NEW YORK--(BUSINESS WIRE)--February 23, 2010--Barnes & Noble, Inc. (NYSE:BKS), the world’s largest bookseller, today reported sales and earnings for its fiscal 2010 third quarter ended January 30, 2010. The company also announced that its Board of Directors has declared a quarterly cash dividend of $0.25 per share payable on March 31, 2010 to stockholders of record on March 10, 2010.

Total sales for the third quarter were $2.2 billion, a 33% increase compared to the prior year. Barnes & Noble store sales decreased 4.7% to $1.4 billion, with comparable store sales decreasing 5.5% for the quarter. Total sales in the 2010 quarter include Barnes & Noble College Bookstore (“College”) sales of $566 million. For the 2010 quarter, College’s comparable store sales decreased 1.3% but were down only 0.2% for the five week “back-to-school rush” period ending February 6, 2010.

Barnes & Noble.com sales increased 32% to $210 million for the quarter, as compared to the prior year. Most notably, Barnes & Noble.com’s sales accelerated throughout the quarter, increasing 67% year-over-year for the month of January.

“nook^TM began shipping only in the middle of the third quarter, and, as evident in our sales, we are thrilled with how customers have embraced our product and our digital eBook platform,” said Steve Riggio, chief executive officer of Barnes & Noble, Inc. “In addition to the accelerating online sales trends, nook^TM sales have been strong at our bookstores since the product became available earlier this month.”

For the third quarter, the company reported earnings before interest, taxes, depreciation and amortization (EBITDA) of $204 million. The company’s third quarter earnings incorporate the first full quarter of College’s financial results since acquisition. College contributed $49 million to EBITDA during the quarter. Consolidated net earnings were $80.2 million, or $1.38 per share, at the high end of the guidance range of $1.20 to $1.40 per share.

The company ended the third quarter with $40 million in cash and no debt outstanding under its revolving credit facility.

Bestselling titles during the quarter included John Grisham’s Ford Country, Greg Mortenson’s Stones into School, Elizabeth Gilbert’s Committed, Andre Agassi’s Open and Nicholas Sparks’ Last Song.

For the fiscal 2010 fourth quarter ending May 1, 2010, comparable store sales at Barnes & Noble stores are expected to decline 2% to 4% and College’s comparable store sales are expected to be in a range of (1%) to 1%. The company expects full-year comparable store sales at Barnes & Noble stores to decline 3% to 5% and continues to expect College’s comparable store sales to be in a range of (1%) to 1% from the acquisition date to the end of fiscal 2010.

The fourth quarter loss per share is expected to be in a range of $0.85 to $1.15. Consistent with the update provided on January 7, 2010, fiscal year 2010 earnings per share is expected to be in a range of $0.23 to $0.53.

As of January 30, 2010, the company operated 719 Barnes & Noble stores and 639 Barnes & Noble College Bookstores. During the third quarter, three Barnes & Noble stores were opened and nine were closed; three College stores were opened. Additionally, the company closed 46 B. Dalton bookstores.

A conference call with Barnes & Noble, Inc.’s senior management will be webcast beginning at 10:00 A.M. ET on Tuesday, February 23, 2010, and is accessible at www.barnesandnobleinc.com/webcasts.

Barnes & Noble, Inc. will report full year earnings results for the 2010 fiscal year ending May 1, 2010, on or about June 24, 2010.

Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller and a Fortune 500 company, operates 723 bookstores in 50 states. Barnes & Noble College Booksellers, LLC, a wholly-owned subsidiary of Barnes & Noble, also operates 639 college bookstores serving nearly 4 million students and over 250,000 faculty members at colleges and universities across the United States. Barnes & Noble is the nation’s top bookseller brand for the seventh year in a row, as determined by a combination of the brand’s performance on familiarity, quality, and purchase intent; the top bookseller in quality for the second year in a row and the number two retailer in trust, according to the EquiTrend® Brand Study by Harris Interactive®. Barnes & Noble conducts its online business through Barnes & Noble.com (www.bn.com), one of the Web’s largest e-commerce sites, which also features hundreds of thousands of titles in its eBookstore (www.bn.com/ebooks). Customers can buy and read eBooks on a wide range of platforms, including nook^TM by Barnes & Noble, the iPhone and iPod touch, BlackBerry^®smartphones, as well as most Windows^® and Mac^® laptops or full-sized desktop computers.

General information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the company’s corporate website: www.barnesandnobleinc.com.

This press release contains “forward-looking statements.” Barnes & Noble is including this statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. These forward-looking statements are based on currently available information and represent the beliefs of the management of the company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks include, but are not limited to, general economic and market conditions, decreased consumer demand for the company’s products, possible disruptions in the company’s computer systems, telephone systems or supply chain, possible risks associated with data privacy and information security, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible disruptions or delays in the opening of new stores or the inability to obtain suitable sites for new stores, higher than anticipated store closing or relocation costs, higher interest rates, the performance of the company’s online, digital and other initiatives, the performance and successful integration of acquired businesses, the success of the company’s strategic investments, unanticipated increases in merchandise, component or occupancy costs, unanticipated adverse litigation results or effects, the results or effects of any governmental review of the company’s stock option practices, product and component shortages, and other factors which may be outside of the company’s control. Please refer to the company’s annual, quarterly and periodic reports on file with the SEC for a more detailed discussion of these and other risks that could cause results to differ materially. The company assumes no obligation to update or revise any forward-looking statements.

BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)

	13 weeks ended			13 weeks ended			39 weeks ended			39 weeks ended
	January 30, 2010			January 31, 2009			January 30, 2010			January 31, 2009

Sales	$	2,174,542			1,631,616		$	4,491,118		3,965,922
Cost of sales and occupancy		1,558,871			1,108,899			3,177,403		2,732,683
Gross profit		615,671			522,717			1,313,715		1,233,239
Selling and administrative expenses		411,443			334,437			1,024,238		947,661
Depreciation and amortization		57,068			45,546			151,091		132,244
Pre-opening expenses		399			1,783			3,381		8,259
Operating profit		146,761			140,951			135,005		145,075
Interest expense, net		13,849			751			18,097		3,149
Income from continuing operations before taxes		132,912			140,200			116,908		141,926
Income taxes		52,523			55,235			48,212		55,965
Income from continuing operations (net of income tax)		80,389			84,965			68,696		85,961
Loss from discontinued operations (net of income tax)		-			(4,020	)		-		(7,848	)
Net income		80,389			80,945			68,696		78,113
Net (income) loss attributable to noncontrolling interests		14			207			18		30
Net income attributable to Barnes & Noble, Inc.	$	80,403			81,152		$	68,714		78,143

Income attributable to Barnes & Noble, Inc.
Income from continuing operations	$	80,389			84,965		$	68,696		85,961
Less loss attributable to noncontrolling interests		14			207			18		30
Net income from continuing operations attributable to Barnes & Noble, Inc.	$	80,403			85,172		$	68,714		85,991

Basic income per common share:
Income from continuing operations attributable to Barnes & Noble, Inc.	$	1.40			1.50		$	1.20		1.52
Loss from discontinued operations attributable to Barnes & Noble, Inc.		-			(0.07	)		-		(0.14	)
Net income attributable to Barnes & Noble, Inc.	$	1.40			1.43		$	1.20		1.39

Diluted loss per common share:
Income from continuing operations attributable to Barnes & Noble, Inc.	$	1.38			1.49		$	1.18		1.49
Loss from discontinued operations attributable to Barnes & Noble, Inc.		-			(0.07	)		-		(0.14	)
Net income attributable to Barnes & Noble, Inc.	$	1.38			1.42		$	1.18		1.35

Weighted average common shares outstanding
Basic		55,365			54,602			55,260		54,404
Diluted		56,003			54,964			56,074		55,526

Dividends declared per common share	$	0.25			0.25		$	0.75		0.75

Percentage of sales:
Sales		100.0	%		100.0	%		100.0	%	100.0	%
Cost of sales and occupancy		71.7	%		68.0	%		70.7	%	68.9	%
Gross profit		28.3	%		32.0	%		29.3	%	31.1	%
Selling and administrative expenses		18.9	%		20.5	%		22.8	%	23.9	%
Depreciation and amortization		2.6	%		2.8	%		3.4	%	3.3	%
Pre-opening expenses		0.0	%		0.1	%		0.1	%	0.2	%
Operating profit		6.7	%		8.6	%		3.0	%	3.7	%
Interest expense, net		0.6	%		0.0	%		0.4	%	0.1	%
Income from continuing operations before taxes		6.1	%		8.6	%		2.6	%	3.6	%
Income taxes		2.4	%		3.4	%		1.1	%	1.4	%
Income from continuing operations (net of income tax)		3.7	%		5.2	%		1.5	%	2.2	%


BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)

	January 30, 2010			January 31, 2009			May 2, 2009


ASSETS
Current assets:
Cash and cash equivalents	$	40,178			281,608		86,594
Receivables, net		246,592			80,998		70,721
Merchandise inventories		1,518,414			1,203,471		1,233,756
Prepaid expenses and other current assets		90,554			121,101		121,563
Current assets of discontinued operations		-			30,199		-
Total current assets		1,895,738			1,717,377		1,512,634

Property and equipment:
Land and land improvements		8,617			9,298		9,298
Buildings and leasehold improvements		1,202,702			1,096,801		1,102,439
Fixtures and equipment		1,584,456			1,385,454		1,331,524
		2,795,775			2,491,553		2,443,261
Less accumulated depreciation and amortization		1,977,781			1,670,839		1,642,517
Net property and equipment		817,994			820,714		800,744

Goodwill		522,702			240,008		254,842
Intangible assets, net		584,713			83,443		82,691
Other noncurrent assets		65,094			8,000		13,368
Noncurrent assets of discontinued operations		-			8,321		-
Total assets	$	3,886,241			2,877,863		2,664,279

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,184,915			746,599		698,315
Accrued liabilities		959,169			704,342		587,454
Current liabilities of discontinued operations		-			18,807		-
Total current liabilities		2,144,084			1,469,748		1,285,769

Deferred taxes		274,728			79,170		79,369
Other long-term liabilities		516,914			393,006		387,318
Noncurrent liabilities of discontinued operations	-				12,713		-

Shareholders' equity:
Common stock; $.001 par value; 300,000 shares authorized; 88,631, 87,681 and 88,225 shares issued, respectively		89			88		88
Additional paid-in capital		1,284,189			1,262,358		1,274,454
Accumulated other comprehensive loss		(12,015	)		(14,503	)	(12,015	)
Retained earnings		727,516			721,200		697,042
Treasury stock, at cost, 33,215, 33,066 and 33,148 shares, respectively		(1,050,828	)		(1,047,529	)	(1,049,328	)
Total Barnes & Noble, Inc. shareholders' equity		948,951			921,614		910,241
Noncontrolling interest		1,564			1,612		1,582
Total shareholders' equity		950,515			923,226		911,823
Commitments and contingencies		-			-		-
Total liabilities and shareholders' equity	$	3,886,241			2,877,863		2,664,279

Barnes & Noble, Inc. EBITDA Reconciliation⁽¹⁾

($ in thousands)	13 weeks ended January 30, 2010
	Barnes & Noble, Inc.		Barnes & Noble College
Net income	$	80,389	$	21,105
Interest		13,849		3,268
Income taxes		52,523		14,216
Depreciation and amortization		57,068		10,627
EBITDA	$	203,829	$	49,216

(1) To supplement the Company’s consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), in this press release the Company uses the non-GAAP financial measure of EBITDA (defined by the Company as earnings before interest, taxes, depreciation and amortization). The Company’s management reviews this non-GAAP measure internally to evaluate the Company’s performance and manage its operations. Given the recent changes in the Company’s business and their impact on the current quarter, the Company believes that the inclusion of EBITDA results provides investors useful and important information regarding the Company’s operating results.

CONTACT:
Barnes & Noble, Inc.
Media
Mary Ellen Keating, 212-633-3323
Senior Vice President, Corporate Communications
mkeating@bn.com
or
Investors
Joseph J. Lombardi, 212-633-3215
Chief Financial Officer
jlombardi@bn.com
or
Andy Milevoj, 212-633-3489
Director of Investor Relations
amilevoj@bn.com