Barnes and Noble 2005 Annual Report Download - page 29

Reclassifications
Certain prior-period amounts have been reclassified for
comparative purposes to conform with the fiscal 2005
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 28, 2006, January
29, 2005 and January 31, 2004 contained 52 weeks.
Newly Issued Accounting Pronouncements
There were no accounting standards issued during the fiscal
year ended January 28, 2006 that are reasonably likely to
affect the Company’s consolidated financial statements.
Revised Previously Issued Consolidated Statements of
Cash Flows
For fiscal 2005, the Company has revised the amounts
shown for net cash flows from (used by) discontinued
operations for fiscal 2004 and 2003 from $37,500 and
$0 to ($167,405) and ($27,124), respectively, and has
separately disclosed the operating, investing and
financing portions of these cash flows. In addition, the
balance of cash and cash equivalents presented on the
statement of cash flows at the beginning and end of
fiscal 2003 have been increased by $232,029 and
$204,905, respectively, to include the cash of the
discontinued operation.
2. GAMESTOP SPIN-OFF
On October 1, 2004, the Company’s independent
directors approved an overall plan for the complete
disposition of all of its Class B common stock in
GameStop Corp. (GameStop), the Company’s video
game operating segment. This disposition was
completed in two steps as described below.
The first step in the disposition was the sale of
6,107,338 shares of GameStop Class B common stock
held by the Company to GameStop (the Stock Sale) for
an aggregate consideration of $111,520, consisting of
$37,500 in cash and a promissory note in the principal
amount of $74,020, bearing interest at a rate of 5.5%
per annum. Scheduled payments on the note of $37,500
and $12,173 were received in January 2005 and
October 2005, respectively, and the remaining balance
is due in two equal annual installments of $12,173 on
October 1, 2006 and 2007. The Stock Sale was
completed on October 1, 2004. Because of the capital
nature of the disposition, the proceeds from the Stock
Sale were recorded as a reduction in the basis of the
investment in GameStop, resulting in no gain for
financial reporting purposes. In that regard, the tax
adjustments associated with the related taxable capital
gain on the Stock Sale, amounting to $14,443, have
been charged directly to retained earnings. Also
included in the charge to retained earnings are $263 of
GameStop costs related to the redemption of their
shares from the Company.
The second step in the disposition was the spin-off by the
Company of its remaining 29,901,662 shares of
GameStop’s Class B common stock (the Spin-Off). The
Spin-Off was completed on November 12, 2004 with the
distribution of 0.424876232 of a share of GameStop
Class B common stock as a tax-free distribution on each
outstanding share of the Company’s common stock to the
Company’s stockholders of record as of the close of
business on November 2, 2004. The Class B shares
retained their super voting power of 10 votes per share
and are separately listed on the New York Stock Exchange
under the symbol GME.B. As a result of the Stock Sale
and the Spin-Off, GameStop is no longer a subsidiary of
the Company and, accordingly, the Company will present
all historical results of operations of GameStop as
discontinued operations. The discontinued operations
generated sales of $1,232,141 and $1,578,838 and net
income of $20,001 (net of $19,413 in tax) and $40,571
(net of $26,666 in tax) for fiscal 2004 (to the date of the
Spin-Off) and 2003, respectively.
3. BARNES & NOBLE.COM ACQUISITION
On September 15, 2003, the Company completed its
acquisition of all of Bertelsmann AG’s (Bertelsmann)
interest in barnesandnoble.com inc. (bn.com) and
barnesandnoble.com llc (Barnes & Noble.com). The
purchase price paid by the Company was $165,406
(including acquisition related costs) in a combination of
cash and a note, equivalent to $2.80 per share in
bn.com or membership unit in Barnes & Noble.com.
The note issued to Bertelsmann in the amount of
$82,000 was paid 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%.
On May 27, 2004, the Company completed a merger
(the Merger) of bn.com with a wholly owned subsidiary
of the Company. The purchase price paid by the
Company was $158,776 (including acquisition related
costs). Under the terms of the Merger, the holders of
bn.com’s outstanding common stock, other than the
Company and its subsidiaries, received $3.05 in cash
for each share that they owned. The Merger was
approved by the shareholders of bn.com at a special
[NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS continued ]
28 2005 Annual ReportBarnes & Noble, Inc.