FORM 10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

0001193125-12-377074.txt : 20120831 0001193125-12-377074.hdr.sgml : 20120831 20120831121457 ACCESSION NUMBER: 0001193125-12-377074 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 26 CONFORMED PERIOD OF REPORT: 20120728 FILED AS OF DATE: 20120831 DATE AS OF CHANGE: 20120831 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARNES & NOBLE INC CENTRAL INDEX KEY: 0000890491 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 061196501 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12302 FILM NUMBER: 121067735 BUSINESS ADDRESS: STREET 1: 122 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10011 BUSINESS PHONE: 2126333300 MAIL ADDRESS: STREET 1: 122 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10011 10-Q 1 d400022d10q.htm FORM 10-Q FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 28, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-12302

BARNES & NOBLE, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		06-1196501
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

122 Fifth Avenue, New York, NY		10011
(Address of Principal Executive Offices)		(Zip Code)

(212) 633-3300

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of July 31, 2012, 59,956,047 shares of Common Stock, par value $.001 per share, were outstanding, which number includes 1,153,694 shares of unvested restricted stock that have voting rights and are held by members of the Board of Directors and the Company’s employees.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Fiscal Quarter Ended July 28, 2012

Index to Form 10-Q


		Page No.
PART I -	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Operations – For the 13 weeks ended July 28, 2012 and July 30, 2011		3

	Consolidated Statements of Comprehensive Income (Loss) – For the 13 weeks ended July 28, 2012 and July 30, 2011		4

	Consolidated Balance Sheets – July 28, 2012, July 30, 2011 and April 28, 2012		5

	Consolidated Statement of Changes in Shareholders’ Equity – For the 13 weeks ended July 28, 2012		7

	Consolidated Statements of Cash Flows – For the 13 weeks ended July 28, 2012 and July 30, 2011		8

	Notes to Consolidated Financial Statements		9

	Report of Independent Registered Public Accounting Firm		28

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		38

Item 4.	Controls and Procedures		38

PART II -	OTHER INFORMATION

Item 1.	Legal Proceedings		39

Item 1A.	Risk Factors		43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		44

Item 4.	Mine Safety Disclosure		44

Item 6.	Exhibits		45

	SIGNATURES		46

	Exhibit Index		47

PART I - FINANCIAL INFORMATION

Item 1:

Financial Statements

BARNES & NOBLE, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per share data)

(unaudited)


	13 weeks ended
	July 28, 2012			July 30, 2011
Sales	$	1,453,507			1,418,404
Cost of sales and occupancy		1,039,619			1,030,846

Gross profit		413,888			387,558

Selling and administrative expenses		410,055			411,118
Depreciation and amortization		58,035			55,671

Operating loss		(54,202	)		(79,231	)
Interest expense, net and amortization of deferred financing fees		8,941			9,442

Loss before taxes		(63,143	)		(88,673	)
Income taxes		(22,163	)		(32,067	)

Net loss	$	(40,980	)		(56,606	)

Loss per common share
Basic	$	(0.78	)		(0.99	)
Diluted	$	(0.78	)		(0.99	)
Weighted average common shares outstanding
Basic		58,021			57,153
Diluted		58,021			57,153

BARNES & NOBLE, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(In thousands, except per share data)


	July 28, 2012			July 30, 2011
Net loss	$	(40,980	)		(56,606	)
Other comprehensive earnings, net of tax		—			—

Total comprehensive loss	$	(40,980	)		(56,606	)

See accompanying notes to consolidated financial statements.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except per share data)


	July 28, 2012		July 30, 2011		April 28, 2012
	(unaudited)		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	20,221		22,353		54,131
Receivables, net		144,297		156,543		160,497
Merchandise inventories, net		1,947,422		1,814,436		1,561,841
Prepaid expenses and other current assets		192,316		156,632		221,324

Total current assets		2,304,256		2,149,964		1,997,793

Property and equipment:
Land and land improvements		2,541		8,617		2,541
Buildings and leasehold improvements		1,200,928		1,208,454		1,196,764
Fixtures and equipment		1,804,193		1,690,529		1,784,492

		3,007,662		2,907,600		2,983,797
Less accumulated depreciation and amortization		2,410,984		2,228,562		2,361,142

Net property and equipment		596,678		679,038		622,655

Goodwill		518,578		523,006		519,685
Intangible assets, net		562,522		563,034		564,054
Other noncurrent assets		62,650		56,615		61,062

Total assets	$	4,044,684		3,971,657		3,765,249

See accompanying notes to consolidated financial statements.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except per share data)


	July 28, 2012			July 30, 2011			April 28, 2012
	(unaudited)			(unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,387,004			1,275,708			959,423
Accrued liabilities		474,467			403,667			546,495
Gift card liabilities		312,855			301,249			321,362

Total current liabilities		2,174,326			1,980,624			1,827,280

Long-term debt		302,800			509,600			324,200
Long-term deferred taxes		268,410			279,716			268,774
Other long-term liabilities		397,415			434,334			405,065
Redeemable Preferred Shares; $.001 par value; 5,000 shares authorized; 204, zero and 204 shares issued, respectively		192,589			—			192,273
Shareholders’ equity:
Common stock; $.001 par value; 300,000 shares authorized; 91,833, 90,641 and 91,376 shares issued, respectively		92			91			91
Additional paid-in capital		1,347,990			1,327,948			1,340,909
Accumulated other comprehensive loss		(16,635	)		(11,630	)		(16,635	)
Retained earnings		436,336			505,773			481,574
Treasury stock, at cost, 33,743, 33,453 and 33,722 shares, respectively		(1,058,639	)		(1,054,799	)		(1,058,282	)

Total shareholders’ equity		709,144			767,383			747,657

Commitments and contingencies		—			—			—

Total liabilities and shareholders’ equity	$	4,044,684			3,971,657			3,765,249

See accompanying notes to consolidated financial statements.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Shareholders’ Equity

For the 13 weeks ended July 28, 2012

(In thousands)

(unaudited)


	Barnes & Noble, Inc. Shareholders’ Equity
	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Losses			Retained Earnings			Treasury Stock at Cost			Total
Balance at April 28, 2012	$	91		1,340,909		(16,635	)		481,574			(1,058,282	)	$	747,657

Net loss		—		—		—			(40,980	)		—			(40,980	)
Exercise of 153 common stock options		1		1,979		—			—			—			1,980
Stock options and restricted stock tax benefits		—		62		—			—			—			62
Stock-based compensation expense		—		5,040		—			—			—			5,040
Accretive dividend on preferred stockholders		—		—		—			(316	)		—			(316	)
Accrued/paid dividends for preferred stockholders		—		—		—			(3,942	)		—			(3,942	)
Treasury stock acquired, 21 shares		—		—		—			—			(357	)		(357	)

Balance at July 28, 2012	$	92		1,347,990		(16,635	)		436,336			(1,058,639	)	$	709,144

See accompanying notes to consolidated financial statements.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the 13 weeks ended July 28, 2012 and July 30, 2011

(In thousands)

(unaudited)


	13 weeks ended
	July 28, 2012			July 30, 2011
Cash flows from operating activities:
Net loss	$	(40,980	)		(56,606	)
Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities:
Depreciation and amortization (including amortization of deferred financing fees)		59,381			57,006
Stock-based compensation expense		5,040			4,689
Deferred taxes		743			691
Loss on disposal of property and equipment		40			111
Decrease in other long-term liabilities		(7,650	)		(14,313	)
Changes in operating assets and liabilities, net		2,603			(194,898	)

Net cash flows provided by (used in) operating activities		19,177			(203,320	)

Cash flows used in investing activities:
Purchases of property and equipment		(26,457	)		(26,625	)
Net increase in other noncurrent assets		(2,943	)		(3,847	)
Other investing activities, net		(4,100	)		—

Net cash flows used in investing activities		(33,500	)		(30,472	)

Cash flows (used in) provided by financing activities:
Net (decrease) increase in credit facility		(21,400	)		196,500
Proceeds from exercise of common stock options		1,980			678
Purchase of treasury stock		(357	)		(607	)
Excess tax benefit from stock-based compensation		190			145

Net cash flows (used in) provided by financing activities		(19,587	)		196,716

Net decrease in cash and cash equivalents		(33,910	)		(37,076	)
Cash and cash equivalents at beginning of period		54,131			59,429

Cash and cash equivalents at end of period	$	20,221			22,353

Changes in operating assets and liabilities, net:
Receivables, net	$	16,200			(6,249	)
Merchandise inventories		(385,581	)		(439,074	)
Prepaid expenses and other current assets		29,008			5,304
Accounts payable and accrued liabilities		342,976			245,121

Changes in operating assets and liabilities, net	$	2,603			(194,898	)

Supplemental cash flow information:
Cash paid during the period for:
Interest paid	$	10,259			10,296
Income taxes (net of refunds)	$	1,660			1,872
Non-cash financing activity:
Accrued dividend on redeemable preferred stock	$	3,942			—

See accompanying notes to consolidated financial statements.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

The unaudited consolidated financial statements include the accounts of Barnes & Noble, Inc. and its subsidiaries (collectively, Barnes & Noble or the Company).

In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements of the Company contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its consolidated financial position as of July 28, 2012 and the results of its operations and its cash flows for the 13 weeks then ended. These consolidated financial statements are condensed and therefore do not include all of the information and footnotes required by generally accepted accounting principles. The consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the 52 weeks ended April 28, 2012 (fiscal 2012).

Due to the seasonal nature of the business, the results of operations for the 13 weeks ended July 28, 2012 are not indicative of the results to be expected for the 52 weeks ending April 27, 2013 (fiscal 2013).

(1) Merchandise Inventories

Merchandise inventories are stated at the lower of cost or market. Cost is determined primarily by the retail inventory method under both the first-in, first-out (FIFO) basis and the last-in, first-out (LIFO) basis. B&N College’s textbook and trade book inventories are valued using the LIFO method, where the related reserve was not material to the recorded amount of the Company’s inventories or results of operations.

Market is determined based on the estimated net realizable value, which is generally the selling price. Reserves for non-returnable inventory are based on the Company’s history of liquidating non-returnable inventory.

The Company also estimates and accrues shortage for the period between the last physical count of inventory and the balance sheet date. Shortage rates are estimated and accrued based on historical rates and can be affected by changes in merchandise mix and changes in actual shortage trends.

(2) Reclassifications

Certain prior period amounts have been reclassified to conform to the current presentation.

(3) Revenue Recognition

Revenue from sales of the Company’s products is recognized at the time of sale, other than those with multiple elements and FOB destination point shipping terms. The Company’s products are considered delivered once they have been shipped and title and risk of loss have transferred. While the majority of the Company’s shipping terms are FOB shipping point, there are certain third party distribution partners with shipping terms of FOB destination point. Certain of the Company sales agreements with these distribution partners contain rights of inspection or acceptance provisions as is standard in the Company’s industry. The Company accrues for estimated sales returns in the period in which the related revenue is recognized based on historical experience and industry standards. Sales taxes collected from retail customers are excluded from reported revenues. All of the Company’s sales are recognized as revenue on a “net” basis, including sales in connection with any periodic promotions offered to customers. The Company does not treat any promotional offers as expenses.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

In accordance with Accounting Standards Codification (ASC) 605-25, Revenue Recognition, Multiple Element Arrangements and Accounting Standards Updates (ASU) 2009-13 and 2009-14, for multiple-element arrangements that involve tangible products that contain software that is essential to the tangible product’s functionality, undelivered software elements that relate to the tangible product’s essential software and other separable elements, the Company allocates revenue to all deliverables using the relative selling-price method. Under this method, revenue is allocated at the time of sale to all deliverables based on their relative selling price using a specific hierarchy. The hierarchy is as follows: vendor-specific objective evidence, third-party evidence of selling price, or best estimate of selling price. NOOK^® (references to NOOK^® include the Company’s NOOK 1^st Edition™, NOOK Wi-Fi 1^st Edition™, NOOK Color™, NOOK Simple Touch™, NOOK Tablet™ and NOOK Simple Touch™ with GlowLight^TM eBook Reader devices) eBook Reader revenue is recognized at the segment point of sale.

The Company includes post-service customer support (PCS) in the form of software updates and potential increased functionality on a when-and-if-available basis, as well as wireless access and wireless connectivity with the purchase of NOOK^® devices from the Company. Using the relative selling price described above, the Company allocates revenue based on the best estimate of selling price for the deliverables as no vendor-specific objective evidence or third-party evidence exists for any of the elements. Revenue allocated to NOOK^® and the software essential to its functionality is recognized at the time of sale, provided all other conditions for revenue recognition are met. Revenue allocated to the PCS and the wireless access is deferred and recognized on a straight-line basis over the 2-year estimated life of NOOK^®.

The average percentage of a NOOK^®’s sales price that is deferred for undelivered items and recognized over its 2-year estimated life ranges between 2% and 5%, depending on the type of device sold. The amount of NOOK^®-related deferred revenue as of July 28, 2012, July 30, 2011 and April 28, 2012 was $18,171, $18,338 and $19,785, respectively. These amounts are classified on the Company’s balance sheet in accrued liabilities for the portion that is subject to deferral for one year or less and other long-term liabilities for the portion that is subject to deferral for more than one year.

The Company also pays certain vendors who distribute NOOK^® a commission on the content sales sold through that device. The Company accounts for these transactions as a reduction in the sales price of the NOOK^® based on historical trends of content sales and a liability is established for the estimated commission expected to be paid over the life of the product. The Company recognizes revenue of the content at the point of sale of the content. The Company records revenue from sales of digital content, sales of third-party extended warranties, service contracts and other products, for which the Company is not obligated to perform, and for which the Company does not meet the criteria for gross revenue recognition under ASC 605-45-45, Reporting Revenue Gross as a Principal versus Net as an Agent, on a net basis. All other revenue is recognized on a gross basis.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

NOOK acquires the rights to distribute digital content from publishers and distributes the content on barnesandnoble.com, NOOK^® devices and other eBookstore platforms. Certain digital content is distributed under an agency pricing model in which the publishers set fixed prices for eBooks and NOOK receives a fixed commission on content sold through the eBookstore. The majority of the Company’s eBook sales are sold under the agency model.

The Barnes & Noble Member Program offers members greater discounts and other benefits for products and services, as well as exclusive offers and promotions via e-mail or direct mail for an annual fee of $25.00, which is non-refundable after the first 30 days. Revenue is recognized over the twelve-month period based upon historical spending patterns for Barnes & Noble Members.

(4) Research and Development Costs for Software Products

The Company follows the guidance in ASC 985-20, Cost of Software to Be Sold, Leased or Marketed, regarding software development costs to be sold, leased, or otherwise marketed. Capitalization of software development costs begins upon the establishment of technological feasibility and is discontinued when the product is available for sale. A certain amount of judgment and estimation is required to assess when technological feasibility is established, as well as the ongoing assessment of the recoverability of capitalized costs. The Company’s products reach technological feasibility shortly before the products are released and therefore research and development costs are generally expensed as incurred.

(5) Earnings (Loss) per Share

In accordance with ASC 260-10-45, Share-Based Payment Arrangements and Participating Securities and the Two-Class Method, the Company’s unvested restricted shares, unvested restricted stock units and shares issuable under the Company’s deferred compensation plan are considered participating securities. During periods of net income, the calculation of earnings per share for common stock are reclassified to exclude the income attributable to unvested restricted shares, unvested restricted stock units and shares issuable under the Company’s deferred compensation plan from the numerator and exclude the dilutive impact of those shares from the denominator.

During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. Due to the net loss during the 13 weeks ended July 28, 2012 and July 30, 2011, participating securities in the amounts of 2,921,248 and 3,469,589, respectively, were excluded from the calculation of loss per share using the two-class method because the effect would be antidilutive. The Company’s outstanding stock options and accretion/payments of dividends on preferred shares were also excluded from the calculation of loss per share using the two-class method because the effect would be antidilutive.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

The following is a reconciliation of the Company’s basic and diluted loss per share calculation:


	13 weeks ended
	July 28, 2012			July 30, 2011
Numerator for basic loss per share:
Net loss	$	(40,980	)		(56,606	)
Preferred stock dividends		(3,942	)		—
Accretion of dividends on preferred stock		(316	)		—

Net loss available to common shareholders	$	(45,238	)		(56,606	)
Numerator for diluted loss per share:
Net loss available to common shareholders	$	(45,238	)		(56,606	)
Denominator for basic and diluted loss per share:
Basic weighted average common shares		58,021			57,153
Average dilutive options		—			—

Diluted weighted average common shares		58,021			57,153
Loss per common share
Basic	$	(0.78	)		(0.99	)
Diluted	$	(0.78	)		(0.99	)

(6) Segment Reporting

Through the third quarter of fiscal 2012, the Company reported an operating segment titled B&N.com which included both its digital business and eCommerce operations. Due to the increased focus on the digital business and the Company’s recently developed 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 (focusing 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 determined that the segment previously referred to as B&N.com is no longer applicable and created a new segment titled NOOK to report upon its digital business, moving the eCommerce business (i.e., sales of physical merchandise over the Internet) into the B&N Retail segment. Also as a result of this assessment, certain corporate office and other costs have been allocated to all three segments. The Company’s three operating segments are: B&N Retail, B&N College and NOOK.

B&N Retail

This segment includes 689 bookstores as of July 28, 2012, primarily under the Barnes & Noble Booksellers trade name. The 689 Barnes & Noble stores generally offer a NOOK^® department, boutique,

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

counter, a comprehensive trade book title base, a café, a Children’s department, a Toys & Games department, a DVDs/BluRay department, a music department, a gift department, a magazine department, bargain department and a calendar of ongoing events, including author appearances and children’s activities. The B&N Retail segment also includes the Company’s eCommerce website, barnesandnoble.com, and the publishing operation, Sterling Publishing.

B&N College

This segment includes 667 stores as of July 28, 2012 that are primarily school-owned stores operated under contracts by B&N College and sales of digital content within the higher education marketplace through NOOK Study^™. The 667 B&N College stores generally offer new, used, rental and digital textbooks, course-related materials, emblematic apparel and gifts, trade books, computer products and NOOK^® products and related accessories, school and dorm supplies, and convenience and café items.

NOOK

This segment includes the Company’s digital business, including the development and support of the Company’s NOOK^® product offerings. The digital business includes digital content such as eBooks, digital newsstand, apps and sales of NOOK^® devices and accessories to third party distribution partners, B&N Retail and B&N College.

Summarized financial information concerning the Company’s reportable segments is presented below:

Sales


	13 weeks ended
	July 28, 2012			July 30, 2011
B&N Retail	$	1,119,387		$	1,097,252
B&N College		220,718			220,494
NOOK		191,975			191,412
Elimination^(a)		(78,573	)		(90,754	)

Total	$	1,453,507		$	1,418,404

Sales by Product Line


	13 weeks ended
	July 28,			July 30,
	2012			2011
Media ^(b)		62	%		61	%
Digital ^(c)		18	%		20	%
Other ^(d)		20	%		19	%

Total		100	%		100	%

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

Depreciation and Amortization


	13 weeks ended
	July 28, 2012		July 30, 2011
B&N Retail	$	40,940	$	39,485
B&N College		11,715		10,849
NOOK		5,380		5,337

Total	$	58,035	$	55,671

Operating Profit (Loss)


	13 weeks ended
	July 28, 2012			July 30, 2011
B&N Retail	$	33,621		$	211
B&N College		(25,747	)		(23,053	)
NOOK		(62,076	)		(56,389	)

Total	$	(54,202	)	$	(79,231	)

Capital Expenditures


	13 weeks ended
	July 28, 2012		July 30, 2011
B&N Retail	$	9,616	$	12,390
B&N College		9,533		8,933
NOOK		7,308		5,302

Total	$	26,457	$	26,625

Total Assets ^(e)


	July 28, 2012		July 30, 2011
B&N Retail	$	2,242,167	$	2,005,773
B&N College		1,385,414		1,506,871
NOOK		417,103		459,013

Total	$	4,044,684	$	3,971,657

(a)	Represents the elimination of intercompany sales from NOOK to Barnes & Noble Retail and Barnes & Noble College on a sell through basis.

(b)	Includes tangible books, music, movies, rentals and newsstand.

(c)	Includes NOOK^®, related accessories, eContent and warranties.

(d)	Includes toys & games, café products, college apparel, gifts and miscellaneous other.

(e)	Excludes intercompany balances.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

A reconciliation of operating profit from reportable segments to income (loss) from operations before taxes in the consolidated financial statements is as follows:


	13 weeks ended
	July 28, 2012			July 30, 2011
Reportable segments operating loss	$	(54,202	)	$	(79,231	)
Interest expense, net and amortization of deferred financing costs		8,941			9,442

Consolidated loss before taxes	$	(63,143	)	$	(88,673	)

(7) Changes in Intangible Assets and Goodwill


			As of July 28, 2012
Amortizable Intangible Assets	Useful Life		Gross Carrying Amount		Accumulated Amortization			Total
Customer relationships and other acquired intangible assets		3-25	$	271,938	$	(36,814	)	$	235,124
Author contracts		10		18,461		(17,511	)		950
Technology		3-10		9,950		(2,856	)		7,094
Distribution contracts		10		8,325		(5,089	)		3,236
Other		3-10		6,188		(4,806	)		1,382

			$	314,862	$	(67,076	)	$	247,786


Unamortizable Intangible Assets
Trade name								$	293,400
Publishing contracts									21,336

								$	314,736

Total intangible assets								$	562,522

Amortizable intangible assets are generally amortized over their useful life on a straight-line basis, with the exception of certain items such as customer relationships and other acquired intangible assets, which are amortized on an accelerated basis.


Aggregate Amortization Expense:
For the 13 weeks ended July 28, 2012	$	5,641
For the 13 weeks ended July 30, 2011	$	3,544

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)


Estimated Amortization Expense:
(12 months ending on or about April 30)
2013	$	20,720
2014	$	18,583
2015	$	14,647
2016	$	11,355
2017	$	10,875

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 for the 13 weeks ended July 28, 2012 was $1,816.

The changes in the carrying amount of goodwill by segment for the 13 weeks ended July 28, 2012 are as follows:


	B&N Retail			B&N College		NOOK		Total Company
Balance as of April 28, 2012	$	225,336			274,070		20,279	$	519,685
Benefit of excess tax amortization ^(a)		(1,107	)		—		—		(1,107	)

Balance as of July 28, 2012	$	224,229			274,070		20,279	$	518,578

(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.

(8) Gift Cards

The Company sells gift cards which can be used in its stores or on Barnes & Noble.com. The Company does not charge administrative or dormancy fees on gift cards and gift cards have no expiration dates. Upon the purchase of a gift card, a liability is established for its cash value. Revenue associated with gift cards is deferred until redemption of the gift card. Over time, some portion of the gift cards issued are not redeemed. The Company estimates the portion of the gift card liability for which the likelihood of redemption is remote based upon the Company’s historical redemption patterns. The Company records this amount in income on a straight-line basis over a 12-month period beginning in the 13th month after the month the gift card was originally sold. If actual redemption patterns vary from the Company’s estimates, actual gift card breakage may differ from the amounts recorded. The Company recognized gift card breakage of $6,045 and $5,295 during the 13 weeks ended July 28, 2012 and July 30, 2011, respectively. The Company had gift card liabilities of $312,855 and $301,249 as of July 28, 2012 and July 30, 2011, respectively.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

(9) Other Long-Term Liabilities

Other long-term liabilities consist primarily of deferred rent and obligations under a junior seller note related to the acquisition of B&N College. The Company provides for minimum rent expense over the lease terms (including the build-out period) on a straight-line basis. The excess of such rent expense over actual lease payments (net of tenant allowances) is classified as deferred rent. Other long-term liabilities also include accrued pension liabilities, store closing expenses and long-term deferred revenues. The Company had the following long-term liabilities at July 28, 2012, July 30, 2011 and April 28, 2012:


	July 28, 2012		July 30, 2011		April 28, 2012
Deferred rent	$	212,603	$	257,899	$	220,875
Junior seller note		150,000		150,000		150,000
Other		34,812		26,435		34,190

Total long-term liabilities	$	397,415	$	434,334	$	405,065

(10) Income Taxes

As of July 28, 2012, the Company had $17,129 of unrecognized tax benefits, all of which, if recognized, would affect the Company’s effective tax rate. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. The Company had $4,034 accrued for interest and penalties, which is included in the $17,129 of unrecognized tax benefits noted above.

The Company is subject to U.S. federal income tax as well as income tax in jurisdictions of each state having an income tax. The tax years that remain subject to examination are primarily 2007 and forward. Some earlier years remain open for a small minority of states.

(11) Fair Values of Financial Instruments

In accordance with ASC 820, Fair Value Measurements and Disclosures, the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Level 1 –

Observable inputs that reflect quoted prices in active markets

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

Level 2 –

Inputs other than quoted prices in active markets that are either directly or indirectly observable

Level 3 –

Unobservable inputs in which little or no market data exists, therefore requiring the Company to develop its own assumptions

The Company’s financial instruments include cash, receivables and accounts payable. The fair values of cash, receivables and accounts payable approximated carrying values because of the short-term nature of these instruments. The Company believes that its credit facility approximates fair value since interest rates are adjusted to reflect current rates. The Company believes that the terms and conditions of the Seller Note are consistent with comparable market debt issues.

(12) Credit Facility

On April 27, 2012, the Company entered into an amendment (the 2012 Amended Credit Facility) to its existing agreement with Bank of America, N.A. entered into on April 29, 2011, as administrative agent, collateral agent and swing line lender, and other lenders in order to permit the transactions contemplated by the investment agreement among the Company, Morrison Investment Holdings, Inc., and Microsoft Corporation and to make certain other changes to the Company’s 2011 Amended Credit Agreement in connection therewith.

On April 29, 2011, the Company entered into an amended and restated credit agreement (the 2011 Amended Credit Agreement) with Bank of America, N.A., as administrative agent, collateral agent and swing line lender, and other lenders, which amended and restated the credit agreement (the 2009 Credit Agreement) entered into on September 30, 2009 with Bank of America, N.A., as administrative agent, collateral agent and swing line lender, and other lenders. Under the 2011 Amended Credit Agreement, Lenders are providing up to $1,000,000 in aggregate commitments under a five-year asset-backed revolving credit facility, which is secured by eligible inventory with the ability to include eligible real estate and accounts receivable and related assets. Borrowings under the 2011 Amended Credit Agreement are limited to a specified percentage of eligible inventories and accounts receivable and accrued interest, at the election of the Company, at Base Rate or LIBO Rate, plus, in each case, an Applicable Margin (each term as defined in the 2011 Amended Credit Agreement). In addition, the Company has the option to request an increase in commitments under the 2011 Amended Credit Agreement by up to $300,000, subject to certain restrictions.

The 2011 Amended Credit Agreement requires Availability (as defined in the 2011 Amended Credit Agreement) to be greater than the greater of (i) 10% of the Loan Cap (as defined in the 2011 Amended Credit Agreement) and (ii) $50,000. In addition, the 2011 Amended Credit Agreement contains covenants that limit, among other things, the Company’s ability to incur indebtedness, create liens, make investments, make restricted payments, merge or acquire assets, and contains default provisions that are typical for this type of financing, among other things. Proceeds from the 2011 Amended Credit Agreement are used for general corporate purposes, including seasonal working capital needs.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

As a result of the 2011 Amended Credit Agreement, $6,580 of deferred financing fees related to the 2009 Credit Facility were written off in fiscal 2011, and included in net interest expenses. The remaining unamortized deferred costs of $16,341 and new charges of $10,180 relating to the Company’s 2011 Amended Credit Facility were deferred and are being amortized over the five-year term of the 2011 Amended Credit Facility.

The Company had $302,800 of outstanding debt under the 2012 Amended Credit Facility as of July 28, 2012 compared with $509,600 as of July 30, 2011. The Company had $35,067 of outstanding letters of credit under its 2012 Amended Credit Facility as of July 28, 2012 compared with $31,214 as of July 30, 2011.

(13) Stock-Based Compensation

For the 13 weeks ended July 28, 2012 and July 30, 2011, the Company recognized stock-based compensation expense in selling and administrative expenses as follows:


	13 weeks ended
	July 28, 2012		July 30, 2011
Restricted stock expense	$	3,628		4,080
Restricted stock unit expense		705		371
Stock option expense		707		238

Stock-based compensation expense	$	5,040		4,689

(14) Pension and Other Postretirement Benefit Plans

As of December 31, 1999, substantially all employees of the Company were covered under a noncontributory defined benefit pension plan (the Pension Plan). As of January 1, 2000, the Pension Plan was amended so that employees no longer earn benefits for subsequent service. Effective December 31, 2004, the barnesandnoble.com llc (Barnes & Noble.com) Employees’ Retirement Plan (the B&N.com Retirement Plan) was merged with the Pension Plan. Substantially all employees of Barnes & Noble.com were covered under the B&N.com Retirement Plan. As of July 1, 2000, the B&N.com Retirement Plan was amended so that employees no longer earn benefits for subsequent service. Subsequent service continues to be the basis for vesting of benefits not yet vested at December 31, 1999 and June 30, 2000 for the Pension Plan and the B&N.com Retirement Plan, respectively, and the Pension Plan will continue to hold assets and pay benefits. The actuarial assumptions used to calculate pension costs are reviewed annually. Pension expense was $745 and $515 for the 13 weeks ended July 28, 2012 and July 30, 2011, respectively.

The Company provides certain health care and life insurance benefits (the Postretirement Plan) to certain retired employees, limited to those receiving benefits or retired as of April 1, 1993. Total Company contributions charged to employee benefit expenses for the Postretirement Plan were $38 for the 13 weeks ended July 28, 2012 and July 30, 2011, respectively.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

(15) Microsoft

On April 27, 2012, the Company entered into an investment agreement among the Company, Morrison Investment Holdings, Inc. (Morrison), and Microsoft Corporation (Microsoft) pursuant to which the Company will form a Delaware limited liability company (NewCo), and transfer to NewCo the Company’s digital device, digital content and college bookstore businesses and NewCo will sell to Morrison, and Morrison will purchase, 300,000 convertible preferred membership interests in NewCo (Series A Preferred) for an aggregate purchase price of $300,000.

Concurrently with its entry into this agreement, the Company has also entered into a commercial agreement with Microsoft, pursuant to which, among other things, NewCo will develop and distribute a Windows 8 application for e-reading and digital content purchases, and an intellectual property license and settlement agreement with Microsoft and Microsoft Licensing GP.

The closing conditions are set forth in the definitive documents between the parties. While there can be no assurance that the transaction will close or close by a particular date certain, the Company is actively pursuing work in connection with the closing conditions and is working to try and complete the required conditions in this Fall and, in any event, prior to the required date set forth in the definitive agreement.

Investment Agreement

Pursuant to the agreement, Microsoft would invest $300,000 in NewCo in exchange for 300,000 Series A Preferred interest, representing approximately 17.6% of the common membership interest in NewCo on an as-converted basis. Following Microsoft’s investment, the Company would retain the common membership interest in NewCo, representing approximately 82.4% of the common membership interests in NewCo (after giving effect to the conversion of the Series A Preferred interests into common membership interests).

Commercial Agreement

Under the commercial agreement, NewCo will develop certain applications for Windows 8 for purchasing and consumption of digital reading content. The commercial agreement also requires NewCo to use its good faith efforts to undertake an international expansion of the digital business.

As part of the commercial agreement, NewCo and Microsoft would share in the revenues, net of certain items, from digital content purchased from NewCo by customers using the NewCo Windows 8 applications or through certain Microsoft products and services that may be developed in the future and are designed to interact

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

with the NewCo online bookstore. Microsoft will make certain nonrefundable advance payments to NewCo in connection with such revenue sharing. For each of the first three years after the launch of such application for Windows 8, these advance payments would be equal to $60,000 per year. These advance payments would be subject to deferral under certain circumstances. Microsoft would also pay to NewCo $25,000 each year for the first five years of the term for purposes of assisting NewCo in acquiring local digital reading content and technology development in the performance of NewCo’s obligations under the commercial agreement.

Settlement and License Agreement

The patent agreement provides for Microsoft and its subsidiaries to license to the Company and its affiliates certain intellectual property in exchange for royalty payments based on sales of certain devices. Additionally, the Company and Microsoft will dismiss certain outstanding patent litigation between the Company, Microsoft and their respective affiliates in accordance with the settlement and license agreement.

(16) Liberty Investment

On August 18, 2011, the Company entered into an investment agreement between the Company and Liberty GIC, Inc. (Liberty), a subsidiary of Liberty Media Corporation, pursuant to which the Company issued and sold to Liberty, and Liberty purchased, 204,000 shares of the Company’s Series J Preferred Stock, par value $0.001 per share (Preferred Stock), for an aggregate purchase price of $204,000, in a private placement exempt from the registration requirements of the 1933 Act. The shares of Preferred Stock will be convertible, at the option of the holders, into shares of Common Stock representing 16.6% of the Common Stock outstanding as of August 29, 2011, (after giving pro forma effect to the issuance of the Preferred Stock), based on the initial conversion rate. The initial conversion rate reflects an initial conversion price of $17.00 and is subject to adjustment in certain circumstances. The initial dividend rate for the Preferred Stock is equal to 7.75% per annum of the initial liquidation preference of the Preferred Stock, to be paid quarterly and subject to adjustment in certain circumstances. The Preferred Stock is mandatorily redeemable on August 18, 2021 and may be redeemed at the discretion of the Company anytime after August 17, 2016. Starting August 18, 2013, if the closing price of the Common Stock exceeds 150% of the then-applicable conversion price of the Preferred Stock for 20 consecutive trading days, the Company may require conversion of all the Preferred Stock to Common Stock.

The holders of shares of Series J Preferred Stock will be entitled to vote on all matters presented to the holders of common stock (as a single class with such holders), on an as-converted basis. In addition, for so long as Liberty and its affiliates continue to meet certain ownership requirements, the holders of the Series J Preferred Stock voting as a separate class will be entitled to elect two directors to the Board, and Liberty will have consent rights under the investment agreement over certain matters.

The entry into the investment agreement and the issuance and sale of the Preferred Stock was approved by the Company’s Board of Directors following a recommendation made by a Special Committee of the Board of Directors. In light of the investment by Liberty, the Company and Liberty Media Corporation ceased discussions regarding Liberty Media Corporation’s previously announced acquisition proposal. The terms, rights, obligations and preferences of the Preferred Stock are set forth in a Certificate of Designations of the Company, which was filed with the Secretary of State of the State of Delaware on August 18, 2011. On August 18, 2011, the Company amended the Rights Agreement to reflect the issuance of the Preferred Stock.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

The Preferred Stock does not meet the categories of ASC 480-10, Distinguishing Liabilities from Equity, and is therefore reported as temporary equity for classification purposes. The related issuance costs, which include advisory, legal and accounting fees, of $12,621 were recorded in temporary equity as a reduction of the proceeds from the Liberty investment. The Company will be required to accrete these fees on a straight line basis as dividends over the ten year term. This is in line with ASC 480-10-S99 for SEC registrants, which requires shares to be classified outside of permanent equity as temporary equity or mezzanine equity when there are events not solely within the control of the issuer that could trigger redemption. The Company has determined that the various embedded options did not require bifurcation from the Preferred Stock. Additionally, the Company concluded that a beneficial conversion feature did not exist as the effective conversion price was greater than the Company’s share price on the commitment date.

(17) Shareholders’ Equity

On November 17, 2009, the Board of Directors of the Company declared a dividend, payable to stockholders of record on November 27, 2009 of one right (a Right) per each share of outstanding Common Stock of the Company, par value $0.001 per share (Common Stock), to purchase 1/1000th of a share of Series I Preferred Stock, par value $0.001 per share, of the Company (the Preferred Stock), at a price of $100.00 per share (such amount, as may be adjusted from time to time as provided in the Rights Agreement described below, the Purchase Price). In connection therewith, on November 17, 2009, the Company entered into a Rights Agreement, dated November 17, 2009 (as amended February 17, 2010, June 23, 2010, October 29, 2010 and August 18, 2011 and as may be further amended from time to time, the Rights Agreement) with Mellon Investor Services LLC, as Rights Agent. The Rights will be exercisable upon the earlier of (i) such date the Company learns that a person or group, without Board approval, acquires or obtains the right to acquire beneficial ownership of 20% or more of the Company’s outstanding common stock or a person or group that already beneficially owns 20% or more of the Company’s outstanding common stock at the time the Rights Agreement was entered into, without Board approval, acquires any additional shares (other than pursuant to the Company’s compensation or benefit plans) (any person or group specified in this sentence, an Acquiring Person) and (ii) such date a person or group announces an intention to commence or following the commencement of (as designated by the Board) a tender or exchange offer which could result in the beneficial ownership of 20% or more of the Company’s outstanding common stock. The Rights will expire on November 17, 2012, unless earlier redeemed or canceled by the Company. If a person or group becomes an Acquiring Person, each Rights holder (other than the Acquiring Person) will be entitled to receive, upon exercise of the Right and payment of the Purchase Price, that number of 1/1000ths of a share of Preferred Stock equal to the number of shares of Common Stock which at the time of the applicable triggering transaction would have a market value of twice the Purchase Price. In the event the Company is acquired in a merger or other business combination by an Acquiring Person, or 50% or more of the Company’s assets are sold to an Acquiring Person, each Right will entitle its holder (other than an Acquiring Person) to purchase common shares in the surviving entity at 50% of the market price.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

(18) Legal Proceedings

The Company is involved in a variety of claims, suits, investigations and proceedings that arise from time to time in the ordinary course of its business, including actions with respect to contracts, intellectual property, taxation, employment, benefits, securities, personal injuries and other matters. The results of these proceedings in the ordinary course of business are not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations.

The Company records a liability when it believes that it is both probable that a liability will be incurred, and the amount of loss can be reasonably estimated. The Company evaluates, at least quarterly, developments in its legal matters that could affect the amount of liability that has been previously accrued and makes adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount of a loss or potential loss. The Company may be unable to reasonably estimate the reasonably possible loss or range of loss for a particular legal contingency for various reasons, including, among others: (i) if the damages sought are indeterminate; (ii) if proceedings are in the early stages; (iii) if there is uncertainty as to the outcome of pending proceedings (including motions and appeals); (iv) if there is uncertainty as to the likelihood of settlement and the outcome of any negotiations with respect thereto; (v) if there are significant factual issues to be determined or resolved; (vi) if the proceedings involve a large number of parties; (vii) if relevant law is unsettled or novel or untested legal theories are presented; or (viii) if the proceedings are taking place in jurisdictions where the laws are complex or unclear. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any. With respect to the legal matters described below, the Company has determined, based on its current knowledge, that the amount of loss or range of loss, that is reasonably possible including any reasonably possible losses in excess of amounts already accrued, is not reasonably estimable. However, legal matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond the Company’s control. As such, there can be no assurance that the final outcome of these matters will not materially and adversely affect the Company’s business, financial condition, results of operations, or cash flows.

The following is a discussion of the material legal matters involving the Company.

In re Barnes & Noble Stockholder Derivative Litigation (Consolidated Cases Formerly Captioned Separately as: Louisiana Municipal Police Employees Retirement System v. Riggio et al.; Southeastern Pennsylvania Transportation Authority v. Riggio et al.; City of Ann Arbor Employees’ Retirement System v. Riggio et al.; Louise Schuman v. Riggio et al.; Virgin Islands Government Employees’ Retirement System v. Riggio et al.; Electrical Workers Pension Fund, Local 103, I.B.E.W. v. Riggio et al.)

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

definitive agreement to purchase Barnes & Noble College Booksellers, which was announced on August 10, 2009 (the Transaction). The complaints generally seek damages in favor of the Company in an unspecified amount; costs, fees and interest; disgorgement; restitution; and equitable relief, including injunctive relief. On September 1, 2009, the Delaware Court of Chancery issued an Order of Consolidation consolidating the five lawsuits (the Consolidated Cases) and directing plaintiffs to file a consolidated amended complaint. In a related development, on August 27, 2009, the Company received a demand pursuant to Delaware General Corporation Law, Section 220, on behalf of the Electrical Workers Pension Fund, Local 103, I.B.E.W., a shareholder, seeking to inspect certain books and records related to the Transaction. On September 18, 2009, this shareholder filed a shareholder derivative complaint in Delaware Court of Chancery against certain of the Company’s directors alleging breach of fiduciary duty and unjust enrichment and seeking to enjoin the consummation of the Transaction. On October 6, 2009, the plaintiffs in the Consolidated Cases filed a motion seeking to consolidate the later-filed sixth case with the Consolidated Cases. On November 3, 2009, a Consolidated Complaint was filed in the Consolidated Cases. On December 11, 2009, the court entered an order consolidating all actions and appointing co-lead counsel for plaintiffs. The Company and defendants filed motions to dismiss the Consolidated Complaint on January 12, 2010. Plaintiffs filed an Amended Consolidated Complaint on March 16, 2010. The Company and defendants filed motions to dismiss the Amended Consolidated Complaint on April 30, 2010. Plaintiffs filed their response to the motion to dismiss on June 2, 2010. Oral argument on the motions to dismiss was held on October 21, 2010. Following those arguments, the Court denied the Company’s motion to dismiss, denied in part and granted in part the motion to dismiss filed by Defendants Leonard Riggio, Stephen Riggio and Lawrence Zilavy, and denied in part and granted in part the motion to dismiss filed by the remaining defendants, dismissing all claims asserted against Directors George Campbell, Jr. and Patricia Higgins. All defendants except Leonard Riggio moved for summary judgment on December 21, 2011. Briefing on those motions was completed by March 2, 2012. The Court ruled on those motions on March 27, 2012, denying summary judgment as to Defendants Lawrence Zilavy and Michael Del Giudice and granting summary judgment as to, and dismissing all claims against, Defendants Stephen Riggio, Irene R. Miller, Margaret T. Monaco and William Dillard, II. On June 13, 2012, all remaining defendants agreed to settle all remaining claims, subject to receipt of court approval (the Settlement). In the Settlement, the sellers in the Transaction have agreed to waive $22,750 of the purchase price by waiving a corresponding principal amount (and interest on) of the Junior Seller Note issued by the Company to the sellers as part of the purchase price of the Transaction. A hearing will be held on September 4, 2012 to approve the Settlement and what, if any, attorney’s fees will be paid by the Company to plaintiffs. If the Settlement Agreement is approved by the Delaware Court of Chancery, the Consolidated Cases will be dismissed, on the merits, with prejudice. Upon approval, the $22,750 reduction in purchase price will be recorded as a credit to additional paid in capital.

Whitney Parker v. Leonard Riggio, et al. (formerly Stephen Strugala v. Leonard Riggio, et al.)

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

Barnes & Noble College Booksellers, the adoption of the Shareholder Rights Plan, and other unspecified instances of alleged mismanagement and alleged wrongful conduct. The complaint also generally alleges violations of Section 14(a) of the 1934 Act in connection with the issuance of various proxy statements by the Company. The complaint generally seeks declaratory and equitable relief, including injunctive relief, and costs and fees. On January 19, 2011, the Court granted the parties’ Stipulation and Order. On February 18, 2011, the plaintiff filed a Notice of Voluntary Dismissal of Claim, dismissing without prejudice his putative class claim for violations of Section 14(a) of the 1934 Act. On March 8, 2011, defendants filed a motion to dismiss all claims in the litigation. On October 4, 2011, the Court granted defendants’ motion to dismiss, but also granted plaintiff leave to replead within 30 days. On November 3, 2011, plaintiff requested a pre-motion conference with the Court to discuss an anticipated motion to substitute a new plaintiff, Ms. Whitney Parker, for Mr. Strugala, and simultaneously filed an amended complaint on behalf of Ms. Parker containing substantially the same claims asserted in Mr. Strugala’s original complaint. The Court held a pre-motion conference on December 9, 2011, at which the parties agreed that Ms. Parker could be substituted for Mr. Strugala without prejudice to any of defendants’ rights. On January 20, 2012, defendants moved to dismiss the amended complaint. Briefing on that motion was completed on May 4, 2012. On August 3, 2012, the Court granted defendants’ motion to dismiss, dismissing the complaint in its entirety and denying plaintiff’s request for leave to replead.

Lina v. Barnes & Noble, Inc., and Barnes & Noble Booksellers, Inc. et al.

On August 5, 2011, a purported class action complaint was filed against Barnes & Noble, Inc. and Barnes & Noble Booksellers, Inc. in the Superior Court for the State of California making the following allegations against defendants with respect to salaried Store Managers at Barnes & Noble stores located in the State of California from the period of August 5, 2007 to present: (1) failure to pay wages and overtime; (2) failure to pay for missed meal and/or rest breaks; (3) waiting time penalties; (4) failure to pay minimum wage; (5) failure to provide reimbursement for business expenses; and (6) failure to provide itemized wage statements. The claims are generally derivative of the allegation that these salaried managers were improperly classified as exempt from California’s wage and hour laws. The complaint contains no allegations concerning the number of any such alleged violations or the amount of recovery sought on behalf the purported class. The Company was served with the complaint on August 11, 2011. On August 30, 2011, the Company filed an answer in state court, and on August 31, 2011 it removed the action to federal court pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d). On October 28, 2011, the district court granted plaintiff’s motion to remand the action back to state court, over the Company’s opposition. On November 7, 2011, the Company petitioned the Ninth Circuit for an appeal of the district court’s remand order. The Ninth Circuit affirmed the district court’s remand order on May 18, 2012. The parties are currently engaged in pre-certification discovery. The Court has not yet set a date for plaintiff’s anticipated motion for class certification, and it has not yet set a trial date.

Barnes & Noble, Inc. and Barnesandnoble.com llc v. LSI Corporation and Agere Systems, Inc.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

5,862,182; 5,920,552; 6,044,073; 6,119,091; 6,404,732; 6,452,958; 6,707,867 and 7,583,582. Barnes & Noble, Inc. amended the complaint on August 10, 2011 to add barnesandnoble.com llc as a plaintiff, to add Agere Systems, Inc. (Agere) as a defendant, to add a cause of action seeking a declaratory judgment that neither Barnes & Noble, Inc. nor barnesandnoble.com llc infringes U.S. Patent No. 7,477,633, and to add causes of action seeking a declaratory judgment that each of the eleven patents-in-suit is invalid. On November 1, 2011, LSI and Agere answered the amended complaint and asserted counterclaims against Barnes & Noble, Inc. and barnesandnoble.com llc, alleging infringement of the eleven patents-in-suit. On November 28, 2011, Barnes & Noble, Inc. and barnesandnoble.com llc answered the counterclaims and asserted several affirmative defenses, including the defense that seven of the patents-in-suit are unenforceable as a result of standard-setting misconduct. As required by the Court’s Local Patent Rules, LSI and Agere served their Disclosure of Asserted Claims and Infringement Contentions on July 2, 2012. In that disclosure, LSI and Agere asserted infringement of only six of the eleven patents that it had previously accused Barnes & Noble, Inc. and barnesandnoble.com llc of infringing. The Court has set certain pretrial dates in the case, including a claim construction hearing on March 11, 2013. The Court has not yet set a trial date in the case.

Dustin Torrez, an individual, on behalf of himself and all others similarly situated v. Barnes & Noble, Inc.

On October 11, 2011, a complaint was filed in the Superior Court for the State of California, County of San Francisco against the Company. The complaint is styled as a California state-wide class action. It alleges violations of California Civil Code section 1747.08 (the Song-Beverly Credit Card Act of 1971) due to the Company’s alleged improper requesting and recording of zip codes from California customers who used credit cards as payment. The complaint was re-filed in the Superior Court for the State of California, County of San Francisco on December 23, 2011 as a separate action. The Summons and Complaint have not been served on the Company for either action. On February 10, 2012, the plaintiff filed a request that the action filed in December be dismissed with prejudice.

Kevin Khoa Nguyen, an individual, on behalf of himself and all others similarly situated v. Barnes & Noble, Inc.

On April 17, 2012, a complaint was filed in the Superior Court for the State of California, County of Orange against the Company. The complaint is styled as a nationwide class action and includes a California state-wide subclass based on alleged cancellations of orders for HP TouchPad Tablets placed on the Company’s website in August 2011. The lawsuit alleges claims for unfair business practices and false advertising under both New York and California state law, violation of the Consumer Legal Remedies Act under California law, and breach of contract. The complaint demands specific performance of the alleged contracts to sell HP TouchPad Tablets at a specified price, injunctive relief, and monetary relief, but does not specify an amount. The Company submitted its initial response to the complaint on May 18, 2012, and moved to compel plaintiff to arbitrate his claims on an individual basis pursuant to a contractual arbitration provision on May 25, 2012. The Company also moved to stay all proceedings pending final resolution of the motion to compel arbitration on July 20, 2012. The Court has not yet ruled on the motion to compel arbitration or the motion to stay.

BARNES & NOBLE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the 13 weeks ended July 28, 2012 and July 30, 2011

(Thousands of dollars, except per share data)

(unaudited)

Deep9 Corporation v. Barnes & Noble, Inc. and barnesandnoble.com llc

On January 1, 2011, Deep9 Corporation (Deep9) filed a complaint against Barnes & Noble, Inc. and barnesandnoble.com llc in the United States District Court for the Western District of Washington. The complaint alleges that Barnes & Noble, Inc. and barnesandnoble.com llc infringe U.S. Patent Nos. 5,937,405 and 6,377,951. On February 1, 2011, Barnes & Noble, Inc. and barnesandnoble.com llc filed an answer denying infringement and asserting several affirmative defenses. At the same time, Barnes & Noble, Inc. and barnesandnoble.com llc filed counterclaims seeking a declaratory judgment that neither Barnes & Noble, Inc. nor barnesandnoble.com llc infringes the patents-in-suit and that each of the two patents-in-suit is invalid. The Court issued an order regarding claim construction on January 10, 2012 and amended that order on January 24, 2012. On July 19, 2012, each party filed motions for summary judgment, and Barnes & Noble, Inc. and barnesandnoble.com llc filed motions to exclude as unreliable certain opinions of Deep9’s technical expert and to preclude Deep9’s damages expert from testifying at trial. Briefing on those motions was completed on August 10, 2012. On August 2, 2012, Deep9 filed a Daubert motion to preclude Barnes & Noble, Inc. and barnesandnoble.com llc’s damages expert from testifying at trial, which Barnes & Noble, Inc. and barnesandnoble.com llc are opposing. Briefing on Deep9’s Daubert motion was completed on August 13, 2012. The Court has not yet ruled on any of the pending summary judgment or Daubert motions. A five day jury trial is scheduled to begin on October 22, 2012.

(19) Recent Accounting Pronouncements

In July 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-02, Intangibles-Goodwill and Other (ASU 2012-02). ASU 2012-02 will allow the Company the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that an indefinite-lived intangible asset is impaired. Determining that it is more likely than not that an indefinite-lived intangible asset is impaired will require quantitative impairment testing, otherwise, no further action will be required. This ASU is effective for annual and interim impairment tests performed for fiscal years beginning after September 18, 2012, with early adoption permitted. The adoption is not expected to have an impact on the Company’s Fiscal 2014 Consolidated Financial Statements.

Report of Independent Registered Public Accounting Firm

The Board of Directors

Barnes & Noble, Inc.

New York, New York

We have reviewed the condensed consolidated balance sheets of Barnes & Noble, Inc. and Subsidiaries as of July 28, 2012 and July 30, 2011, and the related consolidated statements of operations and comprehensive loss for the 13 week periods ended July 28, 2012 and July 30, 2011, changes in shareholders’ equity for the 13 week period ended July 28, 2012, and cash flows for the 13 week periods ended July 28, 2012 and July 30, 2011 included in the accompanying Securities and Exchange Commission Form 10-Q for the period ended July 28, 2012. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board, the consolidated balance sheet of Barnes & Noble, Inc. and Subsidiaries as of April 28, 2012, and the related consolidated statements of operations, comprehensive loss, changes in shareholders’ equity and cash flows for the year then ended (not presented herein) and in our report dated June 27, 2012, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of April 28, 2012 is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ BDO USA, LLP

BDO USA, LLP

New York, New York

August 31, 2012

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources

The primary sources of Barnes & Noble, Inc.’s (Barnes & Noble or the Company) cash are net cash flows from operating activities, funds available under its senior credit facility and short-term vendor financing.

The Company’s cash and cash equivalents were $20.2 million as of July 28, 2012, compared with $22.4 million as of July 30, 2011.

Merchandise inventories increased $133.0 million, or 7.3%, to $1.95 billion as of July 28, 2012, compared with $1.81 billion as of July 30, 2011. This increase was due to several factors, including college new stores, timing of college back-to-school rush, expanded title count and increased depth per title in the growing retail Juvenile business, and expanded footage in non-book categories such as Toys & Games and Gift. Receivables, net decreased $12.2 million or 7.8% to $144.3 million as of July 28, 2012, compared to $156.5 million as of July 30, 2011. This decrease was due to lower channel partner balances. Prepaid expenses and other current assets increased $35.7 million or 22.8% to $192.3 million as of July 28, 2012, compared to $156.6 million as of July 30, 2011. This increase was primarily due to higher short-term deferred taxes. Accounts Payable increased $111.3 million or 8.7% to $1.39 billion as of July 28, 2012, compared to $1.28 billion as of July 30, 2011. The increase in Accounts Payable was in proportion to the increase in inventory and was 71% and 70% of merchandise inventory as of July 28, 2012 and July 30, 2011, respectively. Accrued liabilities increased $70.8 million or 17.5% to $474.5 million as of July 28, 2012, compared to $403.7 million as of July 30, 2011. This increase was primarily due to several factors, including timing of expenses, compensation, legal fees, accrued taxes and deferred income. Gift card liabilities increased $11.6 million or 3.9% to $312.9 million as of July 28, 2012, compared to $301.2 million as of July 30, 2011 on higher sales.

The Company’s investing activities consist principally of capital expenditures for the Company’s website and digital initiatives, new store construction, the maintenance of existing stores and system enhancements for the Company’s stores. Capital expenditures totaled $26.5 million and $26.6 million during the 13 weeks ended July 28, 2012 and July 30, 2011, respectively.

On April 27, 2012, the Company entered into an amendment (the 2012 Amended Credit Facility) to its existing agreement with Bank of America, N.A. entered into on April 29, 2011, as administrative agent, collateral agent and swing line lender, and other lenders in order to permit the transactions contemplated by the investment agreement among the Company, Morrison Investment Holdings, Inc. (Morrison), and Microsoft Corporation (Microsoft) and to make certain other changes to the Company’s 2011 Amended Credit Agreement in connection therewith.

to a specified percentage of eligible inventories with the ability to include eligible real estate, accounts receivable and accrued interest, at the election of the Company, at Base Rate or LIBO Rate, plus, in each case, an Applicable Margin (each term as defined in the 2011 Amended Credit Agreement). In addition, the Company has the option to request an increase in commitments under the 2011 Amended Credit Agreement by up to $300.0 million, subject to certain restrictions.

The 2011 Amended Credit Agreement requires Availability (as defined in the 2011 Amended Credit Agreement) to be greater than the greater of (i) 10% of the Loan Cap (as defined in the 2011 Amended Credit Agreement) and (ii) $50 million. In addition, the 2011 Amended Credit Agreement contains covenants that limit, among other things, the Company’s ability to incur indebtedness, create liens, make investments, make restricted payments, merge or acquire assets, and contains default provisions that are typical for this type of financing, among other things. Proceeds from the 2011 Amended Credit Agreement are used for general corporate purposes, including seasonal working capital needs.

On July 28, 2012, the Company had borrowings of $282.6 million net of cash on hand against its $1.0 billion credit facility. Compared to the same time last year, this is a reduction of $204.7 million as the Company used the net proceeds from the Liberty investment last August to reduce its debt. The Company had $35.1 million of outstanding letters of credit under the 2012 Amended Credit Facility as of July 28, 2012 compared with $31.2 million as of July 30, 2011.

On April 27, 2012, the Company entered into an investment agreement among the Company, Morrison and Microsoft pursuant to which the Company will form a Delaware limited liability company (NewCo), and transfer to NewCo the Company’s digital device, digital content and college bookstore businesses and NewCo will sell to Morrison, and Morrison will purchase, 300 million convertible preferred membership interests in NewCo for an aggregate purchase price of $300.0 million. Concurrently with its entry into this agreement, the Company has also entered into a commercial agreement with Microsoft, pursuant to which, among other things, NewCo will develop and distribute a Windows 8 application for e-reading and digital content purchases, and an intellectual property license and settlement agreement with Microsoft and Microsoft Licensing GP.

On August 18, 2011, the Company entered into an investment agreement between the Company and Liberty GIC, Inc. (Liberty) pursuant to which the Company issued and sold to Liberty, and Liberty purchased, 204,000 shares of the Company’s Series J Preferred Stock, par value $0.001 per share (Preferred Stock), for an aggregate purchase price of $204.0 million in a private placement exempt from the registration requirements of the 1933 Act. The shares of Preferred Stock will be convertible, at the option of the holders, into shares of Common Stock representing 16.6% of the Common Stock outstanding as of August 29, 2011, (after giving pro forma effect to the issuance of the Preferred Stock), based on the initial conversion rate. The initial conversion rate reflects an initial conversion price of $17.00 and is subject to adjustment in certain circumstances. The initial dividend rate for the Preferred Stock is equal to 7.75% per annum of the initial liquidation preference of the Preferred Stock to be paid quarterly and subject to adjustment in certain circumstances. The entry into the investment agreement and the issuance and sale of the Preferred Stock was approved by the Company’s Board of Directors following a recommendation made by a Special Committee of the Board of Directors. The terms, rights, obligations and preferences of the Preferred Stock are set forth in a Certificate of Designations of the Company, which was filed with the Secretary of State of the State of Delaware on August 18, 2011.

Based upon the Company’s current operating levels, management believes cash and cash equivalents on hand, net cash flows from operating activities, short-term vendor financing and the capacity under the Amended Credit Facility will be sufficient to meet the Company’s normal working capital and debt service requirements for at least the next twelve months. The Company regularly evaluates its capital structure and conditions in the financing markets to ensure it maintains adequate flexibility to successfully execute its business plan.

Segments

The Company identifies its operating segments based on the way the business is managed (focusing on the financial information distributed) and the manner in which the chief operating decision maker interacts with other members of management. The Company has three operating segments: B&N Retail, B&N College and NOOK.

Seasonality

The B&N Retail business, like that of many retailers, is seasonal, with the major portion of sales and operating profit realized during its third fiscal quarter, which includes the holiday selling season.

The B&N College business is highly seasonal, with the major portion of sales and operating profit realized during the second and third fiscal quarters, when college students generally purchase textbooks for the upcoming semesters. Textbook rentals, which primarily occur at the beginning of the semester, are being recognized over the rental period.

The NOOK business, like that of many technology companies, is impacted by the launch of new products and the promotional efforts to support those new products, as well as the traditional retail holiday selling seasonality.

Business Overview

The Company’s financial performance has been significantly impacted in recent years by a number of factors, including the economic downturn, increased competition and the expanding digital market. However, recently the Company has benefited from reduced physical bookstore competition in the marketplace, as well as the successful execution of new marketing strategies.

The Company derives the majority of its sales and net income from its B&N Retail and B&N College stores.

B&N Retail comparable store sales trends have improved as one of B&N Retail’s largest competitors in the sale of physical books, Borders Group, Inc. (Borders), completed liquidating all of its stores under Chapter 11 of the Bankruptcy Code in early fiscal 2012. While the Company expects declining physical book trends to continue industry-wide as consumer spending shifts further online and toward digital products, it expects to be the beneficiary of further market consolidation as other non-book retailers reduce their presence in the book category. Additionally, the Company continues to experience positive trends in its Juvenile, Gift and Toys & Games businesses as a result of the successful execution of new marketing strategies. Other categories such as Café and Newsstand also improved as a result of increased store traffic.

The Company has leveraged its unique assets, iconic brands and reach to become a leader in the distribution of digital content. In 2009, the Company entered the eBook market with its acquisition of Fictionwise, Inc., a leader in the eBook marketplace, and the popularity of its eBook site continues to grow. Since then, the Company launched its NOOK^® brand of eReading products, which provide a fun, easy-to-use and immersive digital reading experience. With NOOK^®, customers gain access to the Company’s expansive NOOK Bookstore™ of more than two million digital titles, and the ability to enjoy content access to a wide array of popular devices.

In October 2010, Barnes & Noble introduced NOOK Color™, the first full-color touch Reader’s Tablet™, complementing its NOOK 1^st Edition™ and NOOK Wi-Fi 1^st Edition™ devices, which offer a paper-like reading experience with a color touch screen for navigation. In May 2011, the Company introduced The All-New NOOK™, The Simple Touch Reader™, the easiest-to-use, most intuitive eReader available that is ultra light, features best-in-class battery performance, a 6-inch full touchscreen and the most advanced E Ink Pearl display at a desirable market price point. On November 7, 2011, Barnes & Noble launched NOOK Tablet™, the Company’s fastest and lightest tablet with the best in entertainment. On February 21, 2012, Barnes & Noble launched NOOK Tablet™ – 8GB, a new addition to the highly rated NOOK Tablet™ line. On April 12, 2012, the Company introduced NOOK Simple Touch™ with GlowLight^TM, the world’s first E Ink device with patent-pending lighting technology that lets you read in the dark.

In addition to NOOK^® devices, the Company makes it easy for customers to enjoy any book, anytime, anywhere with its free line of NOOK^® software specific application, which has won the Webby People’s Voice Award. Customers can use Barnes & Noble’s eReading software to access and read books from their personal Barnes & Noble digital library on devices including iPad™, iPhone^®, Android™ smartphones and tablets, PC and Mac^®. The Lifetime Library™ helps ensure that Barnes & Noble customers will always be able to access their digital libraries on NOOK^® products and software-enabled devices and BN.com. The Company also offers NOOK Newsstand™, which provides an extensive selection of digital newspapers and magazines, available in both subscription and single copy format, NOOK Kids™, a collection of digital picture and chapter books for children and NOOK Study™, an innovative study platform and software solution for higher education.

As digital and electronic sales become a larger part of its business, the Company believes its footprint of more than 1,300 stores will continue to be a major competitive asset. The Company will continue to integrate its traditional retail, trade book and college bookstores businesses with its electronic and Internet offerings, using retail stores in attractive geographic markets to promote and sell digital devices and content. Customers can see, feel and experiment with the NOOK^® in the Company’s stores.

Although the stores will be just a part of the offering, they will remain a key driver of sales and cash flow as the Company expands its multi-channel relationships with its customers. While the Company plans to open a few retail stores in new geographic markets, the Company does not expect to expand the total number of retail stores in the near future.

B&N College provides direct access to a large and well-educated demographic group, enabling the Company to build relationships with students throughout their college years and beyond. The Company also expects to be the beneficiary of market consolidation as more and more schools outsource their bookstore management. The Company is in a unique market position to benefit from this trend given its full suite of services: bookstore management, textbook rental and digital delivery.

Although the Company believes cash on hand, cash flows from operating activities, funds available from its senior credit facility and short-term vendor financing provide the Company with adequate liquidity and capital resources for seasonal working capital requirements, the Company may raise additional capital to support the growth of its digital businesses.

Results of Operations

13 weeks ended July 28, 2012 compared with the 13 weeks ended July 30, 2011

Sales

The following table summarizes the Company’s sales for the 13 weeks ended July 28, 2012 and July 30, 2011:


	13 weeks ended
*Dollars in thousands*	July 28, 2012			% Total			July 30, 2011			% Total
B&N Retail	$	1,119,387			77.0	%	$	1,097,252			77.4	%
B&N College		220,718			15.2	%		220,494			15.5	%
NOOK		191,975			13.2	%		191,412			13.5	%
Elimination		(78,573	)		(5.4	)%		(90,754	)		(6.4	)%

Total Sales	$	1,453,507			100.0	%	$	1,418,404			100.0	%

During the 13 weeks ended July 28, 2012, the Company’s sales increased $35.1 million, or 2.5%, to $1.45 billion from $1.42 billion during the 13 weeks ended July 30, 2011. The increase by segment is as follows:

•

B&N Retail sales for the 13 weeks ended July 28, 2012 increased $22.1 million, or 2.0%, to $1.12 billion from $1.10 billion during the same period a year ago, and accounted for 77.0% of total Company sales. This increase was primarily attributable to a 4.6% increase in comparable store sales, which increased sales by $43.1 million, offset by closed stores that decreased sales by $16.1 million. The comparable sales increase was driven by higher physical book sales due to the Borders liquidations and bestselling titles. B&N Retail also experienced positive comparable sales in categories where it has relayed its stores and expanded its product assortment, such as Juvenile, Toys & Games, and Gift. Sales of NOOK^® products in bookstores declined due primarily to lower average selling prices. B&N Retail also includes its eCommerce business and third-party sales of Sterling Publishing Co., Inc.

•

B&N College sales increased $0.2 million, or 0.1%, to $220.7 million during the 13 weeks ended July 28, 2012 from $220.5 million during the 13 weeks ended July 30, 2011. Sales were essentially flat, as new store sales were offset by a higher mix of textbook rentals, which have a lower price than new or used textbooks. Comparable store sales for the 13 weeks ended July 28, 2012 decreased 2.0% during this non back-to-school rush period. New B&N College stores contributed to an increase in sales of $7.3 million during the quarter, while closed stores decreased sales by $3.0 million.

•

NOOK sales increased $0.5 million, or 0.3%, to $192.0 million during the 13 weeks ended July 28, 2012 from $191.4 million during the 13 weeks ended July 30, 2011. Digital content sales increased 46.1% for the quarter. Digital content sales are defined to include digital lockers, digital newsstand and the apps business. Device sales revenue declined for the quarter due to lower average selling prices and device production scaling issues related to the NOOK Simple Touch^™ with GlowLight^™.

•

The elimination represents sales from NOOK to B&N Retail and B&N College that were sold through to the end user.

During the 13 weeks ended July 28, 2012, B&N Retail had no store openings and two store closings, and B&N College had 25 openings and five closings.

Cost of Sales and Occupancy


	13 weeks ended
*Dollars in thousands*	July 28, 2012		% of Sales			July 30, 2011		% of Sales
B&N Retail	$	782,651		69.9	%	$	786,803		71.7	%
B&N College		169,675		76.9	%		169,322		76.8	%
NOOK		87,293		77.0	%		74,721		74.2	%

Total Cost of Sales
and Occupancy	$	1,039,619		71.5	%	$	1,030,846		72.7	%

The Company’s cost of sales and occupancy includes costs such as merchandise costs, distribution center costs (including payroll, freight, supplies, depreciation and other operating expenses), rental expense, management service agreement costs with schools, common area maintenance and real estate taxes, partially offset by landlord tenant allowances amortized over the life of the lease.

During the 13 weeks ended July 28, 2012, cost of sales and occupancy increased $8.8 million, or 0.9%, to $1.04 billion from $1.03 billion during the 13 weeks ended July 30, 2011. Cost of sales and occupancy decreased as a percentage of sales to 71.5% from 72.7% during the same period one year ago. The increase or (decrease) by segment is as follows:

•

B&N Retail cost of sales and occupancy decreased as a percentage of sales to 69.9% from 71.7% during the same period one year ago. This decrease was primarily attributable to a higher mix of higher margin core products and slightly lower occupancy costs.

•

B&N College cost of sales and occupancy increased slightly as a percentage of sales to 76.9% from 76.8% during the same period one year ago.

•

NOOK cost of sales and occupancy increased as a percentage of sales to 77.0% from 74.2% during the same period one year ago. This increase in cost of sales and occupancy was primarily due to product markdowns on NOOK^® price adjustments as well as higher occupancy costs on increased office space in Palo Alto, CA.

Gross Margin


	13 weeks ended
*Dollars in thousands*	July 28, 2012		% of Sales			July 30, 2011		% of Sales
B&N Retail	$	336,736		30.1	%	$	310,449		28.3	%
B&N College		51,043		23.1	%		51,172		23.2	%
NOOK		26,109		23.0	%		25,937		25.8	%

Total Gross Margin	$	413,888		28.5	%	$	387,558		27.3	%

The Company’s consolidated gross margin increased $26.3 million, or 6.8%, to $413.9 million during the 13 weeks ended July 28, 2012 from $387.6 million during the 13 weeks ended July 30, 2011. This increase was due to the matters discussed above.

Selling and Administrative Expenses


	13 weeks ended
*Dollars in thousands*	July 28, 2012		% of Sales			July 30, 2011		% of Sales
B&N Retail	$	262,175		23.4	%	$	270,753		24.7	%
B&N College		65,075		29.5	%		63,376		28.7	%
NOOK		82,805		73.0	%		76,989		76.5	%

Total Selling and Administrative Expenses	$	410,055		28.2	%	$	411,118		29.0	%

Selling and administrative expenses decreased $1.1 million, or 0.3%, to $410.0 million during the 13 weeks ended July 28, 2012 from $411.1 million during the 13 weeks ended July 30, 2011. Selling and administrative expenses decreased as a percentage of sales to 28.2% from 29.0% during the same period one year ago. The increase or (decrease) by segment is as follows:

•

B&N Retail selling and administrative expenses decreased as a percentage of sales to 23.4% from 24.7% during the same period one year ago. The current year selling and administrative expenses included the reversal of an incentive compensation accrual related to fiscal 2012. Excluding this item, selling and administrative expenses as a percentage of sales would have decreased to 23.7% from 24.7% during the same period one year ago. This decrease was primarily due to improved store productivity.

•

B&N College selling and administrative expenses increased as a percentage of sales to 29.5% from 28.7% during the same period one year ago primarily due to new store openings and increased expenses for digital higher education initiatives.

•

NOOK selling and administrative expenses decreased as a percentage of sales to 73.0% from 76.5% during the same period one year ago. The current year selling and administrative expenses included the reversal of an incentive compensation accrual related to fiscal 2012. Excluding this item, selling and administrative expenses as a percentage of sales would have decreased to 76.0% from 76.5% during the same period one year ago. Expenses increased $5.8 million for the quarter primarily to support international expansion plans as well as increased advertising.

Depreciation and Amortization


	13 weeks ended
*Dollars in thousands*	July 28, 2012		% of Sales			July 30, 2011		% of Sales
B&N Retail	$	40,940		3.7	%	$	39,485		3.6	%
B&N College		11,715		5.3	%		10,849		4.9	%
NOOK		5,380		4.7	%		5,337		5.3	%

Total Depreciation and Amortization	$	58,035		4.0	%	$	55,671		3.9	%

During the 13 weeks ended July 28, 2012, depreciation and amortization increased $2.4 million, or 4.2%, to $58.0 million from $55.7 million during the same period one year ago.

Operating Profit (Loss)


	13 weeks ended
*Dollars in thousands*	July 28, 2012			% of Sales			July 30, 2011			% of Sales
B&N Retail	$	33,621			3.0	%	$	211			0.0	%
B&N College		(25,747	)		(11.7	)%		(23,053	)		(10.5	)%
NOOK		(62,076	)		(54.7	)%		(56,389	)		(56.0	)%

Total Operating Loss	$	(54,202	)		(3.7	)%	$	(79,231	)		(5.6	)%

The Company’s consolidated operating loss decreased $25.1 million, or 31.7%, to $(54.2) million during the 13 weeks ended July 28, 2012 from $(79.2) million during the 13 weeks ended July 30, 2011. This decrease was due to the matters discussed above.

Interest Expense, Net and Amortization of Deferred Financing Fees


	13 weeks ended
*Dollars in thousands*	July 28, 2012		July 30, 2011		% of Change
Interest Expense, Net and Amortization of Deferred Financing Fees	$	8,941	$	9,442		(5.3	)%

Net interest expense and amortization of deferred financing fees decreased $0.5 million to $8.9 million during the 13 weeks ended July 28, 2012 from $9.4 million during the 13 weeks ended July 30, 2011.

Income Taxes


	13 weeks ended
*Dollars in thousands*	July 28, 2012			Effective Rate			July 30, 2011			Effective Rate
Income Taxes	$	(22,163	)		35.1	%	$	(32,067	)		36.2	%

The Company had an income tax benefit of $22.2 million during the 13 weeks ended July 28, 2012 compared with an income tax benefit of $32.1 million during the 13 weeks ended July 30, 2011. The Company’s effective tax rate was 35.1% and 36.2% for the 13 weeks ended July 28, 2012 and July 30, 2011, respectively.

Net Loss


	13 weeks ended
*Dollars in thousands*	July 28, 2012			July 30, 2011
Net Loss	$	(40,980	)	$	(56,606	)

As a result of the factors discussed above, the Company reported consolidated net loss of $(41.0) million during the 13 weeks ended July 28, 2012, compared with consolidated net loss of $(56.6) million during the 13 weeks ended July 30, 2011.

Critical Accounting Policies

During the first quarter of fiscal 2013, there were no changes in the Company’s policies regarding the use of estimates and other critical accounting policies. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” found in the Company’s Annual Report on Form 10-K for the fiscal year ended April 28, 2012 for additional information relating to the Company’s use of estimates and other critical accounting policies.

Disclosure Regarding Forward-Looking Statements

This quarterly report on Form 10-Q may contain certain forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act)) and information relating to the Company that are based on the beliefs of the management of the Company as well as assumptions made by and information currently available to the management of the Company. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “will” and similar expressions, as they relate to the Company or the management of the Company, identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events, the outcome of which is subject to certain risks, including, among others, the general economic environment and consumer spending patterns, decreased consumer demand for the Company’s products, low growth or declining sales and net income due to various factors, risk that international expansion will not be successfully achieved or may be achieved later than expected, possible disruptions in the Company’s computer systems, telephone systems or supply chain, possible risks associated with data privacy, information security and intellectual property, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible risks that inventory in channels of distribution may be larger than able to be sold, possible risk that returns from consumers or channels of distribution may be greater than estimated, the risk that the expected sales lift from Borders’ store closures is not achieved in whole or part, the risk that digital sales growth is less than expectations and the risk that it does not exceed the rate of investment spend, higher-than-anticipated store closing or relocation costs, higher interest rates, the performance of the Company’s online, digital and other initiatives, the performance and successful integration of acquired businesses, the success of the Company’s strategic investments, unanticipated increases in merchandise, component or occupancy costs, unanticipated adverse litigation results or effects, product and component shortages, the potential adverse impact on the business resulting from the review of a potential separation of the NOOK digital business, the risk that the transactions contemplated by the partnership with Microsoft Corporation (Microsoft) to form a new Company subsidiary (NewCo) to be comprised of NOOK and B&N College, including with respect to any spin-off, split-off or other disposition by the Company of its interest in NewCo, are not able to be implemented on the terms contemplated or at all, the risk that the transactions do not achieve the expected benefits for the parties including the risk that NewCo’s applications are not commercially successful or that the expected distribution of those applications is not achieved, the risk that the separation of the digital and college businesses or any subsequent spin-off, split-off or other disposition by the Company of its interest in NewCo results in adverse impacts on the

Company or NewCo (including as a result of termination of agreements and other adverse impacts), the potential impact on the Company’s retail business of the separation, the potential tax consequences for the Company and its shareholders of a subsequent spin-off, split-off or other disposition by the Company of its interest in NewCo, the risk that the international expansion contemplated by the relationship is not successful, the risk that NewCo is not able to perform its obligations under the commercial agreement, including with respect to the development of applications and international expansion, and the consequences thereof, the costs and disruptions arising out of any such separation of NOOK and B&N College, the risk that Barnes & Noble may not recoup its investments in NOOK as part of any separation, the risks, difficulties, and uncertainties that may result from the separation of businesses that were previously co-mingled including necessary ongoing relationships, and potential for adverse customer impacts and other factors which may be outside of Barnes & Noble’s control, including those factors discussed in detail in Item 1A, “Risk Factors,” in Barnes & Noble’s Annual Report on Form 10-K and Form 10-K/A, and in Barnes & Noble’s other filings made hereafter from time to time with the Securities and Exchange Commission. The forward looking statements relating to international expansion are also subject to the following risks, among others that may affect the introduction, success and timing of the NOOK^® eReader and content in countries outside the United States: the Company may not be successful in reaching agreements with international companies, the terms of agreements that the Company reaches may not be advantageous to the Company, the Company’s NOOK^® device may require technological changes to comply with applicable laws, and marketplace acceptance and other companies have already entered the marketplace with products that have achieved some customer acceptance. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Form 10-Q.

Item 3:

Quantitative and Qualitative Disclosures About Market Risk

The Company limits its interest rate risks by investing certain of its excess cash balances in short-term, highly-liquid instruments with an original maturity of one year or less. The Company does not expect any material losses from its invested cash balances and the Company believes that its interest rate exposure is modest. As of July 28, 2012, the Company’s cash and cash equivalents totaled approximately $20.2 million.

Additionally, the Company may from time to time borrow money under the 2011 Amended Credit Facility at various interest rate options based on the Base Rate or LIBO Rate (each term as defined in the 2011 Amended Credit Agreement) depending upon certain financial tests. Accordingly, the Company may be exposed to interest rate risk on borrowings under its credit facility. The Company had $302.8 million and $509.6 million in borrowings under its credit facility at July 28, 2012 and July 30, 2011, respectively.

The Company does not have any material foreign currency exposure as nearly all of its business is transacted in United States currency.

Item 4:

Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company’s management conducted an evaluation (as required under Rules 13a-15(b) and 15d-15(b) under the Exchange Act), under the supervision and with the participation of the principal executive officer and principal financial officer, of the Company’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports. Based on management’s evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective at the reasonable assurance level.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

The following is a discussion of the material legal matters involving the Company.

Between August 17, 2009 and August 31, 2009, five putative shareholder derivative complaints were filed in Delaware Court of Chancery against the Company’s directors. The complaints generally allege breach of fiduciary duty, waste of corporate assets and unjust enrichment in connection with the Company’s entry into a definitive agreement to purchase Barnes & Noble College Booksellers, which was announced on August 10, 2009 (the Transaction). The complaints generally seek damages in favor of the Company in an unspecified amount; costs, fees and interest; disgorgement; restitution; and equitable relief, including injunctive relief. On September 1, 2009, the Delaware Court of Chancery issued an Order of Consolidation consolidating the five lawsuits (the Consolidated Cases) and directing plaintiffs to file a consolidated amended complaint. In a related development, on August 27, 2009, the Company received a demand pursuant to Delaware General Corporation Law, Section 220, on behalf of the Electrical Workers Pension Fund, Local 103, I.B.E.W., a shareholder, seeking to inspect certain books and records related to the Transaction. On September 18, 2009, this shareholder filed a shareholder derivative complaint in Delaware Court of Chancery against certain of the Company’s directors alleging breach of fiduciary duty and unjust enrichment and seeking to enjoin the consummation of the Transaction. On October 6, 2009, the plaintiffs in the Consolidated Cases filed a motion seeking to consolidate the later-filed sixth case with the Consolidated Cases. On November 3, 2009, a Consolidated Complaint was filed in the Consolidated Cases. On December 11, 2009, the court entered an order consolidating all actions and appointing co-lead counsel for plaintiffs. The Company and defendants filed motions to dismiss the Consolidated Complaint on January 12, 2010. Plaintiffs filed an Amended Consolidated Complaint on March 16, 2010. The Company and defendants filed motions to dismiss the Amended Consolidated Complaint on April 30, 2010. Plaintiffs filed their response to the motion to dismiss on June 2, 2010. Oral argument on the motions to dismiss was held on October 21, 2010. Following those arguments, the Court denied the Company’s motion to dismiss, denied in part and granted in part the motion to dismiss filed by Defendants Leonard Riggio, Stephen Riggio and Lawrence Zilavy, and denied in part and granted in part the motion to dismiss filed by the remaining defendants, dismissing all claims asserted against Directors George Campbell, Jr. and Patricia Higgins. All defendants except Leonard Riggio moved for summary judgment on December 21, 2011. Briefing on those motions was completed by March 2, 2012. The Court ruled on those motions on March 27, 2012, denying summary judgment as to Defendants Lawrence Zilavy and Michael Del Giudice and granting summary judgment as to, and dismissing all claims against, Defendants Stephen Riggio, Irene R. Miller, Margaret T. Monaco and William Dillard, II. On June 13, 2012, all remaining defendants agreed to settle all remaining claims, subject to receipt of court approval (the Settlement). In the Settlement, the sellers in the Transaction have agreed to waive $22,750 of the purchase price by waiving a corresponding principal amount (and interest on) of the Junior Seller Note issued by the Company to the sellers as part of the purchase price of the Transaction. A hearing will be held on September 4, 2012 to approve the Settlement and what, if any, attorney’s fees will be paid by the Company to plaintiffs. If the Settlement Agreement is approved by the Delaware Court of Chancery, the Consolidated Cases will be dismissed, on the merits, with prejudice. Upon approval, the $22,750 reduction in purchase price will be recorded as a credit to additional paid in capital.

Whitney Parker v. Leonard Riggio, et al. (formerly Stephen Strugala v. Leonard Riggio, et al.)

On December 21, 2010, a complaint was filed in the United States District Court for the Southern District of New York by Stephen Strugala against the Company’s current directors and former directors Lawrence Zilavy and Michael Del Giudice. The complaint is purportedly brought both directly, on behalf of a putative class of shareholders, and derivatively, on behalf of the Company. The complaint generally alleges breaches of fiduciary duties, waste and unjust enrichment in connection with the Company’s acquisition of Barnes & Noble College Booksellers, the adoption of the Shareholder Rights Plan, and other unspecified instances of alleged mismanagement and alleged wrongful conduct. The complaint also generally alleges violations of Section 14(a) of the 1934 Act in connection with the issuance of various proxy statements by the Company. The complaint generally seeks declaratory and equitable relief, including injunctive relief, and costs and fees. On January 19, 2011, the Court granted the parties’ Stipulation and Order. On February 18, 2011, the plaintiff filed a Notice of Voluntary Dismissal of Claim, dismissing without prejudice his putative class claim for violations of Section 14(a) of the 1934 Act. On March 8, 2011, defendants filed a motion to dismiss all claims in the litigation. On October 4, 2011, the Court granted defendants’ motion to dismiss, but also granted plaintiff leave to replead within 30 days. On November 3, 2011, plaintiff requested a pre-motion conference with the Court to discuss an anticipated motion to substitute a new plaintiff, Ms. Whitney Parker, for Mr. Strugala, and simultaneously filed an amended complaint on behalf of Ms. Parker containing substantially the same claims asserted in Mr. Strugala’s original complaint. The Court held a pre-motion conference on December 9, 2011, at which the parties agreed that Ms. Parker could be substituted for Mr. Strugala without prejudice to any of defendants’ rights. On January 20, 2012, defendants moved to dismiss the amended complaint. Briefing on that motion was completed on May 4, 2012. On August 3, 2012, the Court granted defendants’ motion to dismiss, dismissing the complaint in its entirety and denying plaintiff’s request for leave to replead.

Lina v. Barnes & Noble, Inc., and Barnes & Noble Booksellers, Inc. et al.

Barnes & Noble, Inc. and Barnesandnoble.com llc v. LSI Corporation and Agere Systems, Inc.

On June 6, 2011, Barnes & Noble, Inc. filed a complaint against LSI Corporation (LSI) in the United States District Court for the Northern District of California, Case No. 11-CV-2709 EMC. The complaint sought a declaratory judgment that Barnes & Noble, Inc. does not infringe U.S. Patent Nos. 5,546,420; 5,670,730; 5,862,182; 5,920,552; 6,044,073; 6,119,091; 6,404,732; 6,452,958; 6,707,867 and 7,583,582. Barnes & Noble, Inc. amended the complaint on August 10, 2011 to add barnesandnoble.com llc as a plaintiff, to add Agere Systems, Inc. (Agere) as a defendant, to add a cause of action seeking a declaratory judgment that neither Barnes & Noble, Inc. nor barnesandnoble.com llc infringes U.S. Patent No. 7,477,633, and to add causes of action seeking a declaratory judgment that each of the eleven patents-in-suit is invalid. On November 1, 2011, LSI and Agere answered the amended complaint and asserted counterclaims against Barnes & Noble, Inc. and barnesandnoble.com llc, alleging infringement of the eleven patents-in-suit. On November 28, 2011, Barnes & Noble, Inc. and barnesandnoble.com llc answered the counterclaims and asserted several affirmative defenses, including the defense that seven of the patents-in-suit are unenforceable as a result of standard-setting misconduct. As required by the Court’s Local Patent Rules, LSI and Agere served their Disclosure of Asserted Claims and Infringement Contentions on July 2, 2012. In that disclosure, LSI and Agere asserted infringement of only six of the eleven patents that it had previously accused Barnes & Noble, Inc. and barnesandnoble.com llc of infringing. The Court has set certain pretrial dates in the case, including a claim construction hearing on March 11, 2013. The Court has not yet set a trial date in the case.

Dustin Torrez, an individual, on behalf of himself and all others similarly situated v. Barnes & Noble, Inc.

Kevin Khoa Nguyen, an individual, on behalf of himself and all others similarly situated v. Barnes & Noble, Inc.

Deep9 Corporation v. Barnes & Noble, Inc. and barnesandnoble.com llc

Item 1A.

Risk Factors

There have been no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended April 28, 2012.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities


Period	Total Number of Shares Purchased (a)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
April 29, 2012 – May 28, 2012		12,618	$	18.08		—	$	2,470,561
May 29, 2012 – June 27, 2012		1,764	$	15.36		—	$	2,470,561
June 28, 2012 – July 28, 2012		6,179	$	16.46		—	$	2,470,561

Total		20,561	$	17.36		—

(a)

All of the shares on this table above were originally granted to employees as restricted stock pursuant to the Company’s 2004 Incentive Plan and 2009 Incentive Plan. Both Incentive Plans provide for the withholding of shares to satisfy tax obligations due upon the vesting of restricted stock, and pursuant to the 2004 Incentive Plan and the 2009 Incentive Plan, the shares reflected above were relinquished by employees in exchange for the Company’s agreement to pay federal and state withholding obligations resulting from the vesting of the Company’s restricted stock.

On May 15, 2007, the Company announced its Board of Directors authorized a stock repurchase program for the purchase of up to $400.0 million of the Company’s common stock. The maximum dollar value of common stock that may yet be purchased under this program is approximately $2.5 million as of July 28, 2012.

Stock repurchases under this program may be made through open market and privately negotiated transactions from time to time and in such amounts as management deems appropriate. As of July 28, 2012, the Company has repurchased 33,742,825 shares at a cost of approximately $1.06 billion. The repurchased shares are held in treasury.

Item 4.

Mine Safety Disclosure

Not Applicable.

Item 6.

Exhibits

(a) Exhibits filed with this Form 10-Q:



10.1		Barnes & Noble.com Digital Products Device Development Incentive Bonus Plan, dated as of May 2, 2010.

10.2		Form of Barnes & Noble.com Digital Products Device Development Incentive Bonus Plan Participation Agreement.

10.3		Letter Agreement between Barnes & Noble.com, llc and Ravi Gopalakrishnan, dated as of March 5, 2009.

10.4		Letter Agreement between Barnes & Noble.com, llc and Daniel A. Gilbert, dated as of March 22, 2010.

10.5		Letter Agreement between Barnes & Noble College Booksellers, LLC and Max J. Roberts, dated as of September 30, 2009.

10.6		Letter Agreement between Barnes & Noble.com, llc and Jamie Iannone, dated as of March 29, 2009.

15.1		Letter from BDO USA, LLP regarding unaudited interim financial information.

31.1		Certification by the Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by the Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Calculation Linkbase Document

101.DEF		XBRL Taxonomy Definition Linkbase Document

101.LAB		XBRL Taxonomy Label Linkbase Document

101.PRE		XBRL Taxonomy Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


BARNES & NOBLE, INC.
(Registrant)

By:		/s/ MICHAEL P. HUSEBY
		Michael P. Huseby
		Chief Financial Officer
		(principal financial officer)



By:		/s/ ALLEN LINDSTROM
		Allen Lindstrom
		Vice President, Corporate Controller
		(principal accounting officer)

August 31, 2012

EXHIBIT INDEX



10.1		Barnes & Noble.com Digital Products Device Development Incentive Bonus Plan, dated as of May 2, 2010.

10.2		Form of Barnes & Noble.com Digital Products Device Development Incentive Bonus Plan Participation Agreement.

10.3		Letter Agreement between Barnes & Noble.com, llc and Ravi Gopalakrishnan, dated as of March 5, 2009.

10.4		Letter Agreement between Barnes & Noble.com, llc and Daniel A. Gilbert, dated as of March 22, 2010.

10.5		Letter Agreement between Barnes & Noble College Booksellers, LLC and Max J. Roberts, dated as of September 30, 2009.

10.6		Letter Agreement between Barnes & Noble.com, llc and Jamie Iannone, dated as of March 29, 2009.

15.1		Letter from BDO USA, LLP regarding unaudited interim financial information.

31.1		Certification by the Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by the Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Calculation Linkbase Document

101.DEF		XBRL Taxonomy Definition Linkbase Document

101.LAB		XBRL Taxonomy Label Linkbase Document

101.PRE		XBRL Taxonomy Presentation Linkbase Document

EX-10.1 2 d400022dex101.htm DIGITAL PRODUCTS DEVICE DEVELOPMENT INCENTIVE BONUS PLAN Digital Products Device Development Incentive Bonus Plan

EXHIBIT 10.1

BARNES &NOBLE.COM

DIGITAL PRODUCTS DEVICE DEVELOPMENT INCENTIVE

BONUS PLAN

LOGO

TABLE OF CONTENTS


		Page
1.	Definition of Terms		2
1.	a. Bonus Period		2
	b. Net Device Sales Bonus Pool		2
	c. Bonus Amount		2
	d. Code		2
	e. Company		2
	f. Eligible Employee		3
	g. Net Device Sales Revenue		3
	h. Plan		3

2.	Payment of Bonus Amounts		3

3.	Offset For Obligations To The Company		4

4.	Termination of Right to Bonus Amount for Breach of Contractual Obligations		4

5.	No Trust Created		4

6.	Bonus Amounts Payable Only from General Corporate Assets; Unsecured General Creditor Status of Employee		4

7.	No Contract of Employment		5

8.	Bonus Amounts Not Transferable		5

9.	Withholding		5

10.	Amendment		5

11.	Not a Security		5

12.	Notice		5

13.	Severability		5

14.	Administration		5

15.	Governing Law		6

16.	Prior Agreements		6

BARNES & NOBLE.COM DIGITAL PRODUCTS DEVICE DEVELOPMENT

INCENTIVE BONUS PLAN

THIS PLAN is adopted effective May 2, 2010, by barnesandnoble.com llc (“Barnes & Noble.com” or the “Company”), a wholly-owned subsidiary of Barnes & Noble, Inc., for the benefit of Eligible Employees (defined in Paragraph 1, below) selected for participation;

The Company recognizes the valuable services performed for it by the Eligible Employees and wishes to encourage continued employment; and

The Company wishes to provide the terms and conditions upon which the Company shall pay Bonus Amounts to the Eligible Employees for each Bonus Period.

NOW, THEREFORE, the Company establishes the Plan as follows:

1. Definition of Terms. Certain words and phrases are defined when first used in later Paragraphs of this Plan and, in addition, the following words and phrases shall have the following respective meanings:

a. Bonus Period: For the year 2010, the Bonus Period shall be the fifteen (15) month period beginning February 1, 2010 and ending on April 30, 2011, and thereafter the Bonus Period shall be the twelve month period comprising a fiscal year of the Company, ending on the Saturday closest to the last Saturday of April (each a “Fiscal Year”). For example, Fiscal Year 2011 begins on May 1, 2010 and ends on April 30, 2011.

b. Net Device Sales Bonus Pool: A bonus pool of no more than One and Eight Tenths Percent (1.80%) of Net Device Sales Revenue will be allocated by the Compensation Committee of Barnes & Noble, Inc. for the purpose of establishing a pool for use in awarding annual and/or one-time bonuses to Eligible Employees for a Bonus Period.

c. Bonus Amount: The amount awarded to an Eligible Employee under the Plan, if any, that the Company determines, in its sole discretion, to award to an Eligible Employee as a bonus with respect to a Bonus Period. The Bonus Amount awards shall come from the Net Device Sales Bonus Pool and the amounts of all Bonus Award shall be determined by the Chief Executive Officer of Barnes & Noble, Inc., the Chief Financial Officer, Barnes & Noble, Inc., the President, B&N Digital Products, and the Vice President Human Resources of Barnes & Noble.com (the “Award Committee”). The Award Committee shall act on behalf of the Company and may determine and distribute all or any portion of the Net Device Sales Bonus Pool as Bonus Amount awards at its complete discretion. The Bonus Amount may be awarded on an annual or one-time bonus basis by the Award Committee. Any Bonus Amount awarded from the Net Device Sales Bonus Pool shall be awarded subject to the terms of the Plan.

d. Code: The Internal Revenue Code of 1986, as amended or as it may be amended from time to time, and any regulations or other guidance promulgated thereunder.

e. Company: Barnes & Noble.com.

f. Eligible Employee: An individual who (i) is classified by the Company as an employee of the Barnes & Noble.com Digital Products Group, or the Award Committee determines has made a significant contribution to the success of the Barnes & Noble.com Digital Products Group device development efforts; (ii) is in good standing, meaning rated at least “Achieved Expectations” by their supervisor and not under a final warning or performance improvement plan as of the date of the payment of any Bonus Amount; (iii) the Company has selected in its sole discretion to be eligible for participation in the Plan as evidenced by the offer of a Participation Agreement; and (iv) who executes a Participation Agreement for the applicable Bonus Period as provided herein. The Award Committee shall have complete and sole discretion to determine participation in the Plan for a Bonus Period.

g. Net Device Sales Revenue: The net sales revenue of Barnes & Noble, Inc. with respect to a Bonus Period for any e-book reading device developed specifically by the Barnes & Noble.com Digital Products Group for the Company. Net Device Sales Revenue shall not include sales revenue for any e-book reading devices sold by Barnes & Noble, Inc., or any of its subsidiaries or affiliates, including the Company, which were not developed specifically by the Barnes & Noble.com Digital Products Group. Net Device Sales Revenue shall not include any revenue associated with sales (i) that result in returns; (ii) for which the Company does not receive payment in full (i.e., bad debt); or (iii) that cause the Company to incur replacement costs. New Device Sales Revenue may include and exclude such items as the Company may determine in its sole discretion from time to time, and may be calculated in such manner as the Company may determine in its sole discretion, such as, by way of example only, a calculation of net sales revenue reflecting discounts offered, cost of sales, etc.

h. Plan: This document titled Barnes & Noble.com Digital Products Device Development Incentive Bonus Plan, together with any and all amendments or supplements thereto.

2. Payment of Bonus Amounts. The Company, by and through its Award Committee, will determine which employees of the Company or Barnes & Noble, Inc. will receive an offer of a Participation Agreement and the Bonus Amount for each Eligible Employee, subject to all terms and conditions of the Plan. Bonus Amount awards may differ in amount between the Eligible Employees, as determined by the Award Committee in its sole discretion, and otherwise subject to the terms and conditions of the Plan. Further, the total amount of the Net Device Sales Bonus Pool for any Bonus Period need not be awarded by the Award Committee as Bonus Amount awards under the Plan. Participation Agreements shall be approved and extended by the Award Committee based upon the selections made by the Award Committee for participation in the Plan for a Bonus Period.

Payment of the Bonus Amount to an Eligible Employee, if any, shall be made in two equal annual installments subject to all terms and conditions herein. Bonus Amounts shall be determined after the close of the Company’s Fiscal Year. Following the determination of the Bonus Amounts by the Award Committee, provided the Eligible Employee is eligible for payment under the Plan, the Company shall make the first installment payment equal to Fifty Percent (50%) of the Bonus Amount, no later than three (3) months following the close of the Fiscal Year. Provided that the Eligible Employee remains employed with the Company and eligible under the terms of the Plan through the payment date of the second installment, the Company shall make the second installment

payment equal to the remaining Fifty Percent (50%) of the Bonus Amount, on the first anniversary of the date of the payment of the first installment of the Bonus Amount. Eligible Employees have no vested right in the Bonus Amount or any portion or installment thereof until the date of the payment of the Bonus Amount or any portion or installment thereof under the Plan according to the terms herein. Payment of one-time bonuses will be made in one payment subject to all terms and conditions herein.

If an Eligible Employee’s employment with the Company ends, whether through resignation or termination for any reason (whether voluntarily or involuntarily) prior to the date of the payment of either installment of the Bonus Amount, the Eligible Employee shall not be entitled to and shall forfeit all right, title and interest in and to any Bonus Amount that has not been paid as of the date of such separation from employment with the Company.

3. Offset For Obligations To The Company. If, at such time as an Eligible Employee becomes entitled to a Bonus Amount payment hereunder, the Eligible Employee has any debt, obligation or other liability representing an amount owing to the Company or its parents, subsidiaries or affiliates, the Company may offset the amount owed it by the Eligible Employee against the amount of the Bonus Amount otherwise distributable hereunder.

4. Termination of Right to Bonus Amount for Breach of Contractual Obligations. Notwithstanding anything to the contrary set forth herein, if an Eligible Employee breaches any of the provisions of any employment agreement entered into by and between the Eligible Employee and the Company from time to time, including any agreement containing the terms and provisions of any non-disclosure, non-compete, confidentiality, non-solicit or inventions agreement entered into by and between the Eligible Employee and the Company (whether such breach occurs during or after Eligible Employee’s employment with the Company), or the terms of this Plan or any other agreement with the Company, then the Eligible Employee’s right to a Bonus Amount otherwise payable under this Plan, to the extent not previously paid, shall immediately terminate and be forfeited.

5. No Trust Created. Nothing contained in this Plan, and no action taken pursuant to its provisions by any party hereto shall create, or be construed to create, a trust of any kind, or a fiduciary relationship between the Company and the Eligible Employee or any other person.

6. Bonus Amounts Payable Only from General Corporate Assets; Unsecured General Creditor Status of Employee. The payment of Bonus Amounts to Eligible Employees shall be made from assets which shall continue, for all purposes, to be a part of the general, unrestricted assets of the Company; no person shall have any interest in any such assets by virtue of the provisions of this Plan. The Company’s obligation hereunder shall be an unfunded and unsecured promise to pay money in the future, subject to the terms and conditions of the Plan. To the extent that any person acquires a right to receive payments from the Company under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Company; no such person shall have nor acquire any legal or equitable right, interest or claim in or to any property or assets of the Company. Any accounts maintained to reflect an Eligible Employee’s benefit under this Plan shall be hypothetical in nature and shall be maintained for bookkeeping purposes only.

7. No Contract of Employment. Neither this Plan nor any action taken hereunder shall be construed as a contract of employment for any term of years, as giving the Eligible Employee any right to be retained in the employ of the Company, or to affect the right of the Company to change the Eligible Employee’s present or future rate of compensation or work assignment or to terminate the employment of the Eligible Employee with or without cause.

8. Bonus Amounts Not Transferable. Neither the Eligible Employee nor any other person shall have any power or right to transfer, assign, anticipate, hypothecate or otherwise encumber any part or all of the Bonus Amounts payable hereunder. No such funds shall be subject to seizure by any creditor of any such Eligible Employee or other person, by a proceeding at law or in equity, nor shall such amounts be transferable by operation of law in the event of bankruptcy, insolvency or death of the Employee, or any other person. Any such attempted assignment or transfer shall be void.

9. Withholding. The Company shall withhold any federal, state or local income taxes as it deems to be required or appropriate.

10. Amendment. This Plan may be amended, altered, modified, or terminated at any time by a written instrument signed by the Company, its respective successors or assigns.

11. Not a Security. Nothing contained herein shall be construed to create a security. This Plan relates to the payment of incentive bonus compensation for Eligible Employees, and is not intended to be, or to create, a security.

12. Notice. All notices or other communications to Eligible Employees or the Company hereunder (“Notice”) shall be in writing and shall either be delivered personally, by electronic mail or by registered or certified mail, return receipt requested (a) to the Eligible Employee at the address of the Eligible Employee on the records of the Company or to such other address as to which the Eligible Employee or the Eligible Employee’s personal representative give Notice in accordance with this Section and (b) to the Company at the address of the principal office of the Company, and addressed to the Vice President, Human Resources, with a copy to the General Counsel of Barnes & Noble, Inc. The Notice shall be deemed given as of the date of delivery, or if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

13. Severability. In the event any provision of the Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provisions of the Plan.

14. Administration. The Company shall administer the Plan and interpret, construe and apply its provisions in accordance with its terms and shall have discretionary authority to interpret those terms. The Company shall determine in its discretion those who are eligible to participate in the Plan as Eligible Employees and shall have the right to set guidelines for the administration of the Plan and participation and payment of Bonus Amounts under the Plan, including without limitation, the approval of the Net Device Sales Bonus Pool amounts, the calculation of Net Device Sales Revenue and all Bonus Amounts. The Company may further establish, adopt or revise such other rules and regulations as it may deem necessary or advisable for the administration of the Plan. All decisions of the Company (or its designee to the extent applicable) shall be final and binding on Eligible Employees and all other employees of the Company.

15. Governing Law. This Plan, and the rights of the Company and the Employee hereunder, shall be governed by and construed in accordance with the laws of the State of New York. This Plan is intended to comply with the requirements of Section 409A of the Code. This Plan shall be interpreted in a manner that is consistent with Code Section 409A.

16. Prior Agreements. This Plan supersedes and replaces all other plans, arrangements and agreements relating to the subject matter hereof, and any such prior plans, arrangements and agreements are hereby canceled and of no further force and effect.

EX-10.2 3 d400022dex102.htm FORM OF DIGITAL PRODUCTS DEVICE DEVELOPMENT INCENTIVE BONUS PLAN Form of Digital Products Device Development Incentive Bonus Plan

EXHIBIT 10.2

[FORM OF] BARNES & NOBLE.COM DIGITAL PRODUCTS DEVICE

DEVELOPMENT INCENTIVE BONUS PLAN

PARTICIPATION AGREEMENT

Participant:_[Name]

Barnes & Noble.com has developed its Digital Products Device Development Incentive Bonus Plan as a means to reward those employees who contribute to the success of eReader Device Development. The Company is pleased to offer you the opportunity to participate in the Plan. Your bonus opportunity will be based on [•]% of Net Device Sales Revenue, as defined in the Plan document, and will be awarded in accordance with the terms of the Plan. Part of the eligibility determination under the Plan is a requirement that you execute this Participation Agreement. By signing below, you acknowledge and agree that: (i) your participation in the Plan is controlled by the Plan document and that you must meet all of the eligibility criteria in the Plan for the payment of a Bonus Amount; (ii) the determination with regard to a Bonus Amount and the timing of the payment of any Bonus Amount is subject to all of the terms of the Plan, including any future amendments or changes to the Plan; (iii) you will keep confidential and agree that you shall not disclose orally or in writing, directly or indirectly, to any person (other than to the members of your immediate family) the existence or terms of this Participation Agreement, and (iv) this Participation Agreement is not a guarantee of continued employment.

Acknowledged and Agreed:

[Name]

Date

PLEASE RETURN YOUR SIGNED AGREEMENT TO:

John Heaney

Vice President

Human Resources

Barnes& Noble.com

76 Ninth Avenue

New York, New York 10011

EX-10.3 4 d400022dex103.htm LETTER AGREEMENT - RAVI GOPALAKRISHNAN Letter Agreement - Ravi Gopalakrishnan

EXHIBIT 10.3

LOGO

76 Ninth Avenue

New York, NY 10011

Tel: (212) 414-6000

REVISED

Thursday March 5, 2009

Ravi Gopalakrishnan

[Address on file with the Company]

Dear Ravi:

It is my pleasure to present you with this offer of employment to join Barnes & Noble.com as a Director, Digital Products Software Development in our Northern California office. The following represents the key elements of our offer:


Position:		Director, Digital Products Software Development

Reports to:		Tony Astarita – VP, Digital Products

Start date:		Friday, March 6, 2009

Base salary:		$210,000 annually

Benefits:		Eligible to participate in the Barnes & Noble.com/Barnes and Noble, Inc. Plan after sixty (60) days of continuous employment (plan details to follow, upon acceptance of offer of employment).

Vacation:		You will be eligible for 15 days of vacation time annually after completion of six months of continuous service.

Incentive Compensation:		You will be eligible to participate in our Incentive Compensation Program for 2009. The target level payment for your position is 20% of your base salary. Payments under this plan are based on Company and individual performance. Payments for 2009, if any are made, would be paid in the first quarter of 2010 and are prorated based on your start date.

Severance Benefits:		Should your employment terminate for any reason other than your resignation or for “Cause” as defined below, you shall receive a severance package of three (3) months base salary. You understand and agree that any severance benefits provided by Barnes & Noble.com are contingent on your executing a General Release in exchange for benefits.

		The term “Cause” shall mean (i) any act of fraud or embezzlement in respect to the Company or any of its interests, opportunities, property or assets, or any act of intentional dishonesty committed in the course of

Page 2 , GOPALAKRISHNAN


		your employment, (ii) the commission by you of a felony under the laws of the United States or any state thereof, or of any crime involving moral turpitude or other wrongful act or omission causing material harm to the standing and reputation of the Company, (iii) any acts or omissions by you that (as determined by the Company in its reasonable discretion and judgment) are unlawful and/or that constitute fraud, dishonesty, breach of the duty of loyalty, gross negligence or any other misconduct in the course of your employment or otherwise, which could bring the Company into disrepute, could create civil or criminal liability for the Company or could adversely affect the Company’s business.

You have represented, and hereby confirm, that you are not subject to any currently effective employment contract, or any other contractual or other binding obligations pursuant to which your employment or employment activities with or on behalf of Barnes & Noble.com may be subject to any restrictions, including without limitation, any agreements or other obligations or documents relating to non-competition, confidentiality, trade secrets, proprietary information or works for hire.

This offer is contingent upon verification of your identity and your ability to legally work for Barnes & Noble.com in the United States. In addition, this offer is contingent upon satisfactory references and verification of your employment record, academic credentials and any certifications represented on your employment application and/or resume.

Please sign this letter and scan/email to Mark Israel at misrael@book.com, or fax it back to Mark Israel at 212-414-6394. You will receive two signed copies of this document at new employee orientation on Friday, March 13, 2009.

I am delighted with your interest in Barnes & Noble.com and am eager to have you join our team. The challenge, opportunity, and rewards that lie ahead for Barnes & Noble.com are unique and incredibly exciting. I look forward to hearing from you after you have had a chance to review this offer.


Very truly yours,

	/s/ John J. Heaney	3/5/09
	John J. Heaney	Date
	Vice President, Human Resources
	Barnes & Noble.com


ACCEPTED AND AGREED:

/s/ Ravi Gopalakrishnan		3/6/2009
Ravi Gopalakrishnan		Date

AGREEMENT REGARDING CERTAIN TERMS AND CONDITIONS OF EMPLOYMENT

This agreement is by and between Barnes & Noble.com, llc. (“Company”) and Ravi Gopalakrishnan (“Employee”). In consideration of the Employee’s being hired by the Company, the Company’s providing Employee access to Confidential Information that is necessary to perform his/her work, the payment by the Company of Employee’s compensation and for other good and valuable consideration, the Company and Employee agree as follows:

At-Will Employment

1. Employee acknowledges and agrees that his/her employment is at-will, which means that both Employee and the company shall have the right to terminate such employment at any time, for any reason, with or without cause. Employee further acknowledges and agrees that this Agreement is not intended to and does not constitute a contract or agreement between Employee and the Company providing a specified term of employment or limiting the right of either party to terminate Employee’s employment with the Company at any time, for any reason, with or without cause.

Duty of Loyalty

2. Employee acknowledges that he/she owes a duty of loyalty to the Company, which Employee acknowledges means, among other things, that while an employee of the Company Employee must act on the best interests of the Company. Employee therefore agrees that, without limitation, (a) he/she shall devote his/her best efforts and undivided time, effort and loyalty to the business of the Company; (b) he/she shall discharge all of his/her duties and responsibilities that are or may be assigned to him by the Company, conscientiously, in good faith and to the best of his/her ability, giving to the Company the full benefit of his/her knowledge, expertise, skill and judgment; (c) he/she shall not engage in any illegal or unethical conduct in the performance of his/her duties and responsibilities; and (d) he/she shall not engage in any conduct that creates an actual, potential or apparent conflict between Employee’s personal interests and the Company’s interest, or which otherwise may adversely affect Employee’s judgment or ability to act in the Company’s best interests.

Confidential Information and Company Property

3. Employee acknowledges that his/her duties and responsibilities will put employee in a position of acquiring and creating Confidential Information (as that term is defined below) concerning the Company, the disclosure of which to competitors of the Company or others would cause the Company to suffer substantial and irreparable damage. Employee acknowledges, therefore, that it is in the Company’s legitimate business interest to restrict Employee’s disclosure or use of such Confidential Information (and other Company Property) for any purpose other than the services provided by the Employee to the Company and to limit the possibility of any potential appropriation of such Confidential Information (and other Company Property) by Employee for his/her own benefit or the benefit of the Company’s competitors and to the detriment of the Company.

Page 2, GOPALAKRISHNAN

(continued) Confidential Information and Company Property

4. Employee agrees and acknowledges that “Confidential Information” shall mean all non-public information, whether or not created or maintained in written form, which constitutes, relates or refers to any and all of the following: financial data, strategic business plans, product development information (or other proprietary product data), marketing plans, processes, inventions, devices and all other non-public, proprietary or confidential information of, concerning or provided by or on behalf of the Company, its companies, entities, subsidiaries, licenses or clients, including without limitation, any technical, economic, financial, marketing or other information which is not common knowledge among competitors or other companies who may like to posses such confidential information or may find it useful. Specifically, without limitation, Confidential Information shall also refer to all client information, including for example, client lists, the identity of any contact persons and all sales information. All of the foregoing is merely illustrative and Confidential Information is not limited to those illustrations.

5. Employee agrees and acknowledges that “Company Property” shall mean all property and resources of the Company, including without limitation, all Confidential Information, the Company computer system and all software, e-mail and databases, telephone and facsimile services and all other administrative or support services provided by the Company.

6. Employee further agrees that “Company Property” shall also include, and Employee shall promptly disclose and provide to the Company, all Inventions (as defined below), whether or not any such Inventions also may be included within “Confidential Information” as defined under this Agreement, or are patentable, copyrightable or protectable as trade secrets. As used herein, an “Invention” shall mean any original work of authorship, design, formula, process, improvement, composition of matter, computer software program, data, information or database, method, procedure or other invention, development or improvement of any kind that Employee conceives, originates, develops, improves, modifies and/or creates, solely or jointly with others, during the period of Employee’s employment either as a result of such employment or as a result of access to Company Property including residuals thereof. The term “residuals” as used herein shall mean information in non-tangible form, which may be retained by Employee after access to Company Property, including ideas, concepts, know-how or techniques contained therein. Employee shall give Company all reasonable assistance and execute all documents necessary to assist and enable Company to perfect, preserve, register and record its rights in any such Invention.

Page 3, GOPALAKRISHNAN

(continued) Confidential Information and Company Property

7. All Company Property and Confidential Information is owned and/or held by and for the Company exclusively, is intended for authorized, job-related purposes on behalf of the Company only and shall not be used for personal or other non-job-related purposes.

8. Specifically, without limitation, Employee acknowledges that all Inventions are hereby irrevocably assigned by Employee to the Company and, specifically without limitation, that any copyrightable works prepared by Employee within the scope of his/her employment are “works for hire” under the Copyright Act and that the Company will be considered the author and owner of such copyrightable works. In the event that any rights to any Inventions are deemed not to be works made for hire, or in the event that Employee should, by operation of law, be deemed to retain any rights in such Inventions, Employee hereby irrevocably assigns, without any further consideration and regardless of any use by the Company of any such Inventions, all of his/her rights, title and interest, if any, in and to such Inventions to the Company. Employee agrees that the Company, as the owner of such rights has the full and complete right to prepare and create derivative works based upon the Inventions, Works of Authorship and any derivative works of such Works of Authorship and to use, reproduce, publish, print, copy, market, advertise, distribute, transfer, sell, publicly perform and publicly display, and otherwise exploit by all means now known or later developed, such Works of Authorship and derivative works anywhere throughout the world.

9. Employee understands that the Company, from time to time, may have entered into agreements with other parties which imposed obligations or restrictions on the Company regarding Inventions made during the course of the work under such agreements or regarding the confidential nature of such works, or otherwise received from third parties confidential or proprietary information (“Third Party Information”) subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. Employee acknowledges and agrees to be bound by all such obligations and restrictions, will hold Third Party Information in the strictest confidence, will not disclose (to anyone other than Company personnel who need to know such information in connection with their work for the Company) or use Third Party Information unless expressly authorized by the Company in writing, and will otherwise take all action necessary to discharge the obligations to the Company arising in connection with such Third Party Information.

10. Further, without limitation, the Employee shall not, directly or indirectly, (a) remove from the Company’s premises, or divulge, disclose or make accessible to any other person, firm, partnership, corporation or other entity, any Confidential Information or non-public Company Property, except as may be required by law and only after reasonable prior notice to the Company; or (b) make use of any Confidential Information or Company Property for any purpose outside the course of performing the authorized duties of his/her employment, including to benefit the Employee or any other person or entity.

Page 4, GOPALAKRISHNAN

(continued) Confidential Information and Company Property

11. Employee acknowledges and represents that his/her performance of all the terms of this Agreement and his/her duties as an employee of the Company will not breach any invention, assignment or proprietary information or similar agreement with any former employer or other party. Employee further acknowledges and represents that Employee will not bring to the Company or use in the performance of his/her duties for the Company any documents or materials of any kind of a former employer or other person or entity, that Employee is not legally authorized or permitted to use and/or that are not generally available to the public.

12. Employee acknowledges and agrees that the foregoing agreements and restrictions are reasonable and necessary for the protection of the Company and its business, and are not limited in time to the duration of Employee’s employment but extend after and shall survive the termination of his/her employment, irrespective of the reason for its termination. The Employee further acknowledges and agrees that the Company shall be entitled to an injunction or other form of equitable relief to prevent or terminate any violation of the foregoing restrictions. Any such relief shall be in addition to and not in lieu of any other remedy available to the Company, whether at law or in equity.

13. Upon the termination for any reason of his/her employment with the Company, or at any time the Company may so request, Employee shall promptly deliver to the Company all Confidential Information and Company Property, including all memoranda, notes, documents or magnetic discs, tapes or other electronic or computer means of information storage, of any kind that constitute, contain, relate or refer to Confidential Information or Company Property, and which the Employee may have in his/her possession or under his/her control.

Non-Competition and Non-Solicitation

14. During his/her employment by the Company and for six (6) months thereafter, Employee agrees that, without the prior written consent of the Company (a) he/she will not, directly or indirectly, either as principal, manager, agent, consultant, officer, stockholder, partner, investor, lender or employee or in any other capacity, carry on, be engaged in or have any financial interest in, any business which is in competition with the business of the Company and/or its members, officers, companies, entities, subsidiaries, successors or licensees and (b) he/she shall not, on his/her own behalf or on behalf of any person or company, directly or indirectly, communicate with any person who has been employed by the Company or any of its companies, entities, subsidiaries, successors, agents or licensees at any time during the twelve (12) months immediately preceding such communication, in order to encourage, solicit or suggest that such person terminate his/her employment with the Company, or to solicit or offer employment to such person.

Page 5, GOPALAKRISHNAN

(continued) Confidential Information and Company Property

15. For purposes of the foregoing paragraph, a business shall be deemed to be in competition with the Company if it is principally involved in any Retail or E-Commerce Company or other entity related to merchandising books and related products. Nothing in the foregoing paragraph shall be construed so as to preclude Employee from investing directly or indirectly in any publicly traded equity securities, provided that no such investment in any class of securities may exceed 5% of the outstanding securities of such class.

16. Employee and the Company agree that the terms of paragraph 14 constitute a reasonable covenant under the circumstances and that Employee has received adequate consideration for his/her agreement to such terms such as, without limitation, the Company’s agreement to the terms of this Agreement. Employee agrees that any breach of the covenants contained in paragraph 14 would irreparably injure the Company. Accordingly, Employee agrees that the Company may, in addition to pursuing any other remedies it may have at law or in equity, obtain an injunction against Employee from any court having jurisdiction over such application for an injunction, restraining any further violation of this Agreement by Employee.

Arbitration

17. (a) Any dispute, controversy or claim between Employee and the Company concerning any “Claims”, as further defined below, shall be submitted to and finally determined by binding arbitration to be held in New York, New York before one arbitrator according to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, and judgment upon any award rendered may be entered in any court having jurisdiction thereof. For purposes of the arbitration of any Claim hereunder and the entry of judgment upon any award, Employee and the Company hereby consent to personal jurisdiction in the State of New York.

(b) The Claims subject to this arbitration provision are and shall be those claims concerning (i) any term, condition, covenant, representation or acknowledgement contained in this Agreement; or (ii) any other aspect of Employee’s employment or the termination thereof, including without limitation, any and all actual or potential claims under any applicable federal, state, local or other statues, orders, laws, ordinances, regulations or the like, or case law, that relate to employment or employment practices and/or, specifically, that prohibit discrimination based upon age, race, religion, sex, national origin, disability or any other unlawful bases, including without limitation, the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Americans with Disabilities Act of 1990, as amended, the Family Medical Leave Act of 1993, as amended, the Employee Retirement Income Security Act of 1990, as amended, the Fair Labor Standards Act, as amended, the Vietnam Era Veterans’ Readjustment Assistance Act, as amended, the Equal Pay Act, as amended, and any similar applicable statues, orders, laws, ordinances, regulations or the like, or case law, of any State. The parties further agree that the Claims subject to arbitration shall exclude any claims required by an applicable Federal, State, local or other statute to be submitted to another forum (for example, a workers compensation claim or a claim for unemployment insurance benefits).

Page 6, GOPALAKRISHNAN

(continued) Arbitration

(c) Notwithstanding the provisions of paragraphs 17(a) and (b), the parties specifically agree that the Company shall be entitled to seek equitable and injunctive relief, including a temporary restraining order, preliminary injunction or permanent injunction, in a court of competent jurisdiction, as provided in paragraphs 12 and 16 for a breach of the “Confidential Information and Company Property” and “Non-Competition and Non-Solicitation” provisions of this agreement.

(d) Employee specifically acknowledges that he/she understands that the right to the determination and/or trial of any Claims in court before a judge or a jury is a valuable right, and that by signing this Agreement he/she hereby knowingly and voluntarily waives his/her right to assert any Claims in any court of competent jurisdiction and he/she hereby knowingly and voluntarily waives the right to a determination and/or trial before a judge or a jury.

Applicable Law

18. This Agreement, and any arbitration hereunder, shall in all respects be subject to, governed by and enforced and construed pursuant to and in accordance with the laws of the State of New York, without regard to and excluding New York choice of law rules and except that the interpretation and enforceability of this arbitration clause shall be governed by the Federal Arbitration Act.

Successors

19. This Agreement shall inure to the benefit of the Company, its subsidiaries and affiliates, and the successors and assigns of each of them.

Amendment

20. No term, condition, covenant, representation or acknowledgement contained in this Agreement may be amended or modified unless in writing signed by both parties, and no course of conduct shall be deemed a waiver of its provisions.

Severability

21. If any part of this Agreement is found to be void, illegal or invalid for any reason whatsoever, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void, illegal or invalid parts were deleted. If any provision of this Agreement is limited in any respect, it shall nevertheless be enforced to the extent that it is held to be enforceable.

Complete Agreement

22. This Agreement constitutes the entire Agreement with respect to the subject matter hereof and cancels and supersedes any and all other previous agreements with respect to the subject matter hereof. The terms of this Agreement shall survive the termination of and any change in Employee’s position with the Company.

Page 7, GOPALAKRISHNAN

Employee Review of Agreement

23. Employee understands that he/she has the right to consult an attorney prior to the signing of this Agreement, and acknowledges that his/her signature below signifies that he/she has fully reviewed and understands all of the terms of this Agreement and that he/she has agreed to those terms.



/s/ Ravi Gopalakrishnan		3/6/2009
Ravi Gopalakrishnan		Date

Barnes & Noble.com, llc

By:	/s/ John J. Heaney	3/5/09
	Name: John J. Heaney	Date
	Title: Vice President, Human Resources

EX-10.4 5 d400022dex104.htm LETTER AGREEMENT - DANIEL A. GILBERT Letter Agreement - Daniel A. Gilbert

EXHIBIT 10.4

LOGO

76 Ninth Avenue

New York, NY 10011

Tel: (212) 414-6000

March 22, 2010

Mr. Daniel A. Gilbert

[Address on file with the Company]

Dear Dan:

It is my pleasure to present you with this offer of employment to join barnesandnoble.com llc (“BN.com” or the “Company”) as Executive Vice President, Operations and Customer Service. This position will be headquartered in Palo Alto, California. The following represents the elements of our offer:


Position:		Executive Vice President, Operations and Customer Service. Position includes, but (commensurate with your title) is not limited to, responsibility for: supply and demand planning, sourcing, manufacturing, operations, distribution and logistics related to digital devices including management of the Digital Products Operations Team located in Palo Alto, CA; inventory management, warehousing, fulfillment and logistics for all bn.com orders; Customer Service Operations for Barnes & Noble, including management of the Customer Service Center in Lyndhurst, NJ and outsourced Customer Service functions.

Reports to:		William J. Lynch, Jr., CEO, Barnes & Noble, Inc., or a similarly situated executive.

Start date:		By April 12, 2010

Annual Base salary:		$450,000

Benefits:		Eligible to participate in the Company Benefit Plan after sixty (60) days of continuous employment (Benefit Plan details to follow, upon acceptance of offer of employment). The Company will provide standard and reasonable Kidnap and Ransom insurance coverage in connection with your business travel.

Incentive Compensation:		You are eligible to participate in the Company’s Incentive Bonus Program. For fiscal year 2011 (May 2, 2010 to April 30, 2011), you will be paid an Incentive Compensation Bonus of $450,000 at such

Page 2 – DANIEL A. GILBERT



		time that such Incentive Compensation Bonuses are paid to other Company executives for fiscal 2011 (prorated up for the period from your actual Start Date to May 2, 2010 provided you begin employment by April 12, 2010). For fiscal years after fiscal 2011, you will be eligible to earn an Incentive Compensation Bonus payment with a target level for your position of 75% to 150% of your Annual Base Salary. Other than for fiscal 2011, payments under the Incentive Compensation Bonus Plan will be based on Company and individual performance. As a result, your Incentive Compensation Bonus for any year after fiscal 2011 may be below, at or above your target level. You must be an active employee of BN.com in good standing at the time payments are made for the Incentive Compensation Bonus to be considered earned and to receive each respective Incentive Compensation Bonus payment, including the payment for fiscal 2011.

Digital Sales Bonus:		In addition to Incentive Compensation, you will be eligible to receive an annual bonus equal to 0.15% of the Net Sales Revenue of the Company with respect to each fiscal year for any e-book reading device or e-book reading device accessory developed or manufactured specifically by or for the Company (collectively, “Covered Devices and Covered Accessories”). For purpose of this paragraph: (i) sales of Covered Devices and Covered Accessories by the Company to third party resellers shall be included in Net Sales Revenue at the price at which they are sold by the Company to the reseller; and (ii) Extended Warranties (whether offered by the Company or by a third party) shall be considered a Covered Accessory and shall be included in Net Sales Revenue on a gross revenue basis. Net Sales Revenue shall not include (i) sales revenue of e-book reading devices or e-book reading device accessories sold by Barnes & Noble, Inc. or any of its subsidiaries or affiliates, including but not limited to BN.com, but which were not specifically developed or manufactured by or for the Company, or (ii) any sales revenue for any digital content for any device. Net Sales Revenue shall be calculated as gross sales revenue minus returns, discounts and bad debt. Fifty percent (50%) of any Digital Sales Bonus will be paid out within sixty (60) days after the close of the fiscal year used to calculate the bonus. The remaining fifty percent (50%) of the Digital Sales Bonus shall be paid within sixty (60) days after the close of the following fiscal year. You must be an active employee of Barnes & Noble.com in good standing at the time the payments are made for that portion of the bonus to be considered earned and to receive each respective payment.

Page 3 – DANIEL A. GILBERT



Special Payment:		You will be paid a one-time payment of $150,000, less deductions for applicable taxes. This payment will be made on the first payroll date of the month after your employment commences with the Company. If you voluntarily resign without Good Reason or are terminated for Cause (both as defined below) within twelve (12) months of your Start Date, you agree that you are obligated to reimburse the Company in the amount of the net after-tax portion of this Special Payment which you actually received, and that you will reimburse the Company promptly.

Restricted Stock Grant:		On the first business day of the month following the month in which your employment with the Company commences, you shall be granted 100,000 shares of restricted stock of Barnes & Noble, Inc. in accordance with the Company’s 2009 Incentive Plan vesting in four equal annual installments on the first through fourth anniversaries of the date of grant.

Vacation:		You will be eligible for 20 days of Company-paid vacation time annually after completion of six months of continuous service.

Severance:		If your employment is terminated (other than for Cause (as defined below)) or you resign for Good Reason (as defined below), you will receive severance as set out below provided that you execute a release in the form attached as Attachment 1.

		(i) If your employment is terrninated without Cause or you resign with Good Reason within the first twelve (12) months of your Start Date, you will receive severance equal to (i) one year of Annual Base Salary and (ii) $450,000. In addition, the first 25,000 shares of your Restricted Stock Grant shall automatically vest.

		(ii) If your employment is terminated without Cause or you resign with Good Reason after the first twelve (12) months of your Start Date but prior to the end of the first twenty-four (24) months of your Start Date, you will receive severance equal to (i) one year of Annual Base Salary and (ii) $450,000.

		(iii) If your employment is terminated without Cause or you resign with Good Reason after the first twenty-four (24) months of your Start Date, you will receive severance equal to one year of Annual Base Salary.

Page 4 – DANIEL A. GILBERT



		(iv) In addition to the benefits described above, in each of the instances described in paragraphs (i), (ii) and (iii), you will also be provided with the opportunity to elect the health care (medical and dental) benefits coverage that then current employees at your level receive, for you and your dependents, at the same rate paid by then current employees at your level, for up to 12 months after your employment termination, and the Company will pay the excess (if any) premiums over such rate for such 12 month period. Any period for which you elect these benefits will count toward your overall COBRA eligibility.

		Subject to the Company’s receipt of the executed release and any restrictions set forth in paragraph 14 of the Employment Agreement, all severance will be paid in equal periodic installments on the first day of each calendar month over a period of 12 calendar months commencing with the first calendar month beginning on or next following the 30^th day after the date your employment is terminated by the Company (the “Severance Period”). If the executed release is not received by the Company within 30 days after your employment termination, you will forfeit your right to severance. The periodic installments of severance shall constitute a series of separate payments for purposes of Section 409A of the Internal Revenue Code. If your employment is terminated for Cause or voluntarily by you without Good Reason, you will not receive any severance and will receive only your Annual Base Salary earned through your termination date and accrued unused vacation pay earned through your termination date.

For purposes of this letter, “Cause” means (A) your engaging in intentional misconduct or gross negligence which is injurious to Company; (B) your indictment or conviction by a court of competent jurisdiction with respect to any felony or other crime or violation of law involving fraud or dishonesty (with the exception of misconduct based in good faith on the advice of professional consultants, such as attorneys and accountants), or your entry of a plea of nolo contendere with respect to any felony involving fraud or dishonesty (with the exception of misconduct based in good faith on the advice of professional consultants, such as attorneys and accountants); (C) any gross negligence, intentional acts or intentional omissions by you, as determined by the Company in its reasonable discretion and judgment, that constitute, in any material respect, fraud, dishonesty, embezzlement or misappropriation in connection with the performance of the duties and responsibilities of your employment hereunder; (D) engaging in any act of intentional misconduct or moral turpitude, as determined by the Company, reasonably likely to adversely affect the Company or its business; (E) abuse of or dependency on alcohol or

Page 5 – DANIEL A. GILBERT

drugs (illicit or otherwise) which adversely affects job performance; (F) willful failure or refusal by you to properly perform (as determined by the Company in its reasonable discretion and judgment) the duties, responsibilities or obligations of your employment in any material respect for reasons other than Disability or authorized leave, or to properly perform or follow (as determined by the Company in its reasonable discretion and judgment) any lawful direction by the Company in any material respect; or (G) material breach of this Agreement or of any other duty to, written policy of, or agreement with the Company.

For purposes of this letter, “Good Reason” shall mean the occurrence of one or more of the following events without your written consent: (A) there shall have been a material diminution of your title, duties or responsibilities, (B) there shall have been a material reduction in the Annual Base Salary you receive from the Company; (C) your office shall be relocated to a location more than 50 miles from Palo Alto, California; or (D) the Company fails to make any material payments to you as required by this Agreement.

You will only be deemed to terminate employment for Good Reason if (A) you provide the Company with written notice of Good Reason within a period not to exceed 90 days after you first become aware of the existence of the condition alleged to give rise to Good Reason, (B) the Company fails to remedy the condition within 30 days of such notice, and (C) your termination is within six (6) months following your first awareness of the existence of the condition alleged to give rise to Good Reason.

You have represented, and hereby confirm that your employment by the Company and your performance of any and all terms and duties of your employment by the Company will not breach any employment agreement or any other binding obligations with any current or former employer or any other party.

This offer is contingent upon verification of your identity and your ability to legally work for the Company in the United States. In addition, this offer is contingent upon satisfactory references and verification of your employment record, academic credentials and any certifications represented on your employment application and/or resume. This offer is also contingent upon your execution of the attached Agreement Regarding Certain Terms and Conditions of Employment (the “Employment Agreement”).

If you wish to accept this offer of employment as set forth above, please review, sign and return the enclosed Employment Agreement along with an original signed copy (one of the two mailed to you) of this offer letter by March 25, 2010. If you do not contact me by March 25, 2010, the Company’s offer of employment shall be deemed to be rescinded and without effect. If you have any questions, please call me at your convenience.

Page 6 – DANIEL A. GILBERT

I am delighted with your interest in BN.com and am eager to have you join our team. The challenge, opportunity, and rewards that lie ahead for BN.com are unique and incredibly exciting. I look forward to hearing from you after you have had a chance to review this offer.

Very truly yours,

/s/ John J. Heaney

John J. Heaney.

Vice President, Human Resources

BN.com

ACCEPTED AND AGREED:

/s/ Dan Gilbert

Dan Gilbert

Date: 3/23/2010


Barnes & Noble, Inc., the parent company of the Company, hereby unconditionally guarantees the payment and performance of all of the obligations of the Company hereunder. Barnes & Noble, Inc.

By		/s/ Michelle Smith
Title		VP, Human Resources

AGREEMENT REGARDING CERTAIN TERMS AND CONDITIONS OF EMPLOYMENT

This agreement is by and between Barnes & Noble.com, llc. (“Company”) and Daniel A. Gilbert (“Employee”). This agreement incorporates by reference the terms of Employee’s March 22, 2010, offer letter and collectively refers to these two documents as “the Agreement.” In consideration of the Employee’s being hired by the Company, the Company’s providing Employee access to Confidential Information that is necessary to perform his/her work, the payment by the Company of Employee’s compensation and for other good and valuable consideration, the Company and Employee agree as follows:

At-Will Employment

Duty of Loyalty

2. Employee acknowledges that he/she owes a duty of loyalty to the Company, which Employee acknowledges means, among other things, that while an employee of the Company Employee must act on the best interests of the Company. Employee therefore agrees that, without limitation, (a) he/she shall devote his/her best efforts and undivided business time, effort and loyalty to the business of the Company; (b) he/she shall discharge all of his/her duties and responsibilities that are or may be assigned to him by the Company, conscientiously, in good faith and to the best of his/her ability, giving to the Company the full benefit of his/her knowledge, expertise, skill and judgment; (c) he/she shall not engage in any illegal or unethical conduct in the performance of his/her duties and responsibilities; and (d) he/she shall not engage in any conduct that creates an actual, potential or apparent conflict between Employee’s personal interests and the Company’s interest, or which otherwise materially adversely affect Employee’s judgment or ability to act in the Company’s best interests.

Confidential Information and Company Property

Page 2, GILBERT

(continued) Confidential Information and Company Property

4. Employee agrees and acknowledges that “Confidential Information” shall mean all non-public information, whether or not created or maintained in written form, which constitutes, relates or refers to any and all of the following: financial data, strategic business plans, product development information (or other proprietary product data), marketing plans, processes, inventions, devices and all other non-public, proprietary or confidential information of, concerning or provided by or on behalf of the Company, its companies, entities, subsidiaries, licenses or clients, including without limitation, any technical, economic, financial, marketing or other information which is not common knowledge among competitors or other companies who may like to possess such confidential information or may find it useful. Specifically, without limitation, Confidential Information shall also refer to all client information, including for example, client lists, the identity of any contact persons and all sales information. All of the foregoing is merely illustrative and Confidential Information is not limited to those illustrations.

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(continued) Confidential Information and Company Property

9. Employee understands that the Company, from time to time, may have entered into agreements with other parties which imposed obligations or restrictions on the Company regarding Inventions made during the course of the work under such agreements or regarding the confidential nature of such works, or otherwise received from third parties confidential or proprietary information (“Third Party Information”) subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. Employee acknowledges and agrees to be bound by all such obligations and restrictions, will hold Third Party Information in the strictest confidence, will not disclose (to anyone other than Company personnel who need to know such information in connection with then work for the Company) or use Third Party Information unless expressly authorized by the Company in writing, and will otherwise take all action necessary to discharge the obligations to the Company arising in connection with such Third Party Information.

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(continued) Confidential Information and Company Property

11. Employee acknowledges and represents that his/her performance of all the terms of this Agreement and his/her duties as an employee of the Company will hot breach any invention, assignment or proprietary information or similar agreement with any former employer or other party. Employee further acknowledges and represents that Employee will not bring to the Company or use in the performance of his/her duties for the Company any documents or materials of any kind of a former employer or other person or entity, that Employee is not legally authorized or permitted to use and/or that are not generally available to the public.

12. Employee acknowledges and agrees that the agreements and restrictions contained in the Agreement are reasonable and necessary for the protection of the Company and its business, and are not limited in time to the duration of Employee’s employment but extend after and shall survive the termination of his/her employment, irrespective of the reason for its termination. The Employee further acknowledges and agrees that the Company shall be entitled to an injunction or other form of equitable relief to prevent or terminate any violation of the foregoing restrictions. Any such relief shall be in addition to and not in lieu of any other remedy available to the Company, whether at law or in equity.

Non-Competition and Non-Solicitation

14. (a) During his/her employment by the Company, and during any applicable Severance Period, Employee agrees that, without the prior written consent of the Company he/she will not, directly or indirectly, either as principal, manager, agent, consultant, officer, stockholder, partner, investor, lender or employee or in any other capacity, carry on, be engaged in or have any financial interest in, any business which is in competition with the business of the Company and/or its members, officers, companies, entities, subsidiaries, successors or licensees.

(b) During his/her employment by the Company, and for twelve (12) months thereafter, Employee agrees that, without the prior written consent of the Company he/she shall not, on his/her own behalf or on behalf of any person or company, directly or indirectly, communicate with any person who has been employed by the Company or any of its companies, entities, subsidiaries, successors, agents or licensees at any time during the twelve (12) months immediately preceding such communication, in order to encourage, solicit or suggest that such person terminate his/her employment with the Company, or to solicit or offer employment to such person.

(c) If Employee breaches any terms or provisions of this paragraph 14 the Company may, in addition to any other remedies that the Company may have for any such breach, immediately terminate the payment of any severance then being paid to the Employee pursuant to this Agreement. A termination of severance payments pursuant to this paragraph 14, shall not constitute a breach of the severance agreement and release.

Page 5, GILBERT

(continued) Confidential Information and Company Property

15. For purposes of the foregoing paragraph, a business shall be deemed to be in competition with the Company if it is engaged in the sale of books, eBooks and/or eBook readers and/or related merchandise, including, without limitation, Amazon.com, Inc., Books-A-Million, Inc., Borders Group Inc., and any similar company or any subsidiary or affiliate of the foregoing entities. Nothing in the foregoing paragraph shall be construed so as to preclude Employee from investing directly or indirectly in any publicly traded equity securities, provided that no such investment in any class of securities may exceed 5% of the outstanding securities of such class.

16. Employee and the Company agree that the terms of paragraph 14 constitute a reasonable covenant under the circumstances and that Employee has received adequate consideration for his/her agreement to such terms such as, without limitation, the Company’s agreement to the terms of this Agreement Employee agrees that any breach of the covenants contained in paragraph 14 would irreparably injure the Company. Accordingly, Employee agrees that the Company may, in addition to pursuing any other remedies it may have at law or in equity, obtain an injunction against Employee from any court having jurisdiction over such application for an injunction, restraining any further violation of this Agreement by Employee.

Arbitration

(a) Any dispute, controversy or claim between Employee and the Company concerning any “Claims”, as further defined below, shall be submitted to and finally determined by binding arbitration to be held in San Francisco, California before one arbitrator according to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, and judgment upon any award rendered may be entered in any court having jurisdiction thereof. For purposes of the arbitration of any Claim hereunder and the entry of judgment upon any award, Employee and the Company hereby consent to personal jurisdiction in the State of California. (b) The Claims subject to this arbitration provision are and shall be those claims concerning (i) any term, condition, covenant, representation or acknowledgement contained in this Agreement; or (ii) any other aspect of Employee’s employment or the termination thereof, including without limitation, any and all actual or potential claims under any applicable federal, state, local or other statues, orders, laws, ordinances, regulations or the like, or case law, that relate to employment or employment practices and/or, specifically, that prohibit discrimination based upon age, race, religion, sex, national origin, disability or any other unlawful bases, including without limitation, the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Americans with Disabilities Act of 1990, as amended, the Family Medical Leave Act of 1993, as amended, the Employee Retirement Income Security Act of 1990, as amended, the Fair Labor Standards Act, as amended, the Vietnam Era Veterans’ Readjustment Assistance Act, as amended, the Equal Pay Act, as amended, and any similar applicable statues, orders, laws, ordinances, regulations or the like,

Page 6, GILBERT

(continued) Arbitration

or case law, of any State. The parties further agree that the Claims subject to arbitration shall exclude any claims required by an applicable Federal, State, local or other statute to be submitted to another forum (for example, a workers compensation claim or a claim for unemployment insurance benefits).

(c) Notwithstanding the provisions of paragraphs 17(a) and (b), the Parties may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other interim or conservatory relief, as necessary, without breach of this arbitration agreement and without abridgment of the powers of the arbitrator, but that the arbitrator shall otherwise have authority to grant equitable or injunctive relief. The Company agrees to pay all costs of the arbitrator and the arbitration. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. The arbitrator may award the prevailing party in any such arbitration attorneys’ fees and costs incurred in connection therewith, except for those the Company shall bear, as set forth above.

(d) The Parties have read and understand this paragraph 17, which discusses arbitration. The Parties understand that by signing this Agreement, the Parties agree to submit any future claims arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof to binding arbitration to the extent permitted by law. The Parties specifically acknowledge that they understand that the right to the determination and/or trial of any Claims in court before a judge or a jury is a valuable right, and that by signing this Agreement they hereby knowingly and voluntarily waive their right to assert any Claims in any court of competent jurisdiction and they hereby knowingly and voluntarily waive the right to a determination and/or trial before a judge or a jury.

Applicable Law

17. This Agreement, and any arbitration hereunder, shall in all respects be subject to, governed by and enforced and construed pursuant to and in accordance with the laws of the State of New York, without regard to and excluding New York choice of law rules and except that the interpretation and enforceability of this arbitration clause shall be governed by the Federal Arbitration Act.

Successors

18. This Agreement shall inure to the benefit of the Company, its subsidiaries and affiliates, and the successors and assigns of each of them.

Amendment

19. No term, condition, covenant, representation or acknowledgement contained in this Agreement may be amended or modified unless in writing signed by both parties, and no course of conduct shall be deemed a waiver of its provisions.

Page 7, GILBERT

Severability

20. If any part of this Agreement is found to be void, illegal or invalid for any reason whatsoever, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void, illegal or invalid parts were deleted. If any provision of this Agreement is limited in any respect, it shall nevertheless be enforced to the extent that it is held to be enforceable.

Complete Agreement

21. This Agreement constitutes the entire Agreement with respect to the subject matter hereof and cancels and supersedes any and all other previous agreements with respect to the subject matter hereof. The terms of this Agreement shall survive the termination of and any change in Employee’s position with the Company.

Employee Review of Agreement

22. Employee understands that he/she has the right to consult an attorney prior to the signing of this Agreement, and acknowledges that his/her signature below signifies that he/she has fully reviewed and understands all of the terms of this Agreement and that he/she has agreed to those terms.



/s/ Daniel A. Gilbert		3/23/2010
Daniel A. Gilbert		Date

Barnes & Noble.com, llc

By:	/s/ John J. Heaney	3/22/2010
	Name: John J. Heaney	Date
	Title: Vice President, Human Resources

Barnes & Noble, Inc., the parent company of the Company, hereby unconditionally guarantees the payment and performance of all of the obligations of the Company hereunder.

Barnes & Noble, Inc.

By:	/s/ Michelle Smith
Title	VP, Human Resources

Attachment 1

GENERAL RELEASE AND WAIVER

l. [Name] (“Employee”) hereby acknowledges and agrees that Employee’s employment with barnesandnoble.com llc (the “Company”) terminated on , 20 (the “Termination Date”).

2. Employee acknowledges and agrees that Employee’s executing this General Release and Waiver (“Release”) is a condition precedent to the Company’s obligation to pay (and the Employee’s right to retain) the payments and benefits set forth in Section entitled “Severance” of the employment letter agreement, dated as of March [•], 2010, between Employee and the Company (such agreement referred to herein as the “Employment Agreement” and such payments and benefits collectively referred to herein as the “Separation Benefit”), that the Separation Benefit is adequate consideration for this Release, and that any monetary or other benefits that, prior to the execution of this Release, Employee may have earned or accrued, or to which Employee may have been entitled, have been paid or such payments or benefits have been released, waived or settled by Releasor (as defined below) except as expressly provided in this Release.

3. (a) THIS SECTION PROVIDES A COMPLETE RELEASE AND WAIVER OF ALL EXISTING AND POTENTIAL CLAIMS EMPLOYEE MAY HAVE AGAINST EVERY PERSON AND ENTITY INCLUDED WITHIN THE DESCRIPTION BELOW OF “RELEASEE.” BEFORE EMPLOYEE SIGNS THIS RELEASE, EMPLOYEE MUST READ THIS SECTION CAREFULLY, AND MAKE SURE THAT EMPLOYEE UNDERSTANDS IT FULLY.

(b) In consideration of Employee’s receipt and acceptance of the Separation Benefit from the Company, and on behalf of the Company and each Releasee (as defined below), Employee, on Employee’s behalf and on behalf of Employee’s heirs, executors, administrators, successors and assigns (collectively, “Releasor”), hereby irrevocably, unconditionally and generally releases the Company, its current and former officers, directors, shareholders, trustees, parents, members, managers, affiliates, subsidiaries, branches, divisions, benefit plans, agents, attorneys, advisors, counselors and employees, and the current and former officers, directors, shareholders, agents, attorneys, advisors, counselors and employees of any such parent, affiliate, subsidiary, branch or division of the Company and the heirs, executors, administrators, receivers, successors and assigns of all of the foregoing (each, a “Releasee”), from or in connection with, and hereby waives and/or settles, except as provided in Section 3 (c), any and all actions, causes of action, suits, debts, dues, sums of money, accounts, controversies, agreements, promises, damages, judgments, executions, or any liability, claims or demands, known or unknown and of any nature whatsoever, whether or not related to employment, and which Releasor ever had, now has or hereafter can, shall or may have as of the date of this Release, including, without limitation, (i) any rights and/or claims arising under any contract, express or implied, written or oral, including, without limitation, the Employment Agreement; (ii) any rights and/or claims arising under any applicable foreign, Federal, state, local or other statutes, orders, laws, ordinances, regulations or the like, or case law, that relate to employment or employment practices, including, without limitation, family and medical, and/or, specifically, that prohibit discrimination based upon age, race, religion, sex, color, creed, national origin, sexual orientation, marital status, disability, medical condition, pregnancy, veteran status or any other unlawful bases, including, without limitation, the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Americans with Disabilities Act of 1990, as amended, the Family Medical Leave Act of 1993, as amended, the Employee Retirement

Income Security Act of 1974, as amended, the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as amended, the Worker Adjustment and Retraining Notification Act of 1988, as amended, and any similar applicable statutes, orders, laws, ordinances, regulations or the like, or case law, of the State of New York and any State in which any Releasee is subject to jurisdiction, or any political subdivision thereof, including, without limitation, the New York State Human Rights Law, the New York State Labor Law and the New York City Human Rights Law, and all applicable rules and regulations promulgated pursuant to or concerning any of the foregoing statutes, orders, laws, ordinances, regulations or the like; (iii) any waivable rights and/or claims relating to wages and hours, including under state or local labor or wage payment laws; (iv) any rights and/or claims to benefits that Employee may have or become entitled to receive under any severance, termination, change of control, bonus or similar policy, plan, program, agreement or similar or related arrangements, including, without limitation, any offer letter, letter agreement or employment agreement between Employee and the Company; (v) any rights and/or claims that Employee may have to receive any equity in the Company (whether restricted or unrestricted) in the future; and (vi) and any rights and/or Claims for attorneys’ fees. Employee agrees not to challenge or contest the reasonableness, validity or enforceability of this Release.

(c) Notwithstanding the foregoing, Employee does not release any Releasee from any of the following rights and/or claims: (i) any rights and/or claims Employee may have that arise after the date Employee signs this Release; (ii) any rights and/or claims that by law cannot be waived by private agreement; (iii) Employee’s right to file a charge with or participate in any investigation or proceeding conducted by the U.S. Equal Employment Opportunity Commission (“EEOC”) or similar government agency; provided that even though Employee can file a charge or participate in an investigation or proceeding conducted by the EEOC or similar government agency, by executing this Release, Employee is waiving his ability to obtain relief of any kind from any Releasee to the extent permitted by law; (iv) Employee’s non-forfeitable rights to accrued benefits (within the meaning of Sections 203 and 204 of ERISA); (v) any rights and/or claims for indemnification (whether under agreement, charter document or by operation of law) as a current or former director, member, officer, employee or agent, or to insurance coverage under any directors’ and officers’ personal liability insurance or fiduciary insurance policy; and (vi) any rights and/or claims to enforce the Employment Agreement in accordance with its terms.

4. Employee represents and warrants that Employee has not filed or commenced any complaints, claims, actions or proceedings of any kind against any Releasee with any Federal, state or local court or any administrative, regulatory or arbitration agency or body. Employee hereby waives any right to, and agrees not to, seek reinstatement or employment of any kind with any Releasee and, without waiver by any Releasee of the foregoing, the existence of this Release shall be a valid, nondiscriminatory basis for rejecting any such application or, in the event Employee obtains such employment, for terminating such employment. This Release and the Separation Benefit are not intended to be, shall not be construed as and are not, an admission or concession by any Releasee of any wrongdoing or illegal or actionable acts or omissions.

5. (a) Employee hereby represents and agrees that Employee shall keep confidential and not disclose orally or in writing, to any person, except as may be required by law, any and all information concerning the existence or terms of this Release and the amount of any payments made hereunder. Employee further agrees that, except as shall be required by law, Employee shall keep confidential and not disclose orally or in writing, directly or indirectly, to any person (except Employee’s immediate family, attorneys and accountant), any and all information concerning any facts, claims or assertions relating or referring to treatment Employee received by or on behalf of any Releasee through the date of this Release.

(b) If Employee is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any information covered by Section 5(a), Employee shall promptly notify the Company of such request or requirement so that the Company may seek to avoid or minimize the required disclosure and/or to obtain an appropriate protective order or other appropriate relief to ensure that any information so disclosed is maintained in confidence to the maximum extent possible by the agency or other person receiving the disclosure, or, in the discretion of the Company, to waive compliance with the provisions of this Release. Employee shall use reasonable efforts, in cooperation with the Company or otherwise, to avoid or minimize the required disclosure and/or to obtain such protective order or other relief. If, in the absence of a protective order or the receipt of a waiver hereunder, Employee is compelled to disclose such information or else stand liable for contempt or suffer other sanction, censure or penalty, Employee shall disclose only so much of such information to the party compelling disclosure as he believes in good faith on the basis of advice of counsel is required by law, and Employee shall give the Company prior notice of such information he believes he is required to disclose.

6.(a) Employee shall not make, either directly or by or through another person, any oral or written negative, disparaging or adverse statements or representations of or concerning any Releasee. The executive officers of the Company shall not make any oral or written disparaging statements regarding Employee.

(b) Without limitation to the survival of any other terms of the Employment Agreement subsequent to the end of Employee’s employment, the expiration or termination of the Employment Agreement, and/or the execution and effectiveness of this Release, Employee and the Company expressly acknowledge that the terms of Sections 4 and 5 of the Employment Agreement survive and shall be in full force and effect as provided in the Employment Agreement.

7. The covenants, representations and acknowledgments made by Employee in this Release shall continue to have full force and effect after the execution and effectiveness of this Release and the delivery of the Separation Benefit, and this Release shall inure to the benefit of each Releasee, and the successors and assigns of each of them, to the extent necessary to preserve the intended benefits of such provisions. If any section of this Release is determined to be void, voidable or unenforceable, it shall have no effect on the remainder of this Release, which shall remain in full force and effect, and the provisions so held invalid or unenforceable shall be deemed modified as to give such provisions the maximum effect permitted by applicable law. Without limitation to Section 3.8 of the Employment Agreement, the Company shall be excused and released from any obligation to make payment of the Separation Benefit, and Employee shall be obligated to return to the Company the Separation Benefit, in the event that Employee is found to have (a) made a material misstatement in any term, condition, covenant, representation or acknowledgment in this Release, or (b) Employee is found to have committed or commits a material breach of any term, condition or covenant in this Release.

8. This Release and the Employment Agreement constitute the sole and complete agreement between the parties with respect to the matters set forth therein and supersedes all prior agreements, understandings and arrangements, oral or written, between Employee and the Company with respect to the subject matter thereof. This Release may not be amended or modified except by an instrument or instruments in writing signed by the party against whom enforcement of any such modification or amendment is sought. Either party may, by an instrument in writing, waive compliance by the other party with any term or provision of this Release to be performed or complied with by such other party.

9. With respect to any claims or disputes under or in connection with this Release or any claims released under Section 3 of this Release, Employee and the Company hereby acknowledge and agree that Sections 6.7 and 6.9 of the Employment Agreement shall govern. Employee acknowledges that a breach or threatened breach of the provisions of this Release may give rise to losses or damages for which the Company cannot be reasonably or adequately compensated in an action at law, and that such violation may result in irreparable and continuing harm to the Company. Accordingly, Employee agrees that, in addition to any other remedy that the Company may have at law or in equity, the Company shall be entitled to seek equitable relief, including, without limitation, injunction and specific performance and Employee hereby waives any requirements for security or posting of any bond in connection with such relief. No specification in this Release of any particular remedy shall be construed as a waiver or prohibition of any other remedies (including claims for damages) in the event of a breach or threatened breach of this Release.

10. Employee agrees and acknowledges that (a) Employee has had an adequate opportunity to review this Release and all of its terms, (b) Employee understands all of the terms of this Release, which are fair, reasonable and are not the result of any fraud, duress, coercion, pressure or undue influence exercised by or on behalf of any Releasee and (c) Employee has agreed to and/or entered into this Release and all of the terms hereof, knowingly, freely and voluntarily.

11. By executing this Release, Releasor acknowledges that (a) Employee has been advised by the Company to consult with an attorney before executing this Release; (b) Employee was provided adequate time (i.e., at least 21 days) to review this Release and to consider whether to sign this Release and (c) Employee has been advised that Employee has 7 days following execution to revoke this Release (“Revocation Period”). Notwithstanding anything to the contrary contained herein or in the Employment Agreement, this Release shall not be effective or enforceable, and the Separation Benefit is not payable and shall not be delivered or paid by the Company, until the Revocation Period has expired and provided that Employee has not revoked this Release. Employee agrees that any revocation shall be made in writing and delivered to _, Vice President, Human Resources, Barnes & Noble.com, 76 Ninth Avenue, NY, NY 10011. Employee acknowledges that revocation of this Release shall result in the Company’s not having an obligation to pay the Separation Benefit.

Signature: Date:

[Name]

EX-10.5 6 d400022dex105.htm LETTER AGREEMENT - MAX J. ROBERTS Letter Agreement - Max J. Roberts

EXHIBIT 10.5

LOGO

September 30, 2009

Max J. Roberts

[Address on file with the Company]

Dear Mr. Roberts:

This letter agreement (the “Agreement”) is intended to set forth our mutual understanding regarding your employment as President and Chief Operating Officer of Barnes & Noble College Booksellers, LLC, or successor thereto, a wholly-owned subsidiary of Barnes & Noble, Inc. Reference herein to the “Company” shall mean Barnes & Noble College Booksellers, LLC, or successor thereto, and/or Barnes & Noble, Inc. Reference herein to “you” or the “Executive” shall refer to Max J. Roberts.

Accordingly, we are pleased to agree as follows:

1. Employment; Duties. You agree to be President and Chief Operating Officer of Barnes & Noble College Booksellers, LLC, or successor thereto, for the term of this Agreement. In this capacity, you shall perform such duties and have such responsibilities as are typically associated with the office of President and Chief Operating Officer, including such duties and responsibilities as are prescribed by the Board of Directors of Barnes & Noble, Inc. (the “Board”) consistent with the office of President and Chief Operating Officer of Barnes & Noble College Booksellers, LLC, or successor thereto. While you are the Company’s employee, you agree to devote your full business time and attention to the performance of your duties and responsibilities hereunder.

2. Term. (a) Unless terminated earlier in accordance with the provisions set forth below, the initial term of this Agreement will be for a period beginning on September 30, 2009 (the “Effective Date”) and ending on the second anniversary of the Effective Date (“Initial Term”). At the expiration (but not earlier termination) of the Initial Term, and any subsequent “Renewal Term” (as defined below), the term of this Agreement shall automatically renew for additional periods of one year (each a “Renewal Term”), unless either party has given the other party written notice of non-renewal at least three (3) months prior to the expiration date of the Initial or Renewal Term, as applicable. In the event that either party has given written notice of non-renewal, and your employment with the Company continues after the expiration of the Initial Term or any Renewal Term, such post-expiration employment shall be “at-will” and either party may terminate such employment with or without notice and for any reason or no reason.

(b) This Agreement shall terminate upon your death and may be terminated by the Company by written notice to you following your Disability (as defined below). This Agreement may also be terminated by the Company immediately

122 Fifth Avenue, New York, NY 10011 (212) 633-3300

for Cause (as defined below) or upon two weeks written notice to you for any other reason. This Agreement may also be terminated by you upon written notice to the Company, for Good Reason (as defined below).

