Barnes and Noble 1997 Annual Report Download - page 33

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In addition to providing pension benefits, the Company pro-
vides certain health care and life insurance benefits to retired
employees (the Plan). Only those employees receiving benefits or
retired as of April 1,1993 are eligible to participate in the Plan and
receive these benefits. The Plan is unfunded. The following table
sets forth the status of the Plan and the postretirement health care
liability of the Plan, which is attributable solely to retirees, recog-
nized in the accompanying consolidated balance sheets as of
January 31, 1998 and February 1, 1997 using a discount rate of
7.3% and 7.5%, respectively.
JANUARY 31, FEBRUARY 1,
1998 1997
Accumulated postretirement
benefit obligation $ (1,975) (4,349)
Unrecognized (gain) loss (2,407) 137
Postretirement health care liability $ (4,382) (4,212)
The net periodic cost for the postretirement health care ben-
efits under the Plan is related to interest costs of $315, $326 and
$375 during fiscal 1997,1996 and 1995, respectively. The unrecog-
nized (gain) loss resulting from the impact of experience changes
on current assumptions is recorded over the average remaining life
expectancy of the Plan participants.
The health care cost trend rate used to measure the expected
cost of the Plan benefits is assumed to be 8.0% in 1998, declining
at one-half percent decrements each year through 2004 to 5.0% in
2004 and each year thereafter. The health care cost trend assump-
tion has a significant effect on the amounts reported. For example,
a 1% increase in the health care cost trend rate would increase the
accumulated postretirement benefit obligation by approximately
$198 as of January 31, 1998 and the net periodic cost by approxi-
mately $32 during fiscal 1997.
6. INCOME TAXES
The Company files a consolidated federal return. Federal and
state income tax provisions (benefits) for fiscal 1997, 1996 and
1995 are as follows:
FISCAL YEAR 1997 1996 1995
CURRENT:
Federal $ 26,324 18,413 17,317
State 7,013 5,140 4,471
33,337 23,553 21,788
DEFERRED:
Federal 9,575 5,300 (25,717)
State 2,023 1,304 (6,393)
11,598 6,604 (32,110)
Total $ 44,935 30,157 (10,322)
A reconciliation between the provision (benefit) for income
taxes and the expected provision (benefit) for income taxes at the
federal statutory rate of 35% during fiscal 1997, 1996, and 1995,
is as follows:
FISCAL YEAR 1997 1996 1995
Expected provision (benefit)
for income taxes at
federal statutory rate $ 38,361 28,484 (22,154)
Amortization of goodwill
and trade names and
write-down of goodwill 1,140 1,157 12,978
State income taxes, net of
federal income tax benefit 5,873 3,341 2,906
Rehabilitation tax credit — (2,974) —
Other, net (439) 149 (4,052)
Provision (benefit) for
income taxes $ 44,935 30,157 (10,322)
29
Notes to Consolidated Financial Statements continued