Barnes & and Barnes & Noble, Inc. have teamed up to acquire a majority interest in enews, an Internet magazine subscription service. Although terms of the deal were not disclosed, in January 2000 B& bought a 32% stake in enews for $26.4 million in cash and 714,754 B& shares that was valued at the time at $12.9 million.

Enews has been providing its services to B&'s magazine store since March 1998, and the e-retailer has plans to expand enews's reach through a number of new initiatives involving B&N's bricks-and-mortar stores. B& and B&N are working on plans to offer magazine subscriptions through the company's superstores, mostly likely using B& counters that are being established at the superstores. A pilot program to sell subscriptions to college students through B&N's college stores is also in the works. B& vice chairman Steve Riggio further noted that B& expects to be able to use enews's platform to help in the eventual digital distribution of magazine content.

Judging by B&'s 10-k filing, enews can use the B&N investment. According to the filing, enews lost $31.4 million in 2000 on sales of $7.8 million.

More from the 10-k

The data about enews was just a small part of the information B& released in its 10-k filing. Although the documents don't have a narrative, the theme in B&'s report is cost control as the company drives for profitability by 2002. The company said it expects its costs for marketing, sales and fulfillment, which were $132.5 million last year, will decline in 2001 in both actual dollars as well as in percentage of sales. The lower costs will be the result of B&N's plan to consolidate its fulfillment activities by closing facilities in New Jersey and Kentucky and concentrating operations in Memphis and Reno. Fulfillment charges were $50.5 million last year. The company is also hoping to improve efficiencies by filling more orders in-house. In 2000, B&N accounted for 53.6% of the e-retailer's purchases and Ingram for 20.4%.

The redesign of its Web site, as well as the addition of new features, increased the total cost of technology and Web site development to $40.4 million in 2000, 12.6% of sales. B& said it expects technology expenses to decline as a percentage of sales in 2001. General and administrative expenses were $31.3 million in 2001, and the company expects costs to decrease slightly in the year as the result of its previously announced reorganization which includes layoffs at B&'s New York headquarters and in Fatbrain's California office (News, Feb. 12). With the elimination of 350 positions company-wide, B& had 1,752 full- and part-time employees as of February 28, 2001.

One of the biggest savings in the year will come from lower capital expenditures that B& estimates will be between $20 million and $25 million in 2001 compared to about $104 million last year. The e-retailer said it will be able to reduce expenditures because "all major capital investments were substantially completed in 2000."

Although B&'s cash and short-term securities fell from $478 million on December 31, 1999, to $212 million at the end of 2000, the e-retailer said it has enough funds to operate through the rest of the year.

In its international operations, B& said revenues rose 53%, to $19.6 million, in 2000 and the company had customers in more than 200 countries.