Barnes and Noble 2001 Annual Report Download - page 29

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S c o n t i n u e d
2 0 0 1 A n n u a l R e p o r t ■B a r n e s & N o b l e , I n c .
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Ad ve r tising Cost s
The costs of advertising are expensed as incurred during
the year pursuant to Statement of Position 93-7,
“ R e p o rting on Advertising Costs”. In addition,
consideration received from vendors in conjunction with
the Company’s cooperative advertising program is
netted against the related expenses. Advertising costs are
c h a r ged to selling and administrative expenses.
P r e-Opening Ex p e n s e s
In April 1998, the Accounting Standards Executive
Committee issued Statement of Position 98-5,
“ R e p o rting on the Costs of Start-Up Activities” (SOP 98-
5). SOP 98-5 re q u i res an entity to expense all start - u p
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
re c o rded a one-time non-cash charge reflecting the
cumulative effect of a change in accounting principle in
the amount of $4,500 after taxes, re p resenting 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 fiscal 2001, fiscal
2000 and fiscal 1999 was immaterial.
Closed Sto r e Ex p e n s e s
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 $9,831, $5,026 and
$5,447 during fiscal 2001, fiscal 2000 and fiscal 1999,
respectively, are included in selling and administrative
expenses in the accompanying consolidated statements
of operations.
N et 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
e a r nings per share reflect, in periods in which they have
a dilutive effect, the impact of common shares issuable
upon exercise of its stock options and those of its
GameStop subsidiary, and assumes the conversion of the
C o m p a n y ’s 5.25% convertible subordinated notes for the
period outstanding since their issuance in March 2001.
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.”
Re c l as s i fi c at i o n s
Certain prior-period amounts have been reclassified for
comparative purposes to conform with the fiscal 2001
presentation.
Re p o rting 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 February 2, 2002,
February 3, 2001 and January 29, 2000 contained 52
weeks, 53 weeks and 52 weeks, respectively.
2. REC E I VA B L E S , NET
Receivables represent customer, credit card, landlord
and other receivables due within one year as follows:
February 2, February 3,
2002 2001
Trade accounts $ 5,594 8 ,1 4 6
Credit card receivables (a) 26,632 24, 0 0 0
Receivables from landlords
for leasehold improvements 1 0, 4 07 1 8 , 5 6 8
Barnes&Noble.com receivable 47,204 1 7, 9 8 7
Other receivables 8 ,7 3 3 15 ,804
Total receivables, net $ 9 8 , 570 8 4 , 5 0 5
(a) C redit card receivables consist of receivables from credit card
companies. The Company assumes no customer credit risk
for these receivables.