|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
46-0599018
|
(State or Other Jurisdiction of Incorporation or Organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
120 Mountain View Blvd., Basking Ridge, NJ
|
|
07920
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Title of Class
|
Trading Symbol
|
Name of Exchange on which registered
|
Common Stock, $0.01 par value per share
|
BNED
|
New York Stock Exchange
|
Large accelerated filer
|
|
¨
|
Accelerated filer
|
|
x
|
|
|
|
|
|
|
Non-accelerated filer
|
|
¨
|
Smaller reporting company
|
|
¨
|
|
|
|
|
|
|
|
|
|
Emerging Growth Company
|
|
¨
|
|
INDEX TO FORM 10-K
|
||
|
|
Page No.
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
•
|
general competitive conditions, including actions our competitors and content providers may take to grow their businesses;
|
•
|
a decline in college enrollment or decreased funding available for students;
|
•
|
decisions by colleges and universities to outsource their physical and/or online bookstore operations or change the operation of their bookstores;
|
•
|
implementation of our digital strategy may not result in the expected growth in our digital sales and/or profitability;
|
•
|
risk that digital sales growth does not exceed the rate of investment spend;
|
•
|
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;
|
•
|
the risk of price reduction or change in format of course materials by publishers, which could negatively impact revenues and margin;
|
•
|
the general economic environment and consumer spending patterns;
|
•
|
decreased consumer demand for our products, low growth or declining sales;
|
•
|
the strategic objectives, successful integration, anticipated synergies, and/or other expected potential benefits of various acquisitions, may not be fully realized or may take longer than expected;
|
•
|
the integration of the operations of various acquisitions into our own may also increase the risk of our internal controls being found ineffective;
|
•
|
changes to purchase or rental terms, payment terms, return policies, the discount or margin on products or other terms with our suppliers;
|
•
|
our ability to successfully implement our strategic initiatives including our ability to identify, compete for and execute upon additional acquisitions and strategic investments;
|
•
|
risks associated with operation or performance of MBS Textbook Exchange, LLC’s point-of-sales systems that are sold to college bookstore customers;
|
•
|
technological changes;
|
•
|
risks associated with counterfeit and piracy of digital and print materials;
|
•
|
our international operations could result in additional risks;
|
•
|
our ability to attract and retain employees;
|
•
|
risks associated with data privacy, information security and intellectual property;
|
•
|
trends and challenges to our business and in the locations in which we have stores;
|
•
|
non-renewal of managed bookstore, physical and/or online store contracts and higher-than-anticipated store closings;
|
•
|
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;
|
•
|
disruption of or interference with third party web service providers and our own proprietary technology;
|
•
|
work stoppages or increases in labor costs;
|
•
|
possible increases in shipping rates or interruptions in shipping service;
|
•
|
product shortages, including decreases in the used textbook inventory supply associated with the implementation of publishers’ direct to student textbook consignment rental programs, as well as risks associated with merchandise sourced indirectly from outside the United States;
|
•
|
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;
|
•
|
enactment of laws or changes in enforcement practices which may restrict or prohibit our use of texts, emails, interest based online advertising, recurring billing or similar marketing and sales activities;
|
•
|
the amount of our indebtedness and ability to comply with covenants applicable to any future debt financing;
|
•
|
our ability to satisfy future capital and liquidity requirements;
|
•
|
our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms;
|
•
|
adverse results from litigation, governmental investigations, tax-related proceedings, or audits;
|
•
|
changes in accounting standards; and
|
•
|
the other risks and uncertainties detailed in the section titled “Risk Factors” in
Part I - Item 1A
of this Form 10-K.
|
•
|
Course Material Sales and Rentals
. Sales and rentals of course materials are a core revenue driver and our online platform and registration solutions are deeply ingrained in their partner schools’ textbook selection process. Students can access affordable course materials and affinity products, including new and used print, eTextbooks, and e-content, which are available for sale or rent. We work directly with faculty to ensure the textbooks they have chosen for their courses are available in all required formats before the start of classes. Our wholesale distribution channel enables our Retail Segment to optimize textbook sourcing so they are able to more efficiently source and distribute a comprehensive inventory of affordable course materials to customers.
|
•
|
Inclusive Access.
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 on or before the first day of class. We have entered into several agreements with major publishers, including Cengage Learning, McGraw-Hill Education and Pearson, to provide their e-content through
First Day
, or directly to campus bookstores and virtual bookstores. The seamless delivery is made possible by our
First Day
technology and publishers' technology integrations with campus systems. These initiatives provide students, faculty and institutions greater access to more affordable course materials. In Fiscal 2019,
First Day
total sales increased by 92% from the prior year.
|
•
|
BNC OER+.
BNC OER+
, a turnkey solution for colleges and universities, offers advanced, affordable learning materials built on a high-quality foundation of OER courseware and enhanced with digital content that includes videos, activities and auto-graded practice assessments that faculty can easily customize to align with class objectives.
BNC OER
+ significantly reduces course material costs for students and enables easier implementation for faculty.
BNC OER+
is delivered digitally, with
|
•
|
eTextbooks.
We have partnered with VitalSource, a global leader in building, enhancing and delivering digital content, on our digital reading platform and a broad digital catalog.
|
•
|
General Merchandise
. For our physical campus bookstores and custom store solutions, we drive general merchandise sales through both in-store and online channels and feature collegiate and athletic apparel, other custom-branded school spirit products, lifestyle 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 5.6% in Fiscal 2019.
|
•
|
Cafés and Convenience Stores.
At our physical campus locations, we operate 88 customized cafés, featuring Starbucks Coffee
®
, and 13 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.
|
•
|
Brand Partnerships.
Through our unique relationship with students, colleges and universities, and our premier position on campus, we operate as a media channel for brands looking to target the college demographic, and derive revenue from these marketing share programs. We also focused on promoting lifestyle products to students and faculty by promoting various brands to connect on a much more personal level. We create strategic, integrated campaigns which include research, email, social media, display advertising, on-campus events, signage, and sampling. Our client list includes brands such as Chase, Target, Masterpass, GEICO, DirecTV, GrubHub, Shutterfly, The New York Times and Tom's of Maine. Revenue from these services have higher margin rates due to the relatively low incremental cost structure to provide these services.
|
•
|
Wholesale Textbook Distribution.
Our large inventory of used textbooks consists of approximately 300,000 textbook titles in stock, and utilizes a highly automated distribution facility that processes more than 11 million textbooks annually.
|
•
|
Wholesale Inventory Management, Hardware and POS Software.
We sell hardware and a software suite of applications that provides inventory management and point-of-sale solutions to approximately 400 college bookstores. We provide on-site installation for point-of-sale terminals and servers, and offer 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.
|
Name
|
|
Age
|
|
Position
|
Michael P. Huseby
|
|
64
|
|
Chairman and Chief Executive Officer
|
Barry Brover
|
|
58
|
|
Executive Vice President, Operations; Executive Vice President, Barnes & Noble College
|
Thomas D. Donohue
|
|
49
|
|
Executive Vice President, Chief Financial Officer
|
Kanuj Malhotra
|
|
52
|
|
Executive Vice President, Corporate Development; President, Digital Student Solutions
|
Michael C. Miller
|
|
47
|
|
Executive Vice President, Corporate Strategy and General Counsel
|
Stephen Culver
|
|
54
|
|
Senior Vice President, Chief Information Officer
|
JoAnn Magill
|
|
65
|
|
Senior Vice President, Human Resources
|
Seema C. Paul
|
|
55
|
|
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)
|
|
Number of Physical Campus Stores
|
2020
|
|
67
|
2021
|
|
65
|
2022
|
|
45
|
2023
|
|
42
|
2024
|
|
43
|
2025 and later
|
|
510
|
Item 5.
|
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
Fiscal Year
(a)
|
||||||||||||||||||
(In thousands of dollars,
except for share and per share amounts)
|
|
2019
(b)
|
|
2018
(b)
|
|
2017
(b)
|
|
2016
(b)
|
|
2015
|
||||||||||
STATEMENT OF OPERATIONS DATA:
|
|
|
|
|
|
|
||||||||||||||
Sales:
|
|
|
|
|
|
|
||||||||||||||
Product sales and other
|
|
$
|
1,838,760
|
|
|
$
|
1,984,472
|
|
|
$
|
1,641,881
|
|
|
$
|
1,581,104
|
|
|
$
|
1,549,005
|
|
Rental income
|
|
195,883
|
|
|
219,145
|
|
|
232,481
|
|
|
226,925
|
|
|
223,993
|
|
|||||
Total sales
|
|
2,034,643
|
|
|
2,203,617
|
|
|
1,874,362
|
|
|
1,808,029
|
|
|
1,772,998
|
|
|||||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product and other cost of sales
|
|
1,395,339
|
|
|
1,522,687
|
|
|
1,281,043
|
|
|
1,224,927
|
|
|
1,200,304
|
|
|||||
Rental cost of sales
|
|
111,578
|
|
|
123,697
|
|
|
134,258
|
|
|
128,403
|
|
|
127,980
|
|
|||||
Total cost of sales
|
|
1,506,917
|
|
|
1,646,384
|
|
|
1,415,301
|
|
|
1,353,330
|
|
|
1,328,284
|
|
|||||
Gross profit
|
|
527,726
|
|
|
557,233
|
|
|
459,061
|
|
|
454,699
|
|
|
444,714
|
|
|||||
Selling and administrative expenses
|
|
423,880
|
|
|
433,746
|
|
|
380,793
|
|
|
374,171
|
|
|
360,645
|
|
|||||
Depreciation and amortization expense
|
|
65,865
|
|
|
65,586
|
|
|
53,318
|
|
|
52,690
|
|
|
50,509
|
|
|||||
Impairment loss (non-cash)
(c)
|
|
57,748
|
|
|
313,130
|
|
|
—
|
|
|
11,987
|
|
|
—
|
|
|||||
Restructuring and other charges
(c)
|
|
7,233
|
|
|
5,429
|
|
|
1,790
|
|
|
8,830
|
|
|
—
|
|
|||||
Transaction costs
(d)
|
|
654
|
|
|
2,045
|
|
|
9,605
|
|
|
2,398
|
|
|
—
|
|
|||||
Operating (loss) income
|
|
(27,654
|
)
|
|
(262,703
|
)
|
|
13,555
|
|
|
4,623
|
|
|
33,560
|
|
|||||
Interest expense, net
|
|
9,780
|
|
|
10,306
|
|
|
3,464
|
|
|
1,872
|
|
|
210
|
|
|||||
(Loss) earnings before taxes
|
|
(37,434
|
)
|
|
(273,009
|
)
|
|
10,091
|
|
|
2,751
|
|
|
33,350
|
|
|||||
Income tax (benefit) expense
|
|
(13,060
|
)
|
|
(20,443
|
)
|
|
4,730
|
|
|
2,667
|
|
|
14,218
|
|
|||||
Net (loss) income
|
|
$
|
(24,374
|
)
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
|
$
|
84
|
|
|
$
|
19,132
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
(0.52
|
)
|
|
$
|
(5.40
|
)
|
|
$
|
0.12
|
|
|
$
|
—
|
|
|
$
|
0.33
|
|
Diluted
|
|
$
|
(0.52
|
)
|
|
$
|
(5.40
|
)
|
|
$
|
0.11
|
|
|
$
|
—
|
|
|
$
|
0.33
|
|
Weighted average common shares (thousands)
(e)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
47,306
|
|
|
46,763
|
|
|
46,317
|
|
|
46,238
|
|
|
38,452
|
|
|||||
Diluted
|
|
47,306
|
|
|
46,763
|
|
|
46,763
|
|
|
46,479
|
|
|
38,493
|
|
|
|
Fiscal Year
(a)
|
||||||||||||||||||
(In thousands of dollars,
except for share and per share amounts)
|
|
2019
(b)
|
|
2018
(b)
|
|
2017
(b)
|
|
2016
(b)
|
|
2015
|
||||||||||
BALANCE SHEET DATA
(at period end):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
|
$
|
946,180
|
|
|
$
|
1,039,211
|
|
|
$
|
1,299,832
|
|
|
$
|
1,071,683
|
|
|
$
|
1,090,668
|
|
Total liabilities
|
|
$
|
495,552
|
|
|
$
|
571,248
|
|
|
$
|
586,124
|
|
|
$
|
363,297
|
|
|
$
|
363,999
|
|
Short-term debt
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Long-term debt
|
|
$
|
33,500
|
|
|
$
|
96,400
|
|
|
$
|
59,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Parent company equity
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
726,669
|
|
Total stockholders' equity
|
|
$
|
450,628
|
|
|
$
|
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 2019” means the 52 weeks ended April 27, 2019, “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 and “Fiscal 2015” means the 52 weeks ended May 2, 2015.
