Barnes and Noble 2004 Annual Report Download - page 34

write-off of the unamortized portion of the deferred
financing fees from the issuance of the notes and the
redemption premium resulted in a charge of $14,582.
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 January 29, 2005, January 31, 2004 and
February 1, 2003, the Company had a notional amount
outstanding of $0, $0 and $55,000, respectively.
Selected information related to the Company’s term
loan, revolving credit facility and convertible
subordinated notes:
Fiscal Year 2004 2003 2002
Balance at end of year $245,000 300,000 300,000
Average balance outstanding
during the year $276,043 342,469 377,297
Maximum borrowings
outstanding during the year $392,700 474,150 490,300
Weighted average interest rate
during the year 5.25 % 6.33 % 6.26 %
Interest rate at end of year 3.78 % 5.25 % 5.25 %
Fees expensed with respect to the unused portion of the
Credit Facility were $1,014, $1,170 and $999, during
fiscal 2004, 2003 and 2002, respectively.
The amounts outstanding under the Credit Facility have
been classified as long-term debt based on the
Company’s ability to continually maintain principal
amounts outstanding.
The Company has no agreements to maintain com-
pensating balances.
6. 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 Credit Facility approximates its carrying amount
because of its recent and frequent repricing based upon
market conditions.
7. 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 $16,498 in fiscal 2002 includes the
recognition of losses of $11,485 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 $16,498 loss in other expense was primarily
comprised of $8,489 attributable to iUniverse.com,
$5,081 attributable to BOOK®magazine and $2,351
attributable to enews, inc. The 22 percent ownership
interest in iUniverse.com continues to be accounted for
under the equity method, although the recorded value
of the investment is $0 as of January 31, 2004 and
January 29, 2005.
[NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS continued ]
32 2004 Annual ReportBarnes & Noble, Inc.