-----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, CfOafKB85vmg6+Gx7clmoy3+B/75dsG58nzTm6e/zwl4ts5ffr9LLbXtl6OOUN9R DgybFwDdQSHgxsOTpClROw== 0000940510-04-000010.txt : 20040311 0000940510-04-000010.hdr.sgml : 20040311 20040311171101 ACCESSION NUMBER: 0000940510-04-000010 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040125 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040311 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BORDERS GROUP INC CENTRAL INDEX KEY: 0000940510 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 383294588 STATE OF INCORPORATION: DE FISCAL YEAR END: 0126 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13740 FILM NUMBER: 04663573 BUSINESS ADDRESS: STREET 1: 100 PHOENIX DRIVE CITY: ANN ARBOR STATE: MI ZIP: 48108 BUSINESS PHONE: (734) 477-1100 MAIL ADDRESS: STREET 1: 100 PHOENIX DRIVE CITY: ANN ARBOR STATE: MI ZIP: 48108 8-K 1 f03-4q_earnings8k.htm FISCAL 2003 4TH QUARTER EARNINGS RELEASE 8-K Fiscal 2003 4th Quarter 8-K

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 March 11, 2004

Commission file number 1-13740

BORDERS GROUP, INC.

(Exact name of registrant as specified in its charter)

Michigan	38-3294588
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Indentification No.)

100 Phoenix Drive, Ann Arbor, Michigan 48108
(Address of principal executive offices with zip code)

(734) 477-1100
(Registrant's telephone number, including area code)

ITEM 7. Financial Statements, Pro Forma Information and Exhibits.


(c)	Exhibits:
		99.5	Press Release issued by Borders Group, Inc. on March 11, 2004.

ITEM 9. Regulation FD Disclosure.

The information contained in this Item 9 is being furnished pursuant to "Item 12. Results of Operations and Financial Condition" in accordance with SEC Release No. 33-8216, and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

On March 11, 2004, Borders Group, Inc. issued a press release regarding its financial results for the fourth quarter and full year of fiscal 2003 ended January 25, 2004. A copy of the press release is attached hereto as Exhibit 99.5.

The information contained in this Current Report, including the exhibit, shall not be incorporated by reference into any filing of Borders Group, Inc., whether made before or after the date hereof, regardless of any general incorporation language in such filing.

SIGNATURES

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 thereto duly authorized.

BORDERS GROUP, INC.
(Registrant)

Date: March 11, 2004	By: /s/ Edward W. Wilhelm
	Edward W. Wilhelm
	Senior Vice President and
	Chief Financial Officer
	(Principal Financial and
	Accounting Officer)

EXHIBIT INDEX

DESCRIPTION OF EXHIBITS


(c)	Exhibits:
		99.5	Press Release issued by Borders Group, Inc. on March 11, 2004.

EX-99 2 f03-4q_ex995.htm EXHIBIT 99.5 FISCAL 2003 4TH QTR EARNINGS RELEASE Exhibit 99.5

EXHIBIT 99.5

News Release


Investor Contact	Media Contact
Ed Wilhelm	Anne Roman
(734) 477-4245	(734) 477-1392

Borders Group Reports 2003 Fourth Quarter EPS Of $1.50;
Up 13.6% Over 2002

Company Reiterates $1.70 to $1.75 Full Year 2004 EPS Projection; Up 12% to 15% Over 2003

Ann Arbor, Mich., March 11, 2004--Borders Group Inc. (NYSE: BGP) today reported final fourth quarter and full-year 2003 results for the period ended Jan. 25, 2004. With fourth quarter consolidated earnings per share of $1.50, the company generated earnings growth of 13.6% over the same period in 2002, which is in-line with previous company guidance. Full-year consolidated earnings per share were $1.52, an increase of 11.8% over 2002. Management reiterated full-year 2004 earnings per share guidance of $1.70 to $1.75, representing growth of 12% to 15% over 2003.

“We are pleased with our performance in the fourth quarter, which drove another year of increased sales and earnings growth for Borders Group,” said Chief Executive Officer Greg Josefowicz. “In addition to increased earnings, we have continued to provide returns to investors through share repurchases and our recently initiated quarterly cash dividend. As we begin fiscal year 2004, we will continue to focus on driving shareholder value with a strong emphasis on generating top line sales growth.”

Consolidated Results

As reported Feb. 10, Borders Group achieved fourth quarter consolidated sales of $1.3 billion, an increase of 7.5% over 2002. For the full year 2003, consolidated sales were $3.7 billion, a 6.1% increase over the prior year.

For the fourth quarter, net income was $119.8 million, up 12.8% compared to a year ago. Fourth quarter net income before the cumulative effect of an accounting change increased 14.8% over last year to $121.9 million. The increase in fourth quarter net income was attributable to operating leverage driven primarily by improved sales. For the fourth quarter, gross margin as a percent of sales was flat at 33.5% as lower supply chain costs as a percent of sales helped offset higher bestseller discounts. Fourth quarter SG&A as a percent of sales improved from 17.7% to 17.1%, driven by sales leverage combined with continued disciplined cost control across all businesses.

-more-

Borders Group Q4/Full-Year 2003--2

The company’s overall financial position remains strong. Cash flow produced from operations in 2003, after subtracting capital expenditures, totaled $131.0 million. For the year, Borders Group repurchased 2.6 million shares of common stock totaling $44.0 million. In addition, the company paid its first quarterly cash dividend of $0.08 per share in January. Borders Group plans to continue its shareholder value strategy of quarterly cash dividend payments and share repurchases subject to approval from its Board of Directors.

Borders Superstores

In 2003, Borders Group opened 41 new Borders superstores in the U.S., ending the fiscal year with 445 total domestic locations. As previously reported, fourth quarter sales at Borders superstores were $827.0 million, an increase of 8.9% over the same period in 2002. For the year, Borders superstore sales increased 6.5% over fiscal 2002, ending the year at $2.5 billion. Borders comparable store sales increased by 2.5% in the fourth quarter and by 0.5% for the full year. Category sales strength came from books, DVD and gifts and stationery, while music continued to decline. Net income for the fourth quarter, before the cumulative effect of an accounting change, was $79.8 million, a 9.0% increase over 2002.

International

Consistent with the company’s internal projections, the International segment reached profitability for the full year 2003, driven by fourth quarter net income of $9.9 million. This compares to fourth quarter net income of $1.2 million in 2002. Full-year net income for the segment was $0.1 million compared to a full-year 2002 segment net loss of $12.3 million. Sales at International stores for the full year were $407.5 million, a 29.4% increase over 2002. In the fourth quarter, International sales were $145.0 million, up 28.8% from the prior year. These sales increases benefited, in part, from favorable currency exchange rates. In 2003, International segment sales represented 11.0% of total consolidated sales compared to 9.0% a year ago. Borders Group opened seven new overseas superstores in fiscal 2003, ending the year with 37 total International superstore locations.

Waldenbooks

Waldenbooks generated fourth quarter sales of $340.4 million, which is down 2.5% from a year ago due to store closures. Full-year sales in the Waldenbooks segment were $820.9 million, a decrease of 3.7% from 2002. Comparable store sales at Waldenbooks increased 0.3% in the fourth quarter. For the year, comparable stores sales in the segment declined 0.6%. Net income for segment increased by 8.7% in the fourth quarter to $45.2 million, due primarily to improved sales and reduced store closure costs and asset impairments. Borders Group closed 67 under-performing Waldenbooks stores in 2003, ending the fiscal year with 716 total locations.

-more-

Borders Group Q4/Full-Year 2003--3

Non-Operating Adjustments

All earnings per share figures reported for the fourth quarter and full year 2003 include the impact of non-operating adjustments, which for the fourth quarter totaled an after-tax charge of $0.10 per share. This charge is comprised of several items including asset impairments, FIN 46 adoption, tentative settlement of the California overtime litigation, and a receivable writedown net of insurance recoveries and other reserve adjustments.

