Barnes & Noble Reports Fiscal 2013 Second Quarter Financial Results

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to Barnes & Noble or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. Barnes & Noble undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this communication.

BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share data)
				13 weeks ended				13 weeks ended			26 weeks ended				26 weeks ended
				October 27, 2012				October 29, 2011			October 27, 2012				October 29, 2011
Sales				$	1,884,532			1,891,961			$	3,338,039			3,310,365
Cost of sales and occupancy					1,404,034			1,420,297				2,443,653			2,451,143
Gross profit					480,498			471,664				894,386			859,222
Selling and administrative expenses					415,747			415,632				825,802			826,750
Depreciation and amortization					57,613			57,755				115,648			113,427
Operating income (loss)					7,138			(1,723)				(47,064)			(80,955)
Interest expense, net					8,122			8,460				17,064			17,901
Income (loss) before taxes					(984)			(10,183)				(64,128)			(98,856)
Income taxes					(409)			(3,620)				(22,573)			(35,687)
Net income (loss)					(575)			(6,563)				(41,555)			(63,169)
Net loss attributable to noncontrolling interests					2,808			-				2,808			-
Net income (loss) attributable to Barnes & Noble, Inc.				$	2,233			(6,563)			$	(38,747)			(63,169)
Basic loss per common share:
Loss attributable to Barnes & Noble, Inc. available
for common shareholders				$	(0.04)			(0.17)			$	(0.82)			(1.16)
Diluted loss per common share:
Loss attributable to Barnes & Noble, Inc. available
for common shareholders				$	(0.04)			(0.17)			$	(0.82)			(1.16)
Weighted average common shares outstanding:
Basic					58,168			57,261				58,094			57,207
Diluted					58,168			57,261				58,094			57,207
Percentage of sales:
Sales					100.0%			100.0%				100.0%			100.0%
Cost of sales and occupancy					74.5%			75.1%				73.2%			74.0%
Gross profit					25.5%			24.9%				26.8%			26.0%
Selling and administrative expenses					22.1%			22.0%				24.7%			25.0%
Depreciation and amortization					3.1%			3.1%				3.5%			3.4%
Operating income (loss)					0.4%			-0.1%				-1.4%			-2.4%
Interest expense, net					0.4%			0.4%				0.5%			0.5%
Income (loss) before taxes					-0.1%			-0.5%				-1.9%			-3.0%
Income taxes					0.0%			-0.2%				-0.7%			-1.1%
Net income (loss)					0.0%			-0.3%				-1.2%			-1.9%
Net loss attributable to noncontrolling interests					0.1%			0.0%				0.1%			0.0%
Net income (loss)					0.1%			-0.3%				-1.2%			-1.9%

BARNES & NOBLE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands)
				October 27, 2012				October 29, 2011
ASSETS
Current assets:
Cash and cash equivalents				$	470,994			$	23,633
Receivables, net					224,545				240,600
Merchandise inventories					1,796,208				1,836,740
Prepaid expenses and other current assets					223,325				180,352
Total current assets					2,715,072				2,281,325
Property and equipment:
Land and land improvements					2,541				8,617
Buildings and leasehold improvements					1,211,156				1,220,869
Fixtures and equipment					1,833,667				1,725,135
					3,047,364				2,954,621
Less accumulated depreciation and amortization					2,462,310				2,280,551
Net property and equipment					585,054				674,070
Goodwill					515,524				521,899
Intangible assets, net					558,157				574,964
Other noncurrent assets					57,218				55,794
Total assets				$	4,431,025			$	4,108,052
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable				$	1,448,397			$	1,461,981
Accrued liabilities					470,975				436,868
Gift card liabilities					297,191				287,268
Total current liabilities					2,216,563				2,186,117
Long-term debt					338,400				274,900
Long-term deferred taxes					292,879				275,868
Other long-term liabilities					364,966				418,923
Redeemable Preferred Shares; $.001 par value; 5,000
shares authorized; 204 and 204 shares issued, respectively					192,904				191,681
Preferred Member Interests in NOOK Media, LLC					289,054				-
Shareholders' equity:
Common stock; $.001 par value; 300,000 shares
authorized; 92,037 and 90,856 shares issued, respectively					92				91
Additional paid-in capital					1,377,992				1,331,983
Accumulated other comprehensive loss					(16,635)				(11,630)
Retained earnings					434,174				495,830
Treasury stock, at cost, 33,801 and 33,527 shares, respectively					(1,059,364)				(1,055,711)
Total shareholders' equity					736,259				760,563
Commitments and contingencies					-				-
Total liabilities and shareholders' equity				$	4,431,025			$	4,108,052

