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x
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ANNUAL 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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Title of Class
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Name of Exchange on which registered
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Common Stock, $0.01 par value per share
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New York Stock Exchange
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Large accelerated filer
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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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INDEX TO FORM 10-K
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Page No.
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general competitive conditions, including actions our competitors and content providers may take to grow their businesses;
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a decline in college enrollment or decreased funding available for students;
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decisions by colleges and universities to outsource their physical and/or online bookstore operations or change the operation of their bookstores;
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the general economic environment and consumer spending patterns;
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decreased consumer demand for our products, low growth or declining sales;
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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;
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the integration of MBS Textbook Exchange, LLC’s operations into our own may also increase the risk of our internal controls being found ineffective;
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implementation of our digital strategy may not result in the expected growth in our digital sales and/or profitability;
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risk that digital sales growth does not exceed the rate of investment spend;
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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;
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our ability to successfully implement our strategic initiatives including our ability to identify, compete for and execute upon additional acquisitions and strategic investments;
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risks associated with operation or performance of MBS Textbook Exchange, LLC’s point-of-sales systems that are sold to college bookstore customers;
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changes to purchase or rental terms, payment terms, return policies, the discount or margin on products or other terms with our suppliers;
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technological changes;
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risks associated with counterfeit and piracy of digital and print materials;
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our international operations could result in additional risks;
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our ability to attract and retain employees;
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the risk of price reduction or change in format of course materials by publishers, which could negatively impact revenues and margin;
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risks associated with data privacy, information security and intellectual property;
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trends and challenges to our business and in the locations in which we have stores;
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non-renewal of managed bookstore, physical and/or online store contracts and higher-than-anticipated store closings;
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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;
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disruption of or interference with third party web service providers and our own proprietary technology;
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work stoppages or increases in labor costs;
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possible increases in shipping rates or interruptions in shipping service;
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product shortages, including risks associated with merchandise sourced indirectly from outside the United States;
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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;
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enactment of laws which may restrict or prohibit our use of emails or similar marketing activities;
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the amount of our indebtedness and ability to comply with covenants applicable to any future debt financing;
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our ability to satisfy future capital and liquidity requirements;
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our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms;
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adverse results from litigation, governmental investigations, tax-related proceedings, or audits;
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changes in accounting standards; and
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the other risks and uncertainties detailed in the section titled “Risk Factors” in
Part I - Item 1A
of this Form 10-K.
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The
BNC Segment
is comprised of the operations of Barnes & Noble College Booksellers, LLC ("BNC") which operates 768 physical campus bookstores, the majority of which also have school-branded e-commerce sites operated by BNC and which offer students access to affordable course materials and affinity products, including emblematic apparel and gifts. BNC also offers its First Day™ inclusive access program, in which course materials, including e-content, are offered at a reduced price through a course materials fee, and delivered to students digitally on or before the first day of class. Additionally, the BNC segment offers a suite of digital content, software, and services to colleges and universities through our LoudCloud platform, such as predictive analytics, a variety of open educational resources courseware, and a competency-based learning platform.
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The
MBS Segment
is comprised of MBS Textbook Exchange, LLC's ("MBS") two highly integrated businesses: MBS Direct which operates 676 virtual bookstores for college and university campuses, and K-12 schools, and MBS Wholesale which is one of the largest textbook wholesalers in the country. MBS Wholesale's business centrally sources and sells new and used textbooks to more than 3,500 physical college bookstores, including BNC’s 768 campus bookstores. MBS Wholesale sells hardware and a software suite of applications that provides inventory management and point-of-sale solutions to approximately 430 college bookstores.
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The
Digital Student Solutions ("DSS") Segment
includes direct-to-student product and service offerings to assist students to study more effectively and improve academic performance, thus enabling them to gain the valuable skills necessary to succeed after college. DSS is comprised of the operations of Student Brands, LLC, a leading direct-to-student subscription-based writing services business, with approximately 100,000 subscribers across its digital properties, as well as tutoring and test prep services offered through our partnership with
The Princeton Review
. We currently offer these online student services directly to students, and increasingly will be leveraging our BNC and MBS physical and virtual bookstore footprint to market directly to students where we serve as the campus bookstore. We continue to aggressively expand our ecosystem of products and services through our own internal development, as well as by partnering with other companies to provide a complete hub of products and services designed to improve student success and outcomes.
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Cost of Sales expenses primarily related to facility costs and insurance for the Corporate Services component have been reclassified to Selling and Administrative Expenses.
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For our digital rental products, we have reclassified Rental Income to Product Sales and Other, and have reclassified Rental Cost of Sales to Product and Other Cost of Sales, with no impact to Gross Margin. Digital rental revenue and digital rental cost of sales are recognized at the time of delivery and are not deferred over the rental period.
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Ability to Compete by Developing New Products and Solutions to Meet Market Needs.
We offer a comprehensive range of cost-effective alternatives for course materials. As demand for new, enhanced, and more affordable products and services increase in the rapidly changing education landscape, we strive to evolve our business model and enhance our solutions. We continue to aggressively innovate and collaborate with our partners to provide solutions that extend well beyond course materials to include new digital services that increase the likelihood of successful student outcomes.
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First Day™.
We offer our First Day™ inclusive access program, in which course materials, including e-content, are offered at a reduced price through a course materials fee, and delivered to students digitally on or before the first day of class. We have entered into several agreements with major publishers, including Cengage, McGraw-Hill Education and Pearson, to distribute their e-content through First Day™.
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Comprehensive Suite of Course Materials.
Our physical and virtual bookstores and accompanying e-commerce sites offer new and used, print and digital course materials, which are available to buy or rent. Through our MBS Wholesale business, we possess a robust inventory comprised of approximately 300,000 textbook titles in stock and maintain a comprehensive catalog of new and used textbooks and digital course material solutions.
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LoudCloud Courseware
™
.
Our courseware, utilizing open educational resources ("OER") and other expert sources, is a cost-effective solution enhanced with digital content that includes videos, activities and auto-graded practice assessments that faculty can easily customize to align with class objectives. In Fiscal 2018, consistent with our LoudCloud Courseware™ development road map, we expanded our courseware titles from 10 to 32 course titles, with sales to approximately 21,000 students at 40 colleges and universities, including technical colleges and online programs. LoudCloud Courseware™ significantly reduces course material costs for students and enables easier implementation for faculty.
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Student Solutions.
Direct-to-student businesses focused on study tools, writing help, all centered around assisting students with the writing process and journey. Student Brands addresses writing pain points; students can search for a topic, develop an outline, and access authenticity technology. The content database allows students to leverage academic resources and references, with over 26 million essays across 4 languages representing more than 15 different countries, and receives more than 20 million unique monthly visitors to its sites. Student Brands has a substantial and growing community of online learners, with approximately 100,000 subscribers across its digital properties. We continue to aggressively expand our ecosystem of products and services through our own internal development, as well as by partnering with other companies to provide a complete hub of products and services designed to improve student success and outcomes.
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Large Footprint with Direct Access to Students and Faculty.
We operate 1,444 physical and virtual bookstores and serve more than 6 million students enrolled in higher education institutions and K-12 institutions. Through Student Brands and its affiliated websites, we extend our footprint directly to students as we offer services focused on writing help to approximately 100,000 subscribers using our digital properties, across 4 languages representing more than 15 different countries.
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Social Hub and Customer Connections.
At our physical campus bookstores, we serve as social hubs for students and their faculty, allowing us to forge deep customer relationships that help us drive awareness of our services and loyalty. For our MBS Direct and MBS Wholesale businesses, we are connected with our customers’ students online and through our proprietary systems. As a result of our proprietary data on students and textbook adoptions, we can develop prescriptive content and services to help students.
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System Integrations with Our Higher Education Partners.
We are deeply ingrained in the course material adoption processes of our customers and seamlessly integrate their systems with our technology. Both BNC and MBS have highly
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Understanding Our Demographics.
Our multi-channel strategies focus on building close relationships and one-to-one connections with our students, faculty, administrators, and alumni, whether in-store, online, or mobile. We provide connectivity to our services whether our customers are in the classroom, at the stadium, or at orientation. We leverage and monetize our unique access to college students for third party brand partners looking to target the college demographic.
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Well-Established, Deep Relationships with Partners and Stable, Long-Term Contracts.
We have strong partnerships with college and university administrators, as well as with publishers, vendors, and suppliers. We strive to be the first stop for students, educators, and administrators by offering existing and prospective clients the most comprehensive solutions available with our flexible physical, virtual, and hybrid bookstore models.
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Relationships with Colleges and Universities.
BNC stores are typically operated under management agreements with the college or university to be the official university bookstore and the exclusive seller of course materials and supplies, including physical and digital products sold in-store, online or through learning management systems. BNC's management contracts with colleges and universities typically include five year terms with renewal options and are typically cancelable by either party without penalty with 90 to 120 days' notice. Our BNC campus bookstores have an average relationship tenure of 15 years. From Fiscal 2015 through Fiscal 2018, over 90% of these contracts were renewed or extended, often before their termination dates. Our BNC decentralized management structure empowers local teams to make decisions based on the local campus needs and fosters collaborative working relationships with our partners.
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Relationships with Publishers.
We have long-term relationships with over 10,000 publishers, who partner with us to access one of the largest distribution networks of college and K-12 educational materials in the United States.
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Well-Recognized Brands.
The
Barnes & Noble
and
MBS
brands are virtually synonymous with bookselling, and we believe are widely recognized and respected brands in the United States. Our large college footprint, reputation, and credibility in the marketplace not only support our marketing efforts to universities, students, and faculty, but are also important for leading publishers who rely on us as one of their primary distribution channels.
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Scalable and Advanced Digital Solutions Focused Largely on the Student
. The implementation of our digital strategy leverages our significant bookstore management assets, both physical and virtual, our student relationships, and our well established brands to help accelerate the adoption of our new digital products and services. Our physical and virtual bookstore footprint, and associated student relationships, present a sizable addressable market for the Company’s new digital products and services. By their nature, our new digital solutions are designed to be marketed and sold both inside and outside our physical and virtual bookstore footprint. We continue to enhance and invest in our digital content and solutions to complement and leverage our bookstore and wholesale businesses. The revenue from these services have higher margin rates due to the relatively fixed cost structure of these operations.
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Increasing Market Share with New Accounts
. New store openings are an important driver of growth. In Fiscal 2018, BNC signed contracts for 33 new physical bookstores for estimated first year annual sales of $66 million. In Fiscal 2018, MBS signed contracts for 21 new virtual bookstores for estimated first year annual sales of $6 million. Currently, over 50% of college and university affiliated physical bookstores in the United States are operated by their respective institutions. We anticipate the trend towards outsourcing in the campus bookstore market, and we intend to aggressively pursue these opportunities to grow our BNC and MBS businesses. We evaluate each new contract based on established profitability measures to ensure we maintain a portfolio of profitable accounts. Our ability to offer existing and prospective clients physical, virtual and hybrid bookstore models is a key element of our competitive strategy.
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Expanding Our Strategic Opportunities through Acquisitions and Partnerships
. We intend to pursue strategic relationships with companies that enhance our educational services or distribution platform, or create compelling content offerings. Acquisitions and partnerships, such as Student Brands, LoudCloud and MBS, helped us expand into new educational verticals and markets, but other markets for expansion remain, including international markets. These will continue to be opportunistically evaluated.
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Course Material Sales and Rentals
. Sales and rentals of course materials are a core revenue driver and BNC's online platform and registration solutions are deeply ingrained in their partner schools’ textbook selection process. BNC works directly with faculty to ensure the textbooks they have chosen for their courses are available in all required formats before the start of classes. MBS’s wholesale distribution channel enables BNC to optimize textbook sourcing so they are able to more efficiently source and distribute a comprehensive inventory of affordable course materials to customers.
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LoudCloud Courseware
™
.
LoudCloud Courseware™, a turnkey solution for colleges and universities, offers advanced, affordable learning materials built on a high-quality foundation of open educational resources and enhanced with digital content that includes videos, activities and auto-graded practice assessments that faculty can easily customize to align with class objectives. LoudCloud Courseware™ significantly reduces course material costs for students and enables easier implementation for faculty. LoudCloud Courseware™ is delivered digitally on BNC's LoudCloud platform, with analytics integrated into the solution, and companion print versions available to students and educators to provide flexibility to learn and teach in either format. Courseware offerings include general education courses, including sociology, psychology and economics. In May 2018, as part of its ongoing mission to drive affordability and accessibility, BNC announced that it lowered the price of its courseware and expanded its available subject offerings to 32 courses for the fall 2018 semester, which is consistent with our LoudCloud Courseware™ development road map. In Fiscal 2018, we had LoudCloud Courseware™ sales to approximately 21,000 students at 40 colleges and universities, including technical colleges and online programs.
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eTextbooks.
BNC has partnered with VitalSource, a global leader in building, enhancing and delivering digital content, on our digital reading platform and a broad digital catalog.
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General Merchandise
. BNC drives general merchandise sales through both its in-store and online channels and features collegiate and athletic apparel, other custom-branded school spirit products, technology products, supplies and convenience items. We continue to see significant growth in our general merchandise e-commerce sales, with year over year growth of 22.8% in Fiscal 2018. Additionally, BNC's Promoversity subsidiary's standalone e-commerce solution can serve any school, corporation or group looking for customized apparel, corporate gifts and novelties, and other merchandise.
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Cafes and Convenience Stores.
BNC operates 86 customized cafés, featuring Starbucks Coffee
®
, and 18 stand-alone convenience stores, as well as diverse grab-and-go options including organic, vegan, gluten-free and ethnic fare. These offerings increase traffic and time spent in our physical stores.
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LoudCloud Platform.
Through our LoudCloud platform, we address the growing demand for alternative forms of educational materials and learning tools. LoudCloud is a sophisticated digital platform comprised of learning analytics and competency learning solutions. Our
LoudSight
predictive analytics solution captures and analyzes key demographic, behavioral and performance metrics from students and provides real-time alerts, allowing educators to identify, monitor and support at-risk students to improve student success. LoudCloud's analytics solution connects disparate systems on campus, builds predictive models based upon data collected by institutions, and presents advisors with a unified view of the factors that drive student success on their campus. LoudSight has the ability to capture and analyze over 200 parameters across demographic, performance and participation data points.
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Through our partnership with Instructure, a leading educational technology company and creator of the Canvas LMS,
LoudSight
can be fully integrated in Canvas’s platform, providing higher education institutions with actionable insights that provide a comprehensive view of the student journey. Instructure is a leading LMS provider at schools across the country, and we believe the ability to integrate with a school’s Canvas system makes our analytics solution more efficient and effective.
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We entered into an agreement with Unizin, Ltd. ("Unizin") in Fiscal 2018 to provide its 22 member universities with
LoudSight
. As a result, faculty and advisors will have access to a customized solution that helps educators identify, monitor, and support at-risk students, with the goal of improving student success rates and retention.
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We announced our strategic partnership with Portland State University ("PSU") to co-develop a degree planning solution. Using insights generated by PSU's reTHINK initiative and leveraging our analytics platform, the solution will ultimately help more students graduate on time with better pathways to employment and provide the university with long-term demand planning tools.
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Brand Partnerships.
Through BNC's unique relationship with students, colleges and universities, and our premier position on campus, BNC operates as a media channel for brands looking to target the college demographic, and derives revenue from these marketing share programs. BNC creates strategic, integrated campaigns which include research, email, social media, display advertising, on-campus events, signage, and sampling. BNC's client list includes brands, such as Chase, Target,
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Course Material Sales and Rentals
.
MBS Direct services virtual bookstores with a comprehensive e-commerce experience and a broad suite of affordable course materials, including new and used print and digital textbooks, which are available for sale or rent. MBS Direct offers a robust used textbook selection, unique guaranteed buyback program, dynamic pricing, and marketplace offerings. Additionally, MBS Direct sells new, used and digital textbooks directly to students through Textbooks.com
SM
, one of the largest e-commerce sites for new and used textbooks. MBS’s Wholesale distribution channel
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Wholesale Textbook Distribution.
MBS Wholesale centrally sources and sells new and used textbooks to over 3,500 physical college bookstores, including BNED’s 768 campus bookstores. MBS Wholesale's large inventory of used textbooks consists of approximately 300,000 textbook titles in stock, and it has a highly automated distribution facility that processes more than 13 million textbooks annually.
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Wholesale Inventory Management, Hardware and POS Software.
MBS Wholesale sells hardware and a software suite of applications that provides inventory management and point-of-sale solutions to approximately 430 college bookstores. MBS Wholesale provides on-site installation for point-of-sale terminals and servers, and offers technical assistance through user training and our support center facility. The cost savings and ease of deployment ensure clients get the most out of their management systems and create strong customer loyalty.
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eTextbooks.
MBS has partnered with VitalSource, a global leader with a broad digital catalog to build, enhance and deliver digital content.
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LoudCloud Courseware
™
.
LoudCloud Courseware™, a turnkey solution for colleges and universities, offers advanced, affordable learning materials built on a high-quality foundation of open educational resources and enhanced with digital content that includes videos, activities and auto-graded practice assessments that faculty can easily customize to align with class objectives. LoudCloud Courseware™ significantly reduces course material costs for students and enables easier implementation for faculty. MBS’s broad base of wholesale and virtual bookstore customers provides us with new sales opportunities for BNC's digital suite of course materials and platforms as discussed above in the
BNC Segment
discussion.
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Increased Use of Online and Digital Platforms as Companions or Alternatives to Printed Course Materials
. Students and faculty can now choose from a wider variety of educational content and tools than ever before, delivered across both print and digital platforms. Students and faculty are increasingly relying on online and digital platforms as a means to discover, consume and share educational content and access affordable non-traditional educational content, including online coursework and supplemental materials. Whereas some companies are creating digital delivery systems that would seek to make traditional textbooks obsolete, others are developing new technologies to complement traditional offerings. Importantly, we have the ability to adjust and grow our digital offering efficiently to complement our printed textbook sales and rental business. Technology-enabled learning is a rapid growth area in the higher education industry, as a growing number of students are enrolling in online services to complement print and digital course materials and classroom activities, and we are ready to meet demand with our virtual bookstore and e-commerce solutions, and our LoudCloud Courseware™ offering.
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Distribution Network Evolving
. The way course materials are distributed and consumed is changing significantly, a trend that is expected to continue. The market for course materials, including textbooks and supplemental materials, is intensely competitive and subject to rapid change.
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Disintermediation.
We are experiencing growing competition from alternative media and alternative sources of textbooks and course-related materials. Significant changes in the distribution of course materials are already underway as a result of start-ups promoting free online textbooks, including OER, and generating revenue from related services, institutions licensing digital materials and providing them to students for a fee, or the surge of textbook rental programs in campus bookstores and online platforms. In addition to the official physical or virtual campus bookstore, course materials are also sold through off-campus bookstores, e-commerce outlets, digital platform companies, publishers, including Cengage, Pearson and McGraw Hill, bypassing the bookstore distribution channel by selling or renting directly to students and educational institutions, and student-to-student transactions over the Internet.
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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. MBS was selected as a national distributor for rental textbooks offered through McGraw-Hill Education's newly announced consignment rental program (which includes approximately 230 titles) and Pearson Education’s expanded consignment rental program (which includes approximately 150 titles). Through its centrally located, advanced distribution center, MBS will offer the seamless integration of these consignment rental programs and centralized administration and distribution to more than 3,500 stores. These consignment rental programs will also be made available to MBS Wholesale customers, including institutionally run and contract managed campus bookstores, as well as BNC physical bookstores, and MBS Direct customers.
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|
Price Competition.
In addition to the competition in the services we provide to our customers, our textbook business faces significant price competition. Students often purchase textbooks and course materials from multiple 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. In Fiscal 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.
|
|
•
|
Competition.
In addition to the competition we face from alternative distribution sources, we also have competition from other college bookstore operators and educational content providers.
|
|
◦
|
Competitors consist of other college bookstore operators and educational content providers. Competitors include BBA Solutions, a college textbook retailer; bn.com, the e-commerce platform of Barnes & Noble, Inc.; Chegg.com, an online textbook rental company and student learning platform; eCampus, an online provider of course materials; Follett Corporation, a contract operator of campus bookstores; IndiCo, an entity created by National Association of College Bookstores (“NACS”); Texas Book Company, bookstore management and operations; and Vital Source Technologies, Inc., a digital course materials provider. We also have competition from providers of eTextbooks, such as Apple iTunes, Blackboard, Google, and Redshelf, and various private textbook rental websites. At our institutions we serve, we face competition for predictive analytics and competency-based learning platforms, such as Civitas Learning, a learning analytics platform.
|
|
◦
|
Competitors that provide online bookstore solutions to colleges and universities not only compete with our physical bookstore operations, but also compete with MBS Direct's virtual stores. MBS Direct also faces competition from Akademos, Ambassador Educational Solutions, Chegg.com; eCampus, edMap, EdTech, Follett Corporation, Texas Book Company, Tree of Life, and VitalSource Technologies, Inc. MBS Wholesale competes with Amazon, BBA Solutions, Follett Corporation, IndiCo, Nebraska Book Company, and Texas Book Company for new and used book inventory and distribution.
|
|
◦
|
Competitors that compete with our general merchandise and convenience offerings include Fanatics, Sodexo & Aramark, online retailers, physical and online office supply stores, and local and national retailers that offer college themed and other general merchandise.
|
|
◦
|
Our DSS segment faces competition from other digital student solutions providers that include Chegg.com, CourseHero, Grammarly, Quizlet, Noodle Tools, and Turnitin (iParadigms). As we develop a wider range of products and services, our competitive landscape will change and include other competitors in the broader student services market.
|
|
•
|
A Majority of Traditional Campus Bookstores Have Yet to be Outsourced.
|
|
◦
|
Outsourcing Trends.
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.
|
|
◦
|
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. We are awarded additional contracts for stores as colleges and universities decide to outsource their bookstore, and we also obtain new contracts for stores that were previously operated by competitors. Our virtual bookstore capability expands our addressable market to include schools that cannot or prefer not to have a physical campus bookstore. Sales trends are primarily impacted by new store openings, increasing the students and faculty served, as well as changes in comparable store sales and store closings.
|
|
•
|
Overall Economic Environment, College Enrollment and Consumer Spending Patterns.
Our business is affected by the overall economic environment, funding levels at colleges and universities, by changes in enrollments at colleges and universities, and spending on course materials and general merchandise.
|
|
◦
|
Economic Environment
: BNC general merchandise sales are subject to short-term fluctuations driven by the broader retail environment. We expect general merchandise sales to 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. Lighter store traffic and a continued reluctance by the consumer to make discretionary purchases, along with a softer retail environment, has recently impacted our general merchandise sales. We are confident that our product assortment reflects consumer trends and have received encouraging customer response to
|
|
◦
|
Enrollment Trends.
The growth of our business depends on our ability to attract new students and to increase the level of engagement by our current student customers. We continue to see downward enrollment trends and shrinking resources from state and federal government for colleges and universities. Enrollment trends, specifically at community colleges, continue to decline, led primarily by an improved economy and a dip in the United States birth rate resulting in fewer students at the traditional 18-24 year old college age. Consistent with projections from the National Center for Education Statistics, we expect undergraduate enrollment to increase in the long-term.
|
|
Name
|
|
Age
|
|
Position
|
|
Michael P. Huseby
|
|
63
|
|
Chairman and Chief Executive Officer
|
|
Patrick Maloney
|
|
62
|
|
Executive Vice President, Operations; President, Barnes & Noble College
|
|
Barry Brover
|
|
57
|
|
Executive Vice President, Chief Financial Officer
|
|
Kanuj Malhotra
|
|
51
|
|
Executive Vice President, Corporate Development; President, Digital Student Solutions
|
|
Michael C. Miller
|
|
46
|
|
Executive Vice President, Corporate Strategy and General Counsel
|
|
Stephen Culver
|
|
53
|
|
Senior Vice President, Chief Information Officer
|
|
JoAnn Magill
|
|
64
|
|
Senior Vice President, Human Resources
|
|
Seema C. Paul
|
|
54
|
|
Senior Vice President, Chief Accounting Officer
|
|
•
|
actual or anticipated fluctuations in our operating results due to factors related to our businesses;
|
|
•
|
success or failure of our business strategies, including our digital education initiative;
|
|
•
|
our quarterly or annual earnings or those of other companies in our industries;
|
|
•
|
our ability to obtain financing as needed;
|
|
•
|
announcements by us or our competitors of significant acquisitions or dispositions;
|
|
•
|
changes in accounting standards, policies, guidance, interpretations or principles;
|
|
•
|
the failure of securities analysts to cover our Common Stock;
|
|
•
|
changes in earnings estimates by securities analysts or our ability to meet those estimates;
|
|
•
|
the operating and stock price performance of other comparable companies;
|
|
•
|
investor perception of our Company and the higher education industry;
|
|
•
|
overall market fluctuations;
|
|
•
|
results from any material litigation or government investigation;
|
|
•
|
changes in laws and regulations (including tax laws and regulations) affecting our business;
|
|
•
|
changes in capital gains taxes and taxes on dividends affecting stockholders; and
|
|
•
|
general economic conditions and other external factors.
|
|
•
|
authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares of capital stock, making a takeover more difficult and expensive;
|
|
•
|
provide that special meetings of the stockholders may be called only by or at the direction of a majority of our Board or the chairman of our Board of Directors; and
|
|
•
|
require advance notice to be given by stockholders for any stockholder proposals or director nominations.
|
|
Contract Terms to Expire During (12 months ending on or about April 30)
|
|
BNC
Number of Stores
|
|
2019
|
|
51
|
|
2020
|
|
47
|
|
2021
|
|
64
|
|
2022
|
|
50
|
|
2023
|
|
50
|
|
2024 and later
|
|
506
|
|
Item 5.
|
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
|
Fiscal 2018
|
|
Fiscal 2017
|
||||||||||||
|
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
|
First Quarter
|
|
$
|
11.12
|
|
|
$
|
10.75
|
|
|
$
|
11.88
|
|
|
$
|
8.50
|
|
|
Second Quarter
|
|
$
|
7.56
|
|
|
$
|
7.23
|
|
|
$
|
12.31
|
|
|
$
|
9.15
|
|
|
Third Quarter
|
|
$
|
9.10
|
|
|
$
|
8.39
|
|
|
$
|
13.15
|
|
|
$
|
8.75
|
|
|
Fourth Quarter
|
|
$
|
8.20
|
|
|
$
|
7.47
|
|
|
$
|
11.30
|
|
|
$
|
9.09
|
|
|
|
|
Fiscal Year
(a)
|
||||||||||||||||||
|
(In thousands of dollars,
except for share and per share amounts)
|
|
2018
(b)
|
|
2017
(b)
|
|
2016
(b)
|
|
2015
|
|
2014
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Sales:
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product sales and other
|
|
$
|
1,984,472
|
|
|
$
|
1,641,881
|
|
|
$
|
1,581,104
|
|
|
$
|
1,549,005
|
|
|
$
|
1,542,551
|
|
|
Rental income
|
|
219,145
|
|
|
232,481
|
|
|
226,925
|
|
|
223,993
|
|
|
205,371
|
|
|||||
|
Total sales
|
|
2,203,617
|
|
|
1,874,362
|
|
|
1,808,029
|
|
|
1,772,998
|
|
|
1,747,922
|
|
|||||
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Product and other cost of sales
|
|
1,522,687
|
|
|
1,281,043
|
|
|
1,224,927
|
|
|
1,200,304
|
|
|
1,185,393
|
|
|||||
|
Rental cost of sales
|
|
123,697
|
|
|
134,258
|
|
|
128,403
|
|
|
127,980
|
|
|
124,767
|
|
|||||
|
Total cost of sales
|
|
1,646,384
|
|
|
1,415,301
|
|
|
1,353,330
|
|
|
1,328,284
|
|
|
1,310,160
|
|
|||||
|
Gross profit
|
|
557,233
|
|
|
459,061
|
|
|
454,699
|
|
|
444,714
|
|
|
437,762
|
|
|||||
|
Selling and administrative expenses
|
|
433,746
|
|
|
380,793
|
|
|
374,171
|
|
|
360,645
|
|
|
331,423
|
|
|||||
|
Depreciation and amortization expense
|
|
65,586
|
|
|
53,318
|
|
|
52,690
|
|
|
50,509
|
|
|
48,014
|
|
|||||
|
Impairment loss (non-cash)
(c)(d)
|
|
313,130
|
|
|
—
|
|
|
11,987
|
|
|
—
|
|
|
—
|
|
|||||
|
Restructuring and other charges
(d)(e)
|
|
5,429
|
|
|
1,790
|
|
|
8,830
|
|
|
—
|
|
|
—
|
|
|||||
|
Transaction costs
(f)
|
|
2,045
|
|
|
9,605
|
|
|
2,398
|
|
|
—
|
|
|
—
|
|
|||||
|
Operating (loss) income
|
|
(262,703
|
)
|
|
13,555
|
|
|
4,623
|
|
|
33,560
|
|
|
58,325
|
|
|||||
|
Interest expense, net
|
|
10,306
|
|
|
3,464
|
|
|
1,872
|
|
|
210
|
|
|
385
|
|
|||||
|
(Loss) Earnings before taxes
|
|
(273,009
|
)
|
|
10,091
|
|
|
2,751
|
|
|
33,350
|
|
|
57,940
|
|
|||||
|
Income taxes
|
|
(20,443
|
)
|
|
4,730
|
|
|
2,667
|
|
|
14,218
|
|
|
22,834
|
|
|||||
|
Net (loss) income
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
|
$
|
84
|
|
|
$
|
19,132
|
|
|
$
|
35,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(Loss) Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic
|
|
$
|
(5.40
|
)
|
|
$
|
0.12
|
|
|
$
|
—
|
|
|
$
|
0.33
|
|
|
$
|
0.88
|
|
|
Diluted
|
|
$
|
(5.40
|
)
|
|
$
|
0.11
|
|
|
$
|
—
|
|
|
$
|
0.33
|
|
|
$
|
0.88
|
|
|
Weighted average common shares (thousands)
(g)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic
|
|
46,763
|
|
|
46,317
|
|
|
46,238
|
|
|
38,452
|
|
|
37,270
|
|
|||||
|
Diluted
|
|
46,763
|
|
|
46,763
|
|
|
46,479
|
|
|
38,493
|
|
|
37,275
|
|
|||||
|
|
|
Fiscal Year
(a)
|
||||||||||||||||||
|
(In thousands of dollars,
except for share and per share amounts)
|
|
2018
(b)
|
|
2017
(b)
|
|
2016
(b)
|
|
2015
|
|
2014
|
||||||||||
|
OTHER OPERATING DATA:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Adjusted EBITDA (non-GAAP)
(h)
|
|
$
|
126,760
|
|
|
$
|
78,268
|
|
|
$
|
80,528
|
|
|
$
|
84,069
|
|
|
$
|
106,339
|
|
|
Adjusted Earnings (non-GAAP)
(h)
|
|
$
|
56,949
|
|
|
$
|
12,347
|
|
|
$
|
15,462
|
|
|
$
|
19,132
|
|
|
$
|
35,106
|
|
|
Capital expenditures
|
|
$
|
42,809
|
|
|
$
|
34,670
|
|
|
$
|
50,790
|
|
|
$
|
48,452
|
|
|
$
|
38,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
OTHER OPERATING DATA - BNC:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Comparable store sales (decrease) increase
(i)
|
|
(4.1
|
)%
|
|
(3.5
|
)%
|
|
(1.9
|
)%
|
|
0.1
|
%
|
|
(2.7
|
)%
|
|||||
|
Number of stores at period end
|
|
768
|
|
|
769
|
|
|
751
|
|
|
724
|
|
|
700
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
OTHER OPERATING DATA - MBS:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Number of stores at period end
|
|
676
|
|
|
712
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Fiscal Year
(a)
|
||||||||||||||||||
|
(In thousands of dollars,
except for share and per share amounts)
|
|
2018
(b)
|
|
2017
(b)
|
|
2016
(b)
|
|
2015
|
|
2014
|
||||||||||
|
(at period end):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total assets
|
|
$
|
1,039,211
|
|
|
$
|
1,299,832
|
|
|
$
|
1,071,683
|
|
|
$
|
1,090,668
|
|
|
$
|
1,109,919
|
|
|
Total liabilities
|
|
$
|
571,248
|
|
|
$
|
586,124
|
|
|
$
|
363,297
|
|
|
$
|
363,999
|
|
|
$
|
360,282
|
|
|
Short-term debt
(j)
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Long-term debt
(j)
|
|
$
|
96,400
|
|
|
$
|
59,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Preferred membership interests
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
383,397
|
|
|
Parent company equity
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
726,669
|
|
|
$
|
366,240
|
|
|
Total stockholders' equity
|
|
$
|
467,963
|
|
|
$
|
713,708
|
|
|
$
|
708,386
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(a)
|
Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April. “Fiscal 2018” means the 52 weeks ended April 28, 2018, “Fiscal 2017” means the 52 weeks ended April 29, 2017, “Fiscal 2016” means the 52 weeks ended April 30, 2016, “Fiscal 2015” means the 52 weeks ended May 2, 2015 and “Fiscal 2014” means the 53 weeks ended May 3, 2014.
|
|
(b)
|
We acquired Student Brands, LLC on August 3, 2017. The consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands from the acquisition date, August 3, 2017, to April 28, 2018.
|
|
(c)
|
In Fiscal 2018, we completed our annual goodwill impairment test. Based on the results of the impairment test, the carrying value of goodwill exceeded its fair value for our BNC segment, as defined prior to the segment change in the fourth quarter of Fiscal 2018, and we recorded a goodwill impairment (non-cash impairment loss) of $313.1 million. For additional information, see
Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Policies.
|
|
(d)
|
In Fiscal 2016, we implemented a plan to restructure our digital operations. As a result of this restructuring, we recorded a non-cash impairment loss of $12.0 million related to all of the capitalized content costs for the Yuzu
®
eTextbook platform ($9 million), and recorded a non-recurring other than temporary loss related to an investment held at cost ($3 million).
|
|
(e)
|
In Fiscal 2018, we recognized restructuring and other charges of approximately $5.4 million, which is comprised of the termination and transition payments related to the transition of the Chief Executive Officer. For additional information, see
Item 8. Financial Statements and Supplementary Data - Note 9. Supplementary Information.
|
|
(f)
|
Transaction costs are costs incurred for business development and acquisitions.
|
|
(g)
|
For periods prior to the Spin-Off from Barnes & Noble, Inc. on August 2, 2015, basic earnings per share and weighted-average basic shares outstanding are based on the number of shares of Barnes & Noble, Inc. common stock outstanding as of the end of the period, adjusted for the distribution ratio of 0.632 shares of our Common Stock for every one share of Barnes & Noble, Inc. common stock held on the record date for the Spin-Off. Additionally, for period prior to the Spin-Off, diluted earnings per share and weighted-average diluted shares outstanding reflect potential common shares from Barnes & Noble, Inc. equity plans in which our employees participated. Certain of our employees held restricted stock units and stock options granted by Barnes & Noble, Inc. which were considered participating securities.
|
|
(h)
|
To supplement our results prepared in accordance with GAAP, we use the measure of Adjusted EBITDA and Adjusted Earnings, which are non-GAAP financial measures as defined by the Securities and Exchange Commission (the “SEC”). See
Item 7.
|
|
(i)
|
Effective Fiscal 2017, comparable store sales includes sales from stores that have been open for an entire fiscal year period, does not include sales from closed stores for all periods presented, and digital agency sales are included on a gross basis. We believe the current comparable store sales calculation method better reflects the manner in which management views comparable store sales, as well as the seasonal nature of our business.
|
|
(j)
|
Prior to or at the time of the Spin-Off, we were party to an amended and restated credit facility with Barnes & Noble, Inc. All outstanding debt under this Credit Facility was recorded on Barnes & Noble, Inc.’s balance sheet. On August 3, 2015, we entered into a credit agreement under which the lenders committed to provide us with a five-year asset-backed revolving credit facility in an aggregate committed principal amount of $400 million. On February 27, 2017, we amended the credit agreement to add a new $100 million incremental first in, last out seasonal loan facility.
|
|
Item 7.
|
MANAGMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
|
Fiscal Year
|
||||||||||
|
Dollars in thousands
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Sales:
|
|
|
|
|
|
|
||||||
|
Product sales and other
|
|
$
|
1,984,472
|
|
|
$
|
1,641,881
|
|
|
$
|
1,581,104
|
|
|
Rental income
|
|
219,145
|
|
|
232,481
|
|
|
226,925
|
|
|||
|
Total sales
|
|
$
|
2,203,617
|
|
|
$
|
1,874,362
|
|
|
$
|
1,808,029
|
|
|
|
|
|
|
|
|
|
||||||
|
Net (loss) income
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
||||||
|
Adjusted Earnings (non-GAAP)
(a)
|
|
$
|
56,949
|
|
|
$
|
12,347
|
|
|
$
|
15,462
|
|
|
|
|
|
|
|
|
|
||||||
|
Adjusted EBITDA (non-GAAP)
(a)
|
|
|
|
|
|
|
||||||
|
BNC
|
|
$
|
87,493
|
|
|
$
|
107,847
|
|
|
$
|
108,252
|
|
|
MBS
|
|
54,598
|
|
|
(3,569
|
)
|
|
—
|
|
|||
|
DSS
|
|
7,559
|
|
|
—
|
|
|
—
|
|
|||
|
Corporate Services
|
|
(22,166
|
)
|
|
(25,373
|
)
|
|
(27,724
|
)
|
|||
|
Elimination
|
|
(724
|
)
|
|
(637
|
)
|
|
—
|
|
|||
|
Total Adjusted EBITDA (non-GAAP)
|
|
$
|
126,760
|
|
|
$
|
78,268
|
|
|
$
|
80,528
|
|
|
|
|
|
|
|
|
|
||||||
|
(a)
|
Adjusted Earnings and Adjusted EBITDA are a non-GAAP financial measures. See
Adjusted Earnings (non-GAAP)
and
Adjusted EBITDA (non-GAAP)
discussion below.
|
|
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
|||||||||
|
|
|
BNC Stores
|
|
MBS Direct Stores
|
|
BNC Stores
|
|
MBS Direct Stores
|
|
BNC
Stores
|
|||||
|
Opened at beginning of period
|
|
769
|
|
|
712
|
|
|
751
|
|
|
700
|
|
|
724
|
|
|
Opened
|
|
33
|
|
|
21
|
|
|
38
|
|
|
15
|
|
|
39
|
|
|
Closed
|
|
34
|
|
|
57
|
|
|
20
|
|
|
3
|
|
|
12
|
|
|
Opened at end of period
|
|
768
|
|
|
676
|
|
|
769
|
|
|
712
|
|
|
751
|
|
|
Comparable store sales
(a)
|
|
(4.1
|
)%
|
|
N/A
|
|
|
(3.5
|
)%
|
|
N/A
|
|
|
(1.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
(a)
|
Effective Fiscal 2017, BNC comparable store sales includes sales from stores that have been open for an entire fiscal year period, does not include sales from closed stores for all periods presented, and digital agency sales are included on a gross basis. We believe the current comparable store sales calculation method better reflects the manner in which management views comparable sales, as well as the seasonal nature of our business. Prior year comparable store sales have been updated to exclude store inventory sales to MBS, which are reflected as intercompany inventory transfers since the acquisition. For Fiscal 2016, BNC comparable store sales included sales from stores that were open for at least 15 months, excluded sales from closed stores for all periods presented, and included digital agency sales on a net basis.
|
|
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
|||
|
Sales:
|
|
|
|
|
|
|
|||
|
Product sales and other
|
|
90.1
|
%
|
|
87.6
|
%
|
|
87.4
|
%
|
|
Rental income
|
|
9.9
|
|
|
12.4
|
|
|
12.6
|
|
|
Total sales
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
Cost of sales:
|
|
|
|
|
|
|
|||
|
Product and other cost of sales
(a)
|
|
76.7
|
|
|
78.0
|
|
|
77.5
|
|
|
Rental cost of sales
(a)
|
|
56.4
|
|
|
57.8
|
|
|
56.6
|
|
|
Total cost of sales
|
|
74.7
|
|
|
75.5
|
|
|
74.9
|
|
|
Gross margin
|
|
25.3
|
|
|
24.5
|
|
|
25.1
|
|
|
Selling and administrative expenses
|
|
19.7
|
|
|
20.3
|
|
|
20.7
|
|
|
Depreciation and amortization expense
|
|
3.0
|
|
|
2.8
|
|
|
2.9
|
|
|
Impairment loss (non-cash)
|
|
14.2
|
|
|
—
|
|
|
0.7
|
|
|
Restructuring and other charges
|
|
0.2
|
|
|
0.1
|
|
|
0.5
|
|
|
Transactions costs
|
|
0.1
|
|
|
0.5
|
|
|
0.1
|
|
|
Operating (loss) income
|
|
(11.9
|
)%
|
|
0.7
|
%
|
|
0.2
|
%
|
|
|
52 weeks ended, April 28, 2018
|
||||||||||||||||||||||
|
Dollars in thousands
|
BNC
|
|
MBS
(a)
|
|
DSS
(b)
|
|
Corporate Services
|
|
Eliminations
(c)
|
|
Total
|
||||||||||||
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product sales and other
|
$
|
1,602,887
|
|
|
$
|
453,580
|
|
|
$
|
15,762
|
|
|
$
|
—
|
|
|
$
|
(87,757
|
)
|
|
$
|
1,984,472
|
|
|
Rental income
|
213,196
|
|
|
5,949
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
219,145
|
|
||||||
|
Total sales
|
1,816,083
|
|
|
459,529
|
|
|
15,762
|
|
|
—
|
|
|
(87,757
|
)
|
|
2,203,617
|
|
||||||
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product and other cost of sales
|
1,254,392
|
|
|
354,969
|
|
|
359
|
|
|
—
|
|
|
(87,033
|
)
|
|
1,522,687
|
|
||||||
|
Rental cost of sales
|
120,482
|
|
|
3,215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
123,697
|
|
||||||
|
Total cost of sales
|
1,374,874
|
|
|
358,184
|
|
|
359
|
|
|
—
|
|
|
(87,033
|
)
|
|
1,646,384
|
|
||||||
|
Gross profit
|
441,209
|
|
|
101,345
|
|
|
15,403
|
|
|
—
|
|
|
(724
|
)
|
|
557,233
|
|
||||||
|
Selling and administrative expenses
|
353,716
|
|
|
50,020
|
|
|
7,844
|
|
|
22,166
|
|
|
—
|
|
|
433,746
|
|
||||||
|
Depreciation and amortization expense
|
53,737
|
|
|
6,406
|
|
|
5,253
|
|
|
190
|
|
|
—
|
|
|
65,586
|
|
||||||
|
Sub-Total:
|
$
|
33,756
|
|
|
$
|
44,919
|
|
|
$
|
2,306
|
|
|
$
|
(22,356
|
)
|
|
$
|
(724
|
)
|
|
57,901
|
|
|
|
Impairment loss (non-cash)
|
|
|
|
|
|
|
|
|
|
|
313,130
|
|
|||||||||||
|
Restructuring and other charges
|
|
|
|
|
|
|
|
|
|
|
5,429
|
|
|||||||||||
|
Transaction costs
|
|
|
|
|
|
|
|
|
|
|
2,045
|
|
|||||||||||
|
Operating (loss) income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(262,703
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
52 weeks ended, April 29, 2017
|
||||||||||||||||||||||
|
Dollars in thousands
|
BNC
|
|
MBS
(a)
|
|
DSS
(b)
|
|
Corporate Services
|
|
Eliminations
(c)
|
|
Total
|
||||||||||||
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product sales and other
|
$
|
1,614,002
|
|
|
$
|
33,169
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(5,290
|
)
|
|
$
|
1,641,881
|
|
|
Rental income
|
231,559
|
|
|
922
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
232,481
|
|
||||||
|
Total sales
|
1,845,561
|
|
|
34,091
|
|
|
—
|
|
|
—
|
|
|
(5,290
|
)
|
|
1,874,362
|
|
||||||
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product and other cost of sales
|
1,256,673
|
|
|
29,023
|
|
|
—
|
|
|
—
|
|
|
(4,653
|
)
|
|
1,281,043
|
|
||||||
|
Rental cost of sales
|
133,938
|
|
|
320
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
134,258
|
|
||||||
|
Total cost of sales
|
1,390,611
|
|
|
29,343
|
|
|
—
|
|
|
—
|
|
|
(4,653
|
)
|
|
1,415,301
|
|
||||||
|
Gross profit
|
454,950
|
|
|
4,748
|
|
|
—
|
|
|
—
|
|
|
(637
|
)
|
|
459,061
|
|
||||||
|
Selling and administrative expenses
|
347,103
|
|
|
8,317
|
|
|
—
|
|
|
25,373
|
|
|
—
|
|
|
380,793
|
|
||||||
|
Depreciation and amortization expense
|
52,067
|
|
|
1,059
|
|
|
—
|
|
|
192
|
|
|
—
|
|
|
53,318
|
|
||||||
|
Sub-Total:
|
$
|
55,780
|
|
|
$
|
(4,628
|
)
|
|
$
|
—
|
|
|
$
|
(25,565
|
)
|
|
$
|
(637
|
)
|
|
24,950
|
|
|
|
Impairment loss (non-cash)
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||
|
Restructuring and other charges
|
|
|
|
|
|
|
|
|
|
|
1,790
|
|
|||||||||||
|
Transaction costs
|
|
|
|
|
|
|
|
|
|
|
9,605
|
|
|||||||||||
|
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,555
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(a)
|
On February 27, 2017, we acquired MBS. The consolidated financial statements for the 52 weeks ended April 29, 2017 include the financial results of MBS from the acquisition date, February 27, 2017, to April 29, 2017.
