-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AnNqVgnZH7TfiWWIl0wVQpLicbCRl8kxojubuxyZkWDzkxKpzuLlbMbgahNRCEnY SbyU8fTT6WsN40u2kXLLxg== 0001157523-04-002480.txt : 20040318 0001157523-04-002480.hdr.sgml : 20040318 20040318111304 ACCESSION NUMBER: 0001157523-04-002480 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040318 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040318 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARNES & NOBLE INC CENTRAL INDEX KEY: 0000890491 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 061196501 STATE OF INCORPORATION: DE FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12302 FILM NUMBER: 04676964 BUSINESS ADDRESS: STREET 1: 122 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10011 BUSINESS PHONE: 2126333300 MAIL ADDRESS: STREET 1: 122 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10011 8-K 1 a4597309.txt BARNES & NOBLE, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): March 18, 2004 BARNES & NOBLE, INC. (Exact name of Registrant as Specified in its Charter) Delaware (State or other Jurisdiction of Incorporation) 1-12302 06-1196501 ------------------------------ ------------------------------ (Commission File Number) (IRS Employer Identification No.) 122 Fifth Avenue, New York, NY 10011 ---------------------------------- ------------ (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (212) 633-3300 -------------- ----------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report ) ---------------------------------------------------- Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits 99.1 Press Release of Barnes & Noble, Inc., dated March 18, 2004 Item 12. Results of Operations and Financial Condition On March 18, 2004, Barnes & Noble, Inc. (the "Company") issued a press release announcing its financial results for the fiscal quarter and fiscal year ended January 31, 2004. A copy of this press release is attached hereto as Exhibit 99.1. The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. Use of Non-GAAP Financial Information To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), in the press release attached hereto as Exhibit 99.1 the Company uses non-GAAP measures of EBITDA (defined by the Company as operating profit (loss) before depreciation, amortization and impairment charge, less the minority interest in GameStop Corp.'s EBITDA) for the 13 and 52 weeks ended January 31, 2004 and February 1, 2003, and free cash flow (defined by the Company as cash flow from operating activities less capital expenditures) for the 52 weeks ended January 31, 2004. Additionally, following the Company's acquisition of Bertelsmann AG's interest in barnesandnoble.com inc. ("B&N.com") on September 15, 2003, the Company consolidated the results of B&N.com. Accordingly, the Company is disclosing in the press release attached hereto as Exhibit 99.1 pro forma results as if the Company consolidated B&N.com for all of fiscal 2003. The Company's management reviews these non-GAAP measures internally to evaluate the Company's performance and manage its operations. In addition, since the Company has historically provided EBITDA results to the investment community, the Company believes that the inclusion of EBITDA results provides a consistent and comparable measure to help investors understand the Company's operating results. Furthermore, since the Company will consolidate B&N.com on a going forward basis, the Company believes that pro forma results (as if the Company consolidated B&N.com) provide investors a better understanding of the Company's current operating results and provide a comparable measure to help investors understand the Company's future operating results. The non-GAAP measures included in the press release attached hereto as Exhibit 99.1 have been reconciled to the comparable GAAP measure as required under SEC rules regarding the use of non-GAAP financial measures. The Company urges investors to carefully review the GAAP financial information included as part of the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and quarterly earnings releases. SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BARNES & NOBLE, INC. (Registrant) By: /s/ Joseph J. Lombardi ----------------------------- Joseph J. Lombardi Chief Financial Officer Date: March 18, 2004 Barnes & Noble, Inc. EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 99.1 Press Release of Barnes & Noble, Inc., dated March 18, 2004 EX-99 3 a4597309-ex991.txt BARNES & NOBLE, INC. PRESS RELEASE EXHIBIT 99.1 Barnes & Noble Achieves EPS Guidance of $2.07 for 2003 NEW YORK--(BUSINESS WIRE)--March 18, 2004--Barnes & Noble, Inc. (NYSE: BKS) Issues 2004 Guidance: Pro Forma Net Earnings to Increase 22% to 26% GAAP Net Earnings to Increase 11% to 15% Barnes & Noble, Inc. (NYSE: BKS), the world's largest bookseller, today reported sales and earnings for the fourth quarter and for the full year ended January 31, 2004. 2003 RESULTS Barnes & Noble store sales were $1.3 billion for the quarter and $3.9 billion for the year, reflecting increases of 10% and 8%, respectively, over the prior year periods. Comparable store sales increased 6.4% for the fourth quarter and increased 3.2% for the year. The company opened 31 new Barnes & Noble stores for the year and closed 12 locations ending the year with 647 stores. B. Dalton sales, which comprise approximately 5% of total bookstore sales, were $79.7 million for the quarter, a decrease of (10%) over the prior year, and $221.0 million for the year, a decrease of (15%) over 2002, due primarily to the closing of 63 stores. Comparable store sales increased 4.1% for the fourth quarter and decreased (2.0%) for the year. Earnings per share for the bookstore business, including publishing, increased 9% to $1.40 during the fourth quarter and increased 15% to $1.75 for the full year. Led by strong working capital management, the bookstore business generated free cash flow from operations of $290 million which is net of $93 million of capital expenditures. This robust cash flow enabled the company to prepay its $82 million note to Bertelsmann, which was issued in connection with the company's acquisition of Bertelsmann's interest in Barnes & Noble.com. Inventory turns improved approximately 5% due to increased emphasis on more efficient supply chain management. On January 29, 2004, Barnes & Noble.com reported a fourth quarter sales increase of 4.3%, as compared with the year-ago period. Full year 2003 sales were $424.8 million. The company's share of net losses for Barnes & Noble.com was $(3.8) million or $(0.05) per share for the quarter and $(13.6) million or $(0.18) per share for the year. Barnes & Noble.com's results were accounted for under the equity accounting method up to September 15, 2003, and were consolidated thereafter. On March 17, 2004, GameStop, the nation's largest video-game and entertainment-software specialty retailer, reported sales of $625.4 million for the quarter and $1.6 billion for the year, an increase of 20% and 17%, respectively, over the prior year periods. Comparable store sales increased 3.9% for the fourth quarter and increased 0.8% for the year. The company's share of net earnings was $24.1 million or $0.30 per share for the fourth quarter and $38.2 million or $0.50 per share for the year. Consolidated net earnings for the fourth quarter increased 17% to $130.0 million or $1.65 per share. Consolidated net earnings for the year increased 21% to $151.9 million or $2.07 per share compared to $1.71 in the prior year, excluding charges of $(0.32) recorded in 2002 to write down certain of the company's investments. "Although 2003 began as a difficult year, with the first quarter being strongly impacted by the war in Iraq, we were extremely pleased with the rebound in the bookselling business that began during the second quarter," said Steve Riggio, Chief Executive Officer of Barnes & Noble, Inc. "Barnes & Noble's superior store execution enabled the company to capitalize on the strength of the book business when it returned. The tremendous success of bestsellers, combined with the continued growth of the membership program, enabled the company to increase its market share. The company also achieved a double-digit percentage increase in sales of self-published product. We look forward to the completion of the merger with Barnes & Noble.com, which will further integrate our two companies, and enable us to more fully realize the opportunities inherent