Barnes and Noble 2003 Annual Report Download - page 29

Stock Options
The Company grants options to purchase Barnes &
Noble, Inc. (BKS), GameStop Corp. (GME) and
barnesandnoble.com inc. (BNBN) common shares
under stock-based incentive plans. The Company
accounts for all transactions under which employees
receive such options based on the price of the
underlying stock in accordance with the provisions
of Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees”. The
following table illustrates the effect on net income (loss)
and income (loss) per share as if the Company had
applied the fair value-recognition provisions of SFAS
No. 123, “Accounting for Stock-Based Compensation”,
as amended by SFAS No. 148, “Accounting for Stock-
Based Compensation - Transition and Disclosure”, to
stock-based incentive plans:
Fiscal Year 2003 2002 2001
Net earnings – as reported $ 151,853 99,948 63,967
Compensation expense, net of tax
BKS stock options 12,513 15,985 9,972
GME stock options,
net of minority interest 4,778 4,676 8,300
BNBN stock options(a) 10 -- --
Pro forma net earnings –
pro forma for SFAS No. 123 $ 134,552 79,287 45,695
Basic earnings per share:
As reported $ 2.30 1.51 0.96
Pro forma for SFAS No. 123 $ 2.04 1.19 0.69
Diluted earnings per share:
As reported $ 2.07 1.39 0.94
Pro forma for SFAS No. 123 $ 1.85 1.12 0.70
(a) Subsequent to the Company acquiring a controlling
interest in Barnes & Noble.com (See footnote 8).
Reclassifications
Certain prior-period amounts have been reclassified for
comparative purposes to conform with the fiscal 2003
presentation.
Reporting Period
The Company’s fiscal year is comprised of 52 or 53
weeks, ending on the Saturday closest to the last day of
January. The reporting periods ended January 31, 2004,
February 1, 2003 and February 2, 2002 contained 52
weeks.
Newly Issued Accounting Pronouncements
In December 2003, the Financial Accounting Standards
Board (FASB) issued SFAS No. 132 (Revised 2003),
“Employers’ Disclosures about Pensions and Other Post-
retirement Benefits and amendment of FASB Statements
No. 87, 88 and 106”. This Statement revises employers’
disclosures about pension plans and other post-
retirement benefit plans. The disclosures required by this
Statement are effective for fiscal years ending after
December 15, 2003. The Company has incorporated
these expanded disclosures into these footnotes.
2. RECEIVABLES, NET
Receivables represent customer, credit/debit card,
advertising, landlord and other receivables due within
one year as follows:
January 31, February 1,
2004 2003
Trade accounts $ 12,927 20,534
Credit/Debit card receivables (a) 32,955 27,382
Advertising 5,202 4,288
Receivables from landlords for
leasehold improvements 2,508 9,800
Other receivables 6,937 4,944
Total receivables, net $ 60,529 66,948
(a) Credit/Debit card receivables consist of receivables from
credit/debit card companies. The Company assumes no
customer credit risk for these receivables.
3. DEBT
On May 22, 2002, the Company obtained a $500,000
three-year senior revolving credit facility (the Facility) with
a syndicate of banks led by Fleet National Bank as
administrative agent. The Facility, which was to expire in
May 2005, replaced the Company’s $850,000 five-year
senior revolving credit facility obtained on November 18,
1997. In fiscal 2003, the Company exercised its option to
extend $490,000 of its $500,000 Facility for one
additional year, through May 2006. The Facility permits
borrowings at various interest-rate options based on the
prime rate or London Interbank Offer Rate (LIBOR) plus
applicable margin depending upon the level of the
Company’s fixed charge coverage ratio. The Company’s
fixed charge coverage is calculated as the ratio of earnings
before interest, taxes, depreciation, amortization and rents
to interest plus rents. In addition, the Facility requires the
Company to pay a commitment fee of 0.25 percent, which
[NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS continued ]
28 2003 Annual ReportBarnes & Noble, Inc.