Barnes & Noble Education Inc.
08/29/2025 | Press release | Distributed by Public on 08/29/2025 15:01
Business/Financial Results, Non-Reliance of Financial Report (Form 8-K)
Item 2.02 Results of Operations and Financial Condition.
The information related to the Company's anticipated financial results for fiscal year 2025 set forth in Item 4.02 below is incorporated by reference into this Item 2.02.
Item 4.02 Non-Reliance on Previously Issued Financial Statements or Related Audit Report or Completed Interim Review.
On August 26, 2025, the Board of Directors (the "Board") of Barnes & Noble Education, Inc. (the "Company") concluded that the Company's previously-issued unaudited interim condensed consolidated financial statements for the fiscal third quarter and nine-months ended January 25, 2025, the fiscal second quarter and six-months ended October 26, 2024, the fiscal first quarter ended July 27, 2024, and the fiscal third quarter and nine-months ended January 27, 2024 contained in its Quarterly Reports on Form 10-Q and the Company's previously-issued audited consolidated financial statements for the fiscal year ended April 27, 2024 contained in its Annual Report on Form 10-K (the "Non-Reliance Periods"), as well as its disclosures related to such financial statements, including any reports, earnings releases, and investor presentations, and related communications issued by or on behalf of the Company with respect to the Non-Reliance Periods (the "Previously Issued Financial Information"), should no longer be relied upon. The determination by the Board was made upon the recommendation of the Audit Committee (the "Audit Committee") of the Board and after consultation with the Company's management team.
As previously reported by the Company in its Current Report on Form 8-K filed on July 18, 2025 (the "Prior 8-K"), certain information regarding the recording of cost of digital sales was brought to the attention of management in July 2025, which promptly informed the Audit Committee, that caused the Audit Committee to commence an internal investigation with the assistance of outside counsel and advisors.
The Audit Committee has made substantial progress in its investigation and in its review of the potential impact of these matters on the Company's Previously Issued Financial Information for the Non-Reliance Periods. The Company expects the adjustments to Previously Issued Financial Information resulting from the investigation to be substantially consistent with what was previously reported in the Prior 8-K. The Company expects to report that correcting these matters will result in a decrease of $2.5 million in cost of sales for the fiscal third quarter and nine-months ended January 27, 2024; an increase of $5.7 million in cost of sales for the fiscal year ended April 27, 2024; a decrease in cost of sales of $0.7 million for the fiscal first quarter ended July 27, 2024; an increase in cost of sales of $13.1 million and $12.4 million for the fiscal second quarter and six-months ended October 26, 2024, respectively; and a decrease in costs of sales of $1.9 million and an increase of $10.5 million in cost of sales for the fiscal 2025 third quarter and nine-months ended January 25, 2025, respectively. These adjustments to cost of sales will have a corresponding impact on the Company's results of operations, as well as its accrued liabilities and accounts receivable in the Non-Reliance Periods. None of the adjustments resulting from the investigation will impact the Company's fiscal 2025 year-end cash and cash equivalents and total debt. Based on evidence reviewed by the Committee and its advisors to date, the Company believes that these potential impacts resulted from the actions of a payment processing employee, who has been suspended pending final results of the Committee's investigation.
During the course of its investigation, the Audit Committee and its advisors also identified $3.5 million of sales in the quarterly period ended January 25, 2025 that did not meet the criteria for revenue recognition. The Company did not recognize any cost of sales associated with these sales. The Company expects to report that correcting this matter will result in a decrease of $3.5 million in sales and accounts receivable in the fiscal third quarter and nine-months ended January 25, 2025.
Based on a quantitative analysis of the adjustments described above and considering certain qualitative factors, the Board concluded that the Previously Issued Financial Information for the Non-Reliance Periods should no longer be relied upon. As a result, the Company expects to restate the financial statements for the Non-Reliance Periods (the "Restatement"), which will be corrected within its Annual Report on Form 10-K for the fiscal year ended May 3, 2025, when filed. However, the final determination regarding the scope of any such Restatement will depend on the completion of the Audit Committee's review and the ongoing work of the Company and its independent registered public accounting firms for the fiscal periods of 2024 and 2025. The Company is also evaluating potential accounting adjustments unrelated to the investigation that could impact the Non-Reliance Periods. It is possible that the magnitude of such a Restatement may change as additional items may be identified as this work is completed.
As previously reported in the Prior 8-K, the Company expects to report material weaknesses, including a material weakness related to the appropriate review and approval of manual journal entries when it files its Annual Report on Form 10-K for the year ended May 3, 2025. As a result of the expected material weaknesses, the Company believes that its internal control over financial reporting was not effective, and its disclosure controls and procedures were not effective, as of May 3, 2025 and as of April 27, 2024, the respective end dates of each of its fiscal years 2024 and 2025, and the respective end dates of each of its
interim Non-Reliance Periods within such fiscal years. The Company's assessment of the effectiveness of its internal control over financial reporting will be described in more detail in the Annual Report on Form 10-K for the year ended May 3, 2025.
The Company has voluntarily contacted the staff of the Securities and Exchange Commission (the "SEC") to advise the staff that an internal investigation is ongoing, and the Company intends to fully cooperate with the staff with respect to these matters.
As reported in the Prior 8-K, total sales in fiscal year 2025 is expected to be $1.61 billion (unaudited), an increase of $40.5 million in fiscal year 2025 over fiscal year 2024, and BNC First Day total revenue in fiscal year 2025 is expected to be $593.8 million (unaudited), an increase of $119.9 million over the prior year period. The total sales in fiscal year 2025 excludes the $3.5 million of revenue recognized in fiscal third quarter ended January 25, 2025 discussed above. The Company expects to report total net debt (defined as total debt, less cash and cash equivalents) of $94.0 million (unaudited) as of the end of fiscal year 2025, which was a decrease of $91.8 million from the Company's total net debt of $185.8 million as of the end of fiscal year 2024. In addition, as previously reported in the Prior 8-K, the Company expects to be in compliance with its financial covenants under its credit agreement as of fiscal 2025 year-end. The Company has received from its lenders an extension of time within which it must deliver financial statements to its lenders.
The Audit Committee has discussed the matters disclosed in Item 4.02 of this Current Report on Form 8-K with BDO USA, P.C., the Company's independent registered accounting firm for the fiscal year ended May 3, 2025, and with Ernst & Young LLP, the Company's independent registered accounting firm for the fiscal year ended April 27, 2024.
Barnes & Noble Education Inc. published this content on August 29, 2025, and is solely responsible for the information contained herein. Distributed via SEC EDGAR on August 29, 2025 at 21:01 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]