Operating Cash Flow Improved by $129 Million
Debt Reduced by $218 Million
SG&A Expenses Reduced by $96.5 Million
ANN ARBOR, Mich., March 31 /PRNewswire-FirstCall/ -- Borders Group, Inc. (NYSE: BGP) today reported results for the fiscal fourth quarter and full year 2008, ended Jan. 31, 2009. Highlights include:
- On a full-year basis, cash flow from operations improved by $128.6 million at year-end as SG&A expenses were reduced by $96.5 million and inventory was reduced by $326.8 million.
- Debt at year-end was reduced by $217.8 million to $336.2 million -- a 39.3% reduction.
- Total consolidated 2008 sales were $3.2 billion, down 8.8% from 2007. For the fourth quarter, total consolidated sales were $1.1 billion, down 12.9% from a year ago.
- Comparable store sales for the fourth quarter at Borders superstores declined by 15.3% and declined by 4.7% at Waldenbooks Specialty Retail stores. For the full year, same-store sales declined by 10.8% at Borders and declined by 5.1% at Waldenbooks.
- On an operating basis, the company generated fourth-quarter income from continuing operations of $63.8 million or $1.05 per share compared to income of $74.3 million or $1.26 cents per share for the same period a year ago. On a GAAP basis, including non-operating charges, fourth quarter income from continuing operations was $28.9 million or $0.48 per share compared to income of $67.3 million or $1.14 per share a year ago.
"Our top priority is getting our financial house in order by continuing to reduce expenses, pay down debt and improve cash flow," said Borders Group Chief Executive Officer Ron Marshall. "We are working with vendors and others to enhance cooperation and are pleased to have the continued support of our largest shareholder with the recently announced extension of our financing agreement with Pershing Square. At the same time, we are focused on driving sales through improved execution and by re-engaging with our customers. Borders is a strong brand with millions of loyal customers. I am confident that by shoring up our financial foundation and reclaiming our position as the bookseller for serious readers, we will ultimately secure a viable future."
(Logo: http://www.newscom.com/cgi-bin/prnh/20060208/BORDERSGRPLOGO)
Consolidated Results
All sales and earnings/loss figures reported throughout this news release are on a continuing operations basis unless otherwise noted.
Fourth quarter consolidated sales were $1.1 billion, down 12.9% from a year ago. For the full year, consolidated sales were $3.2 billion, an 8.8% decrease from 2007. On an operating basis, Borders Group generated fourth-quarter income of $63.8 million or $1.05 per share compared to income of $74.3 million or $1.26 per share for the same period last year. On a GAAP basis, fourth-quarter income was $28.9 million or $0.48 per share compared to GAAP income of $67.3 million or $1.14 per share a year ago. The fourth quarter GAAP income includes non-operating charges -- primarily non-cash--totaling $34.9 million. For the full year, on an operating basis, the company posted a consolidated loss of $16.2 million or $0.27 per share in 2008 compared to a loss of $0.4 million or $0.01 per share in 2007. On a GAAP basis, the full-year loss was $184.7 million or $3.07 per share, compared to a loss of $19.9 million or $0.34 per share in 2007. The GAAP full-year loss includes an after-tax, non-operating charge of $168.5 million, also primarily non-cash.
Excluding non-operating charges, SG&A as a percent of sales improved in the fourth quarter by 1.8% from 20.7% to 18.9% due to the company's aggressive expense reduction initiatives, which were offset by de-leveraging due to negative sales trends. Expense reduction initiatives helped reduce SG&A dollar expenses by $52.1 million in the quarter. On a GAAP basis, SG&A as a percent of sales decreased in the fourth quarter by 0.3% from 20.6% to 20.3%. For the full year, SG&A as a percent of sales on an operating basis improved by 0.6% from 25.4% to 24.8% due to expense reductions, which drove an SG&A dollar decline of $96.5 million. On a GAAP basis, SG&A as a percent of sales for the full year increased by 0.4% to 25.9% compared to 25.5% in 2007.
Operating cash flow improved in the fourth quarter by $18.3 million to $219.6 million compared to $201.3 million for the period in the prior year. For the full-year, operating cash flow improved by $128.6 million to $233.6 million from $105.0 million in 2007.
Full-year capital expenditures were $79.9 million compared to $131.3 million in 2007 as management took aggressive action to reduce capital expenditures. In the fourth quarter, capital expenditures totaled $6.2 million and further reduction is planned. Year-end debt totaled $336.2 million compared to debt at the end of 2007 of $554.0 million, a decrease of 39.3%. Inventory productivity improved as the company reduced its 2008 year-end inventory investment to $915.2 million compared to 2007 year-end inventory of $1.24 billion, a 26.3% reduction.
Non-Operating Adjustments
The following table details the non-operating adjustments for the fourth quarter and full year 2008.
Non-Operating Adjustments -- $in millions Q4 2008 Full Year 2008
Goodwill impairment $40.3 $40.3
Store asset impairments $4.2 $35.3
Store closure costs $9.0 $11.3
Term loan costs $2.8 $9.8
Severance and other compensation costs $7.8 $9.9
Strategic alternative costs $2.2 $7.3
Warrant liability re-measurement $(12.9) $(40.1)
Deferred tax asset impairment
and other tax items $(21.4) $88.2
All other combined $2.9 $6.5
Total $34.9 $168.5
Borders Superstores
Total sales at Borders superstores in the fourth quarter were $816.1 million, down 14.8% from a year ago. For the full year, total sales were $2.6 billion, down 9.4% from 2007. In the fourth quarter, comparable store sales decreased by 15.3% at Borders superstores with books generating same-store sales of -11.7% and non-book categories generating same-store sales of -21.1% for the period. For the full year, comparable store sales at Borders stores decreased by 10.8% with books generating same-store sales of -8.2% and non-book categories generating same store sales of -16.1%. Borders.com sales were $26.4 million in the fourth quarter and $45.7 million for 2008, which included eight months of operation.
Operating income on an operating basis in the fourth quarter was $86.5 million compared to $102.1 million for the same period a year ago. On a GAAP basis, operating income in the fourth quarter was $17.1 million compared to $87.4 million the prior year. For the full year, operating income on an operating basis was $17.7 million compared to $56.9 million in 2007. On a GAAP basis, there was an operating loss of $100.9 million compared to income of $30.6 million in 2007.
The company opened one new Borders superstore in the U.S. during the fourth quarter and closed five, ending fiscal 2008 with a total of 515 superstore locations.
Waldenbooks Specialty Retail
Total sales in the fourth quarter at Waldenbooks Specialty Retail stores were $195.6 million, a 14.3% decline compared to the same period in 2007. For the full-year, total segment sales were $480 million, a decline of 14.7% from the prior year. Comparable store sales in the fourth quarter decreased by 4.7% and decreased by 5.1% for the full year.
In the fourth quarter, on an operating basis, operating income was $16.0 million compared to operating income of $26.5 million for the same period in 2007. On a GAAP basis, operating income was $11.5 million compared to $25.5 million for the same period in 2007. For the full year, on an operating basis, the operating loss was $16.7 million compared to an operating loss of $17.3 million for the same period in 2007. On a GAAP basis, the full year operating loss was $27.5 million compared to an operating loss of $21.4 million for the same period in 2007.
The company closed 84 Waldenbooks Specialty Retail locations in the fourth quarter, bringing the fiscal 2008 closure total to 112. Borders Group ended fiscal 2008 with a total of 386 locations in this segment.
International
Total sales within the International segment (which consists primarily of Paperchase) totaled $43.2 million in the fourth quarter, which is down by 21.7% compared to a year ago. Excluding the impact of foreign currency translation, segment sales would have increased by 0.2% for the period. For the full-year, International sales were $136.7 million, down by 5.8% compared to 2007. Excluding the impact of foreign currency translation, sales would have increased by 4.7% for the year.
On an operating basis, operating income for the fourth quarter was $6.0 million compared to income of $7.0 million a year ago. On a GAAP basis, operating income in the fourth quarter was $5.5 million compared to income of $6.6 million the prior year. For the full-year, operating income on an operating basis was $4.5 million compared to $8.4 million in 2007. On a GAAP basis, full-year operating income was $3.7 million compared to $8.0 million in 2007.
Outlook
"In this economy, we expect sales trends to continue to be negative throughout 2009 and will manage the business accordingly," said Marshall. "We have planned only minimal capital expenditures and will continue to hold the line on our deeply reduced cost structure while remaining engaged with our vendors and others as we work to get the company on more firm financial footing. In addition, our efforts to drive the top line and improve margins will continue to intensify as we move forward."
Next Financial Release
Borders Group plans to issue fiscal first quarter 2009 results May 26 after market close with a conference call for investors the following day, May 27, at 8 a.m. Eastern.
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 25,000 employees. Through its subsidiaries, the company operates approximately 1,000 stores worldwide primarily under the Borders(R) and Waldenbooks(R) brand names. For online shopping, visit Borders.com. For more information about the company, visit www.borders.com/media.
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 condition and 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
January 31, 2009 (1) February 2, 2008 (1)
Operating Adjustments GAAP Operating Adjustments GAAP
Basis (2) (2) Basis Basis (3) (3) Basis
Borders
Superstores $842.5 $- $842.5 $957.8 $- $957.8
Waldenbooks
Specialty
Retail 195.6 - 195.6 228.3 - 228.3
International 43.2 - 43.2 55.2 - 55.2
Total
sales 1,081.3 - 1,081.3 1,241.3 - 1,241.3
Other revenue 6.4 - 6.4 21.1 - 21.1
Total
revenue 1,087.7 - 1,087.7 1,262.4 - 1,262.4
Cost of
goods sold,
including
occupancy
costs 775.4 18.9 794.3 871.5 6.5 878.0
Gross
margin 312.3 (18.9) 293.4 390.9 (6.5) 384.4
Selling,
general and
administrative
expenses 204.0 14.7 218.7 256.1 ( 0.7) 255.4
Pre-opening
expense 0.4 - 0.4 1.2 - 1.2
Goodwill
impairment - 40.3 40.3 - - -
Asset impairments
and other
writedowns - 7.0 7.0 - 10.4 10.4
Operating
Income
(loss) 107.9 (80.9) 27.0 133.6 (16.2) 117.4
Interest expense 6.5 (8.4) (1.9) 10.5 - 10.5
Income (loss)
before
income
taxes 101.4 (72.5) 28.9 123.1 (16.2) 106.9
Income taxes
(benefit) 37.6 (37.6) - 48.8 (9.2) 39.6
Income (loss)
from
continuing
operations $63.8 $(34.9) $28.9 $74.3 $(7.0) $67.3
Loss from
operations of
discontinued
operations
(net of tax) - - - 10.4 (5.0) 5.4
Gain on disposal
of discontinued
operations
(net of tax) - 0.7 0.7 - (8.0) (8.0)
Gain from
discontinued
operations
(net of tax) - 0.7 0.7 10.4 (13.0) (2.6)
Net Income
(loss) $63.8 $(34.2) $29.6 $84.7 $(20.0) $64.7
Diluted EPS from
continuing
operations $1.05 $(0.57) $0.48 $1.26 $(0.12) $1.14
Diluted EPS from
discontinued
operations $- $0.01 $0.01 $0.18 $(0.22) $(0.04)
Diluted EPS
including
discontinued
operations $1.05 $(0.56) $0.49 $1.44 $(0.34) $1.10
Diluted weighted
avg. common
shares 60.6 60.6 60.6 58.8 58.8 58.8
Comparable Store Sales
Borders Superstores (15.3%) 2.1%
Waldenbooks
Specialty
Retail (4.7%) 1.2%
Sales and Earnings Summary (As Percentage of Total Sales)
Quarter Ended Quarter Ended
January 31, 2009 (1) February 2, 2008 (1)
Operating Adjustments GAAP Operating Adjustments GAAP
Basis (2) (2) Basis Basis (3) (3) Basis
Borders
Superstores 77.9% -% 77.9% 77.2% -% 77.2%
Waldenbooks
Specialty
Retail 18.1 - 18.1 18.4 - 18.4
International 4.0 - 4.0 4.4 - 4.4
Total
sales 100.0 - 100.0 100.0 - 100.0
Other revenue 0.5 - 0.5 1.7 - 1.7
Total
revenue 100.5 - 100.5 101.7 - 101.7
Cost of goods
sold, including
occupancy
costs 71.7 1.7 73.4 70.1 0.6 70.7
Gross
margin 28.8 (1.7) 27.1 31.6 (0.6) 31.0
Selling,
general and
administrative
expenses 18.9 1.4 20.3 20.7 (0.1) 20.6
Pre-opening
expense - - - 0.1 - 0.1
Goodwill
impairment - 3.7 3.7 - - -
Asset
impairments
and other
writedowns - 0.7 0.7 - 0.8 0.8
Operating
Income
(loss) 9.9 (7.5) 2.4 10.8 (1.3) 9.5
Interest
expense 0.6 (0.8) (0.2) 0.9 - 0.9
Income (loss)
before income
taxes 9.3 (6.7) 2.6 9.9 (1.3) 8.6
Income taxes
(benefit) 3.4 (3.4) - 3.9 (0.7) 3.2
Income
(loss) from
continuing
operations 5.9% (3.3)% 2.6% 6.0% (0.6)% 5.4%
(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,
goodwill impairment, 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 legal
settlement. 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 asset impairments, store closure costs and write-offs
related to the Company's music reduction initiative. 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
Year Ended Year Ended
January 31, 2009 (1) February 2, 2008 (1)
Operating Adjustments GAAP Operating Adjustments GAAP
Basis (2) (2) Basis Basis (3) (3) Basis
Borders
Superstores $2,625.4 $- $2,625.4 $2,847.2 $- $2,847.2
Waldenbooks
Specialty
Retail 480.0 - 480.0 562.8 - 562.8
International 136.7 - 136.7 145.1 - 145.1
Total
sales 3,242.1 - 3,242.1 3,555.1 - 3,555.1
Other revenue 33.3 - 33.3 42.3 - 42.3
Total
revenue 3,275.4 - 3,275.4 3,597.4 - 3,597.4
Cost of goods
sold, including
occupancy
costs 2,468.9 15.9 2,484.8 2,655.4 12.9 2,668.3
Gross
margin 806.5 (15.9) 790.6 942.0 (12.9) 929.1
Selling,
general and
administrative
expenses 803.1 36.5 839.6 899.6 7.4 907.0
Pre-opening
expense 2.8 - 2.8 5.0 - 5.0
Goodwill
impairment - 40.3 40.3 - - -
Asset impairments
and other
writedowns - 57.1 57.1 - 13.0 13.0
Operating Income
(loss) 0.6 (149.8) (149.2) 37.4 (33.3) 4.1
Interest expense 30.2 (24.9) 5.3 43.1 - 43.1
Loss before
income
taxes (29.6) (124.9) (154.5) (5.7) (33.3) (39.0)
Income taxes
(benefit) (13.4) 43.6 30.2 (5.3) (13.8) (19.1)
Loss from
continuing
operations $(16.2) $(168.5) $(184.7) $(0.4) $(19.5) $(19.9)
Loss from
operations of
discontinued
operations
(net of tax) (1.7) - (1.7) (2.1) (6.6) (8.7)
Loss on disposal
of discontinued
operations
(net of tax) - (0.3) (0.3) - (128.8) (128.8)
Loss from
discontinued
operations
(net of tax) (1.7) (0.3) (2.0) (2.1) (135.4) (137.5)
Net loss $(17.9) $(168.8) $(186.7) $(2.5) $(154.9) $(157.4)
Basic EPS from
continuing
operations $(0.27) $(2.80) $(3.07) $(0.01) $(0.33) $(0.34)
Basic EPS from
discontinued
operations $(0.03) $- $(0.03) $(0.03) $(2.31) $(2.34)
Basic EPS
including
discontinued
operations $(0.30) $(2.80) $(3.10) $(0.04) $(2.64) $(2.68)
Basic weighted
avg. common
shares 60.2 60.2 60.2 58.7 58.7 58.7
Comparable Store Sales
Borders
Superstores (10.8%) 1.5%
Waldenbooks
Specialty
Retail (5.1%) 2.2%
Sales and Earnings Summary (As Percentage of Total Sales)
Year Ended Year Ended
January 31, 2009 (1) February 2, 2008 (1)
Operating Adjustments GAAP Operating Adjustments GAAP
Basis (2) (2) Basis Basis (3) (3) Basis
Borders
Superstores 81.0% -% 81.0% 80.1% -% 80.1%
Waldenbooks
Specialty
Retail 14.8 - 14.8 15.8 - 15.8
International 4.2 - 4.2 4.1 - 4.1
Total
sales 100.0 - 100.0 100.0 - 100.0
Other revenue 1.0 - 1.0 1.2 - 1.2
Total
revenue 101.0 - 101.0 101.2 - 101.2
Cost of goods
sold, including
occupancy
costs 76.2 0.5 76.7 74.7 0.4 75.1
Gross
margin 24.8 (0.5) 24.3 26.5 (0.4) 26.1
Selling,
general and
administrative
expenses 24.8 1.1 25.9 25.4 0.1 25.5
Pre-opening
expense - - - 0.1 - 0.1
Goodwill
impairment - 1.2 1.2 - - -
Asset impairments
and other
writedowns - 1.8 1.8 - 0.4 0.4
Operating
Loss - (4.6) (4.6) 1.0 (0.9) 0.1
Interest
expense 0.9 (0.8) 0.1 1.2 - 1.2
Loss before
income
taxes (0.9) (3.8) (4.7) (0.2) (0.9) (1.1)
Income taxes
(benefit) (0.4) 1.3 0.9 (0.2) (0.3) (0.5)
Loss from
continuing
operations (0.5)% (5.1)% (5.6)% -% (0.6)% (0.6)%
(1) The results of Borders Ireland, 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,
goodwill impairment, 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 the related tax benefit, as well as income received from a legal
settlement and 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 asset impairments, store closure costs and write-offs
related to the Company's music reduction initiative. 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
January 31, February 2,
2009 2008
Assets
Cash and cash equivalents $53.6 $58.5
Merchandise inventories 915.2 1,242.0
Other current assets 102.4 103.5
Current assets of discontinued
operations(1) - 102.0
Property and equipment, net 494.2 592.8
Other assets and deferred charges 43.4 109.8
Goodwill 0.2 40.5
Noncurrent assets of discontinued
operations - 53.6
Total assets $1,609.0 $2,302.7
Liabilities, Minority Interest and
Stockholders' Equity
Short-term borrowings and current
portion of long-term debt $329.8 $548.6
Trade accounts payable 350.0 511.9
Other current liabilities 313.9 349.8
Current liabilities of discontinued
operations - 57.5
Long-term debt 6.4 5.4
Other long-term liabilities 345.8 325.0
Noncurrent liabilities of discontinued
operations - 25.4
Total liabilities 1,345.9 1,823.6
Minority interest 0.5 2.2
Total stockholders' equity 262.6 476.9
Total liabilities, minority interest
and stockholders' equity $1,609.0 $2,302.7
(1) Includes $2.5 million of cash and cash equivalents as of February 2,
2008.
Certain reclassifications have been made to conform to current year
presentation.
Borders Group, Inc. Financial Statements
(dollars in millions)
Unaudited
Condensed Consolidated Statements of Cash Flows
Quarter Ended Year Ended
January 31, February 2, January 31, February 2,
2009 2008 2009 2008
CASH PROVIDED BY (USED FOR):
OPERATIONS
Income (loss) from
continuing
operations $28.9 $67.3 $(184.7) $(19.9)
Adjustments to
reconcile loss
from continuing
operations to
operating cash flows:
Depreciation 24.7 29.5 107.1 103.7
Stock-based
compensation
cost (2.0) 1.7 3.0 5.1
Change in other
long-term assets,
liabilities and
deferred
charges 13.9 (2.1) 45.1 2.0
Goodwill
impairment 40.3 - 40.3 -
Asset impairment
and other
writedowns 7.0 10.4 57.1 13.0
Decrease in
inventories 340.8 318.4 321.4 52.2
Decrease in
accounts
payable (263.7) (232.1) (160.2) (59.2)
Cash provided by
other current
assets and other
current
liabilities 29.7 8.2 4.5 8.1
Net cash provided
by operating
activities of
continuing
operations 219.6 201.3 233.6 105.0
INVESTING
Capital
expenditures (6.2) (26.6) (79.9) (131.3)
Investment in
Paperchase (3.6) (0.8) (3.6) (0.8)
Proceeds from the
sale of discontinued
operations 2.8 - 97.3 20.4
Net cash
(used for)
provided by
investing
activities of
continuing
operations (7.0) (27.4) 13.8 (111.7)
FINANCING
Net (repayment of)
funding from
debt and financing
obligations (190.6) (241.6) (219.2) 43.4
Issuance and
repurchase of
common stock (0.4) 0.2 (0.1) 3.4
Net (repayment of)
funding from
long-term debt (0.9) 0.4 (0.2) 0.4
Net (repayment of)
funding from
long-term capital
lease obligations (1.0) (0.2) (0.4) (0.4)
Cash dividends paid - - (6.5) (19.4)
Net cash
(used for)
provided by
financing
activities of
continuing
operations (192.9) (241.2) (226.4) 27.4
Effect of exchange
rates on cash
and equivalents (0.9) 0.7 (0.9) 0.8
Net cash (used for)
provided by
discontinued
operations (2.0) 64.0 (25.0) (60.6)
NET INCREASE (DECREASE)
IN CASH AND
EQUIVALENTS 16.8 (2.6) (4.9) (39.1)
Cash and equivalents
at beginning
of period 38.4 61.1 58.5 97.6
Cash and equivalents
at end of period $53.6 $58.5 $53.6 $58.5
Store Activity Summary
Quarter Ended Year Ended
January 31, February 2, January 31, February 2,
2009 2008 2009 2008
Borders Superstores
Beginning number
of stores 519 510 509 499
Openings 1 6 12 18
Closings (5) (7) (6) (8)
Ending number
of stores 515 509 515 509
Ending square footage
(in millions) 12.8 12.6 12.8 12.6
Waldenbooks Specialty
Retail Stores (1)
Beginning number
of stores 467 521 490 564
Openings--Airport stores 3 - 8 1
Closings (84) (31) (112) (75)
Ending number
of stores 386 490 386 490
Ending square footage
(in millions) 1.4 1.9 1.4 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 January 31, 2009 Quarter Ended February 2, 2008
Operating Adjustments GAAP Operating Adjustments GAAP
Basis (1) (1) Basis Basis (2) (2) Basis
Borders Superstores
Sales $842.5 $- $842.5 $957.8 $- $957.8
Deprec-
iation
expense 19.8 - 19.8 24.4 - 24.4
Operating
income
(loss) 86.5 (69.4) 17.1 102.1 (14.7) 87.4
Waldenbooks Specialty Retail
Sales $195.6 $- $195.6 $228.3 $- $228.3
Deprec-
iation
expense 3.7 - 3.7 3.5 (0.6) 2.9
Operating
income
(loss) 16.0 (4.5) 11.5 26.5 (1.0) 25.5
International (3)
Sales $43.2 $- $43.2 $55.2 $- $55.2
Deprec-
iation
expense 1.2 - 1.2 1.6 0.6 2.2
Operating
income
(loss) 6.0 (0.5) 5.5 7.0 (0.4) 6.6
Corporate (4)
Operating
loss $(0.6) $(6.5) $(7.1) $(2.0) $(0.1) $(2.1)
Consolidated (3)
Sales $1,081.3 $- $1,081.3 $1,241.3 $- $1,241.3
Deprec-
iation
expense 24.7 - 24.7 29.5 - 29.5
Operating
income
(loss) 107.9 (80.9) 27.0 133.6 (16.2) 117.4
Year Ended January 31, 2009 Year Ended February 2, 2008
Operating Adjustments GAAP Operating Adjustments GAAP
Basis (1) (1) Basis Basis (2) (2) Basis
Borders Superstores
Sales $2,625.4 $- $2,625.4 $2,847.2 $- $2,847.2
Deprec-
iation
expense 90.7 - 90.7 90.0 0.2 90.2
Operating
income
(loss) 17.7 (118.6) (100.9) 56.9 (26.3) 30.6
Waldenbooks Specialty Retail
Sales $480.0 $- $480.0 $562.8 $- $562.8
Deprec-
iation
expense 10.6 - 10.6 8.3 (0.6) 7.7
Operating
loss (16.7) (10.8) (27.5) (17.3) (4.1) (21.4)
International (3)
Sales $136.7 $- $136.7 $145.1 $- $145.1
Deprec-
iation
expense 5.8 - 5.8 5.2 0.6 5.8
Operating
income
(loss) 4.5 (0.8) 3.7 8.4 (0.4) 8.0
Corporate (4)
Operating
loss $(4.9) $(19.6) $(24.5) $(10.6) $(2.5) $(13.1)
Consolidated (3)
Sales $3,242.1 $- $3,242.1 $3,555.1 $- $3,555.1
Deprec-
iation
expense 107.1 - 107.1 103.5 0.2 103.7
Operating
income
(loss) 0.6 (149.8) (149.2) 37.4 (33.3) 4.1
(1) Results from 2008 were impacted by a number of non-operating items,
including deferred tax asset impairments, store asset impairments,
goodwill impairment, 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 the related tax benefit, as well as income received from a legal
settlement and 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 asset impairments, store closure costs and write-offs
related to the Company's music reduction initiative. 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.
