What changed in this filing

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Item 1. Financial Statements

2024-03-12 compared with 2023-12-07 · 330 added, 216 removed, 625 unchanged (47% of the section changed)

5 unchanged sentences

13 weeks ended 39 weeks ended

2023 October 29,

2022 October 28,

2023 October 29,

2024 January 28,

2023 January 27,

2024 January 28,

Product sales and other $ 415,375 $ 393,745 $ 1,237,723 $ 1,204,806

8 unchanged sentences

Depreciation and amortization expense 10,148 10,112 30,576 31,264

Impairment loss (non-cash) 5,798 6,008 5,798 6,008

Restructuring and other charges 3,413 4,127 12,320 4,762

1 unchanged sentence

Interest expense, net 10,620 6,918 29,538 15,672

Income (loss) from continuing operations before income taxes 25,168 23,785 ( 24,814 ) ( 25,690 )

Income tax expense (benefit) 314 ( 383 ) 303 464

Income (loss) from continuing operations $ 24,854 $ 24,168 $ ( 25,117 ) $ ( 26,154 )

Loss from discontinued operations, net of tax of $ 0 , $ 83 , $ 20 , and $ 169 , respectively

Loss from continuing operations before income taxes ( 9,699 ) ( 21,995 ) ( 34,513 ) ( 47,685 )

Income tax expense 229 139 532 603

Loss from continuing operations $ ( 9,928 ) $ ( 22,134 ) $ ( 35,045 ) $ ( 48,288 )

Income (loss) from discontinued operations, net of tax of $ 0 , $ 128 , $ 20 , and $ 297 , respectively

$ 289 $ ( 2,915 ) $ ( 802 ) $ ( 7,324 )

Net income (loss) $ 24,180 $ 22,144 $ ( 26,208 ) $ ( 30,563 )

Earnings (loss) per share of common stock:

Continuing operations $ 0.47 $ 0.46 $ ( 0.48 ) $ ( 0.50 )

Discontinued operations $ ( 0.01 ) $ ( 0.04 ) $ ( 0.02 ) $ ( 0.08 )

Total Basic Earnings per share $ 0.46 $ 0.42 $ ( 0.50 ) $ ( 0.58 )

Weighted average common shares outstanding - Basic 52,791 52,438 52,716 52,305

Net loss $ ( 9,639 ) $ ( 25,049 ) $ ( 35,847 ) $ ( 55,612 )

Loss per share of common stock:

Basic and Diluted:

Continuing operations $ ( 0.19 ) $ ( 0.42 ) $ ( 0.66 ) $ ( 0.92 )

Discontinued operations $ 0.01 $ ( 0.06 ) $ ( 0.02 ) $ ( 0.14 )

Total Diluted Earnings per share $ 0.46 $ 0.42 $ ( 0.50 ) $ ( 0.58 )

Weighted average common shares outstanding - Diluted 52,870 53,195 52,716 52,305

Total Basic and Diluted Earnings per share $ ( 0.18 ) $ ( 0.48 ) $ ( 0.68 ) $ ( 1.06 )

Weighted average common shares outstanding - Basic and Diluted 53,153 52,602 52,862 52,404

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

(In thousands, except per share data)

2023 October 29,

2024 January 28,

2023 April 29,

19 unchanged sentences

Current operating lease liabilities 125,545 116,051 99,980

Short-term borrowings 224,067 — —

Liabilities held for sale — 5,384 8,423

25 unchanged sentences

39 weeks ended

2023 October 29,

2024 January 28,

Cash flows from operating activities:

6 unchanged sentences

Amortization of deferred financing costs 8,380 2,058

Impairment loss (non-cash) 5,798 6,008

Deferred taxes 171 171

10 unchanged sentences

Changes in other operating assets and liabilities, net ( 114,011 ) ( 30,354 )

Net cash flows (used in) provided by operating activities from continuing operations ( 47,160 ) 10,073

Net cash flows used in operating activities from continuing operations ( 83,221 ) ( 21,248 )

Net cash flows used in operating activities from discontinued operations ( 3,650 ) ( 1,349 )

Net cash flow (used in) provided by operating activities $ ( 51,099 ) $ 9,370

Net cash flow used in operating activities $ ( 86,871 ) $ ( 22,597 )

Cash flows from investing activities:

12 unchanged sentences

Net cash flows provided by financing activities $ 59,893 $ 56,422

Net increase in cash, cash equivalents and restricted cash 3,353 12,779

Net (decrease) increase in cash, cash equivalents and restricted cash ( 16,964 ) 7,499

Cash, cash equivalents and restricted cash at beginning of period 31,988 21,036

24 unchanged sentences

Balance October 29, 2022 55,131 $ 551 $ 744,339 $ ( 522,057 ) 2,533 $ ( 22,369 ) $ 200,464

Stock-based compensation expense 1,078 1,078

Vested equity awards 9 — — —

Shares repurchased for tax withholdings for vested stock awards 3 ( 7 ) ( 7 )

Net loss ( 25,049 ) ( 25,049 )

Balance January 28, 2023 55,140 $ 551 $ 745,417 $ ( 547,106 ) 2,536 $ ( 22,376 ) $ 176,486

Common Stock Paid-In Accumulated Treasury Stock Total

15 unchanged sentences

Balance October 28, 2023 55,818 $ 558 $ 747,518 $ ( 619,564 ) 2,681 $ ( 22,548 ) $ 105,964

Stock-based compensation expense

Vested equity awards

Shares repurchased for tax withholdings for vested stock awards

3 ( 4 ) ( 4 )

Net loss ( 9,639 ) ( 9,639 )

Balance January 27, 2024 55,840 $ 558 $ 748,330 $ ( 629,203 ) 2,684 $ ( 22,552 ) $ 97,133

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

2 unchanged sentences

References to “MBS” refer to our virtual bookstore and wholesale textbook distribution business operated through our subsidiary MBS Textbook Exchange, LLC.

This Form 10-Q should be read in conjunction with our Audited Consolidated Financial Statements and accompanying Notes to consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended April 29, 2023, which includes consolidated financial statements for the Company as of April 29, 2023, and April 30, 2022 and for each of the three fiscal years ended April 29, 2023, April 30, 2022 and May 1, 2021 ("Fiscal 2023," "Fiscal 2022" and "Fiscal 2021", respectively) and the unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended July 29, 2023.

Description of Business

5 unchanged sentences

We provide product and service offerings designed to address the most pressing issues in higher education, including equitable access, enhanced convenience and improved affordability through innovative course material delivery models designed to drive improved student experiences and outcomes.

We offer our BNC First Day ® equitable and inclusive access programs, consisting of First Day Complete and First Day , which provide faculty required course materials on or before the first day of class at a discounted rate, as compared to the total retail price for the same course materials if purchased separately.

The BNC First Day discounted price is offered as a course fee or included in tuition.

During the 26 weeks ended October 28, 2023, BNC First Day total revenue increased by $ 72,684 , or 39 %, to $ 261,021 compared to $ 188,337 during the prior year period.

We offer our BNC First Day ® equitable and inclusive access programs, consisting of First Day Complete and First Day , which provide faculty required course materials on or before the first day of class at below market rates, as compared to the total retail price for the same course materials if purchased separately (a la carte) and students are billed the below market price directly by the institution as a course charge or included in tuition.

During the 13 weeks ended January 27, 2024, BNC First Day total revenue increased by $ 63,371 , or 53 %, to $ 184,073 compared to $ 120,702 during the prior year period.

During the 39 weeks ended January 27, 2024, BNC First Day total revenue increased by $ 136,055 , or 44 %, to $ 445,094 compared to $ 309,039 during the prior year period.

These programs have allowed us to reverse historical long-term trends in course materials revenue declines as the growth of our BNC First Day programs offsets declines in a la carte courseware sales and closed store sales.

We expect to continue to introduce scalable and advanced solutions focused largely on the student and customer experience, expand our e-commerce capabilities and accelerate such capabilities through our merchandising and e-commerce service provider agreement with Fanatics Retail Group Fulfillment, LLC, Inc.

1 unchanged sentence

D/B/A "Lids" (“Lids”) (collectively referred to herein as the “F/L Relationship”), win new accounts, and expand our revenue opportunities through strategic relationships.

We expect gross general merchandise sales to increase over the long term, as our product assortments continue to emphasize and reflect changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online, which we expect to be further enhanced and accelerated through the F/L Relationship.

We expect gross comparable store general merchandise sales to increase over the long term, as our product assortments continue to emphasize and reflect changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online, which we expect to be further enhanced and accelerated through the F/L Relationship.

Through this relationship, Fanatics and Lids provide unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools on our behalf to drive increased value for customers and accelerate growth of our logo general merchandise business.

2 unchanged sentences

During the fourth quarter of Fiscal 2023, assets related to our DSS Segment met the criteria for classification as Assets Held for Sale and Discontinued Operations and is no longer a reportable segment.

We have two reportable segments:

Retail and Wholesale.

For additional information related to our strategies, operations and segments, see Part I - Item 1.

Business in our Annual Report on Form 10-K for the fiscal year ended April 29, 2023 .

On May 31, 2023, we completed the sale of

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

these assets related to our DSS Segment.

We have two reportable segments:

Retail and Wholesale.

For additional information related to our strategies, operations and segments, see Part I - Item 1.

Business in our Annual Report on Form 10-K for the fiscal year ended April 29, 2023 .

BNC First Day Equitable and Inclusive Access Programs

The BNC First Day discounted price is offered as a course fee or included in tuition.

We offer our BNC First Day ® equitable and inclusive access programs, consisting of First Day Complete and First Day , which provide faculty required course materials on or before the first day of class at below market rates, as compared to the total retail price for the same course materials if purchased separately (a la carte) and students are billed the below market rate, directly by the institution as a course charge or included in tuition.

• First Day Complete is adopted by an institution and includes the majority of undergraduate classes (and on occasion graduate classes), providing students both physical and digital materials.

3 unchanged sentences

These programs have allowed us to reverse historical long-term trends in course materials revenue declines, which have been observed at those schools where such programs have been adopted, and improve predictability of our future results.

The growth of our BNC First Day programs offsets declines in a la carte courseware sales.

We are moving quickly and decisively to accelerate our First Day Complete strategy.

We plan to move many institutions to First Day Complete in Fiscal 2024 and the majority of our schools by Fiscal 2025, with continued relative adoption of this model thereafter.

In the Fall of 2023, 157 campus stores are utilizing First Day ® Complete representing enrollment of nearly 800,000 undergraduate and post graduate students (as reported by National Center for Education Statistics), an increase of approximately 47% compared to Fall of 2022.

During the 26 weeks ended October 28, 2023, First Day Complete sales increased by $ 55,455 , or 52 %, to $ 161,934 as compared to $ 106,479 in the prior year period.

During the 26 weeks ended October 28, 2023, First Day sales increased by $ 17,229 , or 21 %, to $ 99,087 as compared to $ 81,858 in the prior year period.

We have seen many institutions adopt First Day Complete in Fiscal 2024 and plan to continue to scale the number of schools adopting First Day Complete in Fiscal 2025 and beyond.

In the Spring of 2024, 160 campus stores are utilizing First Day ® Complete representing enrollment of nearly 805,000 undergraduate and post graduate students (as reported by National Center for Education Statistics), an increase of approximately 39% compared to Spring of 2023.

During the 13 weeks ended January 27, 2024, First Day Complete sales increased by $ 42,629 , or 64 %, to $ 109,531 as compared to $ 66,902 in the prior year period.

During the 13 weeks ended January 27, 2024, First Day sales increased by $ 20,742 , or 39 %, to $ 74,542 as compared to $ 53,800 in the prior year period.

During the 39 weeks ended January 27, 2024, First Day Complete sales increased by $ 98,084 , or 57 %, to $ 271,465 as compared to $ 173,381 in the prior year period.

During the 39 weeks ended January 27, 2024, First Day sales increased by $ 37,971 , or 28 %, to $ 173,629 as compared to $ 135,658 in the prior year period.

Relationship with Fanatics and Lids

1 unchanged sentence

Under the related service provider agreements, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our general merchandise business.

Fanatics and Lids process consumer personal information on our behalf, subject to certain contractual obligations as our service providers, offering our campus stores expanded product selection, a world-class online and mobile experience, and a progressive direct-to-consumer platform.

Fanatics, operates as our service provider, including processing consumer personal information on our behalf, using their cutting-edge e-commerce and technology expertise to offer our campus store websites expanded product selection, a world-class online and mobile experience, and a progressive direct-to-consumer platform.

Coupled with Lids, the leading standalone brick and mortar retailer focused exclusively on licensed fan and alumni products, our campus stores have improved access to trend and sales performance data on licensees, product styles, and design treatments.

2 unchanged sentences

As our service provider, we leverage Fanatics’ e-commerce technology and expertise on our behalf for the operational management of the emblematic merchandise and gift sections of our campus store websites.

Lids manages in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus stores, and Lids owns the inventory it manages, relieving us of the obligation to finance inventory purchases from working capital.

Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

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 (“GAAP”).

Net income (loss) is equal to comprehensive income (loss) on our condensed consolidated statement of operations.

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements of the Company contain all

Lids manages in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

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.

stores, and Lids owns the inventory it manages, relieving us of the obligation to finance inventory purchases from working capital.

Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

Net income (loss) is equal to comprehensive income (loss) on our condensed consolidated statement of operations.

In the opinion of the Company’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 consolidated financial statements are condensed and therefore do not include all of the information and footnotes required by GAAP.

1 unchanged sentence

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 and 26 weeks ended October 28, 2023 are not indicative of the results expected for the 52 weeks ending April 27, 2024 ("Fiscal 2024").

Due to the seasonal nature of the business, the results of operations for the 13 and 39 weeks ended January 27, 2024 are not indicative of the results expected for the 52 weeks ending April 27, 2024 ("Fiscal 2024").

Liquidity and Going Concern

6 unchanged sentences

Our liquidity is highly dependent on the seasonal nature of our business, particularly with respect to course material sales, as sales are generally highest in the second and third fiscal quarters, when college students generally purchase textbooks for the upcoming Fall and Spring semesters, respectively.

As of October 28, 2023, we had $ 35,341 of cash on hand, including $ 20,333 of restricted cash primarily related to segregated funds for commission due to Lids for logo merchandise sales as per the merchandising service provider agreement.

As of January 27, 2024, we had $ 15,024 of cash on hand, including $ 6,901 of restricted cash primarily related to segregated funds for commission due to Lids for logo merchandise sales as per the merchandising service provider agreement.

Our business was significantly negatively impacted by the COVID-19 pandemic during the years ended April 30, 2022 and May 1, 2021, as many schools adjusted their learning models and on-campus activities.

Although most academic institutions have since reopened after the COVID-19 pandemic, the lingering impacts of the pandemic have resulted in changes in customer behaviors, lower enrollments, and an evolving educational landscape which continued to impact our financial results during the year ended April 29, 2023.

Although most academic institutions have since reopened after the COVID-19 pandemic, the lingering impacts of the pandemic have resulted in changes in customer behaviors, lower enrollments, and an evolving educational landscape, including increased competition and disintermediation, which continued to impact our financial results during the year ended April 29, 2023.

Some institutions are still providing alternatives to traditional in-person instruction, including online and hybrid learning options and significantly reduced classroom sizes.

The impact of COVID-19 store closings, as well as lower earnings during the year ended April 29, 2023, resulted in the loss of cash flows and increased borrowings that we would not otherwise have expected to incur.

We recognized Net Income from Continuing Operations of $ 24,854 and $ 24,168 for the 13 weeks ended October 28, 2023 and October 29, 2022, respectively, and a Net Loss from Continuing Operations of $( 25,117 ) and $( 26,154 ) for the 26 weeks ended October 28, 2023 and October 29, 2022, respectively, and we incurred a Net Loss from Continuing Operations of $( 90,140 ), $( 61,559 ), and $( 133,569 ) for the years ended April 29, 2023, April 30, 2022, and May 1, 2021, respectively.

Our Cash Flow (Used In) Provided by Operating Activities from Continuing Operations were $( 47,160 ) and $ 10,073 for the 26 weeks ended October 28, 2023 and October 29, 2022, respectively, and were $ 90,513 , $( 16,195 ), and $ 27,049 , for the years ended April 29, 2023, April 30, 2022, and May 1, 2021, respectively.

The tightening of our available credit commitments, including the elimination and repayment of our FILO Facility in fiscal year 2023 of $ 40,000 , had a significant impact on our liquidity during fiscal year 2023 and fiscal year 2024, including our ability to make timely vendor payments and school commission payments.

Our losses and projected cash needs, combined with our current liquidity level, raised substantial doubt about our ability to continue as a going concern as of the year ended April 29, 2023, which Management subsequently remediated by implementing a plan to improve the Company’s liquidity and successfully alleviate substantial doubt including (1) raising additional liquidity an d (2) taking additional operational restructuring actions.

We recognized Net Loss from Continuing Operations of $( 9,928 ) and $( 22,134 ) for the 13 weeks ended January 27, 2024 and January 28, 2023, respectively, and a Net Loss from Continuing Operations of $( 35,045 ) and $( 48,288 ) for the 39 weeks ended January 27, 2024 and January 28, 2023, respectively, and we incurred a Net Loss from Continuing Operations of $( 90,140 ), $( 61,559 ), and $( 133,569 ) for the years ended April 29, 2023, April 30, 2022, and May 1, 2021, respectively.

Our Cash Flow (Used In) Provided by Operating Activities from Continuing Operations were $( 83,221 ) and $( 21,248 ) for the 39 weeks ended January 27, 2024 and January 28, 2023, respectively, and were $ 90,513 , $( 16,195 ), and $ 27,049 , for the years ended April 29, 2023, April 30, 2022, and May 1, 2021, respectively.

The tightening of our available credit commitments,

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

including the elimination and repayment of our FILO Facility in fiscal year 2023 of $ 40,000 , had a significant impact on our liquidity during fiscal year 2023 and fiscal year 2024, including our ability to make timely vendor payments and school commission payments.

Our losses and projected cash needs, combined with our current liquidity levels and the maturity of our Credit Facility, which becomes due on December 28, 2024, raises substantial doubt about our ability to continue as a going concern.

The Company's ability to continue as a going concern is contingent upon the successful execution of management's plan to improve the Company’s liquidity, including (1) raising additional liquidity and (2) continuing to take additional operational restructuring actions to achieve the required levels of liquidity to support the operations of the business.

Pursuant to the July 28, 2023 Credit Agreement amendment, the Board established a committee consisting of three independent directors to explore, consider, solicit expressions of interest or proposals for, respond to any communications, inquiries or proposals regarding, and advise as to all strategic alternatives to effect a “Specified Liquidity Transaction” (as defined in the Credit Agreement).

The Board continues its ongoing review of a broad range of strategic alternatives available to the Company, including but not limited to potential capital raises, asset divestitures, a sale of the business, and pursuit of standalone growth plans.

The Board has not set a timetable for the conclusion of this review, nor has it made any decisions related to any further actions at this time.

There can be no assurance that the review will result in any transaction or other strategic change or outcome.

Debt amendments

On October 10, 2023, we amended our existing Credit Agreement to revise certain reporting requirements to the administrative agent and lenders under the Credit Agreement.

The amendment introduced a Specified Liquidity Transaction Fee of $3,800 that would become due and payable at the earlier to occur of (1) January 31, 2024, to the extent a Specified Liquidity Transaction (as defined in the Credit Agreement) has not been consummated prior to such date (or such later date that is up to thirty days thereafter to the extent agreed to in writing by the Administrative Agent in its sole discretion) or (b) an Event of Default under the Credit Agreement.

On July 28, 2023, we amended our existing Credit Agreement to (i) extend the maturity date of the Credit Agreement to December 28, 2024, (ii) reduce advance rates with respect to the borrowing base by 1000 basis points on September 2, 2024 (in lieu of the reductions previously contemplated for September 2023), (iii) subject to the conditions set forth in such amendment, add a CARES Act tax refund claim to the borrowing base, from April 1, 2024 through July 31, 2024, (iv) amend the financial maintenance covenant to require Availability (as defined in the Credit Agreement) at all times greater than the greater of (x) 10% of the Aggregate Loan Cap (as defined in the Credit Agreement) and (y) (A) $32,500 minus, subject to the conditions set forth in such amendment, (B) (a) $7,500 for the period of April 1, 2024 through and including April 30, 2024, (b) $2,500 for the period of May 1, 2024 through and including May 31, 2024 and (c) $0 at all other times, (v) add a minimum Consolidated EBITDA (as defined in the Credit Agreement) financial maintenance covenant, and (vi) amend certain negative and affirmative covenants and add certain additional covenants, all as more particularly set forth in such amendment.

5 unchanged sentences

We must pay a fee of $50,000 to the lenders under the Term Loan Agreement on the earlier of September 2, 2024 and the Termination Date (as defined in the Term Loan Agreement).

On October 10, 2023, we amended our existing Credit Agreement to revise certain reporting requirements to the administrative agent and lenders under the Credit Agreement.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

On December 12, 2023, we amended our existing Credit Agreement to, among other things:

(i) amend the financial maintenance covenant to require Availability (as defined in the Credit Agreement) at all times to be greater than the greater of (x) 10% of the Aggregate Loan Cap (as defined in the Credit Agreement) and (y) (A) $32,500 or, subject to the satisfaction of certain conditions relating to the repayment of the Credit Agreement in full, (B) (a) $20,000 for the period of December 8, 2023 through January 12, 2024, (b) $25,000 for the period from January 26, 2024 through February 9, 2024, (c) $25,000 for the period of April 1, 2024 through April 30, 2024 and (d) $30,000 for the period of May 1, 2024 through May 31, 2024, and (ii) revise certain reporting requirements under the Credit Agreement.

The amendment also revised the Specified Liquidity Transaction Fee introduced in the October 2023 Credit Agreement Amendment such that the $3,800 became due and was paid on January 31, 2024.

On March 12, 2024, we amended our existing Credit Agreement to, among other things, (i) revise certain reporting requirements under the Credit Agreement and (ii) set certain milestones for liquidity and refinancing contingency plans, with respect to which we must execute a binding commitment no later than April 3, 2024 (as may be extended by the administrative agent to April 10, 2024).

Operational restructuring plans

1 unchanged sentence

We reduced our workforce, eliminated duplicate administrative headcounts at all levels, implemented improved system development processes to reduce maintenance costs, reduced capital expenditures, and evaluated operating contractual obligations for cost savings.

Over the last year, we have achieved annualized savings of $30,000 to $35,000 from these cost savings initiatives.

Additionally, during Fiscal 2024, Management's planned to implement further cost savings measures, including reduction of gross capital expenditures, amounting to approximately $25,000, of which approximately $14,000 has been achieved during the 26 weeks ended October 28, 2023.

Management believes that these plans are within its control and will be focused on implementing as outlined.

During the 13 weeks ended October 28, 2023, Net Income from Continuing Operations increased by $686 compared to the prior year period.

Excluding interest expense and restructuring and other charges Net Income from Continuing Operations improved by $10,478 during the 13 weeks ended October 28, 2023 compared to the prior year period.

During the 26 weeks ended October 28, 2023, Net Loss from Continuing Operations decreased by $1,037 compared to the prior year period.

Excluding interest expense and restructuring and other charges Net Loss from Continuing Operations decreased by $19,473 during the 26 weeks ended October 28, 2023 compared to the prior year period.

The improvements in Net Income from Continuing Operations during the 13 and 26 weeks are primarily due to operational improvements and cost savings initiatives.

Over the course of Fiscal 2024, we have achieved annualized savings of approximately $30,000 to $35,000 from the Fiscal 2023 cost savings initiatives.

Additionally, during Fiscal 2024, Management's plan to implement further cost savings measures, including reduction of gross capital expenditures, amounting to approximately $25,000, of which approximately $18,000 has been achieved during the 39 weeks ended January 27, 2024.

Management believes that these plans are within its control and will be focused on implementing these cost savings measures.

During the 13 weeks ended January 27, 2024, Net Loss from Continuing Operations improved by $12,206, or 55%, compared to the prior year period.

Net Loss from Continuing Operations, excluding interest expense, impairment loss (non-cash) and restructuring and other charges, improved by $14,984 during the 13 weeks ended January 27, 2024 compared to the prior year period.

During the 39 weeks ended January 27, 2024, Net Loss from Continuing Operations improved by $13,243, or 27%, compared to the prior year period.

Net Loss from Continuing Operations, excluding interest expense, impairment loss (non-cash) and restructuring and other charges, improved by $34,457 during the 39 weeks ended January 27, 2024 compared to the prior year period.

The improvements in Net Loss from Continuing Operations during the 13 and 39 weeks are primarily due to operational improvements, including successful implementation of our BNC First Day programs, and cost savings initiatives.

13 weeks ended 39 weeks ended

Dollars in thousands

January 27, 2024 January 28, 2023 Var $ Var % January 27, 2024 January 28, 2023 Var $ Var %

Net loss from continuing operations

$ ( 9,928 ) $ ( 22,134 ) $ 12,206 55% $ ( 35,045 ) $ ( 48,288 ) $ 13,243 27%

Reconciling items:

Interest Expense (a)

$ 10,620 $ 6,918 $ 3,702 54% $ 29,538 $ 15,672 $ 13,866 88%

Impairment loss (non-cash)

5,798 6,008 (210) (3)% 5,798 6,008 (210) (3)%

Restructuring and other charges

3,413 4,127 (714) (17)% 12,320 4,762 7,558 159%

Total Reconciling items

$ 19,831 $ 17,053 $ 2,778 16% $ 47,656 $ 26,442 $ 21,214 80%

Net Income (Loss) from Continuing Operations Excluding Interest Expense, Impairment Loss and Restructuring and Other Charges

$ 9,903 $ (5,081) $ 14,984 295% $ 12,611 $ (21,846) $ 34,457 158%

(a) Interest expense increased by $13.9 million compared to the prior year period, comprised of $7.2 million resulting from higher borrowings and higher interest rates and $6.3 million resulting from increased amortization of deferred financing costs.

For additional information, see Note 7.

Debt - Deferred Financing Costs and Note 7.

Debt - Interest Expense .

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

Management believes that the expected impact on our liquidity and cash flows resulting from the debt amendments and the operational initiatives outlined above are sufficient to enable the Company to meet its obligations for at least twelve months from the issuance date of these condensed consolidated financial statements and to continue to alleviate the conditions that initially raised substantial doubt about the Company's ability to continue as a going concern.

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.

For example, our retail business is seasonal, particularly with respect to textbook sales and rentals, with the major portion of sales and operating profit realized during the second and third fiscal quarters when college students generally purchase and rent textbooks for the upcoming semesters and lowest in the first and fourth fiscal quarters.

Our quarterly results also may fluctuate depending on the timing of the start of the various schools’ semesters, the revenue impact of accounting principles with respect to the recognition of revenue associated with our equitable and inclusive access programs, the ability to secure inventory on a timely basis, as well as shifts in our fiscal calendar dates.

These shifts in timing may affect the comparability of our results across periods.

Our retail business is highly seasonal, with the major portion of sales and operating profit realized during the second and third fiscal quarters, when college students generally purchase and rent textbooks for the upcoming semesters.

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.

9 unchanged sentences

On May 31, 2023, we completed the sale of these assets related to our DSS Segment for cash proceeds of $ 20,000 , net of certain transaction fees, severance costs, escrow, and other considerations.

During the 26 weeks ended October 28, 2023, we recorded a Gain on Sale of Business of $ 3,068 in Loss from Discontinued Operations, Net, related to the sale.

During the 39 weeks ended January 27, 2024, we recorded a Gain on Sale of Business of $ 3,545 in Loss from Discontinued Operations, Net, related to the sale.

Net cash proceeds from the sale were used for debt repayment and provided additional funds for working capital needs under our Credit Facility.

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13 weeks ended 39 weeks ended

Dollars in thousands October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Dollars in thousands January 27, 2024 January 28, 2023 January 27, 2024 January 28, 2023

Total sales $ — $ 9,010 $ 2,784 $ 26,659

8 unchanged sentences

Restructuring costs (c)

11 1,848 3,308 1,848

Transaction costs — — 13 —

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Loss from discontinued operations, net of tax $ 289 $ ( 2,915 ) $ ( 802 ) $ ( 7,324 )

(a) Cost of sales and Gross margin for the DSS Segment includes amortization expense (non-cash) related to content development costs of $ 1,618 and $ 3,169 for the 13 and 26 weeks ended October 29, 2022, respectively.

(b) During the 26 weeks ended October 28, 2023, we recognized an impairment loss (non-cash) of $ 610 (both pre-tax and after-tax),

(a) Cost of sales and gross profit for the DSS Segment includes amortization expense (non-cash) related to content development costs of $ 1,686 and $ 4,855 for the 13 and 39 weeks ended January 28, 2023 , respectively.

(b) During the 39 weeks ended January 27, 2024, we recognized an impairment loss (non-cash) of $ 610 (both pre-tax and after-tax),

BARNES & NOBLE EDUCATION, INC.

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Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

comprised of $ 119 and $ 491 of property and equipment and operating lease right-of-use assets, respectively, on the condensed consolidated statement of operations as part of discontinued operations.

(c) During the 26 weeks ended October 28, 2023, we recognized restructuring and other charges of $ 3,297 comprised of severance and other employee termination costs.

(c) During the 39 weeks ended January 27, 2024 and January 28, 2023 , we recognized restructuring and other charges of $ 3,308 and $ 1,848 , respectively, comprised of severance and other employee termination costs.

The following table summarizes the assets and liabilities of the Assets Held for Sale included in the condensed consolidated balance sheets:

April 29, 2023 October 29, 2022

April 29, 2023 January 28, 2023

Cash and cash equivalents $ 1,057 $ 802

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Accrued liabilities 8,212 5,236

Other long-term liabilities — 20

Liabilities held for sale $ 8,423 $ 5,384

Restricted Cash

As of October 28, 2023 and October 29, 2022, we had restricted cash of $ 20,333 and $ 15,590 , respectively, comprised of $ 19,388 and $ 14,686 , respectively, in prepaid and other current assets in the condensed consolidated balance sheet related to segregated funds for commission due to Lids for logo merchandise sales as per the Lids service provider merchandising agreement, and $ 945 and $ 904 , respectively, in other noncurrent assets in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.

As of January 27, 2024, January 28, 2023, and April 29, 2023, we had restricted cash of $ 6,901 , $ 18,309 , and $ 16,712 , respectively, comprised of $ 5,948 , $ 17,397 , and $ 15,790 , respectively, in prepaid and other current assets in the condensed consolidated balance sheet related to segregated funds for commission due to Lids for logo merchandise sales as per the Lids service provider merchandising agreement, and $ 953 , $ 912 , and $ 922 , respectively, in other noncurrent assets in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.

Merchandise Inventories

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Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

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We recognize lease expense on a straight-line basis over the lease term for contracts with fixed lease payments, including those with fixed annual minimums, or over a rolling twelve-month period for leases where the annual guarantee resets at the start of each contract year, in order to best reflect the pattern of usage of the underlying leased asset.

We recognize lease expense related to our college and university contracts as cost of sales in our condensed consolidated statement of operations and we recognize lease expense related to our various office spaces as selling and administrative expenses in our condensed consolidated statement of operations.

For additional information, see Note 8.

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We estimate returns based on an analysis of historical experience.

A provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded.

For sales and rentals involving third-party products, we evaluate whether we are acting as a principal or an agent.

Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring them to the

A provision for anticipated merchandise returns is

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded.

For sales and rentals involving third-party products, we evaluate whether we are acting as a principal or an agent.

Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring them to the customer.

There are significant judgments involved in determining whether we control the specified goods or services prior to transferring them to the customer including whether we have the ability to direct the use of the good or service and obtain substantially all of the remaining benefits from the good or service.

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Shared-service costs such as human resources, legal, treasury, information technology, and various other corporate level expenses and other governance functions, are not allocated to a specific reporting segment and are recorded in Corporate Services.

Evaluation of Long-Lived Assets

Goodwill on our condensed consolidated balance sheet as of January 28, 2023 related to our DSS reporting unit has been classified as Assets Held for Sale.

On May 31, 2023, we completed the sale of these assets related to our DSS Segment.

We review our long-lived assets for impairment whenever events or changes in circumstances, including but not limited to contractual changes, renewals or amendments are made to agreements with our college, university, or K-12 schools, indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets .

As of January 27, 2024, our other long-lived assets include property and equipment, operating lease right-of-use assets, amortizable intangibles, and other noncurrent assets of $ 57,273 , $ 220,238 , $ 97,947 , and $ 12,488 , respectively, on our condensed consolidated balance sheet.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

Although most academic institutions have since reopened since the COVID-19 pandemic, some are providing alternatives to traditional in-person instruction, including online and hybrid learning options and significantly reduced classroom sizes.

Enrollment trends have been negatively impacted at physical campuses.

While many athletic conferences resumed their sport activities, other events, such as parent and alumni weekends and prospective student campus tour activities, some may still be curtailed or offer a virtual option.

These combined events , as well as increased competition and disintermediation, continue to impact the Company’s course materials and general merchandise business.

During the 13 weeks ended January 27, 2024, we evaluated certain of our store-level long-lived assets in the Retail segment for impairment.

Based on the results of the impairment tests, we recognized an impairment loss (non-cash) of $ 5,798 (both pre-tax and after-tax), comprised of $ 364 , $ 2,726 , and $ 2,708 of property and equipment, operating lease right-of-use assets, and amortizable intangibles, respectively, on the condensed consolidated statements of operations.

During the 13 weeks ended January 28, 2023 , we evaluated certain of our store-level long-lived assets in the Retail segment for impairment.

Based on the results of the impairment tests, we recognized an impairment loss (non-cash) of $ 6,008 (both pre-tax and after-tax), comprised of $ 708 , $ 1,697 , $ 3,599 and $ 4 of property and equipment, operating lease right-of-use assets, amortizable intangibles, and other noncurrent assets, respectively, on the condensed consolidated statements of operations.

The fair value of the impaired long-lived assets were determined using an income approach (Level 3 input), using the Company’s best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations.

For additional information, see Note 6.

Fair Value Measurements .

The provision for income taxes includes federal, state and local income taxes currently payable and those deferred because of temporary differences between the financial statement and tax basis of assets and liabilities.

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Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280):

In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures to improve annual income tax disclosure requirements, primarily to (1) disclose specific categories in the rate reconciliation (2) provide additional information for reconciling items that meet a quantitative threshold, and (3) enhance cash tax payment disclosures.

This guidance will be effective for the Company for the annual report for the fiscal year ending April 26, 2025.

Early adoption is permitted and the guidance is applied on a prospective basis.

We are currently assessing this guidance and determining the impact on our condensed consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

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We are currently assessing this guidance and determining the impact on our condensed consolidated financial statements.

Revenue from sales of our products and services is recognized either at the point in time when control of the products is transferred to our customers or over time as services are provided in an amount that reflects the consideration we expect to be entitled to in exchange for the products or services.

Summary of Significant Accounting Policies for additional information related to our revenue recognition policies and Note 4.

Segment Reporting for a description of each segment's product and service offerings.

BARNES & NOBLE EDUCATION, INC.

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Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

Summary of Significant Accounting Policies for additional information related to our revenue recognition policies and Note 4.

Segment Reporting for a description of each segment's product and service offerings.

Disaggregation of Revenue

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13 weeks ended 39 weeks ended

October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

January 27, 2024 January 28, 2023 January 27, 2024 January 28, 2023

Course Materials Product Sales $ 317,725 $ 286,714 $ 891,631 $ 834,190

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• unsatisfied performance obligations associated with the premium paid for the sale of treasury shares, which are expected to be recognized over the term of the e-commerce and merchandising contracts for Fanatics and Lids, respectively .

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

(Thousands of dollars, except share and per share data)

The following table presents changes in deferred revenue associated with our contract liabilities:

39 weeks ended

October 28, 2023 October 29, 2022

January 27, 2024 January 28, 2023

Deferred revenue at the beginning of period $ 15,356 $ 16,475

8 unchanged sentences

$ 52,795 $ 50,309

As of October 28, 2023, we expect to recognize $ 38,105 of the deferred revenue balance within the next 12 months.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

Segment Reporting

On May 31, 2023, we completed the sale of these assets related to our DSS Segment.

For additional information, see Note 2.

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The majority of the physical campus bookstores have school-branded e-commerce websites which we operate independently or along with our merchant service providers, and which offer students access to affordable course materials and affinity products, including emblematic apparel and gifts.

The Retail Segment offers our BNC First Day ® equitable and inclusive access programs, consisting of First Day Complete and First Day , which provide faculty required course materials on or before the first day of class at a discounted rate, as compared to the total retail price for the same course materials if purchased separately.

The BNC First Day discounted price is offered as a course fee or included in tuition.

The Retail Segment offers our BNC First Day ® equitable and inclusive access programs, consisting of First Day Complete and First Day , which provide faculty required course materials on or before the first day of class at below market rates, as compared to the total retail price for the same course materials if purchased separately (a la carte) and students are billed the below market rate, directly by the institution as a course charge or included in tuition.

Additionally, the Retail Segment offers a suite of digital content and services to colleges and universities, including a variety of open educational resource-based courseware.

3 unchanged sentences

Additionally, the Wholesale Segment sells hardware and a software suite of applications that provides inventory management and point-of-sale solutions to approximately 325 college bookstores.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

(Thousands of dollars, except share and per share data)

Corporate Services represents unallocated shared-service costs which include corporate level expenses and other governance functions, including executive functions, such as accounting, legal, treasury, information technology, and human resources.

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Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

1 unchanged sentence

13 weeks ended 39 weeks ended

October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

January 27, 2024 January 28, 2023 January 27, 2024 January 28, 2023

Retail $ 439,446 $ 421,259 $ 1,284,242 $ 1,256,376

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Total Depreciation and Amortization $ 10,148 $ 10,112 $ 30,576 $ 31,264

Impairment loss (non-cash) - Retail $ 5,798 $ 6,008 $ 5,798 $ 6,008

Restructuring and Other Charges

10 unchanged sentences

Interest Expense, net $ 10,620 $ 6,918 $ 29,538 $ 15,672

Total Income (Loss) from Continuing Operations Before Income Taxes $ 25,168 $ 23,785 $ ( 24,814 ) $ ( 25,690 )

Total Loss from Continuing Operations Before Income Taxes $ ( 9,699 ) $ ( 21,995 ) $ ( 34,513 ) $ ( 47,685 )

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

1 unchanged sentence

Share Repurchases

During the 13 and 26 weeks ended October 28, 2023, we did not repurchase shares of our Common Stock under the stock repurchase program and as of October 28, 2023, approximately $ 26,669 remains available under the stock repurchase program.

During the 13 and 26 weeks ended October 28, 2023, we repurchased 66,852 and 144,750 shares of our Common Stock, respectively, outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.

During the 13 and 39 weeks ended January 27, 2024, we did not repurchase shares of our Common Stock under the stock repurchase program and as of January 27, 2024, approximately $ 26,669 remains available under the stock repurchase program.

During the 13 and 39 weeks ended January 27, 2024, we repurchased 3,135 and 147,885 shares of our Common Stock, respectively, outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.

Earnings Per Share

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During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company.

During the 13 weeks ended October 28, 2023 and October 29, 2022, average shares of 3,149,756 and 3,153,516 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively.

During the 26 weeks ended October 28, 2023 and October 29, 2022, average shares of 3,453,892 and 4,898,303 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively.

During the 13 weeks ended January 27, 2024 and January 28, 2023, average shares of 3,009,464 and 4,677,926 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively.

During the 39 weeks ended January 27, 2024 and January 28, 2023, average shares of 3,305,749 and 4,824,844 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively.

The following is a reconciliation of the basic and diluted earnings per share calculation:

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

(Thousands of dollars, except share and per share data)

13 weeks ended 39 weeks ended

(shares in thousands) October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Numerator for basic earnings per share:

Net income (loss) from continuing operations $ 24,854 $ 24,168 $ ( 25,117 ) $ ( 26,154 )

Less allocation of earnings to participating securities ( 3 ) ( 11 ) — —

Net income (loss) from continuing operations available to common shareholders $ 24,851 $ 24,157 $ ( 25,117 ) $ ( 26,154 )

Loss from discontinued operations, net of tax

( 674 ) ( 2,024 ) ( 1,091 ) ( 4,409 )

Net income (loss) available to common shareholders $ 24,177 $ 22,133 $ ( 26,208 ) $ ( 30,563 )

Numerator for diluted earnings per share:

Net income (loss) from continuing operations $ 24,851 $ 24,157 $ ( 25,117 ) $ ( 26,154 )

Allocation of earnings to participating securities 3 11 — —

Less diluted allocation of earnings to participating securities ( 3 ) ( 11 ) — —

Net income (loss) from continuing operations available to common shareholders $ 24,851 $ 24,157 $ ( 25,117 ) $ ( 26,154 )

(shares in thousands) January 27, 2024 January 28, 2023 January 27, 2024 January 28, 2023

Numerator for basic and diluted earnings per share:

Loss from continuing operations, net of tax $ ( 9,928 ) $ ( 22,134 ) $ ( 35,045 ) $ ( 48,288 )

Loss from discontinued operations, net of tax 289 ( 2,915 ) ( 802 ) ( 7,324 )

( 674 ) ( 2,024 ) ( 1,091 ) ( 4,409 )

Net income (loss) available to common shareholders $ 24,177 $ 22,133 $ ( 26,208 ) $ ( 30,563 )

Denominator for basic earnings per share:

Basic weighted average shares of Common Stock 52,791 52,438 52,716 52,305

Denominator for diluted earnings per share:

Basic weighted average shares of Common Stock 52,791 52,438 52,716 52,305

Average dilutive restricted stock units 74 141 — —

Average dilutive restricted shares 5 10 — —

Average dilutive stock options — 606 — —

Diluted weighted average shares of Common Stock 52,870 53,195 52,716 52,305

Earnings (Loss) per share of Common Stock:

Continuing operations $ 0.47 $ 0.46 $ ( 0.48 ) $ ( 0.50 )

Discontinuing operations ( 0.01 ) ( 0.04 ) ( 0.02 ) ( 0.08 )

Total Basic Earnings per share $ 0.46 $ 0.42 $ ( 0.50 ) $ ( 0.58 )

Net loss available to common shareholders $ ( 9,639 ) $ ( 25,049 ) $ ( 35,847 ) $ ( 55,612 )

Denominator for basic and diluted earnings per share:

Basic and diluted weighted average shares of Common Stock 53,153 52,602 52,862 52,404

Loss per share of Common Stock:

Basic and Diluted

Continuing operations $ ( 0.19 ) $ ( 0.42 ) $ ( 0.66 ) $ ( 0.92 )

Discontinuing operations 0.01 ( 0.06 ) ( 0.02 ) ( 0.14 )

Total Diluted Earnings per share $ 0.46 $ 0.42 $ ( 0.50 ) $ ( 0.58 )

Basic and diluted loss per share of Common Stock $ ( 0.18 ) $ ( 0.48 ) $ ( 0.68 ) $ ( 1.06 )

Fair Value Measurements

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A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor.

Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

These tiers include:

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

These tiers include:

Level 1—Observable inputs that reflect quoted prices in active markets

8 unchanged sentences

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets .

During the 13 weeks ended January 27, 2024 and January 28, 2023, we evaluated certain of our store-level long-lived assets in the Retail segment for impairment and based on the results of the impairment tests, we recognized an impairment loss (non-cash) of $ 5,798 and $ 6,008 (both pre-tax and after-tax), respectively, on the condensed consolidated statement of operations.

The fair value of the impaired long-lived assets were determined using an income approach (Level 3 input), using our best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations.

For additional information, see Note 2.

Summary of Significant Accounting Policies .

The following table shows the fair values of our non-financial assets and liabilities that were required to be remeasured at fair value on a non-recurring basis for each respective period and the total impairments recorded as a result of the remeasurement process:

13 and 39 weeks ended January 27, 2024

13 and 39 weeks ended January 28, 2023

Carrying Value

Prior to Impairment Fair Value Impairment Loss

(non-cash) Carrying Value Prior to Impairment Fair Value Impairment Loss

Property and equipment, net $ 364 $ — $ 364 $ 708 $ — $ 708

Operating lease right-of-use assets 6,130 3,404 2,726 3,002 1,305 1,697

Intangible assets, net 2,708 — 2,708 3,599 — 3,599

Other noncurrent assets — — — 4 — 4

Total $ 9,202 $ 3,404 $ 5,798 $ 7,313 $ 1,305 $ 6,008

Other Non-Financial Liabilities

1 unchanged sentence

The fair value of the liability for the cash-settled phantom share unit awards will be remeasured at the end of each reporting period through settlement to reflect current risk-free rate and volatility assumptions.

As of October 28, 2023, we recorded a liability of $ 32 (Level 2 input) which is reflected in accrued liabilities on the condensed consolidated balance sheet.

As of October 29, 2022, we recorded a liability of $ 1,398 (Level 2 input) which is reflected in accrued liabilities ($ 1,318 ) and other long-term liabilities ($ 80 ) on the condensed consolidated balance sheet.

As of January 27, 2024, we recorded a liability of $ 34 (Level 2 input) which is reflected in accrued liabilities on the condensed consolidated balance sheet.

As of January 28, 2023, we recorded a liability of $ 1,261 (Level 2 input) which is reflected in accrued liabilities ($ 1,205 ) and other long-term liabilities ($ 56 ) on the condensed consolidated balance sheet.

For additional information, see Note 10.

Long-Term Incentive Plan Compensation Expense .

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

Maturity Date

October 28, 2023 October 29, 2022

January 27, 2024 January 28, 2023

Credit Facility December 28, 2024 $ 224,067 $ 255,600

1 unchanged sentence

sub-total 255,817 285,600

Deferred financing costs ( 1,871 ) ( 1,555 )

Deferred financing costs, Term Loan (a)

( 1,559 ) ( 1,743 )

Total debt $ 254,258 $ 283,857

3 unchanged sentences

Total debt $ 254,258 $ 283,857

(a) For additional information on Credit Facility and Term Loan deferred financing costs, see Deferred Financing Costs below.

Credit Facility

We have a credit agreement (the “Credit Agreement”), amended from time to time including on October 10, 2023, July 28, 2023, May 24, 2023, March 8, 2023, March 31, 2021 and March 1, 2019, under which the lenders originally committed to provide us with a 5 year asset-backed revolving credit facility in an aggregate committed principal amount of $ 400,000 (the “Credit Facility”) effective from the March 1, 2019 amendment.

We have a credit agreement (the “Credit Agreement”), amended from time to time including on December 12, 2023, October 10, 2023, July 28, 2023, May 24, 2023, March 8, 2023, March 31, 2021 and March 1, 2019, under which the lenders originally committed to provide us with a 5 year asset-backed revolving credit facility in an aggregate committed principal amount of $ 400,000 (the “Credit Facility”) effective from the March 1, 2019 amendment.

We had the option to request an increase in commitments under the Credit Facility of up to $ 100,000 , subject to certain restrictions.

2 unchanged sentences

As of July 31, 2022, the FILO Facility was repaid and eliminated according to its terms and future commitments under the FILO Facility were reduced to $ 0 .

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

(Thousands of dollars, except share and per share data)

March 2023 Credit Agreement Amendment

On March 8, 2023, we amended our existing Credit Agreement to (i) extend the maturity date of the Credit Agreement by six months to August 29, 2024, (ii) reduce the commitments under the Credit Agreement by $20,000 to $380,000, (iii) increase the applicable margin with respect to the interest rate under the Credit Agreement to 3.375% per annum, in the case of interest accruing based on a Secured Overnight Financing Rate, and 2.375%, in the case of interest accruing based on an alternative base rate, in each case, without regard to a pricing grid, (iv) reduce advance rates with respect to the borrowing base (x) by 500 basis points upon the achievement of certain liquidity events, which may include a sale of equity interests or of assets (a “Specified Event”), or, if such a Specified Event shall not have occurred, on May 31, 2023 (see discussion below) and (y) by an additional 500 basis points on September 29, 2023, (v) amend certain negative covenants and add certain additional covenants, (vi) amend the financial maintenance covenant to require Availability (as defined in the Credit Agreement) to be at all times greater than the greater of 10% of the Aggregate Loan Cap (as defined in the Credit Agreement) and $32,500 and (vii) require repayment of the loans under the Credit Agreement upon a Specified Event.

On March 8, 2023, we amended our existing Credit Agreement to (i) extend the maturity date of the Credit Agreement by six months to August 29, 2024, (ii) reduce the commitments under the Credit Agreement by $20,000 to $380,000, (iii) increase the applicable margin with respect to the interest rate under the Credit Agreement to 3.375% per annum, in the case of interest accruing based on a Secured Overnight Financing Rate, and 2.375%, in the case of interest accruing based on an alternative base rate, in each case, without regard to a pricing grid, (iv) reduce advance rates with respect to the borrowing base (x) by 500 basis points upon the achievement of certain liquidity events, which may include a sale of equity interests or of assets (a “Specified Event”), or, if such a Specified Event shall not have occurred, no later than May 31, 2023 (see discussion below) and (y) by an additional 500 basis points on September 29, 2023, (v) amend certain negative covenants and add certain additional covenants, (vi) amend the financial maintenance covenant to require Availability (as defined in the Credit Agreement) to be at all times greater than the greater of 10% of the Aggregate Loan Cap (as defined in the Credit Agreement) and $32,500 and (vii) require repayment of the loans under the Credit Agreement upon a Specified Event.

For additional information related to the Credit Agreement amendment, see the Company’s Report on Form 8-K dated March 8, 2023 and filed with the SEC on March 9, 2023.

As noted above, the amendment requires the achievement of a Special Event by no later than May 31, 2023 (as such date may be extended pursuant to the terms of the Credit Agreement).

As noted above, the amendment required the achievement of a Special Event by no later than May 31, 2023 (as such date may be extended pursuant to the terms of the Credit Agreement).

Summary of Significant Accounting Policies for information related to the sale of our DSS segment on May 31, 2023 .

1 unchanged sentence

During the 52 weeks ended April 29, 2023, we incurred debt issuance costs totaling $4,081 related to the March 2023 Credit Agreement amendment.

The debt issuance costs have been deferred and are presented as prepaid and other current assets and other noncurrent assets in the condensed consolidated balance sheets, and subsequently amortized ratably over the term of the credit agreement.

The debt issuance costs have been deferred and are presented as prepaid and other current assets

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

and other noncurrent assets in the condensed consolidated balance sheets, and subsequently amortized ratably over the term of the Credit Agreement.

May 2023 Credit Agreement Amendment

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The amendment also requires that we appoint a Chief Restructuring Officer and that, by August 11, 2023, we (i) appoint two independent members to the board of directors of the Company from prospective candidates that have been previously disclosed to the Administrative Agent and the Lenders and (ii) appoint a committee of the board of directors of the Company to consist of three board members (two of whom will be the new independent directors).

The committee’s responsibilities will include, among other things, to explore, consider, solicit expressions of interest or proposals for, respond to any communications, inquiries or proposals regarding, and advise as to all strategic alternatives to effect a “Specified Liquidity Transaction” (as defined in the Credit

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

(Thousands of dollars, except share and per share data)

There can be no guarantee or assurances that any such transaction or transactions be consummated.

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For additional information related to the Credit Agreement amendment, see the Company's Report on Form 8-K filed with the SEC on July 28, 2023.

During the 26 weeks ended October 28, 2023, we incurred debt issuance costs totaling $11,516 related to the July 2023 Credit Agreement amendment.

During the 39 weeks ended January 27, 2024, we incurred debt issuance costs totaling $11,516 related to the July 2023 Credit Agreement amendment.

1 unchanged sentence

On October 10, 2023, we amended our existing Credit Agreement to revise certain reporting requirements to the administrative agent and lenders under the Credit Agreement.

During the 26 weeks ended October 28, 2023, we incurred debt issuance costs totaling $1,428 related to the October 2023 Credit Agreement amendment.

As of October 28, 2023, and through the date of this filing, we were in compliance with all debt covenants under the Credit Agreement.

The amendment introduced a Specified Liquidity Transaction Fee of $3,800 that would become due and payable at the earlier to occur of (a) January 31, 2024, to the extent a Specified Liquidity Transaction (as defined in the Credit Agreement) has not been consummated prior to such date (or such later date that is up to thirty days thereafter to the extent agreed to in writing by the Administrative Agent in its sole discretion) or (b) an Event of Default under the Credit Agreement.

During the 39 weeks ended January 27, 2024, we incurred debt issuance costs totaling $1,428 related to the October 2023 Credit Agreement amendment.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

December 2023 Credit Agreement Amendment

On December 12, 2023, we amended our existing Credit Agreement to, among other things:

The amendment also revised the Specified Liquidity Transaction Fee introduced in the October 2023 Credit Agreement Amendment such that the $3,800 became due and was paid on January 31, 2024.

During the 39 weeks ended January 27, 2024, we incurred debt issuance costs totaling $4,047 related to the December 2023 Credit Agreement amendment.

For additional information related to the Credit Agreement amendment, see the Company’s Report on Form 8-K dated December 12, 2023 and filed with the SEC on December 13, 2023.

March 2024 Credit Agreement Amendment

As of January 27, 2024, and through the date of this filing, we were in compliance with all debt covenants under the Credit Agreement.

The Credit Facility is secured by substantially all of the inventory, accounts receivable and related assets of the borrowers under the Credit Facility.

This is considered an all asset lien (inclusive of proceeds from tax refunds payable to the Company and a pledge of equity from subsidiaries, exclusive of real estate).

During the 26 weeks ended October 28, 2023, we borrowed $ 284,698 and repaid $ 233,970 under the Credit Agreement, and had outstanding borrowings of $ 204,881 as of October 28, 2023, comprised entirely of borrowings under the Credit Facility.

During the 26 weeks ended October 29, 2022, we borrowed $ 348,200 and repaid $ 321,900 under the Credit Agreement, and had outstanding borrowings of $ 222,000 as of October 29, 2022, comprised entirely of borrowings under the Credit Facility.

As of October 28, 2023 and October 29, 2022, we have issued $ 575 and $ 4,759 , respectively, in letters of credit under the Credit Facility.

During the 39 weeks ended January 27, 2024, we borrowed $ 454,459 and repaid $ 384,545 under the Credit Agreement, and had outstanding borrowings of $ 224,067 as of January 27, 2024, comprised entirely of borrowings under the Credit Facility.

During the 39 weeks ended January 28, 2023, we borrowed $ 482,000 and repaid $ 452,100 under the Credit Agreement, and had outstanding borrowings of $ 255,600 as of January 28, 2023, comprised entirely of borrowings under the Credit Facility.

As of January 27, 2024 and January 28, 2023, we have issued $ 3,575 and $ 4,759 , respectively, in letters of credit under the Credit Facility.

On June 7, 2022, we entered into a Term Loan Credit Agreement (the “Term Loan Credit Agreement”) with TopLids LendCo, LLC and Vital Fundco, LLC and we entered into an amendment to our existing Credit Agreement, which permitted us to incur the Term Loan Facility (as defined below).

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The proceeds of the Term Loans are being used to finance working capital, and to pay fees and expenses related to the Term Loan Facility.

During the 26 weeks ended October 28, 2023, we incurred $ 863 for interest in kind on the Term Loans and repaid $ 0 under the Term Loan Credit Agreement, with $ 30,863 of outstanding borrowings as of October 28, 2023.

During the 26 weeks ended October 29, 2022, we borrowed $ 30,000 and repaid $ 0 under the Term Loan Credit Agreement.

During the 39 weeks ended January 27, 2024, we incurred $ 1,750 for interest in kind on the Term Loans and repaid $ 0 under the Term Loan Credit Agreement, with $ 31,750 of outstanding borrowings as of January 27, 2024.

During the 39 weeks ended January 28, 2023, we borrowed $ 30,000 and repaid $ 0 under the Term Loan Credit Agreement.

March 2023 Term Loan Credit Agreement Amendment

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Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

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We paid a fee of $50 on the amendment closing date to the lenders under the Term Loan Credit Agreement.

The debt issuance costs have been deferred and are presented as a reduction to long-term borrowings in the consolidated balance sheets, and subsequently amortized ratably over the term of the Term Loan Facility.

July 2023 Term Loan Credit Agreement Amendment

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For additional information, see the Company's Report on Form 8-K filed with the SEC on July 28, 2023.

During the 26 weeks ended October 28, 2023, we incurred debt issuance costs totaling $480 related to the July 2023 Term Loan Credit Agreement amendment.

During the 39 weeks ended January 27, 2024, we incurred debt issuance costs totaling $480 related to the July 2023 Term Loan Credit Agreement amendment.

The debt issuance costs have been deferred and are presented as a reduction to long-term borrowings in the condensed consolidated balance sheets, and subsequently amortized ratably over the term of the Term Loan Facility.

The Term Loans accrue interest at a rate equal to 11.25%, payable quarterly.

All interest on the Term Loan prior to the July 29, 2023 was paid in cash.

During the 13 weeks ended October 28, 2023, all interest on the Term Loan was incurred in kind as permitted under the July 2023 Term Loan Amendment.

All interest on the Term Loan prior to July 29, 2023 was paid in cash.

During the 13 weeks ended October 28, 2023 and 13 weeks ended January 27, 2024, all interest on the Term Loan was incurred in kind as permitted under the July 2023 Term Loan Amendment.

The Term Loans do not amortize prior to maturity.

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The Credit Agreement amendment permitted us to incur the Term Loan Facility and also provides that, upon repayment of the Term Loan Credit Agreement (and, if applicable, any replacement credit facility thereof), we may incur second lien secured debt in an aggregate principal amount not to exceed $75,000.

Deferred Financing Costs

The debt issuance costs have been deferred and are presented as noted below in the consolidated balance sheets, and are subsequently amortized ratably over the term of respective debt.

Balance Sheet Location

Maturity Date/

Amortization Term

January 27, 2024 January 28, 2023

Credit Facility - Prepaid and Other Current Assets

December 28, 2024 $ 14,570 $ 1,583

Credit Facility - Other noncurrent assets

Credit Facility - sub-total

Term Loan - Contra Debt

April 7, 2025 1,559 1,743

Total deferred financing costs

$ 16,129 $ 3,458

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

Interest Expense

During the 13 weeks ended October 28, 2023 and October 29, 2022, we recognized interest expense of $ 10,664 and $ 4,886 , respectively, and during the 26 weeks ended October 28, 2023 and October 29, 2022, we recognized interest expense of $ 18,918 and $ 8,754 , respectively.

Cash interest paid during the 26 weeks ended October 28, 2023 and October 29, 2022 was $ 13,972 and $ 7,301 , respectively.

During the 13 weeks ended January 27, 2024 and January 28, 2023, we recognized interest expense of $ 10,620 and $ 6,918 , respectively, and during the 39 weeks ended January 27, 2024 and January 28, 2023, we recognized interest expense of $ 29,538 and $ 15,672 , respectively.

The following table disaggregates interest expense for the 13 and 39 week periods:

13 weeks ended 39 weeks ended

January 27, 2024 January 28, 2023 January 27, 2024 January 28, 2023

Interest Incurred

Credit Facility $ 5,747 $ 5,215 $ 18,286 $ 11,910

Term Loan 907 853 3,074 2,213

Total Interest Incurred $ 6,654 $ 6,068 $ 21,360 $ 14,123

Amortization of Deferred Financing Costs

Credit Facility $ 3,662 $ 396 $ 7,456 $ 1,187

Term Loan 312 462 924 871

Total Amortization of Deferred Financing Costs $ 3,974 $ 858 $ 8,380 $ 2,058

Interest Income, net of expense $ ( 8 ) $ ( 8 ) $ ( 202 ) $ ( 509 )

Total Interest Expense $ 10,620 $ 6,918 $ 29,538 $ 15,672

Cash interest paid during the 39 weeks ended January 27, 2024 and January 28, 2023 was $ 19,640 and $ 13,406 , respectively.

We recognize lease assets and lease liabilities on the condensed consolidated balance sheets for substantially all lease arrangements as required by FASB ASC 842, Leases (Topic 842).

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Our lease terms generally range from one year to fifteen years and a number of agreements contain minimum annual guarantees, many of which are adjusted at the start of each contract year based on the actual sales activity of the leased premises for the most recently completed contract year.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

(Thousands of dollars, except share and per share data)

Payment terms are based on the fixed rates explicit in the lease, including minimum annual guarantees, and/or variable rates based on:

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We utilized an estimated collateralized incremental borrowing rate as of the effective date or the commencement date of the lease, whichever is later.

The following table summarizes lease expense:

During the 39 weeks ended January 27, 2024 and January 28, 2023, we recognized lease expense of $ 139 and $ 121 , respectively, related to our various office spaces as selling and administrative expenses in our condensed consolidated statement of operations.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

We recognized lease expense related to our college and university contracts as cost of sales in our condensed consolidated statement of operations as follows:

13 weeks ended 39 weeks ended

October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

January 27, 2024 January 28, 2023 January 27, 2024 January 28, 2023

Variable lease expense $ 18,679 $ 17,240 $ 56,039 $ 57,698

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Net lease expense $ 52,509 $ 55,795 $ 159,353 $ 172,040

The decrease in lease expense during the 26 weeks ended October 28, 2023 is primarily due to lower commission rates related to the shift from physical to digital course materials, closed stores, and the impact of the timing due to contract renewals, partially offset by higher sales for contracts based on a percentage of sales.

The decrease in lease expense during the 39 weeks ended January 27, 2024 is primarily due to lower commission rates related to the shift from physical to digital course materials, closed stores, and the impact of the timing due to contract renewals, partially offset by higher sales for contracts based on a percentage of sales.

The following table summarizes our minimum fixed lease obligations, excluding variable commissions:

As of October 28, 2023

As of January 27, 2024

Remainder of Fiscal 2024 $ 95,818

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Operating lease liabilities at period end $ 280,771

Future lease payment obligations related to leases that were entered into, but did not commence as of October 28, 2023, were not material.

Future lease payment obligations related to leases that were entered into, but did not commence as of January 27, 2024, were not material.

The following summarizes additional information related to our operating leases:

October 28, 2023 October 29, 2022

January 27, 2024 January 28, 2023

Weighted average remaining lease term (in years) 4.4 years 5.2 years

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Right-of-use assets obtained in exchange for lease liabilities from initial recognition $ 78,446 $ 91,365

Supplementary Information

Restructuring and other charges

During the 13 and 39 weeks ended January 27, 2024, we recognized restructuring and other charges totaling $ 3,413 and $ 12,320 , respectively, comprised primarily of $ 3,413 and $ 11,240 , respectively, for costs primarily associated with professional service costs for restructuring as discussed below and process improvements, and $ 0 and $ 1,080 , respectively, for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives ($ 921 is included in accrued liabilities in the condensed consolidated balance sheet as of January 27, 2024).

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

Supplementary Information

Restructuring and other charges

During the 13 and 26 weeks ended October 28, 2023, we recognized restructuring and other charges totaling $ 4,274 and $ 8,907 , respectively, comprised primarily of $ 4,245 and $ 7,827 , respectively, for costs primarily associated with professional service costs for restructuring and $ 29 and $ 1,080 , respectively, for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives ($ 2,311 is included in accrued liabilities in the condensed consolidated balance sheet as of October 28, 2023).

defined in the Credit Agreement).

Restructuring and other expenses associated with the costs of this committee, as well as other related professional service costs, are expected to decrease when the Company concludes on a strategic alternative.

During the 13 and 26 weeks ended October 29, 2022, we recognized restructuring and other charges totaling $ 260 and $ 635 , respectively, comprised primarily of costs associated with professional service costs for restructuring, process improvements.

During the 13 and 39 weeks ended January 28, 2023, we recognized restructuring and other charges totaling $ 4,127 and $ 4,762 , respectively, comprised primarily of $ 2,848 in each period for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives, and $ 1,279 and $ 1,914 , respectively, for costs primarily associated with professional service costs for restructuring and process improvements.

Long-Term Incentive Plan Compensation Expense

During the 13 and 26 weeks ended October 28, 2023, we did not grant any long-term incentive plan awards.

During the 13 and 39 weeks ended January 27, 2024, we did not grant any long-term incentive plan awards.

We recognized compensation expense for previously granted long-term incentive plan awards in selling and administrative expenses as follows:

13 weeks ended 39 weeks ended

2023 October 29,

2022 October 28,

2023 October 29,

2024 January 28,

2023 January 27,

2024 January 28,

Stock-based awards

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Total compensation expense for long-term incentive awards $ 813 $ 1,137 $ 2,440 $ 4,442

Total unrecognized compensation cost related to unvested awards as of October 28, 2023 was $ 4,001 and is expected to be recognized over a weighted-average period of 1.5 years.

Total unrecognized compensation cost related to unvested awards as of January 27, 2024 was $ 3,173 and is expected to be recognized over a weighted-average period of 1.3 years.

Employee Benefit Plans

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For all plans, we are responsible to fund the employer contributions directly.

Total employee benefit expense for these plans was $ 590 and $ 1,026 during the 13 weeks ended October 28, 2023 and October 29, 2022, respectively.

Total employee benefit expense for these plans was $ 1,687 and $ 2,285 during the 26 weeks ended October 28, 2023 and October 29, 2022, respectively.

Total employee benefit expense for these plans was $ 0 and $ 1,101 during the 13 weeks ended January 27, 2024 and January 28, 2023, respectively.

Total employee benefit expense for these plans was $ 1,687 and $ 3,386 during the 39 weeks ended January 27, 2024 and January 28, 2023, respectively.

Commencing in September 2023, we revised the 401(k)-retirement savings plan to an annual end of plan year discretionary match, in lieu of the current pay period match.

We recorded an income tax expense of $ 229 on pre-tax loss of $( 9,699 ) during the 13 weeks ended January 27, 2024, which represented an effective income tax rate of ( 2.4 )% and an income tax expense of $ 139 on pre-tax loss of $( 21,995 ) during the 13 weeks ended January 28, 2023, which represented an effective income tax rate of ( 0.6 )%.

We recorded an income tax expense of $ 532 on pre-tax loss of $( 34,513 ) during the 39 weeks ended January 27, 2024, which represented an effective income tax rate of ( 1.5 )% and an income tax expense of $ 603 on pre-tax loss of $( 47,685 ) during the 39 weeks ended January 28, 2023, which represented an effective income tax rate of ( 1.3 )%.

The effective tax rate for the 13 weeks ended January 27, 2024 is lower than the prior year comparable period due to immaterial return to provision adjustments recorded in the prior year.

The effective tax rate for the 39 weeks ended January 27, 2024 is materially consistent with the prior year comparable period.

In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized.

As of January 27, 2024, we determined that it was more likely than not that

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 13 and 26 weeks ended October 28, 2023 and October 29, 2022

For the 13 and 39 weeks ended January 27, 2024 and January 28, 2023

(Thousands of dollars, except share and per share data)

Our provision for income taxes during interim reporting periods has historically been calculated by applying an estimate of the annual effective tax rate for the full fiscal year to ordinary income (loss) (pre-tax income (loss) excluding unusual or infrequently occurring discrete items) for the reporting period.

For the 26 weeks ended October 28, 2023, and in accordance with ASC 740-270-30-18 “ Income Taxes - Interim Reporting - Initial Measurement, ” and paragraph 82 of FASB interpretation No.

18, " Accounting for Income Taxes in Interim Periods " ("FIN 18"), we computed our provision for income taxes based on the actual effective tax rate for the year-to-date period by applying the discrete method.

We determined that as small changes in estimated ordinary income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the 26 weeks ended October 28, 2023.

We believe that, at this time, the use of this discrete method represents the best estimate of our annual effective tax rate.

We recorded an income tax expense of $ 314 on pre-tax income of $ 25,168 during the 13 weeks ended October 28, 2023, which represented an effective income tax rate of 1.2 % and an income tax benefit of $( 383 ) on pre-tax income of $ 23,785 during the 13 weeks ended October 29, 2022, which represented an effective income tax rate of ( 1.6 )%.

We recorded an income tax expense of $ 303 on pre-tax loss of $( 24,814 ) during the 26 weeks ended October 28, 2023, which represented an effective income tax rate of ( 1.2 )% and an income tax expense of $ 464 on pre-tax loss of $( 25,690 ) during the 26 weeks ended October 29, 2022, which represented an effective income tax rate of ( 1.8 )%.

The effective tax rate for the 26 weeks ended October 28, 2023 is lower than the prior year comparable period due to utilization of the discrete tax provision methodology discussed above.

In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized.

As of October 28, 2023, we determined that it was more likely than not that we would not realize all deferred tax assets and our tax rate for the current fiscal year reflects this determination.

we would not realize all deferred tax assets and our tax rate for the current fiscal year reflects this determination.

We will continue to evaluate this position.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements