Barnes and Noble 2013 Annual Report Download - page 54

As of April 27, 2013
Amortizable intangible
assets Useful Life
Gross
Carrying
Amount
Accumulated
Amortization Total
Customer relationships 5-25 $ 271,938 $ (48,040) $ 223,898
Technology 5-10 10,710 (4,456) 6,254
Distribution contracts 10 8,325 (6,370) 1,955
Other 3-10 6,338 (5,250) 1,088
$ 297,311 $ (64,116) $ 233,195
Unamortizable
intangible assets
Trade name $ 293,400
Publishing contracts 21,336
$ 314,736
Total amortizable
and unamortizable
intangible assets $ 547,931
All amortizable intangible assets are being amortized over
their useful life on a straight-line basis, with the exception
of certain items such as customer relationships and other
acquired intangibles, which are amortized on an acceler-
ated basis.
Aggregate Amortization Expense:
For the 52 weeks ended April 27, 2013 $ 21,426
For the 52 weeks ended April 28, 2012 $ 18,415
For the 52 weeks ended April 30, 2011 $ 14,512
Estimated Amortization Expense:
(12 months ending on or about April 30)
2014 $ 17,356
2015 $ 14,861
2016 $ 11,334
2017 $ 11,060
2018 $ 10,790
On October 17, 2011, the Company finalized the purchase
of certain intellectual property assets from the Borders
Group, Inc. Chapter 11 Bankruptcy for $14,528 includ-
ing acquisition related fees. These intellectual property
assets include a customer list, trade names and URLs.
The Company accounted for the transaction as an asset
purchase, and these assets are included on its consolidated
balance sheet as Intangible Assets. The intangible assets
are being amortized on an accelerated basis over a three
year period, commencing October 17, 2011. Amortization
expense related to the acquisition of these assets for fiscal
2013 was $5,145.
The changes in the carrying amount of goodwill by segment
for fiscal 2013 are as follows:
B&N
Retail
Segment
B&N
College
Segment
B&N.com
Segment
NOOK
Segment
Total
Company
Balance as of
April 30, 2011 $ 225,336 274,070 24,707 — $ 524,113
Benefit of excess
tax amortizationa— — (4,428) — (4,428)
Re-allocation of
Goodwillb— — (20,279) 20,279 —
Balance as of
April 28, 2012 $ 225,336 274,070 — 20,279 $ 519,685
Benefit of excess
tax amortizationa(3,910) — — — (3,910)
Tikatok
impairment
(see Note 14) — — — (1,947) (1,947)
NOOK
impairmentc— — — (18,332) (18,332)
Balance as of
April 27, 2013 $ 221,426 274,070 — — $ 495,496
a The tax basis of goodwill arising from an acquisition during the 52
weeks ended January 29, 2005 exceeded the related basis for financial
reporting purposes by approximately $96,576. In accordance with ASC
740-10-30, Accounting for Income Taxes, the Company is recognizing
the tax benefits of amortizing such excess as a reduction of goodwill as
it is realized on the Company’s income tax return.
b Prior to April 28, 2012, the Company reported an operating segment
titled B&N.com, which included both its NOOK digital business and
eCommerce operations. Due to the increased focus on the digital busi-
ness and the Company’s ability to review the digital business separate
from its eCommerce business, the Company performed an evaluation
on the effect of its impact on the identification of operating segments.
The assessment considered the way the business is managed (focus-
ing on the financial information distributed) and the manner in which
the chief operating decision maker interacts with other members of
management. As a result of this assessment, during the fourth quarter
of fiscal 2012, the Company created a new segment titled NOOK to
report upon its digital business, moving the eCommerce business into
the B&N Retail segment. The Company’s three operating segments
are: B&N Retail, B&N College and NOOK. As a result of this evaluation,
$20,279 of goodwill was re-allocated between B&N.com and NOOK
segments.
c During the fourth quarter of 2013, the Company has determined that
goodwill impairment indicators arose in its NOOK reporting unit as
recurring losses have led to revisions in its strategic plans. As a
result, during the fourth quarter of fiscal 2013, the Company recorded
a non-cash goodwill impairment charge of $18,332 in selling and
administrative expenses, which represented all the goodwill in the
NOOK reporting unit.
52 Barnes & Noble, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued