Barnes and Noble 2003 Annual Report Download - page 16

Download and view the complete annual report

Please find page 16 of the 2003 Barnes and Noble annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 58

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58

the effect of the $25.3 million impairment charge during
fiscal 2002.
Interest Expense, Net and Amortization of Deferred
Financing Fees
Interest expense, net of interest income, and amortization
of deferred financing fees, decreased $1.4 million, or
6.4%, to $20.1 million in fiscal 2003 from $21.5 million
in fiscal 2002. The decrease was primarily the result
of reduced average borrowings under the Company’s
senior credit facility due to effective working capital
management.
Equity in Net Loss of Barnes & Noble.com
The Company accounted for its approximate 38
percent economic interest in Barnes & Noble.com
under the equity method through September 15, 2003.
Equity losses in Barnes & Noble.com were $14.3
million and $26.8 million in fiscal 2003 and 2002,
respectively.
Other Expense
In fiscal 2002, the Company determined that a decrease
in value in certain of its equity investments occurred
which was other than temporary. As a result, other
expense of $16.5 million during fiscal 2002 included the
recognition of losses of $11.5 million in excess of what
would otherwise have been recognized by application of
the equity method in accordance with Accounting
Principles Board Opinion No. 18, “The Equity Method
of Accounting for Investments in Common Stock”. The
$16.5 million loss in other expense was primarily
comprised of $8.5 million attributable to iUniverse.com,
$5.1 million attributable to BOOK®magazine and $2.4
million attributable to enews, inc.
Income Taxes
Barnes & Noble’s effective tax rate in fiscal 2003
increased to 40.75 percent compared with 40.25
percent during fiscal 2002.
Minority Interest
Minority interest was $23.4 million in fiscal 2003
compared with $19.1 million in fiscal 2002, and relates
primarily to GameStop.
Earnings
As a result of the factors discussed above, the Company
reported consolidated net earnings of $151.9 million
(or $2.07 per share) during fiscal 2003 compared with
net earnings of $99.9 million (or $1.39 per share)
during fiscal 2002. Components of diluted earnings per
share are as follows:
Fiscal Year 2003 2002
Barnes & Noble Bookstores $ 1.75 1.52
Barnes & Noble.com ( 0.18) ( 0.21)
Total book operating segment 1.57 1.31
Video game operating segment 0.50 0.40
Impairment charge -- ( 0.19)
Other investments -- ( 0.13)
Consolidated EPS $ 2.07 1.39
15
2003 Annual Report Barnes & Noble, Inc.
[MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS continued ]