Barnes and Noble 2004 Annual Report Download - page 40

Amortized intangible assets consist primarily of author
contracts and customer list and relationships, which are
being amortized over periods of 10 years and four years
(on an accelerated basis), respectively.
Aggregate Amortization Expense:
For the 52 weeks ended January 29, 2005 $6,838
Estimated Amortization Expense:
(12 months ending on or about January 31)
2006.........................................................................................$3,720
2007.........................................................................................$2,684
2008.........................................................................................$2,531
2009.........................................................................................$2,395
2010.........................................................................................$2,382
The changes in the carrying amount of goodwill for the
52 weeks ended January 29, 2005 are as follows:
Balance as of January 31, 2004 $175,776
Goodwill acquired (See Note 3) 94,863
Acquisition of partial interest in a subsidiary
of Calendar Club (See Note 9) 3,829
Benefit of excess tax amortization (See Note 3) (6,089 )
Balance as of January 29, 2005 $268,379
14. 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
January 29, 2005, the Company repurchased 9,007,700
shares at a cost of approximately $196,023 under this
program. The repurchased shares are held in treasury.
Subsequent to the fiscal 2004 year-end, the Company
completed its $250,000 repurchase program. On March
24, 2005, the Company’s Board of Directors authorized
a new share repurchase program of up to $200,000 of
its common shares. Share repurchases under this
program may be made through open market and
privately negotiated transactions from time to time and
in such amounts as management deems appropriate.
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.
15. IMPAIRMENT CHARGE
During the first quarter of fiscal 2002, the Company
deemed the decline in value in its available-for-sale
securities in Gemstar-TV Guide International, Inc.
(Gemstar) and Indigo Books & Music Inc. (Indigo) to
be other than temporary. The investments had been
carried at fair market value with unrealized gains and
losses included in shareholders’ equity. Events such as
Gemstar’s largest shareholder taking an impairment
charge for its investment, the precipitous decline in the
stock price subsequent to the abrupt resignation of one
of its senior executives, the questioning of aggressive
revenue recognition policies and the filing of a class
action lawsuit against Gemstar, were among the items
which led to management’s decision to record an
impairment for its investment in Gemstar of nearly
$24,000 (before taxes). The Company’s decision to
record an impairment charge for its investment in
Indigo was based on a review of Indigo’s financial
condition and historical share trading data. As a result,
the Company recorded a non-cash impairment charge
to operating earnings of $25,328 ($14,944 after taxes)
to reclassify the accumulated unrealized losses and to
write down the investments to their fair market value at
the close of business on May 4, 2002. In the second
quarter of fiscal 2002, the Company sold its investment
in Gemstar resulting in a loss of $297. In the fourth
quarter of fiscal 2004, the Company sold its investment
in Indigo resulting in a gain of $17.
16. STOCK-BASED INCENTIVE PLANS
The Company grants stock awards in the form of
restricted stock or options to purchase Barnes & Noble,
Inc. (BKS) common stock, and prior to the Merger
granted options to purchase barnesandnoble.com inc.
(BNBN) common stock under stock-based incentive
plans. Through January 29, 2005, the Company
accounted for stock-based awards in accordance with the
provisions of Accounting Principles Board Opinion No.
25, “Accounting for Stock Issued to Employees” and
related interpretations. In accordance with SFAS No.
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
[NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS continued ]
38 2004 Annual ReportBarnes & Noble, Inc.