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| Borders Group Reports Q3 2008 Results; Debt Reduced by Over $273 Million from Prior Year and Year-to-Date Cash Flow from Operations Improved by $110 Million Over 2007 |
ANN ARBOR, Mich., Nov. 25 /PRNewswire-FirstCall/ -- Borders Group, Inc. (NYSE: BGP) today reported results for the third quarter, ended Nov. 1, 2008. On an operating basis, the consolidated loss from continuing operations for the third quarter was essentially flat with the same period a year ago at $39.0 million or $0.64 per share, compared to $38.4 million or $0.65 per share in the third quarter of 2007. On a GAAP basis, the company reported a consolidated third quarter loss from continuing operations of $172.2 million or $2.85 per share compared to a year ago when it recorded a GAAP loss of $40.0 million or $0.68 per share from continuing operations. The GAAP basis loss includes non-cash, non-operating charges totaling $133.2 million in the third quarter, consisting primarily of deferred tax and fixed asset impairments. Comparable store sales for Borders superstores decreased by 12.8% in the third quarter, and with music excluded, declined by 10.6%. Same-store sales at Waldenbooks decreased by 7.7% for the period. "Borders has successfully reduced debt, improved operating cash flow, lowered expenses, improved gross margin-excluding occupancy-and improved inventory productivity during a time of extreme economic challenge," said Borders Group Chief Executive Officer George Jones. "We stated at the beginning of this year that strengthening our balance sheet is our top priority and we are delivering results. We'll remain keenly focused on these critical initiatives, and in addition, will increase our efforts to drive further gross margin improvement. All of the changes we are making will position Borders Group to compete more effectively." Debt, including the prior-year debt of discontinued operations, was reduced from a year ago by 34.2% or $273.1 million at the end of the third quarter to $525.4 million. This compares to debt of $798.5 million at the end of the third quarter last year. The debt reduction year-over-year was driven primarily by improved management of inventory, lower capital expenditures and proceeds from the previously announced sale of the company's Australia/New Zealand/Singapore businesses, which took place in the second quarter of this year. Operating cash flow from continuing operations improved by $110.0 million, as the company recorded fiscal year-to-date cash flow of $9.4 million compared to cash use of $100.6 million for the same period in 2007. Borders Group reduced inventory by $304.2 million at cost-or 19.5%-at the end of the third quarter compared to the end of the third quarter a year ago. Management is now on-track to reduce fiscal 2009 operating expenses by $140 million compared to its previous target of $120 million. As a result, the company expects to save $70 million this year versus its original $60 million target for 2008. Beyond these operating expense improvements, the company believes there is additional opportunity to improve its realized gross margin through a more effective use of promotions and discounts. Early initiatives enabled the company to generate gross margin rate improvement-excluding occupancy-of 30 basis points in the third quarter and the company believes there is substantial room for further improvement. Strategic Alternatives Update Management provided an update to its previously disclosed strategic alternatives process, which included the exploration of a wide range of options, among them the sale of the company and/or certain divisions, including Paperchase Products Ltd. With respect to the sale of the company, management is no longer contemplating a transaction. Regarding Paperchase, as previously disclosed, Borders Group retains its right to exercise its "put" option to sell its Paperchase business to Pershing Square Capital Management for $65 million and is also in discussions with Pershing Square regarding an alternative financing transaction. No assurance can be given as to whether an alternative financing transaction will be entered into or consummated. Additional Consolidated Q3 Results All earnings and loss figures presented throughout this news release are provided on a continuing operations basis, unless otherwise noted. Borders Group achieved third quarter consolidated sales of $682.1 million, a decrease of 10.0% over 2007. Consolidated gross margin as a percent of sales on an operating basis decreased by 1.4% from 22.2% to 20.8% in the third quarter as the negative impact of de-leveraging occupancy costs more than offset the gross margin benefit of a favorable sales mix and lower shrink. Excluding occupancy, third-quarter consolidated gross margin increased by 30 basis points compared to the prior year. On a GAAP basis consolidated gross margin as a percent of sales decreased by 0.6% from 22.1% to 21.5% in the third quarter. On an operating basis, SG&A as a percent of sales in the third quarter decreased 0.1% from 28.7% in the same period last year to 28.6% resulting from de-leveraging caused by negative sales trends that were offset by the benefit of expense reductions. The expense reduction initiatives helped reduce SG&A dollar expenses by $22.3 million in the third quarter compared to the prior year. On a GAAP basis SG&A as a percentage of sales increased 1.3% from 28.7% to 30.0%. Non-Operating Adjustments GAAP consolidated net loss and loss per share figures reported in this release include the impact of non-operating adjustments, which in the third quarter totaled a net after-tax charge of $133.2 million. The net after-tax charge is comprised of deferred tax asset impairments of $107.0 million, store asset impairments of $31.1 million, as well as other items totaling $12.6 million, including severance costs, store closure and relocation costs, professional fees related to the strategic alternatives process, an adjustment to the U.K. lease guarantee liability and amortization of debt issuance costs. These costs were offset by income related to the fair market value adjustment of the warrant liability and a related tax benefit of $12.7 million as well as income received from a landlord lease termination of $4.8 million after tax. Domestic Borders Superstores Total third quarter sales at domestic Borders superstores were $548.4 million, a decrease of 10.9% over the same period in 2007. As stated, comparable store sales decreased by 12.8% for the period compared to last year, a result significantly impacted by a steep decline in customer traffic that was most pronounced in the months of September and October. Excluding the music category, same-store sales declined by 10.6% for the third quarter compared to one year ago. Sales through Borders.com in the third quarter totaled $11.9 million, which is below management expectations due to the challenging sales environment. As a result, Borders Group does not expect Borders.com to break even this year as previously stated. On an operating basis, Borders superstores reported an operating loss of $37.8 million in the third quarter compared to an operating loss of $30.8 million in the same period a year ago. The loss resulted primarily from negative same-store sales, which were partially offset by expense reductions. On a GAAP basis, Borders superstores reported an operating loss of $80.3 million in the third quarter compared to an operating loss of $31.9 million in the same period a year ago. The company opened two new Borders superstores in the U.S. during the period and ended the third quarter with a total of 519 domestic superstore locations. Waldenbooks Specialty Retail Comparable store sales decreased within the Waldenbooks Specialty Retail segment by 7.7% in the third quarter. Total sales in the segment were down by 16.6% in the third quarter to $91.5 million, as the number of stores was reduced from 521 at the close of the third quarter 2007 to 467 at the end of the third quarter this year. Company expense reduction initiatives and better gross margin performance drove an improvement in the third quarter operating loss for the Waldenbooks Specialty Retail segment. On an operating basis, the operating loss was $13.2 million in the third quarter this year compared to $19.4 million in the third quarter last year. On a GAAP basis, the operating loss for the Waldenbooks Specialty Retail segment was $17.7 million in the third quarter this year compared to $20.5 million in the third quarter last year. International In the third quarter, sales within the International segment (which consists primarily of Paperchase) totaled $30.3 million, which is down 6.2% compared to the same period a year ago. Excluding the impact of foreign currency translation, sales would have increased by 2.7%. On an operating basis, the segment generated an operating loss of $1.6 million in the third quarter this year compared to operating income of $1.8 million in the third quarter last year. On a GAAP basis, the segment generated an operating loss of $1.8 million in the third quarter this year compared to operating income of $1.8 million in the third quarter last year. Next Financial Release Borders Group plans to issue holiday sales results in mid-January. Fourth quarter 2008 results will be issued March 19 after market close with a conference call for investors the following day, March 20, at 8 a.m. About Borders Group Headquartered in Ann Arbor, Mich., Borders Group, Inc. (NYSE: BGP), is a leading retailer of books, music and movies with more than 28,000 employees. Through its subsidiaries, the company operates more than 1,100 stores worldwide primarily under the Borders(R) and Waldenbooks(R) brand names and recently launched Borders.com for online shopping. For more information, visit www.borders.com/aboutus. Safe Harbor Statement This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. One can identify these forward-looking statements by the use of words such as "projects," "expect," "estimated," "look toward," "going forward," "continue," "maintain," "planning," "returning," "guidance," "goal," "will," "may," "intend," "anticipates," and other words of similar meaning. One can also identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address matters such as the company's future financial performance (including earnings per share, gross margins and inventory turns, liquidity, same-store sales, cost reduction initiatives, and anticipated capital expenditures and depreciation and amortization amounts) and its cost reduction initiatives and the benefits thereof. These statements are subject to risks and uncertainties that could cause actual results and plans to differ materially from those included in the company's forward- looking statements. These risks and uncertainties include, but are not limited to, consumer demand for the company's products, particularly during the holiday season, which is believed to be related to general economic and geopolitical conditions, competition and other factors; the availability of adequate capital-including vendor credit-to fund the company's operations and to carry out its strategic plans and the performance of the company's information technology systems and the development of improvements to the systems necessary to implement the company's strategic plan. The company's periodic reports filed from time to time with the Securities and Exchange Commission contain more detailed discussions of these and other risk factors that could cause actual results and plans to differ materially from those included in the forward-looking statements, and those discussions are incorporated herein by reference. The company does not undertake any obligation to update forward-looking statements.
Borders Group, Inc. Financial Statements
(amounts in millions, except per share amounts)
Unaudited
Sales and Earnings Summary
Quarter Ended Quarter Ended
November 1, 2008(1) November 3, 2007(1)
Operating Adjustments GAAP Operating Adjustments GAAP
Basis(2) (2) Basis Basis(3) (3) Basis
Domestic Borders
Superstores $548.4 $- $548.4 $615.8 $- $615.8
Borders.com 11.9 - 11.9 - - -
Waldenbooks
Specialty
Retail 91.5 - 91.5 109.7 - 109.7
International 30.3 - 30.3 32.3 - 32.3
Total sales 682.1 - 682.1 757.8 - 757.8
Other revenue 11.3 - 11.3 7.4 - 7.4
Total revenue 693.4 - 693.4 765.2 - 765.2
Cost of goods
sold, including
occupancy costs 551.1 (4.5) 546.6 597.3 1.2 598.5
Gross margin 142.3 4.5 146.8 167.9 (1.2) 166.7
Selling, general
and administrative
expenses 195.2 9.4 204.6 217.5 (0.2) 217.3
Pre-opening
expense 0.3 - 0.3 1.3 - 1.3
Asset impairments
and other
writedowns - 50.1 50.1 - 1.4 1.4
Operating loss (53.2) (55.0) (108.2) (50.9) (2.4) (53.3)
Interest expense 8.8 (7.7) 1.1 12.2 - 12.2
Loss before
income taxes (62.0) (47.3) (109.3) (63.1) (2.4) (65.5)
Income taxes
(benefit) (23.0) 85.9 62.9 (24.7) (0.8) (25.5)
Loss from
continuing
operations $(39.0) $(133.2) $(172.2) $(38.4) $(1.6) $(40.0)
Loss from
operations of
discontinued
operations
(net of tax) - - - (3.6) - (3.6)
Loss from
disposal of
discontinued
operations
(net of tax) - (3.2) (3.2) - (117.5) (117.5)
Loss from
discontinued
operations
(net of tax) - (3.2) (3.2) (3.6) (117.5) (121.1)
Net loss $(39.0) $(136.4) $(175.4) $(42.0) $(119.1) $(161.1)
Basic EPS from
continuing
operations $(0.64) $(2.21) $(2.85) $(0.65) $ (0.03) $(0.68)
Basic EPS from
discontinued
operations $- $(0.05) $(0.05) $(0.06) $ (2.00) $(2.06)
Basic EPS
including
discontinued
operations $(0.64) $(2.26) $(2.90) $(0.71) $ (2.03) $(2.74)
Basic weighted
avg. common
shares 60.5 60.5 60.5 58.8 58.8 58.8
Comparable Store
Sales
Domestic Borders
Superstores (12.8%) 1.1%
Waldenbooks
Specialty
Retail (7.7%) 3.6%
Sales and Earnings Summary (As Percentage of Total Sales)
Quarter Ended Quarter Ended
November 1, 2008(1) November 3, 2007(1)
Operating Adjustments GAAP Operating Adjustments GAAP
Basis(2) (2) Basis Basis(3) (3) Basis
Domestic
Borders
Superstores 80.4% -% 80.4% 81.3% -% 81.3%
Borders.com 1.7 - 1.7 - - -
Waldenbooks
Specialty
Retail 13.4 - 13.4 14.5 - 14.5
International 4.5 - 4.5 4.2 - 4.2
Total sales 100.0 - 100.0 100.0 - 100.0
Other revenue 1.7 - 1.7 1.0 - 1.0
Total revenue 101.7 - 101.7 101.0 - 101.0
Cost of goods
sold,
including
occupancy
costs 80.9 (0.7) 80.2 78.8 0.1 78.9
Gross margin 20.8 0.7 21.5 22.2 (0.1) 22.1
Selling,
general and
administrative
expenses 28.6 1.4 30.0 28.7 - 28.7
Pre-opening
expense - - - 0.2 - 0.2
Asset
impairments
and other
writedowns - 7.3 7.3 - 0.2 0.2
