Barnes & Noble Reports Fiscal 2013 Year-End Financial Results

  Barnes & Noble Reports Fiscal 2013 Year-End Financial Results

          Fiscal 2013 Retail EBITDA Increases 16.0% to $374 Million

             College Generates Fiscal 2013 EBITDA of $111 Million

NOOK® will Continue to Innovate and Build eReader Devices as it Transitions to
                   a New Partnership Model on Color Tablets

      Additional Inventory Charges Drive Higher NOOK Losses for the Year

Business Wire

NEW YORK -- June 25, 2013

Barnes & Noble, Inc. (NYSE: BKS) today reported sales and earnings for its
fiscal 2013 fourth quarter and full year ended April 27, 2013.

Fourth quarter consolidated revenues decreased 7.4% to $1.3 billion as
compared to the prior year. The consolidated fourth quarter earnings before
interest, taxes, depreciation and amortization (EBITDA) loss was $122.0
million, as compared to a loss of $9.7 million in the prior year. The
consolidated fourth quarter net loss was $118.6 million, as compared to the
prior year net loss of $56.9 million. Fourth quarter net losses were $2.11 per
share as compared to a net loss of $1.06 per share a year ago.

For fiscal 2013, consolidated revenues decreased 4.1% to $6.8 billion as
compared to the prior year. Fiscal 2013 consolidated EBITDA was $10.3 million,
as compared to $176.7 million a year ago. Fiscal 2013 consolidated net losses
were $154.8 million, or $2.97 per share, as compared to $65.6 million, or
$1.35 per share in the prior year.

Fourth quarter and full-year results were adversely impacted by NOOK inventory
charges as discussed in the NOOK section below.

The company ended the fiscal year with cash of $160.5 million and borrowings
of $77 million under its $1 billion revolving credit facility, as compared to
a net debt position of $270 million a year ago.

The company is currently in the process of evaluating certain prior year
amounts, which may result in a revision to the financial statements. The
company's analysis is ongoing, but it does not believe these amounts will be
material to the financial statements. Accordingly, the financial information
presented in this press release is unaudited and remains subject to change
based on this process.

Fourth Quarter 2013 Results from Operations

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

                                                                                     
                Revenues                                        EBITDA
$ in                                    Increase/(Decrease)                          Increase/(Decrease)
millions
                Q4 2013     Q4 2012     $           %           Q4 2013    Q4 2012   $          %
Retail          $ 948       $ 1,053     (105  )     -10.0 %     $ 51       $ 67      (16   )    -23.9  %
College           252         228       24          10.7  %       4          0       4          n/a
NOOK              108         164       (56   )     -34.0 %       (177 )     (77 )   (100  )    -129.8 %
Elimination      (31   )    (64   )   33         -52.0 %      n/a      n/a    n/a       n/a    
^(1)
Total           $ 1,277    $ 1,380    (103  )     -7.4  %     $ (122 )   $ (10 )   (112  )    n/a    
                                                                                                

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

Fiscal 2013 Results from Operations

Segment results for fiscal year 2013 and fiscal year 2012 are as follows:

                                                                                      
                Revenues                                        EBITDA
$ in                                    Increase/(Decrease)                           Increase/(Decrease)
millions
                Fiscal      Fiscal      $           %           Fiscal     Fiscal     $           %
                2013        2012                                2013       2012
Retail          $ 4,568     $ 4,853     (285  )     -5.9  %     $ 374      $ 322      52          16.0  %
College           1,763       1,744     20          1.1   %       111        116      (4    )     -3.9  %
NOOK              776         933       (157  )     -16.8 %       (475 )     (262 )   (214  )     81.7  %
Elimination      (269  )    (401  )   132        -33.0 %      n/a      n/a     n/a        n/a   
^(1)
Total           $ 6,839    $ 7,129    (290  )     -4.1  %     $ 10      $ 177     (166  )     -94.2 %
                                                                                                  

            Represents the elimination of intercompany sales from NOOK to
   (1)  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 $948 million for the quarter and $4.6 billion for
the full year, decreasing 10.0% for the quarter and 5.9% for the fiscal year.
The sales decreases were attributable to comparable store sales decreases of
8.8% for the quarter and 3.4% for the full year, store closures and lower
online sales. Fourth quarter comparable bookstore sales decreased as a result
of lower NOOK unit volume and a stronger title lineup in the prior year period
including The Hunger Games and Fifty Shades of Grey trilogies. Core comparable
bookstore sales, which exclude sales of NOOK products, decreased 5.8% for the
quarter and were essentially flat for the full year.

As a result of the sales decline, fourth quarter Retail EBITDA decreased
23.9%, from $67 million a year ago to $51 million. However, for fiscal 2013,
Retail EBITDA increased 16.0% to $374 million, as the sales decline was
mitigated by a higher sales mix of higher margin core products and lower
expenses.

College

The College segment had revenues of $252 million for the quarter and $1.8
billion for the full year, increasing 10.7% for the quarter and 1.1% for the
year, as compared to the prior year periods. Fourth quarter sales were
positively impacted by the back-to-school rush season, which extended into the
fourth quarter. Comparable College store sales increased 7.5% for the quarter,
while decreasing 1.2% for the full year. Comparable College 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.

Fourth quarter College EBITDA improved to $3.8 million, benefitting from
higher revenues. Full year EBITDA declined 3.9% to $111.5 million, primarily
resulting from increased investments in digital education. College’s full-year
product margins improved on a higher mix of higher margin textbook rentals,
while expenses increased due to new store growth and continued investments in
digital education.

NOOK

The NOOK segment, which consists of the company's digital business (including
devices, digital content and accessories), had revenues of $108 million for
the quarter and $776 million for the full year, decreasing 34.0% for the
quarter and 16.8% for the year, as compared to the year ago periods. Device
sales declined during the fourth quarter due to lower selling volume. Digital
content sales increased 16.2% for the full year, however, they decreased 8.9%
for the fourth quarter due in part to the device sales shortfall as well as
the comparison to the The Hunger Games and Fifty Shades of Grey trilogies a
year ago.

The company plans to significantly reduce losses in the NOOK segment by
limiting risks associated with manufacturing. Going forward, the company
intends to continue to design eReading devices and reading platforms, while
creating a partnership model for manufacturing in the competitive color tablet
market. Thus, the widely popular lines of Simple Touch™ and Glowlight™
products will continue to be developed in house, and the company’s tablet line
will be co-branded with yet to be announced third party manufacturers of
consumer electronics products. At the same time, the company intends to
continue to build its digital catalog, adding thousands of eBooks every week,
and launching new NOOK Apps™.

The company will continue to offer its existing inventory of its high quality
NOOK® HD and NOOK® HD+ devices at amazing prices through the holiday. As
always, Barnes & Noble will provide world-class pre- and post-sales support in
its stores for its NOOK HD and NOOK HD+ customers, as well as ongoing software
upgrades and improvements to the digital bookstore service.

“Our Retail and College businesses delivered strong financial performances in
fiscal year 2013,” said William Lynch, Chief Executive Officer of Barnes &
Noble. “We are taking big steps to reduce the losses in the NOOK segment, as
we move to a partner-centric model in tablets and reduce overhead costs. We
plan to continue to innovate in the single purpose black-and-white eReader
category, and the underpinning of our strategy remains the same today as it
has since we first entered the digital market, which is to offer customers any
digital book, magazine or newspaper, on any device.”

During the fourth quarter, the company determined that goodwill impairment
indicators arose in its NOOK reporting unit as recurring losses have led to
revisions in its strategic plans. As a result, the company recorded a non-cash
goodwill impairment charge of $18.3 million in selling and administrative
expenses. Excluding the impairment charge, NOOK expenses decreased $26 million
as compared to a year ago, a 34% decrease in expenses as compared to fiscal
year 2012.

NOOK EBITDA losses were $177 million for the fourth quarter, which include an
additional $133 million of inventory charges as the company adopted more
aggressive promotional strategies given the shift in strategic direction. NOOK
EBITDA losses were $475 million for the full year, primarily driven by
cumulative NOOK inventory related charges of $222 million.

Guidance

For fiscal year 2014, the company expects Retail comparable bookstore sales to
decline in the high-single digits on a percentage basis. College comparable
store sales are expected to decline in the low-single digits on a percentage
basis.

Conference Call

A conference call with Barnes & Noble, Inc.’s senior management will be
webcast beginning at 10:00 A.M. ET on Tuesday, June 25, 2013, and is
accessible at www.barnesandnobleinc.com/webcasts.

Barnes & Noble, Inc. will report fiscal 2014 first quarter results on or about
August 20, 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 675 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
686 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," "forecasts," "projections,"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 risks associated with ceasing NOOK’s production of tablet devices,
including possible reduction in sales of content, accessories and other
merchandise and other adverse financial impacts, possible risk that component
parts will be rendered obsolete or otherwise not be able to be effectively
utilized in devices to be sold, possible risk that financial and operational
forecasts and projections are not achieved, 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 and Pearson do not achieve the expected
benefits for the parties including the risk that NOOK Media’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 or other
separation of Barnes & Noble’s businesses results in adverse impacts on Barnes
& Noble or NOOK Media (including as a result of termination of agreements and
other adverse impacts), the potential impact on Barnes & Noble’s retail
business of any 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 or other separation of Barnes
& Noble’s businesses, the risk that the international expansion contemplated
by the relationship with Microsoft or otherwise is not successful or is
delayed, the risk that NOOK Media is not able to perform its obligations under
the Microsoft 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 or other separation of Barnes & Noble’s 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, the risk that Barnes & Noble’s ongoing
evaluation of prior year amounts may result in revisions to its financial
statements and changes to the financial information presented in this press
release, the risk that such process results in a delay in the filing of Barnes
& Noble’s Annual Report on Form 10-K and associated risks 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 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)
(Unaudited)
                                                         
                                                                   
                   13 weeks        13 weeks        52 weeks        52 weeks
                   ended           ended           ended           ended
                   April 27,       April 28,       April 27,       April 28,
                   2013            2012            2013            2012
                                                                   
Sales              $ 1,277,021     1,379,710       $ 6,839,005     7,129,199
Cost of sales       1,048,586    979,577         5,158,363    5,213,019 
and occupancy
Gross profit        228,435      400,133         1,680,642    1,916,180 
Selling and
administrative       350,480       409,832           1,670,376     1,739,452
expenses
Depreciation
and                 55,725       58,968          227,134      232,667   
amortization
Operating loss       (177,770  )   (68,667   )       (216,868  )   (55,939   )
Interest            9,510        8,629           35,345       35,304    
expense, net
Loss before          (187,280  )   (77,296   )       (252,213  )   (91,243   )
taxes
Income taxes        (68,639   )   (20,381   )      (97,407   )   (25,600   )
Net loss           $ (118,641  )   (56,915   )     $ (154,806  )   (65,643   )
                                                                   
                                                                   
                                                                   
Loss per
common share:
Basic              $ (2.11     )   (1.06     )     $ (2.97     )   (1.35     )
Diluted            $ (2.11     )   (1.06     )     $ (2.97     )   (1.35     )
                                                                   
Weighted
average common
shares
outstanding:
Basic                58,483        57,563            58,247        57,337
Diluted              58,483        57,563            58,247        57,337
                                                                   
Percentage of
sales:
Sales                100.0     %   100.0     %       100.0     %   100.0     %
Cost of sales       82.1      %   71.0      %      75.4      %   73.1      %
and occupancy
Gross profit        17.9      %   29.0      %      24.6      %   26.9      %
Selling and
administrative       27.4      %   29.7      %       24.4      %   24.4      %
expenses
Depreciation
and                 4.4       %   4.3       %      3.3       %   3.3       %
amortization
Operating loss       -13.9     %   -5.0      %       -3.2      %   -0.8      %
Interest            0.7       %   0.6       %      0.5       %   0.5       %
expense, net
Loss before          -14.7     %   -5.6      %       -3.7      %   -1.3      %
taxes
Income taxes        -5.4      %   -1.5      %      -1.4      %   -0.4      %
Net loss            -9.3      %   -4.1      %      -2.3      %   -0.9      %
                                                                             

                                                            
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                           
                                                                
                                               April 27, 2013   April 28, 2012
ASSETS
Current assets:
Cash and cash equivalents                      $ 160,470        $ 54,131
Receivables, net                                 142,417          160,497
Merchandise inventories                          1,410,769        1,561,841
Prepaid expenses and other current assets       323,955        221,324    
Total current assets                            2,037,611      1,997,793  
                                                                
Property and equipment:
Land and land improvements                       2,541            2,541
Buildings and leasehold improvements             1,224,384        1,196,764
Fixtures and equipment                          1,883,504      1,784,492  
                                                 3,110,429        2,983,797
Less accumulated depreciation and               2,525,520      2,361,142  
amortization
Net property and equipment                      584,909        622,655    
                                                                
Goodwill                                         495,496          519,685
Intangible assets, net                           547,931          564,054
Other noncurrent assets                         57,065         61,062     
Total assets                                   $ 3,723,012     $ 3,765,249  
                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                               $ 851,426        $ 914,544
Accrued liabilities                              569,957          603,415
Gift card liabilities                           341,036        321,362    
Total current liabilities                       1,762,419      1,839,321  
                                                                
Long-term debt                                   77,000           324,200
Long-term deferred taxes                         221,776          242,748
Other long-term liabilities                      413,515          358,039
                                                                
Redeemable Preferred Shares; $.001 par
value; 5,000
shares authorized; 204 and 204 shares            193,535          192,273
issued, respectively
Preferred Member Interests in NOOK Media,        381,627          -
LLC
                                                                
Shareholders' equity:
Common stock; $.001 par value; 300,000
shares
authorized; 92,784 and 91,376 shares             93               91
issued, respectively
Additional paid-in capital                       1,383,848        1,340,909
Accumulated other comprehensive loss             (16,692    )     (16,635    )
Retained earnings                                369,746          542,585
Treasury stock, at cost, 34,078 and 33,722      (1,063,855 )    (1,058,282 )
shares, respectively
Total shareholders' equity                      673,140        808,668    
Commitments and contingencies                   -              -          
Total liabilities and shareholders' equity     $ 3,723,012     $ 3,765,249  
                                                                             

                                                                  
BARNES & NOBLE, INC. AND SUBSIDIARIES
Segment Information
(In thousands)
(Unaudited)
                                                            
                    
                       13 weeks        13 weeks        52 weeks        52 weeks
                       ended           ended           ended           ended
                       April 27,       April 28,       April 27,       April 28,
                       2013            2012            2013            2012
                                                                       
Sales 
      Retail           $ 947,677       1,052,533       $ 4,568,243     4,852,913
      College            252,295       227,891           1,763,248     1,743,662
      NOOK               107,950       163,617           776,237       933,471
      Elimination       (30,901   )   (64,331   )      (268,723  )   (400,847  )
Total                  $ 1,277,021    1,379,710      $ 6,839,005    7,129,199 
                                                                       
Gross Profit
      Retail           $ 259,304       329,353         $ 1,397,859     1,452,804
      College            76,131        69,781            405,076       395,311
      NOOK              (107,000  )   999             (122,293  )   68,065    
Total                  $ 228,435      400,133        $ 1,680,642    1,916,180 
                                                                       
Selling and
Administrative
Expenses
      Retail           $ 208,244       262,244         $ 1,023,633     1,130,311
      College            72,341        69,600            293,618       279,364
      NOOK              69,895       77,988          353,125      329,777   
Total                  $ 350,480      409,832        $ 1,670,376    1,739,452 
                                                                       
EBITDA
      Retail           $ 51,060        67,109          $ 374,226       322,493
      College            3,790         181               111,458       115,947
      NOOK              (176,895  )   (76,989   )      (475,418  )   (261,712  )
Total                  $ (122,045  )   (9,699    )     $ 10,266       176,728   
                                                                       
Net Loss
      EBITDA           $ (122,045  )   (9,699    )     $ 10,266        176,728
      Depreciation
      and                (55,725   )   (58,968   )       (227,134  )   (232,667  )
      Amortization
      Interest           (9,510    )   (8,629    )       (35,345   )   (35,304   )
      Expense, net
      Income Taxes      68,639       20,381          97,407       25,600    
Total                  $ (118,641  )   (56,915   )     $ (154,806  )   (65,643   )
                                                                       
Percentage of
sales:
                                                                       
Gross Margin
      Retail             27.4      %   31.3      %       30.6      %   29.9      %
      College            30.2      %   30.6      %       23.0      %   22.7      %
      NOOK              -138.9    %   1.0       %      -24.1     %   12.8      %
Total                    17.9      %   29.0      %       24.6      %   26.9      %
                                                                       
Selling and
Administrative
Expenses
      Retail             22.0      %   24.9      %       22.4      %   23.3      %
      College            28.7      %   30.5      %       16.7      %   16.0      %
      NOOK              90.7      %   78.5      %      69.6      %   61.9      %
Total                    27.4      %   29.7      %       24.4      %   24.4      %
                                                                                 

                                                              
BARNES & NOBLE, INC. AND SUBSIDIARIES
Earnings (Loss) Per Share
(In thousands, except per share data)
(Unaudited)
                                                           
                                                                     
                   13 weeks ended                   52 weeks ended
                April 27, 2013  April 28,     April 27, 2013  April 28,
                                    2012                             2012
Numerator for
basic loss per
share:
Loss               $  (118,641  )   (56,915  )      $  (154,806  )   (65,643 )
Preferred
stock                 (3,942    )   (3,963   )         (15,767   )   (11,044 )
dividends
Accretion of
dividends on          (758      )   (316     )         (2,266    )   (894    )
preferred
stock
Less
allocation of
earnings and         -            -                -            -       
dividends to
participating
securities
Net loss
available to       $  (123,341  )   (61,194  )      $  (172,839  )   (77,581 )
common
shareholders
                                                                     
Numerator for
diluted loss
per share:
Net loss
available to       $  (123,341  )   (61,194  )      $  (172,839  )   (77,581 )
common
shareholders
Accrual of
preferred             -             -                  -             -
stock
dividends
Accretion of
dividends on          -             -                  -             -
preferred
stock
Effect of
dilutive             -            -                -            -       
options
Net loss
available to         (123,341  )   (61,194  )        (172,839  )   (77,581 )
common
shareholders
                                                                     
Denominator
for basic and
diluted loss
per share:
Basic weighted
average common       58,483       57,563           58,247       57,337  
shares
                                                                     
Denominator
for diluted
loss per
share:
Basic weighted
average common        58,483        57,563             58,247        57,337
shares
Preferred             -             -                  -             -
shares
Average
dilutive             -            -                -            -       
options
Diluted
weighted             58,483       57,563           58,247       57,337  
average common
shares
                                                                     
Loss per
common share
Basic              $  (2.11     )   (1.06    )      $  (2.97     )   (1.35   )
Diluted            $  (2.11     )   (1.06    )      $  (2.97     )   (1.35   )
                                                                             

Contact:

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