Business Operations - The company operates 1,436 physical and virtual bookstores, serving over 6 million students[88]. - The company opened 95 new stores and closed 107 stores during the 26 weeks ended October 26, 2019, resulting in a total of 1,436 stores[114]. Financial Performance - Total sales for the 13 weeks ended October 26, 2019, were $772,228,000, a decrease of 5.2% from $814,766,000 for the same period in 2018[103]. - Net income for the 13 weeks ended October 26, 2019, was $35,931,000, down 39.8% from $59,697,000 in the prior year[103]. - Adjusted EBITDA for the 13 weeks ended October 26, 2019, was $74,544,000, a decrease of 22.0% compared to $95,541,000 for the same period in 2018[103]. - Total sales decreased by $60.4 million, or 5.2%, to $1,091.9 million during the 26 weeks ended October 26, 2019, from $1,152.3 million during the 26 weeks ended October 27, 2018[112]. - Net income for the 26 weeks ended October 26, 2019, was $3.8 million, a decline of 82.0% from $21.1 million in the prior year[141]. - Adjusted Earnings (non-GAAP) for the 26 weeks ended October 26, 2019, was $7.8 million, down from $21.6 million in the same period of 2018, a decrease of 63.9%[145]. Revenue and Sales Trends - Total revenue from the First Day inclusive access program increased by 93% compared to the prior year[88]. - Retail sales decreased by $42.1 million, or 5.4%, to $741.8 million for the 13 weeks ended October 26, 2019, compared to $783.9 million for the same period in 2018[114]. - Product sales and other for the 13 weeks ended October 26, 2019, were $718.5 million, a decrease of 5.0% compared to $756.2 million for the same period in 2018[110]. - Rental income for the 13 weeks ended October 26, 2019, was $53.7 million, down 8.4% from $58.6 million in the prior year[110]. Cost and Expenses - Total employee benefit expense for defined contribution plans was $2,839 for the 26 weeks ended October 26, 2019, down from $3,469 in the prior year[76]. - Stock-based compensation expense for the 26 weeks ended October 26, 2019, was $4,181, compared to $4,973 for the same period in the prior year[83]. - Selling and administrative expenses for the 13 weeks ended October 26, 2019, totaled $113.4 million, an increase from $115.3 million in the same period last year[110]. - Total cost of sales for the 13 weeks ended October 26, 2019, was $585.3 million, compared to $604.0 million for the same period in 2018[110]. Taxation - The effective income tax rate for the 26 weeks ended October 26, 2019, was 56.3%, significantly higher than the 12.4% rate for the same period in the prior year[84]. - Income tax expense for the 13 weeks ended October 26, 2019, was $19.1 million on pre-tax income of $55.0 million, resulting in an effective tax rate of 34.7%[141]. Market Conditions and Competition - The company experienced a decline in enrollment trends, particularly at community colleges, attributed to an improved economy and a dip in the U.S. birth rate[96]. - Price competition remains significant, with students being highly price-sensitive and able to shift spending easily among providers[95]. - The company is facing increasing competition from alternative media and sources for textbooks, including e-commerce outlets and digital platforms[95]. - The overall economic environment and funding levels at colleges and universities are impacting the company's business performance[96]. Future Outlook and Risks - The company anticipates continued growth in online degree program enrollments despite overall declining higher education enrollment[96]. - The company expects new bookstore contracts to drive future growth, with a trend towards outsourcing in the campus bookstore market[96]. - The company operates in a competitive environment with various risks including changes in college enrollment and funding availability[169]. - Digital sales growth may not exceed the rate of investment spend, impacting profitability[169]. - The company faces risks related to the integration of acquisitions and realization of anticipated synergies[169]. Cash Flow and Capital Management - Net cash flows provided by operating activities during the 26 weeks ended October 26, 2019, were $161.4 million, down from $236.6 million in the prior year, a decrease of 32%[153]. - Capital expenditures for the 26 weeks ended October 26, 2019, totaled $19.3 million, compared to $23.2 million in the same period of 2018[154]. - Cash, cash equivalents, and restricted cash at the end of the period were $25.4 million, compared to $20.8 million at the end of the previous year[151]. - The company had no outstanding borrowings under the Credit Agreement as of October 26, 2019, and had borrowed $150 million during the 26 weeks ended[156].

Financial Data and Key Metrics Changes - Total sales for Q2 2020 were $772.2 million, a decrease of $42.5 million or 5.2% compared to $814.8 million in the prior year [27] - Consolidated gross margin for the quarter was 24.3%, down from 25.9% in the prior year [32] - Selling and administrative expenses decreased by $1.9 million or 1.7% compared to the prior year [33] - Cash balance at the end of the quarter was $24.6 million, an increase of $4.6 million compared to $20 million in the prior year [34] Business Line Data and Key Metrics Changes - Comparable store sales in the retail segment decreased by 5.9% for the quarter, compared to a decrease of 5.8% in the prior year [28] - Course material sales decreased by 7.7%, an improvement over the prior year's decline of 8.0% [28] - DSS sales were $5.2 million, an increase of $0.3 million or 5.7% compared to the prior year, primarily due to increased sales of bartleby subscriptions [31] Market Data and Key Metrics Changes - Course material sales continue to be impacted by lower average selling prices, with approximately 40% of the decrease in the quarter due to lower pricing [28] - Community colleges represent around 20% to 21% of total revenue, down from the usual 25% [56] Company Strategy and Development Direction - The company is focusing on strategic initiatives to address affordability, access, and achievement, including growing the high-margin DSS business and expanding the FirstDay program [7][24] - A new strategic partnership with VitalSource was announced to enhance the FirstDay platform [12] - The company aims to stabilize and grow EBITDA by scaling high-margin DSS offerings and increasing omnichannel general merchandise sales [24] Management's Comments on Operating Environment and Future Outlook - Management noted a significant transformation in the higher education industry, including a shift to digital and declining enrollments [7] - The company is optimistic about the potential for strategic partnerships to enhance shareholder value and accelerate strategy execution [6][41] - Management expressed confidence in the initiatives set forth to serve the market effectively and enhance shareholder value [25] Other Important Information - The company has contracts to open approximately $97 million of new business gross sales for 36 million net after store closings [18] - The company expects consolidated adjusted EBITDA to be between $80 million to $85 million for fiscal year 2020 [36] Q&A Session Summary Question: What has changed in the business that prompted the strategic review? - Management noted an increase in unsolicited inquiries from potential strategic partners, indicating a recognition of the value in the company's assets [39] Question: How is the bartleby business performing in terms of student acquisition? - The primary acquisition channel remains college stores, with in-store sales being the main source of new subscribers [42][43] Question: What impact do recent price increases from publishers have on the retail business? - Management indicated that pricing from publishers has been volatile, and the company aims to collaborate with them to provide affordable solutions for students [47][49] Question: How are community colleges performing within the portfolio? - Community colleges continue to represent a lower portion of total revenue, but improvements have been seen due to the implementation of FirstDay programs [54][56] Question: How are recent partnerships with brands like Urban Outfitters performing? - The partnerships have generated excitement and increased foot traffic in stores, with plans to expand these initiatives [61][63]

Financial Performance - Total sales decreased by $17.8 million, or 5.3%, to $319.7 million for the 13 weeks ended July 27, 2019, compared to $337.5 million for the same period in 2018[108]. - Product sales and other decreased by 4.9% to $302.2 million for the 13 weeks ended July 27, 2019, from $317.8 million for the same period in 2018[108]. - Rental income decreased by 11.2% to $17.4 million for the 13 weeks ended July 27, 2019, compared to $19.6 million for the same period in 2018[108]. - Retail sales decreased by $12.4 million, or 4.3%, to $274.7 million during the 13 weeks ended July 27, 2019, compared to $287.1 million during the same period in 2018[112]. - Comparable store sales decreased by $9.0 million, or 3.5%, during the 13 weeks ended July 27, 2019, compared to a decrease of $6.4 million, or 2.5%, in the same period in 2018[116]. - Wholesale sales decreased by $17.6 million, or 19.6%, to $72.3 million during the 13 weeks ended July 27, 2019, from $89.9 million during the same period in 2018[117]. - The company reported a net loss of $32.2 million for the 13 weeks ended July 27, 2019, compared to a net loss of $38.6 million for the same period in 2018[104]. - Adjusted EBITDA improved to a loss of $25.1 million for the 13 weeks ended July 27, 2019, compared to a loss of $32.5 million for the same period in 2018[104]. Cost and Expenses - Total cost of sales decreased to $248.0 million for the 13 weeks ended July 27, 2019, from $270.9 million for the same period in 2018[107]. - Selling and administrative expenses increased to $97.7 million for the 13 weeks ended July 27, 2019, compared to $99.1 million for the same period in 2018[107]. - Total employee benefit expense for defined contribution plans was $1.538 million for the 13 weeks ended July 27, 2019, down from $2.085 million in the prior year[78]. - Stock-based compensation expense for the 13 weeks ended July 27, 2019, was $2.321 million, slightly down from $2.341 million in the prior year[82]. - Total selling and administrative expenses decreased by $1.4 million, or 1.5%, to $97.7 million during the 13 weeks ended July 27, 2019, from $99.1 million during the same period in 2018[125]. Impairment and Restructuring - The company recognized a non-cash impairment loss of $433,000 in the Retail segment during the 13 weeks ended July 27, 2019[10]. - Restructuring and other charges totaled $1.466 million, primarily for severance and professional service costs[75]. - The company recognized a non-cash impairment loss of $0.4 million in the Retail segment during the 13 weeks ended July 27, 2019[131]. Tax and Interest - The company recorded an income tax benefit of $(14.189) million on a pre-tax loss of $(46.344) million, resulting in an effective tax rate of 30.6%[83]. - Net interest expense decreased by $1.0 million to $2.5 million due to lower borrowings during the 13 weeks ended July 27, 2019[134]. Cash Flow and Borrowings - Cash, cash equivalents, and restricted cash at the end of the period was $8.98 million, down from $14.00 million at the end of the prior year period[145]. - The company had $174.1 million of borrowings under the Credit Agreement as of July 27, 2019[143]. - Net cash flows used in operating activities were $(40.2) million for the 13 weeks ended July 27, 2019, compared to $(27.4) million in the prior year[145]. - Cash flows provided by financing activities were $40.6 million for the 13 weeks ended July 27, 2019, compared to $33.8 million in 2018, reflecting a net change of $6.8 million due to increased net borrowings[147]. - As of July 27, 2019, the company had net total outstanding borrowings of $174.1 million, down from $230.2 million as of July 28, 2018[148]. Business Operations and Strategy - The Retail Segment operates 1,491 bookstores, including 777 physical and 714 virtual bookstores, serving over 6 million students[88]. - First Day total revenue increased by 46% compared to the prior year, driven by the inclusive access program[88]. - The company plans to grow by introducing scalable digital solutions and expanding market share through acquisitions and partnerships[88]. - The company opened 84 new stores and closed 41 stores, ending the period with a total of 1,491 stores[112]. - The company continues to see downward enrollment trends at colleges and universities, impacting overall business growth[98]. - Online degree program enrollments are expected to grow, despite declining overall higher education enrollment[98]. Risks and Future Outlook - The company believes future cash from operations and access to borrowings will adequately fund operating and financing needs, although future capital requirements depend on various factors including economic conditions and inventory levels[151]. - The company faces various risks including competitive conditions, economic environment, and potential changes in consumer demand that could impact future performance[161]. - The company has no off-balance sheet arrangements as of July 27, 2019[156]. - The company did not repurchase any shares under its stock repurchase program during the 13 weeks ended July 27, 2019, leaving approximately $26.7 million available for future repurchases[153].

Financial Data and Key Metrics Changes - Total sales for the quarter were $319.7 million, a decrease of $17.8 million or 5.3% compared to $337.5 million in the prior year [30] - The consolidated gross margin rate for the quarter was 22.4%, up from 19.7% in the prior year period, primarily due to lower contract costs and a favorable sales mix [33] - Selling and administrative expenses decreased by $1.4 million or 1.5% compared to the prior year period [34] - Cash balance at the end of the quarter was $8.2 million, a decrease of $5.1 million compared to $13.3 million in the prior year [35] Business Line Data and Key Metrics Changes - Comparable store sales in the retail segment decreased by 3.5% for the quarter, compared to a decrease of 2.5% in the prior year [31] - General merchandise comparable store sales increased by 4.9%, driven by strong school spirit clothing and graduation product sales [32] - Course material sales were down 11% on a comparable basis, impacted by lower enrollments and average selling prices [22] Market Data and Key Metrics Changes - The wholesale segment's net sales were $72.3 million, a decrease of 19.6% compared to the prior year, primarily due to a shift in buying patterns and decreased customer demand [32] - DSS sales were $5.4 million, a decrease of 5.3% compared to the prior year, primarily due to lower subscriptions of student brands [32] Company Strategy and Development Direction - The company is investing in the bartleby learn digital study product and expanding its offerings, including the new bartleby write [7][11] - A new BNC Adoption & Insights portal (AIP) has been launched to enhance course material adoptions and drive student success [15] - The company is focusing on enhancing its e-commerce platform and expanding its online product assortment to improve customer experience [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in driving sales during the Fall Rush while maintaining exceptional service [25] - The company expects to recognize results from its investments in digital throughout the year and into fiscal 2021 [26] - Management noted that the current liquidity remains strong despite declining sales trends in physical course materials [36] Other Important Information - The company adopted ASC 842 leases, recording $277 million of operating lease right of use assets and $294.7 million of operating lease liability [29] - Capital expenditures for the quarter were $8.3 million, slightly up from $8.2 million in the prior year, reflecting continued investment in digital [37] Q&A Session Summary Question: Can you talk about plans for the pricing strategy around bartleby write? - Management indicated that it is too early to tell about bundling opportunities but is focused on understanding student demand [40] Question: What strategies are in place to drive adoption for bartleby during the Fall Rush? - Management is excited about promoting the product with improved training for booksellers and enhanced marketing strategies [42] Question: How is the AIP impacting new store wins and renewals with university partners? - Management noted that course material affordability is a key concern for schools, and AIP provides transparency into savings for students [44] Question: What is the expected timeline for transitioning FirstDay to VitalSource? - Management stated that the transition is already underway and expects it to scale in the next fiscal year without disrupting current users [48] Question: What are the trends seen in summer classes and Fall Rush enrollment? - Management noted that summer course offerings have been slower year-over-year, but they are optimistic about the Fall semester due to new initiatives [60] Question: Can you provide insight into the increase in SG&A costs for the digital business? - Management confirmed that the increase is related to headcount for building out product and marketing competencies, particularly for bartleby [61] Question: Will FirstDay replace price matching communications? - Management clarified that both price matching and inclusive access will be presented as affordable solutions for students [62]

Competition and Market Dynamics - The company faces significant competition from various college bookstore operators and educational content providers, including Follett Corporation and Chegg.com, which may impact market share and pricing strategies[71]. - The retail price for textbooks is influenced by contracts with colleges and universities, which have been reduced due to affordability concerns, negatively impacting revenue and margins[73]. - The company operates in a rapidly changing business environment, making it difficult to predict future operating results, particularly for newer offerings[71]. - The company's business is significantly influenced by the overall economic environment, college enrollment, and consumer spending patterns, with potential adverse effects on financial condition and operating results if these factors deteriorate[79]. Financial Performance - Total sales for the 52 weeks ended April 27, 2019, were $2,034,643, a decrease of 7.66% compared to $2,203,617 for the same period in 2018[270]. - Gross profit for the same period was $527,726, down from $557,233 in 2018, reflecting a gross margin of approximately 25.9%[270]. - Net loss income for the 52 weeks ended April 27, 2019, was $(24,374), an improvement from a net loss of $(252,566) in 2018[270]. - Basic earnings per share for the period was $(0.52), compared to $(5.40) in the previous year, indicating a significant reduction in losses[270]. - The company reported a total operating loss of $27,654 for the fiscal year, compared to a loss of $262,703 in the previous year[355]. Inventory and Supply Chain Management - The company has increased its textbook rental business significantly, offering a lower-cost alternative to purchasing textbooks, which is subject to inventory risks[75]. - The wholesale business sources over 90% of its inventory from two primary channels, with approximately 58% from retail bookstores and 33% from third-party suppliers[74]. - The company’s ability to manage inventory effectively is crucial, as mismanagement could lead to excess or obsolete inventory, impacting revenues and profit margins[76]. Strategic Initiatives and Growth - The company aims to expand its digital products and services, but the success of this strategy is uncertain and depends on customer adoption[75]. - The company may pursue strategic acquisitions and partnerships to grow its business, but identifying suitable candidates and completing transactions may pose challenges[78]. - The company plans to grow by introducing scalable digital solutions and expanding market share through new accounts and strategic acquisitions[281]. Regulatory and Compliance Risks - The company faces risks associated with international operations, including compliance with various regulations, cultural differences, and currency fluctuations, which could adversely affect business results[82]. - The company is subject to stringent data security regulations and risks, including potential legal exposure and reputational damage from data breaches, which could significantly impact financial performance[85]. - Changes in federal, state, local, or international laws could increase regulatory compliance requirements and operational costs, impacting the company's business[89]. Debt and Liquidity - The company is dependent on access to capital markets and bank credit facilities for liquidity needs, believing current resources will meet working capital and debt service requirements for at least the next twelve months[92]. - The company had $133.5 million of borrowings outstanding under the Credit Facility and FILO Facility as of April 27, 2019[2]. - The company recorded a non-cash impairment loss of $57.7 million during the 52 weeks ended April 27, 2019, including $49.3 million of goodwill and $8.5 million of long-lived assets[375]. Employee and Operational Considerations - The company relies on its ability to attract and retain talented employees, with the loss of key personnel potentially harming business operations and financial results[80]. - Stock-based compensation expense increased to $9.0 million from $8.5 million, indicating ongoing investment in employee incentives[275]. - The company has reserved 10,409,345 shares of common stock for future grants under its Equity Incentive Plan[390]. Acquisitions and Investments - The acquisition of PaperRater for $10,000 added significant content to the digital library, with $5,300 allocated to intangible assets and $4,700 to goodwill[322]. - The acquisition of Student Brands for $61,997 included $28,300 in intangible assets and $31,782 in goodwill, enhancing direct-to-student services[323]. - The acquisition of MBS Textbook Exchange for $187,862 included $128,431 in merchandise inventory and resulted in $49,282 in goodwill[324]. Taxation and Deferred Tax Assets - The company recorded a reduction of $20,425 in net deferred tax liabilities due to the U.S. corporate income tax rate reduction from 35% to 21%[399]. - The effective income tax rate for Fiscal 2019 was 34.9%, significantly higher than the 7.5% in Fiscal 2018 due to tax benefits from revaluing deferred tax liabilities[403]. - The company had $91,000 of unrecognized tax benefits as of April 27, 2019, which would affect the effective tax rate if recognized[406].

Financial Data and Key Metrics Changes - Total sales for Q4 2019 were $334.4 million, a decrease of $23.3 million or 6.5% compared to the prior year [45] - Consolidated gross margin rate for the quarter was 35.1%, down from 35.9% in the prior year [48] - Selling and administrative expenses in Q4 decreased by $7.6 million or 7.2% compared to the prior year [50] - The company recognized a non-cash goodwill impairment loss of $49.3 million due to the carrying values exceeding fair values [52] Business Line Data and Key Metrics Changes - Retail segment sales decreased by $15.2 million, while wholesale segment sales decreased by $5.8 million in Q4 [45] - Comparable store sales in the retail segment increased by 0.9% in Q4, compared to a 2.0% increase in the prior year [46] - DSS sales were $5.5 million in Q4, slightly down from $5.6 million in the prior year [48] Market Data and Key Metrics Changes - The wholesale segment's net sales for Q4 were $14.1 million, a decrease of 5.8% [47] - The wholesale segment experienced a full-year decline of 13.5%, primarily due to lower demand [47] Company Strategy and Development Direction - The company is focusing on a digital pivot, with significant investments in digital offerings such as bartleby [7][11] - A new courseware adoption and insights portal is set to enhance institutional sales capabilities [10][30] - The company aims to grow its general merchandise business and improve e-commerce capabilities [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the new unified sales teams and their impact on net new store sales [17] - The company anticipates continued growth in bartleby subscriptions and general merchandise sales [36] - Management acknowledged challenges in the retail environment but remains confident in the company's unique assets and strategic model [41][42] Other Important Information - The company operates 1,448 college and university bookstores, with plans to open 78 additional stores in fiscal 2020 [58] - Fiscal 2020 adjusted EBITDA is expected to be between $90 million and $100 million [59] Q&A Session Summary Question: Outlook for next year and revenue guidance - Management decided not to provide revenue guidance due to significant changes in the business model and focus on margin and cash flow instead [62] Question: Growth trajectory for bartleby - Management is optimistic about content coverage and subscriber growth, with plans to leverage the upcoming freshman class [64][67] Question: Retention and utilization of bartleby subscribers - Typical usage patterns have emerged, with engagement peaking during midterms and finals [71] Question: Competitive positioning of new retail operating segment - The company has expanded its sales team and is taking a proactive approach to target new business [72][75] Question: Store openings and market environment - There is a combination of self-operated bookstores seeking solutions and competitive wins contributing to store openings [81]

Business Operations - The company operates 1,453 physical and virtual bookstores, serving over 6 million students[94]. - The company opened 1 new BNC store and 6 MBS Direct stores during the 39 weeks ended January 26, 2019[112]. - The total number of MBS Direct stores at the end of the period was 680, with a net increase of 6 stores compared to the previous year[112]. - The number of BNC stores at the end of the period was 773, with a net change of 0 stores opened or closed during the 13 weeks[112]. Financial Performance - Total sales for the 13 weeks ended January 26, 2019, were $550.33 million, a decrease of 8.8% from $603.39 million for the same period in 2018[109]. - Total sales for the 39 weeks ended January 26, 2019, decreased by $143.4 million, or 7.8%, to $1,702.6 million from $1,846.0 million in the prior year[122]. - The net income for the 13 weeks ended January 26, 2019, was $769,000, a significant recovery from a net loss of $283.24 million in the same period of 2018[109]. - The company’s net income for the 39 weeks ended January 26, 2019, was $21.8 million, compared to a net loss of $(269.6) million in the prior year[156]. - Adjusted Earnings (non-GAAP) for the 13 weeks ended January 26, 2019, were $3.1 million, down from $19.6 million in the same period of 2018[159]. Sales and Revenue - Product sales and other accounted for 89.8% of total sales in the 13 weeks ended January 26, 2019, compared to 89.9% in the same period of 2018[110]. - BNC sales decreased by $39.9 million, or 8.0%, to $461.0 million during the 13 weeks ended January 26, 2019, compared to $500.9 million in the same period in 2018[125]. - Textbook revenue for BNC decreased primarily due to lower new and used textbook sales, while digital and eTextbook revenue increased[126]. - MBS total sales decreased by $22.5 million, or 16.2%, to $116.4 million during the 13 weeks ended January 26, 2019 from $138.9 million during the same period last year[128]. Expenses and Costs - Total employee benefit expense for the 39 weeks ended January 26, 2019, was $4,978, compared to $5,289 for the same period in 2018[78]. - Selling and administrative expenses as a percentage of total sales increased to 20.2% for the 13 weeks ended January 26, 2019, compared to 18.6% in the prior year[110]. - Selling and administrative expenses totaled $325.4 million, representing a significant portion of the total costs[120]. - Total selling and administrative expenses decreased by $1.5 million, or 1.3%, to $110.9 million during the 13 weeks ended January 26, 2019 from $112.4 million in the same period in 2018[138]. Tax and Financial Obligations - The company recorded an income tax benefit of $(294) on a pre-tax income of $475 for the 13 weeks ended January 26, 2019, resulting in an effective tax rate of (61.9)%[86]. - The effective income tax rate for the 13 weeks ended January 26, 2019, was (61.9)%, compared to 5.1% for the same period in 2018[153]. - The Tax Cuts and Jobs Act reduced the U.S. federal corporate tax rate from 35% to 21%, impacting the company's effective tax rate positively[155]. Digital Initiatives and Future Growth - The company expects to scale its digital offerings with meaningful financial impact over the next 12-18 months[94]. - The company anticipates continuing growth by introducing scalable digital solutions and expanding market share through acquisitions and partnerships[94]. - The company continues to expand its digital product offerings, including the Bartleby textbook solutions launched in August 2018, which are expected to enhance student engagement[98]. Cash Flow and Financing - Net cash flows provided by operating activities increased to $175.9 million for the 39 weeks ended January 26, 2019, compared to $140.4 million for the same period in 2018, an increase of $35.5 million[167]. - Cash flows used in investing activities decreased to $41.7 million for the 39 weeks ended January 26, 2019, from $88.8 million in the same period in 2018, a reduction of 53%[168]. - Cash flows used in financing activities increased to $128.3 million for the 39 weeks ended January 26, 2019, compared to $48.2 million in the same period in 2018, an increase of $80.1 million[169]. - The company has a committed principal amount of $400 million under its asset-backed revolving credit facility and a $100 million incremental FILO Facility, with a commitment fee of 0.375% on the unused portion[173]. Challenges and Risks - The market for educational materials is experiencing significant changes, with increased competition from alternative media and digital platforms impacting traditional sales channels[102]. - The company faces risks including a decline in college enrollment, competitive conditions, and the performance of digital sales initiatives[182]. - The company is unable to predict future trends for CPI and inventory levels, making it difficult to project the long-term tax payable associated with the LIFO reserve[174].

Financial Data and Key Metrics Changes - Total sales for the quarter were $550.3 million, a decrease of $53.1 million or 8.8% compared to $603.4 million in the prior year [35] - The consolidated gross margin rate was 24.2%, down slightly from 24.4% in the prior year [41] - Selling and administrative expenses decreased slightly compared to the prior year, with BNC expenses down by $2.1 million or 2.3% [42] Business Line Data and Key Metrics Changes - Comparable store sales at BNC decreased by 7.7%, with textbook sales down by 11.2% [36] - MBS net sales were $116.4 million, a decrease of 16.2% compared to the prior year [39] - DSS sales were $5.2 million, down from $5.5 million in the prior year [40] Market Data and Key Metrics Changes - Total comp sales at BNC decreased by 7.7%, primarily due to declines in textbook sales [19] - MBS wholesale net sales decreased by 6.4%, attributed to decreased demand for physical books [39] - The industry shift from physical to digital continues to accelerate, impacting revenue and EBITDA for BNC and MBS segments [18] Company Strategy and Development Direction - The company is focusing on enhancing digital offerings across all segments, particularly through the Bartleby Digital Study subscription products [7][8] - There is an emphasis on integrating and leveraging the strengths of the three business segments to provide more value to campus partners [16] - The company is exploring inclusive access bundles to enhance affordability and accessibility for students [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's vision for the future and the importance of digital transformation [31][32] - The management acknowledged the challenges posed by the industry shift and the need for faster adaptation to digital trends [32] - The company expects to see meaningful financial impacts from digital offerings within 12 to 18 months [14] Other Important Information - The company has signed a content licensing agreement with a major publisher to expand Bartleby's content library [14] - Capital expenditures for the third quarter were $8.6 million, an increase from $7.7 million in the prior year, primarily due to investments in digital [46] - The company expects consolidated sales for fiscal year 2019 to be in the range of $2.15 billion to $2.2 billion [48] Q&A Session Summary Question: Did Student Brands lose subscribers during the current quarter? - Management indicated that some weaknesses at Student Brands were intentional to avoid exacerbating churn, focusing on responsible monetization [51] Question: How has the introduction of Cengage Unlimited impacted the business? - Management stated that they are aggregating and distributing Cengage Unlimited without marketing it as a preference over other products, sharing in the margin [65] Question: Has the Spring Rush season been weaker than expected? - Management confirmed that textbook sales declined slightly more than anticipated during the Spring Rush, particularly in wholesale [64]