Q1 2004 Outlook

	•	Consistent with the company’s Feb. 10 disclosure, consolidated earnings per share for the first quarter of 2004, which ends April 25, are expected to range from $0.02 to $0.03 compared to a loss of $0.06 per share in the same period of 2003. First quarter results in 2003 were adversely impacted by the war in Iraq.
	•	Comparable store sales at Borders are expected to increase by 2% to 3% in the first quarter.
	•	First quarter comparable store sales at Waldenbooks are expected to increase 3% to 4%.
	•	Total International sales are expected to increase by 25% to 30% in the first quarter.

2004 Full-Year Outlook

	•	Borders comparable store sales for the year are expected to increase in the low single digits.
	•	Waldenbooks comparable store sales are projected to be flat.
	•	Total sales for the full year for the International segment are expected to increase by approximately 20% over 2003.
	•	Consolidated full year 2004 earnings per share are expected to range from $1.70 to $1.75, which is a 12% to 15% increase over 2003.
	•	Full-year earnings per share estimates include the impact of non-operating adjustments, projected for the year to be an after-tax charge of $0.04 to $0.06 per share. The company expects non-operating adjustments in 2004 to be comprised primarily of store asset impairments and store closing costs.

Next Financial Release/Conference Call

Borders Group will issue final first quarter results after market close May 18 with a conference call to follow at 8 a.m. Eastern May 19.

-more-

Borders Group Q4/Full-Year 2003--4

About Borders Group, Inc.

Borders Group, Inc., (NYSE: BGP) is a leading global retailer of books, music, video and other information and entertainment items with stores in the United States, United Kingdom, Australia, New Zealand, Singapore, and the commonwealth of Puerto Rico. A FORTUNE 500 company headquartered in Ann Arbor, Mich., Borders Group employs approximately 32,000 worldwide and operates over 445 Borders domestic superstores, 37 international Borders stores, 36 Books etc. locations and approximately 700 Waldenbooks stores. Online shopping is available through www.borders.com and www.waldenbooks.com.

Safe Harbor Statement

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. One can identify these forward-looking statements by the use of words such as “projected,” “expected,” “estimates,” “look forward,” “continuing,” “plans,” “guidance,” “will,” “may,” “intends,” “anticipates,” and other words of similar meaning. One can also identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address matters such as the company’s future financial performance (including sales and earnings guidance), its plans relating to store openings and closings and its intentions with respect to dividend payments and share repurchases.

These statements are subject to risks and uncertainties that could cause actual results and plans to differ materially from those included in the company’s forward-looking statements. These risks and uncertainties include, but are not limited to, consumer demand for the company’s products, particularly during the holiday season, which is believed to be related to general economic and geopolitical conditions, weather, and other factors; changes in accounting rules; asset impairments relating to under-performing stores or other unusual items; an unexpected increase in competition; the timing and amount of insurance recoveries relating to the former Borders store at the World Trade Center; uninsured losses from risks such as terrorism, earthquakes, or floods for which no, or limited, insurance coverage is maintained; higher than anticipated interest costs; energy disruptions, shortages or higher than anticipated energy costs; adverse litigation expenses or results; unanticipated work stoppages or increased labor costs; higher than anticipated merchandise or occupancy costs; the performance of the company’s strategic initiatives, including international expansion; the stability and capacity of the company’s information systems; and changes in foreign currency exchange rate.

Exhibit 99.1 to the company’s Form 10-Q for the fiscal quarter ended Oct. 26, 2003 filed with the Securities and Exchange Commission sets forth a more detailed discussion of these and other risk factors that could cause actual results and plans to differ materially from those included in the forward-looking statements, and that discussion is incorporated herein by reference. The company does not undertake any obligation to update forward-looking statements.

###