Barnes and Noble 1998 Annual Report Download - page 50

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$ 4 5 0 , 0 00 re v olving credit and $100 , 0 00 term loan facility (the
Old Facility). The Re volving Credit Facility permits bo r row i n g s
at various interest rate options based on the prime rate or
London Interbank Offer Rate (LIBOR) depending upon certain
financial tests. In addition, the agreement re q u i res the Company
to pay a commitment fee up to 0.25% of the unused portion
depending upon certain financial tests. The Re volving Cre d i t
Facility contains covenants, limitations and events of default
typical of credit facilities of this size and nature, including
financial covenants which re q u i re the Company to meet, among
other things, cash flow and interest coverage ratios and which
limit capital expenditures. The Re volving Credit Facility is
s e c u red by the capital stock, accounts receivable and general
i n t a n gibles of the Company’s subsidiaries.
Net proceeds from the Revolving Credit Facility are
available for general corporate purposes and were used to
redeem all of the Company’s outstanding $190,000, 11-7/8%
senior subordinated notes on January 15, 1998. As a result of
the refinancings, the Company recorded an extraordinary
charge of $11,499 (net of applicable taxes) due to the early
extinguishment of debt during fiscal 1997. The extraordinary
charge represents the payment of a call premium associated
with the redemption of the senior subordinated notes of $6,656
(net of applicable taxes) and the write-off of unamortized fees of
$4,843 (net of applicable taxes).
The Company from time to time enters into interest rate
swap agreements to manage interest costs and risk associated
with changes in interest rates. These agreements effectively
convert underlying variable — rate debt based on prime rate or
LIBOR to fixed-rate debt through the exchange of fixed and
floating interest payment obligations without the exchange of
underlying principal amounts. As of January 30, 1999 and
January 31, 1998 the Company had outstanding $125,000
of swaps with maturities ranging from 1999 to 2003.
The Company recorded interest expense associated with these
agreements of $440 and $306 during fiscal years 1998 and
1997, respectively.
Selected information related to the Company’s revolving
credit facility is as follows:
Fiscal Year 1998 1997 1996
Balance at end of year $ 249,100 284,800 40,000
Average balance
outstanding during
the year $ 380,315 105,127 101,671
Maximum borrowings
outstanding during
the year $535,000 304,900 192,800
Weighted average
interest rate during
the year 6.29% 7.12% 7.56%
Interest rate at end
of year 5.77% 6.60% 6.87%
Fees expensed with respect to the unused portion of the
Company’s revolving credit commitment were $733, $1,204
and $911, during fiscal 1998, 1997 and 1996, respectively.
The amounts outstanding under the Company’s Re vo l v i n g
C redit Facility of $249 , 100 and $284 , 800 as of January 30, 1999
and January 31, 1998, re s p e c t i ve l y , have been classified as
long-term debt based on the terms of the credit agreement and
the Company’s intention to maintain principal amounts out-
standing through November 2002.
The Company has no agreements to maintain compen-
sating balances.
4. Fair Values of Financial Instruments
The carrying values of cash and cash equivalents reported
in the accompanying consolidated balance sheets approximate
fair value due to the short-term maturities of these assets.
The aggregate fair value of the Revolving Credit Facility
approximates its carrying amount, because of its recent and
frequent repricing based upon market conditions. Interest rate
swap agreements are valued based on market quotes obtained
from dealers. The Company also maintains an investment in
Chapters Inc., a Canadian book retailer. The fair value of the
investment in Chapters Inc. is based on quoted market prices
and conversion rates at January 30, 1999 and January 31, 1998.
The carrying amounts and fair values of the Company’s
financial instruments as of January 30, 1999 and January 31,
1998 are as follows:
January 30, 1999 January 31, 1998
Carrying Fair Carrying Fair
Amount Value Amount Value
Cash and cash
equivalents $ 31,081 31,081 12,697 12,697
Revolving credit
facility $ 249,100 249,100 284,800 284,800
Interest rate swaps
liability $ — 2,189 — 1,463
Investment in
Chapters Inc. $ 18,827 33,201 17,686 31,445