Barnes and Noble 2010 Annual Report Download - page 22

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Interest Income (Expense), Net and Amortization of Deferred
Financing Fees
52 weeks ended
Dollars in thousands
January 31,
2009
February 2,
2008 % of Change
Interest Income
(Expense), Net and
Amortization of
Deferred Financing
Fees $ (2,344) $ 7,483 (131.3%)
Net interest income (expense) and amortization of deferred
financing fees decreased $9.8 million, or 131.3%, to ($2.3)
million in fiscal 2008 from $7.5 million in fiscal 2007. The
decrease was primarily due to the utilization of cash to buy
back shares under the Company’s repurchase program dur-
ing the first quarter of fiscal 2008, as well as the decline in
operating profit discussed above.
Income Taxes
52 weeks ended
Dollars in thousands
January 31,
2009
Effective
Rate
February 2,
2008
Effective
Rate
Income Taxes $ 55,591 39.4% $ 74,623 35.6%
Income tax expense during fiscal 2008 was $55.6 million
compared with $74.6 million in fiscal 2007. The Company’s
effective tax rate was 39.4% and 35.6% during fiscal 2008
and 2007, respectively. The provision for income taxes for
fiscal 2007 included a tax benefit of $10.3 million resulting
from previously unrecognized tax benefits for which the
statute of limitations expired in fiscal 2007.
Earnings (Loss) from Discontinued Operations
On February 25, 2009, the Company sold its interest in
Calendar Club to Calendar Club and its chief executive
officer for $7.0 million, which was comprised of $1.0 mil-
lion in cash and $6.0 million in notes. As a result of this
transaction and the operating loss to the date of the sale,
the Company recorded an after tax charge of $9.7 million
related to the write down in fiscal 2008. The results of
Calendar Club have been classified as discontinued opera-
tions in all periods presented.
Net Loss Attributable to Noncontrolling Interests
Net loss attributable to noncontrolling interests was $0.03
million during the 52 weeks ended January 31, 2009 and
relates to the 50% outside interest in Begin Smart LLC.
Net Earnings Attributable to Barnes & Noble, Inc.
52 weeks ended
Dollars in thousands
January 31,
2009 Diluted EPS
February 2,
2008 Diluted EPS
Net Earnings
Attributable to
Barnes & Noble, Inc. $ 75,920 $ 1.29 $ 135,799 $ 2.00
As a result of the factors discussed above, the Company
reported consolidated net earnings attributable to Barnes
& Noble, Inc. of $75.9 million (or $1.29 per diluted share)
during fiscal 2008, compared with consolidated net earn-
ings attributable to Barnes & Noble, Inc. of $135.8 million
(or $2.00 per diluted share) during fiscal 2007.
SEASONALITY
The B&N Retail business, like that of many retailers, is sea-
sonal, with the major portion of sales and operating profit
realized during the third fiscal quarter, which includes the
holiday selling season. The B&N College business is also
seasonal, with the major portion of sales and operating
profit realized during the second and third fiscal quarters,
when college students generally purchase textbooks for the
upcoming semesters.
LIQUIDITY AND CAPITAL RESOURCES
For the B&N Retail business, working capital require-
ments are generally at their highest in the Company’s fiscal
quarter ending on or about January 31 due to the higher
payments to vendors for holiday season merchandise
purchases. For the B&N College business, working capital
requirements are typically highest in the second and third
fiscal quarters, when college students generally purchase
textbooks for the upcoming semesters and lowest in the
first and fourth fiscal quarters. In addition, the Company’s
sales and merchandise inventory levels will fluctuate from
quarter to quarter as a result of the number and timing of
new store openings.
Cash and cash equivalents on hand, cash flows from
operating activities, funds available under its credit facility
and short-term vendor financing continue to provide the
Company with liquidity and capital resources for store
expansion, seasonal working capital requirements and
capital investments. The Company regularly evaluates its
capital structure and conditions in the financing markets
to ensure it maintains adequate flexibility to successfully
execute its business plan.
20 Barnes & Noble, Inc. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued