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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Barnes and Noble Education Inc | NYSE:BNED | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.01 | 0.12% | 8.04 | 468 | 13:01:50 |
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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46-0599018
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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120 Mountain View Blvd., Basking Ridge, NJ
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07920
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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x
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page No.
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13 weeks ended
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26 weeks ended
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||||||||||||
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October 29,
2016 |
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October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Product sales and other
|
$
|
697,927
|
|
|
$
|
684,006
|
|
|
$
|
915,663
|
|
|
$
|
902,722
|
|
Rental income
|
72,744
|
|
|
71,858
|
|
|
94,245
|
|
|
92,125
|
|
||||
Total sales
|
770,671
|
|
|
755,864
|
|
|
1,009,908
|
|
|
994,847
|
|
||||
Cost of sales:
|
|
|
|
|
|
|
|
||||||||
Product and other cost of sales
|
554,498
|
|
|
537,380
|
|
|
732,492
|
|
|
712,289
|
|
||||
Rental cost of sales
|
44,659
|
|
|
43,363
|
|
|
58,489
|
|
|
55,893
|
|
||||
Total cost of sales
|
599,157
|
|
|
580,743
|
|
|
790,981
|
|
|
768,182
|
|
||||
Gross profit
|
171,514
|
|
|
175,121
|
|
|
218,927
|
|
|
226,665
|
|
||||
Selling and administrative expenses
|
101,767
|
|
|
102,439
|
|
|
187,231
|
|
|
189,123
|
|
||||
Depreciation and amortization expense
|
12,987
|
|
|
13,169
|
|
|
25,908
|
|
|
26,269
|
|
||||
Restructuring costs
|
—
|
|
|
—
|
|
|
1,790
|
|
|
—
|
|
||||
Operating income
|
56,760
|
|
|
59,513
|
|
|
3,998
|
|
|
11,273
|
|
||||
Interest expense, net
|
630
|
|
|
554
|
|
|
1,296
|
|
|
557
|
|
||||
Income before income taxes
|
56,130
|
|
|
58,959
|
|
|
2,702
|
|
|
10,716
|
|
||||
Income tax expense
|
26,841
|
|
|
25,558
|
|
|
1,329
|
|
|
4,233
|
|
||||
Net income
|
$
|
29,289
|
|
|
$
|
33,401
|
|
|
$
|
1,373
|
|
|
$
|
6,483
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share of Common Stock:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.63
|
|
|
$
|
0.69
|
|
|
$
|
0.03
|
|
|
$
|
0.14
|
|
Diluted
|
$
|
0.63
|
|
|
$
|
0.69
|
|
|
$
|
0.03
|
|
|
$
|
0.14
|
|
Weighted average shares of Common Stock outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
46,170
|
|
|
48,207
|
|
|
46,259
|
|
|
44,816
|
|
||||
Diluted
|
46,593
|
|
|
48,562
|
|
|
46,652
|
|
|
45,023
|
|
|
October 29,
2016 |
|
October 31,
2015 |
|
April 30,
2016 |
||||||
|
(unaudited)
|
|
(unaudited)
|
|
(audited)
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
176,578
|
|
|
$
|
88,649
|
|
|
$
|
28,568
|
|
Receivables, net
|
93,250
|
|
|
91,383
|
|
|
50,924
|
|
|||
Merchandise inventories, net
|
401,338
|
|
|
431,023
|
|
|
312,747
|
|
|||
Textbook rental inventories
|
86,704
|
|
|
83,846
|
|
|
47,760
|
|
|||
Prepaid expenses and other current assets
|
8,083
|
|
|
6,304
|
|
|
6,453
|
|
|||
Total current assets
|
765,953
|
|
|
701,205
|
|
|
446,452
|
|
|||
Property and equipment, net
|
108,499
|
|
|
110,949
|
|
|
111,185
|
|
|||
Intangible assets, net
|
194,562
|
|
|
193,113
|
|
|
199,663
|
|
|||
Goodwill
|
281,350
|
|
|
274,070
|
|
|
280,911
|
|
|||
Other noncurrent assets
|
38,226
|
|
|
46,335
|
|
|
33,472
|
|
|||
Total assets
|
$
|
1,388,590
|
|
|
$
|
1,325,672
|
|
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$
|
1,071,683
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
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|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
439,746
|
|
|
$
|
349,440
|
|
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$
|
152,175
|
|
Accrued liabilities
|
140,779
|
|
|
137,412
|
|
|
105,877
|
|
|||
Total current liabilities
|
580,525
|
|
|
486,852
|
|
|
258,052
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|
|||
Long-term deferred taxes, net
|
25,743
|
|
|
39,557
|
|
|
29,865
|
|
|||
Other long-term liabilities
|
75,962
|
|
|
69,585
|
|
|
75,380
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|
|||
Total liabilities
|
682,230
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|
595,994
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|
|
363,297
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|
|||
Commitments and contingencies
|
—
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|
—
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|
|
—
|
|
|||
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, 48,972, 48,219 and 48,645 shares, respectively; outstanding, 46,276, 48,217 and 46,755 shares, respectively
|
490
|
|
|
482
|
|
|
486
|
|
|||
Additional paid-in capital
|
703,966
|
|
|
695,816
|
|
|
699,513
|
|
|||
Retained earnings
|
28,375
|
|
|
33,401
|
|
|
27,002
|
|
|||
Treasury stock, at cost
|
(26,471
|
)
|
|
(21
|
)
|
|
(18,615
|
)
|
|||
Total stockholders' equity
|
706,360
|
|
|
729,678
|
|
|
708,386
|
|
|||
Total liabilities and stockholders' equity
|
$
|
1,388,590
|
|
|
$
|
1,325,672
|
|
|
$
|
1,071,683
|
|
|
26 weeks ended
|
||||||
|
October 29,
2016 |
|
October 31,
2015 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
1,373
|
|
|
$
|
6,483
|
|
Adjustments to reconcile net income to net cash flows from operating activities:
|
|
|
|
||||
Depreciation and amortization expense
|
25,908
|
|
|
26,269
|
|
||
Amortization of deferred financing costs
|
325
|
|
|
163
|
|
||
Deferred taxes
|
(4,122
|
)
|
|
(2,176
|
)
|
||
Stock-based compensation expense
|
4,458
|
|
|
2,970
|
|
||
Change in other long-term liabilities
|
582
|
|
|
97
|
|
||
Changes in other operating assets and liabilities, net
|
150,805
|
|
|
47,675
|
|
||
Net cash flows provided by operating activities
|
179,329
|
|
|
81,481
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(17,470
|
)
|
|
(24,541
|
)
|
||
Acquisition of business
|
(917
|
)
|
|
—
|
|
||
Net increase in other noncurrent assets
|
(5,076
|
)
|
|
(3,412
|
)
|
||
Net cash flows used in investing activities
|
(23,463
|
)
|
|
(27,953
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Net changes in Barnes & Noble, Inc. Investment
|
—
|
|
|
(6,423
|
)
|
||
Proceeds from borrowings on Credit Facility
|
47,400
|
|
|
8,700
|
|
||
Repayments of borrowings on Credit Facility
|
(47,400
|
)
|
|
(8,700
|
)
|
||
Payment of deferred financing costs
|
—
|
|
|
(3,251
|
)
|
||
Purchase of treasury shares
|
(7,856
|
)
|
|
(21
|
)
|
||
Net cash flows used in financing activities
|
(7,856
|
)
|
|
(9,695
|
)
|
||
Net increase in cash and cash equivalents
|
148,010
|
|
|
43,833
|
|
||
Cash and cash equivalents at beginning of period
|
28,568
|
|
|
44,816
|
|
||
Cash and cash equivalents at end of period
|
$
|
176,578
|
|
|
$
|
88,649
|
|
Changes in other operating assets and liabilities, net:
|
|
|
|
||||
Receivables, net
|
$
|
(41,794
|
)
|
|
$
|
(14,832
|
)
|
Merchandise inventories
|
(88,591
|
)
|
|
(133,599
|
)
|
||
Textbook rental inventories
|
(38,944
|
)
|
|
(36,296
|
)
|
||
Prepaid expenses and other current assets
|
(1,532
|
)
|
|
(1,681
|
)
|
||
Accounts payable and accrued liabilities
|
321,666
|
|
|
234,083
|
|
||
Changes in other operating assets and liabilities, net
|
$
|
150,805
|
|
|
$
|
47,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
Additional
|
|
|
|
Parent
|
|
|
|
|
|
|
||||||||||||||||
|
|
Common Stock
|
|
Paid-In
|
|
Retained
|
|
Company
|
|
Treasury Stock
|
|
Total
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Earnings
|
|
Investment
|
|
Shares
|
|
Amount
|
|
Equity
|
||||||||||||||
Balance at May 2, 2015
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
726,669
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
726,669
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
(26,918
|
)
|
|
|
|
|
|
(26,918
|
)
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
953
|
|
|
|
|
|
|
953
|
|
||||||||||||
Net change in Barnes & Noble, Inc. Investment
|
|
|
|
|
|
|
|
|
|
(28,868
|
)
|
|
|
|
|
|
(28,868
|
)
|
||||||||||||
Balance at August 2, 2015 (Spin-Off)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
671,836
|
|
|
—
|
|
|
—
|
|
|
671,836
|
|
||||||
Net change in Barnes & Noble, Inc. Investment
|
|
|
|
|
|
|
|
|
|
22,445
|
|
|
|
|
|
|
22,445
|
|
||||||||||||
Capitalization at Spin-Off
|
|
48,187
|
|
|
482
|
|
|
693,799
|
|
|
|
|
(694,281
|
)
|
|
|
|
|
|
—
|
|
|||||||||
Stock-based compensation expense
|
|
|
|
|
|
2,017
|
|
|
|
|
|
|
|
|
|
|
2,017
|
|
||||||||||||
Vested equity awards
|
|
32
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||
Shares repurchased for tax withholdings for vested stock awards
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
(21
|
)
|
|
(21
|
)
|
|||||||||||
Net income
|
|
|
|
|
|
|
|
33,401
|
|
|
|
|
|
|
|
|
33,401
|
|
||||||||||||
Balance at October 31, 2015
|
|
48,219
|
|
|
$
|
482
|
|
|
$
|
695,816
|
|
|
$
|
33,401
|
|
|
$
|
—
|
|
|
2
|
|
|
$
|
(21
|
)
|
|
$
|
729,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
Additional
|
|
|
|
Parent
|
|
|
|
|
|
|
||||||||||||||||
|
|
Common Stock
|
|
Paid-In
|
|
Retained
|
|
Company
|
|
Treasury Stock
|
|
Total
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Earnings
|
|
Investment
|
|
Shares
|
|
Amount
|
|
Equity
|
||||||||||||||
Balance at April 30, 2016
|
|
48,645
|
|
|
$
|
486
|
|
|
$
|
699,513
|
|
|
$
|
27,002
|
|
|
$
|
—
|
|
|
1,890
|
|
|
$
|
(18,615
|
)
|
|
$
|
708,386
|
|
Stock-based compensation expense
|
|
|
|
|
|
4,457
|
|
|
|
|
|
|
|
|
|
|
4,457
|
|
||||||||||||
Vested equity awards
|
|
327
|
|
|
4
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Common stock repurchased
|
|
|
|
|
|
|
|
|
|
|
|
689
|
|
|
(6,718
|
)
|
|
(6,718
|
)
|
|||||||||||
Shares repurchased for tax withholdings for vested stock awards
|
|
|
|
|
|
|
|
|
|
|
|
117
|
|
|
(1,138
|
)
|
|
(1,138
|
)
|
|||||||||||
Net income
|
|
|
|
|
|
|
|
1,373
|
|
|
|
|
|
|
|
|
1,373
|
|
||||||||||||
Balance at October 29, 2016
|
|
48,972
|
|
|
$
|
490
|
|
|
$
|
703,966
|
|
|
$
|
28,375
|
|
|
$
|
—
|
|
|
2,696
|
|
|
$
|
(26,471
|
)
|
|
$
|
706,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Increase Market Share with New Accounts
.
|
•
|
Adapting our Merchandising Strategy and Product and Service Offerings.
|
•
|
Scalable and Leading Digital Product and Solution Set
.
|
•
|
Expand Strategic Opportunities through Acquisitions and Partnerships
.
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||
|
October 29,
2016 |
|
October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
Numerator for basic earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
29,289
|
|
|
33,401
|
|
|
1,373
|
|
|
$
|
6,483
|
|
||
Less allocation of earnings to participating securities
|
(19
|
)
|
|
(22
|
)
|
|
(1
|
)
|
|
(26
|
)
|
||||
Net income available to common shareholders
|
$
|
29,270
|
|
|
$
|
33,379
|
|
|
$
|
1,372
|
|
|
$
|
6,457
|
|
|
|
|
|
|
|
|
|
||||||||
Numerator for diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net income available to common shareholders
|
$
|
29,270
|
|
|
$
|
33,379
|
|
|
$
|
1,372
|
|
|
$
|
6,457
|
|
Allocation of earnings to participating securities
|
19
|
|
|
22
|
|
|
1
|
|
|
26
|
|
||||
Less diluted allocation of earnings to participating securities
|
(19
|
)
|
|
(22
|
)
|
|
(1
|
)
|
|
(26
|
)
|
||||
Net income available to common shareholders
|
$
|
29,270
|
|
|
$
|
33,379
|
|
|
$
|
1,372
|
|
|
$
|
6,457
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares of Common Stock
|
46,170
|
|
|
48,207
|
|
|
46,259
|
|
|
44,816
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Denominator for diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares of Common Stock
|
46,170
|
|
|
48,207
|
|
|
46,259
|
|
|
44,816
|
|
||||
Average dilutive restricted stock units
|
364
|
|
|
355
|
|
|
339
|
|
|
178
|
|
||||
Average dilutive performance shares
|
35
|
|
|
—
|
|
|
24
|
|
|
—
|
|
||||
Average dilutive restricted shares
|
24
|
|
|
—
|
|
|
30
|
|
|
—
|
|
||||
Average dilutive options
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
||||
Diluted weighted average shares of Common Stock
|
46,593
|
|
|
48,562
|
|
|
46,652
|
|
|
45,023
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share of Common Stock:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.63
|
|
|
$
|
0.69
|
|
|
$
|
0.03
|
|
|
$
|
0.14
|
|
Diluted
|
$
|
0.63
|
|
|
$
|
0.69
|
|
|
$
|
0.03
|
|
|
$
|
0.14
|
|
|
October 29,
2016 |
|
October 31,
2015 |
|
April 30,
2016 |
||||||
Tax liabilities and reserves
|
$
|
69,371
|
|
|
$
|
63,459
|
|
|
$
|
69,345
|
|
Deferred contract obligations
(a)
|
4,144
|
|
|
4,255
|
|
|
4,164
|
|
|||
Other
|
2,447
|
|
|
1,871
|
|
|
1,871
|
|
|||
Total other long-term liabilities
|
$
|
75,962
|
|
|
$
|
69,585
|
|
|
$
|
75,380
|
|
(a)
|
Contract obligations primarily consist of the payments we make to the colleges and universities to operate their official bookstores (management service agreement costs), including rent expense.
|
•
|
406,078
PS awards were granted to employees that will only vest based upon the achievement of pre-established performance goals related to Adjusted EBITDA and new business achieved measured over a period of time. The PS will vest based on company performance during Fiscal 2017 - Fiscal 2018 with one additional year of time-based vesting. The targets for achievement range from 0%-150%.
|
•
|
1,157,586
RSU awards were granted to employees with a three year vesting period in accordance with Equity Incentive Plan;
|
•
|
49,484
RSU awards and
12,371
RS awards were granted to the current Board of Directors ("BOD") members for annual compensation with a one year vesting period in accordance with Equity Incentive Plan.
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||
|
October 29,
2016 |
|
October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
Restricted stock expense
|
$
|
70
|
|
|
$
|
460
|
|
|
$
|
220
|
|
|
$
|
540
|
|
Restricted stock units expense
|
2,282
|
|
|
1,557
|
|
|
3,878
|
|
|
2,310
|
|
||||
Performance shares expense
|
216
|
|
|
—
|
|
|
360
|
|
|
—
|
|
||||
Stock option expense
|
—
|
|
|
—
|
|
|
—
|
|
|
120
|
|
||||
Stock-based compensation expense
|
$
|
2,568
|
|
|
$
|
2,017
|
|
|
$
|
4,458
|
|
|
$
|
2,970
|
|
•
|
Large Footprint with Well-Recognized Brand
: We are one of the largest operators of bookstores on college and university campuses in the United States. As of April 30, 2016, we operated 751 stores in 43 states and the District of Columbia, which reached 26% of the total number of students enrolled at colleges and universities in the United States. The Barnes & Noble brand is virtually synonymous with bookselling, and we believe it is one of the most widely recognized and respected brands in the United States. Our large footprint and our 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.
|
•
|
Stable, Long-Term Contracts:
We operate our stores under management contracts with colleges and universities that are typically for five-year terms with renewal options, but can range from one to 15 years, and are typically cancelable by either party without penalty with 90 to 120 days' notice. From Fiscal 2013 through Fiscal 2016, 94% of these contracts were renewed or extended, often before their termination dates. In addition, these contracts are financially beneficial to us as we typically pay the college or university a percentage of our sales, including certain contracts with minimum guarantee payments. Therefore, the expense related to our college and university contracts is primarily a function of each stores success. This arrangement is also beneficial to the colleges and universities, providing them with an incentive to encourage their students and faculty to shop at our affiliated stores.
|
•
|
Well-Established Relationships:
We have strong partnerships with college and university administrators, as well as with publishers, vendors and suppliers.
|
◦
|
With an average relationship tenure of 15 years, we generate value for our college and university partners, and our relationships are supported by innovative engagement programs and educational initiatives. Our decentralized management structure empowers local teams to make decisions based on the local campus needs and foster collaborative working relationships with our partners.
|
◦
|
We have long-term relationships with over 9,000 publishers, who can partner with us to access one of the largest distribution networks of college education materials in the United States.
|
•
|
Direct Access to Students and Faculty:
We have a flexible business model with excellent visibility into the needs of our customers, and the ability to achieve profitability typically within the first year of operation. Our stores serve as social hubs for over 5 million students and their faculty, allowing us to forge deep customer relationships and seamlessly integrate their systems with our technology. Our established position on campus as the official, contracted provider for bookstore services gives us direct access to students and faculty and translates into relatively modest customer acquisition costs and high customer conversion and retention rates. Our flexible research channels help us stay ahead of the rapidly changing needs and behaviors of our customers, and proactively respond with dynamic solutions. The ReFuel Agency College Explorer Study 2015 estimates $523 billion total annual spending for tuition, housing, etc. and $203 billion annual discretionary spending, such as for food, clothing, etc., for the college demographic. Brand partners looking to reach the college audience are also exploring how to leverage our unique position on campus to access the coveted demographic we serve.
|
•
|
Highly Relevant Digital Products and Services:
Our position as a strategic partner with our large footprint of existing and prospective colleges and universities allows us to use our suite of digital products and services to best serve their diverse needs and provides a broader scope of products and services beyond outsourcing of bookstore services. Digital products and services range from those related to providing accessible and affordable course materials solutions more directly related to our core business to analytic solutions designed to improve learning outcomes and retention rates.
|
•
|
Seasoned Management Team:
We have an experienced senior management team with a proven track record, and demonstrated expertise in college bookstore outsourcing and content distribution, marketing and retail operations, and in scaling digital educational products and services.
|
•
|
Increasing Market Share with New Accounts
: Historically, new store openings have been an important driver of growth. From Fiscal 2012 to the end of Fiscal 2016, we increased the number of stores we serve from 636 to 751, or 18%. During the 26 weeks ended
October 29, 2016
, we opened 34 stores and closed 14 stores. As of
October 29, 2016
, we operated 771 stores nationwide. Currently, approximately 52% of college and university affiliated bookstores in the United States are operated by their respective institutions. As of the end of Fiscal 2016, we operated only 19% of all college and university affiliated bookstores in the United States. Based on the anticipated continuing trend towards outsourcing in the campus bookstore market, we intend to aggressively pursue these opportunities and bid on these contracts. We expect new store openings will be the most important driver of future growth in our business.
|
•
|
Adapting our Merchandising Strategy and Product and Service Offerings
: We create on campus and online retail destinations with services students want, and capture market share through new product offerings; enhanced marketing efforts using mobile, search and other technologies; increased local social and promotional offerings; and a broad category assortment of general merchandise, including school spirit apparel and gifts, school supplies, computer and technology products, dorm furnishings, graduation products, and café, convenience food and beverage offerings, marketed to our growing student and alumni base. We also are actively working with publishers by offering them access to FacultyEnlight
®
, our proprietary online platform, to expedite and better coordinate textbook adoption.
|
•
|
Scalable and Advanced Digital Product and Solution Set
: We leverage our digital technology platform to provide product and service offerings designed to address the most pressing issues in higher education, such as affordable and accessible course materials, retention solutions driven by our analytics platform, and products designed to drive and improve student outcomes.
|
•
|
Expanding Strategic Opportunities through Acquisitions and Partnerships
: We intend to pursue strategic relationships with companies that enhance our educational services or distribution platform, or create compelling content offerings. In Fiscal 2016, we acquired LoudCloud Systems, Inc., a sophisticated digital platform and analytics provider. We may also expand our current suite of digital content offerings and platform through acquisitions, internal or third-party software development and strategic partnerships. Expansion into new educational verticals and markets, such as K-12, vocational and international markets, will be opportunistically evaluated. During the first quarter of Fiscal 2017, we acquired Promoversity, a custom merchandise supplier and e-commerce storefront solution serving the collegiate bookstore business and its customers. The acquisition will enable us to customize our e-commerce offerings and drive on-campus apparel sales.
|
•
|
Textbook and Course Material Sales
: Textbooks are a core product offering of our business. We work directly with faculty to ensure the correct textbooks are available in required formats before the start of classes. We provide students with affordable textbook solutions and educate them about each format through various means. During Fiscal 2016, we offered over 220,000 unique textbook titles for sale to support the course offerings on our campuses.
|
•
|
Textbook and Course Material Rentals
: Students are increasingly turning to renting as the most affordable way to obtain their textbooks, and we are an industry leader in textbook rentals. The majority of our robust title list is available for rent, including custom course packs and adaptive learning materials, along with traditional textbooks. We also offer a convenient buyout option to allow the customer to purchase the rented book at the end of the semester, thereby enhancing our revenue and improving our inventory management processes.
|
•
|
General Merchandise
: General merchandise sales are generated in-store, on campus at sporting and other events, as well as online through school-branded e-commerce sites. Our stores feature collegiate and athletic apparel relating to a school and/or its athletic programs and other custom-branded school spirit products, technology, supplies and convenience items. With our recent acquisition of Promoversity, a custom merchandise supplier and e-commerce storefront solution serving the collegiate bookstore business and its customers, we will be able to customize our e-commerce offerings and drive on-campus apparel sales. Other merchandise, such as laptops and other technology products, notebooks, backpacks, school and dormitory supplies and related items are also offered. In addition, as of April 30, 2016, we operated 80 customized cafés, featuring Starbucks Coffee
®
, and 18 stand-alone convenience stores, as well as diverse grab-and-go options including organic, vegan and gluten-free, and ethnic fare for students on the move. These offerings increase traffic and time spent in our stores.
|
•
|
Trade
: In our stores located on larger campuses, we carry an extensive selection of trade, academic and reference books, along with educational toys and games, and schedule store events, such as author signings, that extend beyond the academic community. The majority of our stores carry the most popular campus bestsellers, along with academically relevant titles.
|
•
|
Digital Education:
Through our suite of digital products (as described below), we offer a digital software platform and learning materials to supplement our traditional products (textbooks and course materials) and help faculty provide a more robust educational experience for students. We enable educators to mix and author many forms of content, including eTextbooks and rich media, and provide them with adaptive analytics and assessment capabilities that, when combined, drive improved outcomes and better experiences for students.
