Barnes and Noble 1999 Annual Report Download - page 43

Amortization of goodwill and trade names included in
depreciation and amortization in the accompanying
consolidated statements of operations is $5,148, $3,257 and
$3,257 during fiscal 1999, 1998 and 1997, respectively.
Accumulated amortization at January 29, 2000 and January
30, 1999 was $49,699 and $44,551, respectively.
The Company periodically evaluates the recoverability of
goodwill and considers whether this goodwill should be
completely or partially written off or the amortization periods
accelerated. The Company assesses the recoverability of this
goodwill based upon several factors, including management’s
intention with respect to the acquired operations and those
operations’ projected undiscounted store-level cash flows.
Deferred Charges
Costs incurred to obtain long-term financing are amortized
over the terms of the respective debt agreements using the
straight-line method, which approximates the interest method.
Unamortized costs included in other noncurrent assets as of
January 29, 2000 and January 30, 1999 were $1,969 and $1,397,
respectively. Unamortized costs of $8,209 were included in
the extraordinary loss due to the early extinguishment of debt
for fiscal 1997. Amortization expense included in interest
and amortization of deferred financing fees is $389, $376 and
$1,678 during fiscal 1999, 1998 and 1997, respectively.
Marketable Equity Securities
All marketable equity securities included in other noncurrent
assets are classified as available-for-sale under FASB Statement
No. 115, with unrealized gains and losses (net of taxes) shown
as a component of shareholders’ equity.
Revenue Recognition
Revenue from sales of the Company’s products is recognized
at the time of sale.
The Company sells memberships which entitle purchasers
to additional discounts. The membership revenue is deferred
and recognized as income over the 12-month membership
period.
Sales returns (which are not significant) are recognized at the
time returns are made.
Pre-opening Expenses
In April 1998, the Accounting Standards Executive Committee
issued Statement of Position 98-5, “Reporting on the Costs of
Start-Up Activities” (SOP 98-5). SOP 98-5 requires an entity to
expense all start-up activities, as defined, when incurred. Prior
to 1999, the Company amortized costs associated with the
opening of new stores over the respective store’s first 12 months
of operations. In accordance with SOP 98-5, the Company
recorded a one-time non-cash charge reflecting the cumulative
effect of a change in accounting principle in the amount of
$4,500 after taxes, representing such start-up costs capitalized
as of the beginning of fiscal year 1999. Since adoption, the
Company has expensed all such start-up costs as incurred. The
effect of the change in accounting principle on earnings in 1999
was immaterial.
Closed Store Expenses
Upon a formal decision to close or relocate a store, the Company
charges unrecoverable costs to expense. Such costs include
the net book value of abandoned fixtures and leasehold
improvements and a provision for future lease obligations, net
of expected sublease recoveries. Costs associated with store
closings of $5,447 and $1,208 during fiscal 1999 and fiscal
1998, respectively, are included in selling and administrative
expenses in the accompanying consolidated statements of
operations.
Net Earnings Per Common Share
Basic earnings per share is computed by dividing income
available to common shareholders by the weighted-average
number of common shares outstanding. Diluted earnings per
share reflect, in periods in which they have a dilutive effect, the
impact of common shares issuable upon exercise of stock
options.
Income Taxes
The provision for income taxes includes federal, state and local
income taxes currently payable and those deferred because
of temporary differences between the financial statement and
tax bases of assets and liabilities. The deferred tax assets and
liabilities are measured using the enacted tax rates and laws
that are expected to be in effect when the differences reverse.
Stock Options
The Company accounts for all transactions under which
employees receive shares of stock or other equity instruments
in the Company or the Company incurs liabilities to employees
in amounts based on the price of its stock in accordance with
the provisions of Accounting Principles Board Opinion No.
25, “Accounting for Stock Issued to Employees.”
Certain prior-period amounts have been reclassified for
comparative purposes to conform with the 1999 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 29, 2000, January 30, 1999
and January 31, 1998 each consisted of 52 weeks.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
1999 ANNUAL REPORT
42
Reclassifications