in a multi-channel strategy." GUIDANCE FOR 2004 For the first quarter, the company expects comparable store sales at Barnes & Noble stores to increase between 5.0% and 7.0%, and for the full year comparable store sales are expected to increase approximately 2.0%. On January 8, 2004, the company announced that it entered into a merger agreement with Barnes & Noble.com. As a result of the merger, Barnes & Noble.com will become a wholly owned subsidiary of Barnes & Noble, Inc. Barnes & Noble, Inc. expects to complete the acquisition of Barnes & Noble.com during the company's first quarter. For the first quarter, GameStop expects comparable store sales to range from flat to 2.0%, and for the full year comparable store sales are expected to increase between 4.0% and 6.0%. Consolidated net earnings are expected to be between $168 and $174 million, or an increase of 11% to 15% on a GAAP basis. On a pro forma basis, if the company consolidated 100% of Barnes & Noble.com for all of 2003, net earnings are expected to increase 22% to 26%. The following tables present EPS guidance for the first quarter and the full year. EPS guidance for GameStop is based on the company's approximate 65% ownership interest. FIRST QUARTER EPS 2004 Guidance(a) 2003 - ----------------- -------------------- Low High Pro Forma(b) -------- ---------- ------------ Barnes & Noble Bookstores $ 0.13 $ 0.16 $(0.05) Barnes & Noble.com (0.11) (0.09) (0.12) -------- ---------- ------------ Total Book Operating Segment 0.02 0.07 (0.17) Total Video Game Operating Segment 0.07 0.07 0.06 -------- ---------- ------------ Consolidated $ 0.09 $ 0.14 $(0.11) FULL YEAR EPS 2004 Guidance(c) 2003 - ------------- -------------------- Low High Pro Forma(b) -------- ---------- ------------ Barnes & Noble Bookstores(d) $ 1.88 $ 1.90 $ 1.75 Barnes & Noble.com (0.21) (0.18) (0.35) -------- ---------- ------------ Total Book Operating Segment(d) 1.67 1.72 1.40 Total Video Game Operating Segment 0.53 0.55 0.50 -------- ---------- ------------ Consolidated(d) $ 2.20 $ 2.27 $ 1.90 (a) Based on a weighted average share count of approximately 71 million. (b) Pro forma as if the company consolidated 100% of Barnes & Noble.com for the full year. (c) Based on a weighted average share count of approximately 81 million. (d) Includes the impact of $10.2 million interest addback on the convertible notes. A conference call with Barnes & Noble, Inc.'s senior management will be webcast beginning at 11 A.M. ET on Thursday, March 18, 2004, and is accessible at www.barnesandnobleinc.com/financials, where it will be archived until April 23, 2004. The call will also be archived at www.fulldisclosure.com for one year. Barnes & Noble, Inc. will report first quarter sales and earnings on or about May 20, 2004. ABOUT BARNES & NOBLE, INC. Barnes & Noble, Inc. (NYSE: BKS) is the world's largest bookseller, operating 647 Barnes & Noble stores in 49 states. It also operates 195 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). Barnes & Noble also has approximately a 65% interest in GameStop (NYSE: GME), the nation's largest video game and entertainment software specialty retailer with 1,514 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 Fourth Quarter Summary ($ in millions, except per share amounts) 13 weeks ended 52 weeks ended ---------------- ---------------- Jan. 31, Feb. 1, Jan. 31, Feb. 1, 2004 2003 2004 2003 -------- ------- -------- ------- Sales Barnes & Noble Bookstores (a) $1,454 1,326 4,221 3,917 Barnes & Noble.com (b) 133 - 151 - -------- ------- -------- ------- Total Book operating segment 1,587 1,326 4,372 3,917 GameStop Total Video Game operating segment 625 520 1,579 1,353 -------- ------- -------- ------- Total sales 2,212 1,846 5,951 5,270 -------- ------- -------- ------- Operating profit (loss) Barnes & Noble Bookstores (a) 194 164 233 202 Barnes & Noble.com (b) (6) - (7) - -------- ------- -------- ------- Total Book operating segment 188 164 226 202 GameStop Total Video Game operating segment 65 53 104 87 -------- ------- -------- ------- Total operating profit (loss) 253 217 330 289 -------- ------- -------- ------- Depreciation and amortization Barnes & Noble Bookstores (a) 31 32 128 126 Barnes & Noble.com (b) 6 - 7 - -------- ------- -------- ------- Total Book operating segment 37 32 135 126 GameStop Total Video Game operating segment 8 6 29 23 -------- ------- -------- ------- Total depreciation and amortization 45 38 164 149 -------- ------- -------- ------- EBITDA (Operating profit (loss) + depreciation and amortization) Barnes & Noble Bookstores (a) 225 196 361 328 Barnes & Noble.com (b) - - - - -------- ------- -------- ------- Total Book operating segment 225 196 361 328 GameStop Total Video Game operating segment (c) 47 37 85 70 -------- ------- -------- ------- Total EBITDA 272 233 446 398 -------- ------- -------- ------- EPS Barnes & Noble Bookstores (a) 1.40 1.28 1.75 1.52 Barnes & Noble.com (d) (0.05) (0.04) (0.18) (0.21) -------- ------- -------- ------- Total Book operating segment 1.35 1.24 1.57 1.31 GameStop Total Video Game operating segment (c) 0.30 0.25 0.50 0.40 Gemstar impairment charge - - - (0.19) Other investments - - - (0.13) -------- ------- -------- ------- Total EPS $1.65 1.49 2.07 1.39 -------- ------- -------- ------- Weighted average shares outstanding 79,514 75,245 77,105 77,680 (a) Includes Calendar Club and Sterling Publishing. Operating profit and EBITDA excludes non-cash charge recorded in the first quarter of 2002 from the impairment in the company's investment in Gemstar-TV Guide International Inc. (b) From date of acquisition of Bertelsmann's interest. (c) Based on Barnes & Noble, Inc.'s percentage ownership interest in GameStop, approximately 65%. (d) Results accounted for under the equity method through September 15, 2003, and consolidated thereafter. BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated Statements of Operations (thousands of dollars, except per share data) - ---------------------------------------------------------------------- 13 weeks ended 52 weeks ended ----------------------- ----------------------- January 31, February 1, January 31, February 1, 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Sales $2,212,095 1,846,110 5,951,015 5,269,335 Cost of sales and occupancy 1,570,714 1,307,735 4,323,767 3,847,482 ----------- ----------- ----------- ----------- Gross profit 641,381 538,375 1,627,248 1,421,853 ----------- ----------- ----------- ----------- Selling and administrative expenses 341,632 281,490 1,124,551 973,495 Depreciation and amortization 44,851 38,339 163,629 148,691 Pre-opening expenses 1,632 2,150 8,778 10,227 Impairment charge - - - 25,328 ----------- ----------- ----------- ----------- Operating profit 253,266 216,396 330,290 264,112 Interest expense, net (5,357) (5,536) (20,140) (21,506) Equity in net loss of Barnes & Noble.com - (5,568) (14,311) (26,795) Other expense, net - - - (16,498) ----------- ----------- ----------- ----------- Income before taxes and minority interest 247,909 205,292 295,839 199,313 Income taxes 101,262 82,634 120,554 80,223 ----------- ----------- ----------- ----------- Income before minority interest 146,647 122,658 175,285 119,090 Minority interest (16,604) (11,647) (23,432) (19,142) ----------- ----------- ----------- ----------- Net income 130,043 111,011 151,853 99,948 =========== =========== =========== =========== Income per common share: Basic $1.92 1.72 2.30 1.51 Diluted $1.65 1.49 2.07 1.39 Weighted average common shares outstanding Basic 67,575,000 64,578,000 65,989,000 66,362,000 Diluted 79,514,000 75,245,000 77,105,000 77,680,000 Percentage of sales: Sales 100.0% 100.0% 100.0% 100.0% Cost of sales and occupancy 71.0% 70.8% 72.7% 73.0% ----------- ----------- ----------- ----------- Gross profit 29.0% 29.2% 27.3% 27.0% ----------- ----------- ----------- ----------- Selling and administrative expenses 15.4% 15.3% 18.9% 18.5% Depreciation and amortization 2.0% 2.1% 2.7% 2.8% Pre-opening expenses 0.1% 0.1% 0.1% 0.2% Impairment charge 0.0% 0.0% 0.0% 0.5% ----------- ----------- ----------- ----------- Operating profit 11.5% 11.7% 5.6% 5.0% Interest expense, net -0.3% -0.3% -0.4% -0.4% Equity in net loss of Barnes & Noble.com 0.0% -0.3% -0.2% -0.5% Other expense, net 0.0% 0.0% 0.0% -0.3% ----------- ----------- ----------- ----------- Income before taxes and minority interest 11.2% 11.1% 5.0% 3.8% Income taxes 4.6% 4.5% 2.0% 1.5% ----------- ----------- ----------- ----------- Income before minority interest 6.6% 6.6% 3.0% 2.3% Minority interest -0.7% -0.6% -0.4% -0.4% ----------- ----------- ----------- ----------- Net income 5.9% 6.0% 2.6% 1.9% =========== =========== =========== =========== BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (thousands of dollars, except per share data) - ---------------------------------------------------------------------- Jan. 31, Feb. 1, 2004 2003 ----------- ---------- ASSETS Current assets: Cash and cash equivalents $487,200 267,642 Receivables, net 60,529 66,948 Barnes & Noble.com receivable - 55,174 Merchandise inventories 1,526,156 1,395,872 Prepaid expenses and other current assets 119,604 101,232 ----------- ---------- Total current assets 2,193,489 1,886,868 ----------- ---------- Property and equipment: Land and land improvements 3,247 3,247 Buildings and leasehold improvements 533,272 495,499 Fixtures and equipment 1,127,855 936,136 ----------- ---------- 1,664,374 1,434,882 Less accumulated depreciation and amortization 991,187 812,579 ----------- ---------- Net property and equipment 673,187 622,303 ----------- ---------- Goodwill 572,206 (a) 390,396 Intangible assets, net 46,374 48,176 Investment in Barnes & Noble.com - 23,280 Other noncurrent assets 23,338 24,404 ----------- ---------- Total assets $3,508,594 2,995,427 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $858,068 710,907 Accrued liabilities 585,073 520,541 ----------- ---------- Total current liabilities 1,443,141 1,231,448 ----------- ---------- Long-term debt 300,000 300,000 Deferred income taxes 170,066 119,823 Other long-term liabilities 108,441 115,415 Minority interest 227,287 200,951 Shareholders' equity: Common stock; $.001 par value; 300,000,000 shares authorized; 76,854,856 and 73,110,740 shares issued, respectively 77 73 Additional paid-in capital 914,319 828,522 Accumulated other comprehensive loss (8,579) (11,064) Retained earnings 543,503 391,650 Treasury stock, at cost, 8,807,700 and 8,502,700 shares, respectively (189,661) (181,391) ----------- ---------- Total shareholders' equity 1,259,659 1,027,790 ----------- ---------- Commitments and contingencies - - ----------- ---------- Total liabilities and shareholders' equity $3,508,594 2,995,427 =========== ========== (a) Includes approximately $165 million of goodwill resulting from the September 15, 2003 acquisition of Barnes & Noble.com which is subject to final allocation based upon an independent valuation being performed in accordance with Statement of Financial Accounting Standard No. 141. BARNES & NOBLE, INC. AND SUBSIDIARIES Fourth Quarter Summary Pro Forma as if the Company Owned 100% of Barnes & Noble.com at the Beginning of Fiscal 2002 ($ in millions, except per share amounts) 13 weeks ended 52 weeks ended ---------------- ---------------- Jan. 31, Feb. 1, Jan. 31, Feb. 1, 2004 2003 2004 2003 -------- ------- -------- ------- Sales Barnes & Noble Bookstores (a) $1,454 1,326 4,221 3,917 Barnes & Noble.com (b) 133 128 425 423 -------- ------- -------- ------- Total Book operating segment 1,587 1,454 4,646 4,340 GameStop Total Video Game operating segment 625 520 1,579 1,353 -------- ------- -------- ------- Total sales 2,212 1,974 6,225 5,693 -------- ------- -------- ------- Operating profit (loss) Barnes & Noble Bookstores (a) 194 164 233 202 Barnes & Noble.com (b) (6) (15) (45) (72) -------- ------- -------- ------- Total Book operating segment 188 149 188 130 GameStop Total Video Game operating segment 65 53 104 87 -------- ------- -------- ------- Total operating profit (loss) 253 202 292 217 -------- ------- -------- ------- Depreciation and amortization Barnes & Noble Bookstores (a) 31 32 128 126 Barnes & Noble.com (b) 6 9 26 34 -------- ------- -------- ------- Total Book operating segment 37 41 154 160 GameStop Total Video Game operating segment 8 6 29 23 -------- ------- -------- ------- Total depreciation and amortization 45 47 183 183 -------- ------- -------- ------- EBITDA (Operating profit (loss) + depreciation and amortization) Barnes & Noble Bookstores (a) 225 196 361 328 Barnes & Noble.com (b) - (6) (19) (38) -------- ------- -------- ------- Total Book operating segment 225 190 342 290 GameStop Total Video Game operating segment (c) 47 37 85 70 -------- ------- -------- ------- Total EBITDA 272 227 427 360 -------- ------- -------- ------- EPS Barnes & Noble Bookstores (a) 1.40 1.28 1.75 1.52 Barnes & Noble.com (0.05) (0.11) (0.35) (0.57) -------- ------- -------- ------- Total Book operating segment 1.35 1.17 1.40 0.95 GameStop Total Video Game operating segment (c) 0.30 0.25 0.50 0.40 Gemstar impairment charge - - - (0.19) Other investments - - - (0.13) -------- ------- -------- ------- Total EPS $1.65 1.42 1.90 1.03 -------- ------- -------- ------- Weighted average shares outstanding 79,514 75,245 77,105 77,680 (a) Includes Calendar Club and Sterling Publishing. Operating profit and EBITDA excludes non-cash charge recorded in the first quarter of 2002 from the impairment in the company's investment in Gemstar-TV Guide International Inc. (b) For pro forma purposes only, the company has included 100% of the results of Barnes & Noble.com for all periods presented. (c) Based on Barnes & Noble, Inc.'s percentage ownership interest in GameStop, approximately 65%. BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated Statements of Operations Pro Forma as if the Company Owned 100% of Barnes & Noble.com at the Beginning of Fiscal 2002 (thousands of dollars, except per share data) - ---------------------------------------------------------------------- 13 weeks ended 52 weeks ended ----------------------- ----------------------- Jan. 31, Feb. 1, Jan. 31, Feb. 1, 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Sales $2,212,095 1,973,990 6,224,601 5,692,162 Cost of sales and occupancy 1,570,714 1,410,222 4,537,294 4,184,980 ----------- ----------- ----------- ----------- Gross profit 641,381 563,768 1,687,307 1,507,182 ----------- ----------- ----------- ----------- Selling and administrative expenses 341,632 313,243 1,203,192 1,097,075 Depreciation and amortization 44,851 46,888 182,903 182,193 Pre-opening expenses 1,632 2,150 8,778 10,227 Impairment charge - - - 25,328 ----------- ----------- ----------- ----------- Operating profit 253,266 201,487 292,434 192,359 Interest expense, net (5,357) (5,316) (19,973) (19,891) Equity in net loss of Barnes & Noble.com - - - - Other expense, net - (358) - (20,035) ----------- ----------- ----------- ----------- Income before taxes and minority interest 247,909 195,813 272,461 152,433 Income taxes 101,262 78,815 111,028 61,354 ----------- ----------- ----------- ----------- Income before minority interest 146,647 116,998 161,433 91,079 Minority interest (16,604) (11,647) (23,432) (19,142) ----------- ----------- ----------- ----------- Net income 130,043 105,351 138,001 71,937 =========== =========== =========== =========== Income per common share: Basic $1.92 1.63 2.09 1.08 Diluted $1.65 1.42 1.90 1.03 Weighted average common shares outstanding Basic 67,575,000 64,578,000 65,989,000 66,362,000 Diluted 79,514,000 75,245,000 77,105,000 77,680,000 Percentage of sales: Sales 100.0% 100.0% 100.0% 100.0% Cost of sales and occupancy 71.0% 71.4% 72.9% 73.5% ----------- ----------- ----------- ----------- Gross profit 29.0% 28.6% 27.1% 26.5% ----------- ----------- ----------- ----------- Selling and administrative expenses 15.4% 15.9% 19.3% 19.3% Depreciation and amortization 2.0% 2.4% 2.9% 3.2% Pre-opening expenses 0.1% 0.1% 0.2% 0.2% Impairment charge 0.0% 0.0% 0.0% 0.4% ----------- ----------- ----------- ----------- Operating profit 11.5% 10.2% 4.7% 3.4% Interest expense, net -0.2% -0.3% -0.3% -0.3% Equity in net loss of Barnes & Noble.com 0.0% 0.0% 0.0% 0.0% Other expense, net 0.0% 0.0% 0.0% -0.4% ----------- ----------- ----------- ----------- Income before taxes and minority interest 11.3% 9.9% 4.4% 2.7% Income taxes 4.6% 4.0% 1.8% 1.1% ----------- ----------- ----------- ----------- Income before minority interest 6.7% 5.9% 2.6% 1.6% Minority interest -0.8% -0.6% -0.4% -0.3% ----------- ----------- ----------- ----------- Net income 5.9% 5.3% 2.2% 1.3% =========== =========== =========== =========== CONTACT: Barnes & Noble, Inc. Media Contact: Mary Ellen Keating Senior Vice President Corporate Communications (212) 633-3323 Investor Contact: Joseph J. Lombardi Chief Financial Officer (212) 633-3215 -----END PRIVACY-ENHANCED MESSAGE-----