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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

 

									26 weeks ended
															November 1, 2025						October 26, 2024
Sales:																					As Restated
Product sales and other															$	872,390					$	810,600
Rental income															60,184						54,953
Total sales															932,574						865,553
Cost of sales (exclusive of depreciation and amortization expense):
Product and other cost of sales															714,349						662,411
Rental cost of sales															33,011						29,669
Total cost of sales															747,360						692,080
Gross profit															185,214						173,473
Selling and administrative expenses															145,163						139,963
Depreciation and amortization expense															16,810						21,613
Other expense															5,611						3,468
Operating income															17,630						8,429
Loss on extinguishment of debt (a)															—						55,233
Interest expense, net															7,630						13,081
Income (loss) before income taxes															10,000						(59,885)
Income tax expense															3,267						878
Net income (loss)															$	6,733					$	(60,763)
Income (loss) per Common Stock:
Basic:
Total Basic Income (loss) per share															$	0.20					$	(3.04)
Weighted average common shares outstanding - Basic															34,053,847						20,018,920
Diluted:
Total Diluted Income (loss) per share															$	0.19					$	(3.04)
Weighted average common shares outstanding - Diluted															34,484,151						20,018,920

(a)     For additional information, see the Notes in the Non-GAAP disclosure information of this Press Release.

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									26 weeks ended
															November 1, 2025						October 26, 2024
Percentage of sales:																					As Restated
Sales:
Product sales and other															93.5 %		%				93.7 %		%
Rental income															6.5 %		%				6.3 %		%
Total sales															100.0 %		%				100.0 %		%
Cost of sales (exclusive of depreciation and amortization expense):
Product and other cost of sales (a)															81.9 %		%				81.7 %		%
Rental cost of sales (a)															54.9 %		%				54.0 %		%
Total cost of sales															80.1 %		%				80.0 %		%
Gross profit															19.9 %		%				20.0 %		%
Selling and administrative expenses															15.6 %		%				16.2 %		%
Depreciation and amortization expense															1.8 %		%				2.5 %		%
Other expense															0.6 %		%				0.4 %		%
Operating income															1.9 %		%				0.9 %		%

(a)     Represents the percentage these costs bear to the related sales, instead of total sales.

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

			November 1, 2025						May 3, 2025
ASSETS
Current assets:
Cash and cash equivalents			$	11,720					$	9,058
Receivables, net			314,962						98,077
Merchandise inventories, net			329,123						299,562
Textbook rental inventories			48,477						26,439
Prepaid expenses and other current assets			38,884						32,249
Total current assets			743,166						465,385
Property and equipment, net			38,247						40,229
Operating lease right-of-use assets			190,927						183,695
Intangible assets, net			70,897						78,241
Other noncurrent assets			20,150						22,735
Total assets			$	1,063,387					$	790,285
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable			$	345,406					$	148,848
Accrued liabilities			103,885						65,853
Current operating lease liabilities			76,116						64,524
Total current liabilities			525,407						279,225
Long-term deferred taxes, net			603						1,135
Long-term operating lease liabilities			113,333						115,495
Other long-term liabilities			18,306						19,142
Long-term borrowings			122,500						103,100
Total liabilities			780,149						518,097
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value; authorized, 5,000,000 shares; issued and outstanding, none			—						—
Common stock, $0.01 par value; authorized, 200,000,000 shares; issued, 34,081,114 and 34,081,114 shares, respectively; outstanding, 34,053,847 and 34,053,847 shares, respectively			341						341
Additional paid-in-capital			1,011,291						1,006,974
Accumulated deficit			(705,838)						(712,571)
Treasury stock, at cost			(22,556)						(22,556)
Total stockholders' equity			283,238						272,188
Total liabilities and stockholders' equity			$	1,063,387					$	790,285

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flow

(In thousands)

(Unaudited)

						26 weeks ended
						November 1, 2025						October 26, 2024
												As Restated
Cash flows from operating activities:
Net income (loss)						$	6,733					$	(60,763)
Adjustments to reconcile net loss from operations to net cash flows from operating activities:
Depreciation and amortization expense						16,810						21,613
Amortization of deferred financing costs						1,831						3,333
Loss on extinguishment of debt						—						55,233
Deferred taxes						(532)						135
Pension adjustments						—						7,828
Stock-based compensation expense						4,317						392
Changes in operating lease right-of-use assets and liabilities						2,197						1,345
Changes in other long-term assets and liabilities, net						921						(6,541)
Changes in other operating assets and liabilities, net:
Receivables						(216,885)						(160,931)
Merchandise inventories, net						(29,561)						28,568
Textbook rental inventories						(22,038)						(16,680)
Prepaid expenses and other current assets						(1,637)						4,341
Accounts payable and accrued liabilities						236,480						26,035
Changes in other operating assets and liabilities						(33,641)						(118,667)
Net cash flows used in operating activities						$	(1,364)					$	(96,092)
Cash flows from investing activities:
Purchases of property and equipment						$	(8,051)					$	(7,018)
Net change in other noncurrent assets						—						792
Net cash flows used in investing activities						$	(8,051)					$	(6,226)
Cash flows from financing activities:
Proceeds from borrowings						$	349,200					$	455,044
Repayments of borrowings						(329,800)						(442,461)
Proceeds from Private Equity Investment						—						50,000
Proceeds from Rights Offering						—						45,000
Proceeds from sales of Common Stock under ATM facility, net of commissions						—						9,590
Payment of equity issuance costs						—						(9,702)
Payment of deferred financing costs						(1,900)						(5,569)
Purchase of treasury shares						—						(4)
Proceeds from principal stockholder expense reimbursement						—						1,190
Payment of finance lease principal						(379)						(398)
Net cash flows provided by financing activities						$	17,121					$	102,690
Net increase (decrease) in cash, cash equivalents and restricted cash						$	7,706					$	372
Cash, cash equivalents and restricted cash at beginning of period						28,723						28,570
Cash, cash equivalents, and restricted cash of operations at end of period						$	36,429					$	28,942

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Non-GAAP Information (a)

(In thousands)

(Unaudited)

Adjusted Income (Loss) (a)									26 weeks ended
															November 1, 2025						October 26, 2024
																					As Restated
Net income (loss)															$	6,733					$	(60,763)
Reconciling items (below)															3,844						3,860
Adjusted Income (Loss)															$	10,577					$	(56,903)
Reconciling items
Other (income) expense, net of Investigation expenses															(473)						3,468
Stock-based compensation expense															4,317						392
Reconciling items															$	3,844					$	3,860
Adjusted EBITDA (a)									26 weeks ended
															November 1, 2025						October 26, 2024
																					As Restated
Net income (loss)															$	6,733					$	(60,763)
Add:
Depreciation and amortization expense															16,810						21,613
Interest expense, net															7,630						13,081
Income tax expense															3,267						878
Loss on extinguishment of debt															—						55,233
Other (income) expense, net of Investigation expenses															(473)						3,468
Stock-based compensation expense															4,317						392
Adjusted EBITDA															$	38,284					$	33,902

(a)    For additional information, see "Use of Non-GAAP Financial Information" in the Non-GAAP disclosure information of this Press Release.

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Free Cash Flow (non-GAAP) (a)

									26 weeks ended
Dollars in thousands															November 1, 2025						October 26, 2024
																					As Restated
Net cash flows (used in) provided by operating activities															$	(1,364)					$	(96,092)
Less:
Capital expenditures (b)															8,051						7,018
Cash interest															5,655						9,866
Cash taxes															312						(2,085)
Free Cash Flow (non-GAAP)															$	(15,382)					$	(110,891)

(a)    For additional information, see "Use of Non-GAAP Financial Information" in the Non-GAAP disclosure information of this Press Release.

(b)    Purchases of property and equipment are also referred to as capital expenditures. Our investing activities consist principally of capital expenditures for contractual capital investments associated with renewing existing contracts, new store construction, digital initiatives and enhancements to internal systems and our website.

The following table provides the components of total purchases of property and equipment:

Capital Expenditures									26 weeks ended
Dollars in thousands															November 1, 2025						October 26, 2024
																					As Restated
Physical store capital expenditures															$	5,350					$	3,840
Product and system development															2,275						2,708
Other															426						470
Total Capital Expenditures															$	8,051					$	7,018

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Use of Non-GAAP Financial Information - Adjusted Income (Loss), Adjusted EBITDA and Adjusted Free Cash Flow

To supplement the Company’s consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), the Company uses the financial measures of Adjusted Income (Loss), Adjusted EBITDA, and Adjusted Free Cash Flow, which are non-GAAP financial measures under Securities and Exchange Commission (the "SEC") regulations. We define Adjusted Income (Loss) as net income (loss) adjusted for certain reconciling items that are subtracted from or added to net income (loss). We define Adjusted EBITDA as net income (loss) plus (1) depreciation and amortization; (2) interest expense, net and (3) income taxes, (4) as adjusted for certain other non-cash or non-recurring items, and adjustments defined in the Company’s credit agreement. We define Adjusted Free Cash Flow as Cash Flows from Operating Activities less capital expenditures, cash interest and cash taxes.

These non-GAAP measures have been reconciled to the most comparable financial measures presented in accordance with GAAP as follows: the reconciliation of Adjusted Income (Loss) to net income (loss); the reconciliation of consolidated Adjusted EBITDA to consolidated net income (loss); and the reconciliation of Adjusted Free Cash Flow to Cash Flows from Operating Activities. All of the items included in the reconciliations are either (i) non-cash items or (ii) items that management does not consider in assessing our on-going operating performance.

These non-GAAP financial measures are not intended as substitutes for and should not be considered superior to measures of financial performance prepared in accordance with GAAP. In addition, the Company's use of these non-GAAP financial measures may be different from similarly named measures used by other companies, limiting their usefulness for comparison purposes.

We review these non-GAAP financial measures as internal measures to evaluate our performance at a consolidated level to manage our operations. We believe that these measures are useful performance measures which are used by us to facilitate a comparison of our on-going operating performance on a consistent basis from period-to-period. We believe that these non-GAAP financial measures provide for a more complete understanding of factors and trends affecting our business than measures under GAAP can provide alone, as they exclude certain items that management believes do not reflect the ordinary performance of our operations in a particular period. Our Board of Directors and management also use Adjusted EBITDA at a consolidated level as one of the primary methods for planning and forecasting expected performance, for evaluating on a quarterly and annual basis actual results against such expectations, and as a measure for performance incentive plans. We believe that the inclusion of Adjusted Income (Loss) and Adjusted EBITDA results provides investors useful and important information regarding our operating results, in a manner that is consistent with management’s evaluation of business performance. We believe that Adjusted Free Cash Flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements and assists investors in their understanding of our operating profitability and liquidity as we manage the business to maximize margin and cash flow.