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ANN ARBOR, Mich., Nov. 24 /PRNewswire-FirstCall/ -- Borders Group, Inc. (NYSE:BGP) today reported results for the fiscal third quarter of 2009, ended Oct. 31, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060208/BORDERSGRPLOGO )
Following are highlights of third quarter results, compared to the same period a year ago, unless specifically noted as year-to-date results:
-- On an operating basis, the company generated a loss from continuing
operations of $39.0 million or $0.65 per share compared to a loss of
$39.0 million or $0.64 per share a year ago. On a GAAP basis, the loss
from continuing operations was $38.5 million or $0.64 per share
compared to a loss of $172.2 million or $2.85 per share a year ago.
The $0.64 per share loss includes income of $0.01 per share of
non-operating adjustments that were primarily non-cash. Year to date,
on an operating basis, the company generated a loss from continuing
operations of $67.6 million or $1.12 per share compared to a loss of
$80.0 million or $1.33 per share a year ago. On a GAAP basis, the
year-to-date loss from continuing operations was $170.1 million or
$2.83 per share compared to a loss of $213.6 million or $3.55 per
share a year ago. The $2.83 per share loss includes $1.71 per share of
non-operating charges that were primarily non-cash.
-- Adjusted EBITDA was a loss of $34.2 million compared to a loss of
$25.5 million in the prior year quarter. On a year-to-date basis, the
adjusted EBITDA loss was $24.3 million compared to a loss of $24.9
million in 2008.
-- Total consolidated sales were $595.5 million, down $86.6 million, or
12.7%.
-- Inventory was reduced by $99.1 million, led by the reduction in
multimedia inventory of $70.4 million.
-- Comparable store sales declined by 12.1% and 7.2% at Borders
superstores and Waldenbooks Specialty Retail stores, respectively.
Excluding multimedia, comparable store sales at Borders declined by
8.5%.
-- SG&A expenses, on an operating basis, were reduced by $27.1 million.
-- Debt, net of cash, at the end of the third quarter was $375.0 million,
a reduction from the prior year of $112.0 million, or 23.0%. Debt,
net of cash, compared to year-end levels increased by $92.4 million,
or 32.7% as inventory was added to core book categories throughout the
third quarter.
"During the third quarter, we prepared for the upcoming holiday selling season," said Borders Group Chief Executive Officer Ron Marshall. "We increased core book inventories, experimented with a range of traffic-driving and in-store promotions and invested in store payroll to get books out on the shelves and our stores in top condition to receive customers. To ensure that our customers are confident in our holiday selection, we recently launched what we believe is book retailing's first-ever in-stock guarantee. If a customer comes to shop at Borders and finds us out of stock on an item -- and that item is among the more than one million titles on Borders.com -- we will order the item for the customer, ship it to her at home and the shipping charges will be on us. There will be no wasted shopping trips for our customers this season."
Consolidated Results
All sales and earnings/loss figures reported throughout this news release are on a continuing operations basis unless otherwise noted.
Third quarter consolidated sales were $595.5 million, a 12.7% decrease from the same period a year ago. On an operating basis, the company generated a third-quarter loss from continuing operations of $39.0 million or $0.65 per share compared to a loss of $39.0 million or $0.64 per share a year ago. On a GAAP basis, the loss from continuing operations was $38.5 million or $0.64 per share compared to a loss of $172.2 million or $2.85 per share a year ago. The $0.64 per share loss includes income of $0.01 per share of non-operating adjustments that were primarily non-cash.
Excluding non-operating charges, SG&A as a percent of sales improved over third quarter last year by 0.4% from 28.7% to 28.3% due to the company's aggressive expense reduction initiatives, which were partially offset by de-leveraging due to negative sales trends. Expense reduction initiatives helped reduce SG&A dollar expenses in the third quarter by $27.1 million compared to the prior year. On a GAAP basis, SG&A as a percent of sales was down compared to last year by 1.0% from 30.1% to 29.1%.
The company made an additional investment of $16.8 million in inventory within its core book category compared to the same period last year. At the same time, Borders Group reduced third-quarter inventory in the multimedia category by $70.4 million and by $45.5 million within its Waldenbooks Specialty Retail segment due to store closures over the past 12 months. In total, inventory was reduced by $99.1 million for the period.
Third quarter capital expenditures were $6.8 million compared to $17.9 million in 2008 as the company continued to manage capital prudently. For the full year, capital expenditures were $11.2 million compared to $72.0 million a year ago. Debt, net of cash, at the end of the third quarter was $375.0 million, a reduction from the prior year of $112.0 million, or 23.0%. Debt, net of cash, compared to year-end levels increased by $92.4 million, or 32.7%.
Non-Operating Adjustments
The table below details non-operating adjustments for the third quarter and year to date. Expense (income) amounts are as follows:
Non-Operating Line Item
Adjustments Item Impact Q3 2009 YTD 2009 ----------------- ---- -------- ------- -------- Consulting,
professional and Gross Margin
other fees Cash and SG&A $1.2 million $10.1 million ----------------- ---- ----------- ------------ ------------- Store closure and Gross Margin
related items Cash and SG&A ($1.0) million ($0.3) million ----------------- ---- ----------- ------------- ------------- Severance and
other
compensation Gross Margin
costs Cash and SG&A $3.4 million $5.4 million ----------------- ---- ----------- ------------ ------------ Asset impairments
and other Asset
writedowns Non-cash Impairments $0.2 million $1.0 million ----------------- -------- ---------- ------------ ------------ Accelerated
depreciation-
multimedia space
reduction Non-cash SG&A $0.0 million $7.1 million ----------------- -------- --- ------------ ------------ Term loan cost/
discount Interest
amortization Non-cash Expense $1.1 million $3.8 million --------------- -------- ------- ------------ ------------ International Warrant/Put
"put" expiration Non-cash Expense $0.0 million $16.2 million ---------------- -------- ---------- ------------ ------------- Warrant liability
fair value Warrant/Put
adjustment Non-cash Expense ($28.7) million $18.9 million ----------------- -------- ----------- ------------ ------------- Total pre-tax
non-operating ($23.8) million $62.2 million
adjustments ----------------- ------------- ------------- Normalized income Income Taxes
taxes Non-cash (Benefit) $23.3 million $40.3 million ----------------- -------- ------------ ------------- ------------- Total after-tax
non-operating
adjustments ($0.5) million $102.5 million --------------- -------------- --------------
($0.01) EPS $1.71 EPS
----------- ---------
Borders Superstores
Total third quarter sales at Borders superstores, including Borders.com, in the third quarter were $492.4 million, down 12.1% from a year ago. Comparable store sales decreased by 12.1% at Borders superstores in the third quarter. Excluding the multimedia category, comparable store sales at Borders declined by 8.5%.
On an operating basis, the segment generated a third quarter operating loss of $44.5 million compared to an operating loss of $37.8 million for the same period a year ago. On a GAAP basis, the segment generated an operating loss in the third quarter of $46.2 million compared to an operating loss of $80.3 million the prior year.
No Borders superstores were closed during the third quarter and the period ended with 513 locations.
Waldenbooks Specialty Retail
Total sales in the third quarter within the Waldenbooks Specialty Retail segment were $72.9 million, a 20.3% decline compared to the same period in 2008 as the number of stores was decreased to 361 at the end of the third quarter this year compared to 467 stores that were open at the close of the same period a year ago. The company closed nine Waldenbooks locations in the third quarter of this year. Comparable store sales in the third quarter at Waldenbooks decreased by 7.2%.
On an operating basis, the segment generated an operating loss of $8.2 million in the third quarter compared to an operating loss of $13.2 million for the same period in 2008. On a GAAP basis, the segment generated a third quarter operating loss of $10.0 million compared to an operating loss of $17.7 million for the same period in 2008.
Borders Group announced Nov. 5 that the company plans to close approximately 200 stores within its Waldenbooks Specialty Retail segment in January 2010 to emerge with a smaller, more profitable mall business. Through this right-sizing, the company will reduce the number of stores with operating losses, reduce overall rent expense and lease-adjusted leverage and generate cash flow through sales and working capital reductions.
International
Total sales within the International segment (which consists primarily of Paperchase) were $30.2 million in the third quarter, which is flat with a year ago of $30.3 million. Excluding the impact of foreign currency translation, segment sales increased by 7.0% for the period.
On an operating basis, the segment generated an operating loss of $1.3 million in the third quarter compared to an operating loss of $1.6 million for the same period in 2008. On a GAAP basis, the segment generated a third quarter operating loss of $1.4 million compared to an operating loss of $1.8 million for the same period in 2008.
