Barnes and Noble 2003 Annual Report Download - page 20

Borrowings under the Company’s convertible subordinated
notes and senior credit facilities averaged $342.5 million,
$377.3 million and $689.3 million and peaked at $474.2
million, $490.3 million and $870.0 million during fiscal
2003, 2002 and 2001, respectively. The ratio of debt to
equity improved to 0.24:1.00 as of January 31, 2004 from
0.29:1.00 as of February 1, 2003, primarily due to the
increase in net earnings and stock option exercise proceeds.
Capital Investment
Capital expenditures totaled $163.4 million, $179.5
million and $168.8 million during fiscal 2003, 2002
and 2001, respectively. Capital expenditures in fiscal
2004, primarily for the opening of between 30 and 35
new Barnes & Noble stores, between 300 and 330
GameStop stores, and the opening of a new distribution
center scheduled for 2006 are expected to be between
$225 million and $250 million, although commitment
to many of such expenditures has not yet been made.
Based on current operating levels and the store expansion
planned for the next fiscal year, management believes
cash flows generated from operating activities, short-
term vendor financing and borrowing capacity under the
Facility will be sufficient to meet the Company’s working
capital and debt service requirements, and support the
development of its short- and long-term strategies for at
least the next 12 months.
In fiscal 1999, the Board of Directors authorized a common
stock repurchase program for the purchase of up to $250.0
million of the Company’s common shares. As of January
31, 2004, the Company has repurchased 8,807,700 shares
at a cost of approximately $189.7 million under this
program. The repurchased shares are held in treasury.
In fiscal 2002, the Company announced its intent to
purchase up to $10.0 million of Barnes & Noble.com
Class A Common Stock in the open market or through
privately negotiated transactions. The Company
purchased approximately 3.0 million shares of Barnes
& Noble.com Class A Common Stock for $3.3 million.
On September 15, 2003, the Company completed its
acquisition of all of Bertelsmann’s interest in Barnes &
Noble.com. The purchase price paid by the Company
was $165.4 million (including acquisition related costs)
in a combination of cash and a note, equivalent to $2.80
per share or membership unit in Barnes & Noble.com.
The note issued to Bertelsmann in the amount of $82.0
million was paid off in the fourth quarter of fiscal 2003.
As a result of the acquisition, the Company increased
its economic interest in Barnes & Noble.com to
approximately 75 percent. Subsequent to the purchase,
Barnes & Noble.com employees exercised 3.9 million
stock options thereby reducing the Company’s economic
interest in Barnes & Noble.com to approximately 73
percent. On January 8, 2004, the Company and bn.com
entered into a definitive merger agreement. Under the
terms of the merger, the holders of bn.com’s outstanding
common stock, other than that owned by the Company
and its subsidiaries, will be entitled to receive $3.05 in
cash for each share that they own. As a result of this
transaction, bn.com will become wholly owned by the
Company. The closing of the merger is expected to occur
during the second quarter of fiscal 2004.
19 2003 Annual Report Barnes & Noble, Inc.
[MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS continued ]
Contractual Obligations
The following table sets forth the Company’s contractual obligations as of January 31, 2004 (in millions):
Payments Due by Period
Less Than 1-3 3-5 More Than
Contractual Obligations Total 1 Year Years Years 5 Years
Long-term debt $ 300.0 $ -- $ -- $ -- $ 300.0
Capital lease obligations -- -- -- -- --
Operating leases 2,936.4 383.9 706.9 618.4 1,227.2
Purchase obligations 51.8 22.9 28.5 0.4 --
Other Long-Term Liabilities
Reflected on the
Registrant’s Balance Sheet
under GAAP 6.8 1.6 1.8 -- 3.4
Total $ 3,295.0 $ 408.4 $ 737.2 $ 618.8 $ 1,530.6