Operating loss (7.8) (8.0) (15.8) (6.7) (0.3) (7.0)
Interest
expense 1.3 (1.1) 0.2 1.6 - 1.6
Loss before
income taxes (9.1) (6.9) (16.0) (8.3) (0.3) (8.6)
Income taxes (3.4) 12.6 9.2 (3.3) (0.1) (3.4)
Loss from
continuing
operations (5.7)% (19.5)% (25.2)% (5.0)% (0.2)% (5.2)%
(1) The results of Borders Ireland, Books etc., UK Superstores, Borders Australia, Borders New Zealand and Borders Singapore are reported as discontinued operations. (2) Results from 2008 were impacted by a number of non-operating items, including deferred tax asset impairments, store asset impairments, store closure costs, severance costs, professional fees related to strategic alternatives and amortization of the term loan discount and debt issuance costs, offset by income related to the fair market value adjustment of the warrant liability and related tax benefit as well as income received from a landlord lease termination. Therefore, solely for analytical purposes and as an aid to better understand underlying trends, operating basis data are presented excluding these items. (3) Results from 2007 were impacted by a number of non-operating items, including store closure costs and severance costs. Therefore, solely for analytical purposes and as an aid to better understand underlying trends, operating basis data are presented excluding these items.
Borders Group, Inc. Financial Statements
(amounts in millions, except per share amounts)
Unaudited
Sales and Earnings Summary
Nine Months Ended Nine Months Ended
November 1, 2008(1) November 3, 2007(1)
Operating Adjustments GAAP Operating Adjustments GAAP
Basis(2) (2) Basis Basis(3) (3) Basis
Domestic
Borders
Superstores $1,763.6 $- $1,763.6 $1,889.4 $- $1,889.4
Borders.com 19.3 - 19.3 - - -
Waldenbooks
Specialty
Retail 284.4 - 284.4 334.5 - 334.5
International 93.5 - 93.5 89.9 - 89.9
Total sales 2,160.8 - 2,160.8 2,313.8 - 2,313.8
Other revenue 26.9 - 26.9 20.5 - 20.5
Total revenue 2,187.7 - 2,187.7 2,334.3 - 2,334.3
Cost of goods
sold, including
occupancy costs 1,694.2 (3.0) 1,691.2 1,783.9 6.4 1,790.3
Gross margin 493.5 3.0 496.5 550.4 (6.4) 544.0
Selling, general
and administra-
tive expenses 598.4 21.8 620.2 643.5 8.1 651.6
Pre-opening
expense 2.4 - 2.4 3.8 - 3.8
Asset impairments
and other
writedowns - 50.1 50.1 - 2.6 2.6
Operating loss (107.3) (68.9) (176.2) (96.9) (17.1) (114.0)
Interest expense 23.7 (16.5) 7.2 32.7 - 32.7
Loss before
income taxes (131.0) (52.4) (183.4) (129.6) (17.1) (146.7)
Income taxes
(benefit) (51.0) 81.2 30.2 (54.1) (4.6) (58.7)
Loss from
continuing
operations $(80.0) $(133.6) $(213.6) $(75.5) $(12.5) $(88.0)
Loss from
operations of
discontinued
operations
(net of tax) (1.7) - (1.7) (11.7) (1.6) (13.3)
Loss on disposal
of discontinued
operations
(net of tax) - (1.0) (1.0) - (120.8) (120.8)
Loss from
discontinued
operations
(net of tax) (1.7) (1.0) (2.7) (11.7) (122.4) (134.1)
Net loss $(81.7) $(134.6) $(216.3) $(87.2) $(134.9) $(222.1)
Basic EPS from
continuing
operations $(1.33) $(2.22) $(3.55) $(1.29) $(0.21) $ (1.50)
Basic EPS from
discontinued
operations $(0.02) $(0.02) $(0.04) $(0.20) $(2.08) $ (2.28)
Basic EPS
including
discontinued
operations $(1.35) $(2.24) $(3.59) $(1.49) $(2.29) $ (3.78)
Basic weighted
avg. common
shares 60.2 60.2 60.2 58.7 58.7 58.7
Comparable
Store Sales
Domestic
Borders
Superstores (8.6%) 1.3%
Waldenbooks
Specialty
Retail (5.2%) 3.0%
Sales and Earnings Summary (As Percentage of Total Sales)
Nine Months Ended Nine Months Ended
November 1, 2008(1) November 3, 2007(1)
Operating Adjustments GAAP Operating Adjustments GAAP
Basis(2) (2) Basis Basis(3) (3) Basis
Domestic
Borders
Superstores 81.6% -% 81.6% 81.7% -% 81.7%
Borders.com 0.9 - 0.9 - - -
Waldenbooks
Specialty
Retail 13.2 - 13.2 14.4 - 14.4
International 4.3 - 4.3 3.9 - 3.9
Total sales 100.0 - 100.0 100.0 - 100.0
Other revenue 1.2 - 1.2 0.9 - 0.9
Total revenue 101.2 - 101.2 100.9 - 100.9
Cost of goods
sold,
including
occupancy
costs 78.3 (0.1) 78.2 77.1 0.3 77.4
Gross margin 22.9 0.1 23.0 23.8 (0.3) 23.5
Selling, general
and administra-
tive expenses 27.7 1.0 28.7 27.8 0.4 28.2
Pre-opening
expense 0.2 - 0.2 0.2 - 0.2
Asset impairments
and other
writedowns - 2.3 2.3 - - -
Operating loss (5.0) (3.2) (8.2) (4.2) (0.7) (4.9)
Interest expense 1.1 (0.8) 0.3 1.4 - 1.4
Loss before income
taxes (6.1) (2.4) (8.5) (5.6) (0.7) (6.3)
Income taxes (2.4) 3.8 1.4 (2.3) (0.2) (2.5)
Loss from
continuing
operations (3.7)% (6.2)% (9.9)% (3.3)% (0.5)% (3.8)%
(1) The results of Borders Ireland Limited, Books etc., U.K. Superstores, Borders Australia, Borders New Zealand and Borders Singapore are reported as discontinued operations. (2) Results from 2008 were impacted by a number of non-operating items, including deferred tax asset impairments, store asset impairments, store closure costs, severance costs, professional fees related to strategic alternatives and amortization of the term loan discount and debt issuance costs, offset by income related to the fair market value adjustment of the warrant liability and related tax benefit as well as income received from a landlord lease termination. Therefore, solely for analytical purposes and as an aid to better understand underlying trends, operating basis data are presented excluding these items. (3) Results from 2007 were impacted by a number of non-operating items, including store closure costs and severance costs. Therefore, solely for analytical purposes and as an aid to better understand underlying trends, operating basis data are presented excluding these items.
