Publishers File Opposition Brief in Case Against Internet Archive for Blatant Scanning and Distribution of Literary Works on Industrial Scale

First Quarter 2018 Consolidated Results • Operating revenues were $723.0 million, compared to $773.5 million in the first quarter of 2017. • Favorable changes in foreign currency exchange rates benefited revenues by $7.5 million. • Same store, day adjusted (1) operating revenues declined 7.2%, an improvement compared to the 8.8% decline in the fourth quarter of 2017. The improvement was due to stronger digital advertising revenue and our strategic subscriber pricing initiatives. • Total digital revenues increased 9% to $255.5 million, or approximately 35% of total revenue. • GAAP net losses were $0.4 million, including $14.4 million of after-tax restructuring, asset impairment charges and other costs. Click Read More below for additional information.

A summary of results for the third quarter ended October 31, 2020 as compared to the third quarter ended November 2, 2019: -Net sales of $820 million, down 5% as compared to last year, reflecting the adverse impact of COVID-19 on store sales. -Digital net sales increased 43% to $382 million reflecting robust growth in every month of the quarter. -Gross profit rate improved 390 basis points to 64.0% on higher average unit retail and lower average unit cost, benefiting from inventory shrink favorability of approximately 100 basis points and changes in foreign currency exchange rates of approximately 90 basis points. -Operating income improved to $59 million and $65 million on a reported and adjusted non-GAAP basis, respectively, as compared to $14 million and $25 million last year, on a reported and adjusted non-GAAP basis, respectively. -Generated positive operating cash flows of $63 million during the third quarter ended October 31, 2020, ending the quarter with $813 million of cash and equivalents and liquidity of approximately $1.2 billion.

First Quarter Results Overview: *Total net sales were $77.3 million, a decrease of $53.0 million or 40.7%, compared to $130.3 million last year. As previously announced, the Company temporarily closed all of its 239 stores on March 18, 2020 in response to the COVID-19 pandemic. All stores remained closed to the public for the final 45 days of the 91-day fiscal quarter, including during the peak weeks of the quarter surrounding normal school spring breaks and Easter. Net sales from physical stores for the first quarter of fiscal 2020 were $47.0 million, a decrease of 57.5% compared to $110.6 million for the first quarter of fiscal 2019. The Company's e-commerce business continued to operate throughout the first quarter, and increased significantly following the closure of the Company’s stores. Net sales from e-commerce for the first quarter of fiscal 2020 were $30.3 million, an increase of 54.2% compared to approximately $19.7 million for the first quarter of fiscal 2019. The Company ended the quarter with 239 total stores, including one RSQ-branded pop-up store, all of which were closed as of the end of the first quarter of fiscal 2020, compared to 229 total stores, including three RSQ-branded pop-up stores, last year. *Gross profit was $1.6 million, or 2.1% of net sales, compared to $35.7 million, or 27.4% of net sales last year. Product margins decreased 770 basis points as a percentage of net sales primarily due to an estimated inventory valuation reserve of $4.7 million and increased markdowns. Occupancy costs deleveraged 1,250 basis points as a percentage of net sales despite being $0.5 million lower than last year, primarily due to the significant net sales decline resulting from the store closures noted above. Distribution costs deleveraged 440 basis points as a percentage of net sales primarily due to an increase in e-commerce shipping charges of $0.9 million resulting from a greater volume of e-commerce orders. Buying costs deleveraged 70 basis points as a percentage of net sales despite being $0.1 million below last year. *Operating loss was $28.4 million, or 36.7% of net sales, compared to operating income of $0.1 million, or 0.1% of net sales, last year. The decrease in operating results was directly attributable to the impacts of the COVID-19 pandemic on our business, including as noted above. *Net loss was $17.4 million, or $0.59 per share, compared to net income of $0.7 million, or $0.02 per diluted share, last year.