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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 | |
---|---|---|---|---|---|---|---|---|
0.003 | 1.39% | 0.219 | 0.224 | 0.21 | 0.22 | 694,907 | 00:51:07 |
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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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x
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging Growth Company
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¨
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Page No.
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13 weeks ended
|
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39 weeks ended
|
||||||||||||
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January 27,
2018 |
|
January 28,
2017 |
|
January 27,
2018 |
|
January 28,
2017 |
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Product sales and other
|
$
|
540,903
|
|
|
$
|
457,147
|
|
|
$
|
1,693,230
|
|
|
$
|
1,372,810
|
|
Rental income
|
62,488
|
|
|
64,477
|
|
|
152,733
|
|
|
158,722
|
|
||||
Total sales
|
603,391
|
|
|
521,624
|
|
|
1,845,963
|
|
|
1,531,532
|
|
||||
Cost of sales:
|
|
|
|
|
|
|
|
||||||||
Product and other cost of sales
|
419,641
|
|
|
366,190
|
|
|
1,326,221
|
|
|
1,098,682
|
|
||||
Rental cost of sales
|
37,215
|
|
|
39,509
|
|
|
91,936
|
|
|
97,998
|
|
||||
Total cost of sales
|
456,856
|
|
|
405,699
|
|
|
1,418,157
|
|
|
1,196,680
|
|
||||
Gross profit
|
146,535
|
|
|
115,925
|
|
|
427,806
|
|
|
334,852
|
|
||||
Selling and administrative expenses
|
111,974
|
|
|
97,111
|
|
|
326,532
|
|
|
282,171
|
|
||||
Depreciation and amortization expense
|
17,007
|
|
|
13,149
|
|
|
48,728
|
|
|
39,057
|
|
||||
Impairment loss (non-cash)
|
313,130
|
|
|
—
|
|
|
313,130
|
|
|
—
|
|
||||
Restructuring and other charges
|
—
|
|
|
—
|
|
|
5,429
|
|
|
1,790
|
|
||||
Transaction costs
|
49
|
|
|
467
|
|
|
1,895
|
|
|
2,638
|
|
||||
Operating (loss) income
|
(295,625
|
)
|
|
5,198
|
|
|
(267,908
|
)
|
|
9,196
|
|
||||
Interest expense, net
|
2,954
|
|
|
679
|
|
|
7,828
|
|
|
1,975
|
|
||||
(Loss) income before income taxes
|
(298,579
|
)
|
|
4,519
|
|
|
(275,736
|
)
|
|
7,221
|
|
||||
Income tax (benefit) expense
|
(15,344
|
)
|
|
758
|
|
|
(6,113
|
)
|
|
2,087
|
|
||||
Net (loss) income
|
$
|
(283,235
|
)
|
|
$
|
3,761
|
|
|
$
|
(269,623
|
)
|
|
$
|
5,134
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) Earnings per share of common stock:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(6.04
|
)
|
|
$
|
0.08
|
|
|
$
|
(5.77
|
)
|
|
$
|
0.11
|
|
Diluted
|
$
|
(6.04
|
)
|
|
$
|
0.08
|
|
|
$
|
(5.77
|
)
|
|
$
|
0.11
|
|
Weighted average shares of common stock outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
46,914
|
|
|
46,276
|
|
|
46,712
|
|
|
46,265
|
|
||||
Diluted
|
46,914
|
|
|
46,844
|
|
|
46,712
|
|
|
46,716
|
|
|
January 27,
2018 |
|
January 28,
2017 |
|
April 29,
2017 |
||||||
|
(unaudited)
|
|
(unaudited)
|
|
(audited)
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
22,373
|
|
|
$
|
132,061
|
|
|
$
|
19,003
|
|
Receivables, net
|
243,434
|
|
|
178,825
|
|
|
86,040
|
|
|||
Merchandise inventories, net
|
614,499
|
|
|
494,032
|
|
|
434,064
|
|
|||
Textbook rental inventories
|
61,427
|
|
|
67,372
|
|
|
52,826
|
|
|||
Prepaid expenses and other current assets
|
12,274
|
|
|
8,134
|
|
|
10,698
|
|
|||
Total current assets
|
954,007
|
|
|
880,424
|
|
|
602,631
|
|
|||
Property and equipment, net
|
110,987
|
|
|
107,272
|
|
|
116,613
|
|
|||
Intangible assets, net
|
224,314
|
|
|
191,628
|
|
|
209,885
|
|
|||
Goodwill
|
49,282
|
|
|
281,346
|
|
|
329,467
|
|
|||
Other noncurrent assets
|
41,990
|
|
|
39,233
|
|
|
41,236
|
|
|||
Total assets
|
$
|
1,380,580
|
|
|
$
|
1,499,903
|
|
|
$
|
1,299,832
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
488,954
|
|
|
$
|
480,378
|
|
|
$
|
192,742
|
|
Accrued liabilities
|
252,202
|
|
|
207,731
|
|
|
120,478
|
|
|||
Short-term borrowings
|
—
|
|
|
—
|
|
|
100,000
|
|
|||
Total current liabilities
|
741,156
|
|
|
688,109
|
|
|
413,220
|
|
|||
Long-term deferred taxes, net
|
4,278
|
|
|
22,709
|
|
|
16,871
|
|
|||
Other long-term liabilities
|
73,468
|
|
|
76,196
|
|
|
96,433
|
|
|||
Long-term borrowings
|
113,000
|
|
|
—
|
|
|
59,600
|
|
|||
Total liabilities
|
931,902
|
|
|
787,014
|
|
|
586,124
|
|
|||
Commitments and contingencies
|
—
|
|
|
—
|
|
|
—
|
|
|||
Stockholders' equity:
|
|
|
|
|
|
||||||
Preferred stock, $0.01 par value; authorized, 5,000 shares; issued and outstanding, none
|
—
|
|
|
—
|
|
|
—
|
|
|||
Common stock, $0.01 par value; authorized, 200,000 shares; issued, 50,028, 48,972 and 49,372 shares, respectively; outstanding, 46,914, 46,276 and 46,517 shares, respectively
|
500
|
|
|
490
|
|
|
494
|
|
|||
Additional paid-in capital
|
715,088
|
|
|
706,736
|
|
|
708,871
|
|
|||
(Accumulated deficit) Retained earnings
|
(237,260
|
)
|
|
32,136
|
|
|
32,363
|
|
|||
Treasury stock, at cost
|
(29,650
|
)
|
|
(26,473
|
)
|
|
(28,020
|
)
|
|||
Total stockholders' equity
|
448,678
|
|
|
712,889
|
|
|
713,708
|
|
|||
Total liabilities and stockholders' equity
|
$
|
1,380,580
|
|
|
$
|
1,499,903
|
|
|
$
|
1,299,832
|
|
|
39 weeks ended
|
||||||
|
January 27,
2018 |
|
January 28,
2017 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net (loss) income
|
$
|
(269,623
|
)
|
|
$
|
5,134
|
|
Adjustments to reconcile net (loss) income to net cash flows from operating activities:
|
|
|
|
||||
Depreciation and amortization expense
|
48,728
|
|
|
39,057
|
|
||
Amortization of deferred financing costs
|
1,127
|
|
|
488
|
|
||
Impairment loss (non-cash)
|
313,130
|
|
|
—
|
|
||
Deferred taxes
|
(12,594
|
)
|
|
(7,156
|
)
|
||
Stock-based compensation expense
|
6,223
|
|
|
7,227
|
|
||
Change in other long-term liabilities
|
(23,252
|
)
|
|
815
|
|
||
