Barnes and Noble 2002 Annual Report Download - page 34

Mandatory prepayments include the requirement that
loans outstanding under the Facility be reduced by 100
percent of the net cash proceeds from (i) the disposition
of the Company's stock in certain entities, (ii) any
equity issuance, and (iii) the disposition of certain other
material assets, other than those assets disposed of
during the ordinary course of business. Under certain
circumstances, mandatory commitment reductions may
include the requirement that the aggregate size of the
Facility be reduced upon the disposition by the Company
of its stock in GameStop.
The 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, leverage and
fixed charge coverage ratios and which limit capital
expenditures. Negative covenants include limitations
on other indebtedness, liens, investments, mergers,
consolidations, sales or leases of assets, acquisitions,
distributions and dividends and other payments in
respect of capital stock, transactions with affiliates, and
sale/leaseback transactions. In the event the Company
defaults on these financial covenants, all outstanding
borrowings under the Facility may become immediately
payable and no further borrowings may be available.
The Facility is secured by the Company’s capital stock
in its subsidiaries, and by the accounts receivable and
certain general intangibles of the Company and its
subsidiaries. Net proceeds from the Facility are available
for general corporate purposes.
In fiscal 2001, the Company issued $300,000, 5.25 percent
convertible subordinated notes due March 15, 2009. The
notes are convertible into the Company’s common stock
at a conversion price of $32.512 per share.
In fiscal 2000, the Company obtained an additional
$100,000 senior unsecured seasonal credit facility
(seasonal credit facility) with a syndicate of banks led
by The Chase Manhattan Bank. The seasonal credit
facility, which matured on January 31, 2001, permitted
for borrowings at an interest rate based on LIBOR. In
addition, the agreement required the Company to pay a
commitment fee of 0.375 percent of the unused portion.
The seasonal credit facility was guaranteed by all
restricted subsidiaries of Barnes & Noble.
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. For each of the years ended
February 1, 2003 and February 2, 2002, the Company
had a notional amount outstanding of $55,000 in swaps,
maturing on February 3, 2003.
Selected information related to the Company's convertible
subordinated notes, revolving credit facility and seasonal
credit facility is as follows:
Fiscal Year 2002 2001 2000
Balance at end of year $ 300,000 449,000 666,900
Average balance outstanding
during the year $ 377,297 689,326 697,832
Maximum borrowings outstanding
during the year $ 490,300 870,000 918,700
Weighted average interest rate
during the year 5.70% 5.27% 7.55%
Interest rate at end of year 5.25% 4.33% 6.01%
Fees expensed with respect to the unused portion of the
Company’s revolving credit commitment were $999,
$516 and $272, during fiscal 2002, 2001 and 2000,
respectively.
The amounts outstanding under the Company’s revolving
credit facility have been classified as long-term debt
based on the Company’s intention and ability to maintain
principal amounts outstanding.
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.
Interest-rate swap agreements are valued based on market
quotes obtained from dealers. The estimated fair value
of the interest-rate swaps liability was $6 and $2,256 at
February 1, 2003 and February 2, 2002, respectively.
The interest-rate swaps are included as a component of
other long-term liabilities.
[NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS continued ]
33 2002 Annual Report Barnes & Noble, Inc.