Barnes and Noble 2010 Annual Report Download - page 23

Cash Flow
Cash flows provided from operating activities were $125.8
million, ($146.7) million, ($158.8) million, $376.2 mil-
lion and $429.0 million during fiscal 2010, the transition
period, the 13 weeks ended May 3, 2008, fiscal 2008 and
2007, respectively. The decrease in cash flows provided
from operating activities in fiscal 2010 and fiscal 2008
were primarily due to lower earnings as a result of negative
comparable store sales.
Capital Structure
Strong cash flows from operations and a continued
emphasis on working capital management strengthened
the Company’s balance sheet in fiscal 2010.
On September 30, 2009, in connection with the closing of
the Acquisition described in Note 4 to the Consolidated
Financial Statements contained herein, the Company
issued the Sellers (i) a senior subordinated note in the
principal amount of $100.0 million, payable in full on
December 15, 2010, with interest of 8% per annum payable
on the unpaid principal amount, and (ii) a junior subor-
dinated note in the principal amount of $150.0 million,
payable in full on the fifth anniversary of the closing of the
Acquisition, with interest of 10% per annum payable on
the unpaid principal amount. On December 22, 2009, the
Company consented to the pledge and assignment of the
Senior Seller Note by the Sellers as collateral security.
On September 30, 2009, the Company entered into a credit
agreement (the Credit Agreement) with Bank of America,
N.A., as administrative agent, collateral agent and swing
line lender, and other lenders, under which the lenders
committed to provide up to $1.0 billion in commitments
under a four-year asset-backed revolving credit facility
(the Credit Facility) and which is secured by eligible inven-
tory and accounts receivable and related assets. Borrowings
under the Credit Agreement are limited to a specified
percentage of eligible inventories and accounts receivable
and accrue interest, at the election of the Company, at Base
Rate or LIBO Rate, plus, in each case, an Applicable Margin
(each term as defined in the Credit Agreement). In addi-
tion, the Company has the option to request the increase in
commitments under the Credit Agreement by up to $300
million subject to certain restrictions.
The Credit Agreement includes a fixed charge coverage
ratio requirement which would be triggered if Availability
(as defined in the Credit Agreement) were to fall below (a)
the greater of (i) 15% of the Loan Cap (as defined in the
Credit Agreement) or (ii) $110 million. In addition, the
Credit Facility contains covenants that limit, among other
things, the Company’s ability to incur indebtedness, create
liens, make investments, make restricted payments, merge
or acquire assets, and contains default provisions that are
typical for this type of financing, among other things.
The Credit Facility replaces the Company’s prior $850
million credit agreement (Prior Credit Facility) which had
a maturity date of July 31, 2011, as well as B&N College’s
$400 million credit agreement which had a maturity date of
November 13, 2011. The remaining unamortized deferred
costs of $0.8 million relating to the Company’s Prior Credit
Facility was deferred and will be amortized over the four-
year term of the Credit Facility.
The Prior Credit Facility had a maturity date of July 31, 2011
and could have been increased to $1.0 billion under certain
circumstances at the option of the Company. The Prior
Credit Facility had an applicable margin that was applied
to loans and standby letters of credit ranging from 0.500%
to 1.000% above the stated Eurodollar rate. A fee was paid
on commercial letters of credit ranging from 0.2500% to
0.5000%. In addition, a commitment fee ranging from
0.100% to 0.200% was paid on the unused portion of the
Prior Credit Facility. In each case, the applicable rate was
based on the Company’s consolidated fixed charge coverage
ratio. Proceeds from the Prior Credit Facility were used for
general corporate purposes, including seasonal working
capital needs.
2010 Annual Report 21