Barnes and Noble 2001 Annual Report Download - page 15

I n te re st Expense, Net and Amort i zation
of Defe rred Financing Fees
I n t e r est expense, net of interest income, and amort i z a t i o n
of deferred financing fees, decreased $17.2 million to
$36.3 million in fiscal 2001 from $53.5 million in fiscal
2000. The decrease was primarily the result of reduced
b o rrowings due to effective working capital management
and lower interest rates on the Company’s outstanding
debt, partially through the issuance of the Company’s
convertible subordinated notes sold in March 2001.
Equity in Net Loss of Barnes & Noble.com
In November 2000, Barnes & Noble.com acquired
Fatbrain.com, Inc. (Fatbrain), the third largest online
b o o k s e l l e r. Barnes & Noble.com issued shares of its
common stock to Fatbrain shareholders. As a result
of this merg e r, the Company and Bertelsmann each
retained an approximate 36 percent interest in Barnes
& Noble.com. Accord i n g l y, the Company’s share in
the net loss of Barnes & Noble.com is based on an
a p p roximate 40 percent equity interest from the
beginning of fiscal 2000 through November 2000 and
approximately 36 percent thereafter. The Company’s
equity in the net loss of Barnes & Noble.com for fiscal
2001 and fiscal 2000 was $88.4 million and $103.9
million, respectively.
Other Expense
Other expense of $11.7 million in fiscal 2001 was due
to $4.0 million in equity losses in iUniverse.com, $2.5
million in equity losses in BOOK®magazine and $5.5
million in equity losses in enews, inc., partially offset by
a one-time gain of $0.3 million from the partial sale of
Indigo Books & Music Inc. (formerly Chapters Inc.).
Other expense of $9.3 million in fiscal 2000 was
primarily due to the equity losses of iUniverse.com,
partially offset by a one-time gain of $0.3 million from
the partial sale of iUniverse.com.
P r ovision for Income Taxes
B a rnes & Noble’s effective tax rate in fiscal 2001
decreased to 41.5 percent compared with (57.5) percent
during fiscal 2000. The fiscal 2001 decrease was
primarily related to the goodwill write-down associated
with the impairment charge, which provided no tax
benefit in fiscal 2000.
Earnings (Loss)
As a result of the factors discussed above, the Company
reported consolidated net earnings of $64.0 million (or
$0.94 per share) during fiscal 2001 compared with a net loss
of ($52.0) million (or ($0.81) per share) during fiscal 2000.
Components of diluted earnings per share are as follows:
Fiscal Year 2001 2000
Retail Earnings Per Share
Bookstores $ 1 . 5 9 1 . 8 5
Video Game & Entertainment Software Stores 0.1 1 (0.1 6)
Retail EPS $ 1 .70 1 . 6 9
EPS Impact of Investing Activities
Share in net losses of Barnes & Noble.com $ ( 0 . 6 6 ) (0 . 9 8)
Share of net losses from other
investments (including Calendar Club) $ ( 0 . 0 7) ( 0 . 0 8 )
Total Investing Activities $ ( 0 . 73 ) ( 1 . 0 6 )
Other Adjustments
Legal settlement expense $ (0 . 0 3 ) --
Impairment charge -- ( 1.44 )
Total Other Adjustments $ ( 0 . 0 3 ) ( 1.44)
Consolidated EPS $ 0.94 ( 0 . 8 1 )
53 WEEKS ENDED FEBRUA R Y 3, 2001 COMPARED
WITH 52 WEEKS ENDED JA N UA RY 29, 2000
Sa l e s
The Company’s sales increased $889.8 million or 25.5%
during fiscal 2000 to $4.376 billion from $3.486 billion
during fiscal 1999. Contributing to this improvement
was an increase of $533.8 million attributable to the
inclusion of sales from Babbage’s Etc. and Funco, Inc.
( V ideo Game & Entertainment Software or GameStop).
T h r ough its acquisitions of Babbage’s Etc. in October
1999 and Funco, Inc. in June 2000 (the Acquisitions),
the Company has become the nation’s l a rgest video-game
and PC-entertainment software specialty re t a i l e r. Fiscal
2000 sales from Barnes & Noble bookstores, which
contributed 72.4% of total sales or 87.6% of total
bookstore sales, increased 12.3% to $3.170 billion
from $2.822 billion in fiscal 1999.
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S O F
F I N A N C I A L C O N D I T I O N A N D R E S U L T S O F O P E R A T I O N S c o n t i n u e d
2 0 0 1 A n n u a l R e p o r t ■B a r n e s & N o b l e , I n c .
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