Intangible Assets and Goodwill

12 Months Ended

May 03, 2014

10.

Intangible Assets and Goodwill


Amortizable intangible assets	Useful Life		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


Amortizable intangible assets	Useful Life		As of May 3, 2014
Amortizable intangible assets	Useful Life		Gross Carrying Amount		Accumulated Amortization			Total
Customer relationships		5-25	$	271,938	$	(61,872	)	$	210,066
Technology		5-10		10,710		(6,824	)		3,886
Distribution contracts		10		8,325		(7,312	)		1,013
Other		3-10		6,419		(5,942	)		477

			$	297,392	$	(81,950	)	$	215,442

Unamortizable intangible assets
Trade name								$	293,400
Publishing contracts									19,734

								$	313,134

Total amortizable and unamortizable intangible assets								$	528,576

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 accelerated basis.


Aggregate Amortization Expense:
For the 53 weeks ended May 3, 2014	$	17,835
For the 52 weeks ended April 27, 2013	$	21,426
For the 52 weeks ended April 28, 2012	$	18,415

Estimated Amortization Expense:
(12 months ending on or about April 30)
2015	$	14,704
2016	$	11,224
2017	$	10,948
2018	$	10,732
2019	$	10,539

The Company tests unamortizable intangible assets by comparing the fair value and the carrying value of such assets. The Company also completed its annual impairment tests for its other unamortizable intangible assets by comparing the estimated fair value to the carrying value of such assets. Impairment losses included in selling and administrative expenses related to unamortizable intangible assets totaled $1,602, $0 and $0 during fiscal 2014, fiscal 2013 and fiscal 2012, respectively. Changes in market conditions, among other factors, could have a material impact on these estimates.

These impairments in fiscal 2014 relate to a certain publishing contract. The publishing contracts include the value of long-standing relationships with authors, agents and publishers established upon the Company’s acquisition of Sterling in 2003. Given Sterling’s strong history of maintaining such relationships, the Company believes they produce value indefinitely without an identifiable remaining useful life. However, given the continued declines in the physical book business, certain of these contracts were impaired as of its most recent impairment testing date.

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 including 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 2014 are as follows:


	B&N Retail Segment			B&N College Segment		NOOK Segment			Total Company
Balance as of April 28, 2012	$	225,336			274,070		20,279		$	519,685
Benefit of excess tax amortization (a)		(3,910	)		—		—			(3,910	)
Tikatok impairment (see Note 13)		—			—		(1,947	)		(1,947	)
NOOK impairment (b)		—			—		(18,332	)		(18,332	)

Balance as of April 27, 2013	$	221,426			274,070		—		$	495,496
Benefit of excess tax amortization (a)		(2,307	)		—		—			(2,307	)

Balance as of May 3, 2014	$	219,119			274,070		—		$	493,189

(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)

During the fourth quarter of 2013, the Company 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.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References+ Details