Barnes & Noble Reports First Quarter Financial Results: Achieves Earnings Per Share Guidance; Declares Quarterly Dividend

Sales for the first quarter increased 2% to $1.1 billion. Barnes &Noble store sales increased 2% to $980.5 million, with comparablestore sales decreasing 0.3% for the quarter. B. Dalton sales were$23.3 million for the quarter, a 26% decrease due to store closingsand a 1.8% comparable store sales decline. Sales at Barnes & Noble.comof $91.1 million for the quarter were flat compared to the prior yearperiod.

Bestselling titles during the quarter included John Grogan's"Marley & Me," James Patterson's "Fifth Horseman," Stephen King's"Cell," Giada de Laurentiis' "Giada's Family Dinners" and "JimCramer's Real Money."

First quarter net earnings were $10.0 million or $0.14 per share,in-line with company guidance of $0.10 to $0.14 per share. Effectivethis quarter, the company has adopted Statement of FinancialAccounting Standards No. 123(R) (As Amended), "Share-Based Payment,"and began expensing stock options at the beginning of fiscal year2006.

Excluding a $0.04 per share impact due to stock compensationexpense, first quarter net earnings were $0.18 per share, representinga 31% increase compared to the prior year.

In the first quarter of 2006, the company acquired 2.2 millionshares for $93 million under its share repurchase program.

GUIDANCE

For the second quarter, the company expects comparable store salesat Barnes & Noble stores to decrease in the low-single digits due tothe difficult comparisons against last year's 4.3% comparable storesales increase, which included extraordinary sales of Harry Potter andthe Half-Blood Prince. For the full year, the company continues toexpect comparable store sales to be in the low single digits.

Barnes & Noble, Inc.'s second quarter earnings per share isexpected to be in a range of $0.22 to $0.26, which includes stockcompensation expense of $0.04 per share. For the full year, thecompany continues to expect earnings per share to be in a range of$2.20 to $2.30, which includes stock compensation expense of $0.15 pershare.

As of April 29, 2006, the company operated 684 Barnes & Noblestores and 113 B. Dalton stores. During the first quarter, eightBarnes & Noble stores were opened and five were closed. B. Daltonclosed five stores during the quarter.

A conference call with Barnes & Noble, Inc.'s senior managementwill be webcast beginning at 11:00 A.M. ET on Thursday, May 18, 2006,and is accessible at www.barnesandnobleinc.com/webcasts. The call willalso be archived at www.fulldisclosure.com for one year.

Barnes & Noble, Inc. will report second quarter earnings on orabout August 17, 2006.

ABOUT BARNES & NOBLE, INC.

Barnes & Noble, Inc. (NYSE: BKS), the world's largest booksellerand a Fortune 500 company, operates 797 bookstores in 50 states. Forthe fourth year in a row, the company is the nation's top retail brandfor quality, according to the EquiTrend(R) Brand Study by HarrisInteractive(R). Barnes & Noble conducts its online business throughBarnes & Noble.com (www.bn.com), one of the Web's largest e-commercesites and the number one online bookseller for quality amonge-commerce companies, according to the latest EquiTrend survey.

General information on Barnes & Noble, Inc. can be obtained viathe Internet by visiting the company's corporate Web site:http://www.barnesandnobleinc.com.

SAFE HARBOR

This press release contains "forward-looking statements." Barnes &Noble is including this statement for the express purpose of availingitself of the protections of the safe harbor provided by the PrivateSecurities Litigation Reform Act of 1995 with respect to all suchforward-looking statements. These forward-looking statements are basedon currently available information and represent the beliefs of themanagement of the company. These statements are subject to risks anduncertainties that could cause actual results to differ materially.These risks include, but are not limited to, general economic andmarket conditions, decreased consumer demand for the company'sproducts, possible disruptions in the company's computer or telephonesystems, possible work stoppages or increases in labor costs, possibleincreases in shipping rates or interruptions in shipping service,effects of competition, possible disruptions or delays in the openingof new stores or the inability to obtain suitable sites for newstores, higher than anticipated store closing or relocation costs,higher interest rates, the performance of the company's online andother initiatives, the successful integration of acquired businesses,the successful and timely completion and integration of the company'snew New Jersey distribution center, unanticipated increases inmerchandise or occupancy costs, unanticipated adverse litigationresults or effects, product shortages, and other factors which may beoutside of the company's control. Please refer to the company'sannual, quarterly and periodic reports on file with the SEC for a moredetailed discussion of these and other risks that could cause resultsto differ materially.
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
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13 weeks ended
----------------------
April 29, April 30,
2006 2005
----------- ----------

Sales $1,114,735 1,097,170
Cost of sales and occupancy 775,985 769,819
---------- ----------
Gross profit 338,750 327,351
---------- ----------
Selling and administrative expenses 281,142 266,059
Depreciation and amortization 40,555 43,311
Pre-opening expenses 3,280 2,447
---------- ----------
Operating profit 13,773 15,534
Interest income (expense), net 1,510 (329)
---------- ----------
Income before taxes and minority interest 15,283 15,205
Income taxes 6,228 6,196
---------- ----------
Income before minority interest 9,055 9,009
Minority interest 936 897
---------- ----------
Net income $ 9,991 9,906
========== ==========

Income per common share:
Basic $ 0.15 0.14
Diluted $ 0.14 0.13


Weighted average common shares outstanding
Basic 65,745 69,722
Diluted 70,100 74,400


Percentage of sales:
Sales 100.0% 100.0%
Cost of sales and occupancy 69.6% 70.2%
---------- ----------
Gross profit 30.4% 29.8%
---------- ----------
Selling and administrative expenses 25.2% 24.2%
Depreciation and amortization 3.6% 3.9%
Pre-opening expenses 0.3% 0.2%
---------- ----------
Operating profit 1.2% 1.4%
Interest expense, net 0.1% 0.0%
---------- ----------
Income before taxes and minority interest 1.4% 1.4%
Income taxes 0.6% 0.6%
---------- ----------
Income before minority interest 0.8% 0.8%
Minority interest 0.1% 0.1%
---------- ----------
Net income 0.9% 0.9%
========== ==========



BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share data)

----------------------------------------------------------------------
April 29, April 30, January 28,
2006 2005 2006
---------- ---------- ----------

ASSETS
Current assets:
Cash and cash equivalents $ 57,616 322,095 372,586
Receivables, net 97,288 94,292 99,117
Merchandise inventories 1,366,480 1,307,421 1,313,997
Prepaid expenses and other current
assets 77,087 125,733 74,476
---------- ---------- ----------
Total current assets 1,598,471 1,849,541 1,860,176
---------- ---------- ----------

Property and equipment:
Land and land improvements 3,247 3,247 3,247
Buildings and leasehold
improvements 983,603 958,827 984,535
Fixtures and equipment 1,199,796 1,083,330 1,174,973
---------- ---------- ----------
2,186,646 2,045,404 2,162,755
Less accumulated depreciation and
amortization 1,392,324 1,250,446 1,356,379
---------- ---------- ----------
Net property and equipment 794,322 794,958 806,376
---------- ---------- ----------

Goodwill 262,681 267,311 263,731
Intangible assets, net 93,110 96,196 93,834
Deferred taxes 114,720 123,682 114,046
Other noncurrent assets 24,325 36,881 25,969
---------- ---------- ----------
Total assets $2,887,629 3,168,569 3,164,132
========== ========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 768,591 729,779 828,852
Accrued liabilities 540,544 496,852 683,816
---------- ---------- ----------
Total current liabilities 1,309,135 1,226,631 1,512,668
---------- ---------- ----------

Long-term debt - 245,000 -
Deferred income taxes 157,344 193,743 158,035
Other long-term liabilities 363,294 370,812 367,531

Minority interest 9,121 8,044 10,057

Shareholders' equity:
Common stock; $.001 par value;
300,000 shares authorized;
84,180, 80,270 and 83,370
shares issued, respectively 84 80 83
Additional paid-in capital 1,116,859 1,007,922 1,091,018
Accumulated other comprehensive
loss (8,965) (9,781) (9,085)
Retained earnings 512,617 396,040 512,594
Treasury stock, at cost, 18,843,
11,162 and 16,690 shares,
respectively (571,860) (269,922) (478,769)
---------- ---------- ----------
Total shareholders' equity 1,048,735 1,124,339 1,115,841
---------- ---------- ----------
Commitments and contingencies - - -
---------- ---------- ----------
Total liabilities and shareholders'
equity $2,887,629 3,168,569 3,164,132
========== ========== ==========