EX-99 3 a4401765_991.txt BARNES & NOBLE EXHIBIT 99.1 Exhibit 99.1 Barnes & Noble Announces First Quarter Results NEW YORK--(BUSINESS WIRE)--May 22, 2003--Barnes & Noble, Inc. (NYSE: BKS), the world's largest bookseller, today reported financial results for the first quarter ended May 3, 2003. FIRST QUARTER RESULTS Barnes & Noble Booksellers For the first quarter, sales were $863.9 million and net loss was $(3.2) million or $(0.05) per share. -- Barnes & Noble store sales were $803.5 million for the quarter. Comparable store sales decreased (1.8)% for the month of April and (5.2)% for the first quarter. The company opened four new Barnes & Noble stores and closed two locations ending the quarter with 630 stores. -- B. Dalton sales, which comprise approximately 5.0% of total bookstore sales, were $45.9 million for the quarter, a decrease of (24.1)%. Comparable store sales decreased (11.7)% for the month of April and (14.0)% for the first quarter. The company closed 13 B. Dalton stores. The results include the effect of the newly adopted Emerging Issues Task Force Issue No. 02-16 (EITF 02-16), which addresses the accounting for cooperative advertising and other vendor incentive programs. The impact of EITF 02-16 was less than $(0.01) per share for the first quarter and is expected to be approximately $(0.02) per share for the full year. "An improvement in April sales enabled us to outperform our revised guidance, in spite of the difficulties all retailers experienced in the first quarter," said Steve Riggio, chief executive officer of Barnes & Noble, Inc. "However, we remain cautious about sales trends for the balance of the year due to the current uncertain retail climate." GameStop GameStop, the nation's largest video game and entertainment software specialty retailer, reported a comparable store sales increase of 3.5% during the quarter, on top of a 28.7% comparable store sales increase during the first quarter of fiscal 2002. GameStop sales were $321.7 million for the quarter, an increase of 18.5%. The company's share of net earnings for the first quarter (based upon Barnes & Noble, Inc.'s basic ownership interest of approximately 63%) was $4.2 million or $0.06 per share. Barnes & Noble.com Barnes & Noble.com reported a first quarter EBITDA loss (loss before interest, taxes, depreciation, amortization and equity losses) of $(5.9) million, a 52.8% improvement from the first quarter 2002 EBITDA loss. Total operating expenses decreased 11.4% quarter-over-quarter, as Barnes & Noble.com continues to reduce and leverage its operating expense base. The company's share of net losses for Barnes & Noble.com was $(3.0) million or $(0.04) per share for the quarter. Consolidated Consolidated net loss for the first quarter was $(2.0) million or $(0.03) per share compared with $(1.4) million or $(0.02) per share, prior to a non-cash impairment charge of $(0.23) per share, in the previous year. GUIDANCE FOR THE SECOND QUARTER Barnes & Noble Booksellers The company expects comparable store sales at Barnes & Noble stores to range from flat to 2.0%. Based upon these projections, the company expects earnings to range between $0.10 and $0.14 per share for the second quarter of 2003, versus an equivalent $0.16 for the same period last year. GameStop The company's share of net earnings in GameStop is expected to range from $0.05 to $0.06 per share. Barnes & Noble.com The company's share of second quarter net losses in Barnes & Noble.com is expected to be in the range of $(0.05) to $(0.06) per share. Consolidated Consolidated results for the second quarter are expected to range from $0.09 to $0.15 per share, based upon a share count of approximately 67 million shares. Full year guidance remains unchanged, in a range of $1.87 to $1.95 per share. A conference call with Barnes & Noble, Inc.'s management will be simulcast on the Web at (www.companyboardroom.com) beginning at 11 A.M. ET on Thursday, May 22, 2003, and is accessible at (http://www.barnesandnobleinc.com/financials), where it will be archived until June 20, 2003. The next scheduled press release will be the May sales release on June 5, 2003. ABOUT BARNES & NOBLE, INC. Barnes & Noble, Inc. (NYSE: BKS) is the world's largest bookseller, operating 630 Barnes & Noble stores in 49 states. It also operates 245 B. Dalton Bookseller stores, primarily in regional shopping malls. The company offers titles from more than 50,000 publisher imprints, including thousands of small, independent publishers and university presses. It conducts its e-commerce business through Barnes & Noble.com (NASDAQ: BNBN) (http://www.bn.com) in which it owns an approximate 38% interest. Barnes & Noble also has approximately a 60% interest in GameStop (NYSE: GME), the nation's largest video game and entertainment software specialty retailer with 1,309 stores. General financial information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the company's corporate Web site: http://www.barnesandnobleinc.com/financials. SAFE HARBOR This press release contains "forward-looking statements." Barnes & Noble is including this statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. These forward-looking statements are based on currently available information and represent the beliefs of the management of the company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks include, but are not limited to, general economic and market conditions, decreased consumer demand for the company's products, possible disruptions in the company's computer or telephone systems, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible disruptions or delays in the opening of new stores or the inability to obtain suitable sites for new stores, higher than anticipated store closing or relocation costs, higher interest rates, the performance of the company's online and other initiatives, the successful integration of acquired businesses, unanticipated increases in merchandise or occupancy costs, unanticipated adverse litigation results or effects, product shortages, and other factors which may be outside of the company's control. Please refer to the company's annual, quarterly and periodic reports on file with the SEC for a more detailed discussion of these and other risks that could cause results to differ materially. BARNES & NOBLE, INC. AND SUBSIDIARIES First Quarter Summary ($ in millions, except per share amounts) 13 weeks ended ------------------------ May 3, 2003 May 4, 2002 ----------- ----------- BARNES & NOBLE RETAIL OPERATIONS BARNES & NOBLE BOOKSELLERS (Bookstores - includes Calendar Club and Sterling Publishing) Sales $ 864 862 Operating loss (1) (19) Depreciation and amortization 33 31 Impairment charge - 25 ------- -------- EBITDA (operating loss + depreciation and amortization + impairment charge) 32 37 ======= ======== EPS (0.05) 0.01 GAMESTOP (Video Game & Entertainment Software Stores) Sales 322 271 Operating profit 11 9 Depreciation and amortization 6 5 ------- -------- EBITDA (operating profit + depreciation and amortization) 17 14 ======= ======== Barnes & Noble, Inc.'s percentage ownership in GameStop (basic) 63.1% 66.3% ------- -------- Barnes & Noble, Inc.'s portion of GameStop's EBITDA 11 9 ======= ======== EPS 0.06 0.05 TOTAL RETAIL EPS 0.01 0.06 INVESTING ACTIVITIES Share of net losses of Barnes & Noble.com (0.04) (0.07) Share of net loss from other investments - (0.01) ------- -------- CONSOLIDATED EPS BEFORE GEMSTAR IMPAIRMENT CHARGE (0.03) (0.02) Impairment charge (Gemstar International Ltd.) (1) - (0.23) ------- -------- CONSOLIDATED EPS $ (0.03) (0.25) ======= ======== Weighted average shares outstanding 64,867,000 67,252,000 (1) In fiscal 1998, Barnes & Noble, Inc. purchased an investment in NuvoMedia, Inc. for $4.8 million. In fiscal 1999, NuvoMedia was acquired by Gemstar International Ltd. (Gemstar). In connection with this sale, Barnes & Noble, Inc. recognized a pre-tax gain of $22.4 million (which was recorded as stock in Gemstar). As a result of Gemstar's financial difficulties, the Company believed that the decline in the value of its investment in Gemstar was other than temporary, and recorded an impairment charge in the first quarter of fiscal 2002. The investment was sold in the second quarter of fiscal 2002. BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated Statements of Operations (thousands of dollars, except per share data) ---------------------------------------------------------------------- 13 weeks ended ----------------- May 3, 2003 May 4, 2002 ----------- ----------- Sales $1,185,605 1,133,126 Cost of sales and occupancy 884,960 849,990 ---------- ---------- Gross profit 300,645 283,136 ---------- ---------- Selling and administrative expenses 250,673 230,544 Depreciation and amortization 39,040 35,750 Pre-opening expenses 1,502 1,750 Impairment charge - 25,328 ---------- ---------- Operating profit (loss) 9,430 (10,236) Interest expense, net (4,643) (5,406) Equity in net loss of Barnes & Noble.com (4,972) (7,435) Other expense, net - (1,813) ---------- ---------- Loss before taxes and minority interest (185) (24,890) Income taxes (75) (10,227) ----------- ----------- Loss before minority interest (110) (14,663) Minority interest (1,916) (1,658) ---------- ---------- Net loss $ (2,026) (16,321) ========== ========== Loss per common share: Basic $ (0.03) (0.25) Diluted $ (0.03) (0.25) Weighted average common shares outstanding Basic 64,867,000 67,252,000 Diluted 64,867,000 67,252,000 Percentage of sales: Sales 100.0% 100.0% Cost of sales and occupancy 74.6% 75.0% ---------- ---------- Gross profit 25.4% 25.0% ---------- ---------- Selling and administrative expenses 21.1% 20.3% Depreciation and amortization 3.3% 3.2% Pre-opening expenses 0.2% 0.2% Impairment charge 0.0% 2.2% ---------- ---------- Operating profit (loss) 0.8% -0.9% Interest expense, net -0.4% -0.5% Equity in net loss of Barnes & Noble.com -0.4% -0.6% Other expense, net 0.0% -0.2% ---------- ---------- Loss before taxes and minority interest 0.0% -2.2% Income taxes 0.0% -0.9% ---------- ---------- Loss before minority interest 0.0% -1.3% Minority interest -0.2% -0.1% ---------- ---------- Net loss -0.2% -1.4% ========== ========== BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (thousands of dollars, except per share data) ---------------------------------------------------------------------- May 3, May 4, February 1, 2003 2002 2003 -------- -------- --------- (unaudited) ASSETS Current assets: Cash and cash equivalents $ 195,987 183,262 267,642 Receivables, net 64,014 52,474 66,948 Barnes & Noble.com receivable 35,920 43,618 55,174 Merchandise inventories 1,418,377 1,354,708 1,395,872 Prepaid expenses and other current assets 103,539 105,964 101,232 ---------- --------- --------- Total current assets 1,817,837 1,740,026 1,886,868 ---------- --------- --------- Property and equipment: Land and land improvements 3,247 3,247 3,247 Buildings and leasehold improvements 491,278 466,174 495,499 Fixtures and equipment 949,266 842,373 936,136 ---------- --------- --------- 1,443,791 1,311,794 1,434,882 Less accumulated depreciation and amortization 842,580 719,777 812,579 ---------- --------- --------- Net property and equipment 601,211 592,017 622,303 ---------- --------- --------- Goodwill 391,704 340,881 390,396 Intangible assets, net 47,713 - 48,176 Investment in Barnes & Noble.com 19,782 40,782 23,280 Other noncurrent assets 23,009 39,317 24,404 ---------- --------- --------- Total assets $2,901,256 2,753,023 2,995,427 ========== ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 661,556 677,850 710,907 Accrued liabilities 420,861 335,200 520,541 ---------- --------- --------- Total current liabilities 1,082,417 1,013,050 1,231,448 ---------- --------- --------- Long-term debt 357,000 355,000 300,000 Deferred income taxes 119,845 115,079 119,823 Other long-term liabilities 115,142 107,462 115,415 Minority interest 202,979 183,664 200,951 Shareholders' equity: Common stock; $.001 par value; 300,000,000 shares authorized; 73,470,067, 72,856,628 and 73,110,740 shares issued, respectively 73 73 73 Additional paid-in capital 832,339 821,504 828,522 Accumulated other comprehensive loss (11,032) (813) (11,064) Retained earnings 389,624 275,381 391,650 Treasury stock, at cost, 8,807,700, 5,504,700 and 8,502,700 shares, respectively (187,131) (117,377) (181,391) ---------- --------- --------- Total shareholders' equity 1,023,873 978,768 1,027,790 ---------- --------- --------- Commitments and contingencies - - - ---------- --------- --------- Total liabilities and shareholders' equity $2,901,256 2,753,023 2,995,427 ========== ========= ========= CONTACT: Media Contact: Mary Ellen Keating Senior Vice President Corporate Communications Barnes & Noble, Inc. (212) 633-3323 or Investor Contact: Joseph J. Lombardi Chief Financial Officer Barnes & Noble, Inc. (212) 633-3215