Barnes and Noble 1999 Annual Report Download - page 44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued 43
2. Receivables, Net
Receivables represent customer, bankcard, landlord and other
receivables due within one year as follows:
January 29, 2000 January 30, 1999
Trade accounts $ 9,558 6,743
Bankcard receivables 21,309 19,421
Receivables from
landlords for
leasehold improvements 12,807 23,659
Other receivables 14,566 7,700
Total receivables, net $58,240 57,523
3. Debt
On November 18, 1997, the Company obtained an $850,000
five-year senior revolving credit facility (the Revolving Credit
Facility) with a syndicate led by The Chase Manhattan Bank.
The Revolving Credit Facility refinanced an existing $450,000
revolving credit and $100,000 term loan facility (the Old
Facility). The Revolving Credit Facility permits borrowings 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 requires the Company to pay
a commitment fee up to 0.25 percent of the unused portion
depending upon certain financial tests. The Revolving Credit
Facility contains covenants, limitations and events of default
typical of credit facilities of this size and nature, including
financial covenants which require the Company to meet, among
other things, cash flow and interest coverage ratios and which
limit capital expenditures. The Revolving Credit Facility is
secured by the capital stock, accounts receivable and general
intangibles 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 percent 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 29, 2000 and
January 30, 1999 the Company had outstanding $85,000 and
$125,000 of swaps, respectively, with maturities ranging
from 2000 to 2003. The Company recorded interest expense
associated with these agreements of $470 and $440 during
fiscal years 1999 and 1998, respectively.
Selected information related to the Company’s revolving
credit facility is as follows:
Fiscal Year 1999 1998 1997
Balance at end of year $431,600 249,100 284,800
Average balance
outstanding during
the year $397,114 380,315 105,127
Maximum borrowings
outstanding during
the year $693,500 535,000 304,900
Weighted average interest
rate during the year 6.01 % 6.29 % 7.12 %
Interest rate at end of year 6.26 % 5.77% 6.60 %
Fees expensed with respect to the unused portion of the
Company’s revolving credit commitment were $664, $733 and
$1,204, during fiscal 1999, 1998 and 1997, respectively.
The amounts outstanding under the Company’s Revolving
Credit Facility of $431,600 and $249,100 as of January 29,
2000 and January 30, 1999, respectively, have been classified
as long-term debt based on the terms of the credit agreement
and the Company’s intention to maintain principal amounts
outstanding through November 2002.
The Company has no agreements to maintain compensating
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. Investments
in publicly traded securities accounted for under Statement
of Financial Accounting Standards No. 115, “Accounting for
Certain Investments in Debt and Equity Securities” (SFAS 115)
are carried at amounts approximating fair value.
The Company maintains an investment in Chapters Inc.
(Chapters), a Canadian book retailer. The carrying value and
fair value (based on quoted market prices and conversion rates)
of this investment was $18,827 and $33,201, respectively, at
January 30, 1999. Due to the partial sale of its investment in