Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Matthew Fassler – Goldman Sachs.
Matthew Fassler – Goldman Sachs
Where did the inventory write downs associated with the multi-media clearance show up on the P&L?
Mark Bierley
There would have been minor charges in promotional discounts. A lot of that quite frankly was done in the first quarter. In the second quarter we were more in the mode of returning the inventory back to our vendors.
Matthew Fassler – Goldman Sachs
And you were able to do that with no financial consequences?
Mark Bierley
Correct.
Matthew Fassler – Goldman Sachs
So nothing in non operating phase would have embedded that clearance?
Mark Bierley
Correct
Matthew Fassler – Goldman Sachs
So the accelerated depreciation in multi-media space reduction really relates to fixturing as opposed to inventory?
Mark Bierley
Correct.
Matthew Fassler – Goldman Sachs
If you could just quantify, give us a dollar reduction in trade book inventories. Could you give us a year on year percent reduction in book inventories in the Borders store so that we can compare that to your same store sales decline?
Mark Bierley
I can. Trade book inventory was down for Borders Superstore in the quarter by 16.5%. Kid's inventory was actually relatively flat to last year.
Ron Marshall
It's important to point out that the kids inventory had dipped down fairly significantly and was really just in the past two weeks of the second quarter that those inventories rebuilt.
Matthew Fassler – Goldman Sachs
The consultant fees that you book during the quarter, the $4.7 million I guess marginally more than Q1, can you just remind us what those related to?
Mark Bierley
I would say that a lot of that is behind us at this point. We had used some external parties to help with the inventory work and it was a split between costs associated with consultants that helped us move the fixtures out on multi-media about half of it, and the other half was the consultants that helped us on the inventory initiatives.
Matthew Fassler – Goldman Sachs
And in the first quarter was it similar use or was that more kind of transactional related?
Mark Bierley
The first quarter was more towards the consultant fee on the inventory and other cost reductions that we put in place.
Matthew Fassler – Goldman Sachs
Your other Superstore in the sector came out with an e-book strategy and obviously you have your hands full with some pretty core and important which you're working on and dealing with, but what is your initial thought process to how you might want to get into that game?
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