Barnes and Noble 1999 Annual Report Download - page 45

Chapters, as more fully discussed in Note 5, the Company
currently accounts for this investment as an available-for-sale
security.
Interest rate swap agreements are valued based on market
quotes obtained from dealers. The carrying value and estimated
fair value of the interest rate swaps asset (liability) was $0 and
$447, respectively, at January 29, 2000, and $0 and ($2,189),
respectively, at January 30, 1999.
5. Marketable Equity Securities
Marketable equity securities are carried on the balance sheet at
their fair market value as a component of other noncurrent
assets. The Company did not have any marketable equity
securities on January 30, 1999 as defined by SFAS 115. The
following marketable equity securities have been classified as
available-for-sale securities:
Unrealized Jan. 29, 2000
Cost Losses Market Value
Gemstar
International
Ltd. $ 27,137 $ ( 1,684) $ 25,453
Chapters 8,294 ( 353) 7,941
$ 35,431 $( 2,037) $ 33,394
In fiscal 1998, the Company accounted for its investment in
NuvoMedia Inc. (NuvoMedia) under the cost method. In fiscal
1999, NuvoMedia was acquired by Gemstar International Ltd.
(Gemstar), a publicly traded company. Under the terms of the
agreement, NuvoMedia shareholders received Gemstar shares
in exchange for their ownership interests.
Prior to fiscal 1999, the Company accounted for its investment
in Chapters under the equity method. During fiscal 1999,
the Company sold a portion of its investment in Chapters.
Subsequent to the partial sale of its investment, the Company
retained a seven percent interest in Chapters and accordingly, has
recorded the remaining investment as an available-for-
sale security.
6. Other Income
The following table sets forth the components of other income
(expense), in thousands of dollars:
Fiscal Year 1999 1998 1997
Gain on sale of
NuvoMedia(1) $ 22,356 -- --
Gain on partial sale
of Chapters(2) 10,975 -- --
Equity in net earnings
(losses) of Chapters(2) (101) 1,140 1,016
Equity in net losses
of iUniverse.com(3) ( 2,121) -- --
Equity in net earnings
of Calendar Club LLC(4) 1,228 2,274 897
Termination of planned
acquisition of Ingram
Book Group(5) ( 5,000) -- --
$ 27,337 3,414 1,913
(1) In fiscal 1999, in connection with the sale of NuvoMedia
as more fully discussed in Note 5, the Company recognized
a pre-tax gain of $22,356.
(2) During fiscal 1999, the Company sold a portion of its
investment in Chapters resulting in a pre-tax gain of
$10,975. Prior to this transaction, the Company accounted
for its investment in Chapters under the equity method.
(3) During 1999, the Company acquired a 41 percent interest
in iUniverse.com for $20,000. Subsequent to the fiscal
1999 year end, the Company invested an additional
$8,000 in iUniverse.com thereby increasing its percentage
ownership interest to 49 percent. This investment is being
accounted for under the equity method and is reflected
as a component of other noncurrent assets.
(4) The Company’s 50 percent interest in Calendar Club
LLC (Calendar Club) is being accounted for under the
equity method and is reflected as a component of other
noncurrent assets.
(5) In 1999, the Company and the Ingram Book Group
(Ingram) announced their agreement to terminate the
Company’s planned acquisition of Ingram. The Company’s
application before the Federal Trade Commission for
the purchase was formally withdrawn. As a result, other
income reflects a one-time charge of $5,000 for acquisition
costs relating primarily to legal, accounting and other
transaction related costs.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
1999 ANNUAL REPORT
44