|
|
(b)
|
We acquired Student Brands, LLC on August 3, 2017. The consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands from the acquisition date, August 3, 2017, to April 28, 2018.
|
|
(c)
|
For additional information related to the intercompany activities and eliminations, see
Part II - Item 8. Financial Statements and Supplementary Data - Note 4. Acquisitions and Note 5. Segment Reporting.
|
|
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 28,
2018
|
|
April 29,
2017
|
|
%
|
||||
|
Product sales and other
|
|
$
|
1,984,472
|
|
|
$
|
1,641,881
|
|
|
20.9%
|
|
Rental income
|
|
219,145
|
|
|
232,481
|
|
|
(5.7)%
|
||
|
Total Sales
|
|
$
|
2,203,617
|
|
|
$
|
1,874,362
|
|
|
17.6%
|
|
Sales variances
|
|
52 weeks ended
|
||||||
|
Dollars in millions
|
|
April 28,
2018
|
|
April 29,
2017
|
||||
|
MBS Sales
(a)
|
|
|
|
|
||||
|
Wholesale
|
|
$
|
236.9
|
|
|
$
|
14.1
|
|
|
Direct
|
|
188.5
|
|
|
20.0
|
|
||
|
MBS Sales subtotal:
|
|
$
|
425.4
|
|
|
$
|
34.1
|
|
|
BNC Sales
|
|
|
|
|
||||
|
New stores
|
|
$
|
64.4
|
|
|
$
|
109.5
|
|
|
Closed stores
|
|
(12.1
|
)
|
|
(23.8
|
)
|
||
|
Comparable stores
|
|
(69.8
|
)
|
|
(60.2
|
)
|
||
|
Textbook rental deferral
|
|
1.3
|
|
|
0.6
|
|
||
|
Service revenue
(b)
|
|
2.9
|
|
|
5.8
|
|
||
|
Other
(c)
|
|
(16.2
|
)
|
|
5.6
|
|
||
|
BNC Sales subtotal:
|
|
$
|
(29.5
|
)
|
|
$
|
37.5
|
|
|
|
|
|
|
|
||||
|
DSS Sales
(d)
|
|
$
|
15.8
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||
|
Eliminations
(e)
|
|
$
|
(82.4
|
)
|
|
$
|
(5.3
|
)
|
|
Total sales variance
|
|
$
|
329.3
|
|
|
$
|
66.3
|
|
|
(a)
|
Represents sales for MBS for the 52 weeks ended April 28, 2018.
|
|
(b)
|
Service revenue includes Promoversity, brand partnerships, shipping and handling, LoudCloud digital content, software, and services, and revenue from other programs.
|
|
(c)
|
Other includes inventory liquidation sales to third parties, and certain accounting adjusting items related to return reserves, agency sales and other deferred items.
|
|
(d)
|
DSS revenue includes Student Brands, LLC subscription-based writing services business. The consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands, LLC from the date of acquisition, August 3, 2017. All material intercompany accounts and transactions have been eliminated in consolidation.
|
|
(e)
|
Eliminates MBS sales to BNC and BNC commissions earned from MBS. See
Part II - Item 8. Financial Statements and Supplementary Data - Note 5. Segment Reporting
for a discussion of intercompany activities and eliminations.
|
|
Comparable Store Sales variances for BNC
|
|
52 weeks ended
|
||||||||||||
|
Dollars in millions
|
|
April 28, 2018
|
|
April 29, 2017
|
||||||||||
|
Textbooks (Course Materials)
|
|
$
|
(65.6
|
)
|
|
(5.9
|
)%
|
|
$
|
(55.7
|
)
|
|
(4.9
|
)%
|
|
General Merchandise
|
|
1.2
|
|
|
0.2
|
%
|
|
(0.7
|
)
|
|
(0.1
|
)%
|
||
|
Trade Books
|
|
(5.3
|
)
|
|
(10.2
|
)%
|
|
(3.2
|
)
|
|
(5.8
|
)%
|
||
|
Other
|
|
(0.1
|
)
|
|
(78.3
|
)%
|
|
(0.6
|
)
|
|
(88.9
|
)%
|
||
|
Total Comparable Store Sales
|
|
$
|
(69.8
|
)
|
|
(4.1
|
)%
|
|
$
|
(60.2
|
)
|
|
(3.5
|
)%
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 28,
2018 |
|
% of
Related Sales |
|
April 29,
2017 |
|
% of
Related Sales |
||||
|
Product and other cost of sales
|
|
$
|
1,254,392
|
|
|
78.3%
|
|
$
|
1,256,673
|
|
|
77.9%
|
|
Rental cost of sales
|
|
120,482
|
|
|
56.5%
|
|
133,938
|
|
|
57.8%
|
||
|
Total Cost of Sales
|
|
$
|
1,374,874
|
|
|
75.7%
|
|
$
|
1,390,611
|
|
|
75.3%
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 28,
2018 |
|
% of
Related Sales |
|
April 29,
2017 |
|
% of
Related Sales |
||||
|
Product and other gross margin
|
|
$
|
348,495
|
|
|
21.7%
|
|
$
|
357,329
|
|
|
22.1%
|
|
Rental gross margin
|
|
92,714
|
|
|
43.5%
|
|
97,621
|
|
|
42.2%
|
||
|
Gross Margin
|
|
$
|
441,209
|
|
|
24.3%
|
|
$
|
454,950
|
|
|
24.7%
|
|
•
|
Product and other gross margin decreased (40 basis points) due to lower margin rates (35 bps), specifically for general merchandise and used textbooks, which were impacted by publisher price decreases and lower sales of underutilized inventory to third parties compared to the prior year due to inventory transfers to MBS, and an unfavorable sales mix (5 basis points).
|
|
•
|
Rental gross margin increased (130 basis points), driven primarily by higher rental margin rates (140 basis points) and favorable sales mix (10 basis points), partially offset by increased costs related to our college and university contracts (15 basis points) resulting from contract renewals and new store contracts.
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 28,
2018 |
|
% of
Sales |
|
April 29,
2017 |
|
% of
Sales |
||||
|
Selling and Administrative Expenses
|
|
$
|
433,746
|
|
|
19.7%
|
|
$
|
380,793
|
|
|
20.3%
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 28,
2018 |
|
% of
Sales |
|
April 29,
2017 |
|
% of
Sales |
||||
|
Depreciation and Amortization Expense
|
|
$
|
65,586
|
|
|
3.0%
|
|
$
|
53,318
|
|
|
2.8%
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 28,
2018 |
|
% of
Sales |
|
April 29,
2017 |
|
% of
Sales |
||||
|
Operating (Loss) Income
|
|
$
|
(262,703
|
)
|
|
(11.9)%
|
|
$
|
13,555
|
|
|
0.7%
|
|
|
|
52 weeks ended
|
||||||
|
Dollars in thousands
|
|
April 28, 2018
|
|
April 29, 2017
|
||||
|
Interest Expense, Net
|
|
$
|
10,306
|
|
|
$
|
3,464
|
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 28,
2018
|
|
Effective Rate
|
|
April 29,
2017
|
|
Effective Rate
|
||||
|
Income Tax (Benefit) Expense
|
|
$
|
(20,443
|
)
|
|
7.5%
|
|
$
|
4,730
|
|
|
46.9%
|
|
|
|
52 weeks ended
|
||||||
|
Dollars in thousands
|
|
April 28, 2018
|
|
April 29, 2017
|
||||
|
Net (Loss) Income
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
|
|
52 weeks ended, April 29, 2017
|
||||||||||||||||||||||
|
Dollars in thousands
|
BNC
|
|
MBS
(a)
|
|
DSS
|
|
Corporate Services
|
|
Eliminations
(b)
|
|
Total
|
||||||||||||
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product sales and other
|
$
|
1,614,002
|
|
|
$
|
33,169
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(5,290
|
)
|
|
$
|
1,641,881
|
|
|
Rental income
|
231,559
|
|
|
922
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
232,481
|
|
||||||
|
Total sales
|
1,845,561
|
|
|
34,091
|
|
|
—
|
|
|
—
|
|
|
(5,290
|
)
|
|
1,874,362
|
|
||||||
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product and other cost of sales
|
1,256,673
|
|
|
29,023
|
|
|
—
|
|
|
—
|
|
|
(4,653
|
)
|
|
1,281,043
|
|
||||||
|
Rental cost of sales
|
133,938
|
|
|
320
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
134,258
|
|
||||||
|
Total cost of sales
|
1,390,611
|
|
|
29,343
|
|
|
—
|
|
|
—
|
|
|
(4,653
|
)
|
|
1,415,301
|
|
||||||
|
Gross profit
|
454,950
|
|
|
4,748
|
|
|
—
|
|
|
—
|
|
|
(637
|
)
|
|
459,061
|
|
||||||
|
Selling and administrative expenses
|
347,103
|
|
|
8,317
|
|
|
—
|
|
|
25,373
|
|
|
—
|
|
|
380,793
|
|
||||||
|
Depreciation and amortization expense
|
52,067
|
|
|
1,059
|
|
|
—
|
|
|
192
|
|
|
—
|
|
|
53,318
|
|
||||||
|
Sub-Total:
|
$
|
55,780
|
|
|
$
|
(4,628
|
)
|
|
$
|
—
|
|
|
$
|
(25,565
|
)
|
|
$
|
(637
|
)
|
|
24,950
|
|
|
|
Impairment loss (non-cash)
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||
|
Restructuring and other charges
|
|
|
|
|
|
|
|
|
|
|
1,790
|
|
|||||||||||
|
Transaction costs
|
|
|
|
|
|
|
|
|
|
|
9,605
|
|
|||||||||||
|
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,555
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
52 weeks ended, April 30, 2016
|
||||||||||||||||||||||
|
Dollars in thousands
|
BNC
|
|
MBS
(a)
|
|
DSS
|
|
Corporate Services
|
|
Eliminations
(b)
|
|
Total
|
||||||||||||
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product sales and other
|
$
|
1,581,104
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,581,104
|
|
|
Rental income
|
226,925
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
226,925
|
|
||||||
|
Total sales
|
1,808,029
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,808,029
|
|
||||||
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product and other cost of sales
|
1,224,927
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,224,927
|
|
||||||
|
Rental cost of sales
|
128,403
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
128,403
|
|
||||||
|
Total cost of sales
|
1,353,330
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,353,330
|
|
||||||
|
Gross profit
|
454,699
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
454,699
|
|
||||||
|
Selling and administrative expenses
|
346,447
|
|
|
—
|
|
|
—
|
|
|
27,724
|
|
|
—
|
|
|
374,171
|
|
||||||
|
Depreciation and amortization expense
|
52,564
|
|
|
—
|
|
|
—
|
|
|
126
|
|
|
—
|
|
|
52,690
|
|
||||||
|
Sub-Total:
|
$
|
55,688
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(27,850
|
)
|
|
$
|
—
|
|
|
27,838
|
|
|
|
Impairment loss (non-cash)
|
|
|
|
|
|
|
|
|
|
|
|
11,987
|
|
||||||||||
|
Restructuring and other charges
|
|
|
|
|
|
|
|
|
|
|
8,830
|
|
|||||||||||
|
Transaction costs
|
|
|
|
|
|
|
|
|
|
|
|
2,398
|
|
||||||||||
|
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,623
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(a)
|
On February 27, 2017, we acquired MBS. The consolidated financial statements for the 52 weeks ended April 29, 2017 include the financial results of MBS from the acquisition date, February 27, 2017, to April 29, 2017.
|
|
(b)
|
For additional information related to the intercompany activities and eliminations, see
Part II - Item 8. Financial Statements and Supplementary Data - Note 4. Acquisitions and Note 5. Segment Reporting.
|
|
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 29,
2017 |
|
April 30,
2016 |
|
%
|
||||
|
Product sales and other
|
|
$
|
1,641,881
|
|
|
$
|
1,581,104
|
|
|
3.8%
|
|
Rental income
|
|
232,481
|
|
|
226,925
|
|
|
2.4%
|
||
|
Total Sales
|
|
$
|
1,874,362
|
|
|
$
|
1,808,029
|
|
|
3.7%
|
|
Sales variances
|
|
|
||
|
Dollars in millions
|
|
52 weeks ended
|
||
|
MBS Sales
(a)
|
|
|
||
|
Wholesale
|
|
$
|
14.1
|
|
|
Direct
|
|
20.0
|
|
|
|
MBS Sales subtotal:
|
|
$
|
34.1
|
|
|
BNC Sales
|
|
|
||
|
New stores
|
|
$
|
109.5
|
|
|
Closed stores
|
|
(23.8
|
)
|
|
|
Comparable stores
|
|
(60.2
|
)
|
|
|
Textbook rental deferral
|
|
0.6
|
|
|
|
Service revenue
(b)
|
|
5.8
|
|
|
|
Other
(c)
|
|
5.6
|
|
|
|
BNC Sales subtotal:
|
|
$
|
37.5
|
|
|
Eliminations
(d)
|
|
$
|
(5.3
|
)
|
|
Total sales variance
|
|
$
|
66.3
|
|
|
(a)
|
Represents sales for MBS from the acquisition date, February 27, 2017, to April 29, 2017. See MBS discussion below.