Changes in other operating assets and liabilities, net
|
77,701
|
|
|
99,437
|
|
||
Net cash flows provided by operating activities
|
141,440
|
|
|
145,002
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(30,101
|
)
|
|
(26,488
|
)
|
||
Acquisition of business, net of cash acquired
|
(58,259
|
)
|
|
(917
|
)
|
||
Net increase in other noncurrent assets
|
(1,479
|
)
|
|
(6,246
|
)
|
||
Net cash flows used in investing activities
|
(89,839
|
)
|
|
(33,651
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from borrowings under Credit Agreement
|
481,600
|
|
|
116,100
|
|
||
Repayments of borrowings under Credit Agreement
|
(528,200
|
)
|
|
(116,100
|
)
|
||
Purchase of treasury shares
|
(1,630
|
)
|
|
(7,858
|
)
|
||
Net cash flows used in financing activities
|
(48,230
|
)
|
|
(7,858
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
3,371
|
|
|
103,493
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
21,697
|
|
|
30,866
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
25,068
|
|
|
$
|
134,359
|
|
Changes in other operating assets and liabilities, net:
|
|
|
|
||||
Receivables, net
|
$
|
(157,043
|
)
|
|
$
|
(127,369
|
)
|
Merchandise inventories
|
(180,434
|
)
|
|
(181,285
|
)
|
||
Textbook rental inventories
|
(8,601
|
)
|
|
(19,612
|
)
|
||
Prepaid expenses and other current assets
|
(1,079
|
)
|
|
(1,583
|
)
|
||
Accounts payable and accrued liabilities
|
424,858
|
|
|
429,286
|
|
||
Changes in other operating assets and liabilities, net
|
$
|
77,701
|
|
|
$
|
99,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Common Stock
|
|
Paid-In
|
|
Retained
|
|
Treasury Stock
|
|
Total
|
||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Earnings
|
|
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
|
|
|
|
|
|
7,227
|
|
|
|
|
|
|
|
|
7,227
|
|
||||||||||
Vested equity awards
|
|
327
|
|
|
4
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||
Common stock repurchased
|
|
|
|
|
|
|
|
|
|
689
|
|
|
(6,718
|
)
|
|
(6,718
|
)
|
|||||||||
Shares repurchased for tax withholdings for vested stock awards
|
|
|
|
|
|
|
|
|
|
117
|
|
|
(1,140
|
)
|
|
(1,140
|
)
|
|||||||||
Net income
|
|
|
|
|
|
|
|
5,134
|
|
|
|
|
|
|
5,134
|
|
||||||||||
Balance at January 28, 2017
|
|
48,972
|
|
|
$
|
490
|
|
|
$
|
706,736
|
|
|
$
|
32,136
|
|
|
2,696
|
|
|
$
|
(26,473
|
)
|
|
$
|
712,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Common Stock
|
|
Paid-In
|
|
Accumulated
|
|
Treasury Stock
|
|
Total
|
||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Shares
|
|
Amount
|
|
Equity
|
||||||||||||
Balance at April 29, 2017
|
|
49,372
|
|
|
$
|
494
|
|
|
$
|
708,871
|
|
|
$
|
32,363
|
|
|
2,855
|
|
|
$
|
(28,020
|
)
|
|
$
|
713,708
|
|
Stock-based compensation expense
|
|
|
|
|
|
6,223
|
|
|
|
|
|
|
|
|
6,223
|
|
||||||||||
Vested equity awards
|
|
656
|
|
|
6
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||
Shares repurchased for tax withholdings for vested stock awards
|
|
|
|
|
|
|
|
|
|
259
|
|
|
(1,630
|
)
|
|
(1,630
|
)
|
|||||||||
Net loss
|
|
|
|
|
|
|
|
(269,623
|
)
|
|
|
|
|
|
(269,623
|
)
|
||||||||||
Balance at January 27, 2018
|
|
50,028
|
|
|
$
|
500
|
|
|
$
|
715,088
|
|
|
$
|
(237,260
|
)
|
|
3,114
|
|
|
$
|
(29,650
|
)
|
|
$
|
448,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Increasing market share with new accounts.
|
•
|
Adapting our merchandising strategy and product and service offerings.
|
•
|
Providing a scalable and leading digital product and solution set.
|
•
|
Expanding strategic opportunities through acquisitions and partnerships.
|
Type of Intangible
|
|
Amount
|
|
Estimated Useful Life
|
||
Content
|
|
$
|
14,500
|
|
|
5
|
Technology
|
|
8,000
|
|
|
5
|
|
Non-Compete Agreements
|
|
4,000
|
|
|
3
|
|
Subscriber List
|
|
1,800
|
|
|
2
|
|
Total Intangibles:
|
|
$
|
28,300
|
|
|
|
Cash paid to Seller or escrow
|
|
$
|
165,499
|
|
Consideration to Seller for pre-closing costs
|
|
4,657
|
|
|
Cash paid for Seller closing costs
|
|
4,044
|
|
|
Contract purchase price
|
|
$
|
174,200
|
|
Consideration for payment to settle Seller's outstanding short-term borrowings
|
|
24,437
|
|
|
Consideration for reimbursement of pre-acquisition tax liability to Seller
|
|
15,556
|
|
|
Less: Consideration to Seller for pre-closing costs
|
|
(4,657
|
)
|
|
Less: Consideration for settlement of pre-existing payable to Seller
|
|
(21,674
|
)
|
|
Total value of consideration transferred
|
|
$
|
187,862
|
|
|
|
|
Total consideration transferred
|
|
$
|
187,862
|
|
Cash and cash equivalents
|
|
$
|
472
|
|
Accounts receivable, net
|
|
28,177
|
|
|
Merchandise inventory
|
|
128,431
|
|
|
Property and equipment
|
|
12,403
|
|
|
Intangible assets
|
|
21,576
|
|
|
Prepaid and other assets
|
|
4,748
|
|
|
Total assets
|
|
$
|
195,807
|
|
Accounts payable
|
|
$
|
35,383
|
|
Accrued expenses
|
|
8,799
|
|
|
Other long-term liabilities
|
|
13,044
|
|
|
Total liabilities
|
|
$
|
57,226
|
|
Net assets acquired
|
|
$
|
138,581
|
|
Goodwill
|
|
$
|
49,281
|
|
Type of Intangible
|
|
Amount
|
|
Estimated Useful Life
|
||
Favorable Lease
|
|
$
|
1,076
|
|
|
6.5
|
Trade Name
|
|
3,500
|
|
|
10
|
|
Technology
|
|
1,500
|
|
|
3
|
|
Book Store Relationship
|
|
13,000
|
|
|
13
|
|
Direct Customer Relationship
|
|
2,000
|
|
|
15
|
|
Non-Compete Agreements
|
|
500
|
|
|
3
|
|
Total Intangibles:
|
|
$
|
21,576
|
|
|
|
•
|
BNC purchases new and used textbooks from MBS for distribution at BNC's physical college bookstores. We eliminate the net sales from MBS and the intercompany profit in ending inventory, and
|
•
|
MBS pays commissions to BNC for certain textbooks it sells to MBS that cannot be returned to suppliers or used in their stores. The commission is based on the volume of textbooks sold to MBS and with respect to the textbook requirements of certain distance learning programs that MBS fulfills on BNC's behalf.