BARNES & NOBLE, INC. AND SUBSIDIARIES Segment Information (In thousands)
					13 weeks ended			13 weeks ended		26 weeks ended			26 weeks ended
					October 27, 2012			October 29, 2011		October 27, 2012			October 29, 2011
Sales
	Retail				$	996,028		1,025,802		$	2,115,415		2,123,054
	College					773,007		769,650			993,725		990,144
	NOOK					160,347		151,847			352,322		343,259
	Elimination					(44,850)		(55,338)			(123,423)		(146,092)
Total					$	1,884,532		1,891,961		$	3,338,039		3,310,365
Gross Profit
	Retail				$	293,362		290,490		$	630,099		600,939
	College					168,221		167,691			219,263		218,863
	NOOK					18,915		13,483			45,024		39,420
Total					$	480,498		471,664		$	894,386		859,222
Selling and Administrative Expenses
	Retail				$	264,974		276,401		$	527,150		547,154
	College					80,434		74,900			145,508		138,276
	NOOK					70,339		64,331			153,144		141,320
Total					$	415,747		415,632		$	825,802		826,750
EBITDA
	Retail				$	28,388		14,089		$	102,949		53,785
	College					87,787		92,791			73,755		80,587
	NOOK					(51,424)		(50,848)			(108,120)		(101,900)
Total					$	64,751		56,032		$	68,584		32,472
Net Loss
	EBITDA				$	64,751		56,032		$	68,584		32,472
	Depreciation and Amortization					(57,613)		(57,755)			(115,648)		(113,427)
	Interest Expense, net					(8,122)		(8,460)			(17,064)		(17,901)
	Income Taxes					409		3,620			22,573		35,687
Total					$	(575)		(6,563)		$	(41,555)		(63,169)
Percentage of sales:
Gross Margin
	Retail					29.5%		28.3%			29.8%		28.3%
	College					21.8%		21.8%			22.1%		22.1%
	NOOK					16.4%		14.0%			19.7%		20.0%
Total						25.5%		24.9%			26.8%		26.0%
Selling and Administrative Expenses
	Retail					26.6%		26.9%			24.9%		25.8%
	College					10.4%		9.7%			14.6%		14.0%
	NOOK					60.9%		66.7%			66.9%		71.7%
Total						22.1%		22.0%			24.7%		25.0%

BARNES & NOBLE, INC. AND SUBSIDIARIES Loss Per Share (In thousands, except per share data)
											13 weeks ended									26 weeks ended
											October 27, 2012				October 29, 2011					October 27, 2012				October 29, 2011
Numerator for basic loss per share:
Income (loss) attributable to Barnes & Noble, Inc.											$	2,233			(6,563)					$	(38,747)			(63,169)
Preferred stock dividends												(3,942)			(3,118)						(7,883)			(3,118)
Accretion of dividends on preferred stock												(453)			(262)						(769)			(262)
Net loss available to common shareholders											$	(2,162)			(9,943)					$	(47,399)			(66,549)
Numerator for diluted loss per share:
Net loss available to common shareholders											$	(2,162)			(9,943)					$	(47,399)			(66,549)
Denominator for basic and diluted loss per share:
Basic weighted average common shares												58,168			57,261						58,094			57,207
Basic loss per common share
Net loss attributable to Barnes & Noble, Inc. available for common shareholders											$	(0.04)			(0.17)					$	(0.82)			(1.16)
Diluted loss per common share
Net loss attributable to Barnes & Noble, Inc. available for common shareholders											$	(0.04)			(0.17)					$	(0.82)			(1.16)

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