Attached files
| file | filename |
|---|---|
| 8-K - BORDERS GROUP, INC. THIRD QUARTER 2009- FORM 8-K - BORDERS GROUP INC | q320098kearningsrelease.htm |
Exhibit 99.3
News
Release
Investor
Contact:
Media Contact:
Mark
Bierley
Anne Roman
(734)
477-4105
(734) 477-1392
Borders
Group Reports Q3 2009 Results
ANN ARBOR, Mich.,
Nov. 24, 2009—Borders Group, Inc. (NYSE: BGP)
today reported results for the fiscal third quarter of 2009, ended Oct. 31,
2009.
Following
are highlights of third quarter results, compared to the same period a year ago,
unless specifically noted as year-to-date results:
|
·
|
On
an operating basis, the company generated a loss from continuing
operations of $39.0 million or $0.65 per share compared to a loss of $39.0
million or $0.64 per share a year ago. On a GAAP basis, the loss from
continuing operations was $38.5 million or $0.64 per share compared to a
loss of $172.2 million or $2.85 per share a year ago. The $0.64 per share
loss includes income of $0.01 per share of non-operating adjustments that
were primarily non-cash. Year to date, on an operating basis, the company
generated a loss from continuing operations of $67.6 million or $1.12 per
share compared to a loss of $80.0 million or $1.33 per share a year ago.
On a GAAP basis, the year-to-date loss from continuing operations was
$170.1 million or $2.83 per share compared to a loss of $213.6 million or
$3.55 per share a year ago. The $2.83 per share loss includes $1.71 per
share of non-operating charges that were primarily
non-cash.
|
|
·
|
Adjusted
EBITDA was a loss of $34.2 million compared to a loss of $25.5 million in
the prior year quarter. On a year-to-date basis, the adjusted EBITDA loss
was $24.3 million compared to a loss of $24.9 million in
2008.
|
|
·
|
Total
consolidated sales were $595.5 million, down $86.6 million, or
12.7%.
|
|
·
|
Inventory
was reduced by $99.1 million, led by the reduction in multimedia inventory
of $70.4 million.
|
|
·
|
Comparable
store sales declined by 12.1% and 7.2% at Borders superstores and
Waldenbooks Specialty Retail stores, respectively. Excluding
multimedia, comparable store sales at Borders declined by
8.5%.
|
|
·
|
SG&A
expenses, on an operating basis, were reduced by $27.1
million.
|
|
·
|
Debt,
net of cash, at the end of the third quarter was $375.0 million, a
reduction from the prior year of $112.0 million, or
23.0%. Debt, net of cash, compared to year-end levels increased
by $92.4 million, or 32.7% as inventory was added to core book categories
throughout the third quarter.
|
“During
the third quarter, we prepared for the upcoming holiday selling season,” said
Borders Group Chief Executive Officer Ron Marshall. “We increased core book
inventories, experimented with a range of traffic-driving and in-store
promotions and invested in store payroll to get books out on the shelves and our
stores in top condition to receive customers. To ensure that our customers are
confident in our holiday selection, we recently launched what we believe is book
retailing’s first-ever in-stock guarantee. If a customer comes to shop at
Borders and finds us out of stock on an item—and that item is among the more
than one million titles on Borders.com—we will order the item for the customer,
ship it to her at home and the shipping charges will be on us. There will be no
wasted shopping trips for our customers this season.”
-more-
Borders
Group Q3—2
Consolidated
Results
All sales
and earnings/loss figures reported throughout this news release are on a
continuing operations basis unless otherwise noted.
Third
quarter consolidated sales were $595.5 million, a 12.7% decrease from the same
period a year ago. On an operating basis, the company generated a
third-quarter loss from continuing operations of $39.0 million or $0.65 per
share compared to a loss of $39.0 million or $0.64 per share a year ago. On a
GAAP basis, the loss from continuing operations was $38.5 million or $0.64 per
share compared to a loss of $172.2 million or $2.85 per share a year ago. The
$0.64 per share loss includes income of $0.01 per share of non-operating
adjustments that were primarily non-cash.
Excluding
non-operating charges, SG&A as a percent of sales improved over third
quarter last year by 0.4% from 28.7% to 28.3% due to the company’s aggressive
expense reduction initiatives, which were partially offset by de-leveraging due
to negative sales trends. Expense reduction initiatives helped reduce SG&A
dollar expenses in the third quarter by $27.1 million compared to the prior
year. On a GAAP basis, SG&A as a percent of sales was down compared to last
year by 1.0% from 30.1% to 29.1%.
The
company made an additional investment of $16.8 million in inventory within its
core book category compared to the same period last year. At the same time,
Borders Group reduced third-quarter inventory in the multimedia category by
$70.4 million and by $45.5 million within its Waldenbooks Specialty Retail
segment due to store closures over the past 12 months. In total, inventory was
reduced by $99.1 million for the period.
Third
quarter capital expenditures were $6.8 million compared to $17.9 million in 2008
as the company continued to manage capital prudently. For the full year, capital
expenditures were $11.2 million compared to $72.0 million a year ago. Debt, net
of cash, at the end of the third quarter was $375.0 million, a reduction from
the prior year of $112.0 million, or 23.0%. Debt, net of cash,
compared to year-end levels increased by $92.4 million, or 32.7%.
Non-Operating
Adjustments
The table
below details non-operating adjustments for the third quarter and year to date.
Expense (income) amounts are as follows:
|
Non-Operating
Adjustments
|
Item
|
Line
Item Impact
|
Q3
2009
|
YTD
2009
|
|
Consulting,
professional and other fees
|
Cash
|
Gross
Margin and SG&A
|
$1.2
million
|
$10.1
million
|
|
Store
closure and related items
|
Cash
|
Gross
Margin and SG&A
|
($1.0)
million
|
($0.3)
million
|
|
Severance
and other compensation costs
|
Cash
|
Gross
Margin and SG&A
|
$3.4
million
|
$5.4
million
|
|
Asset
impairments and other writedowns
|
Non-cash
|
Asset
Impairments
|
$0.2
million
|
$1.0
million
|
|
Accelerated
depreciation-multimedia space reduction
|
Non-cash
|
SG&A
|
$0.0
million
|
$7.1
million
|
|
Term
loan cost/discount amortization
|
Non-cash
|
Interest
Expense
|
$1.1
million
|
$3.8
million
|
|
International
“put” expiration
|
Non-cash
|
Warrant/Put
Expense
|
$0.0
million
|
$16.2
million
|
|
Warrant
liability fair value adjustment
|
Non-cash
|
Warrant/Put
Expense
|
($28.7)
million
|
$18.9
million
|
|
Total
pre-tax non-operating adjustments
|
($23.8)
million
|
$62.2
million
|
||
|
Normalized
income taxes
|
Non-cash
|
Income
Taxes (Benefit)
|
$23.3
million
|
$40.3
million
|
|
Total
after-tax non-operating adjustments
|
($0.5)
million
|
$102.5
million
|
||
|
($0.01)
EPS
|
$1.71
EPS
|
-more-
Borders
Group Q3—3
Borders
Superstores
Total
third quarter sales at Borders superstores, including Borders.com, in the third
quarter were $492.4 million, down 12.1% from a year ago. Comparable store sales
decreased by 12.1% at Borders superstores in the third quarter. Excluding the
multimedia category, comparable store sales at Borders declined by
8.5%.
On an
operating basis, the segment generated a third quarter operating loss of $44.5
million compared to an operating loss of $37.8 million for the same period a
year ago. On a GAAP basis, the segment generated an operating loss in the third
quarter of $46.2 million compared to an operating loss of $80.3 million the
prior year.
No
Borders superstores were closed during the third quarter and the period ended
with 513 locations.
Waldenbooks Specialty
Retail
Total
sales in the third quarter within the Waldenbooks Specialty Retail segment were
$72.9 million, a 20.3% decline compared to the same period in 2008 as the number
of stores was decreased to 361 at the end of the third quarter this year
compared to 467 stores that were open at the close of the same period a year
ago. The company closed nine Waldenbooks locations in the third quarter of this
year. Comparable store sales in the third quarter at Waldenbooks decreased by
7.2%.
On an
operating basis, the segment generated an operating loss of $8.2 million in the
third quarter compared to an operating loss of $13.2 million for the same period
in 2008. On a GAAP basis, the segment generated a third quarter operating loss
of $10.0 million compared to an operating loss of $17.7 million for the same
period in 2008.
Borders
Group announced Nov. 5 that the company plans to close approximately 200 stores
within its Waldenbooks Specialty Retail segment in January 2010 to emerge with a
smaller, more profitable mall business. Through this right-sizing, the company
will reduce the number of stores with operating losses, reduce overall rent
expense and lease-adjusted leverage and generate cash flow through sales and
working capital reductions.
International
Total
sales within the International segment (which consists primarily of Paperchase)
were $30.2 million in the third quarter, which is flat with a year ago of $30.3
million. Excluding the impact of foreign currency translation, segment sales
increased by 7.0% for the period.
On an
operating basis, the segment generated an operating loss of $1.3 million in the
third quarter compared to an operating loss of $1.6 million for the same period
in 2008. On a GAAP basis, the segment generated a third quarter operating loss
of $1.4 million compared to an operating loss of $1.8 million for the same
period in 2008.
Conference Call
Today
Management
will review third quarter results on a conference call today at 10 a.m. Eastern.
This call is being web cast by Thomson Financial and can be accessed at the
Borders Group corporate Web site at www.bordersgroupinc.com.
A replay will be accessible on the Web site through Dec. 24. In addition, a
replay phone service will be available toll-free at 866-396-6282, or for
international calls, at 203-369-0517. The phone service will be available
through Dec. 8 until 11:59 p.m. Eastern.
Next Financial
Release-Holiday Sales
Borders
Group plans to issue information about holiday sales results in
mid-January.
-more-
Borders
Group Q3—4
About Borders
Group
Headquartered
in Ann Arbor, Mich., Borders Group, Inc. (NYSE: BGP) is a leading retailer of
books, music and movies with more than 25,000 employees. Through its
subsidiaries, the company operates approximately 1,000 stores worldwide
primarily under the Borders® and
Waldenbooks® brand
names. For online shopping, visit Borders.com. For more information about the
company, visit www.borders.com/investors.
Safe Harbor
Statement
This
release contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. One can identify these forward-looking
statements by the use of words such as "expect," "planning," "possibility,"
"opportunity," "goal," "will," "may," "intend," "anticipates" and other words of
similar meaning. One can also identify them by the fact that they do not relate
strictly to historical or current facts. These statements are likely to address
matters such as the company's future financial condition and performance
(including earnings per share, the profitability of Waldenbooks, liquidity,
sales, inventory levels and capital expenditures), its cost reduction
initiatives and plans for store closings and the expansion of product
categories. These statements are subject to risks and uncertainties that could
cause actual results and plans to differ materially from those included in the
company's forward-looking statements.
These
risks and uncertainties include, but are not limited to, consumer demand for the
company's products, particularly during the holiday season, which is believed to
be related to general economic and geopolitical conditions, competition and
other factors; the availability of adequate capital--including vendor credit--to
fund the company's operations and to carry out its strategic plans; adverse
litigation results or other claims and the performance of the company's
information technology systems.
The
company's periodic reports filed from time to time with the Securities and
Exchange Commission contain more detailed discussions of these and other risk
factors that could cause actual results and plans to differ materially from
those included in the forward-looking statements, and those discussions are
incorporated herein by reference. The company does not undertake any obligation
to update forward-looking statements.
.
###
|
Borders Group, Inc. Financial
Statements
(amounts
in millions, except per share amounts)
Unaudited
|
|||||||||||||||||||||
|
Sales
and Earnings Summary
|
|||||||||||||||||||||
|
Quarter
Ended October 31, 2009 (1)
|
Quarter
Ended November 1, 2008 (1)
|
||||||||||||||||||||
|
Operating
|
Adjustments | GAAP |
Operating
|
Adjustments | GAAP |
|
|||||||||||||||
|
Basis
(2)
|
(2) | Basis |
Basis
(3)
|
(3) | Basis |
|
|||||||||||||||
|
Borders
Superstores
|
$ | 492.4 | $ | - | $ | 492.4 | $ | 560.3 | $ | - | $ | 560.3 | |||||||||
|
Waldenbooks
Specialty Retail
|
72.9 | - | 72.9 | 91.5 | - | 91.5 | |||||||||||||||
|
International
|
30.2 | - | 30.2 |
30.3
|
- | 30.3 | |||||||||||||||
|
Total
sales
|
595.5 | - | 595.5 | 682.1 | - | 682.1 | |||||||||||||||
|
Other
revenue
|
7.0 | - | 7.0 | 11.3 | - | 11.3 | |||||||||||||||
|
Total
revenue
|
602.5 | - | 602.5 | 693.4 | - | 693.4 | |||||||||||||||
|
Cost
of goods sold, including occupancy costs
|
490.6 | (1.4 | ) | 489.2 | 550.9 | (4.5 | ) | 546.4 | |||||||||||||
|
Gross
margin
|
111.9 | 1.4 | 113.3 | 142.5 | 4.5 | 147.0 | |||||||||||||||
|
Selling,
general and administrative expenses
|
168.6 | 5.0 | 173.6 | 195.7 | 9.4 | 205.1 | |||||||||||||||
|
Asset
impairments and other writedowns
|
- | 0.2 | 0.2 | - | 50.1 | 50.1 | |||||||||||||||
|
Operating
loss
|
(56.7 | ) | (3.8 | ) | (60.5 | ) | (53.2 | ) | (55.0 | ) | (108.2 | ) | |||||||||
|
Interest
expense
|
5.2 | 1.1 | 6.3 | 8.8 | 5.0 | 13.8 | |||||||||||||||
|
Warrant/put
expense (income)
|
- | (28.7 | ) | (28.7 | ) | - | (12.7 | ) | (12.7 | ) | |||||||||||
|
Total
interest expense (income)
|
5.2 | (27.6 | ) | (22.4 | ) | 8.8 | (7.7 | ) | 1.1 | ||||||||||||
|
Loss
before income taxes
|
(61.9 | ) | 23.8 | (38.1 | ) | (62.0 | ) | (47.3 | ) | (109.3 | ) | ||||||||||
|
Income
taxes (benefit)
|
(22.9 | ) | 23.3 | 0.4 | (23.0 | ) | 85.9 | 62.9 | |||||||||||||
|
Loss
from continuing operations
|
$ | (39.0 | ) | $ | 0.5 | $ | (38.5 | ) | $ | (39.0 | ) | $ | (133.2 | ) | $ | (172.2 | ) | ||||
|
Loss
from operations of discontinued operations (net of tax)
|
- | - | - | - | - | - | |||||||||||||||
|
Gain
(loss) from disposal of discontinued operations (net of
tax)
|
- | 0.8 | 0.8 | - | (3.2 | ) | (3.2 | ) | |||||||||||||
|
Gain
(loss) from discontinued operations (net of tax)
|
- | 0.8 | 0.8 | - | (3.2 | ) | (3.2 | ) | |||||||||||||
|
Net
loss
|
$ | (39.0 | ) | $ | 1.3 | $ | (37.7 | ) | $ | (39.0 | ) | $ | (136.4 | ) | $ | (175.4 | ) | ||||
|
Basic
EPS from continuing operations
|
$ | (0.65 | ) | $ | 0.01 | $ | (0.64 | ) | $ | (0.64 | ) | $ | (2.21 | ) | $ | (2.85 | ) | ||||
|
Basic
EPS from discontinued operations
|
$ | - | $ | 0.01 | $ | 0.01 | $ | - | $ | (0.05 | ) | $ | (0.05 | ) | |||||||
|
Basic
EPS including discontinued operations
|
$ | (0.65 | ) | $ | 0.02 | $ | (0.63 | ) | $ | (0.64 | ) | $ | (2.26 | ) | $ | (2.90 | ) | ||||
|
Basic
weighted avg. common shares
|
60.1 | 60.1 | 60.1 | 60.5 | 60.5 | 60.5 | |||||||||||||||
|
Comparable Store Sales
|
|||||||||||||||||||||
|
Borders
Superstores
|
(12.1% | ) | (12.8% | ) | |||||||||||||||||
|
Waldenbooks
Specialty Retail
|
(7.2% | ) | (7.7% | ) | |||||||||||||||||
|
Sales
and Earnings Summary (As Percentage of Total Sales)
|
|||||||||||||||||||||
|
Quarter
Ended October 31, 2009 (1)
|
Quarter
Ended November 1, 2008 (1)
|
||||||||||||||||||||
|
Operating
|
Adjustments | GAAP |
Operating
|
Adjustments | GAAP |
|
|||||||||||||||
|
Basis
(2)
|
(2) | Basis |
Basis
(3)
|
(3) | Basis | ||||||||||||||||
|
Borders
Superstores
|
82.7 | % | - | % | 82.7 | % |
82.1
|
% | - | % | 82.1 |
%
|
|||||||||
|
Waldenbooks
Specialty Retail
|
12.2 | - | 12.2 | 13.4 | - | 13.4 | |||||||||||||||
|
International
|
5.1 | - | 5.1 | 4.5 | - | 4.5 | |||||||||||||||
|
Total
sales
|
100.0 | - | 100.0 | 100.0 | - | 100.0 | |||||||||||||||
|
Other
revenue
|
1.2 | - | 1.2 | 1.7 | - | 1.7 | |||||||||||||||
|
Total
revenue
|
101.2 | - | 101.2 | 101.7 | - | 101.7 | |||||||||||||||
|
Cost
of goods sold, including occupancy costs
|
82.4 | (0.2 | ) | 82.2 | 80.8 | (0.7 | ) | 80.1 | |||||||||||||
|
Gross
margin
|
18.8 | 0.2 | 19.0 | 20.9 | 0.7 | 21.6 | |||||||||||||||
|
Selling,
general and administrative expenses
|
28.3 | 0.8 | 29.1 | 28.7 | 1.4 | 30.1 | |||||||||||||||
|
Asset
impairments and other writedowns
|
- | 0.1 | 0.1 | - | 7.3 | 7.3 | |||||||||||||||
|
Operating
loss
|
(9.5 | ) | (0.7 | ) | (10.2 | ) | (7.8) | (8.0 | ) | (15.8 | ) | ||||||||||
|
Interest
expense
|
0.9 | 0.1 | 1.0 | 1.3 | 0.7 | 2.0 | |||||||||||||||
|
Warrant/put
expense (income)
|
- | (4.8 | ) | (4.8 | ) | - | (1.8 | ) | (1.8 | ) | |||||||||||
|
Total
interest expense (income)
|
0.9 | (4.7 | ) | (3.8 | ) | 1.3 | (1.1 | ) | 0.2 | ||||||||||||
|
Loss
before income taxes
|
(10.4 | ) | 4.0 | (6.4 | ) | (9.1 | ) | (6.9) | (16.0 | ) | |||||||||||
|
Income
taxes (benefit)
|
(3.9 | ) | 4.0 | 0.1 | (3.4 | ) | 12.6 | 9.2 | |||||||||||||
|
Loss
from continuing operations
|
(6.5 | ) % | - | % | (6.5 | ) % |
(5.7
|
)% | (19.5 | )% | (25.2 | ) |
%
|
||||||||
|
(1) The
results of Borders Australia, Borders New Zealand and Borders Singapore
are reported as discontinued operations.
(2) Results
from 2009 were impacted by a number of non-operating items, including
asset impairments, severance costs, store closure costs, professional fees
related to our turnaround efforts and amortization of the term loan
discount and debt issuance costs, partially offset by non-cash income
related to the fair market value adjustment of the warrant liability.
Therefore, solely for analytical purposes and as an aid to better
understand underlying trends, operating basis data are presented excluding
these items. To aid in the comparability to last year, operating basis
data is presented using a normalized tax rate.
(3) Results
from 2008 were impacted by a number of non-operating items, including
deferred tax asset impairments, store asset impairments, store closure
costs, severance costs, professional fees related to strategic
alternatives and amortization of the term loan discount and debt issuance
costs, offset by non-cash income related to the fair market value
adjustment of the warrant liability as well as income received from a
landlord lease termination. Therefore, solely for analytical purposes and
as an aid to better understand underlying trends, operating basis data are
presented excluding these items. To aid in the comparability to last year,
operating basis data is presented using a normalized tax
rate.
|
|||||||||||||||||||||
|
Borders
Group, Inc. Financial Statements
|
|||||||||||||||||||||
|
(amounts
in millions, except per share amounts)
Unaudited
|
|||||||||||||||||||||
|
Sales
and Earnings Summary
|
|||||||||||||||||||||
|
Nine
Months Ended October 31, 2009 (1)
|
Nine
Months Ended November 1, 2008 (1)
|
||||||||||||||||||||
|
Operating
|
Adjustments | GAAP |
Operating
|
Adjustments | GAAP |
|
|||||||||||||||
|
Basis
(2)
|
(2) | Basis |
Basis
(3)
|
(3) | Basis |
|
|||||||||||||||
|
Borders
Superstores
|
$ | 1,542.7 | $ | - | $ | 1,542.7 | $ | 1,782.9 | $ | - | $ | 1,782.9 | |||||||||
|
Waldenbooks
Specialty Retail
|
224.3 | - | 224.3 | 284.4 | - | 284.4 | |||||||||||||||
|
International
|
86.8 | - | 86.8 | 93.5 | - | 93.5 | |||||||||||||||
|
Total
sales
|
1,853.8 | - | 1,853.8 | 2,160.8 | - | 2,160.8 | |||||||||||||||
|
Other
revenue
|
23.6 | - | 23.6 | 26.9 | - | 26.9 | |||||||||||||||
|
Total
revenue
|
1,877.4 | - | 1,877.4 | 2,187.7 | - | 2,187.7 | |||||||||||||||
|
Cost
of goods sold, including occupancy costs
|
1,480.0 | (2.1 | ) | 1,477.9 | 1,693.5 | (3.0 | ) | 1,690.5 | |||||||||||||
|
Gross
margin
|
397.4 | 2.1 | 399.5 | 494.2 | 3.0 | 497.2 | |||||||||||||||
|
Selling,
general and administrative expenses
|
490.5 | 24.4 | 514.9 | 601.5 | 21.8 | 623.3 | |||||||||||||||
|
Asset
impairments and other writedowns
|
- | 1.0 | 1.0 | - | 50.1 | 50.1 | |||||||||||||||
|
Operating
loss
|
(93.1 | ) | (23.3 | ) | (116.4 | ) | (107.3 | ) | (68.9 | ) | (176.2 | ) | |||||||||
|
Interest
expense
|
14.2 | 3.8 | 18.0 | 23.7 | 10.7 | 34.4 | |||||||||||||||
|
Warrant/put
expense (income)
|
- | 35.1 | 35.1 | - | (27.2 | ) | (27.2 | ) | |||||||||||||
|
Total
interest expense (income)
|
14.2 | 38.9 | 53.1 | 23.7 | (16.5 | ) | 7.2 | ||||||||||||||
|
Loss
before income taxes
|
(107.3 | ) | (62.2 | ) | (169.5 | ) | (131.0 | ) | (52.4 | ) | (183.4 | ) | |||||||||
|
Income
taxes (benefit)
|
(39.7 | ) | 40.3 | 0.6 | (51.0 | ) | 81.2 | 30.2 | |||||||||||||
|
Loss
from continuing operations
|
$ | (67.6 | ) | $ | (102.5 | ) | $ | (170.1 | ) | $ | (80.0 | ) | $ | (133.6 | ) | $ | (213.6 | ) | |||
|
Loss
from operations of discontinued operations (net of tax)
|
- | - | - | (1.7 | ) | - | (1.7 | ) | |||||||||||||
|
Gain
(loss) on disposal of discontinued operations (net of tax)
|
- | 0.8 | 0.8 | - | (1.0 | ) | (1.0 | ) | |||||||||||||
|
Gain
(loss) from discontinued operations (net of tax)
|
- | 0.8 | 0.8 | (1.7 | ) | (1.0 | ) | (2.7 | ) | ||||||||||||
|
Net
loss
|
$ | (67.6 | ) | $ | (101.7 | ) | $ | (169.3 | ) | $ | (81.7 | ) | $ | (134.6 | ) | $ | (216.3 | ) | |||
|
Basic
EPS from continuing operations
|
$ | (1.12 | ) | $ | (1.71 | ) | $ | (2.83 | ) | $ | (1.33 | ) | $ | (2.22 | ) | $ | (3.55 | ) | |||
|
Basic
EPS from discontinued operations
|
$ | - | $ | 0.01 | $ | 0.01 | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.04 | ) | ||||||
|
Basic
EPS including discontinued operations
|
$ | (1.12 | ) | $ | (1.70 | ) | $ | (2.82 | ) | $ | (1.35 | ) | $ | (2.24 | ) | $ | (3.59 | ) | |||
|
Basic
weighted avg. common shares
|
60.1 | 60.1 | 60.1 | 60.2 | 60.2 | 60.2 | |||||||||||||||
|
Comparable Store Sales
|
|||||||||||||||||||||
|
Borders
Superstores
|
(14.6% | ) | (8.6% | ) | |||||||||||||||||
|
Waldenbooks
Specialty Retail
|
(7.9% | ) | (5.2% | ) | |||||||||||||||||
|
Sales
and Earnings Summary (As Percentage of Total Sales)
|
|||||||||||||||||||||
|
Nine
Months Ended October 31, 2009 (1)
|
Nine
Months Ended November 1, 2008 (1)
|
||||||||||||||||||||
|
Operating
|
Adjustments | GAAP |
Operating
|
Adjustments | GAAP |
|
|||||||||||||||
|
Basis
(2)
|
(2) | Basis |
Basis
(3)
|
(3) | Basis |
|
|||||||||||||||
|
Borders
Superstores
|
83.2 | % | - | % | 83.2 | % |
82.5
|
% | - | % | 82.5 |
%
|
|||||||||
|
Waldenbooks
Specialty Retail
|
12.1 | - | 12.1 | 13.2 | - | 13.2 | |||||||||||||||
|
International
|
4.7 | - | 4.7 | 4.3 | - | 4.3 | |||||||||||||||
|
Total
sales
|
100.0 | - | 100.0 | 100.0 | - | 100.0 | |||||||||||||||
|
Other
revenue
|
1.3 | - | 1.3 | 1.2 | - | 1.2 | |||||||||||||||
|
Total
revenue
|
101.3 | - | 101.3 | 101.2 | - | 101.2 | |||||||||||||||
|
Cost
of goods sold, including occupancy costs
|
79.8 | (0.1 | ) | 79.7 | 78.3 | (0.1 | ) | 78.2 | |||||||||||||
|
Gross
margin
|
21.5 | 0.1 | 21.6 | 22.9 | 0.1 | 23.0 | |||||||||||||||
|
Selling,
general and administrative expenses
|
26.5 | 1.3 | 27.8 | 27.9 | 1.0 | 28.9 | |||||||||||||||
|
Asset
impairments and other writedowns
|
- | 0.1 | 0.1 | - | 2.3 | 2.3 | |||||||||||||||
|
Operating
loss
|
(5.0 | ) | (1.3 | ) | (6.3 | ) | (5.0 | ) | (3.2 | ) | (8.2 | ) | |||||||||
|
Interest
expense
|
0.8 | 0.2 | 1.0 | 1.1 | 0.5 | 1.6 | |||||||||||||||
|
Warrant/put
expense (income)
|
- | 1.9 | 1.9 | - | (1.3 | ) | (1.3 | ) | |||||||||||||
|
Total
interest expense (income)
|
0.8 | 2.1 | 2.9 | 1.1 | (0.8 | ) | 0.3 | ||||||||||||||
|
Loss
before income taxes
|
(5.8 | ) | (3.4 | ) | (9.2 | ) | (6.1 | ) | (2.4 | ) | (8.5 | ) | |||||||||
|
Income
taxes (benefit)
|
(2.2 | ) | 2.2 | - | (2.4 | ) | 3.8 | 1.4 | |||||||||||||
|
Loss
from continuing operations
|
(3.6 | )% | (5.6 | )% | (9.2 | ) % |
(3.7
|
) % | (6.2 | )% | (9.9 | ) |
%
|
||||||||
|
(1) The
results of Borders Australia, Borders New Zealand and Borders Singapore
are reported as discontinued operations.
(2) Results
from 2009 were impacted by a number of non-operating items, including
accelerated depreciation related to our multimedia reduction initiative,
asset impairments, severance costs, store closure costs, professional fees
related to our turnaround efforts, amortization of the term loan discount
and debt issuance costs, and non-cash charges related to the fair
market value adjustment of the warrant liability and international put
expiration. Therefore, solely for analytical purposes and as an aid to
better understand underlying trends, operating basis data are presented
excluding these items. To aid in the comparability to last year, operating
basis data is presented using a normalized tax rate.
(3) Results
from 2008 were impacted by a number of non-operating items, including
deferred tax asset impairments, store asset impairments, store closure
costs, severance costs, professional fees related to strategic
alternatives and amortization of the term loan discount and debt issuance
costs, offset by income related to the fair market value adjustment of the
warrant liability as well as income received from a landlord lease
termination. Therefore, solely for analytical purposes and as an aid to
better understand underlying trends, operating basis data are presented
excluding these items. To aid in the comparability to last year, operating
basis data is presented using a normalized tax rate.
|
|||||||||||||||||||||
Borders
Group, Inc. Financial Statements
(dollars
in millions)
Unaudited
Condensed Consolidated Balance Sheets
|
October
31,
|
November
1,
|
January
31,
|
||||||||||
|
2009
|
2008
|
2009
|
||||||||||
|
Assets
|
||||||||||||
|
Cash
and cash equivalents
|
$ | 32.8 | $ | 38.4 | $ | 53.6 | ||||||
|
Merchandise
inventories
|
1,157.4 | 1,256.5 | 915.2 | |||||||||
|
Other
current assets
|
78.4 | 99.6 | 102.4 | |||||||||
|
Property
and equipment, net
|
426.5 | 521.3 | 494.2 | |||||||||
|
Other
assets and deferred charges
|
46.5 | 90.7 | 43.4 | |||||||||
|
Goodwill
|
0.3 | 40.5 | 0.2 | |||||||||
|
Total
assets
|
$ | 1,741.9 | $ | 2,047.0 | $ | 1,609.0 | ||||||
|
Liabilities
and Stockholders’ Equity
|
||||||||||||
|
Short-term
borrowings and current portion of long-term debt
|
$ | 401.8 | $ | 518.0 | $ |
329.8
|
||||||
|
Trade
accounts payable
|
605.3 | 613.2 | 350.0 | |||||||||
|
Other
current liabilities
|
274.9 | 311.5 | 313.9 | |||||||||
|
Long-term
debt
|
6.0 | 7.4 | 6.4 | |||||||||
|
Other
long-term liabilities
|
354.7 | 353.9 | 345.8 | |||||||||
|
Total
liabilities
|
1,642.7 | 1,804.0 | 1,345.9 | |||||||||
|
Total
stockholders' equity
|
99.2 | 243.0 | 263.1 | |||||||||
|
Total
liabilities and stockholders’ equity
|
$ | 1,741.9 | $ | 2,047.0 | $ | 1,609.0 | ||||||
|
Certain
reclassifications have been made to conform to current year
presentation.
|
Store
Activity Summary
|
|
Quarter
Ended
|
Nine Months
Ended
|
Year Ended |
|
|
October
31, 2009
|
November
1, 2008
|
October
31, 2009
|
November
1, 2008
|
January 31, 2009
|
||||
|
Borders
superstores
|
|||||||||
|
Beginning
number of stores
|
513
|
518
|
515
|
509
|
509
|
||||
|
Openings
|
-
|
2
|
-
|
11
|
12
|
||||
|
Closings
|
-
|
(1)
|
(2)
|
(1)
|
(6)
|
||||
|
Ending
number of stores
|
513
|
519
|
513
|
519
|
515
|
||||
|
Ending
square footage (in millions)
|
12.7
|
12.8
|
12.7
|
12.8
|
12.8
|
||||
|
Waldenbooks
Specialty Retail Stores (1)
|
|||||||||
|
Beginning
number of stores
|
370
|
468
|
386
|
490
|
490
|
||||
|
Openings—Airport
stores
|
-
|
5
|
1
|
5
|
8
|
||||
|
Closings
|
(9)
|
(6)
|
(26)
|
(28)
|
(112)
|
||||
|
Ending
number of stores
|
361
|
467
|
361
|
467
|
386
|
||||
|
Ending
square footage (in millions)
|
1.3
|
1.8
|
1.3
|
1.8
|
1.4
|
(1)
Includes all small format stores in malls, airports and outlet
malls.
|
Borders
Group, Inc. Financial Statements
(dollars
in millions)
Unaudited
Condensed
Consolidated Statements of Cash Flows
|
||||||||||||||||
|
Nine
Months Ended
|
||||||||||||||||
|
Quarter
Ended
|
||||||||||||||||
|
October
31,
|
November
1,
|
October
31,
|
November
1,
|
|||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
CASH
PROVIDED BY (USED FOR):
|
||||||||||||||||
|
OPERATIONS
|
||||||||||||||||
|
Loss
from continuing operations
|
$ | (38.5 | ) | $ | (172.2 | ) | $ | (170.1 | ) | $ | (213.6 | ) | ||||
|
Adjustments
to reconcile loss from continuing operations to operating cash
flows:
|
||||||||||||||||
|
Depreciation
|
22.5 | 27.7 | 75.9 | 82.4 | ||||||||||||
|
Loss
on disposal of assets
|
0.8 | 0.3 | 1.3 | 1.3 | ||||||||||||
|
Stock
based compensation cost
|
0.2 | 1.7 | 0.2 | 5.0 | ||||||||||||
|
Increase
(decrease) in warrant liability
|
(28.7 | ) | (12.7 | ) | 23.2 | 13.6 | ||||||||||
|
Change
in other long-term assets, liabilities and deferred
charges
|
(3.5 | ) | 43.6 | (15.7 | ) | 16.2 | ||||||||||
|
Write-off
of intangible asset
|
- | - | 16.2 | - | ||||||||||||
|
Asset
impairments and other writedowns
|
0.2 | 50.1 | 1.0 | 50.1 | ||||||||||||
|
Increase
in inventories
|
(267.9 | ) | (171.0 | ) | (238.8 | ) | (19.4 | ) | ||||||||
|
Increase
in accounts payable
|
195.1 | 146.2 | 254.0 | 103.5 | ||||||||||||
|
Cash
provided by (used for) other current assets and other current
liabilities
|
(5.5 | ) | 46.7 | (29.5 | ) | (24.7 | ) | |||||||||
|
Net
cash provided by (used for) operating activities of continuing
operations
|
(125.3 | ) | (39.6 | ) | (82.3 | ) | 14.4 | |||||||||
|
INVESTING
|
||||||||||||||||
|
Capital
expenditures
|
(6.8 | ) | (17.9 | ) | (11.2 | ) | (72.0 | ) | ||||||||
|
Proceeds
from the sale of discontinued operations
|
- | 6.6 | - | 94.5 | ||||||||||||
|
Net
cash provided by (used for) investing activities of continuing
operations
|
(6.8 | ) | (11.3 | ) | (11.2 | ) | 22.5 | |||||||||
|
FINANCING
|
||||||||||||||||
|
Net
cash provided by (repayment of) financing obligations
|
119.7 | 55.0 | 73.3 | (28.6 | ) | |||||||||||
|
Issuance
and repurchase of common stock
|
(0.5 | ) | - | (0.8 | ) | 0.3 | ||||||||||
|
Net
funding from (repayment of) long-term debt
|
- | 0.1 | (0.3 | ) | 0.8 | |||||||||||
|
Net
repayment of capital lease obligations
|
(0.2 | ) | - | (0.8 | ) | - | ||||||||||
|
Cash
dividends paid
|
- | - | - | (6.5 | ) | |||||||||||
|
Net
cash provided by (used for) financing activities of
|
||||||||||||||||
|
continuing
operations
|
119.0 | 55.1 | 71.4 | (34.0 | ) | |||||||||||
|
Effect
of exchange rates on cash and cash equivalents
|
- | (0.1 | ) | 0.5 | - | |||||||||||
|
Net
cash provided by (used for) discontinued operations
|
0.8 | (9.6 | ) | 0.8 | (23.0 | ) | ||||||||||
|
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(12.3 | ) | (5.5 | ) | (20.8 | ) | (20.1 | ) | ||||||||
|
Cash
and cash equivalents at beginning of period
|
45.1 | 43.9 | 53.6 | 58.5 | ||||||||||||
|
Cash
and cash equivalents at end of period
|
$ | 32.8 | $ | 38.4 | $ | 32.8 | $ | 38.4 | ||||||||
Borders
Group, Inc. Segment Financial Information
(dollars
in millions, except per share amounts)
Unaudited
|
Quarter
Ended October 31, 2009
|
Quarter
Ended November 1, 2008
|
|||||||||||||||||||||||
|
Operating
Basis
(1)
|
Adjustments
(1)
|
GAAP
Basis
|
Operating
Basis
(2)
|
Adjustments
(2)
|
GAAP
Basis
|
|||||||||||||||||||
|
Borders Superstores
|
||||||||||||||||||||||||
|
Sales
|
$ | 492.4 | $ | - | $ | 492.4 | $ | 560.3 | $ | - | $ | 560.3 | ||||||||||||
|
Depreciation
expense
|
19.2 | - | 19.2 | 23.8 | - | 23.8 | ||||||||||||||||||
|
Operating
loss
|
(44.5 | ) | (1.7 | ) | (46.2 | ) | (37.8 | ) | (42.5 | ) | (80.3 | ) | ||||||||||||
|
Adjusted
EBITDA (5)
|
(25.3 | ) | (14.0 | ) | ||||||||||||||||||||
|
Waldenbooks Specialty
Retail
|
||||||||||||||||||||||||
|
Sales
|
$ | 72.9 | $ | - | $ | 72.9 | $ | 91.5 | $ | - | $ | 91.5 | ||||||||||||
|
Depreciation
expense
|
1.9 | - | 1.9 | 2.3 | - | 2.3 | ||||||||||||||||||
|
Operating
loss
|
(8.2 | ) | (1.8 | ) | (10.0 | ) | (13.2 | ) | (4.5 | ) | (17.7 | ) | ||||||||||||
|
Adjusted
EBITDA (5)
|
(6.3 | ) | (10.9 | ) | ||||||||||||||||||||
|
International (3)
|
||||||||||||||||||||||||
|
Sales
|
$ | 30.2 | $ | - | $ | 30.2 | $ | 30.3 | $ | - | $ | 30.3 | ||||||||||||
|
Depreciation
expense
|
1.4 | - | 1.4 | 1.6 | - | 1.6 | ||||||||||||||||||
|
Operating
loss
|
(1.3 | ) | (0.1 | ) | (1.4 | ) | (1.6 | ) | (0.2 | ) | (1.8 | ) | ||||||||||||
|
Adjusted
EBITDA (5)
|
0.1 | - | ||||||||||||||||||||||
|
Corporate (4)
|
||||||||||||||||||||||||
|
Operating
loss
|
$ | (2.7 | ) | $ | (0.2 | ) | $ | (2.9 | ) | $ | (0.6 | ) | $ | (7.8 | ) | $ | (8.4 | ) | ||||||
|
Adjusted
EBITDA (5)
|
(2.7 | ) | (0.6 | ) | ||||||||||||||||||||
|
Consolidated (3)
|
||||||||||||||||||||||||
|
Sales
|
$ | 595.5 | $ | - | $ | 595.5 | $ | 682.1 | $ | - | $ | 682.1 | ||||||||||||
|
Depreciation
expense
|
22.5 | - | 22.5 | 27.7 | - | 27.7 | ||||||||||||||||||
|
Operating
loss
|
(56.7 | ) | (3.8 | ) | (60.5 | ) | (53.2 | ) | (55.0 | ) | (108.2 | ) | ||||||||||||
|
Adjusted
EBITDA (5)
|
(34.2 | ) | (25.5 | ) | ||||||||||||||||||||
|
Nine
Months Ended October 31, 2009
|
Nine
Months Ended November 1, 2008
|
|||||||||||||||||||||||
|
Operating
Basis
(1)
|
Adjustments
(1)
|
GAAP
Basis
|
Operating
Basis
(2)
|
Adjustments
(2)
|
GAAP
Basis
|
|||||||||||||||||||
|
Borders Superstores
|
||||||||||||||||||||||||
|
Sales
|
$ | 1,542.7 | $ | - | $ | 1,542.7 | $ | 1,782.9 | $ | - | $ | 1,782.9 | ||||||||||||
|
Depreciation
expense
|
59.0 | 7.1 | 66.1 | 70.9 | - | 70.9 | ||||||||||||||||||
|
Operating
loss
|
(66.2 | ) | (13.9 | ) | (80.1 | ) | (68.8 | ) | (49.2 | ) | (118.0 | ) | ||||||||||||
|
Adjusted
EBITDA (5)
|
(7.2 | ) | 2.1 | |||||||||||||||||||||
|
Waldenbooks Specialty
Retail
|
||||||||||||||||||||||||
|
Sales
|
$ | 224.3 | $ | - | $ | 224.3 | $ | 284.4 | $ | - | $ | 284.4 | ||||||||||||
|
Depreciation
expense
|
5.7 | - | 5.7 | 6.9 | - | 6.9 | ||||||||||||||||||
|
Operating
loss
|
(16.7 | ) | (3.2 | ) | (19.9 | ) | (32.7 | ) | (6.3 | ) | (39.0 | ) | ||||||||||||
|
Adjusted
EBITDA (5)
|
(11.0 | ) | (25.8 | ) | ||||||||||||||||||||
|
International (3)
|
||||||||||||||||||||||||
|
Sales
|
$ | 86.8 | $ | - | $ | 86.8 | $ | 93.5 | $ | - | $ | 93.5 | ||||||||||||
|
Depreciation
expense
|
4.1 | - | 4.1 | 4.6 | - | 4.6 | ||||||||||||||||||
|
Operating
loss
|
(2.2 | ) | (0.8 | ) | (3.0 | ) | (1.5 | ) | (0.3 | ) | (1.8 | ) | ||||||||||||
|
Adjusted
EBITDA (5)
|
1.9 | 3.1 | ||||||||||||||||||||||
|
Corporate (4)
|
||||||||||||||||||||||||
|
Operating
loss
|
$ | (8.0 | ) | $ | (5.4 | ) | $ | (13.4 | ) | $ | (4.3 | ) | $ | (13.1 | ) | $ | (17.4 | ) | ||||||
|
Adjusted
EBITDA (5)
|
(8.0 | ) | (4.3 | ) | ||||||||||||||||||||
|
Consolidated (3)
|
||||||||||||||||||||||||
|
Sales
|
$ | 1,853.8 | $ | - | $ | 1,853.8 | $ | 2,160.8 | $ | - | $ | 2,160.8 | ||||||||||||
|
Depreciation
expense
|
68.8 | 7.1 | 75.9 | 82.4 | - | 82.4 | ||||||||||||||||||
|
Operating
loss
|
(93.1 | ) | (23.3 | ) | (116.4 | ) | (107.3 | ) | (68.9 | ) | (176.2 | ) | ||||||||||||
|
Adjusted
EBITDA (5)
|
(24.3 | ) | (24.9 | ) | ||||||||||||||||||||
|
(1) Results
from 2009 were impacted by a number of non-operating items, including
accelerated depreciation related to our multimedia reduction initiative,
asset impairments, severance costs, store closure costs and professional
fees related to our turnaround efforts. Therefore, solely for analytical
purposes and as an aid to better understand underlying trends, operating
basis data are presented excluding these items.
(2) Results
from 2008 were impacted by a number of non-operating items, including
deferred tax asset impairments, store asset impairments, store closure
costs, severance costs and professional fees related to strategic
alternatives. Therefore, solely for analytical purposes and as an aid to
better understand underlying trends, operating basis data are presented
excluding these items.
(3) Excludes
the results of 2008 discontinued operations (Borders Australia, Borders
New Zealand and Borders Singapore).
(4) The
Corporate segment includes various corporate governance costs and
corporate incentive costs.
(5) Adjusted
EBITDA is operating income (loss) before depreciation and
amortization. Adjusted EBITDA is not a Generally Accepted Accounting
Principles (GAAP) measurement. Adjusted EBITDA information is being
included as we believe it is a commonly used measure of operating
performance in the retail industry. Adjusted EBITDA is provided to enhance
an investor’s understanding of our operating results. It should not be
construed as an alternative to income from operations as an indicator of
operating performance or as an alternative to cash flows from operating
activities as a measure of liquidity as determined in accordance with
GAAP. All companies do not calculate Adjusted EBITDA in the same manner.
As a result, Adjusted EBITDA as reported may not be comparable to Adjusted
EBITDA as reported by other companies.
|
||||||||||||||||||||||||