Conference Call Today
Management will review third quarter results on a conference call today at 10 a.m. Eastern. This call is being web cast by Thomson Financial and can be accessed at the Borders Group corporate Web site at http://www.bordersgroupinc.com/. A replay will be accessible on the Web site through Dec. 24. In addition, a replay phone service will be available toll-free at 866-396-6282, or for international calls, at 203-369-0517. The phone service will be available through Dec. 8 until 11:59 p.m. Eastern.
Next Financial Release-Holiday Sales
Borders Group plans to issue information about holiday sales results in mid-January.
About Borders Group
Headquartered in Ann Arbor, Mich., Borders Group, Inc. (NYSE:BGP) is a leading retailer of books, music and movies with more than 25,000 employees. Through its subsidiaries, the company operates approximately 1,000 stores worldwide primarily under the Borders® and Waldenbooks® brand names. For online shopping, visit Borders.com. For more information about the company, visit http://www.borders.com/investors.
Safe Harbor Statement
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. One can identify these forward-looking statements by the use of words such as "expect," "planning," "possibility," "opportunity," "goal," "will," "may," "intend," "anticipates" and other words of similar meaning. One can also identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address matters such as the company's future financial condition and performance (including earnings per share, the profitability of Waldenbooks, liquidity, sales, inventory levels and capital expenditures), its cost reduction initiatives and plans for store closings and the expansion of product categories. These statements are subject to risks and uncertainties that could cause actual results and plans to differ materially from those included in the company's forward-looking statements.
These risks and uncertainties include, but are not limited to, consumer demand for the company's products, particularly during the holiday season, which is believed to be related to general economic and geopolitical conditions, competition and other factors; the availability of adequate capital--including vendor credit--to fund the company's operations and to carry out its strategic plans; adverse litigation results or other claims and the performance of the company's information technology systems.
The company's periodic reports filed from time to time with the Securities and Exchange Commission contain more detailed discussions of these and other risk factors that could cause actual results and plans to differ materially from those included in the forward-looking statements, and those discussions are incorporated herein by reference. The company does not undertake any obligation to update forward-looking statements.
Borders Group, Inc. Financial Statements
(amounts in millions, except per share amounts)
Unaudited
Sales and Earnings Summary
Quarter Ended October 31, 2009 (1)
----------------------------------
Operating Adjustments GAAP
Basis (2) (2) Basis
--------- ---- ----- Borders Superstores $492.4 $- $492.4 Waldenbooks Specialty Retail 72.9 - 72.9 International 30.2 - 30.2
----- ---- ----- Total sales 595.5 - 595.5 Other revenue 7.0 - 7.0
----- ---- ----- Total revenue 602.5 - 602.5 Cost of goods sold, including
occupancy costs 490.6 (1.4) 489.2
----- ---- ----- Gross margin 111.9 1.4 113.3 Selling, general and
administrative expenses 168.6 5.0 173.6 Asset impairments and other
writedowns - 0.2 0.2
----- ----- -----
Operating loss (56.7) (3.8) (60.5) Interest expense 5.2 1.1 6.3
Warrant/put expense (income) - (28.7) (28.7)
----- ----- -----
Total interest expense (income) 5.2 (27.6) (22.4)
----- ----- -----
Loss before income taxes (61.9) 23.8 (38.1) Income taxes (benefit) (22.9) 23.3 0.4
----- ----- -----
Loss from continuing operations $(39.0) $0.5 (38.5)
===== ===== ===== Loss from operations of
discontinued operations (net of tax) - - - Gain (loss) from disposal of
discontinued operations (net of tax) - 0.8 0.8
----- ---- -----
Gain (loss) from discontinued
operations (net of tax) - 0.8 0.8
----- ---- -----
Net loss $(39.0) $1.3 (37.7)
====== ==== =====
Basic EPS from continuing
operations $(0.65) $0.01 $(0.64) Basic EPS from discontinued
operations $- $0.01 $0.01 Basic EPS including discontinued
operations $(0.65) $0.02 $(0.63) Basic weighted avg. common
shares 60.1 60.1 60.1
Comparable Store Sales Borders Superstores (12.1%) Waldenbooks Specialty Retail (7.2%)
Quarter Ended November 1, 2008 (1)
----------------------------------
Operating Adjustments GAAP
Basis (3) (3) Basis
--------- ----------- ----- Borders Superstores $560.3 $- $560.3 Waldenbooks Specialty
Retail 91.5 - 91.5 International 30.3 - 30.3
----- ----- ------ Total sales 682.1 - 682.1 Other revenue 11.3 - 11.3
----- ----- ------ Total revenue 693.4 - 693.4 Cost of goods sold,
including occupancy
costs 550.9 (4.5) 546.4
----- ------ ------ Gross margin 142.5 4.5 147.0 Selling, general and
administrative
expenses 195.7 9.4 205.1 Asset impairments and
other writedowns - 50.1 50.1
----- ------ ------ Operating loss (53.2) (55.0) (108.2) Interest expense 8.8 5.0 13.8 Warrant/put expense
(income) - (12.7) (12.7)
----- ------ ------ Total interest expense
(income) 8.8 (7.7) 1.1
----- ------ ------ Loss before income
taxes (62.0) (47.3) (109.3) Income taxes (benefit) (23.0) 85.9 62.9
----- ------ ------ Loss from continuing
operations $(39.0) $(133.2) $(172.2)
===== ====== ====== Loss from operations
of discontinued
operations (net of tax) - - - Gain (loss) from
disposal of
discontinued
operations (net of tax) - (3.2) (3.2)
----- ----- ------
Gain (loss) from
discontinued
operations (net of tax) - (3.2) (3.2)
------ ------ ------
Net loss $(39.0) $(136.4) $(175.4)
====== ======= ======
Basic EPS from
continuing operations $(0.64) $(2.21) $(2.85) Basic EPS from
discontinued
operations $- $(0.05) $(0.05) Basic EPS including
discontinued
operations $(0.64) $(2.26) $(2.90) Basic weighted avg.
common shares 60.5 60.5 60.5
Comparable Store Sales Borders Superstores (12.8%) Waldenbooks Specialty
Retail (7.7%)
Sales and Earnings Summary (As Percentage of Total Sales)
Quarter Ended October 31, Quarter Ended November 1,
2009 (1) 2008 (1)
------------------------- ------------------------------
Operating Adjust- GAAP Operating Adjust- GAAP
Basis (2) ments (2) Basis Basis (3) ments (3) Basis
--------- ------- ----- --------- -------- -----
Borders
Superstores 82.7% -% 82.7% 82.1% -% 82.1% Waldenbooks
Specialty
Retail 12.2 - 12.2 13.4 - 13.4 International 5.1 - 5.1 4.5 - 4.5
---- ---- ----- ----- ---- ---- Total sales 100.0 - 100.0 100.0 - 100.0 Other revenue 1.2 - 1.2 1.7 - 1.7
----- ---- ----- ----- ---- ---- Total revenue 101.2 - 101.2 101.7 - 101.7 Cost of goods
sold,
including
occupancy
costs 82.4 (0.2) 82.2 80.8 (0.7) 80.1
---- ---- ---- ---- ---- ---- Gross margin 18.8 0.2 19.0 20.9 0.7 21.6 Selling, general
and
administrative
expenses 28.3 0.8 29.1 28.7 1.4 30.1 Asset impairments
and other
writedowns - 0.1 0.1 - 7.3 7.3
---- ---- ---- ---- ---- ---
Operating loss (9.5) (0.7) (10.2) (7.8) (8.0) (15.8) Interest expense 0.9 0.1 1.0 1.3 0.7 2.0 Warrant/put
expense (income) - (4.8) (4.8) - (1.8) (1.8)
---- ---- ---- ---- ---- ---- Total interest
expense (income) 0.9 (4.7) (3.8) 1.3 (1.1) 0.2
---- ---- ---- ---- ---- ---- Loss before income
taxes (10.4) 4.0 (6.4) (9.1) (6.9) (16.0) Income taxes
(benefit) (3.9) 4.0 0.1 (3.4) 12.6 9.2
---- ---- ---- ---- ---- ---- Loss from
continuing
operations (6.5)% -% (6.5)% (5.7)% (19.5)% (25.2)%
(1) The results of Borders Australia, Borders New Zealand and Borders
Singapore are reported as discontinued operations. (2) Results from 2009 were impacted by a number of non-operating items,
including asset impairments, severance costs, store closure costs,
professional fees related to our turnaround efforts and amortization
of the term loan discount and debt issuance costs, partially offset by
non-cash income related to the fair market value adjustment of the
warrant liability. Therefore, solely for analytical purposes and as an
aid to better understand underlying trends, operating basis data are
presented excluding these items. To aid in the comparability to last
year, operating basis data is presented using a normalized tax rate. (3) Results from 2008 were impacted by a number of non-operating items,
including deferred tax asset impairments, store asset impairments,
store closure costs, severance costs, professional fees related to
strategic alternatives and amortization of the term loan discount and
debt issuance costs, offset by non-cash income related to the fair
market value adjustment of the warrant liability as well as income
received from a landlord lease termination. Therefore, solely for
analytical purposes and as an aid to better understand underlying
trends, operating basis data are presented excluding these items. To
aid in the comparability to last year, operating basis data is
presented using a normalized tax rate.
Borders Group, Inc. Financial Statements
(amounts in millions, except per share amounts)
Unaudited
Sales and Earnings Summary
Nine Months Ended Nine Months Ended
October 31, 2009 (1) November 1, 2008 (1)
-------------------------- ------------------------------
Operating Adjust- GAAP Operating Adjust- GAAP
Basis (2) ments (2) Basis Basis (3) ments (3) Basis
--------- ------- ----- --------- -------- ----- Borders
Superstores $1,542.7 $- $1,542.7 $1,782.9 $- $1,782.9
Waldenbooks
Specialty
Retail 224.3 - 224.3 284.4 - 284.4 International 86.8 - 86.8 93.5 - 93.5
----- ---- ----- ----- ---- ----- Total
sales 1,853.8 - 1,853.8 2,160.8 - 2,160.8 Other
revenue 23.6 - 23.6 26.9 - 26.9
------- ---- ------- ------- ---- ------- Total
revenue 1,877.4 - 1,877.4 2,187.7 - 2,187.7 Cost of
goods
sold,
including
occupancy
costs 1,480.0 (2.1) 1,477.9 1,693.5 (3.0) 1,690.5
------- ---- ------- ------- ---- ------- Gross
margin 397.4 2.1 399.5 494.2 3.0 497.2
Selling,
general
and
administrative
expenses 490.5 24.4 514.9 601.5 21.8 623.3 Asset
impairments
and
other
writedowns - 1.0 1.0 - 50.1 50.1
------ ---- ------- ------- ---- -------
Operating
loss (93.1) (23.3) (116.4) (107.3) (68.9) (176.2)
Interest
expense 14.2 3.8 18.0 23.7 10.7 34.4
Warrant/
put
expense
(income) - 35.1 35.1 - (27.2) (27.2)
------ ---- ------ ------- ----- ----- Total
interest
expense
(income) 14.2 38.9 53.1 23.7 (16.5) 7.2
------ ---- ------ ------- ----- ----- Loss
before
income
taxes (107.3) (62.2) (169.5) (131.0) (52.4) (183.4) Income
taxes
(benefit) (39.7) 40.3 0.6 (51.0) 81.2 30.2
------ ---- ----- ----- ----- ----- Loss
from
continuing
operations $(67.6) $(102.5) $(170.1) $(80.0) $(133.6) $(213.6)
===== ====== ====== ===== ====== ====== Loss
from operations
of discontinued
operations (net
of tax) - - - (1.7) - (1.7) Gain (loss)
on disposal
of discontinued
operations (net
of tax) - 0.8 0.8 - (1.0) (1.0)
----- ----- ----- ----- ----- -----
Gain (loss)
from
discontinued
operations
(net of tax) - 0.8 0.8 (1.7) (1.0) (2.7)
----- ----- ----- ----- ----- ----- Net loss $(67.6) $(101.7) $(169.3) $(81.7) $(134.6) $(216.3)
===== ===== ===== ===== ===== =====
Basic EPS
from
continuing
operations $(1.12) $(1.71) $(2.83) $(1.33) $(2.22) $(3.55) Basic EPS
from
discontinued
operations $- $0.01 $0.01 $(0.02) $(0.02) $(0.04) Basic EPS
including
discontinued
operations $(1.12) $(1.70) $(2.82) $(1.35) $(2.24) $(3.59) Basic
weighted
avg. common
shares 60.1 60.1 60.1 60.2 60.2 60.2
Comparable Store
Sales Borders
Superstores (14.6%) (8.6%)
Waldenbooks
Specialty
Retail (7.9%) (5.2%)
Sales and Earnings Summary (As Percentage of Total Sales)
Nine Months Ended Nine Months Ended
October 31, 2009 (1) November 1, 2008 (1)
--------------------------- ------------------------------
Operating Adjust- GAAP Operating Adjust- GAAP
Basis (2) ments (2) Basis Basis (3) ments (3) Basis
--------- ------- ----- --------- -------- ----- Borders
Superstores 83.2% -% 83.2% 82.5% -% 82.5% Waldenbooks
Specialty
Retail 12.1 - 12.1 13.2 - 13.2 International 4.7 - 4.7 4.3 - 4.3
----- ---- ----- ---- ---- ----- Total sales 100.0 - 100.0 100.0 - 100.0 Other revenue 1.3 - 1.3 1.2 - 1.2
----- ---- ----- ----- ---- ----- Total revenue 101.3 - 101.3 101.2 - 101.2 Cost of goods
sold, including
occupancy
costs 79.8 (0.1) 79.7 78.3 (0.1) 78.2
----- ---- ----- ----- ---- ----- Gross margin 21.5 0.1 21.6 22.9 0.1 23.0 Selling, general
and
administrative
expenses 26.5 1.3 27.8 27.9 1.0 28.9 Asset impairments
and other
writedowns - 0.1 0.1 - 2.3 2.3
----- ----- ----- ----- ----- ----- Operating loss (5.0) (1.3) (6.3) (5.0) (3.2) (8.2) Interest expense 0.8 0.2 1.0 1.1 0.5 1.6 Warrant/put
expense (income) - 1.9 1.9 - (1.3) (1.3)
--- --- --- --- ---- ---- Total interest
expense (income) 0.8 2.1 2.9 1.1 (0.8) 0.3
--- --- --- --- ---- --- Loss before
income taxes (5.8) (3.4) (9.2) (6.1) (2.4) (8.5) Income taxes
(benefit) (2.2) 2.2 - (2.4) 3.8 1.4
---- --- --- ---- --- --- Loss from
continuing
operations (3.6)% (5.6)% (9.2) (3.7)% (6.2)% (9.9)%
(1) The results of Borders Australia, Borders New Zealand and Borders
Singapore are reported as discontinued operations. (2) Results from 2009 were impacted by a number of non-operating items,
including accelerated depreciation related to our multimedia reduction
initiative, asset impairments, severance costs, store closure costs,
professional fees related to our turnaround efforts, amortization of
the term loan discount and debt issuance costs, and non-cash charges
related to the fair market value adjustment of the warrant liability
and international put expiration. Therefore, solely for analytical
purposes and as an aid to better understand underlying trends,
operating basis data are presented excluding these items. To aid in
the comparability to last year, operating basis data is presented
using a normalized tax rate. (3) Results from 2008 were impacted by a number of non-operating items,
including deferred tax asset impairments, store asset impairments,
store closure costs, severance costs, professional fees related to
strategic alternatives and amortization of the term loan discount and
debt issuance costs, offset by income related to the fair market value
adjustment of the warrant liability as well as income received from a
landlord lease termination. Therefore, solely for analytical purposes
and as an aid to better understand underlying trends, operating basis
data are presented excluding these items. To aid in the comparability
to last year, operating basis data is presented using a normalized tax
rate.
Borders Group, Inc. Financial Statements
(dollars in millions)
Unaudited
Condensed Consolidated Balance Sheets
October 31, November 1, January 31,
2009 2008 2009
---- ---- ---- Assets Cash and cash equivalents $32.8 $38.4 $53.6 Merchandise inventories 1,157.4 1,256.5 915.2 Other current assets 78.4 99.6 102.4 Property and equipment, net 426.5 521.3 494.2 Other assets and deferred charges 46.5 90.7 43.4
Goodwill 0.3 40.5 0.2
--- ---- --- Total assets $1,741.9 $2,047.0 $1,609.0
======== ======== ======== Liabilities and Stockholders' Equity Short-term borrowings and current
portion of long-term debt $401.8 $518.0 $329.8 Trade accounts payable 605.3 613.2 350.0 Other current liabilities 274.9 311.5 313.9 Long-term debt 6.0 7.4 6.4 Other long-term liabilities 354.7 353.9 345.8
----- ----- ----- Total liabilities 1,642.7 1,804.0 1,345.9
Total stockholders' equity 99.2 243.0 263.1
---- ----- -----
Total liabilities and stockholders'
equity $1,741.9 $2,047.0 $1,609.0
======== ======== ========
Certain reclassifications have been made to conform to current year presentation.
Store Activity Summary
Year
Quarter Ended Nine Months Ended Ended
------------------ ------------------ --------
Oct. 31, Nov. 1, Oct. 31, Nov. 1, Jan. 31,
2009 2008 2009 2008 2009
-------- ------- -------- ------- -------- Borders Superstores Beginning number of
stores 513 518 515 509 509 Openings - 2 - 11 12 Closings - (1) (2) (1) (6)
-------- ------- -------- ------- -------- Ending number of stores 513 519 513 519 515
======== ======= ======== ======= ======== Ending square footage
(in millions) 12.7 12.8 12.7 12.8 12.8
Waldenbooks Specialty
Retail Stores (1) Beginning number of
stores 370 468 386 490 490 Openings-Airport stores - 5 1 5 8 Closings (9) (6) (26) (28) (112)
-------- ------- -------- ------- -------- Ending number of stores 361 467 361 467 386
======== ======= ======== ======= ======== Ending square footage
(in millions) 1.3 1.8 1.3 1.8 1.4
======== ======= ======== ======= ========
(1) Includes all small format stores in malls, airports and outlet malls.
Borders Group, Inc. Financial Statements
(dollars in millions)
Unaudited
Condensed Consolidated Statements of Cash Flows
Quarter Ended Nine Months Ended
------------------ -------------------
Oct. 31, Nov. 1, Oct. 31, Nov. 1,
2009 2008 2009 2008
-------- ------- -------- ------- CASH PROVIDED BY (USED FOR):
OPERATIONS Loss from continuing operations $(38.5) $(172.2) $(170.1) $(213.6) Adjustments to reconcile loss
from continuing operations to
operating cash flows:
Depreciation 22.5 27.7 75.9 82.4
Loss on disposal of assets 0.8 0.3 1.3 1.3
Stock based compensation cost 0.2 1.7 0.2 5.0
Increase (decrease) in
warrant liability (28.7) (12.7) 23.2 13.6
Change in other long-term
assets, liabilities and
deferred charges (3.5) 43.6 (15.7) 16.2
Write-off of intangible asset - - 16.2 -
Asset impairments and
other writedowns 0.2 50.1 1.0 50.1
Increase in inventories (267.9) (171.0) (238.8) (19.4)
Increase in accounts payable 195.1 146.2 254.0 103.5 Cash provided by (used for)
other current assets and other
current liabilities (5.5) 46.7 (29.5) (24.7)
-------- ------- -------- -------
Net cash provided by
(used for) operating
activities of
continuing operations (125.3) (39.6) (82.3) 14.4 INVESTING Capital expenditures (6.8) (17.9) (11.2) (72.0) Proceeds from the sale of
discontinued operations - 6.6 - 94.5
-------- ------- -------- -------
Net cash provided by (used
for) investing activities of
continuing operations (6.8) (11.3) (11.2) 22.5 FINANCING Net cash provided by (repayment
of) financing obligations 119.7 55.0 73.3 (28.6) Issuance and repurchase of common
stock (0.5) - (0.8) 0.3 Net funding from (repayment of)
long-term debt - 0.1 (0.3) 0.8 Net repayment of capital lease
obligations (0.2) - (0.8) - Cash dividends paid - - - (6.5)
-------- ------- -------- -------
Net cash provided by (used
for) financing activities of
continuing operations 119.0 55.1 71.4 (34.0) Effect of exchange rates on cash
and cash equivalents - (0.1) 0.5 - Net cash provided by (used for)
discontinued operations 0.8 (9.6) 0.8 (23.0)
-------- ------- -------- ------- NET DECREASE IN CASH AND CASH
EQUIVALENTS (12.3) (5.5) (20.8) (20.1)
-------- ------- -------- ------- Cash and cash equivalents at
beginning of period 45.1 43.9 53.6 58.5
-------- ------- -------- ------- Cash and cash equivalents at
end of period $32.8 $38.4 $32.8 $38.4
======== ======= ======== =======
Borders Group, Inc. Segment Financial Information
(dollars in millions, except per share amounts)
Unaudited
Quarter Ended Quarter Ended
October 31, 2009 November 1, 2008
----------------------- ------------------------
Adjust- Adjust-
Operating ments GAAP Operating ments GAAP
Basis(1) (1) Basis Basis(2) (2) Basis
----------------------- ------------------------
Borders Superstores
-------------------
Sales $492.4 $- $492.4 $560.3 $- $560.3
Depreciation expense 19.2 - 19.2 23.8 - 23.8
Operating loss (44.5) (1.7) (46.2) (37.8) (42.5) (80.3)
Adjusted EBITDA (5) (25.3) (14.0) Waldenbooks Specialty
Retail
Sales $72.9 $- $72.9 $91.5 $- $91.5
Depreciation expense 1.9 - 1.9 2.3 - 2.3
Operating loss (8.2) (1.8) (10.0) (13.2) (4.5) (17.7)
Adjusted EBITDA (5) (6.3) (10.9)
International (3)
-----------------
Sales $30.2 $- $30.2 $30.3 $- $30.3
Depreciation expense 1.4 - 1.4 1.6 - 1.6
Operating loss (1.3) (0.1) (1.4) (1.6) (0.2) (1.8)
Adjusted EBITDA (5) 0.1 -
Corporate (4)
-------------
Operating loss $(2.7) $(0.2) $(2.9) $(0.6) $(7.8) $(8.4)
Adjusted EBITDA (5) (2.7) (0.6)
Consolidated (3)
----------------
Sales $595.5 $- $595.5 $682.1 $- $682.1
Depreciation expense 22.5 - 22.5 27.7 - 27.7
Operating loss (56.7) (3.8) (60.5) (53.2) (55.0) (108.2)
Adjusted EBITDA (5) (34.2) (25.5)
Nine Months Ended Nine Months Ended
October 31, 2009 November 1, 2008
------------------------- --------------------------
Adjust- Adjust-
Operating ments GAAP Operating ments GAAP
Basis(1) (1) Basis Basis(2) (2) Basis
------------------------- --------------------------
Borders
Superstores
------------
Sales $1,542.7 $- $1,542.7 $1,782.9 $- $1,782.9
Depreciation
expense 59.0 7.1 66.1 70.9 - 70.9
Operating loss (66.2) (13.9) (80.1) (68.8) (49.2) (118.0)
Adjusted
EBITDA (5) (7.2) 2.1 Waldenbooks
Specialty Retail
Sales $224.3 $- $224.3 $284.4 $- $284.4
Depreciation
expense 5.7 - 5.7 6.9 - 6.9
Operating loss (16.7) (3.2) (19.9) (32.7) (6.3) (39.0)
Adjusted
EBITDA (5) (11.0) (25.8)
International (3)
-----------------
Sales $86.8 $- $86.8 $93.5 $- $93.5
Depreciation
expense 4.1 - 4.1 4.6 - 4.6
Operating loss (2.2) (0.8) (3.0) (1.5) (0.3) (1.8)
Adjusted
EBITDA (5) 1.9 3.1
Corporate (4)
-------------
Operating loss $(8.0) $(5.4) $(13.4) $(4.3) $(13.1) $(17.4)
Adjusted
EBITDA (5) (8.0) (4.3)
Consolidated (3)
----------------
Sales $1,853.8 $- $1,853.8 $2,160.8 $- $2,160.8
Depreciation
expense 68.8 7.1 75.9 82.4 - 82.4
Operating loss (93.1) (23.3) (116.4) (107.3) (68.9) (176.2)
Adjusted
EBITDA (5) (24.3) (24.9)
(1) Results from 2009 were impacted by a number of non-operating items,
including accelerated depreciation related to our multimedia reduction
initiative, asset impairments, severance costs, store closure costs
and professional fees related to our turnaround efforts. Therefore,
solely for analytical purposes and as an aid to better understand
underlying trends, operating basis data are presented excluding these
items. (2) Results from 2008 were impacted by a number of non-operating items,
including deferred tax asset impairments, store asset impairments,
store closure costs, severance costs and professional fees related to
strategic alternatives. Therefore, solely for analytical purposes and
as an aid to better understand underlying trends, operating basis data
are presented excluding these items. (3) Excludes the results of 2008 discontinued operations (Borders
Australia, Borders New Zealand and Borders Singapore). (4) The Corporate segment includes various corporate governance costs and
corporate incentive costs. (5) Adjusted EBITDA is operating income (loss) before depreciation and
amortization. Adjusted EBITDA is not a Generally Accepted Accounting
Principles (GAAP) measurement. Adjusted EBITDA information is being
included as we believe it is a commonly used measure of operating
performance in the retail industry. Adjusted EBITDA is provided to
enhance an investor's understanding of our operating results. It
should not be construed as an alternative to income from operations as
an indicator of operating performance or as an alternative to cash
flows from operating activities as a measure of liquidity as
determined in accordance with GAAP. All companies do not calculate
Adjusted EBITDA in the same manner. As a result, Adjusted EBITDA as
reported may not be comparable to Adjusted EBITDA as reported by other
companies.
http://www.newscom.com/cgi-bin/prnh/20060208/BORDERSGRPLOGODATASOURCE: Borders Group, Inc.
CONTACT: Investors: Mark Bierley, +1734-477-4105; or Media: Anne Roman,
+1-734-477-1392
Web Site: http://www.bordersgroupinc.com/