|
(b)
|
We acquired PaperRater on August 21, 2018. The consolidated financial statements for Fiscal 2019 include the financial results of PaperRater from the acquisition date, August 21, 2018, to April 27, 2019.
|
(c)
|
For additional information, see
Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Policies
and
Note 10. Supplementary Information.
|
(d)
|
Transaction costs are costs incurred for business development and acquisitions.
|
(e)
|
For periods prior to the Spin-Off from Barnes & Noble, Inc. on August 2, 2015 (second quarter of Fiscal 2016), 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 periods 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.
|
(f)
|
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. Management's Discussion and Analysis of Financial Condition and Results of Operations - Adjusted Earnings (non-GAAP)
and
- Adjusted EBITDA (non-GAAP).
|
Item 7.
|
MANAGMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
The consolidated financial statements for the 52 weeks ended April 27, 2019 include the financial results of PaperRater from the acquisition date, August 21, 2018, to April 27, 2019.
|
•
|
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.
|
•
|
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.
|
|
|
Fiscal Year
|
||||||||||
Dollars in thousands
|
|
2019
|
|
2018
|
|
2017
|
||||||
Sales:
|
|
|
|
|
|
|
||||||
Product sales and other
|
|
$
|
1,838,760
|
|
|
$
|
1,984,472
|
|
|
$
|
1,641,881
|
|
Rental income
|
|
195,883
|
|
|
219,145
|
|
|
232,481
|
|
|||
Total sales
|
|
$
|
2,034,643
|
|
|
$
|
2,203,617
|
|
|
$
|
1,874,362
|
|
|
|
|
|
|
|
|
||||||
Net (loss) income
|
|
$
|
(24,374
|
)
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
|
|
|
|
|
|
|
||||||
Adjusted Earnings (non-GAAP)
(a)
|
|
$
|
25,412
|
|
|
$
|
56,949
|
|
|
$
|
12,347
|
|
|
|
|
|
|
|
|
||||||
Adjusted EBITDA (non-GAAP)
(a)
|
|
|
|
|
|
|
||||||
Retail
|
|
$
|
89,094
|
|
|
$
|
101,242
|
|
|
$
|
107,524
|
|
Wholesale
|
|
35,018
|
|
|
40,849
|
|
|
(3,246
|
)
|
|||
DSS
|
|
6,169
|
|
|
7,559
|
|
|
—
|
|
|||
Corporate Services
|
|
(24,873
|
)
|
|
(22,166
|
)
|
|
(25,373
|
)
|
|||
Eliminations
|
|
(466
|
)
|
|
(724
|
)
|
|
(637
|
)
|
|||
Total Adjusted EBITDA (non-GAAP)
|
|
$
|
104,942
|
|
|
$
|
126,760
|
|
|
$
|
78,268
|
|
|
|
|
|
|
|
|
(a)
|
Adjusted Earnings and Adjusted EBITDA are a non-GAAP financial measures. See
Adjusted Earnings (non-GAAP)
and
Adjusted EBITDA (non-GAAP)
discussion below.
|
|
52 weeks ended, April 27, 2019
|
||||||||||||||||||||||
Dollars in thousands
|
Retail
|
|
Wholesale
|
|
DSS
(a)
|
|
Corporate Services
|
|
Eliminations
(b)
|
|
Total
|
||||||||||||
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product sales and other
|
$
|
1,693,125
|
|
|
$
|
223,374
|
|
|
$
|
21,339
|
|
|
$
|
—
|
|
|
$
|
(99,078
|
)
|
|
1,838,760
|
|
|
Rental income
|
195,883
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
195,883
|
|
||||||
Total sales
|
1,889,008
|
|
|
223,374
|
|
|
21,339
|
|
|
—
|
|
|
(99,078
|
)
|
|
2,034,643
|
|
||||||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product and other cost of sales
|
1,325,559
|
|
|
167,033
|
|
|
1,309
|
|
|
—
|
|
|
(98,562
|
)
|
|
1,395,339
|
|
||||||
Rental cost of sales
|
111,578
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
111,578
|
|
||||||
Total cost of sales
|
1,437,137
|
|
|
167,033
|
|
|
1,309
|
|
|
—
|
|
|
(98,562
|
)
|
|
1,506,917
|
|
||||||
Gross profit
|
451,871
|
|
|
56,341
|
|
|
20,030
|
|
|
—
|
|
|
(516
|
)
|
|
527,726
|
|
||||||
Selling and administrative expenses
|
363,230
|
|
|
21,323
|
|
|
14,504
|
|
|
24,873
|
|
|
(50
|
)
|
|
423,880
|
|
||||||
Depreciation and amortization expense
|
51,728
|
|
|
6,014
|
|
|
7,974
|
|
|
149
|
|
|
—
|
|
|
65,865
|
|
||||||
Sub-Total:
|
$
|
36,913
|
|
|
$
|
29,004
|
|
|
$
|
(2,448
|
)
|
|
$
|
(25,022
|
)
|
|
$
|
(466
|
)
|
|
37,981
|
|
|
Impairment loss (non-cash)
|
|
|
|
|
|
|
|
|
|
|
57,748
|
|
|||||||||||
Restructuring and other charges
|
|
|
|
|
|
|
|
|
|
|
7,233
|
|
|||||||||||
Transaction costs
|
|
|
|
|
|
|
|
|
|
|
654
|
|
|||||||||||
Operating loss
|
|
|
|
|
|
|
|
|
|
|
$
|
(27,654
|
)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
52 weeks ended, April 28, 2018
|
||||||||||||||||||||||
Dollars in thousands
|
Retail
|
|
Wholesale
|
|
DSS
(a)
|
|
Corporate Services
|
|
Eliminations
(b)
|
|
Total
|
||||||||||||
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product sales and other
|
$
|
1,805,396
|
|
|
$
|
258,369
|
|
|
$
|
15,762
|
|
|
$
|
—
|
|
|
$
|
(95,055
|
)
|
|
1,984,472
|
|
|
Rental income
|
219,145
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
219,145
|
|
||||||
Total sales
|
2,024,541
|
|
|
258,369
|
|
|
15,762
|
|
|
—
|
|
|
(95,055
|
)
|
|
2,203,617
|
|
||||||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product and other cost of sales
|
1,418,618
|
|
|
198,041
|
|
|
359
|
|
|
—
|
|
|
(94,331
|
)
|
|
1,522,687
|
|
||||||
Rental cost of sales
|
123,697
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
123,697
|
|
||||||
Total cost of sales
|
1,542,315
|
|
|
198,041
|
|
|
359
|
|
|
—
|
|
|
(94,331
|
)
|
|
1,646,384
|
|
||||||
Gross profit
|
482,226
|
|
|
60,328
|
|
|
15,403
|
|
|
—
|
|
|
(724
|
)
|
|
557,233
|
|
||||||
Selling and administrative expenses
|
380,984
|
|
|
22,752
|
|
|
7,844
|
|
|
22,166
|
|
|
—
|
|
|
433,746
|
|
||||||
Depreciation and amortization expense
|
53,955
|
|
|
6,188
|
|
|
5,253
|
|
|
190
|
|
|
—
|
|
|
65,586
|
|
||||||
Sub-Total:
|
$
|
47,287
|
|
|
$
|
31,388
|
|
|
$
|
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
|
|
|
|
|
|
|
|
|
|
|
$
|
(262,703
|
)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
We acquired PaperRater, LLC on August 21, 2018. The consolidated financial statements for the 52 weeks ended April 27, 2019 include the financial results of PaperRater in the DSS Segment from the acquisition date, August 21, 2018, to April 27, 2019.
|
(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 6. Segment Reporting.
|
|
|
52 weeks ended
|
||||||||
Dollars in thousands
|
|
April 27,
2019
|
|
April 28,
2018
|
|
%
|
||||
Product sales and other
|
|
1,838,760
|
|
|
1,984,472
|
|
|
(7.3)%
|
||
Rental income
|
|
195,883
|
|
|
219,145
|
|
|
(10.6)%
|
||
Total Sales
|
|
$
|
2,034,643
|
|
|
$
|
2,203,617
|
|
|
(7.7)%
|
Sales variances
|
|
52 weeks ended
|
||
Dollars in millions
|
|
April 29,
2019
|
||
Retail Sales
|
|
|
||
New stores
|
|
$
|
54.7
|
|
Closed stores
|
|
(83.8
|
)
|
|
Comparable stores
(a)
|
|
(93.0
|
)
|
|
Textbook rental deferral
|
|
0.2
|
|
|
Service revenue
(b)
|
|
(5.6
|
)
|
|
Other
(c)
|
|
(8.1
|
)
|
|
Retail Sales subtotal:
|
|
$
|
(135.6
|
)
|
Wholesale Sales
|
|
$
|
(35.0
|
)
|
DSS Sales
(d)
|
|
$
|
5.6
|
|
Eliminations
(e)
|
|
$
|
(4.0
|
)
|
Total sales variance
|
|
$
|
(169.0
|
)
|
(a)
|
Comparable store sales includes sales from physical stores that have been open for an entire fiscal year period and virtual store sales for the period, does not include sales from closed stores for all periods presented, and digital agency sales are included on a gross basis.
|
(b)
|
Service revenue includes Promoversity, brand partnerships, shipping and handling, digital content, software, services, and revenue from other programs.
|
(c)
|
Other includes inventory liquidation sales to third parties, marketplace sales and certain accounting adjusting items related to return reserves, agency sales and other deferred items.
|
(d)
|
DSS revenue includes Student Brands subscription-based writing services business, which we acquired on August 3, 2017. The consolidated financial statements for the 52 weeks ended April 27, 2019 include the financial results of Student Brands in the DSS segment and the cons
olidated financial statements for the
52 weeks ended April 28, 2018
include the financial results of Student Brands from
the date of acquisition on August 3, 2017
.
|
(e)
|
Eliminates Wholesale sales and service fees to Retail and Retail commissions earned from Wholesale. See
Part II - Item 8. Financial Statements and Supplementary Data - Note 6. Segment Reporting
for a discussion of intercompany activities and eliminations.
|
|
|
Fiscal 2019
|
|
Fiscal 2018
|
||||||||
|
|
Physical
|
|
Virtual
|
|
Physical
|
|
Virtual
|
||||
Number of stores at beginning of period
|
|
768
|
|
|
676
|
|
|
769
|
|
|
712
|
|
Opened
|
|
35
|
|
|
33
|
|
|
33
|
|
|
21
|
|
Closed
|
|
31
|
|
|
33
|
|
|
34
|
|
|
57
|
|
Number of stores at end of period
|
|
772
|
|
|
676
|
|
|
768
|
|
|
676
|
|
|
|
|
|
|
|
|
|
|
Comparable Store Sales variances for Retail
|
|
52 weeks ended
|
|||||
Dollars in millions
|
|
April 27, 2019
|
|||||
Textbooks (Course Materials)
|
|
$
|
(97.9
|
)
|
|
(8.0
|
)%
|
General Merchandise
|
|
8.7
|
|
|
1.5
|
%
|
|
Trade Books
|
|
(3.8
|
)
|
|
(8.2
|
)%
|
|
Total Comparable Store Sales
|
|
$
|
(93.0
|
)
|
|
(5.1
|
)%
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
Dollars in thousands
|
|
April 27,
2019 |
|
% of
Related Sales |
|
April 28,
2018 |
|
% of
Related Sales |
||||
Product and other cost of sales
|
|
$
|
1,325,559
|
|
|
78.3%
|
|
$
|
1,418,618
|
|
|
78.6%
|
Rental cost of sales
|
|
111,578
|
|
|
57.0%
|
|
123,697
|
|
|
56.4%
|
||
Total Cost of Sales
|
|
$
|
1,437,137
|
|
|
76.1%
|
|
$
|
1,542,315
|
|
|
76.2%
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
Dollars in thousands
|
|
April 27,
2019 |
|
% of
Related Sales |
|
April 28,
2018 |
|
% of
Related Sales |
||||
Product and other gross margin
|
|
$
|
367,566
|
|
|
21.7%
|
|
$
|
386,778
|
|
|
21.4%
|
Rental gross margin
|
|
84,305
|
|
|
43.0%
|
|
95,448
|
|
|
43.6%
|
||
Gross Margin
|
|
$
|
451,871
|
|
|
23.9%
|
|
$
|
482,226
|
|
|
23.8%
|
•
|
Product and other gross margin increased (30 basis points), driven primarily by a favorable sales mix (105 basis points), partially offset by higher costs related to our college and university contracts (50 basis points) resulting from contract renewals and new store contracts and lower course material margin rates (30 basis points).
|
•
|
Rental gross margin decreased (60 basis points), driven primarily by higher costs related to our college and university contracts (125 basis points) resulting from contract renewals and new store contracts, and an unfavorable rental mix (25 basis points), partially offset by higher rental margin rates (90 basis points).
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
Dollars in thousands
|
|
April 27,
2019 |
|
% of
Sales |
|
April 28,
2018 |
|
% of
Sales |
||||
Selling and Administrative Expenses
|
|
$
|
423,880
|
|
|
20.8%
|
|
$
|
433,746
|
|
|
19.7%
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
Dollars in thousands
|
|
April 27,
2019 |
|
% of
Sales |
|
April 28,
2018 |
|
% of
Sales |
||||
Depreciation and Amortization Expense
|
|
$
|
65,865
|
|
|
3.2%
|
|
$
|
65,586
|
|
|
3.0%
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
Dollars in thousands
|
|
April 27,
2019 |
|
% of
Sales |
|
April 28,
2018 |
|
% of
Sales |
||||
Operating Loss
|
|
$
|
(27,654
|
)
|
|
(1.4)%
|
|
$
|
(262,703
|
)
|
|
(11.9)%
|
|
|
52 weeks ended
|
||||||
Dollars in thousands
|
|
April 27, 2019
|
|
April 28, 2018
|
||||
Interest Expense, Net
|
|
$
|
9,780
|
|
|
$
|
10,306
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||||
Dollars in thousands
|
|
April 27,
2019
|
|
Effective Rate
|
|
April 28,
2018
|
|
Effective Rate
|
||||
Income Tax (Benefit) Expense
|
|
$
|
(13,060
|
)
|
|
34.9%
|
|
$
|
(20,443
|
)
|
|
7.5%
|
|
|
52 weeks ended
|
||||||
Dollars in thousands
|
|
April 27, 2019
|
|
April 28, 2018
|
||||
Net Loss
|
|
$
|
(24,374
|
)
|
|
$
|
(252,566
|
)
|
|
52 weeks ended, April 28, 2018
|
||||||||||||||||||||||
Dollars in thousands
|
Retail
(a)
|
|
Wholesale
(a)
|
|
DSS
(b)
|
|
Corporate Services
|
|
Eliminations
(c)
|
|
Total
|
||||||||||||
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product sales and other
|
$
|
1,805,396
|
|
|
$
|
258,369
|
|
|
$
|
15,762
|
|
|
$
|
—
|
|
|
$
|
(95,055
|
)
|
|
$
|
1,984,472
|
|
Rental income
|
219,145
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
219,145
|
|
||||||
Total sales
|
2,024,541
|
|
|
258,369
|
|
|
15,762
|
|
|
—
|
|
|
(95,055
|
)
|
|
2,203,617
|
|
||||||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product and other cost of sales
|
1,418,618
|
|
|
198,041
|
|
|
359
|
|
|
—
|
|
|
(94,331
|
)
|
|
1,522,687
|
|
||||||
Rental cost of sales
|
123,697
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
123,697
|
|
||||||
Total cost of sales
|
1,542,315
|
|
|
198,041
|
|
|
359
|
|
|
—
|
|
|
(94,331
|
)
|
|
1,646,384
|
|
||||||
Gross profit
|
482,226
|
|
|
60,328
|
|
|
15,403
|
|
|
—
|
|
|
(724
|
)
|
|
557,233
|
|
||||||
Selling and administrative expenses
|
380,984
|
|
|
22,752
|
|
|
7,844
|
|
|
22,166
|
|
|
—
|
|
|
433,746
|
|
||||||
Depreciation and amortization expense
|
53,955
|
|
|
6,188
|
|
|
5,253
|
|
|
190
|
|
|
—
|
|
|
65,586
|
|
||||||
Sub-Total:
|
$
|
47,287
|
|
|
$
|
31,388
|
|
|
$
|
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
|
|
|
|
|
|
|
|
|
|
|
$
|
(262,703
|
)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
52 weeks ended, April 29, 2017
|
||||||||||||||||||||||
Dollars in thousands
|
Retail
(a)
|
|
Wholesale
(a)
|
|
DSS
(b)
|
|
Corporate Services
|
|
Eliminations
(c)
|
|
Total
|
||||||||||||
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product sales and other
|
$
|
1,633,090
|
|
|
$
|
14,758
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(5,967
|
)
|
|
$
|
1,641,881
|
|
Rental income
|
232,481
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
232,481
|
|
||||||
Total sales
|
1,865,571
|
|
|
14,758
|
|
|
—
|
|
|
—
|
|
|
(5,967
|
)
|
|
1,874,362
|
|
||||||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product and other cost of sales
|
1,272,018
|
|
|
14,355
|
|
|
—
|
|
|
—
|
|
|
(5,330
|
)
|
|
1,281,043
|
|
||||||
Rental cost of sales
|
134,258
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
134,258
|
|
||||||
Total cost of sales
|
1,406,276
|
|
|
14,355
|
|
|
—
|
|
|
—
|
|
|
(5,330
|
)
|
|
1,415,301
|
|
||||||
Gross profit
|
459,295
|
|
|
403
|
|
|
—
|
|
|
—
|
|
|
(637
|
)
|
|
459,061
|
|
||||||
Selling and administrative expenses
|
351,771
|
|
|
3,649
|
|
|
—
|
|
|
25,373
|
|
|
—
|
|
|
380,793
|
|
||||||
Depreciation and amortization expense
|
52,102
|
|
|
1,024
|
|
|
—
|
|
|
192
|
|
|
—
|
|
|
53,318
|
|
||||||
Sub-Total:
|
$
|
55,422
|
|
|
$
|
(4,270
|
)
|
|
$
|
—
|
|
|
$
|
(25,565
|
)
|
|
$
|
(637
|
)
|
|
24,950
|
|
|
Impairment loss (non-cash)
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||
Restructuring and other charges
|
|
|
|
|
|
|
|
|
|
|
1,790
|
|
|||||||||||
Transaction costs
|
|
|
|
|
|
|
|
|
|
|
9,605
|
|
|||||||||||
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,555
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
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's retail virtual bookstore business and wholesale business 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 6. 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
|
||
Retail Sales
|
|
|
||
New stores
|
|
$
|
69.3
|
|
Closed stores
|
|
0.7
|
|
|
Comparable physical stores
|
|
(69.8
|
)
|
|
Virtual stores
(a)
|
|
145.2
|
|
|
Textbook rental deferral
|
|
0.5
|
|
|
Service revenue
(b)
|
|
12.9
|
|
|
Other
(c)
|
|
0.2
|
|
|
Retail Sales subtotal:
|
|
$
|
159.0
|
|
Wholesale Sales
(a)
|
|
$
|
243.6
|
|
DSS Sales
(d)
|
|
$
|
15.8
|
|
Eliminations
(e)
|
|
$
|
(89.1
|
)
|
Total sales variance
|
|
$
|
329.3
|
|
(a)
|
The variances represents the virtual bookstores and wholesale business for the full year in Fiscal 2018 compared to the partial period in Fiscal 2017 from the MBS acquisition date, February 27, 2017, to April 29, 2017.
|
(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, marketplace sales, 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.
|
(e)
|
Eliminates Wholesale sales and service fees to Retail and Retail commissions earned from Wholesale. See
Part II - Item 8. Financial Statements and Supplementary Data - Note 6. Segment Reporting
for a discussion of intercompany activities and eliminations.
|
|
|
Fiscal 2018
|
|
Fiscal 2017
|
||||||||
|
|
Physical
|
|
Virtual
|
|
Physical
|
|
Virtual
|
||||
Number of stores at beginning of period
|
|
769
|
|
|
712
|
|
|
751
|
|
|
700
|
|
Opened
|
|
33
|
|
|
21
|
|
|
38
|
|
|
15
|
|
Closed
|
|
34
|
|
|
57
|
|
|
20
|
|
|
3
|
|
Number of stores at end of period
|
|
768
|
|
|
676
|
|
|
769
|
|
|
712
|
|
|
|
|
|
|
|
|
|
|
Comparable Store Sales variances for Physical Bookstores
|
|
52 weeks ended
|
|||||
Dollars in millions
|
|
April 28, 2018
|
|||||
Textbooks (Course Materials)
|
|
$
|
(65.6
|
)
|
|
(5.9
|
)%
|
General Merchandise
|
|
1.2
|
|
|
0.2
|
%
|
|
Trade Books
|
|
(5.4
|
)
|
|
(10.4
|
)%
|
|
Total Comparable Store Sales
|
|
$
|
(69.8
|
)
|
|
(4.1
|
)%
|
|
|
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
|
|
$
|
1,418,618
|
|
|
78.6%
|
|
$
|
1,272,018
|
|
|
77.9%
|
Rental cost of sales
|
|
123,697
|
|
|
56.4%
|
|
134,258
|
|
|
57.8%
|
||
Total Cost of Sales
|
|
$
|
1,542,315
|
|
|
76.2%
|
|
$
|
1,406,276
|
|
|
75.4%
|
|
|
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
|
|
$
|
386,778
|
|
|
21.4%
|
|
$
|
361,072
|
|
|
22.1%
|
Rental gross margin
|
|
95,448
|
|
|
43.6%
|
|
98,223
|
|
|
42.2%
|
||
Gross Margin
|
|
$
|
482,226
|
|
|
23.8%
|
|
$
|
459,295
|
|
|
24.6%
|
•
|
Product and other gross margin decreased (70 basis points) due to lower margin rates (295 basis points), 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 Wholesale, partially offset by lower costs related to our college and university contracts (130 basis points) and a favorable sales mix (95 basis points).
|
•
|
Rental gross margin increased (135 basis points), driven primarily by higher rental margin rates (90 basis points), lower costs related to our college and university contracts (40 basis points), and favorable sales mix (5 basis points).
|
|
|
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
|
|
Dollars in thousands
|
|
Fiscal 2019
|
|
Fiscal 2018
|
|
Fiscal 2017
|
||||||
Net (loss) income
|
|
$
|
(24,374
|
)
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
Reconciling items, after-tax
(below)
|
|
49,786
|
|
|
309,515
|
|
|
6,986
|
|
|||
Adjusted Earnings (non-GAAP)
|
|
$
|
25,412
|
|
|
$
|
56,949
|
|
|
$
|
12,347
|
|
|
|
|
|
|
|
|
||||||
Reconciling items, pre-tax
|
|
|
|
|
|
|
||||||
Impairment loss (non-cash)
(a)
|
|
$
|
57,748
|
|
|
$
|
313,130
|
|
|
$
|
—
|
|
Inventory valuation amortization (non-cash)
(b)
|
|
—
|
|
|
3,273
|
|
|
—
|
|
|||
Content amortization (non-cash)
(c)
|
|
1,096
|
|
|
—
|
|
|
—
|
|
|||
Restructuring and other charges
(a)
|
|
7,233
|
|
|
5,429
|
|
|
1,790
|
|
|||
Transaction costs
(a)
|
|
654
|
|
|
2,045
|
|
|
9,605
|
|
|||
Reconciling items, pre-tax
|
|
66,731
|
|
|
323,877
|
|
|
11,395
|
|
|||
Less: Pro forma income tax impact
(d)
|
|
16,945
|
|
|
14,362
|
|
|
4,409
|
|
|||
Reconciling items, after-tax
|
|
$
|
49,786
|
|
|
$
|
309,515
|
|
|
$
|
6,986
|
|
(a)
|
See
Management Discussion and Analysis - Results of Operations
discussion above.
|
(b)
|
For the 52 weeks ended April 28, 2018, gross margin excludes $3.3 million of incremental cost of sales related to amortization of the Wholesale inventory fair value adjustment related to the MBS acquisition in February 2017.
|
(c)
|
For the 52 weeks ended April 27, 2019, earnings are adjusted for amortization expense (non-cash) related to content development costs which are included in cost of goods sold.
|
(d)
|
Represents the income tax effects of the non-GAAP items.
|
Dollars in thousands
|
|
Fiscal 2019
|
|
Fiscal 2018
|
|
Fiscal 2017
|
||||||
Net (loss) income
|
|
$
|
(24,374
|
)
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
Add:
|
|
|
|
|
|
|
||||||
Depreciation and amortization expense
|
|
65,865
|
|
|
65,586
|
|
|
53,318
|
|
|||
Content amortization (non-cash)
(a)
|
|
1,096
|
|
|
—
|
|
|
|
||||
Interest expense, net
|
|
9,780
|
|
|
10,306
|
|
|
3,464
|
|
|||
Income tax (benefit) expense
|
|
(13,060
|
)
|
|
(20,443
|
)
|
|
4,730
|
|
|||
Impairment loss (non-cash)
(b)
|
|
57,748
|
|
|
313,130
|
|
|
—
|
|
|||
Inventory valuation amortization (non-cash)
(c)
|
|
—
|
|
|
3,273
|
|
|
—
|
|
|||
Restructuring and other charges
(b)
|
|
7,233
|
|
|
5,429
|
|
|
1,790
|
|
|||
Transaction costs
(b)
|
|
654
|
|
|
2,045
|
|
|
9,605
|
|
|||
Adjusted EBITDA (non-GAAP)
|
|
$
|
104,942
|
|
|
$
|
126,760
|
|
|
$
|
78,268
|
|
(a)
|
For the 52 weeks ended April 27, 2019, earnings are adjusted for amortization expense (non-cash) related to content development costs which are included in cost of goods sold.
|
(b)
|
See
Management Discussion and Analysis - Results of Operations
discussion above.
|
(c)
|
For the 52 weeks ended April 28, 2018, gross margin excludes $3.3 million of incremental cost of sales related to amortization of the Wholesale inventory fair value adjustment related to the MBS acquisition in February 2017.
|
Adjusted EBITDA - by Segment
|
|
FISCAL YEAR 2019
|
||||||||||||||||||||||
Dollars in thousands
|
|
Retail
|
|
Wholesale
|
|
DSS
|
|
Corporate Services
|
|
Eliminations
(a)
|
|
Total
Fiscal 2019
|
||||||||||||
Sales
|
|
$
|
1,889,008
|
|
|
$
|
223,374
|
|
|
$
|
21,339
|
|
|
$
|
—
|
|
|
$
|
(99,078
|
)
|
|
$
|
2,034,643
|
|
Cost of sales
(a)
|
|
(1,436,684
|
)
|
|
(167,033
|
)
|
|
(666
|
)
|
|
—
|
|
|
98,562
|
|
|
(1,505,821
|
)
|
||||||
Gross profit
|
|
452,324
|
|
|
56,341
|
|
|
20,673
|
|
|
—
|
|
|
(516
|
)
|
|
528,822
|
|
||||||
Selling and administrative expenses
|
|
363,230
|
|
|
21,323
|
|
|
14,504
|
|
|
24,873
|
|
|
(50
|
)
|
|
423,880
|
|
||||||
Adjusted EBITDA (non-GAAP)
|
|
$
|
89,094
|
|
|
$
|
35,018
|
|
|
$
|
6,169
|
|
|
$
|
(24,873
|
)
|
|
$
|
(466
|
)
|
|
$
|
104,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA - by Segment
|
|
FISCAL YEAR 2018
|
||||||||||||||||||||||
Dollars in thousands
|
|
Retail
|
|
Wholesale
|
|
DSS
|
|
Corporate Services
|
|
Eliminations
(a)
|
|
Total
Fiscal 2018
|
||||||||||||
Sales
|
|
$
|
2,024,541
|
|
|
$
|
258,369
|
|
|
$
|
15,762
|
|
|
$
|
—
|
|
|
$
|
(95,055
|
)
|
|
$
|
2,203,617
|
|
Cost of sales
(b)
|
|
(1,542,315
|
)
|
|
(194,768
|
)
|
|
(359
|
)
|
|
—
|
|
|
94,331
|
|
|
(1,643,111
|
)
|
||||||
Gross profit
|
|
482,226
|
|
|
63,601
|
|
|
15,403
|
|
|
—
|
|
|
(724
|
)
|
|
560,506
|
|
||||||
Selling and administrative expenses
|
|
380,984
|
|
|
22,752
|
|
|
7,844
|
|
|
22,166
|
|
|
—
|
|
|
433,746
|
|
||||||
Adjusted EBITDA (non-GAAP)
|
|
$
|
101,242
|
|
|
$
|
40,849
|
|
|
$
|
7,559
|
|
|
$
|
(22,166
|
)
|
|
$
|
(724
|
)
|
|
$
|
126,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA - by Segment
|
|
FISCAL YEAR 2017
|
||||||||||||||||||||||
Dollars in thousands
|
|
Retail
|
|
Wholesale
|
|
DSS
|
|
Corporate Services
|
|
Eliminations
(a)
|
|
Total
Fiscal 2017
|
||||||||||||
Sales
|
|
$
|
1,865,571
|
|
|
$
|
14,758
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(5,967
|
)
|
|
$
|
1,874,362
|
|
Cost of sales
|
|
(1,406,276
|
)
|
|
(14,355
|
)
|
|
—
|
|
|
—
|
|
|
5,330
|
|
|
(1,415,301
|
)
|
||||||
Gross profit
|
|
459,295
|
|
|
403
|
|
|
—
|
|
|
—
|
|
|
(637
|
)
|
|
459,061
|
|
||||||
Selling and administrative expenses
|
|
351,771
|
|
|
3,649
|
|
|
—
|
|
|
25,373
|
|
|
—
|
|
|
380,793
|
|
||||||
Adjusted EBITDA (non-GAAP)
|
|
$
|
107,524
|
|
|
$
|
(3,246
|
)
|
|
$
|
—
|
|
|
$
|
(25,373
|
)
|
|
$
|
(637
|
)
|
|
$
|
78,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
For the 52 weeks ended April 28, 2018, gross margin excludes $3.3 million of incremental cost of sales related to amortization of the Wholesale inventory fair value adjustment related to the MBS acquisition in February 2017. See
Management Discussion and Analysis - Results of Operations
discussion above.
|
Dollars in thousands
|
|
Fiscal 2019
|
|
Fiscal 2018
|
|
Fiscal 2017
|
||||||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
$
|
16,869
|
|
|
$
|
21,697
|
|
|
$
|
30,866
|
|
Net cash flows provided by operating activities
|
|
120,817
|
|
|
60,042
|
|
|
67,986
|
|
|||
Net cash flows used in investing activities
|
|
(54,646
|
)
|
|
(100,032
|
)
|
|
(224,438
|
)
|
|||
Net cash flows (used in) provided by financing activities
|
|
(68,272
|
)
|
|
35,162
|
|
|
147,283
|
|
|||
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
14,768
|
|
|
$
|
16,869
|
|
|
$
|
21,697
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
Total
|
|
Less Than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More Than
5 Years
|
||||||||||
Credit Facility
(a)
|
|
$
|
33.5
|
|
|
$
|
33.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
FILO Facility
(a)
|
|
250.0
|
|
|
100.0
|
|
|
150.0
|
|
|
—
|
|
|
—
|
|
|||||
School management contract and other lease obligations
(b)
|
|
766.9
|
|
|
138.5
|
|
|
254.1
|
|
|
213.2
|
|
|
161.1
|
|
|||||
Purchase obligations
(c)
|
|
6.1
|
|
|
4.3
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|||||
Other long-term liabilities reflected on the balance sheet under GAAP
(d) (e)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
1,056.5
|
|
|
$
|
276.3
|
|
|
$
|
405.9
|
|
|
$
|
213.2
|
|
|
$
|
161.1
|
|
(a)
|
As of
April 27, 2019
, we had a total of $133.5 million of outstanding borrowings under the 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 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 72% 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 1.8% of the minimum rent payments under those leases.
|
(c)
|
Includes information technology contracts.
|
(d)
|
Other long-term liabilities excludes $32.8 million of tax liabilities related to the long-term tax payable associated with the
|
(e)
|
Other long-term liabilities excludes expected payments related to employee benefit plans. See
Part II -
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 27, 2019
|
|
April 28, 2018
|
|
April 29, 2017
|
||||||
Sales:
|
|
|
|
|
|
|
||||||
Product sales and other
|
|
$
|
1,838,760
|
|
|
$
|
1,984,472
|
|
|
$
|
1,641,881
|
|
Rental income
|
|
195,883
|
|
|
219,145
|
|
|
232,481
|
|
|||
Total sales
|
|
2,034,643
|
|
|
2,203,617
|
|
|
1,874,362
|
|
|||
Cost of sales:
|
|
|
|
|
|
|
||||||
Product and other cost of sales
|
|
1,395,339
|
|
|
1,522,687
|
|
|
1,281,043
|
|
|||
Rental cost of sales
|
|
111,578
|
|
|
123,697
|
|
|
134,258
|
|
|||
Total cost of sales
|
|
1,506,917
|
|
|
1,646,384
|
|
|
1,415,301
|
|
|||
Gross profit
|
|
527,726
|
|
|
557,233
|
|
|
459,061
|
|
|||
Selling and administrative expenses
|
|
423,880
|
|
|
433,746
|
|
|
380,793
|
|
|||
Depreciation and amortization expense
|
|
65,865
|
|
|
65,586
|
|
|
53,318
|
|
|||
Impairment loss (non-cash)
|
|
57,748
|
|
|
313,130
|
|
|
—
|
|
|||
Restructuring and other charges
|
|
7,233
|
|
|
5,429
|
|
|
1,790
|
|
|||
Transaction costs
|
|
654
|
|
|
2,045
|
|
|
9,605
|
|
|||
Operating (loss) income
|
|
(27,654
|
)
|
|
(262,703
|
)
|
|
13,555
|
|
|||
Interest expense, net
|
|
9,780
|
|
|
10,306
|
|
|
3,464
|
|
|||
Income (loss) before income taxes
|
|
(37,434
|
)
|
|
(273,009
|
)
|
|
10,091
|
|
|||
Income tax (benefit) expense
|
|
(13,060
|
)
|
|
(20,443
|
)
|
|
4,730
|
|
|||
Net (loss) income
|
|
$
|
(24,374
|
)
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
|
|
|
|
|
|
|
||||||
(Loss) Earnings per share of Common Stock
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
(0.52
|
)
|
|
$
|
(5.40
|
)
|
|
$
|
0.12
|
|
Diluted
|
|
$
|
(0.52
|
)
|
|
$
|
(5.40
|
)
|
|
$
|
0.11
|
|
Weighted average shares of Common Stock outstanding:
|
|
|
|
|
|
|
||||||
Basic
|
|
47,306
|
|
|
46,763
|
|
|
46,317
|
|
|||
Diluted
|
|
47,306
|
|
|
46,763
|
|
|
46,763
|
|
|
|
As of
|
||||||
|
|
April 27, 2019
|
|
April 28, 2018
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
14,013
|
|
|
$
|
16,126
|
|
Receivables, net
|
|
98,246
|
|
|
100,060
|
|
||
Merchandise inventories, net
|
|
420,322
|
|
|
443,559
|
|
||
Textbook rental inventories
|
|
47,001
|
|
|
47,779
|
|
||
Prepaid expenses and other current assets
|
|
11,778
|
|
|
11,847
|
|
||
Total current assets
|
|
591,360
|
|
|
619,371
|
|
||
Property and equipment, net
|
|
109,777
|
|
|
111,287
|
|
||
Intangible assets, net
|
|
194,978
|
|
|
219,129
|
|
||
Goodwill
|
|
4,700
|
|
|
49,282
|
|
||
Deferred tax assets, net
|
|
2,425
|
|
|
—
|
|
||
Other noncurrent assets
|
|
42,940
|
|
|
40,142
|
|
||
Total assets
|
|
$
|
946,180
|
|
|
$
|
1,039,211
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
186,818
|
|
|
$
|
187,909
|
|
Accrued liabilities
|
|
121,720
|
|
|
125,556
|
|
||
Short-term borrowings
|
|
100,000
|
|
|
100,000
|
|
||
Total current liabilities
|
|
408,538
|
|
|
413,465
|
|
||
Long-term deferred taxes, net
|
|
—
|
|
|
2,106
|
|
||
Other long-term liabilities
|
|
53,514
|
|
|
59,277
|
|
||
Long-term borrowings
|
|
33,500
|
|
|
96,400
|
|
||
Total liabilities
|
|
495,552
|
|
|
571,248
|
|
||
Commitments and contingencies
|
|
—
|
|
|
—
|
|
||
Stockholders' equity:
|
|
|
|
|
||||
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, 51,030 and 50,032 shares, respectively; outstanding, 47,563 and 46,917 shares, respectively
|
|
510
|
|
|
501
|
|
||
Additional paid-in capital
|
|
726,331
|
|
|
717,323
|
|
||
Accumulated deficit
|
|
(244,577
|
)
|
|
(220,203
|
)
|
||
Treasury stock, at cost
|
|
(31,636
|
)
|
|
(29,658
|
)
|
||
Total stockholders' equity
|
|
450,628
|
|
|
467,963
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
946,180
|
|
|
$
|
1,039,211
|
|
|
|
52 weeks ended
|
|
52 weeks ended
|
|
52 weeks ended
|
||||||
|
|
April 27, 2019
|
|
April 28, 2018
|
|
April 29, 2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net (loss) income
|
|
$
|
(24,374
|
)
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
Adjustments to reconcile net (loss) income to net cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization expense
|
|
65,865
|
|
|
65,586
|
|
|
53,318
|
|
|||
Content amortization expense
|
|
1,096
|
|
|
—
|
|
|
—
|
|
|||
Amortization of deferred financing costs
|
|
1,550
|
|
|
1,502
|
|
|
792
|
|
|||
Impairment loss (non-cash)
|
|
57,748
|
|
|
313,130
|
|
|
—
|
|
|||
Deferred taxes
|
|
(4,531
|
)
|
|
(14,765
|
)
|
|
(11,961
|
)
|
|||
Stock-based compensation expense
|
|
9,017
|
|
|
8,459
|
|
|
9,366
|
|
|||
Changes in other long-term liabilities and other
|
|
(6,314
|
)
|
|
(36,823
|
)
|
|
14,235
|
|
|||
Changes in other operating assets and liabilities, net
|
|
20,760
|
|
|
(24,481
|
)
|
|
(3,125
|
)
|
|||
Net cash flows provided by operating activities
|
|
120,817
|
|
|
60,042
|
|
|
67,986
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
|
(46,420
|
)
|
|
(42,809
|
)
|
|
(34,670
|
)
|
|||
Acquisition of business, net of cash and restricted cash acquired
|
|
(10,000
|
)
|
|
(58,259
|
)
|
|
(186,720
|
)
|
|||
Changes in other noncurrent assets and other
|
|
1,774
|
|
|
1,036
|
|
|
(3,048
|
)
|
|||
Net cash flows used in investing activities
|
|
(54,646
|
)
|
|
(100,032
|
)
|
|
(224,438
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from borrowings under Credit Agreement
|
|
521,200
|
|
|
674,500
|
|
|
312,700
|
|
|||
Repayments of borrowings under Credit Agreement
|
|
(584,100
|
)
|
|
(637,700
|
)
|
|
(153,100
|
)
|
|||
Payment of deferred financing costs
|
|
(3,395
|
)
|
|
—
|
|
|
(2,912
|
)
|
|||
Purchase of treasury shares
|
|
(1,977
|
)
|
|
(1,638
|
)
|
|
(9,405
|
)
|
|||
Net cash flows (used in) provided by financing activities
|
|
(68,272
|
)
|
|
35,162
|
|
|
147,283
|
|
|||
Net decrease in cash, cash equivalents, and restricted cash
|
|
(2,101
|
)
|
|
(4,828
|
)
|
|
(9,169
|
)
|
|||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
16,869
|
|
|
21,697
|
|
|
30,866
|
|
|||
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
14,768
|
|
|
$
|
16,869
|
|
|
$
|
21,697
|
|
Changes in other operating assets and liabilities, net:
|
|
|
|
|
|
|
||||||
Receivables, net
|
|
$
|
1,814
|
|
|
$
|
(13,670
|
)
|
|
$
|
(6,407
|
)
|
Merchandise inventories
|
|
23,237
|
|
|
(9,495
|
)
|
|
6,197
|
|
|||
Textbook rental inventories
|
|
778
|
|
|
5,047
|
|
|
(4,150
|
)
|
|||
Prepaid expenses and other current assets
|
|
69
|
|
|
(2,648
|
)
|
|
(2,834
|
)
|
|||
Accounts payable and accrued liabilities
|
|
(5,138
|
)
|
|
(3,715
|
)
|
|
4,069
|
|
|||
Changes in other operating assets and liabilities, net
|
|
$
|
20,760
|
|
|
$
|
(24,481
|
)
|
|
$
|
(3,125
|
)
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
|
||||||
Cash paid during the period for:
|
|
|
|
|
|
|
||||||
Interest paid
|
|
$
|
8,589
|
|
|
$
|
8,035
|
|
|
$
|
2,082
|
|
Income taxes paid (net of refunds)
|
|
$
|
10,277
|
|
|
$
|
25,549
|
|
|
$
|
1,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Common Stock
|
|
Paid-In
|
|
Accumulated
|
|
Treasury Stock
|
|
Total
|
||||||||||||||
|
|
Shares
|
Amount
|
|
Capital
|
|
Deficit
|
|
Shares
|
Amount
|
|
Equity
|
||||||||||||
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
|
|
Stock-based compensation expense
|
|
|
|
|
9,017
|
|
|
|
|
|
|
|
9,017
|
|
||||||||||
Vested equity awards
|
|
998
|
|
9
|
|
|
(9
|
)
|
|
|
|
|
|
|
—
|
|
||||||||
Shares repurchased for tax withholdings for vested stock awards
|
|
|
|
|
|
|
|
|
352
|
|
(1,978
|
)
|
|
(1,978
|
)
|
|||||||||
Net loss
|
|
|
|
|
|
|
(24,374
|
)
|
|
|
|
|
(24,374
|
)
|
||||||||||
Balance at April 27, 2019
|
|
51,030
|
|
$
|
510
|
|
|
$
|
726,331
|
|
|
$
|
(244,577
|
)
|
|
3,467
|
|
$
|
(31,636
|
)
|
|
$
|
450,628
|
|
•
|
The consolidated financial statements for the 52 weeks ended April 27, 2019 include the financial results of PaperRater from the acquisition date, August 21, 2018, to April 27, 2019.
|
•
|
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.
|
•
|
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.
|
|
|
As of
|
||||||
|
|
April 27, 2019
|
|
April 28, 2018
|
||||
Trade accounts
|
|
$
|
74,311
|
|
|
$
|
67,634
|
|
Advances for book buybacks
|
|
6,339
|
|
|
9,554
|
|
||
Credit/debit card receivables
|
|
4,173
|
|
|
3,824
|
|
||
Other receivables
|
|
13,423
|
|
|
19,048
|
|
||
Total receivables, net
|
|
$
|
98,246
|
|
|
$
|
100,060
|
|
|
|
|
|
As of
|
||||||
|
|
Useful Life
|
|
April 27, 2019
|
|
April 28, 2018
|
||||
Property and equipment:
|
|
|
|
|
|
|
||||
Leasehold improvements
|
|
(a)
|
|
$
|
148,015
|
|
|
$
|
148,413
|
|
Machinery, equipment and display fixtures
|
|
3 - 5
|
|
240,171
|
|
|
237,823
|
|
||
Computer hardware and capitalized software costs
|
|
(b)
|
|
136,267
|
|
|
123,575
|
|
||
Office furniture and other
|
|
2 - 7
|
|
59,327
|
|
|
54,477
|
|
||
Content development costs
|
|
3 - 5
|
|
11,593
|
|
|
514
|
|
||
Construction in progress
|
|
|
|
5,499
|
|
|
6,546
|
|
||
Total property and equipment
|
|
|
|
600,872
|
|
|
571,348
|
|
||
Less accumulated depreciation and amortization
|
|
|
|
491,095
|
|
|
460,061
|
|
||
Total property and equipment, net
|
|
|
|
$
|
109,777
|
|
|
$
|
111,287
|
|
(a)
|
Leasehold improvements are capitalized and depreciated over the shorter of the 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
|
|
|
|
|
|
52 weeks ended
|
||||||||||
|
|
April 27, 2019
|
|
April 28, 2018
|
|
April 29, 2017
|
||||||
Retail
|
|
|
|
|
|
|
||||||
Product Sales
|
|
$
|
1,646,917
|
|
|
$
|
1,753,528
|
|
|
$
|
1,594,116
|
|
Rental Income
|
|
195,883
|
|
|
219,145
|
|
|
232,481
|
|
|||
Service and Other Revenue
(a)
|
|
46,208
|
|
|
51,868
|
|
|
38,974
|
|
|||
Retail Total Sales
|
|
$
|
1,889,008
|
|
|
$
|
2,024,541
|
|
|
$
|
1,865,571
|
|
Wholesale Sales
|
|
$
|
223,374
|
|
|
$
|
258,369
|
|
|
$
|
14,758
|
|
DSS Sales
(b)
|
|
$
|
21,339
|
|
|
$
|
15,762
|
|
|
$
|
—
|
|
Eliminations
(c)
|
|
$
|
(99,078
|
)
|
|
$
|
(95,055
|
)
|
|
$
|
(5,967
|
)
|
Total Sales
|
|
$
|
2,034,643
|
|
|
$
|
2,203,617
|
|
|
$
|
1,874,362
|
|
(a)
|
Service and other revenue primarily relates to brand partnerships and other service revenues.
|
(b)
|
DSS sales primarily relate to direct-to-student subscription-based revenue.
|
(c)
|
The sales eliminations represent the elimination of Wholesale sales and fulfillment service fees to Retail and the elimination of Retail commissions earned from Wholesale.
|
|
|
Fiscal Year Ended
|
||
|
|
April 27, 2019
|
||
Deferred revenue at the beginning of period
|
|
$
|
20,144
|
|
Additions to deferred revenue during the period
|
|
212,424
|
|
|
Reductions to deferred revenue for revenue recognized during the period
|
|
(212,150
|
)
|
|
Deferred revenue balance at the end of period
|
|
$
|
20,418
|
|
•
|
The sales eliminations represent the elimination of Wholesale sales and fulfillment service fees to Retail and the elimination of Retail commissions earned from Wholesale, and
|
•
|
These cost of sales eliminations represent (i) the recognition of intercompany profit for Retail inventory that was purchased from Wholesale in a prior period that was subsequently sold to external customers during the current period and the elimination of Wholesale service fees charged for fulfillment of inventory for virtual store sales, net of (ii) the elimination of intercompany profit for Wholesale inventory purchases by Retail that remain in ending inventory at the end of the current period.
|
|
|
As of
|
||||||
|
|
April 27, 2019
|
|
April 28, 2018
|
||||
Total Assets
|
|
|
|
|
||||
Retail (includes goodwill of $0 and $20,538, respectively)
|
|
$
|
707,975
|
|
|
$
|
771,140
|
|
Wholesale (includes goodwill of $0 and $28,743, respectively)
|
|
191,976
|
|
|
235,760
|
|
||
DSS (includes goodwill of $4,700 and $0, respectively)
|
|
40,543
|
|
|
28,564
|
|
||
Corporate Services
|
|
5,686
|
|
|
3,747
|
|
||
Total Assets
|
|
$
|
946,180
|
|
|
$
|
1,039,211
|
|
|
|
|
|
|
|
|
52 weeks ended
|
||||||||||
|
|
April 27, 2019
|
|
April 28, 2018
|
|
April 29, 2017
|
||||||
Capital Expenditures
|
|
|
|
|
|
|
||||||
Retail
|
|
$
|
33,008
|
|
|
$
|
38,598
|
|
|
$
|
34,536
|
|
Wholesale
|
|
1,824
|
|
|
1,559
|
|
|
117
|
|
|||
DSS
(a)
|
|
11,444
|
|
|
2,620
|
|
|
—
|
|
|||
Corporate Services
|
|
144
|
|
|
32
|
|
|
17
|
|
|||
Total Capital Expenditures
|
|
$
|
46,420
|
|
|
$
|
42,809
|
|
|
$
|
34,670
|
|
|
|
|
|
|
|
|
|
|
52 weeks ended
|
||||||||||
|
|
April 27, 2019
(a)
|
|
April 28, 2018
(b)
|
|
April 29, 2017
(c)
|
||||||
Sales:
|
|
|
|
|
|
|
||||||
Retail
|
|
$
|
1,889,008
|
|
|
$
|
2,024,541
|
|
|
$
|
1,865,571
|
|
Wholesale
|
|
223,374
|
|
|
258,369
|
|
|
14,758
|
|
|||
DSS
|
|
21,339
|
|
|
15,762
|
|
|
—
|
|
|||
Eliminations
|
|
(99,078
|
)
|
|
(95,055
|
)
|
|
(5,967
|
)
|
|||
Total Sales
|
|
$
|
2,034,643
|
|
|
$
|
2,203,617
|
|
|
$
|
1,874,362
|
|
|
|
|
|
|
|
|
||||||
Gross Profit
|
|
|
|
|
|
|
||||||
Retail
|
|
$
|
451,871
|
|
|
$
|
482,226
|
|
|
$
|
459,295
|
|
Wholesale
|
|
56,341
|
|
|
60,328
|
|
|
403
|
|
|||
DSS
|
|
20,030
|
|
|
15,403
|
|
|
—
|
|
|||
Eliminations
|
|
(516
|
)
|
|
(724
|
)
|
|
(637
|
)
|
|||
Total Gross Profit
|
|
$
|
527,726
|
|
|
$
|
557,233
|
|
|
$
|
459,061
|
|
|
|
|
|
|
|
|
||||||
Depreciation and Amortization
|
|
|
|
|
|
|
||||||
Retail
|
|
$
|
51,728
|
|
|
$
|
53,955
|
|
|
$
|
52,102
|
|
Wholesale
|
|
6,014
|
|
|
6,188
|
|
|
1,024
|
|
|||
DSS
|
|
7,974
|
|
|
5,253
|
|
|
—
|
|
|||
Corporate Services
|
|
149
|
|
|
190
|
|
|
192
|
|
|||
Total Depreciation and Amortization
|
|
$
|
65,865
|
|
|
$
|
65,586
|
|
|
$
|
53,318
|
|
|
|
|
|
|
|
|
||||||
Operating (Loss) Income
|
|
|
|
|
|
|
||||||
Retail
(d)
|
|
$
|
3,751
|
|
|
$
|
(265,843
|
)
|
|
$
|
53,316
|
|
Wholesale
(d)
|
|
(2,131
|
)
|
|
31,388
|
|
|
(11,237
|
)
|
|||
DSS
|
|
(3,345
|
)
|
|
226
|
|
|
—
|
|
|||
Corporate Services
|
|
(25,463
|
)
|
|
(27,750
|
)
|
|
(27,887
|
)
|
|||
Eliminations
|
|
(466
|
)
|
|
(724
|
)
|
|
(637
|
)
|
|||
Total Operating (Loss) Income
(d)
|
|
$
|
(27,654
|
)
|
|
$
|
(262,703
|
)
|
|
$
|
13,555
|
|
|
|
|
|
|
|
|
||||||
The following is a reconciliation of segment Operating Income to consolidated Income Before Income Taxes
|
|
|
|
|
|
|
||||||
Total Operating (Loss) Income
|
|
$
|
(27,654
|
)
|
|
$
|
(262,703
|
)
|
|
$
|
13,555
|
|
Interest Expense, net
|
|
(9,780
|
)
|
|
(10,306
|
)
|
|
(3,464
|
)
|
|||
Total (Loss) Income Before Income Taxes
|
|
$
|
(37,434
|
)
|
|
$
|
(273,009
|
)
|
|
$
|
10,091
|
|
|
|
|
|
|
|
|
(a)
|
We acquired PaperRater on August 21, 2018. The consolidated financial statements for the 52 weeks ended April 27, 2019 include the financial results of PaperRater from the acquisition date, August 21, 2018, to April 27, 2019.
|
(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)
|
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.
|
(d)
|
In Fiscal 2019, we recorded goodwill impairment (non-cash impairment loss) of
$20,538
and
$28,744
in our Retail and Wholesale Segments, respectively.
|
(shares in thousands)
|
Fiscal 2019
|
|
Fiscal 2018
|
|
Fiscal 2017
|
||||||
Numerator for basic earnings per share:
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(24,374
|
)
|
|
$
|
(252,566
|
)
|
|
$
|
5,361
|
|
Less allocation of earnings to participating securities
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Net (loss) income available to common shareholders
|
$
|
(24,374
|
)
|
|
$
|
(252,566
|
)
|
|
$
|
5,358
|
|
|
|
|
|
|
|
||||||
Numerator for diluted earnings per share:
|
|
|
|
|
|
||||||
Net (loss) income available to common shareholders
|
$
|
(24,374
|
)
|
|
$
|
(252,566
|
)
|
|
$
|
5,358
|
|
Allocation of earnings to participating securities
|
—
|
|
|
—
|
|
|
3
|
|
|||
Less diluted allocation of earnings to participating securities
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Net (loss) income available to common shareholders
|
$
|
(24,374
|
)
|
|
$
|
(252,566
|
)
|
|
$
|
5,358
|
|
|
|
|
|
|
|
||||||
Denominator for basic earnings per share:
|
|
|
|
|
|
||||||
Basic weighted average shares of Common Stock
|
47,306
|
|
|
46,763
|
|
|
46,317
|
|
|||
|
|
|
|
|
|
||||||
Denominator for diluted earnings per share:
|
|
|
|
|
|
||||||
Basic weighted average shares of Common Stock
|
47,306
|
|
|
46,763
|
|
|
46,317
|
|
|||
Average dilutive restricted stock units
|
—
|
|
|
—
|
|
|
389
|
|
|||
Average dilutive performance shares
|
—
|
|
|
—
|
|
|
40
|
|
|||
Average dilutive restricted shares
|
—
|
|
|
—
|
|
|
17
|
|
|||
Average dilutive performance share units
|
—
|
|
|
—
|
|
|
—
|
|
|||
Average dilutive options
|
—
|
|
|
—
|
|
|
—
|
|
|||
Diluted weighted average shares of Common Stock
|
47,306
|
|
|
46,763
|
|
|
46,763
|
|
|||
|
|
|
|
|
|
||||||
(Loss) Earnings per share of Common Stock:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.52
|
)
|
|
$
|
(5.40
|
)
|
|
$
|
0.12
|
|
Diluted
|
$
|
(0.52
|
)
|
|
$
|
(5.40
|
)
|
|
$
|
0.11
|
|
|
|
|
|
As of April 27, 2019
|
||||||||||
Amortizable intangible assets
|
|
Remaining
Life
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Total
|
||||||
Customer relationships
|
|
1 - 15
|
|
$
|
271,800
|
|
|
$
|
(101,781
|
)
|
|
$
|
170,019
|
|
Content
|
|
3 - 4
|
|
19,400
|
|
|
(5,728
|
)
|
|
13,672
|
|
|||
Technology
(a)
|
|
1 - 3
|
|
9,500
|
|
|
(3,883
|
)
|
|
5,617
|
|
|||
Other
(b)
|
|
1 - 9
|
|
9,831
|
|
|
(4,161
|
)
|
|
5,670
|
|
|||
|
|
|
|
$
|
310,531
|
|
|
$
|
(115,553
|
)
|
|
$
|
194,978
|
|
(a)
|
See
Impairment Loss (non-cash)
discussion above.
|
(b)
|
Other consists of recognized intangibles for non-compete agreements, trade names, and favorable leasehold interests.
|
|
|
|
|
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 and favorable leasehold interests.
|
Aggregate Amortization Expense:
|
|
||
For the 52 weeks ended April 27, 2019
|
$
|
21,314
|
|
For the 52 weeks ended April 28, 2018
|
$
|
19,056
|
|
For the 52 weeks ended April 29, 2017
|
$
|
12,095
|
|
|
|
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
|
|
Goodwill related to PaperRater acquisition
|
|
4,700
|
|
|
Impairment loss (non-cash)
(a)
|
|
(49,282
|
)
|
|
Balance at April 27, 2019
|
|
$
|
4,700
|
|
(a)
|
See
Impairment Loss (non-cash)
discussion above.
|
|
|
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,
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
(a)
|
|
—
|
|
|
$
|
—
|
|
|
(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
|
|
Granted
|
|
21,506
|
|
|
$
|
5.58
|
|
|
1,443,746
|
|
|
$
|
5.58
|
|
|
—
|
|
|
$
|
—
|
|
|
385,171
|
|
|
$
|
4.18
|
|
Vested
|
|
(19,704
|
)
|
|
$
|
6.09
|
|
|
(1,056,486
|
)
|
|
$
|
8.31
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Forfeited
(a)
|
|
—
|
|
|
$
|
—
|
|
|
(355,067
|
)
|
|
$
|
6.23
|
|
|
(60,425
|
)
|
|
$
|
9.52
|
|
|
(157,028
|
)
|
|
$
|
6.83
|
|
Balance,
April 27, 2019 |
|
21,506
|
|
|
$
|
5.58
|
|
|
2,352,317
|
|
|
$
|
6.12
|
|
|
225,511
|
|
|
$
|
9.52
|
|
|
765,899
|
|
|
$
|
6.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2019
|
|
Fiscal 2018
|
|
Fiscal 2017
|
||||||
Restricted Stock Expense
|
$
|
110
|
|
|
$
|
120
|
|
|
$
|
280
|
|
Restricted Stock Units Expense
|
7,846
|
|
|
8,370
|
|
|
8,431
|
|
|||
Performance Shares Expense
(a)
|
87
|
|
|
(218
|
)
|
|
655
|
|
|||
Performance Share Units Expense
(a)
|
974
|
|
|
187
|
|
|
—
|
|
|||
Stock-Based Compensation Expense
|
$
|
9,017
|
|
|
$
|
8,459
|
|
|
$
|
9,366
|
|
(a)
|
Stock-based compensation expense reflects cumulative adjustments to reflect changes to the expected level of achievement of the respective grants.
|
|
|
Fiscal 2019
|
|
Fiscal 2018
|
|
Fiscal 2017
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
(a)
|
|
$
|
(6,494
|
)
|
|
$
|
(8,089
|
)
|
|
$
|
14,872
|
|
State
|
|
(2,035
|
)
|
|
2,410
|
|
|
1,819
|
|
|||
Total Current
|
|
(8,529
|
)
|
|
(5,679
|
)
|
|
16,691
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
(a)
|
|
(3,681
|
)
|
|
(13,250
|
)
|
|
(9,238
|
)
|
|||
State
|
|
(850
|
)
|
|
(1,514
|
)
|
|
(2,723
|
)
|
|||
Total Deferred
|
|
(4,531
|
)
|
|
(14,764
|
)
|
|
(11,961
|
)
|
|||
Total
|
|
$
|
(13,060
|
)
|
|
$
|
(20,443
|
)
|
|
$
|
4,730
|
|
(a)
|
For Fiscal 2018, the income tax benefit was 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 2019
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|||
Federal statutory income tax rate
(a)
|
|
21.0
|
%
|
|
34.1
|
%
|
|
35.0
|
%
|
State income taxes, net of federal income tax benefit
|
|
6.3
|
|
|
(0.3
|
)
|
|
(5.8
|
)
|
Permanent book / tax differences
|
|
(3.9
|
)
|
|
(0.7
|
)
|
|
25.5
|
|
Goodwill impairment
|
|
—
|
|
|
(34.2
|
)
|
|
—
|
|
Provisional remeasurement due to Tax Legislation
|
|
10.4
|
|
|
7.5
|
|
|
—
|
|
Credits
|
|
0.3
|
|
|
0.2
|
|
|
(5.5
|
)
|
Other, net
|
|
0.8
|
|
|
0.9
|
|
|
(2.3
|
)
|
Effective income tax rate
|
|
34.9
|
%
|
|
7.5
|
%
|
|
46.9
|
%
|
(a)
|
Due to the Act, 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%
for Fiscal 2018.
|
|
|
As of
|
||||||
|
|
April 27, 2019
|
|
April 28, 2018
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Estimated accrued liabilities
|
|
$
|
10,972
|
|
|
$
|
9,375
|
|
Inventory
|
|
2,969
|
|
|
8,256
|
|
||
Stock-based compensation
|
|
1,738
|
|
|
1,374
|
|
||
Insurance liability
|
|
518
|
|
|
474
|
|
||
Lease transactions
|
|
982
|
|
|
1,095
|
|
||
Property and equipment
|
|
—
|
|
|
2,803
|
|
||
Tax credits
|
|
402
|
|
|
220
|
|
||
Goodwill
|
|
19,903
|
|
|
9,105
|
|
||
Net operating losses
|
|
4,928
|
|
|
5,834
|
|
||
Other
|
|
8,253
|
|
|
4,356
|
|
||
Gross deferred tax assets
|
|
50,665
|
|
|
42,892
|
|
||
Valuation allowance
|
|
(1,194
|
)
|
|
(932
|
)
|
||
Net deferred tax assets
|
|
49,471
|
|
|
41,960
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Intangible asset amortization
|
|
(40,790
|
)
|
|
(44,066
|
)
|
||
Property and equipment
|
|
(6,256
|
)
|
|
—
|
|
||
Gross deferred tax liabilities
|
|
(47,046
|
)
|
|
(44,066
|
)
|
||
Net deferred tax asset (liabilities)
|
|
$
|
2,425
|
|
|
$
|
(2,106
|
)
|
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
|
|
Additions for tax positions of the current period
|
—
|
|
|
Additions for tax positions of prior periods
|
—
|
|
|
Reductions due to settlements
|
—
|
|
|
Other reductions for tax positions of prior periods
|
(6
|
)
|
|
Balance at April 27, 2019
|
$
|
91
|
|
|
|
|
|
Fiscal 2019
|
|
Fiscal 2018
|
|
Fiscal 2017
|
||||||
Minimum contract expense
|
|
$
|
169,131
|
|
|
$
|
170,351
|
|
|
$
|
165,980
|
|
Percentage contract expense
|
|
73,368
|
|
|
80,630
|
|
|
87,843
|
|
|||
Total expense
|
|
$
|
242,499
|
|
|
$
|
250,981
|
|
|
$
|
253,823
|
|
Fiscal Year
|
|
||
2020
|
$
|
138,523
|
|
2021
|
133,741
|
|
|
2022
|
120,327
|
|
|
2023
|
113,518
|
|
|
2024
|
99,693
|
|
|
After 2024
|
161,090
|
|
|
Total
|
$
|
766,892
|
|
Fiscal 2019 Quarterly Period Ended
|
|
July 28,
2018
|
|
October 27, 2018
|
|
January 26, 2019
|
|
April 27, 2019
|
|
Fiscal Year
2019
|
||||||||||
Sales
|
|
$
|
337,484
|
|
|
$
|
814,766
|
|
|
$
|
548,008
|
|
|
$
|
334,385
|
|
|
$
|
2,034,643
|
|
Gross profit
|
|
$
|
66,610
|
|
|
$
|
210,760
|
|
|
$
|
132,953
|
|
|
$
|
117,403
|
|
|
$
|
527,726
|
|
Net (loss) income
|
|
$
|
(38,622
|
)
|
|
$
|
59,697
|
|
|
$
|
769
|
|
|
$
|
(46,218
|
)
|
|
$
|
(24,374
|
)
|
Basic (loss) earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income
|
|
$
|
(0.82
|
)
|
|
$
|
1.26
|
|
|
$
|
0.02
|
|
|
$
|
(0.97
|
)
|
|
$
|
(0.52
|
)
|
Diluted (loss) earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income
|
|
$
|
(0.82
|
)
|
|
$
|
1.25
|
|
|
$
|
0.02
|
|
|
$
|
(0.97
|
)
|
|
$
|
(0.52
|
)
|
Fiscal 2018 Quarterly Period Ended
|
|
July 29,
2017 |
|
October 28, 2017
(a)
|
|
January 27, 2018
|
|
April 28, 2018
|
|
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
|
)
|
(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.
|
|
|
Balance at
beginning
of period
|
|
Charge
(recovery) to
costs and
expenses
|
|
Write-offs
|
|
Balance at
end
of period
|
||||||||
Allowance for Doubtful Accounts
|
|
|
|
|
|
|
|
|
||||||||
April 27, 2019
|
|
$
|
2,083
|
|
|
$
|
2,670
|
|
|
$
|
(2,618
|
)
|
|
$
|
2,135
|
|
April 28, 2018
|
|
$
|
2,259
|
|
|
$
|
3,518
|
|
|
$
|
(3,694
|
)
|
|
$
|
2,083
|
|
April 29, 2017
|
|
$
|
2,320
|
|
|
$
|
3,459
|
|
|
$
|
(3,520
|
)
|
|
$
|
2,259
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Balance at
beginning
of period
|
|
Addition
Charged to
Costs
|
|
Deductions
|
|
Balance at
end
of period
|
||||||||
Sales Returns Reserves
|
|
|
|
|
|
|
|
|
||||||||
April 27, 2019
|
|
$
|
5,229
|
|
|
$
|
197,799
|
|
|
$
|
(197,746
|
)
|
|
$
|
5,282
|
|
April 28, 2018
|
|
$
|
6,817
|
|
|
$
|
170,469
|
|
|
$
|
(172,057
|
)
|
|
$
|
5,229
|
|
April 29, 2017
|
|
$
|
757
|
|
|
$
|
155,486
|
|
|
$
|
(149,426
|
)
|
|
$
|
6,817
|
|
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
|
|
3,365,233
|
|
|
$
|
6.38
|
|
|
4,073,234
|
|
Equity compensation plans not approved by security holders
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Total
|
|
3,365,233
|
|
|
$
|
6.38
|
|
|
4,073,234
|
|
1.
|
Consolidated Financial Statements of Barnes & Noble Education, Inc.:
|
2.
|
Financial Statement Schedules of Barnes & Noble Education, Inc.:
|
3.
|
Exhibits:
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
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 25, 2019
|
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Michael P. Huseby
|
|
Chairman and Chief Executive Officer and Director
(Principal Executive Officer) |
|
June 25, 2019
|
Michael P. Huseby
|
||||
|
|
|
|
|
/s/ Thomas D. Donohue
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
June 25, 2019
|
Thomas D. Donohue
|
||||
|
|
|
||
/s/ Seema C. Paul
|
|
Chief Accounting Officer
(Principal Accounting Officer)
|
|
June 25, 2019
|
Seema C. Paul
|
||||
|
|
|
|
|
/s/ Emily C. Chiu
|
|
Director
|
|
June 25, 2019
|
Emily C. Chiu
|
||||
|
|
|
|
|
/s/ Daniel A. DeMatteo
|
|
Director
|
|
June 25, 2019
|
Daniel A. DeMatteo
|
||||
|
|
|
|
|
/s/ David G. Golden
|
|
Director
|
|
June 25, 2019
|
David G. Golden
|
||||
|
|
|
|
|
/s/ John R. Ryan
|
|
Director
|
|
June 25, 2019
|
John R. Ryan
|
||||
|
|
|
|
|
/s/ Jerry Sue Thornton
|
|
Director
|
|
June 25, 2019
|
Jerry Sue Thornton
|
||||
|
|
|
||
/s/ David A. Wilson
|
|
Director
|
|
June 25, 2019
|
David A. Wilson
|
|
BARNES & NOBLE, INC.
|
By
|
/s/ Peter M. Herpich
|
Name:
|
Peter M. Herpich
|
Title:
|
Vice President, Corporate Controller and Principal Accounting Officer
|
|
|
|
BARNES & NOBLE EDUCATION, INC.
|
By
|
/s/ Michael P. Huseby
|
Name:
|
Michael P. Huseby
|
Title:
|
Chief Executive Officer
|
Effective Date of Change:
|
June 19, 2019
|
Job Title
:
|
EVP, Operations—Barnes & Noble Education, Inc. (the “Company”) EVP, Barnes & Noble College Booksellers, LLC
|
Reports to:
|
Mike Huseby, Chairman & CEO
|
Salary:
|
$610,000/Annualized
|
Annual Incentive Plan:
|
The bonus target for your position is 100% of your base salary. Your bonus percentage will be subject to proration between the time spent in your current role and your new role through the end of the fiscal year.
|
Equity:
|
Subject to approval by the Compensation Committee, you will be eligible to receive an equity grant under our annual long-term incentive program as part of the annual process. Additional details will be shared after approval.
|
Severance Benefits:
|
In the event (a) your employment is terminated by the Company without Cause or (b) you voluntarily terminate your employment for Good Reason, the Company shall (i) pay you an amount equal to one times the sum of your then annual Base Salary and your target annual bonus for the year of termination (the “Severance Amount”), and (ii) provide you continued health care coverage at the Company’s cost pursuant to the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) if you elect COBRA coverage until the earlier of when you are no longer eligible for COBRA coverage or twelve (12) months following your date of termination (the “COBRA Benefits); provided that (x) you execute and deliver to the Company, and do not revoke, a release of all claims against the Company substantially in the form attached hereto as Exhibit A (“Release”) and (y) you have not materially breached as of the date of such termination any provisions of this letter or any other agreement between you and the Company
|
Change of Control:
|
If at any time during your employment (i) there is a Change of Control (as defined below) and (ii) your employment is terminated by the Company without Cause or you voluntarily terminate your employment for Good Reason, in either case, within 90 days preceding or two years following the Change of Control, then the Company shall (A) pay you an amount equal to two times the sum of (i) your then Annual Base Salary, and (ii) your target annual bonus for the year of termination (or, if higher, as in effect immediately prior to the Change of Control) (“Change of Control Amount”), and (B) provide you the COBRA Benefits, less all applicable withholding and other applicable taxes and deductions. (A) The Change of Control Amount and the COBRA Benefits are subject to you executing and delivering to the Company (and not revoking) the Release within 60 days following your termination date, (B) the Change of Control Amount shall be paid to you in cash in a single lump sum within 30 days after the date your employment terminates (or, if later, when the Release becomes irrevocable) and (C) the COBRA Benefits will be provided on a monthly basis. In the event that it is determined that the aggregate amount of the payments and benefits that could be considered “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (collectively, with the regulations and other guidance promulgated thereunder, the “Code”; and such payments and benefits, the “Parachute Payments”) that, but for this paragraph would be payable to you under this Agreement or any other plan, policy, or arrangement of the Company or Barnes & Noble Education, Inc. or any affiliate, exceeds the greatest amount of Parachute Payments that could be paid to you without giving rise to
|
AGREED AND ACCEPTED:
/s/ Barry Brover
Barry Brover |
DATE
June 19, 2019
|
Signature:
|
|
Date:
|
Position:
|
Executive Vice President, Corporate Development and President, Digital Student Solutions
|
Reports to:
|
Michael Huseby, Executive Chairman and Chief Executive Officer
|
Transfer Date:
|
Upon the effectiveness of the spin-off of Barnes & Noble Education, Inc. from Barnes & Noble, Inc.
|
Base Salary:
|
$523,400 annually
|
Incentive Compensation:
|
Eligible to participate in our Incentive Compensation Plan. The target level annual bonus payment for your position is 100% of your base salary. Payments under the plan are based upon achievement of measurable objectives as defined by the Company each fiscal year. The fiscal year period is defined as May 1
st
to April 30
th
.
|
Equity:
|
Subject to approval by the Compensation Committee, you will be eligible to participate in our annual long-term incentive program. Additional details will be shared after approval.
|
Benefits:
|
Eligible to participate in the Company’s health and welfare programs.
|
Liability Insurance:
|
Shall be indemnified and advanced expenses for third party claims and covered under D&O insurance policies on the same terms and conditions as are provided to other executive officers.
|
Severance Benefits:
|
Should your employment terminate for any reason including “Good Reason” as defined below, but excluding your voluntary termination, death or disability or termination for “Cause” as defined below, the Company shall (i) pay you an amount equal to one (1) times the sum of (a) one year’s salary and (b) your target annual bonus for the year of termination (“Severance Amount”), and (ii) provide you continued health care coverage at the Company’s cost pursuant to the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) if you elect COBRA coverage until the earlier of when you are no longer eligible for COBRA coverage or twelve (12) months following your date of termination (the “COBRA Benefits”); provided that (x) you execute and deliver to the
|
Change of Control:
|
If at any time during your employment (i) there is a Change of Control (as defined below) and (ii) your employment is terminated by the Company without Cause or you voluntarily terminate your employment for Good Reason, in either case, within 90 days preceding or two years following the Change of Control or the remainder of the current Renewal Term (as defined in the Employment Agreement), as applicable, then the Company shall (A) pay you an amount equal to two times the sum of (i) your then Annual Base Salary, and (ii) your target annual bonus for the year of termination (or, if higher, as in effect immediately prior to the Change of Control) (“Change of Control Amount”), and (B) provide you the COBRA Benefits, less all applicable withholding and other applicable taxes and deductions. (A) The Change of Control Amount and the COBRA Benefits are subject to you executing and delivering to the Company (and not revoking) the Release within 60 days following your termination date, (B) the Change of Control Amount shall be paid to you in cash in a single lump sum within 30 days after the date your employment terminates (or, if later, when the Release becomes irrevocable) and (C) the COBRA Benefits will be provided on a monthly basis. In the event that it is determined that the aggregate amount of the payments and benefits that could be considered “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (collectively, with the regulations and other guidance promulgated thereunder, the “Code”; and such payments and benefits, the “Parachute Payments”) that, but for this paragraph would be payable to you under this Agreement or any other plan, policy, or arrangement of the Company or Barnes & Noble Education, Inc. or any
|
/s/ Kanuj Malhotra
Kanuj Malhotra |
June 19, 2019
Date |
Job Title
:
|
Chief Legal Officer & EVP, Corporate Strategy
|
Department/Location:
|
Legal Department – Basking Ridge, NJ & NYC
|
Reports to:
|
Mike Huseby, Chairman and Chief Executive Officer
|
Starting Date:
|
April 24, 2017
|
Base Salary:
|
$500,000 annualized
|
Incentive Compensation:
|
Eligible to participate in our FY18 Incentive Compensation Plan. The bonus target level for your position is 60% of your base salary for the 2019 fiscal year and 85% of your base salary for the 2020 fiscal year and thereafter. Payments under that plan are based upon achievement of measurable objectives as defined by the Company each fiscal year. The fiscal year period is defined as May 1
st
to April 30
th
. Guarantee of at least 100% of target bonus to be paid 1
st
year. Specific details to follow.
|
Benefits:
|
Eligible to participate in the Company’s health and welfare programs.
|
Severance:
|
Should your employment terminate for any reason including “Good Reason” as defined below, but excluding your voluntary termination, death or disability or termination for “Cause” as defined below, the Company shall (i) pay you an amount equal to one (1) times the sum of (a) one year’s salary and (b) your target annual bonus for the year of termination (“Severance Amount”), and (ii) provide you continued health care coverage at the Company’s cost pursuant to the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) if you elect COBRA coverage until the earlier of when you are no longer eligible for COBRA coverage or twelve (12) months following your date of termination (the “COBRA Benefits”); provided that (x) you execute and deliver to the Company, and do not revoke, a release of all claims against the Company substantially in the form attached hereto as Exhibit A (“Release”) and (y) you have not materially breached as of the date of such termination any provisions of this letter or your Agreement Regarding Certain Terms and
|
Change of Control:
|
If at any time during your employment (i) there is a Change of Control (as defined below) and (ii) your employment is terminated by the Company without Cause or you voluntarily terminate your employment for Good Reason, in either case, within 90 days preceding or two years following the Change of Control or the remainder of the current Renewal Term (as defined in the Employment Agreement), as applicable, then the Company shall (A) pay you an amount equal to two times the sum of (i) your then Annual Base Salary, and (ii) your target annual bonus for the year of termination (or, if higher, as in effect immediately prior to the Change of Control) (“Change of Control Amount”), and (B) provide you the COBRA Benefits, less all applicable withholding and other applicable taxes and deductions. (A) The Change of Control Amount and the COBRA Benefits are subject to you executing and delivering to the Company (and not revoking) the Release within 60 days following your termination date, (B) the Change of Control Amount shall be paid to you in cash in a single lump sum within 30 days after the date your employment terminates (or, if later, when the Release becomes irrevocable) and (C) the COBRA Benefits will be provided on a monthly basis. In the event that it is determined that the aggregate amount of the payments and benefits that could be considered “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (collectively, with the regulations and other guidance promulgated thereunder, the “Code”; and such payments and benefits, the “Parachute Payments”) that, but for this paragraph would be payable to you under this Agreement or any other plan, policy, or arrangement of the Company or Barnes & Noble Education, Inc. or any affiliate, exceeds the greatest amount of Parachute Payments that could be paid to you without giving rise to any liability for any excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the aggregate amount of Parachute Payments payable to you shall not exceed the amount that
|
/s/ Michael C. Miller
Signature |
June 19, 2019
Date |
Job Title
:
|
EVP, Chief Financial Officer, Barnes & Noble Education, Inc. and its affiliates (the “Company”)
|
Reports to:
|
Mike Huseby, Chairman & CEO
|
Salary:
|
$500,000/Annualized
|
Annual Incentive Plan:
|
The bonus target for your position is 60% of your base salary for the 2019 fiscal year and 85% of your base salary for the 2020 fiscal year and thereafter. Your bonus percentage will be subject to proration between the time spent in your current role and your new role through the end of the fiscal year.
|
Equity:
|
Subject to approval by the Compensation Committee, you will be eligible to receive an equity grant under our annual long-term incentive program as part of the annual process. Additional details will be shared after approval.
|
Severance:
|
If (a) your employment is terminated by the Company without Cause or (b) you voluntarily terminate your employment for Good Reason, the Company shall (i) pay you an amount equal to one (1) times the sum of (a) one year’s salary and (b) your target annual bonus for the year of termination (“Severance Amount”), and (ii) provide you continued health care coverage at the Company’s cost pursuant to the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) if you elect COBRA coverage until the earlier of when you are no longer eligible for COBRA coverage or twelve (12) months following your date of termination (the “COBRA Benefits”); provided that (x) you execute and deliver to the Company, and do not revoke, a release of all claims against the Company substantially in the form attached hereto as Exhibit A (“Release”) and (y) you have not materially breached as of the date of such termination any provisions of this letter or your Agreement Regarding Certain Terms and Conditions of Employment (the “Agreement”) and do not materially breach such provisions at any time during the Relevant Period (as defined in the Agreement). The Company’s obligation to make such payment shall be cancelled upon the occurrence of any such material breach and, in the event such payment has already been made, you shall repay to the Company such payment within 30 days after demand therefor; provided, however, such repayment shall not be required if the Company shall have materially breached this offer letter or the Agreement prior to the time of your breach. The Severance Amount shall be paid in cash in a single
|
Change of Control:
|
If at any time during your employment (i) there is a Change of Control (as defined below) and (ii) your employment is terminated by the Company without Cause or you voluntarily terminate your employment for Good Reason, in either case, within 90 days preceding or two years following the Change of Control or the remainder of the current Renewal Term (as defined in the Employment Agreement), as applicable, then the Company shall (A) pay you an amount equal to two times the sum of (i) your then Annual Base Salary, and (ii) your target annual bonus for the year of termination (or, if higher, as in effect immediately prior to the Change of Control) (“Change of Control Amount”), and (B) provide you the COBRA Benefits, less all applicable withholding and other applicable taxes and deductions. (A) The Change of Control Amount and the COBRA Benefits are subject to you executing and delivering to the Company (and not revoking) the Release within 60 days following your termination date, (B) the Change of Control Amount shall be paid to you in cash in a single lump sum within 30 days after the date your employment terminates (or, if later, when the Release becomes irrevocable) and (C) the COBRA Benefits will be provided on a monthly basis. In the event that it is determined that the aggregate amount of the payments and benefits that could be considered “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (collectively, with the regulations and other guidance promulgated thereunder, the “Code”; and such payments and benefits, the “Parachute Payments”) that, but for this paragraph would be payable to you under this Agreement or any other plan, policy, or arrangement of the Company or Barnes & Noble Education, Inc. or any affiliate, exceeds the greatest amount of Parachute Payments that could be paid to you without giving rise to any liability for any excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the aggregate amount of Parachute Payments payable to you shall not exceed the amount that produces the greatest after-tax benefit to you after taking into account any Excise Tax to be payable by you. Any reduction in Parachute Payments pursuant to the immediately preceding sentence shall be made in the following order: (1) cash payments that do not constitute deferred compensation within the meaning of Section 409A of the Code, (2) welfare or in-kind benefits, (3) equity compensation awards and (4) cash payments that do constitute deferred compensation; in each case, such reductions shall be made in the manner that maximizes the present value to you of all such payments. For the avoidance of doubt, the amounts payable to you under this paragraph shall be in lieu of any amounts payable to you under the previous paragraph (Severance).
|
AGREED AND ACCEPTED
/s/ Thomas Donohue
Thomas Donohue |
Date
June 19, 2019
|
1.
|
B&N Education, LLC, a Delaware limited liability company
|
2.
|
Barnes & Noble College Booksellers, LLC, a Delaware limited liability company
|
3.
|
BNED Digital Holdings, LLC, a Delaware limited liability company
|
4.
|
BNED LoudCloud, LLC, a Delaware limited liability company
|
5.
|
BNED MBS Holdings, LLC, a Delaware limited liability company
|
6.
|
Cram LLC, a Delaware limited liability company
|
7.
|
Educate Ahora LLC, a Delaware limited liability company
|
8.
|
Edúcate Ahora México, S. de R.L. de C.V., a Mexican company
|
9.
|
Etudier Facile LLC, a Delaware limited liability company
|
10.
|
LoudCloud Systems Private Limited, an Indian subsidiary
|
11.
|
MBS Automation LLC, a Delaware limited liability company
|
12.
|
MBS Direct, LLC, a Delaware limited liability company
|
13.
|
MBS Internet, LLC, a Delaware limited liability company
|
14.
|
MBS Service Company LLC, a Delaware limited liability company
|
15.
|
MBS Textbook Exchange, LLC, a Delaware limited liability company
|
16.
|
Promoversity LLC, a Delaware limited liability company
|
17.
|
Student Brands, LLC, a Delaware limited liability company
|
18.
|
Study Mode LLC, a California limited liability company
|
19.
|
Studymode Technologies Private Limited, an Indian company
|
20.
|
TextbookCenter LLC, a Delaware limited liability company
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21.
|
Trabalhos Feitos, LLC, a Delaware limited liability company
|
22.
|
TXTB.com LLC, a Delaware limited liability company
|
23.
|
Worldwide Knowledge LLC, a Delaware limited liability company
|
(i)
|
Registration Statement (Form S-8 No. 333-227515), which relates to the Barnes & Noble Education, Inc. Amended and Restated Equity Incentive Plan,
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(ii)
|
Registration Statement (Form S-8 No.333-206893) and Registration Statement (Form S-8 No. 333-213673) each of which relates to the Barnes & Noble Education, Inc. Equity Incentive Plan;
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1.
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I have reviewed this Annual Report on Form 10-K of Barnes & Noble Education, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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By:
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/s/ Michael P. Huseby
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|
|
|
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Michael P. Huseby
|
|
|
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Chairman & Chief Executive Officer
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|
|
|
|
Barnes & Noble Education, Inc.
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Barnes & Noble Education, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
By:
|
|
/s/ Thomas D. Donohue
|
|
|
|
|
Thomas D. Donohue
|
|
|
|
|
Executive Vice President, Chief Financial Officer
|
|
|
|
|
Barnes & Noble Education, Inc.
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Michael P. Huseby
|
|
|
Michael P. Huseby
|
|
|
Chairman & Chief Executive Officer
Barnes & Noble Education, Inc.
|
|
|
|
|
|
June 25, 2019
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Thomas D. Donohue
|
|
|
Thomas D. Donohue
|
|
|
Executive Vice President, Chief Financial Officer
Barnes & Noble Education, Inc.
|
|
|
|
|
|
June 25, 2019
|
|