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||
|
January 27,
2018 |
|
January 28,
2017 |
|
January 27, 2018
|
|
January 28, 2017
|
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
BNC
|
$
|
506,460
|
|
|
$
|
521,624
|
|
|
$
|
1,518,224
|
|
|
$
|
1,531,532
|
|
MBS
|
138,927
|
|
|
—
|
|
|
413,579
|
|
|
—
|
|
||||
Elimination
|
(41,996
|
)
|
|
—
|
|
|
(85,840
|
)
|
|
—
|
|
||||
Total Sales
|
$
|
603,391
|
|
|
$
|
521,624
|
|
|
$
|
1,845,963
|
|
|
$
|
1,531,532
|
|
|
|
|
|
|
|
|
|
||||||||
Gross Profit
|
|
|
|
|
|
|
|
||||||||
BNC
|
$
|
117,413
|
|
|
$
|
115,925
|
|
|
$
|
337,875
|
|
|
$
|
334,852
|
|
MBS
|
34,949
|
|
|
—
|
|
|
95,713
|
|
|
—
|
|
||||
Elimination
|
(5,827
|
)
|
|
—
|
|
|
(5,782
|
)
|
|
—
|
|
||||
Total Gross Profit
|
$
|
146,535
|
|
|
$
|
115,925
|
|
|
$
|
427,806
|
|
|
$
|
334,852
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and Amortization
|
|
|
|
|
|
|
|
||||||||
BNC
|
$
|
15,411
|
|
|
$
|
13,149
|
|
|
$
|
43,879
|
|
|
$
|
39,057
|
|
MBS
|
1,596
|
|
|
—
|
|
|
4,849
|
|
|
—
|
|
||||
Total Depreciation and Amortization
|
$
|
17,007
|
|
|
$
|
13,149
|
|
|
$
|
48,728
|
|
|
$
|
39,057
|
|
|
|
|
|
|
|
|
|
||||||||
Operating (Loss) Income
|
|
|
|
|
|
|
|
||||||||
BNC
(a),(b),(c)
|
$
|
(308,954
|
)
|
|
$
|
5,198
|
|
|
$
|
(310,004
|
)
|
|
$
|
9,196
|
|
MBS
|
19,156
|
|
|
—
|
|
|
47,878
|
|
|
—
|
|
||||
Elimination
|
(5,827
|
)
|
|
—
|
|
|
(5,782
|
)
|
|
—
|
|
||||
Total Operating (Loss) Income
|
$
|
(295,625
|
)
|
|
$
|
5,198
|
|
|
$
|
(267,908
|
)
|
|
$
|
9,196
|
|
|
|
|
|
|
|
|
|
||||||||
The following is a reconciliation of segment Operating (Loss) Income to consolidated (Loss) Income Before Income Taxes:
|
|
|
|
|
|
|
|
||||||||
Total Operating (Loss) Income
|
$
|
(295,625
|
)
|
|
$
|
5,198
|
|
|
$
|
(267,908
|
)
|
|
$
|
9,196
|
|
Interest Expense, net
|
(2,954
|
)
|
|
(679
|
)
|
|
(7,828
|
)
|
|
(1,975
|
)
|
||||
Total (Loss) Income Before Income Taxes
|
$
|
(298,579
|
)
|
|
$
|
4,519
|
|
|
$
|
(275,736
|
)
|
|
$
|
7,221
|
|
|
|
|
|
|
|
|
|
(c)
|
During the 13 weeks ended January 27, 2018, we completed our annual goodwill impairment test. Based on the results of the impairment test, the carrying value of the BNC reporting unit exceeded its fair value and we recorded a goodwill impairment (non-cash impairment loss) of
$313,130
for the BNC segment. For additional information, see
Note 2. Summary of Significant Accounting Policies
in this Form 10-Q.
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||
|
January 27,
2018 |
|
January 28,
2017 |
|
January 27,
2018 |
|
January 28,
2017 |
||||||||
Numerator for basic and diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(283,235
|
)
|
|
$
|
3,761
|
|
|
$
|
(269,623
|
)
|
|
$
|
5,134
|
|
Less allocation of earnings to participating securities
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Net (loss) income available to common shareholders
|
$
|
(283,235
|
)
|
|
$
|
3,760
|
|
|
$
|
(269,623
|
)
|
|
$
|
5,131
|
|
|
|
|
|
|
|
|
|
||||||||
Numerator for diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net (loss) income available to common shareholders
|
$
|
(283,235
|
)
|
|
$
|
3,760
|
|
|
$
|
(269,623
|
)
|
|
$
|
5,131
|
|
Allocation of earnings to participating securities
|
—
|
|
|
1
|
|
|
—
|
|
|
3
|
|
||||
Less diluted allocation of earnings to participating securities
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Net (loss) income available to common shareholders
|
$
|
(283,235
|
)
|
|
$
|
3,760
|
|
|
$
|
(269,623
|
)
|
|
$
|
5,131
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares of Common Stock
|
46,914
|
|
|
46,276
|
|
|
46,712
|
|
|
46,265
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Denominator for diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares of Common Stock
|
46,914
|
|
|
46,276
|
|
|
46,712
|
|
|
46,265
|
|
||||
Average dilutive restricted stock units
|
—
|
|
|
512
|
|
|
—
|
|
|
397
|
|
||||
Average dilutive performance shares
|
—
|
|
|
52
|
|
|
—
|
|
|
33
|
|
||||
Average dilutive restricted shares
|
—
|
|
|
4
|
|
|
—
|
|
|
21
|
|
||||
Average dilutive performance share units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Average dilutive options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Diluted weighted average shares of Common Stock
|
46,914
|
|
|
46,844
|
|
|
46,712
|
|
|
46,716
|
|
||||
|
|
|
|
|
|
|
|
||||||||
(Loss) Earnings per share of Common Stock:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(6.04
|
)
|
|
$
|
0.08
|
|
|
$
|
(5.77
|
)
|
|
$
|
0.11
|
|
Diluted
|
$
|
(6.04
|
)
|
|
$
|
0.08
|
|
|
$
|
(5.77
|
)
|
|
$
|
0.11
|
|
•
|
537,756
performance share units ("PSU") awards 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 PSU awards will vest based on company performance during Fiscal 2018 - Fiscal 2019 with one additional year of time-based vesting. The number of PSU awards that will vest range from 0%-150% of the target award based on actual performance.
|
•
|
1,562,110
restricted stock units ("RSU") awards were granted to employees with a three year vesting period in accordance with the Equity Incentive Plan;
|
•
|
78,816
RSU awards and
19,704
restricted stock ("RS") awards were granted to the current Board of Directors ("BOD") members for annual compensation with a one year vesting period in accordance with the Equity Incentive Plan.
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||
|
January 27,
2018 |
|
January 28,
2017 |
|
January 27,
2018 |
|
January 28,
2017 |
||||||||
Restricted stock expense
|
$
|
30
|
|
|
$
|
30
|
|
|
$
|
90
|
|
|
$
|
250
|
|
Restricted stock units expense
(a)
|
2,237
|
|
|
2,622
|
|
|
6,277
|
|
|
6,500
|
|
||||
Performance shares expense
(b)
|
58
|
|
|
117
|
|
|
(275
|
)
|
|
477
|
|
||||
Performance share units expense
(b)
|
(255
|
)
|
|
—
|
|
|
131
|
|
|
—
|
|
||||
Stock-based compensation expense
|
$
|
2,070
|
|
|
$
|
2,769
|
|
|
$
|
6,223
|
|
|
$
|
7,227
|
|
•
|
Overall Economic Environment, College Enrollment and Consumer Spending Patterns:
Our business is affected by funding levels at colleges and universities, by changes in enrollments at colleges and universities, and spending on textbooks and general merchandise. The growth of our business depends on our ability to attract new students and to increase the level of engagement by existing students. For the 39 weeks ended January 27, 2018, our comparable store sales were impacted by lower average selling prices of course materials driven by lower publisher prices resulting from a shift to lower cost options and more affordable solutions, including digital. Additionally, comparable store sales declined for textbooks due to lower community college enrollment, increased consumer purchases directly from publishers and other online providers, and general weakness in the retail environment.
|
•
|
Supply Chain and Inventory:
Since the demand for used and new textbooks has historically been greater than the available supply, our financial results are highly dependent upon MBS Wholesale’s ability to build its textbook inventory from suppliers in advance of the selling season. Some textbook publishers have begun to supply textbooks on consignment or rental programs which could impact used textbook supplies in the future. In February 2018, BNED signed an agreement with McGraw-Hill Education, in which MBS would act as a distributor for rental textbooks offered through McGraw-Hill Education's newly announced rental program. The program includes more than 250 titles, with plans for all future titles. See
Fiscal Year 2018 Highlights
above for additional information.
|
•
|
Demand for Digital Offerings:
Over the longer-term, we anticipate significant new opportunities for our digital product offerings. Through our LoudCloud platform, we address the growing demand for alternative forms of educational materials and learning tools. In addition, our acquisition of Student Brands offers additional digital direct-to-student services, centered on assisting students with the writing process. See
Fiscal Year 2018 Highlights
above for additional information.
|
•
|
New and Existing Bookstore Contracts:
We expect awards of new accounts resulting in new physical and virtual store openings will continue to be an important driver of future growth in our business. We expect to continue to successfully renew our current contracts on favorable terms.
|
•
|
Campus Bookstore Outsourcing:
We continue to see increasing trends towards outsourcing in the campus bookstore market, including virtual bookstores and online marketplace websites. We also continue to see a variety of business models being pursued for the provision of textbooks, course materials and general merchandise. Contract costs, which are included in cost of sales, and primarily consist of the payments we make to the colleges and universities to operate their official bookstores (management service agreement costs), including rent expense, have generally increased as a percentage of sales as a result of increased competition for renewals and new store contracts. We continue to work on evolving our business model and enhance our solutions, as well as enforce our contract exclusivity, to combat increased competition.
|
•
|
Course Materials Market:
In addition to the competition in the services we provide to our customers, our textbook business faces significant price competition. Many students purchase from multiple textbook providers, are highly price sensitive and can easily shift spending from one provider or format to another. Some of our competitors have adopted, and may continue to adopt, aggressive pricing policies and devote substantial resources to marketing, website and systems development. As we expand our textbook rental offerings, students have been shifting away from higher priced textbook purchases to lower priced rental options, which has resulted in lower textbook sales and increasing rental income.
|
•
|
Retail Environment:
BNC general merchandise sales, which are subject to short-term fluctuations driven by the broader retail environment, continue to increase over the long term as our product assortments continue to emphasize and reflect the changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online.
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||
Dollars in thousands
|
January 27, 2018
|
|
January 28, 2017
|
|
January 27, 2018
|
|
January 28, 2017
|
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Product sales and other
|
$
|
540,903
|
|
|
$
|
457,147
|
|
|
$
|
1,693,230
|
|
|
$
|
1,372,810
|
|
Rental income
|
62,488
|
|
|
64,477
|
|
|
152,733
|
|
|
158,722
|
|
||||
Total sales
|
$
|
603,391
|
|
|
$
|
521,624
|
|
|
$
|
1,845,963
|
|
|
$
|
1,531,532
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(283,235
|
)
|
|
$
|
3,761
|
|
|
$
|
(269,623
|
)
|
|
$
|
5,134
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Earnings (non-GAAP)
(a)
|
$
|
19,644
|
|
|
$
|
4,047
|
|
|
$
|
39,781
|
|
|
$
|
7,848
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA (non-GAAP)
(a)
|
|
|
|
|
|
|
|
||||||||
BNC
|
$
|
19,636
|
|
|
$
|
18,814
|
|
|
$
|
54,329
|
|
|
$
|
52,681
|
|
MBS
|
20,752
|
|
|
—
|
|
|
56,000
|
|
|
—
|
|
||||
Elimination
|
(5,827
|
)
|
|
—
|
|
|
(5,782
|
)
|
|
—
|
|
||||
Total Adjusted EBITDA (non-GAAP)
|
$
|
34,561
|
|
|
$
|
18,814
|
|
|
$
|
104,547
|
|
|
$
|
52,681
|
|
|
|
|
|
|
|
|
|
(a)
|
Adjusted Earnings and Adjusted EBITDA are a non-GAAP financial measures. See
Adjusted Earnings (non-GAAP)
and
Adjusted EBITDA (non-GAAP)
discussion below.
|
|
13 weeks ended January 27, 2018
|
|
13 weeks ended January 28, 2017
|
|||||
Number of Stores:
|
BNC Stores
|
|
MBS Direct Stores
|
|
BNC Stores
|
|||
Opened
|
6
|
|
|
5
|
|
|
2
|
|
Closed
|
1
|
|
|
13
|
|
|
3
|
|
Opened at end of period
|
782
|
|
|
698
|
|
|
770
|
|
|
|
|
|
|
|
|||
Comparable store sales
(a)
|
(6.2
|
)%
|
|
N/A
|
|
|
(5.3
|
)%
|
|
39 weeks ended January 27, 2018
|
|
39 weeks ended January 28, 2017
|
|||||
Number of Stores:
|
BNC Stores
|
|
MBS Direct Stores
|
|
BNC Stores
|
|||
Opened
|
30
|
|
|
19
|
|
|
36
|
|
Closed
|
17
|
|
|
33
|
|
|
17
|
|
Opened at end of period
|
782
|
|
|
698
|
|
|
770
|
|
|
|
|
|
|
|
|||
Comparable store sales
(a)
|
(4.7
|
)%
|
|
N/A
|
|
|
(4.0
|
)%
|
(a)
|
For BNC, 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
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||
|
January 27, 2018
|
|
January 28, 2017
|
|
January 27, 2018
|
|
January 28, 2017
|
||||
Sales:
|
|
|
|
|
|
|
|
||||
Product sales and other
|
89.6
|
%
|
|
87.6
|
%
|
|
91.7
|
%
|
|
89.6
|
%
|
Rental income
|
10.4
|
|
|
12.4
|
|
|
8.3
|
|
|
10.4
|
|
Total sales
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of sales:
|
|
|
|
|
|
|
|
||||
Product and other cost of sales
(a)
|
77.6
|
|
|
80.1
|
|
|
78.3
|
|
|
80.0
|
|
Rental cost of sales
(a)
|
59.6
|
|
|
61.3
|
|
|
60.2
|
|
|
61.7
|
|
Total cost of sales
|
75.7
|
|
|
77.8
|
|
|
76.8
|
|
|
78.1
|
|
Gross margin
|
24.3
|
|
|
22.2
|
|
|
23.2
|
|
|
21.9
|
|
Selling and administrative expenses
|
18.6
|
|
|
18.6
|
|
|
17.7
|
|
|
18.4
|
|
Depreciation and amortization expense
|
2.8
|
|
|
2.5
|
|
|
2.6
|
|
|
2.6
|
|
Impairment loss (non-cash)
|
51.9
|
|
|
—
|
|
|
17.0
|
|
|
—
|
|
Restructuring and other charges
|
—
|
|
|
—
|
|
|
0.3
|
|
|
0.1
|
|
Transaction costs
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
Operating (loss) income
|
(49.0
|
)%
|
|
1.0
|
%
|
|
(14.5
|
)%
|
|
0.6
|
%
|
(a)
|
Represents the percentage these costs bear to the related sales, instead of total sales.
