Barnes & Noble Founder Len Riggio's Letter to Shareholders

Barnes & Noble, Inc. BKS today announced that Len Riggio, the Company's founder and Chairman sent a letter to Barnes & Noble shareholders in connection with the Company's Annual Meeting on September 28, 2010. The letter provides Mr. Riggio's perspective on Barnes & Noble's growth opportunities, the strategic review process, and the precatory shareholder proposal submitted by Ronald Burkle's investment vehicle, The Yucaipa Companies, to amend the Company's Shareholder Rights Plan. The text of the letter follows: September 21, 2010 Dear Fellow Shareholder: For the past six weeks your mailboxes have been full of letters urging you to vote your shares in favor of the company, or in favor of Mr. Burkle of Yucaipa. They are referred to as “fight letters,” and they often live up to the promise. For myself and the good people of Barnes & Noble it is a fight we did not ask for, and do not deserve. In previous letters we have spelled out our position in great detail, including our belief that Mr. Burkle and Aletheia are engaged in an ill-disguised attempt to gain control of Barnes & Noble without offering our shareholders a fair premium.1 After Yucaipa and Aletheia accumulated in total approximately 34% of the company's voting stock, Yucaipa cried foul when we stopped it from continuing to acquire stock and gain absolute control by implementing a shareholder rights plan. Not to be denied, Yucaipa initiated a costly lawsuit to overturn our plan and was resoundingly rebuffed by the Court for what the judge described as a “threat that the corporation's stockholders would relinquish control through a creeping acquisition without the benefit of receiving a control premium.”2 Yucaipa lost the lawsuit on every claim. In this proxy contest, Yucaipa is attempting to weaken our shareholder rights plan, and as a result we have had no choice but to point out the many companies Mr. Burkle has exerted influence over, a number of which have later encountered severe financial distress, including bankruptcy.3 His protests about Barnes & Noble's stock price ring hollow when you look at Burkle's investment in Source Interlink, a company that filed for bankruptcy just two years after a review of strategic alternatives led by Yucaipa or A&P whose stock price has declined over 25% since he began exerting influence over management. Need I mention K-Mart and Fleming, which went bankrupt following Yucaipa's investments? We urge you to reject Mr. Burkle's attempts by voting in favor of the company's slate, and against his efforts to undercut our shareholder rights plan. As you well know, the book industry – as well as all industries that deal with printed matter – is undergoing a rapid transformation. Rather than trying to stem the inevitable march of technology, we view this development as an enormous opportunity for Barnes & Noble; first to continue to gain our share as the world's largest retail booksellers, second to use our storefronts to sell digital devices, and finally to profit greatly from our growing digital business. In fact, in the eleven months since we launched our e-Reading platform, we have already attained a 20% share of the digital marketplace for books. This compared to our 18% share of the physical book space. And we're just getting started. Speaking for myself, I've never been more excited about our prospects since the first day we opened our doors in 1965. Unfortunately, two major shareholders – Yucaipa and Aletheia – have decided that Barnes & Noble is their next target. We believe that Yucaipa will stop at nothing to gain control over our company without paying all of our shareholders a fair premium, including attempting to inject itself into the sale process that is currently being overseen by a Special Committee of independent directors. In my view, voting with the company in this important proxy contest provides a better opportunity to build and deliver greater shareholder value. By voting with the company, you vote in support of the leadership team which created the number one bookseller in all the world, and one of the most admired retailers in America. Thank you for your continued support.