Barnes and Noble 2000 Annual Report Download - page 52

(1) During 1999, the Company acquired a 41 percent
interest in iUniverse.com for $20,000. In the first
quarter of fiscal 2000, the Company invested an
additional $8,000 in iUniverse.com thereby
increasing its percentage ownership interest to 49
percent. In the third quarter of fiscal 2000, the
Company sold a portion of its investment in
iUniverse.com decreasing its percentage ownership
interest to 29 percent. This transaction resulted in
a pre-tax gain of $326. This investment is being
accounted for under the equity method and is
reflected as a component of other noncurrent assets.
(2) During 2000, the Company acquired an approximate
50 percent interest in BOOK
®magazine for $4,802.
This investment is being accounted for under the
equity method and is reflected as a component of
other noncurrent assets.
(3) 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. In fiscal 1999, in connection with the sale
of NuvoMedia, the Company recognized a pre-tax
gain of $22,356.
(4) During fiscal 1999, the Company sold a portion
of its investment in Chapters Inc. (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.
(5) In fiscal 2000, the Company invested $11,000 to
acquire a controlling interest in Calendar Club by
increasing its percentage ownership interest to 72
percent. Accordingly, the Company has consolidated
the results of operations of Calendar Club. Prior to
fiscal 2000, the Company held a 50 percent interest
in Calendar Club and accordingly accounted for its
investment under the equity method and reflected
it as a component of other noncurrent assets.
(6) 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withdrawn.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.
7. BARNES & NOBLE.COM
On November 12, 1998, the Company and Bertelsmann
AG (Bertelsmann) completed the formation of a limited
liability company to operate the online retail bookselling
operations of the Company’s wholly owned
subsidiary, barnesandnoble.com inc. The new entity,
barnesandnoble.com llc (Barnes & Noble.com), was
structured as a limited liability company. Under the
terms of the relevant agreements, effective as of October
31, 1998, the Company and Bertelsmann each retained a
50 percent membership interest in Barnes & Noble.com.
The Company contributed substantially all of the assets
and liabilities of its online operations to the joint venture
and Bertelsmann paid $75,000 to the Company and
made a $150,000 cash contribution to the joint venture.
Bertelsmann also agreed to contribute an additional
$50,000 to the joint venture for future working capital
requirements. The Company recognized a pre-tax gain
during fiscal 1998 in the amount of $126,435, of which
$63,759 was recognized in earnings based on the $75,000
received directly and $62,676 ($36,351 after taxes) was
reflected in additional paid-in capital based on the
Company’s share of the incremental equity of the joint
venture resulting from the $150,000 Bertelsmann
contribution.
On May 25, 1999, Barnes & Noble.com Inc. completed
an initial public offering (IPO) of 28.75 million shares of
Class A Common Stock and used the proceeds to
purchase a 20 percent interest in Barnes & Noble.com.
As a result, the Company and Bertelsmann each retained
a 40 percent interest in Barnes & Noble.com. The
Company recorded an increase in additional paid-in
capital of $116,158 after taxes representing the
Company’s incremental share in the equity of Barnes &
Noble.com. In November 2000, Barnes & Noble.com
acquired Fatbrain.com, Inc. (Fatbrain), the third largest
online bookseller. Barnes & Noble.com issued shares of
its common stock to Fatbrain shareholders. As a result of
this merger, the Company and Bertelsmann each
retained an approximate 36 percent interest in Barnes &
Noble.com. The Company will continue to account for
its investment under the equity method.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued