Barnes and Noble 1997 Annual Report Download

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BARNES & NOBLE
ANNUAL REPORT
97

Table of contents

  • Page 1
    BARNES & NOBLE 97 ANNUAL REPORT

  • Page 2
    ...A Banner Year: 1997 In Review BarnesandNoble.com A Dynamic Outlook: 1998 and Beyond Selected Consolidated Financial Data Management's Discussion and Analysis Consolidated Financial Statements Notes to Consolidated Statements Report of Independent Certified Public Accountants Shareholder Information...

  • Page 3
    ... of specialty magazines. Our stores provide customers with places to relax and read, comfortable cafés, unique children's sections, music departments and calendars of events featuring author appearances and discussion groups. A UNION STATION, WASHINGTON D.C. BURLINGTON, VT CORPUS CHRISTI, TX

  • Page 4
    BURLINGTON, VT BATON ROUGE, LA B METAIRIE, LA arnes & Noble is committed to talented new writers. In 1990 we established the Discover Great New Writers program as a forum for the works of new and emerging authors. Since then, we've had the opportunity to highlight the works of literally hundreds...

  • Page 5
    ...of a two-for-one stock split on September 22, 1997 and to reï¬,ect the adoption of Statement of Financial Accounting Standards No. 128, "Earnings Per Share," during 1997. (1) (2) TOTAL REVENUES Dollars in Billions $2.8 $2.0 $2.4 BARNES & NOBLE STORE REVENUES Dollars in Billions $2.2 $1.9 $1.3 '95...

  • Page 6
    ... comparable store sales and the excellent execution of our business plan. We have also lengthened our lead as the world's largest bookseller and have emerged as a powerful global brand. For good measure, we have launched an incredibly effective Web site, while at the same time managing to achieve...

  • Page 7

  • Page 8
    ..., Barnes & Noble's market capitalization increased more than $1.1 billion, and our stock price grew 104%. Seventy-nine percent of our "super" stores are now in the comp pool and prospects for further growth are strong. The early performance of BarnesandNoble.com has been impressive-1997 revenues...

  • Page 9

  • Page 10
    ..., Barnes & Noble Booksellers handling, freight, scheduling and inventory costs down. We added five times the capacity of our previous distribution network, thereby broadening title selection and providing just-in-time inventory delivery to our stores. A strategic benefit of the distribution center...

  • Page 11

  • Page 12
    ....COM AND AMERICA ONLINE: A STRATEGIC PARTNERSHIP Last March, we became the exclusive bookseller in America Online's Marketplace. The AOL site provides its members with access to the proprietary database of BarnesandNoble.com, and enables us to directly reach a well-established online community...

  • Page 13
    ... a four-year alliance with America Online • 600,000th book shipped: Making Music For The Joy Of It • 1,000th Affiliate: Business Week We launch Book Benefits Network for Non-Profits with support from American Express • E-commerce agreement with Disney Online announced STRATEGIC MARKETING...

  • Page 14
    ...rst 500 stores represent the establishment of an enduring franchise-one we expect will result in increased market share in the years ahead. As Barnes & Noble enters 1998, we remain the only book retailer operating through all four channels of distribution: retail stores, the Internet, 1-800-THE BOOK...

  • Page 15
    ...fied for comparative purposes. FISCAL YEAR (Thousands of dollars, except per share data) 1997 1996 1995 1994 1993 STATEMENT OF OPERATIONS DATA: Revenues Barnes & Noble stores(1) B. Dalton stores(2) BarnesandNoble.com Other Total revenues Cost of sales and occupancy Gross profit Selling and...

  • Page 16
    ... 1997 1996 1995 1994 1993 STORE OPERATING DATA: Stores open at end of period Barnes & Noble stores(1) B. Dalton stores(2) Total Comparable store sales increase (decrease)(8) Barnes & Noble stores(1) B. Dalton stores(2) Capital Expenditures BALANCE SHEET DATA (AT END OF PERIOD): Working capital...

  • Page 17
    ... Bookstore trade names. Barnes & Noble publishes books under its own imprint for exclusive sale through its retail stores and mail-order catalogs. The Company is also the exclusive bookseller in America Online's Marketplace (keyword: BarnesandNoble) and maintains its own Web site (BarnesandNoble.com...

  • Page 18
    ... Books imprint for exclusive sale in its retail stores, direct-mail catalogs and through BarnesandNoble.com. With publishing and distribution rights to over 1,500 titles, Barnes & Noble Books offers customers high-quality books at excellent values and generates attractive gross margins. The Company...

  • Page 19
    ...revenues of B. Dalton stores which closed 53 stores and posted a comparable store sales decline of 1.1%. BarnesandNoble.com, the Company's new online subsidiary, also contributed to the increase in revenue, posting $14.6 million of revenues during its first partial year of operations. Cost of Sales...

  • Page 20
    ... (or 30.5% of total revenues) during fiscal 1995. The increase in revenues was primarily attributable to an increase in sales from Barnes & Noble stores. The Company opened 91 Barnes & Noble stores and closed 18 during fiscal 1996 (12 of which were relocated), increasing square footage by 33% in...

  • Page 21
    ... effects of the $123.8 million restructuring charge). Fiscal 1996 earnings increased due to the continuing improvement in Barnes & Noble operating profits combined with accelerating revenues over which to spread overhead costs. Net earnings per diluted share were $0.75 during fiscal 1996 compared...

  • Page 22
    ... efficient working capital management; revenues increased 23.8% while inventory levels declined 1.1% through faster inventory turns. The weighted-average age per square foot of the Company's 483 Barnes & Noble stores was 2.8 years as of January 31, 1998 and is expected to increase to approximately...

  • Page 23
    ... planned for the next fiscal year, management believes cash ï¬,ows generated from operating activities, short-term vendor financing and its borrowing capacity under its revolving credit facility will be sufficient to meet the Company's working capital and debt service requirements, and support...

  • Page 24
    ...63,298) (10,322) (52,976) - (52,976) Revenues $ 2,796,852 Cost of sales and occupancy 2,019,291 Gross profit 777,561 Selling and administrative expenses 540,423 Depreciation and amortization 76,951 Pre-opening expenses 12,918 Restructuring charge - Operating profit (loss) 147,269 Interest (net of...

  • Page 25
    CONSOLIDATED BALANCE SHEETS (Thousands of dollars, except per share data) JANUARY 31, 1998 FEBRUARY 1, 1997 ASSETS Current assets: Cash and cash equivalents Receivables, net Merchandise inventories Prepaid expenses and other current assets Total current assets Property and equipment: Land and ...

  • Page 26
    ... STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Thousands of dollars) COMMON STOCK $ 60 5 1 - 66 - - 66 2 - 68 ADDITIONAL PAID-IN CAPITAL 346,704 88,720 6,312 - 441,736 4,529 - 446,265 22,595 - 468,860 RETAINED EARNINGS (DEFICIT) 11,409 - - (52,976) (41,567) - 51,225 9,658 - 53,169 62,827 TOTAL...

  • Page 27
    ... charge due to early extinguishment of debt, net of tax benefits Increase in other long-term liabilities for scheduled rent increases in long-term leases Changes in operating assets and liabilities, net Net cash ï¬,ows from operating activities Cash ï¬,ows from investing activities: Purchases...

  • Page 28
    ... Inventories 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Barnes & Noble, Inc. (Barnes & Noble), through its wholly owned subsidiaries (collectively, the Company), is primarily engaged in the sale of books through four principal bookselling strategies: its "super" store strategy...

  • Page 29
    ...of expected sublease recoveries. Costs associated with store closings of $5,113 during fiscal 1995 are included in selling and administrative expenses in the accompanying consolidated statements of operations. Net Earnings (Loss) Per Common Share Deferred Charges Costs incurred to obtain long-term...

  • Page 30
    ... including financial covenants which require the Company to meet, among other things, cash flow and interest coverage ratios and which limit capital expenditures. The New Facility is secured by the capital stock, accounts receivable and general intangibles of the Company's subsidiaries. Net proceeds...

  • Page 31
    ...Statements continued Selected information related to the Company's revolving credit facility is as follows: 4. FAIR VALUES OF FINANCIAL INSTRUMENTS The carrying values of cash and cash equivalents reported in the accompanying consolidated balance sheets approximate fair value due to the short-term...

  • Page 32
    ... the net periodic pension costs and the funded status of the Pension Plan are as follows: JANUARY 31, FEBRUARY 1, JANUARY 27, 1998 1997 1996 Discount rate (beginning of year) Discount rate (end of year) Expected long-term rate of return on plan assets Assumed rate of compensation increase...

  • Page 33
    Notes to Consolidated Financial Statements continued In addition to providing pension benefits, the Company provides certain health care and life insurance benefits to retired employees (the Plan). Only those employees receiving benefits or retired as of April 1,1993 are eligible to participate ...

  • Page 34
    ... Company accelerated its mall bookstore closing program with the aim of forming a core of more profitable B. Dalton stores, and provided for these closing costs and asset valuation adjustments through a non-cash restructuring charge, and early adoption of Statement of Financial Accounting Standards...

  • Page 35
    ...-pricing model with the following assumptions: volatility of 28%, risk-free interest rate of 6.54% in fiscal 1997, 6.63% in fiscal 1996, and 6.59% in fiscal 1995, and an expected life of six years. A summary of the status of the Company's stock options is presented below: (Thousands of shares...

  • Page 36
    ... annual rent including real estate taxes of approximately $1,309, $1,307 and $1,376 in fiscal years 1997, 1996 and 1995, respectively. Marboro Books Corp., the Company's mail-order subsidiary, leases a 76,000 square foot office/warehouse from a partnership in which a principal shareholder/director...

  • Page 37
    ... 7.0% of the gross sales of such departments. The Company also provides real estate and construction services to Babbage's and purchases business insurance on its behalf for which the Company is reimbursed for its incremental costs to provide such services. The Company charged Software and Babbage...

  • Page 38
    REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors Barnes & Noble, Inc. We have audited the accompanying consolidated balance sheets of Barnes & Noble, Inc. and subsidiaries as of January 31, 1998 and February 1, 1997 and the related consolidated statements of operations, ...

  • Page 39
    ... NONFICTION DON'T SWEAT THE SMALL STUFF Richard Carlson Hyperion (586,772) CHICKEN SOUP FOR THE WOMAN'S SOUL Jack Canfield Health Communications (307,064) CHICKEN SOUP FOR THE TEENAGE SOUL Jack Canfield Health Communications (257,977) DR. ATKIN'S NEW DIET REVOLUTION Robert Atkins Avon (224,200) THE...

  • Page 40
    ...'S WAR: AMERICA'S EYEWITNESS TO WORLD WAR II James Tobin Simon & Schuster 1997 NOBEL PRIZE FOR LITERATURE Dario Fo 1997 CHILDREN'S BOOK AWARDS Caldecott Medal RAPUNZEL Paul O. Zelinsky NAL/Dutton Newbery Medal OUT OF THE DUST Karen Hesse Scholastic BOOKER PRIZE THE GOD OF SMALL THINGS Arundhati...

  • Page 41
    ... the Company's debt agreements. CORPORATE INFORMATION CORPORATE HEADQUARTERS: Barnes & Noble, Inc., 122 Fifth Avenue, New York, New York 10011 (212) 633-3300 COMMON STOCK: New York Stock Exchange, Symbol: BKS TRANSFER AGENT AND REGISTRAR: The Bank of New York, Shareholder Relations, Department 11E...

  • Page 42