|
|
(b)
|
Service revenue includes Promoversity, brand partnerships, shipping and handling, LoudCloud digital content, software, and services, and revenue from other programs.
|
|
(c)
|
Other includes inventory liquidation sales to third parties, and certain accounting adjusting items related to return reserves, agency sales and other deferred items.
|
|
(d)
|
Eliminates MBS sales to BNC and BNC commissions earned from MBS. See
Part II - Item 8. Financial Statements and Supplementary Data - Note 5. Segment Reporting
for a discussion of intercompany activities and eliminations.
|
|
Comparable Store Sales variances for BNC
|
|
52 weeks ended
|
|||||
|
Dollars in millions
|
|
April 29, 2017
|
|||||
|
Textbooks
|
|
$
|
(55.7
|
)
|
|
(4.9
|
)%
|
|
General Merchandise
|
|
(0.7
|
)
|
|
(0.1
|
)%
|
|
|
Trade Books
|
|
(3.2
|
)
|
|
(5.8
|
)%
|
|
|
Other
|
|
(0.6
|
)
|
|
(88.9
|
)%
|
|
|
Total Comparable Store Sales
|
|
$
|
(60.2
|
)
|
|
(3.5
|
)%
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 29,
2017 |
|
% of
Related Sales |
|
April 30,
2016 |
|
% of
Related Sales |
||||
|
Product and other cost of sales
|
|
$
|
1,256,673
|
|
|
77.9%
|
|
$
|
1,224,927
|
|
|
77.5%
|
|
Rental cost of sales
|
|
133,938
|
|
|
57.8%
|
|
128,403
|
|
|
56.6%
|
||
|
Total Cost of Sales
|
|
$
|
1,390,611
|
|
|
75.3%
|
|
$
|
1,353,330
|
|
|
74.9%
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 29,
2017 |
|
% of
Related Sales |
|
April 30,
2016 |
|
% of
Related Sales |
||||
|
Product and other gross margin
|
|
$
|
357,329
|
|
|
22.1%
|
|
$
|
356,177
|
|
|
22.5%
|
|
Rental gross margin
|
|
97,621
|
|
|
42.2%
|
|
98,522
|
|
|
43.4%
|
||
|
Gross Margin
|
|
$
|
454,950
|
|
|
24.7%
|
|
$
|
454,699
|
|
|
25.1%
|
|
•
|
Product and other gross margin decreased (40 basis points), driven primarily by lower margin rates (50 basis points), primarily related to increased markdowns on textbooks, including the impact of our price-matching program (15 basis points), and increased costs related to our college and university contracts (25 basis points) resulting from contract renewals and new store contracts. These decreases were partially offset by improved shrink results (20 basis points) and a favorable sales mix (15 basis points) resulting from an increase in sales of higher margin general merchandise.
|
|
•
|
Rental gross margin decreased (120 basis points), driven primarily by lower rental margin rates (145 basis points), including the impact of our price-matching program (40 basis points) and increased costs related to our college and university contracts (20 basis points) resulting from contract renewals and new store contracts. This decrease was partially offset by a favorable rental mix (40 basis points).
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 29,
2017 |
|
% of
Sales |
|
April 30,
2016 |
|
% of
Sales |
||||
|
Selling and Administrative Expenses
|
|
$
|
380,793
|
|
|
20.3%
|
|
$
|
374,171
|
|
|
20.7%
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 29,
2017 |
|
% of
Sales |
|
April 30,
2016 |
|
% of
Sales |
||||
|
Depreciation and Amortization Expense
|
|
$
|
53,318
|
|
|
2.8%
|
|
$
|
52,690
|
|
|
2.9%
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 29,
2017 |
|
% of
Sales |
|
April 30,
2016 |
|
% of
Sales |
||||
|
Operating Income
|
|
$
|
13,555
|
|
|
0.7%
|
|
$
|
4,623
|
|
|
0.2%
|
|
|
|
52 weeks ended
|
||||||
|
Dollars in thousands
|
|
April 29, 2017
|
|
April 30, 2016
|
||||
|
Interest Expense, Net
|
|
$
|
3,464
|
|
|
$
|
1,872
|
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
|
Dollars in thousands
|
|
April 29,
2017
|
|
Effective Rate
|
|
April 30,
2016
|
|
Effective Rate
|
||||
|
Income Tax Expense
|
|
$
|
4,730
|
|
|
46.9%
|
|
$
|
2,667
|
|
|
96.9%
|
|
|
|
52 weeks ended
|
||||||
|
Dollars in thousands
|
|
April 29, 2017
|
|
April 30, 2016
|
||||
|
Net Income
|
|
$
|
5,361
|
|
|
$
|
84
|
|
|
Dollars in thousands
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
||||||
|
Net (loss) income
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
|
$
|
84
|
|
|
Reconciling items, after-tax
(below)
|
|
309,515
|
|
|
6,986
|
|
|
15,378
|
|
|||
|
Adjusted Earnings (non-GAAP)
|
|
$
|
56,949
|
|
|
$
|
12,347
|
|
|
$
|
15,462
|
|
|
|
|
|
|
|
|
|
||||||
|
Reconciling items, pre-tax
|
|
|
|
|
|
|
||||||
|
Impairment loss (non-cash)
(a)
|
|
$
|
313,130
|
|
|
$
|
—
|
|
|
$
|
11,987
|
|
|
Inventory valuation amortization (MBS) (non-cash)
(a)
|
|
3,273
|
|
|
—
|
|
|
—
|
|
|||
|
Restructuring and other charges
(a)
|
|
5,429
|
|
|
1,790
|
|
|
8,830
|
|
|||
|
Transaction costs
(a)
|
|
2,045
|
|
|
9,605
|
|
|
2,398
|
|
|||
|
Reconciling items, pre-tax
|
|
323,877
|
|
|
11,395
|
|
|
23,215
|
|
|||
|
Less: Pro forma income tax impact
(b)
|
|
14,362
|
|
|
4,409
|
|
|
7,837
|
|
|||
|
Reconciling items, after-tax
|
|
$
|
309,515
|
|
|
$
|
6,986
|
|
|
$
|
15,378
|
|
|
(a)
|
See
Management Discussion and Analysis - Results of Operations
discussion above.
|
|
(b)
|
Represents the income tax effects of the non-GAAP items.
|
|
Dollars in thousands
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
||||||
|
Net (loss) income
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
|
$
|
84
|
|
|
Add:
|
|
|
|
|
|
|
||||||
|
Depreciation and amortization expense
|
|
65,586
|
|
|
53,318
|
|
|
52,690
|
|
|||
|
Interest expense, net
|
|
10,306
|
|
|
3,464
|
|
|
1,872
|
|
|||
|
Income tax (benefit) expense
|
|
(20,443
|
)
|
|
4,730
|
|
|
2,667
|
|
|||
|
Impairment loss (non-cash)
(a)
|
|
313,130
|
|
|
—
|
|
|
11,987
|
|
|||
|
Inventory valuation amortization (MBS) (non-cash)
(a)
|
|
3,273
|
|
|
—
|
|
|
—
|
|
|||
|
Restructuring and other charges
(a)
|
|
5,429
|
|
|
1,790
|
|
|
8,830
|
|
|||
|
Transaction costs
(a)
|
|
2,045
|
|
|
9,605
|
|
|
2,398
|
|
|||
|
Adjusted EBITDA (non-GAAP)
|
|
$
|
126,760
|
|
|
$
|
78,268
|
|
|
$
|
80,528
|
|
|
Adjusted EBITDA - by Segment
|
|
FISCAL YEAR 2018
|
||||||||||||||||||||||
|
Dollars in thousands
|
|
BNC
|
|
MBS
|
|
DSS
|
|
Corporate Services
|
|
Elimination
(a)
|
|
Total
|
||||||||||||
|
Sales
|
|
$
|
1,816,083
|
|
|
$
|
459,529
|
|
|
$
|
15,762
|
|
|
$
|
—
|
|
|
$
|
(87,757
|
)
|
|
$
|
2,203,617
|
|
|
Cost of sales
(a)
|
|
(1,374,874
|
)
|
|
(354,911
|
)
|
|
(359
|
)
|
|
—
|
|
|
87,033
|
|
|
(1,643,111
|
)
|
||||||
|
Gross profit
|
|
441,209
|
|
|
104,618
|
|
|
15,403
|
|
|
—
|
|
|
(724
|
)
|
|
560,506
|
|
||||||
|
Selling and administrative expenses
|
|
353,716
|
|
|
50,020
|
|
|
7,844
|
|
|
22,166
|
|
|
—
|
|
|
433,746
|
|
||||||
|
Adjusted EBITDA (non-GAAP)
|
|
$
|
87,493
|
|
|
$
|
54,598
|
|
|
$
|
7,559
|
|
|
$
|
(22,166
|
)
|
|
$
|
(724
|
)
|
|
$
|
126,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Adjusted EBITDA - by Segment
|
|
FISCAL YEAR 2017
|
||||||||||||||||||||||
|
Dollars in thousands
|
|
BNC
|
|
MBS
|
|
DSS
|
|
Corporate Services
|
|
Elimination
(a)
|
|
Total
Fiscal 2017
|
||||||||||||
|
Sales
|
|
$
|
1,845,561
|
|
|
$
|
34,091
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(5,290
|
)
|
|
$
|
1,874,362
|
|
|
Cost of sales
|
|
(1,390,611
|
)
|
|
(29,343
|
)
|
|
—
|
|
|
—
|
|
|
4,653
|
|
|
(1,415,301
|
)
|
||||||
|
Gross profit
|
|
454,950
|
|
|
4,748
|
|
|
—
|
|
|
—
|
|
|
(637
|
)
|
|
459,061
|
|
||||||
|
Selling and administrative expenses
|
|
347,103
|
|
|
8,317
|
|
|
—
|
|
|
25,373
|
|
|
—
|
|
|
380,793
|
|
||||||
|
Adjusted EBITDA (non-GAAP)
|
|
$
|
107,847
|
|
|
$
|
(3,569
|
)
|
|
$
|
—
|
|
|
$
|
(25,373
|
)
|
|
$
|
(637
|
)
|
|
$
|
78,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Adjusted EBITDA - by Segment
|
|
FISCAL YEAR 2016
|
||||||||||||||||||||||
|
Dollars in thousands
|
|
BNC
|
|
MBS
|
|
DSS
|
|
Corporate Services
|
|
Elimination
(a)
|
|
Total
Fiscal 2016
|
||||||||||||
|
Sales
|
|
$
|
1,808,029
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,808,029
|
|
|
Cost of sales
|
|
(1,353,330
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,353,330
|
)
|
||||||
|
Gross profit
|
|
454,699
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
454,699
|
|
||||||
|
Selling and administrative expenses
|
|
346,447
|
|
|
—
|
|
|
—
|
|
|
27,724
|
|
|
—
|
|
|
374,171
|
|
||||||
|
Adjusted EBITDA (non-GAAP)
|
|
$
|
108,252
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(27,724
|
)
|
|
$
|
—
|
|
|
$
|
80,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Dollars in thousands
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
||||||
|
Cash, cash equivalents, and restricted cash at beginning of period
|
|
$
|
21,697
|
|
|
$
|
30,866
|
|
|
$
|
44,816
|
|
|
Net cash flows provided by operating activities
|
|
60,042
|
|
|
67,986
|
|
|
83,083
|
|
|||
|
Net cash flows used in investing activities
|
|
(100,032
|
)
|
|
(224,438
|
)
|
|
(68,744
|
)
|
|||
|
Net cash flows provided by (used in) financing activities
|
|
35,162
|
|
|
147,283
|
|
|
(28,289
|
)
|
|||
|
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
16,869
|
|
|
$
|
21,697
|
|
|
$
|
30,866
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
|
Total
|
|
Less Than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More Than
5 Years
|
||||||||||
|
Credit Facility
(a)
|
|
$
|
96.4
|
|
|
$
|
96.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
FILO Facility
(a)
|
|
250.0
|
|
|
100.0
|
|
|
150.0
|
|
|
—
|
|
|
—
|
|
|||||
|
School management contract and other lease obligations
(b)
|
|
806.4
|
|
|
140.0
|
|
|
255.2
|
|
|
218.5
|
|
|
192.7
|
|
|||||
|
Purchase obligations
(c)
|
|
7.3
|
|
|
5.2
|
|
|
2.0
|
|
|
0.1
|
|
|
—
|
|
|||||
|
Other long-term liabilities reflected on the balance sheet under GAAP
(d) (e)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Total
|
|
$
|
1,160.1
|
|
|
$
|
341.6
|
|
|
$
|
407.2
|
|
|
$
|
218.6
|
|
|
$
|
192.7
|
|
|
(a)
|
As of
April 28, 2018
, we had a total of $196.4 million of outstanding borrowings under the BNED Credit Facility and FILO Facility. Excludes interest which is generally at a base rate of LIBOR, plus a variable rate. See
Financing Arrangements
discussion above for information about future borrowings and payments under the BNED FILO Credit Facility.
|
|
(b)
|
Our contracts with colleges and universities are typically five years with renewal options, but can range from one to 15 years, and are typically cancelable by either party without penalty with 90 to120 days' notice. Annual projections are based on current minimum guarantee amounts. In approximately 69% of our contracts with colleges and universities that include minimum guarantees, the minimum guaranteed amounts adjust annually to equal less than the prior year's commission earned. Excludes obligations under store leases for property insurance and real estate taxes, which totaled approximately 2.1% of the minimum rent payments under those leases.
|
|
(c)
|
Includes information technology contracts.
|
|
(d)
|
Other long-term liabilities excludes $40.4 million of tax liabilities related to the long-term tax payable associated with the LIFO reserve and $0.1 million of unrecognized tax benefits, for which we cannot make a reasonably reliable estimate of the amount and period of payment. The LIFO reserve is impacted by changes in the consumer price index ("CPI") and is dependent on the inventory levels at the end of our tax year (on or about January 31st) which is in the middle of our second largest selling cycle. At the end of the most recent tax year, inventory levels within our BNC segment declined as compared to the prior year resulting in approximately $13.4 million of the LIFO reserve becoming currently payable. Given recent trends relating to the pricing and rental of textbooks, management believes that an additional portion of the remaining long-term tax payable associated with the LIFO reserve could be payable within the next twelve months. We are unable to predict future trends for CPI and inventory levels, therefore it is difficult to project with reasonable certainty how much of this liability will become payable within the next twelve months. See
Part II - Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Policies
and
Note 14. Income Taxes
.
|
|
(e)
|
Other long-term liabilities excludes expected payments related to employee benefit plans. See Item 8. Financial Statements and Supplementary Data — Note 12. Employee Benefit Plans.
|
|
FINANCIAL STATEMENT INDEX
|
|||
|
|
|
|
Page No.
|
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
|
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||
|
|
|
April 28, 2018
|
|
April 29, 2017
|
|
April 30, 2016
|
||||||
|
Sales:
|
|
|
|
|
|
|
||||||
|
Product sales and other
|
|
$
|
1,984,472
|
|
|
$
|
1,641,881
|
|
|
$
|
1,581,104
|
|
|
Rental income
|
|
219,145
|
|
|
232,481
|
|
|
226,925
|
|
|||
|
Total sales
|
|
2,203,617
|
|
|
1,874,362
|
|
|
1,808,029
|
|
|||
|
Cost of sales:
|
|
|
|
|
|
|
||||||
|
Product and other cost of sales
|
|
1,522,687
|
|
|
1,281,043
|
|
|
1,224,927
|
|
|||
|
Rental cost of sales
|
|
123,697
|
|
|
134,258
|
|
|
128,403
|
|
|||
|
Total cost of sales
|
|
1,646,384
|
|
|
1,415,301
|
|
|
1,353,330
|
|
|||
|
Gross profit
|
|
557,233
|
|
|
459,061
|
|
|
454,699
|
|
|||
|
Selling and administrative expenses
|
|
433,746
|
|
|
380,793
|
|
|
374,171
|
|
|||
|
Depreciation and amortization expense
|
|
65,586
|
|
|
53,318
|
|
|
52,690
|
|
|||
|
Impairment loss (non-cash)
|
|
313,130
|
|
|
—
|
|
|
11,987
|
|
|||
|
Restructuring and other charges
|
|
5,429
|
|
|
1,790
|
|
|
8,830
|
|
|||
|
Transaction costs
|
|
2,045
|
|
|
9,605
|
|
|
2,398
|
|
|||
|
Operating (loss) income
|
|
(262,703
|
)
|
|
13,555
|
|
|
4,623
|
|
|||
|
Interest expense, net
|
|
10,306
|
|
|
3,464
|
|
|
1,872
|
|
|||
|
Income (loss) before income taxes
|
|
(273,009
|
)
|
|
10,091
|
|
|
2,751
|
|
|||
|
Income tax (benefit) expense
|
|
(20,443
|
)
|
|
4,730
|
|
|
2,667
|
|
|||
|
Net (loss) income
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
||||||
|
Earnings (Loss) per share of Common Stock:
|
|
|
|
|
|
|
||||||
|
Basic
|
|
$
|
(5.40
|
)
|
|
$
|
0.12
|
|
|
$
|
—
|
|
|
Diluted
|
|
$
|
(5.40
|
)
|
|
$
|
0.11
|
|
|
$
|
—
|
|
|
Weighted average shares of Common Stock outstanding:
|
|
|
|
|
|
|
||||||
|
Basic
|
|
46,763
|
|
|
46,317
|
|
|
46,238
|
|
|||
|
Diluted
|
|
46,763
|
|
|
46,763
|
|
|
46,479
|
|
|||
|
|
|
As of
|
||||||
|
|
|
April 28, 2018
|
|
April 29, 2017
|
||||
|
ASSETS
|
|
|
|
|
||||
|
Current assets:
|
|
|
|
|
||||
|
Cash and cash equivalents
|
|
$
|
16,126
|
|
|
$
|
19,003
|
|
|
Receivables, net
|
|
100,060
|
|
|
86,040
|
|
||
|
Merchandise inventories, net
|
|
446,169
|
|
|
434,064
|
|
||
|
Textbook rental inventories
|
|
47,779
|
|
|
52,826
|
|
||
|
Prepaid expenses and other current assets
|
|
9,237
|
|
|
10,698
|
|
||
|
Total current assets
|
|
619,371
|
|
|
602,631
|
|
||
|
Property and equipment, net
|
|
111,287
|
|
|
116,613
|
|
||
|
Intangible assets, net
|
|
219,129
|
|
|
209,885
|
|
||
|
Goodwill
|
|
49,282
|
|
|
329,467
|
|
||
|
Other noncurrent assets
|
|
40,142
|
|
|
41,236
|
|
||
|
Total assets
|
|
$
|
1,039,211
|
|
|
$
|
1,299,832
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
||||
|
Current liabilities:
|
|
|
|
|
||||
|
Accounts payable
|
|
$
|
187,909
|
|
|
$
|
192,742
|
|
|
Accrued liabilities
|
|
125,556
|
|
|
120,478
|
|
||
|
Short-term borrowings
|
|
100,000
|
|
|
100,000
|
|
||
|
Total current liabilities
|
|
413,465
|
|
|
413,220
|
|
||
|
Long-term deferred taxes, net
|
|
2,106
|
|
|
16,871
|
|
||
|
Other long-term liabilities
|
|
59,277
|
|
|
96,433
|
|
||
|
Long-term borrowings
|
|
96,400
|
|
|
59,600
|
|
||
|
Total liabilities
|
|
571,248
|
|
|
586,124
|
|
||
|
Commitments and contingencies
|
|
|
|
|
|
|
||
|
Stockholders' equity:
|
|
|
|
|
||||
|
Parent company investment
|
|
—
|
|
|
—
|
|
||
|
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, 50,032 and 49,372 shares, respectively; outstanding, 46,917 and 46,517 shares, respectively
|
|
501
|
|
|
494
|
|
||
|
Additional paid-in capital
|
|
717,323
|
|
|
708,871
|
|
||
|
(Accumulated deficit) Retained earnings
|
|
(220,203
|
)
|
|
32,363
|
|
||
|
Treasury stock, at cost
|
|
(29,658
|
)
|
|
(28,020
|
)
|
||
|
Total stockholders' equity
|
|
467,963
|
|
|
713,708
|
|
||
|
Total liabilities and stockholders' equity
|
|
$
|
1,039,211
|
|
|
$
|
1,299,832
|
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||
|
|
|
April 28, 2018
|
|
April 29, 2017
|
|
April 30, 2016
|
||||||
|
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
|
Net (loss) income
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
|
$
|
84
|
|
|
Adjustments to reconcile net (loss) income to net cash flows from operating activities:
|
|
|
|
|
|
|
||||||
|
Depreciation and amortization expense
|
|
65,586
|
|
|
53,318
|
|
|
52,690
|
|
|||
|
Amortization of deferred financing costs
|
|
1,502
|
|
|
792
|
|
|
488
|
|
|||
|
Impairment loss (non-cash)
|
|
313,130
|
|
|
—
|
|
|
11,987
|
|
|||
|
Deferred taxes
|
|
(14,765
|
)
|
|
(11,961
|
)
|
|
(11,868
|
)
|
|||
|
Stock-based compensation expense
|
|
8,459
|
|
|
9,366
|
|
|
6,670
|
|
|||
|
Changes in other long-term liabilities and other
|
|
(36,823
|
)
|
|
14,235
|
|
|
5,892
|
|
|||
|
Changes in other operating assets and liabilities, net
|
|
(24,481
|
)
|
|
(3,125
|
)
|
|
17,140
|
|
|||
|
Net cash flows provided by operating activities
|
|
60,042
|
|
|
67,986
|
|
|
83,083
|
|
|||
|
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
|
Purchases of property and equipment
|
|
(42,809
|
)
|
|
(34,670
|
)
|
|
(50,790
|
)
|
|||
|
Acquisition of business, net of cash and restricted cash acquired
|
|
(58,259
|
)
|
|
(186,720
|
)
|
|
(17,843
|
)
|
|||
|
Changes in other noncurrent assets and other
|
|
1,036
|
|
|
(3,048
|
)
|
|
(111
|
)
|
|||
|
Net cash flows used in investing activities
|
|
(100,032
|
)
|
|
(224,438
|
)
|
|
(68,744
|
)
|
|||
|
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
|
Net changes in Barnes & Noble, Inc. Investment
|
|
—
|
|
|
—
|
|
|
(6,423
|
)
|
|||
|
Proceeds from borrowings under Credit Agreement
|
|
674,500
|
|
|
312,700
|
|
|
60,600
|
|
|||
|
Repayments of borrowings under Credit Agreement
|
|
(637,700
|
)
|
|
(153,100
|
)
|
|
(60,600
|
)
|
|||
|
Payment of deferred financing costs
|
|
—
|
|
|
(2,912
|
)
|
|
(3,251
|
)
|
|||
|
Purchase of treasury shares
|
|
(1,638
|
)
|
|
(9,405
|
)
|
|
(18,615
|
)
|
|||
|
Net cash flows provided by (used in) financing activities
|
|
35,162
|
|
|
147,283
|
|
|
(28,289
|
)
|
|||
|
Net decrease in cash, cash equivalents, and restricted cash
|
|
(4,828
|
)
|
|
(9,169
|
)
|
|
(13,950
|
)
|
|||
|
Cash, cash equivalents, and restricted cash at beginning of period
|
|
21,697
|
|
|
30,866
|
|
|
44,816
|
|
|||
|
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
16,869
|
|
|
$
|
21,697
|
|
|
$
|
30,866
|
|
|
Changes in other operating assets and liabilities, net:
|
|
|
|
|
|
|
||||||
|
Receivables, net
|
|
$
|
(13,670
|
)
|
|
$
|
(6,407
|
)
|
|
$
|
25,732
|
|
|
Merchandise inventories
|
|
(12,105
|
)
|
|
6,197
|
|
|
(15,323
|
)
|
|||
|
Textbook rental inventories
|
|
5,047
|
|
|
(4,150
|
)
|
|
(210
|
)
|
|||
|
Prepaid expenses and other current assets
|
|
(38
|
)
|
|
(2,093
|
)
|
|
(2,206
|
)
|
|||
|
Accounts payable and accrued liabilities
|
|
(3,715
|
)
|
|
3,328
|
|
|
9,147
|
|
|||
|
Changes in other operating assets and liabilities, net
|
|
$
|
(24,481
|
)
|
|
$
|
(3,125
|
)
|
|
$
|
17,140
|
|
|
|
|
|
|
|
|
|
||||||
|
Supplemental cash flow information:
|
|
|
|
|
|
|
||||||
|
Cash paid during the period for:
|
|
|
|
|
|
|
||||||
|
Interest paid
|
|
$
|
8,035
|
|
|
$
|
2,082
|
|
|
$
|
1,145
|
|
|
Income taxes paid (net of refunds)
|
|
$
|
25,549
|
|
|
$
|
1,473
|
|
|
$
|
13,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
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
|
|
|
|
|
9,366
|
|
|
|
|
|
|
|
9,366
|
|
||||||||||
|
Vested equity awards
|
|
727
|
|
8
|
|
|
(8
|
)
|
|
|
|
|
|
|
—
|
|
||||||||
|
Common stock repurchased
|
|
|
|
|
|
|
|
|
689
|
|
(6,718
|
)
|
|
(6,718
|
)
|
|||||||||
|
Shares repurchased for tax withholdings for vested stock awards
|
|
|
|
|
|
|
|
|
276
|
|
(2,687
|
)
|
|
(2,687
|
)
|
|||||||||
|
Net income
|
|
|
|
|
|
|
5,361
|
|
|
|
|
|
5,361
|
|
||||||||||
|
Balance at April 29, 2017
|
|
49,372
|
|
$
|
494
|
|
|
$
|
708,871
|
|
|
$
|
32,363
|
|
|
2,855
|
|
$
|
(28,020
|
)
|
|
$
|
713,708
|
|
|
Stock-based compensation expense
|
|
|
|
|
8,459
|
|
|
|
|
|
|
|
8,459
|
|
||||||||||
|
Vested equity awards
|
|
660
|
|
7
|
|
|
(7
|
)
|
|
|
|
|
|
|
—
|
|
||||||||
|
Shares repurchased for tax withholdings for vested stock awards
|
|
|
|
|
|
|
|
|
260
|
|
(1,638
|
)
|
|
(1,638
|
)
|
|||||||||
|
Net loss
|
|
|
|
|
|
|
(252,566
|
)
|
|
|
|
|
(252,566
|
)
|
||||||||||
|
Balance at April 28, 2018
|
|
50,032
|
|
$
|
501
|
|
|
$
|
717,323
|
|
|
$
|
(220,203
|
)
|
|
3,115
|
|
$
|
(29,658
|
)
|
|
$
|
467,963
|
|
|
|
|
As of
|
||||||
|
|
|
April 28, 2018
|
|
April 29, 2017
|
||||
|
Trade accounts
|
|
$
|
67,634
|
|
|
$
|
58,460
|
|
|
Advances for book buybacks
|
|
9,554
|
|
|
12,779
|
|
||
|
Credit/debit card receivables
|
|
3,824
|
|
|
3,737
|
|
||
|
Other receivables
|
|
19,048
|
|
|
11,064
|
|
||
|
Total receivables, net
|
|
$
|
100,060
|
|
|
$
|
86,040
|
|
|
|
|
|
|
As of
|
||||||
|
|
|
Useful Life
|
|
April 28, 2018
|
|
April 29, 2017
|
||||
|
Property and equipment:
|
|
|
|
|
|
|
||||
|
Leasehold improvements
|
|
(a)
|
|
$
|
148,413
|
|
|
$
|
144,260
|
|
|
Machinery, equipment and display fixtures
|
|
3 - 5
|
|
237,823
|
|
|
235,153
|
|
||
|
Computer hardware and capitalized software costs
|
|
(b)
|
|
123,575
|
|
|
100,749
|
|
||
|
Office furniture and other
|
|
2 - 7
|
|
54,991
|
|
|
52,339
|
|
||
|
Construction in progress
|
|
|
|
6,546
|
|
|
18,551
|
|
||
|
Total property and equipment
|
|
|
|
571,348
|
|
|
551,052
|
|
||
|
Less accumulated depreciation and amortization
|
|
|
|
460,061
|
|
|
434,439
|
|
||
|
Total property and equipment, net
|
|
|
|
$
|
111,287
|
|
|
$
|
116,613
|
|
|
(a)
|
Leasehold improvements are capitalized and depreciated over the shorter of lease term or the useful life of the improvements, ranging from one to 15 years.
|
|
(b)
|
System costs are capitalized and amortized over their estimated useful lives, from the date the systems become operational. Purchased software is generally amortized over a period of between 2 - 5 years.
|
|
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 estimated 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
|
|
13,045
|
|
|
|
Total liabilities
|
|
$
|
57,227
|
|
|
Net assets to be acquired
|
|
$
|
138,580
|
|
|
Goodwill
|
|
$
|
49,282
|
|
|
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
|
|
|
|
|
Pro forma consolidated income statement
|
|
|
|
||||
|
|
52 weeks ended
|
||||||
|
|
April 29, 2017
|
|
April 30, 2016
|
||||
|
Sales
|
$
|
2,247,825
|
|
|
$
|
2,216,628
|
|
|
Net income
|
$
|
32,055
|
|
|
$
|
25,022
|
|
|
•
|
The sales eliminations represent the elimination of MBS sales to BNC and the elimination of BNC commissions earned from MBS, and
|
|
•
|
The cost of sales eliminations represent (i) the recognition of intercompany profit for BNC inventory that was purchased from MBS in a prior period that was subsequently sold to external customers during the current period, net of (ii) the elimination of intercompany profit for MBS inventory purchases by BNC that remain in ending inventory at the end of the current period.
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||
|
|
|
April 28, 2018
(a)
|
|
April 29, 2017
(b)
|
|
April 30, 2016
|
||||||
|
Sales:
|
|
|
|
|
|
|
||||||
|
BNC
|
|
$
|
1,816,083
|
|
|
$
|
1,845,561
|
|
|
$
|
1,808,029
|
|
|
MBS
|
|
459,529
|
|
|
34,091
|
|
|
—
|
|
|||
|
DSS
|
|
15,762
|
|
|
—
|
|
|
—
|
|
|||
|
Elimination
|
|
(87,757
|
)
|
|
(5,290
|
)
|
|
—
|
|
|||
|
Total Sales
|
|
$
|
2,203,617
|
|
|
$
|
1,874,362
|
|
|
$
|
1,808,029
|
|
|
|
|
|
|
|
|
|
||||||
|
Gross Profit
|
|
|
|
|
|
|
||||||
|
BNC
|
|
$
|
441,209
|
|
|
$
|
454,950
|
|
|
$
|
454,699
|
|
|
MBS
|
|
101,345
|
|
|
4,748
|
|
|
—
|
|
|||
|
DSS
|
|
15,403
|
|
|
—
|
|
|
—
|
|
|||
|
Elimination
|
|
(724
|
)
|
|
(637
|
)
|
|
—
|
|
|||
|
Total Gross Profit
|
|
$
|
557,233
|
|
|
$
|
459,061
|
|
|
$
|
454,699
|
|
|
|
|
|
|
|
|
|
||||||
|
Depreciation and Amortization
|
|
|
|
|
|
|
||||||
|
BNC
|
|
$
|
53,737
|
|
|
$
|
52,067
|
|
|
$
|
52,564
|
|
|
MBS
|
|
6,406
|
|
|
1,059
|
|
|
—
|
|
|||
|
DSS
|
|
5,253
|
|
|
—
|
|
|
—
|
|
|||
|
Corporate Services
|
|
190
|
|
|
192
|
|
|
126
|
|
|||
|
Total Depreciation and Amortization
|
|
$
|
65,586
|
|
|
$
|
53,318
|
|
|
$
|
52,690
|
|
|
|
|
|
|
|
|
|
||||||
|
Operating (Loss) Income
|
|
|
|
|
|
|
||||||
|
BNC
(c)
|
|
$
|
(279,375
|
)
|
|
$
|
53,674
|
|
|
$
|
45,042
|
|
|
MBS
|
|
44,920
|
|
|
(11,595
|
)
|
|
—
|
|
|||
|
DSS
|
|
226
|
|
|
—
|
|
|
—
|
|
|||
|
Corporate Services
|
|
(27,750
|
)
|
|
(27,887
|
)
|
|
(40,419
|
)
|
|||
|
Elimination
|
|
(724
|
)
|
|
(637
|
)
|
|
—
|
|
|||
|
Total Operating (Loss) Income
(c)
|
|
$
|
(262,703
|
)
|
|
$
|
13,555
|
|
|
$
|
4,623
|
|
|
|
|
|
|
|
|
|
||||||
|
The following is a reconciliation of segment Operating Income to consolidated Income Before Income Taxes
|
|
|
|
|
|
|
||||||
|
Total Operating (Loss) Income
|
|
$
|
(262,703
|
)
|
|
$
|
13,555
|
|
|
$
|
4,623
|
|
|
Interest Expense, net
|
|
(10,306
|
)
|
|
(3,464
|
)
|
|
(1,872
|
)
|
|||
|
Total (Loss) Income Before Income Taxes
|
|
$
|
(273,009
|
)
|
|
$
|
10,091
|
|
|
$
|
2,751
|
|
|
|
|
|
|
|
|
|
||||||
|
(a)
|
We acquired Student Brands, LLC on August 3, 2017. The consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands from the acquisition date, August 3, 2017, to April 28, 2018.
|
|
(b)
|
We acquired MBS Textbook Exchange, LLC on February 27, 2017. The consolidated financial statements for the 52 weeks ended April 29, 2017 include the financial results of MBS from the acquisition date, February 27, 2017, to April 29, 2017.
|
|
(c)
|
In Fiscal 2018, we recorded a goodwill impairment (non-cash impairment loss) of
$313,100
based on the results of our annual goodwill impairment test. For additional information, see
Part I - Item 1. Business
and
Part II - Item 8. Financial Statements and Supplementary Data - Note 9. Supplementary Information - Goodwill
.
|
|
|
|
As of
|
||||||
|
|
|
April 28, 2018
|
|
April 29, 2017
|
||||
|
Total Assets
|
|
|
|
|
||||
|
BNC (includes goodwill of $0 and $281,349, respectively)
|
|
$
|
443,541
|
|
|
$
|
838,680
|
|
|
MBS (includes goodwill of $49,282 and $48,118, respectively)
|
|
287,507
|
|
|
251,028
|
|
||
|
DSS (includes goodwill of $0 for both periods)
|
|
36,743
|
|
|
—
|
|
||
|
Corporate Services
|
|
271,420
|
|
|
210,124
|
|
||
|
Total Assets
|
|
$
|
1,039,211
|
|
|
$
|
1,299,832
|
|
|
|
|
|
|
|
||||
|
|
|
52 weeks ended
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||
|
|
|
April 28, 2018
|
|
April 29, 2017
|
|
April 30, 2016
|
||||||
|
Capital Expenditures
|
|
|
|
|
|
|
||||||
|
BNC
|
|
$
|
37,476
|
|
|
$
|
34,435
|
|
|
$
|
50,324
|
|
|
MBS
|
|
2,681
|
|
|
218
|
|
|
—
|
|
|||
|
DSS
|
|
2,620
|
|
|
—
|
|
|
—
|
|
|||
|
Corporate Services
|
|
32
|
|
|
17
|
|
|
466
|
|
|||
|
Total Capital Expenditures
|
|
$
|
42,809
|
|
|
$
|
34,670
|
|
|
$
|
50,790
|
|
|
|
|
|
|
|
|
|
||||||
|
(shares in thousands)
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
||||||
|
Numerator for basic earnings per share:
|
|
|
|
|
|
||||||
|
Net (loss) income
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
|
$
|
84
|
|
|
Less allocation of earnings to participating securities
|
—
|
|
|
(3
|
)
|
|
—
|
|
|||
|
Net (loss) income available to common shareholders
|
$
|
(252,566
|
)
|
|
$
|
5,358
|
|
|
$
|
84
|
|
|
|
|
|
|
|
|
||||||
|
Numerator for diluted earnings per share:
|
|
|
|
|
|
||||||
|
Net (loss) income available to common shareholders
|
$
|
(252,566
|
)
|
|
$
|
5,358
|
|
|
$
|
84
|
|
|
Allocation of earnings to participating securities
|
—
|
|
|
3
|
|
|
—
|
|
|||
|
Less diluted allocation of earnings to participating securities
|
—
|
|
|
(3
|
)
|
|
—
|
|
|||
|
Net (loss) income available to common shareholders
|
$
|
(252,566
|
)
|
|
$
|
5,358
|
|
|
$
|
84
|
|
|
|
|
|
|
|
|
||||||
|
Denominator for basic earnings per share:
|
|
|
|
|
|
||||||
|
Basic weighted average shares of Common Stock
|
46,763
|
|
|
46,317
|
|
|
46,238
|
|
|||
|
|
|
|
|
|
|
||||||
|
Denominator for diluted earnings per share:
|
|
|
|
|
|
||||||
|
Basic weighted average shares of Common Stock
|
46,763
|
|
|
46,317
|
|
|
46,238
|
|
|||
|
Average dilutive restricted stock units
|
—
|
|
|
389
|
|
|
227
|
|
|||
|
Average dilutive performance shares
|
—
|
|
|
40
|
|
|
—
|
|
|||
|
Average dilutive restricted shares
|
—
|
|
|
17
|
|
|
—
|
|
|||
|
Average dilutive performance share units
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Average dilutive options
|
—
|
|
|
—
|
|
|
14
|
|
|||
|
Diluted weighted average shares of Common Stock
|
46,763
|
|
|
46,763
|
|
|
46,479
|
|
|||
|
|
|
|
|
|
|
||||||
|
(Loss) Earnings per share of Common Stock:
|
|
|
|
|
|
||||||
|
Basic
|
$
|
(5.40
|
)
|
|
$
|
0.12
|
|
|
$
|
—
|
|
|
Diluted
|
$
|
(5.40
|
)
|
|
$
|
0.11
|
|
|
$
|
—
|
|
|
|
|
|
|
As of April 28, 2018
|
||||||||||
|
Amortizable intangible assets
|
|
Remaining
Life
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Total
|
||||||
|
Customer relationships
|
|
1 - 16
|
|
$
|
272,419
|
|
|
$
|
(89,767
|
)
|
|
$
|
182,652
|
|
|
Content
|
|
4
|
|
14,500
|
|
|
(2,175
|
)
|
|
12,325
|
|
|||
|
Technology
|
|
2 - 8
|
|
20,100
|
|
|
(4,080
|
)
|
|
16,020
|
|
|||
|
Other
(a)
|
|
1 - 9
|
|
10,853
|
|
|
(2,721
|
)
|
|
8,132
|
|
|||
|
|
|
|
|
$
|
317,872
|
|
|
$
|
(98,743
|
)
|
|
$
|
219,129
|
|
|
a)
|
Other consists of recognized intangibles for non-compete agreements, trade names, subscriber lists and favorable leasehold interests.
|
|
|
|
|
|
As of April 29, 2017
|
||||||||||
|
Amortizable intangible assets
|
|
Remaining
Life |
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Total
|
||||||
|
Customer relationships
|
|
4 - 17
|
|
$
|
270,619
|
|
|
$
|
(77,640
|
)
|
|
$
|
192,979
|
|
|
Technology
|
|
3 - 9
|
|
12,100
|
|
|
(1,320
|
)
|
|
10,780
|
|
|||
|
Other
(a)
|
|
1 - 10
|
|
6,853
|
|
|
(727
|
)
|
|
6,126
|
|
|||
|
|
|
|
|
$
|
289,572
|
|
|
$
|
(79,687
|
)
|
|
$
|
209,885
|
|
|
a)
|
Other consists of recognized intangibles for non-compete agreements, trade names and favorable leasehold interests.
|
|
Aggregate Amortization Expense:
|
|
||
|
For the 52 weeks ended April 28, 2018
|
$
|
19,056
|
|
|
For the 52 weeks ended April 29, 2017
|
$
|
12,095
|
|
|
For the 52 weeks ended April 30, 2016
|
$
|
10,477
|
|
|
|
|
||
|
Estimated Amortization Expense: (Fiscal Year)
|
|
||
|
2019
|
$
|
20,731
|
|
|
2020
|
$
|
19,917
|
|
|
2021
|
$
|
18,098
|
|
|
2022
|
$
|
17,449
|
|
|
2023
|
$
|
14,047
|
|
|
After 2023
|
$
|
128,887
|
|
|
Balance at April 30, 2016
|
|
$
|
280,911
|
|
|
Goodwill related to acquisitions
|
|
48,556
|
|
|
|
Balance at April 29, 2017
|
|
$
|
329,467
|
|
|
Goodwill related to Student Brands acquisition
|
|
31,782
|
|
|
|
Goodwill related to MBS measurement period adjustment
|
|
1,163
|
|
|
|
Impairment loss (non-cash)
(a)
|
|
(313,130
|
)
|
|
|
Balance at April 29, 2018
|
|
$
|
49,282
|
|
|
(a)
|
See
Impairment Loss (non-cash)
discussion above.
|
|
•
|
a Separation and Distribution Agreement that set forth Barnes & Noble’s and our agreements regarding the principal actions that both parties took in connection with the Spin-Off and aspects of our relationship following the Spin-Off. The term of the agreement is perpetual after the Distribution date; and
|
|
•
|
a Trademark License Agreement pursuant to which Barnes & Noble grants us an exclusive license in certain licensed trademarks and a non-exclusive license in other licensed trademarks. The term of the agreement is perpetual after the Distribution date.
|
|
|
|
Restricted Stock Awards
|
|
Restricted Stock Units
|
|
Performance Shares
|
|
Performance Share Units
|
||||||||||||||||||||
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date Fair Value
|
|
Number of
Shares |
|
Weighted
Average Grant Date Fair Value |
|
Number of
Shares |
|
Weighted
Average Grant Date Fair Value |
||||||||||||
|
Balance,
August 2, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Granted (a)
|
|
73,352
|
|
|
$
|
13.08
|
|
|
1,681,552
|
|
|
$
|
10.12
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Vested
|
|
(27,272
|
)
|
|
$
|
13.19
|
|
|
(431,106
|
)
|
|
$
|
7.29
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Forfeited
|
|
—
|
|
|
$
|
—
|
|
|
(8,979
|
)
|
|
$
|
9.92
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Balance,
April 30, 2016
|
|
46,080
|
|
|
$
|
13.02
|
|
|
1,241,467
|
|
|
$
|
11.10
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Granted
|
|
12,371
|
|
|
$
|
9.70
|
|
|
1,207,070
|
|
|
$
|
9.70
|
|
|
406,078
|
|
|
$
|
9.52
|
|
|
—
|
|
|
$
|
—
|
|
|
Vested
|
|
(46,080
|
)
|
|
$
|
13.02
|
|
|
(680,489
|
)
|
|
$
|
9.72
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Forfeited
|
|
—
|
|
|
$
|
—
|
|
|
(36,425
|
)
|
|
$
|
9.69
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Balance,
April 29, 2017
|
|
12,371
|
|
|
$
|
9.70
|
|
|
1,731,623
|
|
|
$
|
10.70
|
|
|
406,078
|
|
|
$
|
9.52
|
|
|
—
|
|
|
$
|
—
|
|
|
Granted
|
|
19,704
|
|
|
$
|
6.09
|
|
|
1,640,926
|
|
|
$
|
5.88
|
|
|
—
|
|
|
$
|
—
|
|
|
537,756
|
|
|
$
|
7.90
|
|
|
Vested
|
|
(12,371
|
)
|
|
$
|
9.70
|
|
|
(697,370
|
)
|
|
$
|
10.93
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Forfeited (b)
|
|
—
|
|
|
$
|
—
|
|
|
(355,055
|
)
|
|
$
|
9.04
|
|
|
(120,142
|
)
|
|
$
|
9.52
|
|
|
—
|
|
|
$
|
—
|
|
|
Balance,
April 28, 2018
|
|
19,704
|
|
|
$
|
6.09
|
|
|
2,320,124
|
|
|
$
|
7.47
|
|
|
285,936
|
|
|
$
|
9.52
|
|
|
537,756
|
|
|
$
|
7.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(a)
|
Restricted Stock Units include the
877,426
converted RSU shares issued during Fiscal 2016 related to our spin-off from Barnes & Noble, Inc.
|
|
(b)
|
The PS and PSUs forfeitures reflect a cumulative adjustment to reflect changes to the expected level of achievement of the respective grants.
|
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
||||||
|
Restricted Stock Expense
|
$
|
120
|
|
|
$
|
280
|
|
|
$
|
840
|
|
|
Restricted Stock Units Expense
(a)
|
8,370
|
|
|
8,431
|
|
|
5,710
|
|
|||
|
Performance Shares Expense
(b)
|
(218
|
)
|
|
655
|
|
|
—
|
|
|||
|
Performance Share Units Expense
(b)
|
187
|
|
|
—
|
|
|
—
|
|
|||
|
Stock Option Expense
|
—
|
|
|
—
|
|
|
120
|
|
|||
|
Stock-Based Compensation Expense
|
$
|
8,459
|
|
|
$
|
9,366
|
|
|
$
|
6,670
|
|
|
(a)
|
The stock-based compensation expense for the RSUs reflect the forfeiture adjustment for unvested shares related to the CEO transition. See
Part I - Item 1. Business
and
Part II - Item 8. Financial Statements and Supplementary Data - Note 9. Supplementary Information - Restructuring and Other Charges
of this Form 10-K for additional information.
|
|
(b)
|
The PS and PSUs expenses reflect a cumulative adjustment to reflect changes to the expected level of achievement of the respective grants.
|
|
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
||||||
|
Current:
|
|
|
|
|
|
|
||||||
|
Federal
(a)
|
|
$
|
(8,089
|
)
|
|
$
|
14,872
|
|
|
$
|
13,019
|
|
|
State
|
|
2,410
|
|
|
1,819
|
|
|
1,783
|
|
|||
|
Total current
|
|
(5,679
|
)
|
|
16,691
|
|
|
14,802
|
|
|||
|
Deferred:
|
|
|
|
|
|
|
||||||
|
Federal
(a)
|
|
(13,250
|
)
|
|
(9,238
|
)
|
|
(9,922
|
)
|
|||
|
State
|
|
(1,514
|
)
|
|
(2,723
|
)
|
|
(2,213
|
)
|
|||
|
Total deferred
|
|
(14,764
|
)
|
|
(11,961
|
)
|
|
(12,135
|
)
|
|||
|
Total
|
|
$
|
(20,443
|
)
|
|
$
|
4,730
|
|
|
$
|
2,667
|
|
|
(a)
|
Income tax benefit caused largely by the revaluation due to the change in the U.S. corporate income tax rate from
35%
to
21%
as described above.
|
|
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
|||
|
Federal statutory income tax rate
(a)
|
|
34.1
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|
State income taxes, net of federal income tax benefit
|
|
(0.3
|
)
|
|
(5.8
|
)
|
|
(15.2
|
)
|
|
Valuation allowances
|
|
—
|
|
|
—
|
|
|
50.6
|
|
|
Permanent book / tax differences
|
|
(0.7
|
)
|
|
25.5
|
|
|
31.1
|
|
|
Goodwill impairment
|
|
(34.2
|
)
|
|
—
|
|
|
—
|
|
|
Provisional remeasurement due to Tax Legislation
|
|
7.5
|
|
|
—
|
|
|
—
|
|
|
Credits
|
|
0.2
|
|
|
(5.5
|
)
|
|
(5.4
|
)
|
|
Other, net
|
|
0.9
|
|
|
(2.3
|
)
|
|
0.8
|
|
|
Effective income tax rate
|
|
7.5
|
%
|
|
46.9
|
%
|
|
96.9
|
%
|
|
(a)
|
Due to the Tax Legislation, we applied a U.S. statutory federal income tax rate of
33.9%
for earnings between April 30, 2017 and January 27, 2018, and
21%
for earnings between January 28, 2018 and April 28, 2018. The result is an effective statutory rate of
34.1%
.
|
|
|
|
As of
|
||||||
|
|
|
April 28, 2018
|
|
April 29, 2017
|
||||
|
Deferred tax assets:
|
|
|
|
|
||||
|
Estimated accrued liabilities
|
|
$
|
9,375
|
|
|
$
|
13,047
|
|
|
Inventory
|
|
8,256
|
|
|
16,969
|
|
||
|
Stock-based compensation
|
|
1,374
|
|
|
1,780
|
|
||
|
Insurance liability
|
|
474
|
|
|
881
|
|
||
|
Lease transactions
|
|
1,095
|
|
|
1,826
|
|
||
|
Property and equipment
|
|
2,803
|
|
|
8,728
|
|
||
|
Tax credits
|
|
220
|
|
|
206
|
|
||
|
Goodwill
|
|
9,105
|
|
|
—
|
|
||
|
Net operating losses
|
|
5,834
|
|
|
4,916
|
|
||
|
Other
|
|
4,356
|
|
|
5,106
|
|
||
|
Gross deferred tax assets
|
|
42,892
|
|
|
53,459
|
|
||
|
Valuation allowance
|
|
(932
|
)
|
|
(1,392
|
)
|
||
|
Net deferred tax assets
|
|
41,960
|
|
|
52,067
|
|
||
|
Deferred tax liabilities:
|
|
|
|
|
||||
|
Intangible asset amortization
|
|
(44,066
|
)
|
|
(68,938
|
)
|
||
|
Gross deferred tax liabilities
|
|
(44,066
|
)
|
|
(68,938
|
)
|
||
|
Net deferred tax liabilities
|
|
$
|
(2,106
|
)
|
|
$
|
(16,871
|
)
|
|
Balance at May 2, 2015
|
$
|
215
|
|
|
Additions for tax positions of the current period
|
21
|
|
|
|
Additions for tax positions of prior periods
|
—
|
|
|
|
Reductions due to settlements
|
—
|
|
|
|
Other reductions for tax positions of prior periods
|
(215
|
)
|
|
|
Balance at April 30, 2016
|
$
|
21
|
|
|
Additions for tax positions of the current period
|
40
|
|
|
|
Additions for tax positions of prior periods
|
25
|
|
|
|
Reductions due to settlements
|
—
|
|
|
|
Other reductions for tax positions of prior periods
|
—
|
|
|
|
Balance at April 29, 2017
|
$
|
86
|
|
|
Additions for tax positions of the current period
|
25
|
|
|
|
Additions for tax positions of prior periods
|
2
|
|
|
|
Reductions due to settlements
|
—
|
|
|
|
Other reductions for tax positions of prior periods
|
(16
|
)
|
|
|
Balance at April 28, 2018
|
$
|
97
|
|
|
|
|
||
|
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
||||||
|
Minimum contract expense
|
|
$
|
170,351
|
|
|
$
|
165,980
|
|
|
$
|
140,743
|
|
|
Percentage contract expense
|
|
80,630
|
|
|
87,843
|
|
|
101,552
|
|
|||
|
|
|
$
|
250,981
|
|
|
$
|
253,823
|
|
|
$
|
242,295
|
|
|
Fiscal Year
|
|
||
|
2019
|
$
|
139,994
|
|
|
2020
|
130,794
|
|
|
|
2021
|
124,379
|
|
|
|
2022
|
113,419
|
|
|
|
2023
|
105,034
|
|
|
|
After 2023
|
192,741
|
|
|
|
|
$
|
806,361
|
|
|
Less Than 1 Year
|
$
|
5,201
|
|
|
1-3 Years
|
1,979
|
|
|
|
3-5 Years
|
107
|
|
|
|
Total
|
$
|
7,287
|
|
|
Fiscal 2018 Quarterly Period Ended
|
|
July 29,
2017
|
|
October 28, 2017
(a)
|
|
January 27, 2018
(b)
|
|
April 28, 2018
(b)
|
|
Fiscal Year
2018
|
||||||||||
|
Sales
|
|
$
|
355,711
|
|
|
$
|
886,861
|
|
|
$
|
603,391
|
|
|
$
|
357,654
|
|
|
$
|
2,203,617
|
|
|
Gross profit
|
|
$
|
65,200
|
|
|
$
|
216,700
|
|
|
$
|
146,999
|
|
|
$
|
128,334
|
|
|
$
|
557,233
|
|
|
Net (loss) income
|
|
$
|
(34,783
|
)
|
|
$
|
48,395
|
|
|
$
|
(283,235
|
)
|
|
$
|
17,057
|
|
|
$
|
(252,566
|
)
|
|
Basic (loss) earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net (loss) income
|
|
$
|
(0.75
|
)
|
|
$
|
1.04
|
|
|
$
|
(6.04
|
)
|
|
$
|
0.36
|
|
|
$
|
(5.40
|
)
|
|
Diluted (loss) earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net (loss) income
|
|
$
|
(0.75
|
)
|
|
$
|
1.03
|
|
|
$
|
(6.04
|
)
|
|
$
|
0.36
|
|
|
$
|
(5.40
|
)
|
|
Fiscal 2017 Quarterly Period Ended
|
|
July 30,
2016 |
|
October 29, 2016
|
|
January 28, 2017
|
|
April 29, 2017
(c)
|
|
Fiscal Year
2017 |
||||||||||
|
Sales
|
|
$
|
239,237
|
|
|
$
|
770,671
|
|
|
$
|
521,624
|
|
|
$
|
342,830
|
|
|
$
|
1,874,362
|
|
|
Gross profit
|
|
$
|
47,833
|
|
|
$
|
171,954
|
|
|
$
|
116,249
|
|
|
$
|
123,025
|
|
|
$
|
459,061
|
|
|
Net (loss) income
|
|
$
|
(27,916
|
)
|
|
$
|
29,289
|
|
|
$
|
3,761
|
|
|
$
|
227
|
|
|
$
|
5,361
|
|
|
Basic (loss) earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net (loss) income
|
|
$
|
(0.60
|
)
|
|
$
|
0.63
|
|
|
$
|
0.08
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
|
Diluted (loss) earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net (loss) income
|
|
$
|
(0.60
|
)
|
|
$
|
0.63
|
|
|
$
|
0.08
|
|
|
$
|
—
|
|
|
$
|
0.11
|
|
|
(a)
|
We acquired Student Brands, LLC on August 3, 2017. The consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands from the acquisition date, August 3, 2017, to April 28, 2018.
|
|
(b)
|
The net (loss) income for the 13 weeks ended April 28, 2018 reflects a
14,100
income tax benefit that should have been recorded during the 13 weeks ended January 27, 2018 in connection with the tax deductible portion of the
$313,130
goodwill impairment. This amount is deemed an immaterial error correction as it relates to our interim condensed consolidated financial statements and amounts recorded as of and for the 52 weeks ended April 28, 2018 appropriately reflect this item.
|
|
(c)
|
We acquired MBS Textbook Exchange, LLC on February 27, 2017. The consolidated financial statements for the 52 weeks ended April 29, 2017 include the financial results of MBS from the acquisition date, February 27, 2017, to April 29, 2017.
|
|
|
|
Balance at
beginning
of period
|
|
Charge
(recovery) to
costs and
expenses
|
|
Write-offs
|
|
Balance at
end
of period
|
||||||||
|
Allowance for Doubtful Accounts
|
|
|
|
|
|
|
|
|
||||||||
|
April 28, 2018
|
|
$
|
2,259
|
|
|
$
|
3,518
|
|
|
$
|
(3,694
|
)
|
|
$
|
2,083
|
|
|
April 29, 2017
|
|
$
|
2,320
|
|
|
$
|
3,459
|
|
|
$
|
(3,520
|
)
|
|
$
|
2,259
|
|
|
April 30, 2016
|
|
$
|
2,313
|
|
|
$
|
4,000
|
|
|
$
|
(3,993
|
)
|
|
$
|
2,320
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Balance at
beginning
of period
|
|
Addition
Charged to
Costs
|
|
Deductions
|
|
Balance at
end
of period
|
||||||||
|
Sales Returns Reserves
|
|
|
|
|
|
|
|
|
||||||||
|
April 28, 2018
|
|
$
|
6,817
|
|
|
$
|
170,469
|
|
|
$
|
(172,057
|
)
|
|
$
|
5,229
|
|
|
April 29, 2017
|
|
$
|
757
|
|
|
$
|
155,486
|
|
|
$
|
(149,426
|
)
|
|
$
|
6,817
|
|
|
April 30, 2016
|
|
$
|
679
|
|
|
$
|
130,421
|
|
|
$
|
(130,343
|
)
|
|
$
|
757
|
|
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
|
Plan Category
|
|
Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
in column (a))
|
||||
|
|
|
(a)
|
|
(b)
|
|
(c)
|
||||
|
Equity compensation plans approved by security holders
|
|
3,163,520
|
|
|
$
|
7.72
|
|
|
1,351,137
|
|
|
Equity compensation plans not approved by security holders
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
Total
|
|
3,163,520
|
|
|
$
|
7.72
|
|
|
1,351,137
|
|
|
1.
|
Consolidated Financial Statements of Barnes & Noble Education, Inc.:
|
|
2.
|
Financial Statement Schedules of Barnes & Noble Education, Inc.:
|
|
3.
|
Exhibits:
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
|
|
Plan of acquisition, reorganization, arrangement, liquidation or succession.
|
||
|
|
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
Articles of Incorporation and By-Laws.
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
Material contracts.
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
Other.
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
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/ Michael P. Huseby
|
|
|
|
Michael P. Huseby
|
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
Date: June 20, 2018
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ Michael P. Huseby
Michael P. Huseby
|
|
Chairman and Chief Executive Officer and Director
(Principal Executive Officer) |
|
June 20, 2018
|
|
|
|
|
|
|
|
/s/ Barry Brover
Barry Brover
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
June 20, 2018
|
|
|
|
|
||
|
/s/ Seema C. Paul
Seema C. Paul
|
|
Chief Accounting Officer
(Principal Accounting Officer)
|
|
June 20, 2018
|
|
|
|
|
||
|
/s/ Daniel A. DeMatteo
Daniel A. DeMatteo
|
|
Director
|
|
June 20, 2018
|
|
|
|
|
|
|
|
/s/ David G. Golden
David G. Golden
|
|
Director
|
|
June 20, 2018
|
|
|
|
|
|
|
|
/s/ John R. Ryan
John R. Ryan
|
|
Director
|
|
June 20, 2018
|
|
|
|
|
|
|
|
/s/ Jerry Sue Thornton
Jerry Sue Thornton
|
|
Director
|
|
June 20, 2018
|
|
|
|
|
||
|
/s/ David A. Wilson
David A. Wilson
|
|
Director
|
|
June 20, 2018
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|