/or market conditions during the subsequent two year period with one additional year of time-based vesting. The number of PS and PSU awards that will vest range from 0%-150% of the target award based on actual performance. We recognize compensation expense for awards ratably over the requisite service period of the award, which is generally three years. We recognize compensation expense based on the number of awards expected to vest using an estimated average forfeiture rate. We calculate the fair value of stock-based awards based on the closing price on the date the award was granted. For those awards with market conditions, we have determined the grant date fair value using the Monte Carlo simulation model. |
Income Taxes Income Taxes (Policies) |
12 Months Ended |
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Apr. 27, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax, Policy [Policy Text Block] | Income Taxes The provision for income taxes includes federal, state and local income taxes currently payable and those deferred because of temporary differences between the financial statement and tax basis of assets and liabilities. The deferred tax assets and liabilities are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse. We regularly review deferred tax assets for recoverability and establish a valuation allowance, if determined to be necessary. For additional information, see Part II - Item 8. Financial Statements and Supplementary Data - Note 14. Income Taxes. As of April 27, 2019, other long-term liabilities includes $32,847 related to the long-term tax payable associated with the LIFO reserve. The LIFO reserve is impacted by changes in the consumer price index (“CPI”) and is dependent on the inventory levels at the end of our tax year (on or about January 31st) which is in the middle of our second largest selling cycle. At the end of the most recent tax year, inventory levels declined as compared to the prior year resulting in approximately $7,260 of the LIFO reserve becoming currently payable. Given recent trends relating to the pricing and rental of textbooks, management believes that an additional portion of the remaining long-term tax payable associated with the LIFO reserve could be payable within the next twelve months. We are unable to predict future trends for CPI and inventory levels, therefore it is difficult to project with reasonable certainty how much of this liability will become payable within the next twelve months. For Fiscal 2019, Fiscal 2018 and Fiscal 2017, we had no material revenue or expense in jurisdictions outside the United States. Impact of U.S. Tax Reform The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduces the U.S. federal corporate income tax rate from 35% to 21% and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, among other provisions. In accordance with SAB 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (SAB 118), we completed our accounting for the tax effects of the enactment of the Act within the provisional period as of April 27, 2019. We recorded measurement period adjustments during Fiscal 2019 to reduce our net deferred tax liability by $3,911, which primarily related to the acceleration of certain deductions as permitted by the U.S. tax code. The most significant impact of the legislation for the Company was a $20,425 reduction of the value of our net deferred (which represents future tax liabilities) and long-term tax liabilities as a result of lowering the U.S. corporate income tax rate from 35% to 21%, which was recorded in Fiscal 2018. We also recorded a liability associated with the one-time transition tax, however, such amount is not material. |
Commitments and Contingencies Commitments and Contingencies (Policies) |
12 Months Ended |
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Apr. 27, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies, Policy [Policy Text Block] | We generally operate our physical bookstores pursuant to multi-year school management contracts under which a school designates us to operate the official school physical bookstore on campus and we provide the school with regular payments that represent a percentage of store sales and, in some cases, include a minimum fixed guaranteed payment. We account for these service agreements for our physical bookstores under lease accounting. We provide for minimum contract expense over the contract terms on a straight-line basis. The excess of such minimum contract expense over actual contract payments (net of school allowances) is reflected in other long-term liabilities and accrued liabilities in the consolidated balance sheets. |
Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Tables) |
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Apr. 27, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable [Table Text Block] | Receivables represent customer, private and public institutional and government billings (colleges, universities and other financial aid providers), credit/debit card receivables, advances for book buybacks, advertising and other receivables due within one year. Components of accounts receivables are as follows:
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Property and Equipment [Table Text Block] | Components of property and equipment are as follows:
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Acquisitions Acquisitions and Strategic Agreements (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 28, 2018 |
Apr. 29, 2017 |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The following is a summary of consideration paid for the acquisition:
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The following is a summary of the fair values of the net assets acquired:
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Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | Identified intangible assets include the following:
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Identified intangible assets include the following:
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Business Acquisition, Pro Forma Information [Table Text Block] | As the acquisition was material to our consolidated financial statements, the following represents the pro forma consolidated income statement as if MBS had been included in the consolidated results for the entire fiscal year for Fiscal 2017:
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Revenue Revenue (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 27, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Table Text Block] | Disaggregation of Revenue The following table disaggregates the revenue associated with our major product and service offerings.
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Contract with Customer, Asset and Liability [Table Text Block] | The following table presents changes in contract liabilities during the fiscal year ended April 27, 2019:
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Segment Reporting Segment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] |
In Fiscal 2018, we recorded a goodwill impairment (non-cash impairment loss) of $313,130 in our Retail Segment (prior BNC segment) based on the results of our annual goodwill impairment test. |
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Reconciliation of Assets from Segment to Consolidated [Table Text Block] |
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Reconciliation of Other Significant Reconciling Items from Segments to Consolidated [Table Text Block] |
(a) Primarily comprised of content development costs for bartleby.com textbook solutions which was launched in Fiscal 2019. |
Equity and Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Reconciliation of Basic and Diluted Loss Per Share | The following is a reconciliation of the basic and diluted earnings per share calculation:
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Supplementary Information Supplementary Information (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 27, 2019 |
Apr. 28, 2018 |
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Other Income and Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets [Table Text Block] | Amortizable intangible assets as of April 27, 2019 and April 28, 2018 are as follows:
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Finite-lived Intangible Assets Amortization Expense [Table Text Block] |
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] |
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Schedule of Goodwill [Table Text Block] | The following table details the changes in carrying value of goodwill (including foreign currency translation):
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Stock-Based Compensation Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation, Activity [Table Text Block] | The following table presents a summary of awards activity related to our current Equity Incentive Plan:
(a) The PS and PSUs forfeitures reflect a cumulative adjustment to reflect changes to the expected level of achievement of the respective grants. |
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Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block] | We recognized stock-based compensation expense for equity-based awards in selling and administrative expenses as follows:
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Income Taxes Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | Income tax (benefits) provisions for Fiscal 2019, Fiscal 2018 and Fiscal 2017 are as follows:
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Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | Reconciliation between the effective income tax rate and the federal statutory income tax rate is as follows:
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Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | The significant components of our deferred taxes consisted of the following:
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Summary of Income Tax Contingencies [Table Text Block] | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
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Commitments and Contingencies Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Rent Expense [Table Text Block] | The expense related to our college and university contracts for physical bookstores, including rent expense, and other facility costs in the consolidated statements of operations are as follows:
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Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | As of April 27, 2019, future minimum annual obligations required under our physical bookstore management contracts with colleges and universities and other facility costs are as follows:
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Unrecorded Unconditional Purchase Obligations Disclosure [Table Text Block] | Purchase obligations, which includes information technology contracts and inventory purchase commitments, as of April 27, 2019 are as follows:
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Selected Quarterly Financial Information (Unaudited) Selected Quarterly Financial Information (Unaudited) (Tables) |
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Apr. 28, 2018 |
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Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information [Table Text Block] |
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Organization Organization (Details) Person in Millions |
12 Months Ended | |
---|---|---|
Apr. 27, 2019
Person
Store
segment
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Apr. 28, 2018
segment
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|
Number Of Students | Person | 6 | |
Number of Stores | Store | 1,448 | |
Number of Reportable Segments | segment | 3 | 3 |
Recent Accounting Pronouncements Accounting Pronouncements (Details) - Lease Agreements [Member] $ in Thousands |
12 Months Ended |
---|---|
Apr. 27, 2019
USD ($)
| |
Minimum [Member] | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 255,000 |
Maximum [Member] | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 315,000 |
Acquisitions Acquisitions and Strategic Agreements (LoudCloud) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Apr. 27, 2019 |
Apr. 28, 2018 |
Apr. 29, 2017 |
|
Payments to Acquire Businesses, Net of Cash Acquired | $ 10,000 | $ 58,259 | $ 186,720 |
Acquisitions Acquisitions and Strategic Agreements (Promoversity Details) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Apr. 27, 2019 |
Apr. 28, 2018 |
Apr. 29, 2017 |
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Payments to Acquire Businesses, Net of Cash Acquired | $ 10,000 | $ 58,259 | $ 186,720 |
Promoversity [Member] | |||
Payments to Acquire Businesses, Net of Cash Acquired | 1,417 | ||
Finite-lived Intangible Assets Acquired | $ 741 | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years | ||
Goodwill, Acquired During Period | $ 441 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets | 221 | ||
Business Combination, Contingent Consideration, Liability | $ 500 |
Acquisitions Acquisitions and Strategic Agreements (PaperRater) (Details) - PaperRater [Member] $ in Thousands |
12 Months Ended |
---|---|
Apr. 27, 2019
USD ($)
| |
Goodwill, Acquired During Period | $ 5 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years |
Business Combination, Consideration Transferred | $ 10 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | $ 5 |
Revenue Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 27, 2019 |
Jan. 26, 2019 |
Oct. 27, 2018 |
Jul. 28, 2018 |
Apr. 28, 2018 |
Jan. 27, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 27, 2019 |
Apr. 28, 2018 |
Apr. 29, 2017 |
|
Contract with Customer, Liability, Revenue Recognized | $ (212,150) | ||||||||||
Contract with Customer, Liability, Current | $ 20,418 | 20,418 | |||||||||
Contract with Customer, Asset, Net | 0 | $ 0 | 0 | $ 0 | |||||||
Prior Period Reclassification Adjustment | 2,610 | ||||||||||
Revenues | 334,385 | $ 548,008 | $ 814,766 | $ 337,484 | 357,654 | $ 603,391 | $ 886,861 | $ 355,711 | 2,034,643 | 2,203,617 | $ 1,874,362 |
Rental income | 195,883 | 219,145 | 232,481 | ||||||||
Deferred Revenue | $ 20,418 | $ 20,144 | 20,418 | 20,144 | |||||||
Deferred Revenue, Additions | 212,424 | ||||||||||
Wholesale [Member] | |||||||||||
Revenues | 223,374 | 258,369 | 14,758 | ||||||||
DSS [Member] | |||||||||||
Revenues | 21,339 | 15,762 | 0 | ||||||||
Intersegment Eliminations [Member] | |||||||||||
Revenues | (99,078) | (95,055) | (5,967) | ||||||||
Retail Segment [Member] | |||||||||||
Revenues | 1,889,008 | 2,024,541 | 1,865,571 | ||||||||
Rental income | 195,883 | 219,145 | 232,481 | ||||||||
Transferred at Point in Time [Member] | Retail Segment [Member] | |||||||||||
Revenues | 1,646,917 | 1,753,528 | 1,594,116 | ||||||||
Transferred over Time [Member] | Retail Segment [Member] | |||||||||||
Revenues | $ 46,208 | $ 51,868 | $ 38,974 |
Credit Facility (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Apr. 27, 2019 |
Apr. 28, 2018 |
Apr. 29, 2017 |
|
Line of Credit Facility [Line Items] | |||
Long-term Line of Credit, Noncurrent | $ 33,500 | $ 96,400 | |
Short-term Debt | 100,000 | 100,000 | |
Proceeds from borrowings on Credit Facility | 521,200 | 674,500 | $ 312,700 |
Repayments of borrowings on Credit Facility | 584,100 | 637,700 | 153,100 |
Line of Credit Facility, Fair Value of Amount Outstanding | 133,500 | ||
Letters of Credit Outstanding, Amount | 4,759 | ||
Debt Issuance Costs, Gross | 3,395 | $ 2,912 | |
Write off of Deferred Debt Issuance Cost | $ 118 | ||
New Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Credit facility maturity term, in years | 5 years | ||
Credit facility, borrowing capacity | $ 400,000 | ||
Line Of Credit Potential Increase Amount | 100,000 | ||
Long-term Line of Credit, Noncurrent | $ 33,500 | 96,400 | |
Line of Credit Facility, Interest Rate Description | Interest under the Credit Facility accrues, at our election, at a LIBOR or alternate base rate, plus, in each case, an applicable interest rate margin, which is determined by reference to the level of excess availability under the Credit Facility. Loans will initially bear interest at LIBOR plus 1.750% per annum, in the case of LIBOR borrowings, or at the alternate base rate plus 0.750% per annum, in the alternative, and thereafter the interest rate will fluctuate between LIBOR plus 1.750% per annum and LIBOR plus 1.250% per annum (or between the alternate base rate plus 0.750% per annum and the alternate base rate plus 0.250% per annum), based upon the excess availability under the Credit Facility at such time. | ||
New Credit Facility [Member] [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, borrowing capacity | $ 100,000 | ||
Short-term Debt | $ 100,000 | $ 100,000 | |
Line of Credit Facility, Interest Rate Description | Loans under the FILO Facility will bear interest at a rate equal to the LIBOR rate, plus 2.750%. The FILO Facility will be available solely during the draw period each year, from April 1 through July 31. We are required to borrow 100% of the aggregate commitments under the FILO Facility on April 1 of each year, and the loans must be repaid in full (including interest and fees) on July 31 of each year. The commitments under the FILO Facility were amended as part of the March 1, 2019 amendment to the Credit Facility and will decrease from $100,000 to $75,000 on August 1, 2019, from $75,000 to $50,000 on August 1, 2020 and from $50,000 to $25,000 on August 1, 2021. We will pay a commitment fee of 0.375% on the daily unused portion of the FILO Facility. | ||
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Credit facility, borrowing capacity | $ 500,000 |
Supplementary Information Supplementary Info - Impairment and Restructuring (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Apr. 27, 2019 |
Apr. 28, 2018 |
Apr. 29, 2017 |
|
Other Nonrecurring Expense | $ 57,748 | $ 313,130 | $ 0 |
Goodwill, Impairment Loss | 49,282 | 313,130 | |
Other Asset Impairment Charges | 8,466 | ||
Restructuring and other charges | 7,233 | 5,429 | $ 1,790 |
Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss) | 2,274 | ||
Write off of Deferred Debt Issuance Cost | 118 | ||
Employee Severance [Member] | |||
Restructuring and other charges | 4,554 | ||
Facility Closing [Member] | |||
Restructuring and other charges | 281 | ||
Other Restructuring [Member] | |||
Restructuring and other charges | 2,054 | ||
Other Expense [Member] | |||
Other Nonrecurring Expense | 2,679 | ||
Patrick Maloney [Member] | |||
Deferred Compensation Arrangement with Individual, Compensation Expense | $ 2,500 | ||
Max Roberts [Member] | |||
Deferred Compensation Arrangement with Individual, Compensation Expense | $ 5,429 |
Supplementary Information Supplementary Info - Goodwill (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Apr. 27, 2019 |
Apr. 28, 2018 |
Apr. 29, 2017 |
Jan. 26, 2019 |
|
Goodwill [Line Items] | ||||
Goodwill, Impairment Loss | $ (49,282) | $ (313,130) | ||
Goodwill | 4,700 | 49,282 | $ 329,467 | $ 49,282 |
