Barnes and Noble 2006 Annual Report Download - page 32

Company has recorded in the current period. See Note
 to the consolidated fi nancial statements for a further
discussion on stock-based compensation.
Gift Cards
Revenue associated with gift cards is deferred until
redemption of the gift card. The Company estimates the
portion of the gift card liability for which the likelihood
of redemption is remote and records this amount in
income on a straight-line basis over a -month period
beginning in the th month after the month the gift
card was originally sold based upon the Company’s
historical redemption patterns. If actual redemption
patterns vary from the Company’s estimates, actual gift
card breakage may diff er from the amounts recorded.
Reclassifi cations
Certain prior-period amounts have been reclassifi ed for
comparative purposes to conform with the fi scal 
presentation.
Reporting Period
The Company’s fi scal year is comprised of  or 
weeks, ending on the Saturday closest to the last day
of January. The reporting period ended February ,
 contained  weeks. The reporting periods ended
January ,  and January ,  contained 
weeks.
Newly Issued Accounting Pronouncements
In July , the Financial Accounting Standards Board
(FASB) issued FASB Interpretation No. , “Accounting
for Uncertainty in Income Taxes-an interpretation
of FASB Statement No. ” (FIN ). FIN  clari-
fi es the accounting for income taxes by prescribing
the minimum recognition threshold a tax position is
required to meet before being recognized in the fi nan-
cial statements. Additionally, FIN  provides guidance
on derecognition, classifi cation, interest, penalties,
accounting in interim periods and disclosure related
to uncertain income tax positions. FIN  is eff ective
for fi scal years beginning after December , . The
Company is currently evaluating the impact of adopt-
ing FIN ; however, the Company does not expect
the adoption of FIN  to have a material eff ect on its
fi nancial position, results of operations or cash fl ows.
2. STOCK-BASED COMPENSATION
Eff ective January , , the Company adopted the
provisions of SFAS R using the modifi ed prospec-
tive transition method. Under this transition method,
stock-based compensation expense recognized for
share-based awards during the  weeks ended February
,  includes (a) compensation expense for all
stock-based compensation awards granted prior to, but
not yet vested as of, January , , based on the grant
date fair value estimated in accordance with the original
provisions of SFAS , revised to estimate forfeitures,
and (b) compensation expense for all stock-based
compensation awards granted subsequent to January
, , based on the grant date fair value estimated in
accordance with the provisions of SFAS R. In accor-
dance with the modifi ed prospective transition method,
results for the prior period have not been restated. Prior
to the adoption of SFAS R, the Company recognized
stock-based compensation expense in accordance with
Accounting Principles Board (APB) Opinion No. ,
“Accounting for Stock Issued to Employees” (APB )
and related Interpretations, as permitted by SFAS .
At February , , the Company had stock-based
compensation plans as more particularly described
below. The total compensation expense related to stock-
based awards granted under these plans during fi scal
, including the impact of the implementation of the
modifi ed prospective transition method in accordance
with SFAS R, was ,. The total compensation
expense related to stock-based awards granted under
these plans during fi scal  and , refl ecting
compensation expense recognized in accordance with
APB , was , and , respectively. Eff ective
January ,  and subsequent thereto, the Company
recognizes stock-based compensation costs, net of esti-
mated forfeitures, for only those shares expected to vest
on a straight-line basis over the requisite service period
of the award. The Company estimated the forfeiture rate
for the year ended February ,  based on its histori-
cal experience during the preceding four fi scal years.
As a result of adopting SFAS R, the impact to the
consolidated statements of operations for fi scal 
on income before income taxes and minority interest,
and net income was a reduction of , and ,,
respectively, from what would have been presented if
the Company had continued to account for stock option
30 Barnes & Noble, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued