Barnes and Noble 2002 Annual Report Download - page 37

Summarized financial information for Barnes & Noble.com follows:
12 months ended December 31,
2002 2001 2000
Net sales $ 422,827 404,600 320,115
Gross profit $ 95,569 91,235 58,314
Net loss
(a)
$(20,132 ) ( 67,386 ) ( 65,403 )
Cash and cash equivalents $ 70,144 115,266 212,304
Other current assets 66,925 68,135 80,332
Noncurrent assets 72,665 103,975 236,299
Current liabilities 134,788 138,773 135,987
Minority interest 52,305 105,845 282,824
Net assets $ 22,641 42,758 110,124
(a) Includes impairment charge of $88,213 and $75,051 in 2001 and 2000, respectively.
[NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS continued ]
36 2002 Annual ReportBarnes & Noble, Inc.
8. 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 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. In October 2002, the Company
announced its intent to purchase up to $10,000 of
Barnes & Noble.com Class A Common Stock in the
open market or through privately negotiated
transactions. As of February 1, 2003, the Company
purchased approximately 1.7 million shares of Barnes
& Noble.com Class A Common Stock. Subsequent to
the fiscal 2002 year end, the Company purchased
additional shares and currently has a 38 percent interest
in Barnes & Noble.com. The Company will continue to
account for its investment under the equity method.
Under the terms of the November 12, 1998 joint venture
agreement between the Company and Bertelsmann, the
Company received a $25,000 payment from Bertelsmann
in connection with the IPO. The Company recognized
the $25,000 pre-tax gain in fiscal 1999. The estimated
fair market values of the Company’s investment in Barnes
& Noble.com were $60,386, $109,825 and $122,000 at
February 1, 2003, February 2, 2002 and February 3,
2001, respectively.