Barnes and Noble 1999 Annual Report Download - page 53

set apart for payment. In the event of any merger, consolidation or other transaction in which the Company’s Common Stock is
exchanged, each share of Series H Preferred Stock will be entitled to receive 400 times the amount and type of consideration received
per share of the Company’s Common Stock. As of January 29, 2000, there were no shares of Series H Preferred Stock outstanding.
14. Restructuring Charge
From 1989 through 1995, the Company closed, on average, between 40 and 60 mall bookstores per year primarily due to
increasing competition from superstores and declining mall traffic. During the fourth quarter of fiscal 1995, the Company
accelerated its mall bookstore closing program with the aim of forming a core of more profitable B. Dalton stores, and
provided for these closing costs and asset valuation adjustments through a non-cash restructuring charge, and early adoption
of Statement of Financial Accounting Standards No. 121, “Accounting for Impairment of Long-Lived Assets and Assets to be
Disposed Of” (SFAS 121). In the fourth quarter of fiscal 1995, the Company recorded a non-cash charge to operating earnings of
$123,768 ($87,303 after tax or $1.32 per share) to reflect the aggregate impact of its restructuring plan and change in accounting
policy. The charge to earnings included a $33,000 write-down of goodwill, and $45,862 related to the write-down of fixed assets
and other long-term assets. The Company has completed this store closing program. Costs incurred in excess of the amount
provided by the restructuring charge were immaterial and have been included in selling and administrative expenses.
The following table sets forth the restructuring liability activity:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
1999 ANNUAL REPORT
52
Lease
Provision for Termination
Store Closing Costs Other Total
Balance at February 1, 1997 $ 1,532 30,462 1,602 33,596
Fiscal 1997 payments 1,532 9,026 1,602 12,160
Balance at January 31, 1998 -- 21,436 -- 21,436
Fiscal 1998 payments -- 12,968 -- 12,968
Balance at January 30, 1999 -- 8,468 -- 8,468
Fiscal 1999 payments -- 8,468 -- 8,468
Balance at January 29, 2000 $ -- -- -- --
15. Stock Option Plans
The Company currently has two incentive plans under which
stock options have been or may be granted to officers, directors
and key employees of the Company — the 1991 Employee
Incentive Plan (the 1991 Plan) and the 1996 Incentive Plan
(the 1996 Plan). The options to purchase common shares
generally are issued at fair market value on the date of the
grant, begin vesting after one year in 33-1/3 percent or 25
percent increments per year, expire 10 years from issuance
and are conditioned upon continual employment during the
vesting period.
The Company increased the number of shares available for
issuance under the 1996 Plan from 6,000,000 to 11,000,000.
The 1996 Plan and the 1991 Plan allow the Company to grant
options to purchase up to 11,000,000 and 4,732,704 shares
of common stock, respectively.
In addition to the two incentive plans, the Company has
granted stock options to certain key executives and directors.
The vesting terms and contractual lives of these grants are
similar to that of the incentive plans.
In accordance with the Statement of Financial Accounting
Standards No. 123, “Accounting for Stock-Based Compensation”
(SFAS 123), the Company discloses the pro forma impact of
recording compensation expense utilizing the Black-Scholes
model. The Black-Scholes option valuation model was developed
for use in estimating the fair value of traded options which
have no vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective
assumptions including the expected stock price volatility.
Because the Company’s stock options have characteristics
significantly different from those of traded options, and because
changes in the subjective input assumptions can materially
affect the fair value estimate, in management’s opinion, the
Black-Scholes model does not necessarily provide a reliable
measure of the fair value of its stock options.