Barnes and Noble 2011 Annual Report Download - page 22

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Interest Income (Expense), Net and Amortization of Deferred
Financing Fees
13 weeks ended
Dollars in thousands May 2, 2009 May 3, 2008 % of Change
Interest Income
(Expense), Net and
Amortization of
Deferred Financing Fees $ (199) $ 807 (124.7%)
Net interest (expense) income and amortization of deferred
fi nancing fees decreased $1.0 million, or 124.7%, to ($0.2)
million during the 13 weeks ended May 2, 2009 from
$0.8 million during the 13 weeks ended May 3, 2008. The
decrease in interest income was primarily due to lower
investment rates.
Income Taxes
13 weeks ended
Dollars in thousands
May 2,
2009
Effective
Rate
May 3,
2008
Effective
Rate
Income Taxes $ (1,374) 39.9% $ (374) 39.8%
Income tax benefi t during the 13 weeks ended May 2, 2009
was $1.4 million compared with $0.4 million during the 13
weeks ended May 3, 2008. The Company’s eff ective tax rate
was 39.9% and 39.8% for the 13 weeks ended May 2, 2009
and May 3, 2008, respectively.
Loss from Discontinued Operations
On February 25, 2009, the Company sold its interest in
Calendar Club to Calendar Club and its chief executive
offi cer for $7.0 million, which was comprised of $1.0
million in cash and $6.0 million in notes. As a result of
this transaction and the operating loss to the date of the
sale, the Company incurred a non-cash after-tax charge of
approximately $0.7 million during the 13 weeks ended May
2, 2009, compared with $1.7 million during the 13 weeks
ended May 3, 2008. Calendar Club is no longer a subsidiary
of the Company and the results of Calendar Club have
been classifi ed as discontinued operations in all periods
presented. During fi scal 2011, the Company received the
$6.0 million note payment from Calendar Club. The note
was received prior to its scheduled due date.
Net Loss Attributable to Noncontrolling Interests
Net loss attributable to noncontrolling interests was $0.03
million during the 13 weeks ended May 2, 2009 and relates
to the Company’s 50% outside interest in Begin Smart LLC.
Net Loss Attributable to Barnes & Noble, Inc.
13 weeks ended
Dollars in thousands
May 2,
2009
Diluted
EPS
May 3,
2008 Diluted EPS
Net Loss Attributable to
Barnes & Noble, Inc. $ (2,693) $ (0.05) $ (2,224) $ (0.04)
As a result of the factors discussed above, the Company
reported a consolidated net loss of $2.7 million (or $0.05
per diluted share) during the 13 weeks ended May 2, 2009,
compared with a consolidated net loss of $2.2 million (or
$0.04 per diluted share) during the 13 weeks ended May 3,
2008.
SEASONALITY
The B&N Retail and B&N.com businesses, like that of many
retailers, is seasonal, with the major portion of sales and
operating profi t realized during the third fi scal quarter,
which includes the holiday selling season. The B&N College
business is also seasonal, with the major portion of sales
and operating profi t realized during the second and third
fi scal quarters, when college students generally purchase
textbooks for the upcoming semesters.
LIQUIDITY AND CAPITAL RESOURCES
For the B&N Retail and B&N.com businesses, working
capital requirements are generally at their highest in the
Company’s fi scal quarter ending on or about January 31
due to the higher payments to vendors for holiday season
merchandise purchases. For the B&N College business,
working capital requirements are typically highest in the
second and third fi scal quarters due to higher payments to
vendors as college students generally purchase textbooks
for the upcoming semester. In addition, the Company’s
sales and merchandise inventory levels will fl uctuate from
quarter to quarter as a result of the number and timing of
new store openings.
Although the Company believes cash on hand, cash fl ows
from operating activities, funds available from its senior
credit facility and short-term vendor fi nancing provide the
Company with adequate liquidity and capital resources for
seasonal working capital requirements, the Company may
raise additional capital to support the growth of online and
digital businesses.
20 Barnes & Noble, Inc. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued