2019 Q3 Form 10-Q Financial Statement

#000163411719000060 Filed on August 27, 2019

View on sec.gov

Income Statement

Concept 2019 Q3 2018 Q3
Revenue $319.7M $337.5M
YoY Change -5.28% -5.12%
Cost Of Revenue $248.0M $270.9M
YoY Change -8.44% -6.76%
Gross Profit $71.66M $66.61M
YoY Change 7.58% 2.16%
Gross Profit Margin 22.42% 19.74%
Selling, General & Admin $97.69M $99.14M
YoY Change -1.47% -0.75%
% of Gross Profit 136.33% 148.84%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $16.80M $16.50M
YoY Change 1.82% 10.0%
% of Gross Profit 23.45% 24.77%
Operating Expenses $97.69M $99.14M
YoY Change -1.47% -0.75%
Operating Profit -$43.81M -$49.07M
YoY Change -10.72% -11.64%
Interest Expense -$2.500M -$3.500M
YoY Change -28.57% 16.67%
% of Operating Profit
Other Income/Expense, Net
YoY Change
Pretax Income -$46.34M -$52.59M
YoY Change -11.88% -10.21%
Income Tax -$14.19M -$13.97M
% Of Pretax Income
Net Earnings -$32.16M -$38.62M
YoY Change -16.74% 11.04%
Net Earnings / Revenue -10.06% -11.44%
Basic Earnings Per Share -$0.68 -$0.82
Diluted Earnings Per Share -$0.68 -$0.82
COMMON SHARES
Basic Shares Outstanding 47.58M shares 46.92M shares
Diluted Shares Outstanding 47.58M shares 46.92M shares

Balance Sheet

Concept 2019 Q3 2018 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $8.200M $13.30M
YoY Change -38.35% -6.34%
Cash & Equivalents $8.222M $13.26M
Short-Term Investments
Other Short-Term Assets $18.10M $18.70M
YoY Change -3.21% 38.52%
Inventory $717.8M $729.9M
Prepaid Expenses
Receivables $98.50M $99.80M
Other Receivables $0.00 $0.00
Total Short-Term Assets $847.8M $867.9M
YoY Change -2.31% -6.43%
LONG-TERM ASSETS
Property, Plant & Equipment $105.9M $108.1M
YoY Change -2.02% -4.42%
Goodwill $4.700M $49.28M
YoY Change -90.46% -85.04%
Intangibles $189.2M $213.9M
YoY Change -11.57% 3.66%
Long-Term Investments
YoY Change
Other Assets $40.46M $41.66M
YoY Change -2.89% -1.27%
Total Long-Term Assets $654.6M $413.0M
YoY Change 58.51% -40.25%
TOTAL ASSETS
Total Short-Term Assets $847.8M $867.9M
Total Long-Term Assets $654.6M $413.0M
Total Assets $1.502B $1.281B
YoY Change 17.3% -20.87%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $443.1M $463.7M
YoY Change -4.44% -9.34%
Accrued Expenses $75.88M $93.23M
YoY Change -18.62% 3.67%
Deferred Revenue $14.19M $15.50M
YoY Change -8.48%
Short-Term Debt $100.0M $100.0M
YoY Change 0.0% 0.0%
Long-Term Debt Due $100.0M $100.0M
YoY Change 0.0% 0.0%
Total Short-Term Liabilities $730.2M $657.0M
YoY Change 11.14% -6.34%
LONG-TERM LIABILITIES
Long-Term Debt $74.10M $130.2M
YoY Change -43.09% 8.41%
Other Long-Term Liabilities $50.27M $58.85M
YoY Change -14.58% -38.99%
Total Long-Term Liabilities $50.27M $58.85M
YoY Change -14.58% -38.99%
TOTAL LIABILITIES
Total Short-Term Liabilities $730.2M $657.0M
Total Long-Term Liabilities $50.27M $58.85M
Total Liabilities $1.082B $849.2M
YoY Change 27.38% -9.45%
SHAREHOLDERS EQUITY
Retained Earnings -$276.7M -$258.8M
YoY Change 6.92% 10595.25%
Common Stock $729.2M $720.2M
YoY Change 1.25% 1.24%
Preferred Stock
YoY Change
Treasury Stock (at cost) $31.68M $29.66M
YoY Change 6.8% 5.85%
Treasury Stock Shares 3.479M shares 3.115M shares
Shareholders Equity $420.8M $431.7M
YoY Change
Total Liabilities & Shareholders Equity $1.502B $1.281B
YoY Change 17.3% -20.87%

Cashflow Statement

Concept 2019 Q3 2018 Q3
OPERATING ACTIVITIES
Net Income -$32.16M -$38.62M
YoY Change -16.74% 11.04%
Depreciation, Depletion And Amortization $16.80M $16.50M
YoY Change 1.82% 10.0%
Cash From Operating Activities -$40.24M -$27.35M
YoY Change 47.12% -51.42%
INVESTING ACTIVITIES
Capital Expenditures $8.309M $8.240M
YoY Change 0.84% 4.56%
Acquisitions
YoY Change
Other Investing Activities $2.200M -$1.100M
YoY Change -300.0% -8.33%
Cash From Investing Activities -$6.105M -$9.314M
YoY Change -34.45% 2.35%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $40.00K $0.00
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities $40.56M $33.80M
YoY Change 20.0% -44.13%
NET CHANGE
Cash From Operating Activities -$40.24M -$27.35M
Cash From Investing Activities -$6.105M -$9.314M
Cash From Financing Activities $40.56M $33.80M
Net Change In Cash -$5.788M -$2.867M
YoY Change 101.88% -41.49%
FREE CASH FLOW
Cash From Operating Activities -$40.24M -$27.35M
Capital Expenditures $8.309M $8.240M
Free Cash Flow -$48.55M -$35.59M
YoY Change 36.41% -44.54%

Facts In Submission

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CY2018Q3 us-gaap Preferred Stock Shares Authorized
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CY2019Q3 us-gaap Preferred Stock Shares Outstanding
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CY2019Q3 us-gaap Proceeds From Lines Of Credit
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CY2019Q3 us-gaap Restructuring Charges
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CY2018Q3 us-gaap Revenues
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CY2019Q3 us-gaap Shares Paid For Tax Withholding For Share Based Compensation
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50000000 USD
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26669000 USD
CY2018Q2 us-gaap Stockholders Equity
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CY2018Q3 us-gaap Stockholders Equity
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CY2019Q2 us-gaap Stockholders Equity
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CY2019Q3 us-gaap Stockholders Equity
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CY2018Q2 us-gaap Treasury Stock Shares
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CY2018Q3 us-gaap Treasury Stock Shares
TreasuryStockShares
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CY2019Q2 us-gaap Treasury Stock Shares
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CY2019Q3 us-gaap Treasury Stock Shares
TreasuryStockShares
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CY2018Q3 us-gaap Treasury Stock Value
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TreasuryStockValue
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CY2019Q3 us-gaap Treasury Stock Value
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CY2019Q3 us-gaap Variable Lease Cost
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CY2018Q3 us-gaap Weighted Average Number Of Diluted Shares Outstanding
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CY2019Q3 us-gaap Weighted Average Number Of Diluted Shares Outstanding
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46917000 shares
CY2019Q3 us-gaap Weighted Average Number Of Shares Outstanding Basic
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CY2019Q3 us-gaap Basis Of Accounting
BasisOfAccounting
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:8px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Basis of Presentation and Consolidation</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our condensed consolidated financial statements reflect our condensed consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (&#8220;GAAP&#8221;). In the opinion of the Company&#8217;s management, the accompanying unaudited condensed consolidated financial statements of the Company contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its consolidated financial position and the results of its operations and cash flows for the periods reported. These condensed consolidated financial statements are condensed and therefore do not include all of the information and footnotes required by GAAP. All material intercompany accounts and transactions have been eliminated in consolidation. </font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On August 21, 2018, we acquired the assets of PaperRater.com ("PaperRater"). The condensed consolidated financial statements for the 13 weeks ended </font><font style="font-family:inherit;font-size:10pt;">July&#160;27, 2019</font><font style="font-family:inherit;font-size:10pt;"> include the financial results of PaperRater in the DSS segment and the condensed consolidated financial statements for the 13 weeks ended </font><font style="font-family:inherit;font-size:10pt;">July&#160;28, 2018</font><font style="font-family:inherit;font-size:10pt;"> exclude the financial results of PaperRater. </font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our business is highly seasonal. Our quarterly results also may fluctuate depending on the timing of the start of the various schools' semesters, as well as shifts in our fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods. Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April. Due to the seasonal nature of the business, the results of operations for the 13 weeks ended </font><font style="font-family:inherit;font-size:10pt;">July&#160;27, 2019</font><font style="font-family:inherit;font-size:10pt;"> are not indicative of the results expected for the 53 weeks ending May 2, 2020 (Fiscal 2020). </font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">For certain of our retail operations, sales are generally highest in the second and third fiscal quarters, when students purchase and rent textbooks and other course materials for the typical academic year, and lowest in the first and fourth fiscal quarters. Sales attributable to our wholesale business are generally highest in our first, second and third quarters, as it sells textbooks and other course materials for retail distribution. Our DSS sales and operating profit are realized relatively consistently throughout the year.</font></div><div style="line-height:120%;padding-top:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;"></font></div></div>
CY2019Q3 us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
DescriptionOfNewAccountingPronouncementsNotYetAdopted
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Note 3. </font><font style="font-family:inherit;font-size:10pt;font-weight:bold;text-decoration:underline;">Recent Accounting Pronouncements</font></div><div style="line-height:120%;padding-top:16px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In August 2018, the Financial Accounting Standards Board ("FASB") issued </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer&#8217;s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"), </font><font style="font-family:inherit;font-size:10pt;">which requires an entity (customer) in a hosting arrangement that is a service contract to follow the guidance to determine which implementation costs to capitalize as an asset (as prepaid expense) related to the service contract and which costs to expense. The ASU requires upfront implementation costs incurred in a cloud computing arrangement (or hosting arrangement) that is a service contract to be amortized to hosting expense over the term of the arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. We have adopted this standard effective April 28, 2019 (first day of this fiscal quarter) prospectively for all implementation costs incurred in a cloud computing arrangement (or hosting arrangement) that is a service contract after the date of adoption. Under previous accounting guidance, we capitalized certain implementation costs, primarily related to digital and consumer data platforms, to property and equipment on the condensed consolidated balance sheets and depreciated these implementation costs to depreciation and amortization expense in the consolidated statement of operations over the term of the service contract once the asset was ready for its intended use. The adoption of this standard will impact our condensed consolidated financial statements to the extent that implementation costs which were previously capitalized and depreciated as described above, will be included in prepaid expenses and other assets in the condensed consolidated balance sheets and amortized to selling and administrative expense in the consolidated statement of operations under this adopted guidance. We expect to incur additional costs to implement cloud computing arrangements during the remainder of Fiscal 2020 and expect the implementation costs capitalized to prepaid expense in the condensed consolidated balance sheet will increase accordingly.</font></div></div>
CY2019Q3 us-gaap Nature Of Operations
NatureOfOperations
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Note 1. </font><font style="font-family:inherit;font-size:10pt;font-weight:bold;text-decoration:underline;">Organization</font></div><div style="line-height:120%;padding-top:8px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Description of Business</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Barnes &amp; Noble Education, Inc. (&#8220;BNED&#8221;) is one of the largest contract operators of physical and virtual bookstores for college and university campuses and K-12 institutions across the United States. We are also one of the largest textbook wholesalers, inventory management hardware and software providers, and a leading provider of digital education solutions. We operate </font><font style="font-family:inherit;font-size:10pt;">1,491</font><font style="font-family:inherit;font-size:10pt;"> physical, virtual, and custom bookstores and serve more than </font><font style="font-family:inherit;font-size:10pt;">6 million</font><font style="font-family:inherit;font-size:10pt;"> students, delivering essential educational content and tools within a dynamic omni channel retail environment. Additionally, we offer direct-to-student products and services to help students study more effectively and improve academic performance. </font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The strengths of our business include our ability to compete by developing new products and solutions to meet market needs, our large footprint with direct access to students and faculty, our well-established, deep relationships with partners and stable, long-term contracts, and our well-recognized brands. We expect to continue to grow our business by introducing scalable and advanced digital solutions focused largely on the student, increasing market share with new accounts, and expanding our strategic opportunities through acquisitions and partnerships. </font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Prior to the fourth quarter of fiscal year 2019, we had </font><font style="font-family:inherit;font-size:10pt;">three</font><font style="font-family:inherit;font-size:10pt;"> reportable segments: BNC, MBS, and Digital Student Solutions (&#8220;DSS&#8221;). During the fourth quarter of fiscal year 2019, in an effort to streamline our retail go-to-market strategy, reinforce our company branding, and more efficiently focus our product development efforts, we realigned our business and sales organization into the following </font><font style="font-family:inherit;font-size:10pt;">three</font><font style="font-family:inherit;font-size:10pt;"> reportable segments: Retail, Wholesale and DSS. For additional information related to our strategies, operations and segments, see</font><font style="font-family:inherit;font-size:10pt;font-style:italic;"> Part I - Item 1. Business </font><font style="font-family:inherit;font-size:10pt;">and </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Part II - Item 8. Financial Statements and Supplementary Data - Note 6. Segment Reporting </font><font style="font-family:inherit;font-size:10pt;">in our Annual Report on Form 10-K for the year ended April 27, 2019</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">.</font></div></div>
CY2019Q3 us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Use of Estimates</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In preparing financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.</font></div></div>

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