|
|
13 weeks ended, January 27, 2018
|
|
13 weeks ended
|
||||||||||||||||
Dollars in thousands
|
BNC
(a)
|
|
MBS
(b)
|
|
Eliminations
|
|
January 27,
2018 (a),(b) |
|
January 28, 2017
|
||||||||||
Sales:
|
|
|
|
|
|
|
|
|
|
||||||||||
Product sales and other
|
$
|
445,642
|
|
|
$
|
137,257
|
|
|
$
|
(41,996
|
)
|
|
$
|
540,903
|
|
|
$
|
457,147
|
|
Rental income
|
60,818
|
|
|
1,670
|
|
|
|
|
62,488
|
|
|
64,477
|
|
||||||
Total sales
|
506,460
|
|
|
138,927
|
|
|
(41,996
|
)
|
|
603,391
|
|
|
521,624
|
|
|||||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
||||||||||
Product and other cost of sales
|
352,742
|
|
|
103,068
|
|
|
(36,169
|
)
|
|
419,641
|
|
|
366,190
|
|
|||||
Rental cost of sales
|
36,305
|
|
|
910
|
|
|
—
|
|
|
37,215
|
|
|
39,509
|
|
|||||
Total cost of sales
|
389,047
|
|
|
103,978
|
|
|
(36,169
|
)
|
|
456,856
|
|
|
405,699
|
|
|||||
Gross profit
|
117,413
|
|
|
34,949
|
|
|
(5,827
|
)
|
|
146,535
|
|
|
115,925
|
|
|||||
Selling and administrative expenses
|
97,777
|
|
|
14,197
|
|
|
—
|
|
|
111,974
|
|
|
97,111
|
|
|||||
Depreciation and amortization expense
|
15,411
|
|
|
1,596
|
|
|
—
|
|
|
17,007
|
|
|
13,149
|
|
|||||
Impairment loss (non-cash)
|
313,130
|
|
|
—
|
|
|
—
|
|
|
313,130
|
|
|
|
||||||
Restructuring and other charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Transaction costs
|
49
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|
467
|
|
|||||
Operating (loss) income
|
$
|
(308,954
|
)
|
|
$
|
19,156
|
|
|
$
|
(5,827
|
)
|
|
$
|
(295,625
|
)
|
|
$
|
5,198
|
|
|
|
|
|
|
|
|
|
|
|
|
39 weeks ended, January 27, 2018
|
|
39 weeks ended
|
||||||||||||||||
Dollars in thousands
|
BNC(a)
|
|
MBS (b)
|
|
Eliminations
|
|
January 27,
2018 (a),(b) |
|
January 28, 2017
|
||||||||||
Sales:
|
|
|
|
|
|
|
|
|
|
||||||||||
Product sales and other
|
$
|
1,369,770
|
|
|
$
|
409,300
|
|
|
$
|
(85,840
|
)
|
|
$
|
1,693,230
|
|
|
$
|
1,372,810
|
|
Rental income
|
148,454
|
|
|
4,279
|
|
|
—
|
|
|
152,733
|
|
|
158,722
|
|
|||||
Total sales
|
1,518,224
|
|
|
413,579
|
|
|
(85,840
|
)
|
|
1,845,963
|
|
|
1,531,532
|
|
|||||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
||||||||||
Product and other cost of sales
|
1,090,756
|
|
|
315,523
|
|
|
(80,058
|
)
|
|
1,326,221
|
|
|
1,098,682
|
|
|||||
Rental cost of sales
|
89,593
|
|
|
2,343
|
|
|
—
|
|
|
91,936
|
|
|
97,998
|
|
|||||
Total cost of sales
|
1,180,349
|
|
|
317,866
|
|
|
(80,058
|
)
|
|
1,418,157
|
|
|
1,196,680
|
|
|||||
Gross profit
|
337,875
|
|
|
95,713
|
|
|
(5,782
|
)
|
|
427,806
|
|
|
334,852
|
|
|||||
Selling and administrative expenses
|
283,546
|
|
|
42,986
|
|
|
—
|
|
|
326,532
|
|
|
282,171
|
|
|||||
Depreciation and amortization expense
|
43,879
|
|
|
4,849
|
|
|
—
|
|
|
48,728
|
|
|
39,057
|
|
|||||
Impairment loss (non-cash)
|
313,130
|
|
|
—
|
|
|
—
|
|
|
313,130
|
|
|
—
|
|
|||||
Restructuring and other charges
|
5,429
|
|
|
—
|
|
|
—
|
|
|
5,429
|
|
|
1,790
|
|
|||||
Transaction costs
|
1,895
|
|
|
—
|
|
|
—
|
|
|
1,895
|
|
|
2,638
|
|
|||||
Operating (loss) income
|
$
|
(310,004
|
)
|
|
$
|
47,878
|
|
|
$
|
(5,782
|
)
|
|
$
|
(267,908
|
)
|
|
$
|
9,196
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
On August 3, 2017, we acquired Student Brands, LLC. The condensed consolidated financial statements for the 13 and 39 weeks ended January 27, 2018 include the financial results of Student Brands in the BNC segment from the date of acquisition, August 3, 2017, and the condensed cons
olidated financial statements for the 13 and 39 weeks ended January 28, 2017 exclude the financial results of Student Brands.
|
(b)
|
On February 27, 2017, we acquired MBS. The results of operations for the 13 and 39 weeks ended January 27, 2018 include the financial results of MBS and all material intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the 13 and 39 weeks ended January 28, 2017 exclude the financial results of MBS.
