Is this great? How will the analysts look at it? Fully diluted earnings = $.76.
Diluted earnings per common share were $0.76 based on 69.8 million shares. This resulted from the retail business' net earnings of $1.06 per share (a 41 percent increase over last year) minus a loss of $0.17 per share due to the debt redemption, and a loss of $0.13 per share for BarnesandNoble.com.
The loss on the refinancing of debt is good. I haven't looked at their financials cause the 10-K isn't out yet, so I am just talking about most likely circumstances.
The probable reason for refinancing is the current low interest rates. The loss on the debt refinancing would be the difference between the current carrying value of the debt, which is a BOOK value, not a market value of debt, and what they had to pay to retire it. I don't know if they bought it on the open market or called it. I would hope they did whatever was cheaper. Regardless, given that it is a refinancing, it looks they took a loss now to save on interest expense for the life of the new debt. Further, the life of the new debt is probably longer that the remainig life of the old debt, and they have locked in nice low interest rates for what I hope is an extended period of time.
Also, the loss on retirement of debt is required by the FASB to be shown as an extraordinary item because the FASB felt that considering it as part of ordinary income was misleading. It is a one-time charge, and should not be considered when forecasting future earnings.
$0.13 loss for Barnesandnoble.com compares favorably with AMZN's losses of 0.39 and 0.47 in Dec and Mar. qtrs. Then when you look at BGP's earnings which are estimated for the Jan. qtr at 0.96, about the same as BKS, one can conclude that the market is undervaluing BKS. This is pretty simplified analysis on my part so I'd really like to see coments by others.