|
•
|
Brand Partnerships:
United States college students spend billions on discretionary purchases each year in categories such as technology, clothing, entertainment, and food. As the official partner to the colleges and universities we serve, we are in a unique position to provide leading brands direct access to 5 million students who shop at our stores. We operate not just as a retailer, but as a media channel for these brands looking to target the college demographic. We are experts in creating strategic solutions and customer programs for brand partners, creating live touch points during the academic year through digital marketing, custom content, store brand building product sampling and live engagement at our locations in the center of campus life. We conduct business with a wide range of companies, including Adobe
®
, Verizon
®
, Nutella
®
, Visa Checkout
®
, West Elm
®
and Kind
®
.
|
•
|
FacultyEnlight
®
:
Our proprietary online platform enhances content search, discovery and adoption (i.e. textbook selection) by faculty on each campus. Thus far, over 275,000 faculty members use FacultyEnlight
®
to compare and contrast key decision-making factors, such as cost savings to students and format availability (including rental and digital options); read and write peer product reviews; and see what textbooks are being used by colleagues at other colleges and universities. This wealth of available information enables faculty to find and select the course materials that are both relevant to their subject matter and affordable to their students. FacultyEnlight
®
also provides us with a communication platform to connect with faculty directly, allowing us to better understand their needs, preferences and challenges when it comes to the textbook adoption process, and deliver our affordability message.
|
•
|
Campus Connect Technologies
™
: We enhance the academic and social purpose of higher education institutions by integrating our technology and systems with the school’s technology and organizational infrastructure to forge a bond with the school with a particular emphasis on the needs of students and faculty. Our customizable technology delivers a seamless experience that enables faculty to research and select, and enables students to find and purchase, the most affordable course materials, maximizing savings and sales. Campus Connect Technologies
™
platform includes:
|
◦
|
Simple Registration Integration
: By linking the online course registration process to the bookstore’s e-commerce site, students can easily find their specific required course materials and purchase those materials immediately. They can view the list of necessary course materials and select their preferred format, delivery and payment method.
|
◦
|
Seamless LMS Integration
: By tying directly into the school’s Learning Management System ("LMS"), faculty and students can easily purchase their course materials and leverage our single-sign on functionality - enabling a stronger connection between student, faculty and campus bookstore.
|
◦
|
Real-Time Financial Aid Platform
: To help simplify financial aid transactions, we provide a sophisticated, real-time Student Financial Aid ("SFA") platform that is fully-integrated with any college or university’s financial aid systems and point-of-sale technology. This integration provides a direct and simple way for students to use their financial aid dollars in our stores and online, even before the start of classes.
|
◦
|
Dynamic Point of Sale ("POS") Platform
: We build a secure, highly customized checkout experience for each campus, greatly expediting and simplifying a student’s shopping experience. Campus debit cards, financial aid and all major forms of tender are fully integrated, allowing students to check out from any register.
|
◦
|
Flexible Course Fee Solution
: Through this model, all required course materials for a particular course or program are included in the cost of tuition. Students are guaranteed the course materials they need in the format they prefer. Course materials can be picked up at the campus store, shipped directly to the student or delivered digitally.
|
•
|
Digital Products:
Our digital products include a sophisticated digital learning management platform that has competency based features, analytics capabilities, courseware offering and a digital eTextbook reading product.
|
◦
|
Learning Management System:
Our LMS is a next-generation platform that delivers both traditional and competency based learning models. This highly flexible platform is designed to enable all learning environments; traditional, online or hybrid. The platform can improve learning outcomes by enabling engagement and collaboration among students and faculty.
|
◦
|
Learning Analytics:
Our learning analytics solution is designed to make sense of complex data systems to deliver real-time insights to advisors and faculty. This solution captures and analyzes key behavioral and performance metrics, identifies vital predictors of success, and surfaces key focus areas in a manner intended to deliver better learning outcomes for students and improve retention for colleges and universities.
|
◦
|
Courseware:
Our courseware offering makes it easier for faculty to adopt Open Educational Resources (“OER”). Built on the foundation of industry recognized OER, including OpenStax, we have created a courseware solution intended to lower costs for students, make it easier for faculty to implement, and help drive better learning outcomes.
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||
Dollars in thousands
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Product sales and other
|
$
|
697,927
|
|
|
$
|
684,006
|
|
|
$
|
915,663
|
|
|
$
|
902,722
|
|
Rental income
|
72,744
|
|
|
71,858
|
|
|
94,245
|
|
|
92,125
|
|
||||
Total sales
|
$
|
770,671
|
|
|
$
|
755,864
|
|
|
$
|
1,009,908
|
|
|
$
|
994,847
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
29,289
|
|
|
$
|
33,401
|
|
|
$
|
1,373
|
|
|
$
|
6,483
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA (non-GAAP)
(a)
|
$
|
70,391
|
|
|
$
|
72,682
|
|
|
$
|
33,867
|
|
|
$
|
37,542
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Earnings (non-GAAP)
(b)
|
$
|
29,683
|
|
|
$
|
33,401
|
|
|
$
|
3,798
|
|
|
$
|
6,483
|
|
|
|
|
|
|
|
|
|
||||||||
Comparable store sales decrease
(c)
|
(2.9
|
)%
|
|
(3.0
|
)%
|
|
(2.9
|
)%
|
|
(1.9
|
)%
|
||||
Stores opened
|
1
|
|
|
7
|
|
|
34
|
|
|
28
|
|
||||
Stores closed
|
—
|
|
|
—
|
|
|
14
|
|
|
9
|
|
||||
Number of stores open at end of period
|
771
|
|
|
743
|
|
|
771
|
|
|
743
|
|
(a)
|
Adjusted EBITDA is a non-GAAP financial measure. See
Adjusted EBITDA (non-GAAP)
discussion below.
|
(b)
|
Adjusted Earnings is a non-GAAP financial measure. See
Adjusted Earnings (non-GAAP)
discussion below.
|
(c)
|
Effective for the first quarter of Fiscal 2017, comparable store sales includes sales from stores that have been open for an entire fiscal year period, does not include sales from closed stores for all periods presented, and digital agency sales are included on a gross basis. We believe the current comparable store sales calculation method better reflects the manner in which management views comparable sales, as well as the seasonal nature of our business. For periods presented prior to the first quarter of Fiscal 2017, comparable store sales includes sales from stores that have been open for at least 15 months, does not include sales from closed stores for all periods presented, and includes digital agency sales on a net basis.
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
||||
Sales:
|
|
|
|
|
|
|
|
||||
Product sales and other
|
90.6
|
%
|
|
90.5
|
%
|
|
90.7
|
%
|
|
90.7
|
%
|
Rental income
|
9.4
|
|
|
9.5
|
|
|
9.3
|
|
|
9.3
|
|
Total sales
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of sales:
|
|
|
|
|
|
|
|
||||
Product and other cost of sales
(a)
|
79.4
|
|
|
78.6
|
|
|
80.0
|
|
|
78.9
|
|
Rental cost of sales
(a)
|
61.4
|
|
|
60.3
|
|
|
62.1
|
|
|
60.7
|
|
Total cost of sales
|
77.7
|
|
|
76.8
|
|
|
78.3
|
|
|
77.2
|
|
Gross margin
|
22.3
|
|
|
23.2
|
|
|
21.7
|
|
|
22.8
|
|
Selling and administrative expenses
|
13.2
|
|
|
13.6
|
|
|
18.5
|
|
|
19.0
|
|
Depreciation and amortization expense
|
1.7
|
|
|
1.7
|
|
|
2.6
|
|
|
2.6
|
|
Restructuring costs
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
Operating income
|
7.4
|
|
|
7.9
|
|
|
0.4
|
|
|
1.2
|
|
Interest expense, net
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
Income before income taxes
|
7.3
|
|
|
7.8
|
|
|
0.3
|
|
|
1.1
|
|
Income tax expense
|
3.5
|
|
|
3.4
|
|
|
0.1
|
|
|
0.4
|
|
Net income
|
3.8
|
%
|
|
4.4
|
%
|
|
0.2
|
%
|
|
0.7
|
%
|
(a)
|
Represents the percentage these costs bear to the related sales, instead of total sales.
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||||||
Dollars in thousands
|
October 29, 2016
|
|
October 31, 2015
|
|
%
|
|
October 29, 2016
|
|
October 31, 2015
|
|
%
|
||||||||
Product sales and other
|
$
|
697,927
|
|
|
$
|
684,006
|
|
|
2.0%
|
|
$
|
915,663
|
|
|
$
|
902,722
|
|
|
1.4%
|
Rental income
|
72,744
|
|
|
71,858
|
|
|
1.2%
|
|
94,245
|
|
|
92,125
|
|
|
2.3%
|
||||
Total Sales
|
$
|
770,671
|
|
|
$
|
755,864
|
|
|
2.0%
|
|
$
|
1,009,908
|
|
|
$
|
994,847
|
|
|
1.5%
|
Sales variances
|
|
|
|
|
||||
Dollars in millions
|
|
13 weeks ended
|
|
26 weeks ended
|
||||
New stores
|
|
$
|
50.0
|
|
|
$
|
58.5
|
|
Closed stores
|
|
(10.7
|
)
|
|
(12.5
|
)
|
||
Comparable stores
|
|
(22.4
|
)
|
|
(28.6
|
)
|
||
Textbook rental deferral
|
|
(3.6
|
)
|
|
(2.2
|
)
|
||
Other revenue
(a)
|
|
2.3
|
|
|
2.4
|
|
||
Other
(b)
|
|
(0.8
|
)
|
|
(2.5
|
)
|
||
Total sales variance
|
|
$
|
14.8
|
|
|
$
|
15.1
|
|
(a)
|
Other revenue includes Promoversity, LoudCloud, brand partnerships, shipping & handling and revenue from other programs.
|
(b)
|
Other includes certain adjusting items related to return reserves and other deferred items.
|
Comparable Store Sales variances
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||||||||||||||
Dollars in millions
|
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
||||||||||||||||||||
Textbooks
|
|
$
|
(19.1
|
)
|
|
(3.3
|
)%
|
|
$
|
(24.4
|
)
|
|
(4.2
|
)%
|
|
$
|
(26.0
|
)
|
|
(3.8
|
)%
|
|
$
|
(27.9
|
)
|
|
(4.1
|
)%
|
General Merchandise
|
|
(2.3
|
)
|
|
(1.3
|
)%
|
|
2.2
|
|
|
1.3
|
%
|
|
(0.7
|
)
|
|
(0.2
|
)%
|
|
9.2
|
|
|
3.5
|
%
|
||||
Trade Books
|
|
(0.8
|
)
|
|
(5.6
|
)%
|
|
0.3
|
|
|
1.8
|
%
|
|
(1.5
|
)
|
|
(5.2
|
)%
|
|
0.4
|
|
|
1.4
|
%
|
||||
Other
|
|
(0.2
|
)
|
|
(88.0
|
)%
|
|
(0.7
|
)
|
|
(72.4
|
)%
|
|
(0.4
|
)
|
|
(88.7
|
)%
|
|
(0.6
|
)
|
|
(51.8
|
)%
|
||||
Total Comparable Store Sales
|
|
$
|
(22.4
|
)
|
|
(2.9
|
)%
|
|
$
|
(22.6
|
)
|
|
(3.0
|
)%
|
|
$
|
(28.6
|
)
|
|
(2.9
|
)%
|
|
$
|
(18.9
|
)
|
|
(1.9
|
)%
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||||||||||||
Dollars in thousands
|
October 29, 2016
|
|
% of
Related Sales |
|
October 31, 2015
|
|
% of
Related Sales |
|
October 29, 2016
|
|
% of
Related Sales |
|
October 31, 2015
|
|
% of
Related Sales |
||||||||||
Product and other cost of sales
|
$
|
554,498
|
|
|
79.4%
|
|
$
|
537,380
|
|
|
78.6%
|
|
$
|
732,492
|
|
|
80.0
|
%
|
|
$
|
712,289
|
|
|
78.9
|
%
|
Rental cost of sales
|
44,659
|
|
|
61.4%
|
|
43,363
|
|
|
60.3%
|
|
58,489
|
|
|
62.1
|
%
|
|
55,893
|
|
|
60.7
|
%
|
||||
Total Cost of Sales
|
$
|
599,157
|
|
|
77.7%
|
|
$
|
580,743
|
|
|
76.8%
|
|
$
|
790,981
|
|
|
78.3
|
%
|
|
$
|
768,182
|
|
|
77.2
|
%
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||||||||||||
Dollars in thousands
|
October 29, 2016
|
|
% of
Related Sales |
|
October 31, 2015
|
|
% of
Related Sales |
|
October 29, 2016
|
|
% of
Related Sales |
|
October 31, 2015
|
|
% of
Related Sales |
||||||||||
Product and other gross margin
|
$
|
143,429
|
|
|
20.6%
|
|
$
|
146,626
|
|
|
21.4%
|
|
$
|
183,171
|
|
|
20.0
|
%
|
|
$
|
190,433
|
|
|
21.1
|
%
|
Rental gross margin
|
28,085
|
|
|
38.6%
|
|
28,495
|
|
|
39.7%
|
|
35,756
|
|
|
37.9
|
%
|
|
36,232
|
|
|
39.3
|
%
|
||||
Gross Margin
|
$
|
171,514
|
|
|
22.3%
|
|
$
|
175,121
|
|
|
23.2%
|
|
$
|
218,927
|
|
|
21.7
|
%
|
|
$
|
226,665
|
|
|
22.8
|
%
|
•
|
Product and other gross margin decreased (80 basis points), driven primarily by lower margin rates (40 basis points), primarily related to increased markdowns on textbooks, including the impact of our price-matching program (15 basis points), and the prior year benefit from the inventory management strategies for used textbooks. The decrease is also attributable to increased costs related to our college and university contracts (30 basis points) resulting from contract renewals and new store contracts and an unfavorable sales mix (10 basis points) resulting from a decrease in higher margin used textbooks as a percentage of sales.
|
•
|
Rental gross margin decreased (110 basis points), driven primarily by increased costs related to our college and university contracts (80 basis points) resulting from contract renewals and new store contracts and lower rental margin rates (65 basis points), including the impact of our price-matching program (50 basis points) and the increased rental deferral (20 basis points) which is due to the delayed timing of rush and will reverse by the end of the fall semester. These decreases were partially offset by a favorable rental mix (35 basis points).
|
•
|
Product and other gross margin decreased (110 basis points), driven primarily by lower margin rates (80 basis points), primarily related to increased markdowns on textbooks, including the impact of our price-matching program (10 basis points), and the prior year benefit from the inventory management strategies for used textbooks. The decrease is also attributable to increased costs related to our college and university contracts (30 basis points) resulting from contract renewals and new store contracts.
|
•
|
Rental gross margin decreased (140 basis points), driven primarily by increased costs related to our college and university contracts (95 basis points) resulting from contract renewals and new store contracts and lower rental margin rates (70 basis points), including the impact of our price-matching program (40 basis points) and the increased rental deferral (10 basis points) which is due to the delayed timing of rush and will reverse by the end of the fall semester. These decreases were partially offset by a favorable rental mix (25 basis points).
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||||||||||||
Dollars in thousands
|
October 29, 2016
|
|
% of
Sales |
|
October 31, 2015
|
|
% of
Sales |
|
October 29, 2016
|
|
% of
Sales |
|
October 31, 2015
|
|
% of
Sales |
||||||||||
Total Selling and Administrative Expenses
|
$
|
101,767
|
|
|
13.2%
|
|
$
|
102,439
|
|
|
13.6%
|
|
$
|
187,231
|
|
|
18.5
|
%
|
|
$
|
189,123
|
|
|
19.0
|
%
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||||||||||||
Dollars in thousands
|
October 29, 2016
|
|
% of
Sales |
|
October 31, 2015
|
|
% of
Sales |
|
October 29, 2016
|
|
% of
Sales |
|
October 31, 2015
|
|
% of
Sales |
||||||||||
Total Depreciation and Amortization Expense
|
$
|
12,987
|
|
|
1.7%
|
|
$
|
13,169
|
|
|
1.7%
|
|
$
|
25,908
|
|
|
2.6
|
%
|
|
$
|
26,269
|
|
|
2.6
|
%
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||||||||||||
Dollars in thousands
|
October 29, 2016
|
|
% of
Sales |
|
October 31, 2015
|
|
% of
Sales |
|
October 29, 2016
|
|
% of
Sales |
|
October 31, 2015
|
|
% of
Sales |
||||||||||
Total Operating Income
|
$
|
56,760
|
|
|
7.4%
|
|
$
|
59,513
|
|
|
7.9%
|
|
$
|
3,998
|
|
|
0.4
|
%
|
|
$
|
11,273
|
|
|
1.2
|
%
|
|
13 weeks ended
|
26 weeks ended
|
|||||||||||||
Dollars in thousands
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
||||||||
Interest Expense, Net
|
$
|
630
|
|
|
$
|
554
|
|
|
$
|
1,296
|
|
|
$
|
557
|
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||||||||||||
Dollars in thousands
|
October 29, 2016
|
|
Effective Rate
|
|
October 31, 2015
|
|
Effective Rate
|
|
October 29, 2016
|
|
Effective Rate
|
|
October 31, 2015
|
|
Effective Rate
|
||||||||||
Income Tax Expense
|
$
|
26,841
|
|
|
47.8%
|
|
$
|
25,558
|
|
|
43.4%
|
|
$
|
1,329
|
|
|
49.2
|
%
|
|
$
|
4,233
|
|
|
39.5
|
%
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||
Dollars in thousands
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
||||||||
Net Income
|
$
|
29,289
|
|
|
$
|
33,401
|
|
|
$
|
1,373
|
|
|
$
|
6,483
|
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||
Dollars in thousands
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
||||||||
Net income
|
$
|
29,289
|
|
|
$
|
33,401
|
|
|
$
|
1,373
|
|
|
$
|
6,483
|
|
Add:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization expense
|
12,987
|
|
|
13,169
|
|
|
25,908
|
|
|
26,269
|
|
||||
Interest expense, net
|
630
|
|
|
554
|
|
|
1,296
|
|
|
557
|
|
||||
Income tax expense
|
26,841
|
|
|
25,558
|
|
|
1,329
|
|
|
4,233
|
|
||||
Restructuring costs
(a)
|
—
|
|
|
—
|
|
|
1,790
|
|
|
—
|
|
||||
Transaction costs
(b)
|
644
|
|
|
—
|
|
|
2,171
|
|
|
—
|
|
||||
Adjusted EBITDA (non-GAAP)
(c)
|
$
|
70,391
|
|
|
$
|
72,682
|
|
|
$
|
33,867
|
|
|
$
|
37,542
|
|
(a)
|
See
Management Discussion and Analysis - Results of Operations
discussion above.
|
(b)
|
Transaction costs are costs incurred for business development and acquisitions, and are included in selling and administrative expenses in the condensed consolidated statements of operations.
|
(c)
|
See
Use of Non-GAAP Measures
discussion above.
|
|
13 weeks ended
|
|
26 weeks ended
|
||||||||||||
Dollars in thousands
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
||||||||
Net income
|
$
|
29,289
|
|
|
$
|
33,401
|
|
|
$
|
1,373
|
|
|
$
|
6,483
|
|
Reconciling items, after-tax
(below)
|
394
|
|
|
—
|
|
|
2,425
|
|
|
—
|
|
||||
Adjusted Earnings (non-GAAP)
(a)
|
$
|
29,683
|
|
|
$
|
33,401
|
|
|
$
|
3,798
|
|
|
$
|
6,483
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciling items, pre-tax
|
|
|
|
|
|
|
|
||||||||
Restructuring costs
(b)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,790
|
|
|
$
|
—
|
|
Transaction costs
(c)
|
644
|
|
|
—
|
|
|
2,171
|
|
|
—
|
|
||||
Reconciling items, pre-tax
|
644
|
|
|
—
|
|
|
3,961
|
|
|
—
|
|
||||
Less: Pro forma income tax impact
(d)
|
250
|
|
|
—
|
|
|
1,536
|
|
|
—
|
|
||||
Reconciling items, after-tax
|
$
|
394
|
|
|
$
|
—
|
|
|
$
|
2,425
|
|
|
$
|
—
|
|
(b)
|
See
Management Discussion and Analysis - Results of Operations
discussion above.
|
(d)
|
Represents the projected reduction in income tax expense based on our current combined federal and state aggregate income tax rate.
|
|
|
26 weeks ended
|
||||||
Dollars in thousands
|
|
October 29, 2016
|
|
October 31, 2015
|
||||
Cash and cash equivalents at beginning of period
|
|
$
|
28,568
|
|
|
$
|
44,816
|
|
Net cash flows provided by operating activities
|
|
179,329
|
|
|
81,481
|
|
||
Net cash flows used in investing activities
|
|
(23,463
|
)
|
|
(27,953
|
)
|
||
Net cash flows used in financing activities
|
|
(7,856
|
)
|
|
(9,695
|
)
|
||
Cash and cash equivalents at end of period
|
|
$
|
176,578
|
|
|
$
|
88,649
|
|
•
|
general competitive conditions, including actions our competitors 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 bookstore operations or change the operation of their bookstores;
|
•
|
the general economic environment and consumer spending patterns;
|
•
|
decreased consumer demand for our products, low growth or declining sales;
|
•
|
restructuring 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, and further enhancements to Yuzu
®
and any future higher education digital products, and the inability to achieve the expected cost savings;
|
•
|
our ability to successfully implement our strategic initiatives including our ability to identify and execute upon additional acquisitions and strategic investments;
|
•
|
technological changes;
|
•
|
our international expansion could result in additional risks;
|
•
|
our ability to attract and retain employees;
|
•
|
changes to payment terms, return policies, the discount or margin on products or other terms with our suppliers;
|
•
|
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 contracts and higher-than-anticipated store closings;
|
•
|
disruptions to our computer systems, data lines, telephone systems or supply chain, including the loss of suppliers;
|
•
|
work stoppages or increases in labor costs;
|
•
|
possible increases in shipping rates or interruptions in shipping service, effects of competition;
|
•
|
obsolete or excessive inventory;
|
•
|
product shortages;
|
•
|
changes in law or regulation;
|
•
|
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 or tax-related proceedings or audits;
|
•
|
changes in accounting standards;
|
•
|
challenges to running our company independently from Barnes & Noble, Inc. following the Spin-Off;
|
•
|
the potential adverse impact on our business resulting from the Spin-Off; and
|
•
|
the other risks and uncertainties detailed in the section titled
“Risk Factors”
in Part I - Item 1A in our Annual Report on Form 10-K for the year ended April 30, 2016.
|
Period
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share (a)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
|
||||||
July 31, 2016 - August 27, 2016
|
12,900
|
|
|
$
|
11.67
|
|
|
12,900
|
|
|
$
|
26,669,324
|
|
August 28, 2016 - October 1, 2016
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
26,669,324
|
|
October 2, 2016 - October 29, 2016
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
26,669,324
|
|
|
12,900
|
|
|
$
|
11.67
|
|
|
12,900
|
|
|
|
|
(a)
|
This amount represents the average price paid per common share. This price includes a per share commission paid for all repurchases.
|
10. 1 †
|
|
Barnes & Noble Education, Inc. Equity Incentive Plan, as amended (incorporated herein by reference to Appendix A in the Company's Definitive Proxy Statement on Schedule 14A filed with the SEC on August 17, 2016).
|
|
|
|
31.1
|
|
Certification by the Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification by the Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
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
|
†
|
Previously filed.
|
BARNES & NOBLE EDUCATION, INC.
|
|
||
(Registrant)
|
|
||
|
|
|
|
By:
|
|
/
S
/ BARRY BROVER
|
|
|
|
Barry Brover
|
|
|
|
Chief Financial Officer
|
|
|
|
(principal financial officer)
|
|
|
|
|
|
By:
|
|
/
S
/ SEEMA PAUL
|
|
|
|
Seema Paul
|
|
|
|
Chief Accounting Officer
|
|
|
|
(principal accounting officer)
|
|
10.1 †
|
|
Barnes & Noble Education, Inc. Equity Incentive Plan, as amended (incorporated herein by reference to Appendix A in the Company's Definitive Proxy Statement on Schedule 14A filed with the SEC on August 17, 2016).
|
|
|
|
31.1
|
|
Certification by the Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification by the Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
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
|
†
|
Previously filed.
|
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1 Month Barnes and Noble Education Chart |
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