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||||||
Dollars in thousands
|
January 27, 2018
|
|
January 28, 2017
|
|
%
|
|
January 27, 2018
|
|
January 28, 2017
|
|
%
|
||||||||
Product sales and other
|
$
|
540,903
|
|
|
$
|
457,147
|
|
|
18.3%
|
|
$
|
1,693,230
|
|
|
$
|
1,372,810
|
|
|
23.3%
|
Rental income
|
62,488
|
|
|
64,477
|
|
|
(3.1)%
|
|
152,733
|
|
|
158,722
|
|
|
(3.8)%
|
||||
Total Sales
|
$
|
603,391
|
|
|
$
|
521,624
|
|
|
15.7%
|
|
$
|
1,845,963
|
|
|
$
|
1,531,532
|
|
|
20.5%
|
Sales variances
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||
Dollars in millions
|
|
January 27, 2018
|
|
January 28, 2017
|
|
January 27, 2018
|
|
January 28, 2017
|
||||||||
MBS Sales
(a)
|
|
|
|
|
|
|
|
|
||||||||
Wholesale
|
|
$
|
92.2
|
|
|
$
|
—
|
|
|
$
|
232.2
|
|
|
$
|
—
|
|
Direct
|
|
46.7
|
|
|
—
|
|
|
181.4
|
|
|
—
|
|
||||
MBS Sales subtotal:
|
|
$
|
138.9
|
|
|
$
|
—
|
|
|
$
|
413.6
|
|
|
$
|
—
|
|
BNC Sales
|
|
|
|
|
|
|
|
|
||||||||
New stores
|
|
$
|
14.1
|
|
|
$
|
34.2
|
|
|
$
|
55.8
|
|
|
$
|
92.7
|
|
Closed stores
|
|
(2.2
|
)
|
|
(8.0
|
)
|
|
(9.7
|
)
|
|
(20.6
|
)
|
||||
Comparable stores
|
|
(31.3
|
)
|
|
(27.3
|
)
|
|
(69.9
|
)
|
|
(59.8
|
)
|
||||
Textbook rental deferral
|
|
2.6
|
|
|
2.3
|
|
|
6.2
|
|
|
0.1
|
|
||||
Service revenue
(b)
|
|
6.7
|
|
|
0.9
|
|
|
13.1
|
|
|
3.3
|
|
||||
Other
(c)
|
|
(5.1
|
)
|
|
1.1
|
|
|
(8.8
|
)
|
|
2.5
|
|
||||
BNC Sales subtotal:
|
|
$
|
(15.2
|
)
|
|
$
|
3.2
|
|
|
$
|
(13.3
|
)
|
|
$
|
18.2
|
|
Eliminations
(d)
|
|
$
|
(42.0
|
)
|
|
$
|
—
|
|
|
$
|
(85.9
|
)
|
|
$
|
—
|
|
Total sales variance
|
|
$
|
81.7
|
|
|
$
|
3.2
|
|
|
$
|
314.4
|
|
|
$
|
18.2
|
|
(a)
|
Represents sales for MBS for the 13 and 39 weeks ended January 27, 2018. MBS’s business is highly seasonal. For MBS’s retail operations (virtual bookstores), a major portion of sales and operating profit are realized during the second and third quarters, when students generally purchase and rent textbooks for the upcoming semesters. For MBS’s wholesale business, a major portion of sales and operating profit is realized during the first, second and third fiscal quarters, as it sells textbooks for retail distribution, which somewhat offsets the decreased first quarter sales attributable to our retail business. MBS has significantly lower operating profit or operating loss realized during the fourth quarter.
|
(b)
|
Service revenue includes Student Brands, brand partnerships, Promoversity, LoudCloud, shipping and handling and revenue from other programs.
|
(c)
|
Other includes certain adjusting items related to return reserves and other deferred items.
|
(d)
|
Eliminates MBS sales to BNC and BNC commissions earned from MBS. See
Part I - Item 1. Financial Statements - Note 5. Segment Reporting
of this Form 10-Q for a discussion of intercompany activities and eliminations.
|
Comparable Store Sales variances-BNC
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||||||||||||||
Dollars in millions
|
|
January 27, 2018
|
|
January 28, 2017
|
|
January 27, 2018
|
|
January 28, 2017
|
||||||||||||||||||||
Textbooks
|
|
$
|
(26.3
|
)
|
|
(7.2
|
)%
|
|
$
|
(25.4
|
)
|
|
(6.7
|
)%
|
|
$
|
(62.8
|
)
|
|
(6.1
|
)%
|
|
$
|
(55.3
|
)
|
|
(5.3
|
)%
|
General Merchandise
|
|
(3.5
|
)
|
|
(2.8
|
)%
|
|
(0.5
|
)
|
|
(0.5
|
)%
|
|
(3.3
|
)
|
|
(0.8
|
)%
|
|
(1.2
|
)
|
|
(0.3
|
)%
|
||||
Trade Books
|
|
(1.5
|
)
|
|
(11.9
|
)%
|
|
(1.2
|
)
|
|
(8.3
|
)%
|
|
(3.8
|
)
|
|
(9.5
|
)%
|
|
(2.7
|
)
|
|
(6.2
|
)%
|
||||
Other
|
|
—
|
|
|
—
|
%
|
|
(0.2
|
)
|
|
(86.7
|
)%
|
|
—
|
|
|
—
|
%
|
|
(0.6
|
)
|
|
(88.3
|
)%
|
||||
Total Comparable Store Sales
|
|
$
|
(31.3
|
)
|
|
(6.2
|
)%
|
|
$
|
(27.3
|
)
|
|
(5.3
|
)%
|
|
$
|
(69.9
|
)
|
|
(4.7
|
)%
|
|
$
|
(59.8
|
)
|
|
(4.0
|
)%
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||||||||||
Dollars in thousands
|
January 27, 2018
|
|
% of
Related Sales |
|
January 28, 2017
|
|
% of
Related Sales |
|
January 27, 2018
|
|
% of
Related Sales
|
|
January 28, 2017
|
|
% of
Related Sales
|
||||||||
Product and other cost of sales
|
$
|
352,742
|
|
|
79.2%
|
|
$
|
366,190
|
|
|
80.1%
|
|
$
|
1,090,756
|
|
|
79.6%
|
|
$
|
1,098,682
|
|
|
80.0%
|
Rental cost of sales
|
36,305
|
|
|
59.7%
|
|
39,509
|
|
|
61.3%
|
|
89,593
|
|
|
60.4%
|
|
97,998
|
|
|
61.7%
|
||||
Total Cost of Sales
|
$
|
389,047
|
|
|
76.8%
|
|
$
|
405,699
|
|
|
77.8%
|
|
$
|
1,180,349
|
|
|
77.7%
|
|
$
|
1,196,680
|
|
|
78.1%
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||||||||||
Dollars in thousands
|
January 27, 2018
|
|
% of
Related Sales |
|
January 28, 2017
|
|
% of
Related Sales |
|
January 27, 2018
|
|
% of
Related Sales
|
|
January 28, 2017
|
|
% of
Related Sales
|
||||||||
Product and other gross margin
|
$
|
92,900
|
|
|
20.8%
|
|
$
|
90,957
|
|
|
19.9%
|
|
$
|
279,014
|
|
|
20.4%
|
|
$
|
274,128
|
|
|
20.0%
|
Rental gross margin
|
24,513
|
|
|
40.3%
|
|
24,968
|
|
|
38.7%
|
|
58,861
|
|
|
39.6%
|
|
60,724
|
|
|
38.3%
|
||||
Gross Margin
|
$
|
117,413
|
|
|
23.2%
|
|
$
|
115,925
|
|
|
22.2%
|
|
$
|
337,875
|
|
|
22.3%
|
|
$
|
334,852
|
|
|
21.9%
|
•
|
Product and other gross margin increased (90 basis points), driven primarily by high margin Student Brands subscription service revenue earned (125 basis points), higher margin rates (20 basis points) related to decreased markdowns on textbooks, and lower costs related to our college and university contracts (5 basis points) resulting from contract renewals and new store contracts. This increase was partially offset by an unfavorable sales mix (60 basis points) resulting from a decrease in higher margin used textbooks and general merchandise as a percentage of sales.
|
•
|
Rental gross margin increased (160 basis points), driven primarily by higher rental margin rates (185 basis points) and lower costs related to our college and university contracts (15 basis points) resulting from contract renewals and new store contracts, partially offset by an unfavorable rental mix (40 basis points).
|
•
|
Product and other gross margin increased (40 basis points), driven primarily by Student Brands subscription service revenue earned (75 basis points) and higher margin rates (15 basis points) related to decreased markdowns on textbooks. This increase was partially offset by an unfavorable sales mix (30 basis points) resulting from a decrease in higher margin used textbooks as a percentage of sales and lower costs related to our college and university contracts (15 basis points) resulting from contract renewals and new store contracts.
|
•
|
Rental gross margin increased (130 basis points), driven primarily by higher rental margin rates (190 basis points), partially offset by higher costs related to our college and university contracts (15 basis points) resulting from contract renewals and new store contracts and an unfavorable rental mix (35 basis points).
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||||||||||||
Dollars in thousands
|
January 27, 2018
|
|
% of
Sales |
|
January 28, 2017
|
|
% of
Sales |
|
January 27, 2018
|
|
% of
Sales |
|
January 28, 2017
|
|
% of
Sales |
||||||||||
Total Selling and Administrative Expenses
|
$
|
111,974
|
|
|
18.6%
|
|
$
|
97,111
|
|
|
18.6%
|
|
$
|
326,532
|
|
|
17.7
|
%
|
|
$
|
282,171
|
|
|
18.4
|
%
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||||||||||||
Dollars in thousands
|
January 27, 2018
|
|
% of
Sales |
|
January 28, 2017
|
|
% of
Sales |
|
January 27, 2018
|
|
% of
Sales |
|
January 28, 2017
|
|
% of
Sales |
||||||||||
Total Depreciation and Amortization Expense
|
$
|
17,007
|
|
|
2.8%
|
|
$
|
13,149
|
|
|
2.5%
|
|
$
|
48,728
|
|
|
2.6
|
%
|
|
$
|
39,057
|
|
|
2.6
|
%
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||||||||||||
Dollars in thousands
|
January 27, 2018
|
|
% of
Sales |
|
January 28, 2017
|
|
% of
Sales |
|
January 27, 2018
|
|
% of
Sales |
|
January 28, 2017
|
|
% of
Sales |
||||||||||
Total Operating (Loss) Income
|
$
|
(295,625
|
)
|
|
(49.0)%
|
|
$
|
5,198
|
|
|
1.0%
|
|
$
|
(267,908
|
)
|
|
(14.5
|
)%
|
|
$
|
9,196
|
|
|
0.6
|
%
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||
Dollars in thousands
|
January 27, 2018
|
|
January 28, 2017
|
|
January 27, 2018
|
|
January 28, 2017
|
||||||||
Interest Expense, Net
|
$
|
2,954
|
|
|
$
|
679
|
|
|
$
|
7,828
|
|
|
$
|
1,975
|
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||||||||||||
Dollars in thousands
|
January 27, 2018
|
|
Effective Rate
|
|
January 28, 2017
|
|
Effective Rate
|
|
January 27, 2018
|
|
Effective Rate
|
|
January 28, 2017
|
|
Effective Rate
|
||||||||||
Income Tax (Benefit) Expense
|
$
|
(15,344
|
)
|
|
5.1%
|
|
$
|
758
|
|
|
16.8%
|
|
$
|
(6,113
|
)
|
|
2.2
|
%
|
|
$
|
2,087
|
|
|
28.9
|
%
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||
Dollars in thousands
|
January 27, 2018
|
|
January 28, 2017
|
|
January 27, 2018
|
|
January 28, 2017
|
||||||||
Net (Loss) Income
|
$
|
(283,235
|
)
|
|
$
|
3,761
|
|
|
$
|
(269,623
|
)
|
|
$
|
5,134
|
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||
Dollars in thousands
|
January 27, 2018
|
|
January 28, 2017
|
|
January 27, 2018
|
|
January 28, 2017
|
||||||||
Net (loss) income
|
$
|
(283,235
|
)
|
|
$
|
3,761
|
|
|
$
|
(269,623
|
)
|
|
$
|
5,134
|
|
Reconciling items, after-tax
(below)
|
302,879
|
|
|
286
|
|
|
309,404
|
|
|
2,714
|
|
||||
Adjusted Earnings (non-GAAP)
(a)
|
$
|
19,644
|
|
|
$
|
4,047
|
|
|
$
|
39,781
|
|
|
$
|
7,848
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciling items, pre-tax
|
|
|
|
|
|
|
|
||||||||
Impairment loss (non-cash)
(a)
|
$
|
313,130
|
|
|
$
|
—
|
|
|
$
|
313,130
|
|
|
$
|
—
|
|
Inventory valuation amortization (MBS) (non-cash)
(a)
|
—
|
|
|
—
|
|
|
3,273
|
|
|
—
|
|
||||
Restructuring and other charges
(a)
|
—
|
|
|
—
|
|
|
5,429
|
|
|
1,790
|
|
||||
Transaction costs
(a)
|
49
|
|
|
467
|
|
|
1,895
|
|
|
2,638
|
|
||||
Reconciling items, pre-tax
|
313,179
|
|
|
467
|
|
|
323,727
|
|
|
4,428
|
|
||||
Less: Pro forma income tax impact
(b)
|
10,300
|
|
|
181
|
|
|
14,323
|
|
|
1,714
|
|
||||
Reconciling items, after-tax
|
$
|
302,879
|
|
|
$
|
286
|
|
|
$
|
309,404
|
|
|
$
|
2,714
|
|
(a)
|
See
Management Discussion and Analysis - Results of Operations
discussion above.
|
(b)
|
Represents the income tax effects of the non-GAAP items.
|
|
13 weeks ended
|
|
39 weeks ended
|
||||||||||||
Dollars in thousands
|
January 27, 2018
|
|
January 28, 2017
|
|
January 27, 2018
|
|
January 28, 2017
|
||||||||
Net (loss) income
|
$
|
(283,235
|
)
|
|
$
|
3,761
|
|
|
$
|
(269,623
|
)
|
|
$
|
5,134
|
|
Add:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization expense
|
17,007
|
|
|
13,149
|
|
|
48,728
|
|
|
39,057
|
|
||||
Interest expense, net
|
2,954
|
|
|
679
|
|
|
7,828
|
|
|
1,975
|
|
||||
Income tax expense
|
(15,344
|
)
|
|
758
|
|
|
(6,113
|
)
|
|
2,087
|
|
||||
Impairment loss (non-cash)
(a)
|
313,130
|
|
|
—
|
|
|
313,130
|
|
|
—
|
|
||||
Inventory valuation amortization (MBS) (non-cash)
(a)
|
—
|
|
|
—
|
|
|
3,273
|
|
|
—
|
|
||||
Restructuring and other charges
(a)
|
—
|
|
|
—
|
|
|
5,429
|
|
|
1,790
|
|
||||
Transaction costs
(a)
|
49
|
|
|
467
|
|
|
1,895
|
|
|
2,638
|
|
||||
Adjusted EBITDA (non-GAAP)
(a)
|
$
|
34,561
|
|
|
$
|
18,814
|
|
|
$
|
104,547
|
|
|
$
|
52,681
|
|
(a)
|
See
Management Discussion and Analysis - Results of Operations
discussion above.
|
Adjusted EBITDA - by Segment
|
|
13 weeks ended, January 27, 2018
|
||||||||||||||
Dollars in thousands
|
|
BNC
|
|
MBS
|
|
Elimination
(a)
|
|
Total
|
||||||||
Sales
|
|
$
|
506,460
|
|
|
$
|
138,927
|
|
|
$
|
(41,996
|
)
|
|
$
|
603,391
|
|
Cost of sales
|
|
389,047
|
|
|
103,978
|
|
|
(36,169
|
)
|
|
456,856
|
|
||||
Gross profit
|
|
117,413
|
|
|
34,949
|
|
|
(5,827
|
)
|
|
146,535
|
|
||||
Selling and administrative expenses
|
|
97,777
|
|
|
14,197
|
|
|
—
|
|
|
111,974
|
|
||||
Adjusted EBITDA (non-GAAP)
|
|
$
|
19,636
|
|
|
$
|
20,752
|
|
|
$
|
(5,827
|
)
|
|
$
|
34,561
|
|
Adjusted EBITDA - by Segment
|
|
39 weeks ended, January 27, 2018
|
||||||||||||||
Dollars in thousands
|
|
BNC
|
|
MBS
|
|
Elimination
(a)
|
|
Total
|
||||||||
Sales
|
|
$
|
1,518,224
|
|
|
$
|
413,579
|
|
|
$
|
(85,840
|
)
|
|
$
|
1,845,963
|
|
Cost of sales (MBS excludes $3,273 related to inventory fair value amortization)
(a)
|
|
1,180,349
|
|
|
314,593
|
|
|
(80,058
|
)
|
|
1,414,884
|
|
||||
Gross profit
|
|
337,875
|
|
|
98,986
|
|
|
(5,782
|
)
|
|
431,079
|
|
||||
Selling and administrative expenses
|
|
283,546
|
|
|
42,986
|
|
|
—
|
|
|
326,532
|
|
||||
Adjusted EBITDA (non-GAAP)
|
|
$
|
54,329
|
|
|
$
|
56,000
|
|
|
$
|
(5,782
|
)
|
|
$
|
104,547
|
|
|
|
39 weeks ended
|
||||||
Dollars in thousands
|
|
January 27, 2018
|
|
January 28, 2017
|
||||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
$
|
21,697
|
|
|
$
|
30,866
|
|
Net cash flows provided by operating activities
|
|
141,440
|
|
|
145,002
|
|
||
Net cash flows used in investing activities
|
|
(89,839
|
)
|
|
(33,651
|
)
|
||
Net cash flows used in financing activities
|
|
(48,230
|
)
|
|
(7,858
|
)
|
||
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
25,068
|
|
|
$
|
134,359
|
|
•
|
general competitive conditions, including actions our competitors and content providers may take to grow their businesses;
|
•
|
a decline in college enrollment or decreased funding available for students;
|
•
|
decisions by colleges and universities to outsource their physical and/or online bookstore operations or change the operation of their bookstores;
|
•
|
the general economic environment and consumer spending patterns;
|
•
|
decreased consumer demand for our products, low growth or declining sales;
|
•
|
the strategic objectives, successful integration, anticipated synergies, and/or other expected potential benefits of various acquisitions, including MBS Textbook Exchange, LLC and Student Brands, LLC, may not be fully realized or may take longer than expected;
|
•
|
the integration of MBS Textbook Exchange, LLC’s operations into our own may also increase the risk of our internal controls being found ineffective;
|
•
|
implementation of our digital strategy may not result in the expected growth in our digital sales and/or profitability;
|
•
|
risk that digital sales growth does not exceed the rate of investment spend;
|
•
|
the performance of our online, digital and other initiatives, integration of and deployment of, additional products and services including new digital channels, and enhancements to higher education digital products, and the inability to achieve the expected cost savings;
|
•
|
our ability to successfully implement our strategic initiatives including our ability to identify, compete for and execute upon additional acquisitions and strategic investments;
|
•
|
risks associated with operation or performance of MBS Textbook Exchange, LLC’s point-of-sales systems that are sold to college bookstore customers;
|
•
|
changes to purchase or rental general terms, payment terms, return policies, the discount or margin on products or other terms with our suppliers;
|
•
|
technological changes;
|
•
|
risks associated with counterfeit and piracy of digital and print materials;
|
•
|
our international operations could result in additional risks;
|
•
|
our ability to attract and retain employees;
|
•
|
the risk of price reduction or change in format of course materials by publishers, which could negatively impact revenues and margin;
|
•
|
risks associated with data privacy, information security and intellectual property;
|
•
|
trends and challenges to our business and in the locations in which we have stores;
|
•
|
non-renewal of managed bookstore, physical and/or online store contracts and higher-than-anticipated store closings;
|
•
|
disruptions to our information technology systems, infrastructure and data due to computer malware, viruses, hacking and phishing attacks, resulting in harm to our business and results of operations;
|
•
|
disruption of or interference with third party web service providers and our own proprietary technology;
|
•
|
work stoppages or increases in labor costs;
|
•
|
possible increases in shipping rates or interruptions in shipping service;
|
•
|
product shortages, including risks associated with merchandise sourced indirectly from outside the United States;
|
•
|
changes in domestic and international laws or regulations, including U.S. tax reform, changes in tax rates, laws and regulations, as well as related guidance;
|
•
|
enactment of laws which may restrict or prohibit our use of emails or similar marketing activities;
|
•
|
the amount of our indebtedness and ability to comply with covenants applicable to any future debt financing;
|
•
|
our ability to satisfy future capital and liquidity requirements;
|
•
|
our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms;
|
•
|
adverse results from litigation, governmental investigations, tax-related proceedings, or audits;
|
•
|
changes in accounting standards; and
|
•
|
the other risks and uncertainties detailed in the section titled
“Risk Factors”
in
Part I - Item 1A
in our Annual Report on Form 10-K for the year ended April 29, 2017.
|
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
|
||||||
October 29, 2017 - November 25, 2017
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
26,669,324
|
|
November 26, 2017 - December 30, 2017
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
26,669,324
|
|
December 31, 2017 - January 27, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
26,669,324
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
|
(a)
|
This amount represents the average price paid per common share. This price includes a per share commission paid for all repurchases.
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
BARNES & NOBLE EDUCATION, INC.
|
|
||
(Registrant)
|
|
||
|
|
|
|
By:
|
|
/
S
/ BARRY BROVER
|
|
|
|
Barry Brover
|
|
|
|
Chief Financial Officer
|
|
|
|
(principal financial officer)
|
|
|
|
|
|
By:
|
|
/
S
/ SEEMA PAUL
|
|
|
|
Seema Paul
|
|
|
|
Chief Accounting Officer
|
|
|
|
(principal accounting officer)
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
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
|
1 Year Barnes and Noble Education Chart |
1 Month Barnes and Noble Education Chart |
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