Barnes and Noble 2001 Annual Report Download - page 22

amortization of intangible assets with an indefinite
useful life. An intangible asset with an indefinite useful
life should be tested for impairment in accordance with
the guidance in SFAS No. 142.
The Company will apply the new standards on
accounting for goodwill and other intangible assets
beginning in the first quarter of the Company’s fiscal
year ending February 1, 2003, at which time the
Company will cease to record amortization expense on
its goodwill. The adoption of SFAS No. 142 will result
in an approximate $12.3 million reduction of
amortization expense in 2002. The Company expects to
complete its analysis of any potential impairment of
goodwill as a result of adopting this standard by the end
of the second quarter of fiscal 2002.
In August 2001, the FASB issued SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-
Lived Assets”, that is applicable to financial statements
issued for fiscal years beginning after December 15, 2001.
The FA S B ’s new rules on asset impairment supersede SFA S
No. 121, “Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of”, and
p o r tions of Accounting Principles Bulletin Opinion 30,
“ R e p o r ting the Results of Operations”. This new standard
p r ovides a single accounting model for long-lived assets to
be disposed of and significantly changes the criteria that
would have to be met to classify an asset as held-for- s a l e .
Classification as held-for-sale is an important distinction
since such assets are not depreciated and are stated at
the lower of fair value and carrying amount. This new
s t a n d a r d also re q u i r es expected future operating losses
f r om discontinued operations to be displayed in the
period(s) in which the losses are incurred, rather than as
of the measurement date as presently required. The
Company is currently evaluating the impact of this
pronouncement to determine its effect, if any, on the
Company’s financial position or operating results.
R E CENT EV E N TS
On Febru a ry 19, 2002, the Company successfully
completed an initial public offering for its GameStop
s u b s i d i a ry, raising $250.0 million in cash for the
Company and $98.0 million in net proceeds for
GameStop. Barnes & Noble has retained an
approximate 63 percent interest in GameStop.
During the first quarter of 2002, the Board of Directors
of Barnes & Noble.com approved the transfer of the
Reno facility to the Company and the Board of
D i rectors of the Company approved the Company’s
assumption of the Reno lease, the purchase of
inventory, and the hiring of all the Reno employees.
The Reno lease assignment and the transfer of the
operations of the Reno facility to the Company is
expected to be completed during the first half of 2002.
D I S C LOSURE REGARDING
FO R WA R D - L OOKING STAT E M E N TS
This re p o rt may contain certain forw a rd - l o o k i n g
statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995) and information re l a t i n g
to the Company that are based on the beliefs of the
management of the Company as well as assumptions
made by and information currently available to the
management of the Company. When used in this re p o rt ,
the words “anticipate,” “believe,” “estimate,” “expect,”
“intend,” “plan” and similar expressions, as they relate to
the Company or the management of the Company,
identify forw a rd-looking statements. Such statements
reflect the current views of the Company with respect to
f u t u re events, the outcome of which is subject to cert a i n
risks, including among others general economic and
market conditions, decreased consumer demand for
the Company’s products, possible disruptions in the
C o m p a n y ’s computer or telephone systems, possible work
stoppages or increases in labor costs, possible increases in
shipping rates or interruptions in shipping service, eff e c t s
of competition, possible disruptions or delays in the
opening of new stores or the inability to obtain suitable
sites for new stores, higher-than-anticipated store closing
or relocation costs, higher interest rates, the perf o rm a n c e
of the Company’s online initiatives such as Barnes &
Noble.com, the perf o rmance and successful integration
of acquired businesses, the success of the Company’s
strategic investments, unanticipated increases in
m e r chandise or occupancy costs, unanticipated adverse
litigation results or effects, and other factors which may
be outside of the Company’s control. In addition, the
video-game market has historically been cyclical in nature
and dependent upon the introduction of new generation
systems and related interactive software. Should one or
m o r e of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those described as
anticipated, believed, estimated, expected, intended or
planned. Subsequent written and oral forw a rd - l o o k i n g
statements attributable to the Company or persons acting
on its behalf are expressly qualified in their entirety by the
c a u t i o n a r y statements in this paragraph.
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S O F
F I N A N C I A L C O N D I T I O N A N D R E S U L T S O F O P E R A T I O N S c o n t i n u e d
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