Barnes and Noble 2000 Annual Report Download - page 58

12. COMPREHENSIVE EARNINGS (LOSS)
Comprehensive earnings are net earnings, plus certain
other items that are recorded directly to shareholders’
equity. The only such item currently applicable to the
Company is the unrealized loss on available-for-sale
securities, as follows:
Fiscal Year 2000 1999 1998
Net earnings (loss) $ ( 51,966) 124,498 92,376
Other comprehensive loss:
Unrealized loss on
available-for-sale
securities, net of deferred
income tax benefit of
$3,317, $839 and $0,
respectively ( 4,676 ) ( 1,198 ) --
Total comprehensive
earnings (loss) $ (56,642 ) 123,300 92,376
13. SHAREHOLDERS’ EQUITY
In fiscal 1999, the Board of Directors authorized
a common stock repurchase program for the purchase
of up to $250,000 of the Company’s common shares.
As of February 3, 2001, the Company has repurchased
5,504,700 shares at a cost of approximately $117,377
under this program. The repurchased shares are held
in treasury.
Each share of the Company’s Common Stock also
entitles the holder to the right (the Right) to purchase one
four-hundredth of a share of the Company’s Series H
Preferred Stock for $225. The Right is only exercisable if
a person or group acquires 15 percent or more of the
Company’s outstanding Common Stock or announces
a tender offer or exchange offer, the consummation
of which would result in such person or group owning
15 percent or more of the Company’s outstanding
Common Stock.
14. IMPAIRMENT CHARGE
During fiscal 2000, the Company recorded a non-cash
charge to operating earnings of $106,833 ($92,440 after
taxes or $1.44 per share). This charge included
approximately $69,928 of goodwill and $32,405 of
property, plant and equipment related to the book
business, primarily goodwill associated with the purchase
of B. Dalton and other mall bookstore assets. The
Company’s mall-based bookstores have experienced
significant declines in sales and profitability as a result of
increased competition from book “super” stores and
Internet book retailers. In fiscal 2000,
B. Dalton comparable store sales declined (1.7%)
compared with an increase in comparable store sales of
0.1% in fiscal 1999. As a result, the anticipated future
cash flows from certain stores were no longer sufficient
to recover the carrying value of the underlying assets.
Also, included in this charge were other charges of
$4,500 related to the write-off of certain investments
which had continuing adverse financial results. The
estimated fair value of the assets was based on
anticipated future cash flows discounted at a rate
commensurate with the risk involved.
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 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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued