Barnes and Noble 2015 Annual Report Download - page 23

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tNOOK selling and administrative expenses increased as
a percentage of sales to . in fiscal  from .
in fiscal . The current year includes a . million
asset impairment resulting from the relocation of the
Palo Alto, CA facility. The prior year included . mil-
lion of impairment charges, primarily including good-
will. Excluding these impairment charges, selling and
administrative expenses increased to . from .
primarily due to sales deleverage. On a dollar basis,
excluding these impairment charges, expenses declined
. million primarily on lower advertising costs of
. million, and a reduction in consulting expenses of
. million.
Depreciation and Amortization
53 Weeks Ended 52 Weeks Ended
Dollars in thousands
May 3,
2014 % Sales
April 27,
2013 % Sales
B&N Retail $ 125,991 2.9% $ 148,855 3.3%
B&N College 48,014 2.7% 46,849 2.7%
NOOK 42,802 12.7% 31,430 6.2%
Total Depreciation and
Amortization $ 216,807 3.4% $ 227,134 3.3%
Depreciation and amortization decreased . million, or
., to . million in fiscal  from . million
in fiscal . This decrease was primarily attributable to
store closings and fully depreciated assets, partially offset
by additional capital expenditures.
Operating Profit (Loss)
53 Weeks Ended 52 Weeks Ended
Dollars in thousands
May 3,
2014 % Sales
April 27,
2013 % Sales
B&N Retail $ 228,062 5.3% $ 227,235 5.0%
B&N College 66,536 3.8% 64,609 3.7%
NOOK (260,406) (77.0)% (511,848) (100.9)%
Total Operating Profit (Loss) $ 34,192 0.5% $ (220,004) (3.2)%
The Company’s consolidated operating profit increased
. million, or ., to an operating profit of .
million in fiscal  from an operating loss of (.)
million in fiscal . This increase was due to the matters
discussed above.
Interest Expense, Net and Amortization of Deferred
Financing Fees
53 Weeks
Ended
52 Weeks
Ended
Dollars in thousands May 3, 2014 April 27, 2013 % of Change
Interest Expense, Net and
Amortization of Deferred
Financing Fees $ 29,507 $ 35,345 (16.5)%
Net interest expense and amortization of deferred financ-
ing fees decreased . million, or ., to . mil-
lion in fiscal  from . million in fiscal . This
decrease was due to lower average borrowings in the
current year.
Income Taxes
53 Weeks Ended 52 Weeks Ended
Dollars in thousands
May 3,
2014
Effective
Rate
April 27,
2013
Effective
Rate
Income Taxes $ 51,953 1,108.9% $ (97,543) 38.2%
The Company recorded an income tax provision in fiscal
 of . million compared with income tax benefit
of (.) million in fiscal . The Company’s effective
tax rate increased to ,. in fiscal  compared with
. in fiscal . The higher effective tax rate in fiscal
 was due primarily to the impacts of valuation allow-
ances, loss allocations within the Company’s NOOK Media
joint venture and non-deductible expenses, partly offset
by R&D tax credits, state loss carryforwards and changes to
unrecognized tax benefits.
In accordance with U.S. GAAP rules on accounting for
income taxes, the Company evaluates the realizability of its
deferred tax assets at each reporting date. The Company
records a valuation allowance when it determines that it
is more likely than not that all or a portion of a particu-
lar deferred tax asset will not be realized. As part of this
evaluation, the Company reviewed all evidence, both
positive and negative, to determine if a valuation allowance
was needed. The Company’s review of positive evidence
included the review of feasible tax planning strategies
that may be implemented and the reversal of temporary
items. The Company determined that there was sufficient
negative evidence to establish valuation allowances against
certain deferred tax assets generated during fiscal ,
totaling . million. The Company will monitor the need
for additional valuation allowances at each quarter in the
future and, if the negative evidence outweighs the positive
evidence, an allowance will be recorded.
2015 Annual Report 21