Goodwill, Purchase Accounting Adjustments | 1,163 | |||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | 79,578 | |||
Student Brands [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | 31,782 | |||
MBS [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | $ 49,282 | |||
Goodwill, Purchase Accounting Adjustments | $ 1,163 | |||
PaperRater [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | 5 | |||
Goodwill, Purchase Accounting Adjustments | $ 4,700 |
Related Party Transactions Related Party (Details) - MBS [Domain] - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Apr. 27, 2019 |
Apr. 28, 2018 |
Apr. 29, 2017 |
|
Related Party Transaction [Line Items] | |||
Revenue from Related Parties | $ 7,376 | ||
Related Party Transaction, Other Revenues from Transactions with Related Party | 339 | ||
Related Party Transaction, Purchases from Related Party | $ 92,956 | ||
Payments for Rent | $ 1,380 | $ 1,380 |
Employees' Defined Contribution Plan (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Apr. 27, 2019 |
Apr. 28, 2018 |
Apr. 29, 2017 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Company contributions, employee benefit expenses | $ 6,702 | $ 7,196 | $ 4,828 |
Commitments and Contingencies Commitments and Contingencies (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Apr. 27, 2019 |
Apr. 28, 2018 |
Apr. 29, 2017 |
|
Loss Contingencies [Line Items] | |||
Operating Leases, Rent Expense, Minimum Rentals | $ 169,131 | $ 170,351 | $ 165,980 |
Operating Leases, Rent Expense, Contingent Rentals | 73,368 | 80,630 | 87,843 |
Operating Leases, Rent Expense, Net | $ 242,499 | $ 250,981 | $ 253,823 |
Minimum Rent Expense Description | Our physical bookstore management contracts with colleges and universities are typically five years with renewal options and are typically cancelable by either party without penalty with 90 to120 days' notice. The annual projections below are based on current minimum guarantee amounts. In approximately 72% of our physical bookstore management contracts with colleges and universities that include minimum guarantees, the minimum guaranteed amounts adjust annually to equal less than the prior year's commission earned. | ||
Operating Leases, Future Minimum Payments Receivable, Current | $ 138,523 | ||
Operating Leases, Future Minimum Payments, Due in Two Years | 133,741 | ||
Operating Leases, Future Minimum Payments, Due in Three Years | 120,327 | ||
Operating Leases, Future Minimum Payments, Due in Four Years | 113,518 | ||
Operating Leases, Future Minimum Payments, Due in Five Years | 99,693 | ||
Operating Leases, Future Minimum Payments, Due Thereafter | 161,090 | ||
Operating Leases, Future Minimum Payments Due | 766,892 | ||
Purchase Obligation, Due in Next Twelve Months | 4,262 | ||
Purchase Obligation, Due in Second and Third Year | 1,819 | ||
Purchase Obligation, Due in Fourth and Fifth Year | 32 | ||
Purchase Obligation | $ 6,113 |
Selected Quarterly Financial Information (Unaudited) Selected Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 27, 2019 |
Jan. 26, 2019 |
Oct. 27, 2018 |
Jul. 28, 2018 |
Apr. 28, 2018 |
Jan. 27, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 27, 2019 |
Apr. 28, 2018 |
Apr. 29, 2017 |
|
Revenue, Net (Deprecated 2018-01-31) | $ 334,385 | $ 548,008 | $ 814,766 | $ 337,484 | $ 357,654 | $ 603,391 | $ 886,861 | $ 355,711 | $ 2,034,643 | $ 2,203,617 | $ 1,874,362 |
Gross Profit | 117,403 | 132,953 | 210,760 | 66,610 | 128,334 | 146,999 | 216,700 | 65,200 | 527,726 | 557,233 | 459,061 |
Net Income (Loss) Attributable to Parent | $ (46,218) | $ 769 | $ 59,697 | $ (38,622) | $ 17,057 | $ (283,235) | $ 48,395 | $ (34,783) | $ (24,374) | $ (252,566) | $ 5,361 |
Earnings Per Share, Basic | $ (0.97) | $ 0.02 | $ 1.26 | $ (0.82) | $ 0.36 | $ (6.04) | $ 1.04 | $ (0.75) | $ (0.52) | $ (5.40) | $ 0.12 |
Earnings Per Share, Diluted | $ (0.97) | $ 0.02 | $ 1.25 | $ (0.82) | $ 0.36 | $ (6.04) | $ 1.03 | $ (0.75) | $ (0.52) | $ (5.40) | $ 0.11 |
Label | Element | Value |
---|---|---|
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents | $ 30,866,000 |
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