Barnes and Noble 2005 Annual Report Download - page 30

meeting held on May 27, 2004. As a result of the
Merger, bn.com became a privately held company,
wholly owned by the Company.
The acquisitions were accounted for by the purchase
method of accounting and, accordingly, the results of
operations since September 15, 2003 are included in the
consolidated financial statements. Based upon the
assessment of the fair values, the allocation of the
purchase price to the proportionate amount of assets
acquired and liabilities assumed in the above noted
transactions was as follows:
Current assets
$ 58,835
Hardware and software 24,625
Other assets 16,028
Customer list and relationships 7,700
Trade name 48,400
Deferred tax assets 54,220
Goodwill 183,164
Total assets acquired 392,972
Liabilities assumed 68,790
Total purchase price $ 324,182
Hardware and software have been assigned an
estimated useful life of four years. The customer list and
relationships intangible asset has been assigned an
estimated useful life of four years to be amortized on an
accelerated basis based on estimated usage where a
substantial portion of the asset will be amortized in the
first year. The goodwill and the trade name (which is
considered to have an indefinite life and will not be
amortized) will be tested at least annually for
impairment in accordance with SFAS No. 142,
“Goodwill and Other Intangible Assets”.
Goodwill arising from the Bertelsmann acquisition that
is deductible for income tax purposes exceeded the
related amount for financial reporting purposes by
approximately $96,576. In accordance with SFAS No.
109, “Accounting for Income Taxes”, the Company
will recognize the tax benefits of amortizing such excess
as a reduction of goodwill as it is realized on the
Company’s income tax return (see Note 12 to the Notes
to Consolidated Financial Statements).
The following table summarizes pro forma results as if
the Company had acquired Barnes & Noble.com
(resulting in a 100% economic interest) and recorded
the above noted allocations of purchase price on the
first day of fiscal 2003:
Fiscal Year 2003
Sales $ 4,649,000
Net income $ 139,387
Earnings from continuing operations
Basic $ 1.50
Diluted $ 1.41
Prior to the quarter ended July 31, 2004, the Company
reported the results of Barnes & Noble.com on a one
month lag basis. Subsequent to the Merger, the results
of Barnes & Noble.com have been included based on a
reporting period which is consistent with that of the
Company. As a result of this change, retained earnings
has been charged directly for the $1,532 loss of Barnes
& Noble.com for the month of January 2004, and all
other reported results are presented as though the
reporting period of Barnes & Noble.com was changed
at the beginning of fiscal 2004.
4. RECEIVABLES, NET
Receivables represent customer, credit/debit card,
advertising, landlord and other receivables due within
one year as follows:
January 28, January 29,
2006 2005
Credit/debit card receivables(a) $ 33,411 31,446
Trade accounts 18,885 12,829
Current portion of note
receivable from GameStop 12,173 12,173
Advertising 9,875 9,473
Receivables from landlords for
leasehold improvements 14,936 18,159
Other receivables 9,837 7,421
Total receivables, net $ 99,117 91,501
(a) Credit/debit card receivables consist of receivables from
credit/debit card companies. The Company assumes no
customer credit risk for these receivables.
[NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS continued ]
29 2005 Annual Report Barnes & Noble, Inc.