Barnes and Noble 2002 Annual Report Download - page 9

(1) Fiscal 2000 includes the results of operations of Funco,
Inc. from June 14, 2000, the date of acquisition.
(2) In fiscal 2000, the Company acquired a controlling interest
in Calendar Club L.L.C. (Calendar Club). The Company’s
consolidated statement of operations includes the results
of operations of Calendar Club. Prior to fiscal 2000, the
Company included its equity in the results of operations of
Calendar Club as a component of other income (expense).
(3) Fiscal 1999 includes the results of operations of Babbage’s
Etc. LLC from October 28, 1999, the date of acquisition.
(4) Also includes Bookstop and Bookstar stores.
(5) Also includes Doubleday Book Shops, Scribner’s Bookstores
and smaller format bookstores operated under the Barnes
& Noble trade name representing the Company’s original
retail strategy.
(6) Also includes FuncoLand stores, Software Etc. stores and
Babbage’s stores.
(7) Represents legal and settlement costs associated with the
lawsuit brought by the American Booksellers Association.
(8) In fiscal 2002, the Company recorded a non-cash charge
to operating earnings to write down its investments
in Gemstar-TV Guide International, Inc. (Gemstar) and
Indigo Books & Music Inc. (Indigo) to their fair market
value. In fiscal 2000, the Company recorded a non-cash
charge to adjust the carrying value of certain assets,
primarily goodwill relating to the purchase of B. Dalton
and other mall-bookstore assets.
(9) Interest expense for fiscal 2002, 2001, 2000, 1999 and
1998 is net of interest income of $3,499, $1,319, $939,
$1,449 and $976, respectively.
(10) On November 12, 1998, the Company and Bertelsmann
AG (Bertelsmann) completed the formation of a limited
liability company to operate the online retail
bookselling operations of the Company’s wholly owned
subsidiary, barnesandnoble.com inc., which had begun
operations in fiscal 1997. As a result of the formation of
barnesandnoble.com llc (Barnes & Noble.com), the
Company began accounting for its interest in Barnes &
Noble.com under the equity method of accounting as
of the beginning of fiscal 1998. Fiscal 1998 reflects a
100 percent equity interest in Barnes & Noble.com for
the first three quarters ended October 31, 1998 (also
the effective date of the limited liability company
agreement), and a 50 percent equity interest beginning
on November 1, 1998 through the end of the fiscal
year. As a result of the initial public offering (IPO)
for the Barnes & Noble.com business on May 25, 1999,
the Company and Bertelsmann each retained a 40
percent interest in Barnes & Noble.com. From the date
of the IPO through the end of fiscal 2002, the
Company’s ownership interest has varied from 40
percent to 36 percent.
(11) As a result of the formation of the limited liability
company Barnes & Noble.com, the Company recognized
a pre-tax gain during fiscal 1998 in the amount of
$126,435, of which $63,759 has been recognized in
earnings based on the $75,000 received directly from
Bertelsmann and $62,676 ($36,351 after taxes) has been
reflected in additional paid-in capital based on the
Company’s share of the incremental equity of the joint
venture resulting from the $150,000 Bertelsmann
contribution. As a result of the Barnes & Noble.com IPO,
the Company recorded an increase in additional paid-in
capital of $200,272 ($116,158 after taxes) representing
the Company’s incremental share in the equity in Barnes
& Noble.com. In addition, the Company recognized a
pre-tax gain of $25,000 in fiscal 1999 as a result of cash
received in connection with the joint venture agreement
with Bertelsmann.
(12) In fiscal 2002, the Company determined that a decrease
in value in certain of its equity investments occurred
which was other than temporary. As a result, other
expense of $16,498 in fiscal 2002 includes the
recognition of losses of $11,485 in excess of what would
otherwise have been recognized by application of the
equity method in accordance with Accounting Principles
Board Opinion No. 18, “The Equity Method of
Accounting for Investments in Common Stock”. The
$16,498 loss in other expense was primarily comprised of
$8,489 attributable to iUniverse.com, $5,081 attributable
to BOOK®magazine and $2,351 attributable to enews,
inc. Included in other expense for fiscal 2001 is $3,985 in
equity losses in iUniverse.com, $2,500 in equity losses in
BOOK®magazine and $5,581 in equity losses in enews,
inc. Included in other expense in fiscal 2000 are losses of
$9,730 from the Company’s equity investments. Included
in other income in fiscal 1999 are pre-tax gains of
$22,356 and $10,975 recognized in connection with
the Company’s investments in Gemstar and Indigo,
respectively, as well as a charge of $5,000 attributable to
the termination of the Ingram Book Group acquisition
and losses from equity investments of $994.
(13) During fiscal 2002, the Company completed an IPO
for its GameStop subsidiary. The Company retained an
approximate 63 percent interest in GameStop.
(14) Comparable store sales increase (decrease) is calculated
on a 52-week basis, and includes sales of stores that
have been open for 15 months for Barnes & Noble
stores (due to the high sales volume associated with
grand openings) and 12 months for B. Dalton and
GameStop stores.
[ SELECTED CONSOLIDATED FINANCIAL DATA continued ]
8 2002 Annual ReportBarnes & Noble, Inc.