Borders Group, Inc. Financial Statements
(dollars in millions)
Unaudited
Condensed Consolidated Balance Sheets
November 1, November 3, February 2,
2008 2007 2008
Assets
Cash and cash equivalents $38.4 $61.1 $58.5
Inventory 1,256.5 1,560.7 1,242.0
Other current assets 99.6 109.7 103.5
Current assets of
discontinued operations(1) - 107.7 102.0
Property and equipment, net 521.3 608.6 592.8
Other assets and deferred
charges 90.7 121.9 109.8
Goodwill 40.5 40.3 40.5
Noncurrent assets of
discontinued operations - 52.6 53.6
Total assets $2,047.0 $2,662.6 $2,302.7
Liabilities, Minority Interest
and Stockholders' Equity
Short-term borrowings and
current portion of
long-term debt $518.0 $789.5 $548.6
Accounts payable 613.2 744.3 511.9
Other current liabilities 311.5 306.3 349.8
Current liabilities of
discontinued operations(2) - 61.7 57.5
Long-term debt 7.4 5.3 5.4
Other long-term liabilities 353.9 317.4 325.0
Noncurrent liabilities of
discontinued operations - 22.9 25.4
Total liabilities 1,804.0 2,247.4 1,823.6
Minority interest 2.0 2.2 2.2
Total stockholders' equity 241.0 413.0 476.9
Total liabilities, minority
interest and stockholders'
equity $2,047.0 $2,662.6 $2,302.7
(1) Includes $4.4 and $2.5 million of cash and cash equivalents as of November 3, 2007 and February 2, 2008, respectively. (2) Includes $3.7 million of short-term borrowings as of November 3, 2007.
Certain reclassifications have been made to conform to current year
presentation.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended
November 1, November 3,
2008 2007
CASH PROVIDED BY (USED FOR):
OPERATIONS
Loss from continuing operations $(213.6) $(88.0)
Adjustments to reconcile loss from
continuing operations to operating
cash flows:
Depreciation 82.4 74.2
Change in other long-term assets,
liabilities and deferred charges 32.8 6.6
Asset impairments and other writedowns 48.4 -
(Increase) in inventories (19.4) (266.2)
Increase in accounts payable 103.5 172.9
Cash used for other current assets and
other current liabilities (24.7) (0.1)
Net cash provided by (used for) operating
activities of continuing operations 9.4 (100.6)
INVESTING
Capital expenditures (72.0) (104.7)
Proceeds from the sale of discontinued
operations 94.5 20.4
Net cash provided by (used for) investing
activities of continuing operations 22.5 (84.3)
FINANCING
Net (repayment of) funding from debt and
financing obligations (28.6) 285.0
Issuance and repurchase of common stock 5.3 6.6
Net funding from (repayment of) long-term debt 0.8 (0.2)
Cash dividends paid (6.5) (19.4)
Net cash provided by (used for) financing
activities of continuing operations (29.0) 272.0
Effect of exchange rates on cash and equivalents - 0.1
Net cash used for discontinued operations (23.0) (123.7)
NET DECREASE IN CASH AND EQUIVALENTS (20.1) (36.5)
Cash and equivalents at beginning of year 58.5 97.6
Cash and equivalents at end of period $38.4 $61.1
Borders Group, Inc. Financial Statements
Unaudited
Store Activity Summary
Quarter Ended Nine Months Ended Year Ended
Nov. 1, Nov. 3, Nov. 1, Nov. 3, Feb. 2,
2008 2007 2008 2007 2008
Domestic
Borders
Superstores
Beginning
number of
stores 518 506 509 499 499
Openings 2 4 11 12 18
Closings (1) - (1) (1) (8)
Ending number
of stores 519 510 519 510 509
Ending square
footage
(in millions) 12.8 12.6 12.8 12.6 12.6
Waldenbooks
Specialty
Retail
Stores (1)
Beginning
number of
stores 468 532 490 564 564
Openings --
Airport stores 5 1 5 1 1
Closings (6) (12) (28) (44) (75)
Ending number
of stores 467 521 467 521 490
Ending square
footage
(in millions) 1.8 2.0 1.8 2.0 1.9
(1) Includes all small format stores in malls, airports and outlet malls.
Borders Group, Inc. Segment Financial Information
(dollars in millions, except per share amounts)
Unaudited
Quarter Ended Quarter Ended
November 1, 2008 November 3, 2007
Operating Adjustments GAAP Operating Adjustments GAAP
Basis(1) (1) Basis Basis(2) (2) Basis
Domestic
Borders
Superstores
Superstores
sales $ 548.4 $- $548.4 $615.8 $- $615.8
Borders.com
sales 11.9 - 11.9 - - -
Total sales $ 560.3 $- $560.3 $615.8 $- $615.8
Depreciation
expense 23.8 - 23.8 22.5 (0.3) 22.2
Operating loss (37.8) (42.5) (80.3) (30.8) (1.1) (31.9)
Waldenbooks
Specialty
Retail
Sales $91.5 $- $91.5 $109.7 $- $109.7
Depreciation
expense 2.3 - 2.3 2.2 - 2.2
Operating loss (13.2) (4.5) (17.7) (19.4) (1.1) (20.5)
International (3)
Sales $30.3 $- $30.3 $32.3 $- $32.3
Depreciation
expense 1.6 - 1.6 1.3 - 1.3
Operating loss (1.6) (0.2) (1.8) 1.8 - 1.8
Corporate (4)
Operating loss $(0.6) $(7.8) $(8.4) $(2.5) $(0.2) $(2.7)
Consolidated (3)
Sales $682.1 $- $682.1 $757.8 $- $757.8
Depreciation
expense 27.7 - 27.7 26.0 (0.3) 25.7
Operating loss (53.2) (55.0) (108.2) (50.9) (2.4) (53.3)
Nine Months Ended Nine Months Ended
November 1, 2008 November 3, 2007
Operating Adjustments GAAP Operating Adjustments GAAP
Basis(1) (1) Basis Basis(2) (2) Basis
Domestic
Borders
Superstores
Superstore
sales $1,763.6 $- $1,763.6 $1,889.4 $- $1,889.4
Borders.com
sales 19.3 - 19.3 - - -
Total sales $1,782.9 $- $1,782.9 $1,889.4 $- $1,889.4
Depreciation
expense 70.9 - 70.9 65.6 0.2 65.8
Operating loss (68.8) (49.2) (118.0) (45.2) (11.6) (56.8)
Waldenbooks
Specialty
Retail
Sales $284.4 $- $284.4 $334.5 $- $334.5
Depreciation
expense 6.9 - 6.9 4.8 - 4.8
Operating loss (32.7) (6.3) (39.0) (43.8) (3.1) (46.9)
International (3)
Sales $93.5 $- $93.5 $89.9 $- $89.9
Depreciation
expense 4.6 - 4.6 3.6 - 3.6
Operating loss (1.5) (0.3) (1.8) 0.7 - 0.7
Corporate (4)
Operating loss $(4.3) $(13.1) $(17.4) $(8.6) $(2.4) $(11.0)
Consolidated (3)
Sales $2,160.8 $- $2,160.8 $2,313.8 $- $2,313.8
Depreciation
expense 82.4 - 82.4 74.0 0.2 74.2
Operating loss (107.3) (68.9) (176.2) (96.9) (17.1) (114.0)
(1) Results from 2008 were impacted by a number of non-operating items, including deferred tax asset impairments, store asset impairments, store closure costs, severance costs, professional fees related to strategic alternatives and amortization of the term loan discount and debt issuance costs, offset by income related to the fair market value adjustment of the warrant liability and related tax benefit as well as income received from a landlord lease termination. Therefore, solely for analytical purposes and as an aid to better understand underlying trends, operating basis data are presented excluding these items. (2) Results from 2007 were impacted by a number of non-operating items, including store closure costs and severance costs. Therefore, solely for analytical purposes and as an aid to better understand underlying trends, operating basis data are presented excluding these items. (3) Excludes the results of discontinued operations (Borders Ireland, Books etc., UK Superstores, Borders Australia, Borders New Zealand and Borders Singapore). (4) The Corporate segment includes various corporate governance costs and corporate incentive costs.
SOURCE Borders Group, Inc. |