Barnes & Noble Reports Fiscal 2013 Second Quarter Financial Results

  Barnes & Noble Reports Fiscal 2013 Second Quarter Financial Results

               Consolidated EBITDA Increases 16% to $65 million

                   NOOK Digital Content Sales Increase 38%

       NOOK Device Unit Sales Double Over Four-Day Black Friday Period

Business Wire

NEW YORK -- November 29, 2012

Barnes & Noble, Inc. (NYSE: BKS) today reported sales and earnings for its
fiscal 2013 second quarter ended October 27, 2012.

Second quarter consolidated revenues were $1.9 billion, a decrease of 0.4% as
compared to the prior year. Second quarter consolidated earnings before
interest, taxes, depreciation and amortization (EBITDA) increased 16% as
compared to a year ago to $65 million. Consolidated second quarter net
earnings attributable to Barnes & Noble were $2 million, as compared to a loss
of $7 million in the prior year. Second quarter net losses attributable to
Barnes & Noble were $0.04 per share, which includes the impact of the dividend
on redeemable preferred shares, as compared to a loss of $0.17 per share a
year ago.

"In addition to growing our EBITDA 16% during the quarter, the company also
completed the formation of our promising NOOK Media subsidiary and closed our
investment from Microsoft," said William Lynch, Chief Executive Officer of
Barnes & Noble. "We expect our two highly acclaimed new NOOK products, and our
Microsoft partnership on Windows 8 to further fuel the growth of our digital
business, and are encouraged by the promising start to the holidays in our
retail and digital businesses."

Second Quarter 2013 Results from Operations

Segment results for the fiscal 2013 and fiscal 2012 second quarters are as
follows:

                                                                                        
                  Revenues                                            EBITDA
$ in                                        Increase/(Decrease)                               Increase/(Decrease)
millions
                  Q2 2013      Q2 2012      $            %            Q2 2013     Q2 2012     $            %
Retail            $996.0       $1,025.8     ($29.8)      -2.9%        $28.4       $14.1       $14.3        101.5%
College           $773.0       $769.7       $3.4         0.4%         $87.8       $92.8       ($5.0)       -5.4%
NOOK              $160.3       $151.8       $8.5         5.6%         ($51.4)     ($50.8)     ($0.6)       -1.1%
Elimination       ($44.9)      ($55.3)      $10.5        -19.0%       n/a         n/a         n/a          n/a
^(1)
Total             $1,884.5     $1,892.0     ($7.4)       -0.4%        $64.8       $56.0       $8.7         15.6%
                                                                                                           

(1) Represents the elimination of intercompany sales from NOOK to Barnes &
Noble Retail and Barnes & Noble College on a sell through basis.

Retail

The Retail segment, which consists of the Barnes & Noble bookstores and BN.com
businesses, had revenues of $996 million for the quarter, decreasing
approximately 3% over the prior year due to flat comparable store sales, store
closures and lower BN.com sales. During the quarter, the company began to
cycle against the favorable impact of the Borders liquidation a year ago. Core
comparable bookstore sales, which exclude sales of NOOK products, increased
1.8% for the quarter as compared to the prior year.

Retail earnings before interest, taxes, depreciation and amortization (EBITDA)
increased from $14 million to $28 million during the second quarter, a 101%
increase, led by a higher mix of higher margin core products. In addition, the
quarter also included the reversal of $4.7 million of accrued legal costs
recorded in fiscal 2012, resulting from the final settlement of the litigation
related to the company’s 2009 acquisition of Barnes & Noble College.

College

The College segment, which consists of the Barnes & Noble College bookstores
business, had revenues of $773 million, increasing 0.4% as compared to a year
ago, led by new store growth. Comparable College store sales decreased 0.5%
for the quarter, as compared to the prior year period. College comparable
store sales reflect the retail selling price of a new or used textbook when
rented, rather than solely the rental fee received and amortized over the
rental period.

College EBITDA decreased $5 million during the quarter as compared to a year
ago to $88 million, resulting from a higher revenue deferral on increased
textbook rental volumes and continued investments in digital education.

NOOK

The NOOK segment, which consists of the company’s digital business (including
Readers, digital content and accessories), had revenues of $160 million for
the quarter, increasing 6% as compared to a year ago. Digital content sales
increased 38% for the second quarter over the second quarter in the prior
year. Digital content sales are defined to include digital books, digital
newsstand, and the apps business. The two new NOOK devices, NOOK HD and NOOK
HD+, began shipping after the close of the company’s fiscal second quarter,
and sales from the launch of those products will be reflected in the current
fiscal third quarter and subsequent quarters.

NOOK EBITDA losses were essentially flat, increasing by 1% over the prior year
to $51.4 million, as margin improvements were offset by higher investments
primarily in product development and international expansion.

Holiday Results to Date

NOOK unit sales doubled over the four-day Black Friday weekend, across all
channels, based on information provided by our channel partners on a
sell-through basis compared to the similar period last year. The growth was
driven by increased promotional activity at channel partners, particularly
Walmart and Target. Retail Core comparable sales, which exclude sales of NOOK
products, slightly declined over the holiday weekend, in-line with company
expectations.

Conference Call

A conference call with Barnes & Noble, Inc.’s senior management will be
webcast beginning at 10:00 A.M. ET on Thursday, November 29, 2012, and is
accessible at www.barnesandnobleinc.com/webcasts.

Barnes & Noble, Inc. will report holiday sales on or about January 3, 2013.

About Barnes & Noble, Inc.

Barnes & Noble, Inc. (NYSE:BKS) is a Fortune 500 company and the leading
retailer of content, digital media and educational products. The company
operates 689 Barnes & Noble bookstores in 50 states, and one of the Web’s
largest e-commerce sites, BN.com (www.bn.com). Its NOOK Media LLC subsidiary
is a leader in the emerging digital reading and digital education markets. The
NOOK digital business offers award-winning NOOK® products and an expansive
collection of digital reading and entertainment content through the NOOK
Store™ (www.nook.com), while Barnes & Noble College Booksellers, LLC operates
674 bookstores serving over 4.6 million students and faculty members at
colleges and universities across the United States. Barnes & Noble is proud to
be named a J.D. Power and Associated 2012 Customer Service Champion and is
only one of 50 U.S. companies so named. Barnes & Noble.com is ranked the
number one online retailer in customer satisfaction in the book, music and
video category and a Top 10 online retailer overall in customer satisfaction
according to ForeSee E-Retail Satisfaction Index (Spring Top 100 Edition).

General information on Barnes & Noble, Inc. can be obtained via the Internet
by visiting the company's corporate website: www.barnesandnobleinc.com.

Forward-Looking Statements

This press release contains certain forward-looking statements (within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended) and information
relating to Barnes & Noble that are based on the beliefs of the management of
Barnes & Noble as well as assumptions made by and information currently
available to the management of Barnes & Noble. When used in this
communication, the words "anticipate," "believe," "estimate," "expect,"
"intend," "plan," "will" and similar expressions, as they relate to Barnes &
Noble or the management of Barnes & Noble, identify forward-looking
statements.

Such statements reflect the current views of Barnes & Noble with respect to
future events, the outcome of which is subject to certain risks, including,
among others, the general economic environment and consumer spending patterns,
decreased consumer demand for Barnes & Noble's products, low growth or
declining sales and net income due to various factors, risk that international
expansion will not be successfully achieved or may be achieved later than
expected, possible disruptions in Barnes & Noble's computer systems, telephone
systems or supply chain, possible risks associated with data privacy,
information security and intellectual property, possible work stoppages or
increases in labor costs, possible increases in shipping rates or
interruptions in shipping service, effects of competition, possible risks that
inventory in channels of distribution may be larger than able to be sold,
possible risk that returns from consumers or channels of distribution may be
greater than estimated, the risk that the expected sales lift from Borders’
store closures is not achieved in whole or part, the risk that digital sales
growth is less than expectations and the risk that it does not exceed the rate
of investment spend, higher-than-anticipated store closing or relocation
costs, higher interest rates, the performance of Barnes & Noble's online,
digital and other initiatives, the performance and successful integration of
acquired businesses, the success of Barnes & Noble's strategic investments,
unanticipated increases in merchandise, component or occupancy costs,
unanticipated adverse litigation results or effects, product and component
shortages, the potential adverse impact on the business resulting from the
review of a potential separation of the NOOK digital business, the risk that
the transactions with Microsoft do not achieve the expected benefits for the
parties including the risk that NOOK Media LLC’s applications are not
commercially successful or that the expected distribution of those
applications is not achieved, the risk that any subsequent spin-off, split-off
or other disposition by Barnes & Noble of its interest in NOOK Media LLC
results in adverse impacts on Barnes & Noble or NOOK Media LLC (including as a
result of termination of agreements and other adverse impacts), the potential
impact on Barnes & Noble’s retail business of the separation, the potential
tax consequences for Barnes & Noble and its shareholders of a subsequent
spin-off, split-off or other disposition by Barnes & Noble of its interest in
NOOK Media LLC, the risk that the international expansion contemplated by the
relationship or otherwise is not successful or is delayed, the risk that NOOK
Media LLC is not able to perform its obligations under the commercial
agreement, including with respect to the development of applications and
international expansion, and the consequences thereof, the costs and
disruptions arising out of any such separation of the NOOK digital and College
businesses, the risk that Barnes & Noble may not recoup its investments in the
NOOK digital business as part of any separation transaction, the risks,
difficulties, and uncertainties that may result from the separation of
businesses that were previously co-mingled including necessary ongoing
relationships, and potential for adverse customer impacts and other factors
which may be outside of Barnes & Noble’s control, including those factors
discussed in detail in Item 1A, "Risk Factors," in Barnes & Noble's Annual
Report on Form 10-K and Form 10-K/A, and in Barnes & Noble's other filings
made hereafter from time to time with the SEC. Our forward looking statements
relating to international expansion are also subject to the following risks,
among others that may affect the introduction, success and timing of the NOOK
e-reader and content in countries outside the United States: we may not be
successful in reaching agreements with international companies, the terms of
agreements that we reach may not be advantageous to us, our NOOK device may
require technological changes to comply with applicable laws, and marketplace
acceptance and other companies have already entered the marketplace with
products that have achieved some customer acceptance.

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

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

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

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

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

for common shareholders
                                                                        
Diluted loss
per common
share
Net loss attributable to
Barnes & Noble, Inc.
available                        $ (0.04)    (0.17)        $ (0.82)     (1.16)

for common shareholders
                                                                        

Contact:

Barnes & Noble, Inc.
Media:
Mary Ellen Keating, 212-633-3323
Senior Vice President
Corporate Communications
mkeating@bn.com
or
Investors:
Andy Milevoj, 212-633-3489
Vice President, Investor Relations
amilevoj@bn.com