(i) “Cause” means (A) Executive’s engaging in intentional misconduct or gross negligence which is injurious to Company; (B) your indictment or conviction with respect to any felony or other crime or violation of law involving fraud or dishonesty, or your entry of a plea of nolo contendere with respect to any felony involving fraud or dishonesty; (C) any gross negligence, intentional acts or intentional omissions by you, as determined by a majority vote of the Board of Directors of Company in its reasonable discretion and judgment, that constitute fraud, dishonesty, embezzlement or misappropriation in connection with the performance of the duties and responsibilities of your employment hereunder; (D) engaging in any act of intentional misconduct or moral turpitude, as determined by a majority vote of the Board of Directors of Company, reasonably likely to adversely affect the Company or its business or reputation; (E) abuse of or dependency on alcohol or drugs (illicit or otherwise) which adversely affects job performance; (F) willful failure or refusal by you to properly perform (as determined by the Company in its reasonable discretion and judgment) the duties, responsibilities or obligations of your employment for reasons other than Disability or authorized leave, or to properly perform or follow (as determined by the Company in its reasonable discretion and judgment) any lawful direction by the Company; or (G) material breach of this Agreement or of any other duty to, written policy of, or agreement with the Company.

(ii) “Disability” shall mean a written determination by a majority of three physicians mutually agreeable to the Company and you (or, in the event of your total physical or mental disability, your legal representative) that you are physically or mentally unable to perform your duties of President and Chief Operating Officer of Barnes & Noble College Booksellers, LLC, or successor thereto, under this Agreement and that such disability can reasonably be expected to continue for a period of six consecutive months or for shorter periods aggregating 180 days in any 12-month period.

(iii) “Good Reason” shall mean the occurrence of one or more of the following events: (A) there shall have been a material diminution of your duties; (B) there shall have been a material diminution in the authority, duties, or responsibilities of the supervisor to whom you are required to report; (C) there shall have been a material reduction in the Annual Base Salary (as defined below) you receive from the Company; or (D) the principal executive offices of the Company shall be relocated to a location more than 50 miles from both New York City and Basking Ridge, New Jersey. The parties acknowledge that the foregoing definitions and any early termination by you for Good Reason shall be effective only to the extent that such definitions and such early termination satisfy the requirements of Section 409A of the Internal Revenue Code of 1986 as amended, and the regulations and other guidance promulgated thereunder (“Code”).

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(iv) You will only be deemed to terminate employment for Good Reason if (A) you provide the Company with written notice of Good Reason within a period not to exceed 90 days after the initial existence of the condition alleged to give rise to Good Reason, (B) the Company fails to remedy the condition within 30 days of such notice, and (C) your termination is within six (6) months following the initial existence of the condition alleged to give rise to Good Reason.

3. Compensation.

3.1. Annual Base Salary. The Company will pay you, for all services you perform hereunder, an annual base salary of seven hundred thousand ($700,000), or such higher amount as the Compensation Committee of the Board (the “Compensation Committee”) may determine, payable in accordance with the Company’s payroll schedule applicable to executive officers of the Company (“Annual Base Salary”).

3.2. Bonus Compensation. In addition to your above-mentioned Annual Base Salary, you shall be eligible to participate in the Company’s bonus program as determined by the Compensation Committee in its sole discretion. The target level annual bonus payment shall be at least 100% of your Annual Base Salary and shall be based upon achievement of measurable objectives as defined by the Company each year.

3.3. Expenses; Car Allowance. During the term of your employment, we will: (a) continue to pay your current car lease, and thereafter pay you a car allowance per month of $1,500, or such higher amount as may be determined by the Compensation Committee; and (b) reimburse you for all expenses incurred by you in the performance of your duties and responsibilities under this Agreement, including, without limitation, entertainment and travel expenses, in accordance with the policies and procedures established by the Compensation Committee (“Eligible Expenses”). All such reimbursements not already paid in accordance with Company policy shall be paid not later than the last day of the calendar year following the calendar year in which the Eligible Expenses were incurred.

3.4. Employee Benefits. During the Initial Term and any Renewal Term, you will be eligible to participate in and receive any benefits to which you are entitled under employee benefit plans which the Company provides for all employees.

3.5. Severance. In the event of the early termination of the Initial Term or any Renewal Term of this Agreement by the Company without Cause or by you with Good Reason, the Company will pay you an amount equal to your then Annual Base Salary, less all applicable withholding and other applicable taxes and deductions (“Severance Amount”), provided that (a) you execute and deliver to the Company a release of all claims against the Company substantially in the form annexed hereto as Exhibit A (“Release”) and (b) you have not materially breached as of the date of such early termination any provisions of this Agreement and do not materially breach such provisions at any time during the period for which such payments are to be made. The Company’s obligation to make such payments will be cancelled upon the occurrence of any such material breach during the period in which such payments are to be made, you shall not receive any further severance payments under this paragraph, and you shall repay to the Company all prior severance payments under this paragraph within 30 days

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after demand therefore. The Severance Amount shall be paid in 12 approximately equal monthly installments, commencing upon the later of the first day of the month following the month in which early termination referred to in this paragraph occurs or the date the Release is returned and the Revocation Period (as defined in the Release) has expired. Notwithstanding anything in this paragraph to the contrary, (y) if a Release is not executed and delivered within 60 days of such early termination of employment, no severance payments under this Section 3.5 shall be paid and (z) if this 60 day period spans two calendar years, any Release returned in the first calendar year shall be deemed to be returned on the first day of the second calendar year. At all times, the right to all such monthly payments made under this Section 3.5 shall be treated as the right to a series of separate payments within the meaning of Section 409A of the Code. Notwithstanding the foregoing, in the event you are determined to be a “Specified Employee” as defined in Section 409A of the Code, such severance pay otherwise payable before the day that is six months following your termination of employment shall be delayed and paid on the first day of the seventh month following your termination of employment, but only to the extent necessary to prevent adverse tax consequences to you under Code Section 409A. Upon the expiration of the Initial Term or any Renewal Term of this Agreement, or upon the early termination of either such Term of this Agreement for Cause or by your death or Disability, or by your voluntary termination of your employment without Good Reason, you shall be entitled only to the payment of such installments of your Annual Base Salary that have been earned through the date of such expiration and/or early termination.

3.6. Restricted Stock. You shall be eligible to receive restricted stock of the Company under the terms of the Company’s 2009 Incentive Plan as, and if, determined by the Compensation Committee in its sole discretion. As the President and Chief Operating Officer of Barnes & Noble College Booksellers, LLC, or successor thereto, your target annual restricted stock grant will be 20% of your Annual Base Salary, subject to Compensation Committee approval.

3.7. Change of Control Payments. (a) If at any time during the Initial Term and any Renewal Term of this Agreement there is a Change of Control and (i) your employment is terminated by the Company without Cause or (ii) you voluntarily terminate your employment for Good Reason, in either case within the greater of two years following the Change of Control or the remainder of the Initial Term or any Renewal Term of this Agreement, as applicable, the Company shall pay you two times your then Annual Base Salary; provided that the maximum amount payable pursuant to this Section 3.7 plus any other change of control payments shall be the maximum amount payable to the Executive without triggering an excise tax under Section 280G of the Code, or any successor provision thereto. Any reduction hereunder in the amount payable upon a Change of Control shall be made to amounts which do not constitute deferred compensation within the meaning of Code Section 409A. The amount due under this Section 3.7 shall be paid to you in one lump sum within 30 days after the date your employment terminates. The amounts payable to you under this Section 3.7 shall be in lieu of any amounts payable to you under Section 3.5 above.

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(b) As used herein, “Change of Control” shall mean the occurrence of one or more of the following events:

(i) after the Effective Date hereof, any person, entity or “group” as identified in Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “1934 Act”), other than you or any of your affiliates or Leonard Riggio or any of his heirs or affiliates, becomes a beneficial owner (as such term is defined in Rule 13d-3 under the 1934 Act) directly or indirectly of securities representing 40% or more of the total number of votes that may be cast for the election of directors of the Company; or

(ii) within two years after a merger, consolidation, liquidation or sale of assets involving the Company, or a contested election of a Company director, or any combination of the foregoing, the individuals who were directors of the Company immediately prior thereto shall cease to constitute a majority of the Board; or

(iii) within two years after a tender offer or exchange offer for voting securities of the Company, the individuals who were directors of the Company immediately prior thereto shall cease to constitute a majority of the Board.

4. Non-Competition and Confidential Information.

4.1. Non-Competition. You agree that so long as you are employed by the Company and for period of two (2) years (the “Relevant Period”) after the expiration or termination for any reason of your employment under this Agreement or otherwise, you will not (a) employ or retain, or induce or cause any other person or entity to employ or retain, any person who is employed or retained by the Company or any of its subsidiaries or affiliates; and (b) engage, directly or indirectly, whether as principal or as agent, officer, director, employee, consultant, shareholder, or otherwise, alone or in association with any other person, corporation or other entity, in any Competing Business, as defined below. For purposes of this Agreement, the term “Competing Business” shall mean any person, corporation or other entity which principally sells or attempts to sell any products or services which are the same as or substantially similar to the products and services (i) sold by the Company or any of its subsidiaries at any time and from time to time during the last two (2) years prior to the expiration or termination for any reason of your employment under this Agreement or otherwise, or (ii) being developed by the Company or any of its subsidiaries at any time during the Initial Term or any Renewal Term of this Agreement or your employment with the Company otherwise, no matter what stage of development was achieved during such period and even if the idea was abandoned during such period.

4.2. Ownership of Other Securities. Nothing in paragraph 4.1 shall be construed as denying you the right to own securities of any corporation listed on a national securities exchange or quoted in the NASDAQ System to the extent of an aggregate of 5% of the outstanding shares of such securities.

4.3. Confidential Information. You shall use best efforts and diligence both during and after any employment with the Company, regardless of how, when or why such employment ends, to protect the confidential, trade secret and/or proprietary character of all Confidential Information and Trade Secret Information, as defined below. You shall not, directly or indirectly, use (for your benefit or for the benefit of any other person) or disclose any Confidential Information or Trade Secret Information, for so long

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as it shall remain proprietary or protectable, except as may be necessary for the performance of your duties for the Company. For purposes of this Agreement, “Confidential Information” shall mean all confidential information of the Company, regardless of the form or medium in which it is or was created, stored, reflected or preserved, information which is either developed by you (alone or with others) or to which you shall have had access during any employment with the Company. Confidential Information includes, but is not limited to, Trade Secret Information, and also includes information which is learned or acquired by the Company from others with whom the Company has a business relationship in which, and as a result of which, such information is revealed to the Company. For purposes of this Agreement, “Trade Secret Information” shall mean all information, regardless of the form or medium in which it is or was created, stored, reflected or preserved, that is not commonly known by or generally available to the public and that: (a) derives or creates economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. The Company’s Trade Secret Information may include, but is not limited to, all confidential information relating to or reflecting the Company’s research and development plans and activities; compilations of data; product plans; sales, marketing and business plans and strategies; pricing, price lists, pricing methodologies and profit margins; current and planned incentive, recognition and rewards programs and services; personnel; inventions, concepts, ideas, designs and formulae; current, past and prospective customer lists; current, past and anticipated customer needs, preferences and requirements; market studies; computer software and programs (including object code and source code); and computer and database technologies, systems, structures and architectures. You understand that Confidential and/or Trade Secret Information may or may not be labeled as such, and you will treat all information which appears to be Confidential and/or Trade Secret Information as confidential unless otherwise informed or authorized by the Company.

4.4. Inventions. Executive shall promptly disclose and provide to the Company, any original works of authorship, designs, formulas, processes, improvements, compositions of matter, computer software programs, data, information or databases, methods, procedures or other inventions, developments or improvements of any kind that Executive conceives, originates, develops, improves, modifies and/or creates, solely or jointly with others, during the period of Executive’s employment, or as a result of such employment (collectively, “Inventions”), and whether or not any such Inventions also may be included within “Confidential Information” or “Trade Secret Information” as defined under this Agreement, or are patentable, copyrightable or protectable as trade secrets. Executive acknowledges and agrees that the Company is and shall be the exclusive owner of all rights, title and interest in and to the Inventions and, specifically without limitation, that any copyrightable works prepared by Executive within the scope of your employment are “works for hire” under the Copyright Act, that such “works for hire” are Inventions and that the Company will be considered the author and owner of such copyrightable works. In the event that any Invention is deemed not to be a “work for hire”, or in the event that Executive should, by operation of law, be deemed to be entitled to retain any rights, title or interest in and to any Invention, Executive hereby irrevocably waives all rights, title and interest and assigns to the Company, without any further consideration and regardless of any use by the Company of any such Inventions,

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all rights, title and interest, if any, in and to such Invention. Executive agrees that the Company, as the owner of all Inventions, has the full and complete right to prepare and create derivative works based upon the Inventions and to use, reproduce, publish, print, copy, market, advertise, distribute, transfer, sell, publicly perform and publicly display, and otherwise exploit by all means now known or later developed, such Inventions and derivative works anywhere throughout the world and at any time during or after Executive’s employment hereunder or otherwise.

4.5. Reasonableness. You acknowledge that the foregoing limitations and obligations are reasonable and properly required by the Company and that in the event that any such limitations are found by a court to be unreasonable and unenforceable, you will submit to such limitations and/or obligations in such form as such court shall determine.

4.6. Return of Information. You shall promptly deliver to the Company, upon the expiration or termination for any reason of your employment under this Agreement or otherwise, or at any other time at the Company’s request, without retaining any copies, all documents, information and other material in your possession or control containing, reflecting and/or relating, directly or indirectly, to any Confidential Information and/or Trade Secret Information.

4.7. Severability. If any of the restrictions in paragraph 4 should for any reason whatsoever be declared invalid, the validity or enforceability of the remainder of this Agreement will not be adversely affected thereby.

4.8. Equitable Relief. You acknowledge that your services to the Company are of a unique character which give them a special value to the Company. You further recognize that any violation of the restrictions in paragraph 4 may give rise to losses or damages for which the Company cannot be reasonably or adequately compensated in an action at law and that such violation may result in irreparable and continuing harm to the Company. Accordingly, you agree that, in addition to any other remedy which the Company may have at law or in equity, the Company shall be entitled to injunctive relief to restrain any violation by you of the restrictions in paragraph 4.

5. Miscellaneous.

5.1. Entire Agreement. This Agreement constitutes the entire agreement between you and the Company with respect to the terms and conditions of your employment by the Company and supersedes all prior agreements, understandings and arrangements, oral or written, between you and the Company with respect to the subject matter hereof.

5.2. Binding Effect; Benefits. This Agreement shall inure to the benefit of and shall be binding upon you and the Company and our respective heirs, legal representatives, successors and assigns.

5.3. Amendments and Waivers. This Agreement may not be amended or modified except by an instrument or instruments in writing signed by the party against whom enforcement of any such modification or amendment is sought. Either party may, by an instrument in writing, waive compliance by the other party with any term or provision of this Agreement to be performed or complied with by such other party.

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5.4. Assignment. Neither this Agreement nor any rights or obligations which either party may have by reason of this Agreement shall be assignable by either party without the prior written consent of the other party.

5.5. Notices. Any notice which may or must be given under this Agreement shall be in writing and shall be personally delivered or sent by certified or registered mail, postage prepaid, or reputable overnight courier, addressed to you at the address set forth on the first page hereof, or to the Company at 122 Fifth Avenue, New York, NY 10011 to the attention of the Vice President for Human Resources for Barnes & Noble, Inc. (with a copy to the General Counsel for Barnes & Noble, Inc.), or to such other address as you or the Company, as the case may be, may designate in writing in accordance with the provisions of this paragraph.

5.6. Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and are not deemed to be a part of this Agreement or to affect the meaning and interpretation of this Agreement.

5.7. Governing Law. This Agreement shall be construed (both as to validity and performance) and enforced in accordance with and governed by the laws of the State of New York applicable to agreements made and to be performed wholly within the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Each party submits to jurisdiction in the State of New York and further agrees that any cause of action arising under this Agreement shall be brought exclusively in a court in New York, New York.

5.8. Survival of Rights and Obligations. All rights and obligations of you and the Company arising during the Initial Term and any Renewal Term of this Agreement shall continue to have full force and effect after the termination of this Agreement unless otherwise provided herein.

5.9. Code Section 409A. Notwithstanding any provision herein to the contrary, in the event that you are determined to be a Specified Employee, for purposes of any payment on termination of employment under this Agreement, payment(s) shall be made or begin, as applicable, on the first payroll date which is more than six months following the date of separation from service (or, if earlier, upon your death), to the extent required to avoid any tax consequences under Code Section 409A. All provisions of this Agreement shall be interpreted in a manner consistent with Section 409A of the Code, as amended, and the regulations and other guidance promulgated thereunder. Notwithstanding the preceding, the Company makes no representations concerning the tax consequences of your participation in this Agreement under Code Section 409A or any other federal, state, or local tax law. Your tax consequences will depend, in part, upon the application of relevant tax law, including Code Section 409A, to the relevant facts and circumstances. You should consult a competent and independent tax advisor regarding the tax consequences of this Agreement.

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5.10. Executive’s Representations and Warranties. You hereby represent and warrant to the Company that (a) your execution, delivery and performance of this Agreement do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which you are a party or by which you are bound; (b) you are not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity, which has not been disclosed to the Company prior to the execution of this Agreement; (c) in the performance of any duties and responsibilities on behalf of the Company, you shall not divulge or use in any way any trade secrets or confidential or proprietary information which are within your possession or knowledge (if any), are owned by any other person or entity and regardless of whether or not such trade secrets or confidential or proprietary information are subject to any written agreement; and (d) upon the execution and delivery of this Agreement, it shall be a valid and binding obligation, enforceable in accordance with its terms. You hereby acknowledge and represent that you fully understand the terms and conditions contained herein.

5.11. Counterparts. This Agreement may be executed in one or more identical counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

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If the foregoing accurately reflects our agreement, kindly sign and return to us the enclosed duplicate copy of this letter.


Very truly yours,

Barnes & Noble, Inc.

By:		/s/ Michelle Smith
		Michelle Smith
		Vice President, Human Resources

Accepted and Agreed to:

/s/ Max J. Roberts

Max J. Roberts

Date: 9/24/09

[Signature Page to Employment Agreement]

EXHIBIT A

GENERAL RELEASE AND WAIVER

1. Max J. Roberts (“Employee”) hereby acknowledges and agrees that Employee’s employment with Barnes & Noble College Booksellers, LLC, or successor thereto, (the “Company”) terminated on , 20 (the “Termination Date”).

2. Employee hereby agrees that after the delivery to the Company of a signed original of this General Release and Waiver (“Release”), Employee will accept from the Company and on behalf of the Company and each Releasee (as defined herein), the payments set forth in Section 3.5 of the employment agreement dated as of , 200 between Employee and the Company (such agreement referred to herein as the “Agreement” and such payments and benefits collectively referred to herein as the “Separation Benefit”). Employee acknowledges and agrees that Employee’s executing the Agreement is a condition precedent to the Company’s obligation to pay the Separation Benefit, that the Separation Benefit is adequate consideration for this Release, and that any monetary or other benefits which, prior to the execution of this Release, Employee may have earned or accrued or to which Employee may have been entitled, have been paid or such payments or benefits have been released, waived or settled by Releasor pursuant to this Release.

3. THIS PARAGRAPH PROVIDES A COMPLETE RELEASE AND WAIVER OF ALL EXISTING AND POTENTIAL CLAIMS YOU MAY HAVE AGAINST EVERY PERSON AND ENTITY INCLUDED WITHIN THE DESCRIPTION BELOW OF “RELEASEE.” BEFORE YOU SIGN THIS RELEASE, YOU MUST READ THIS PARAGRAPH CAREFULLY, AND MAKE SURE THAT YOU UNDERSTAND IT FULLY.

In consideration of Employee’s receipt and acceptance of the Separation Benefit from the Company and on behalf of the Company and each Releasee (as defined below), Employee, on Employee’s behalf and on behalf of Employee’s heirs, executors, administrators, successors and assigns (collectively, “Releasor”), hereby irrevocably, unconditionally and generally releases the Company, Barnes & Noble, Inc., their respective current and former officers, directors, shareholders, trustees, parents, members, managers, affiliates, subsidiaries, branches, divisions, agents, attorneys and employees, and the current and former officers, directors, shareholders, agents, attorneys and employees of any such parent, affiliate, subsidiary, branch or division of the Company and Barnes & Noble, Inc. and the heirs, executors, administrators, receivers, successors and assigns of all of the foregoing (collectively, “Releasee”), from or in connection with, and hereby waives and/or settles, except as may otherwise be stated herein, any and all actions, causes of action, suits, debts, dues, sums of money, accounts, controversies, agreements, promises, damages, judgments, executions, or any liability, claims or demands, known or unknown and of any nature whatsoever and which Releasor ever had, now has or hereafter can, shall or may have as of the date of this Release, including, without limitation, any rights and/or claims arising under any contract, express or implied, written or oral, including without limitation the employment agreement between Employee and the Company, dated , 2009 (“Employment Agreement”); for wrongful dismissal or termination of employment; and arising under any applicable

foreign, federal, state, local or other statutes, orders, laws, ordinances, regulations or the like, or case law, that relate to employment or employment practices and/or, specifically, that prohibit discrimination based upon age, race, religion, sex, national origin, disability or any other unlawful bases, including without limitation, the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Americans with Disabilities Act of 1990, as amended, the Family Medical Leave Act of 1993, as amended, the Employee Retirement Income Security Act of 1990, as amended, the Vietnam Era Veterans’ Readjustment Assistance Act, as amended, the Worker Adjustment and Retraining Notification Act, as amended, and any similar applicable statutes, orders, laws, ordinances, regulations or the like, or case law, of the State of New York and any State in which any Releasee is subject to jurisdiction, or any political subdivision thereof, including without limitation, the New York State Human Rights Law, the New York State Labor Law, and the New York City Human Rights Law, and all applicable rules and regulations promulgated pursuant to or concerning any of the foregoing statutes, orders, laws, ordinances, regulations or the like.

4. Employee represents and warrants that Employee has not filed or commenced any complaints, claims, actions or proceedings of any kind against any Releasee with any federal, state or local court or any administrative, regulatory or arbitration agency or body. Employee hereby waives any right to, and agrees not to, seek reinstatement or employment of any kind with any Releasee and, without waiver by any Releasee of the foregoing, the existence of this Release shall be a valid, non-discriminatory basis for rejecting any such application or, in the event Employee obtains such employment, to terminate such employment.

5. By executing this Release, Releasor acknowledges that (a) Employee has been advised by the Company to consult with an attorney before executing this Release; (b) Employee was provided adequate time (i.e, at least twenty-one (21) days) to review this Release and to consider whether to sign the Release and (c) Employee has been advised that Employee has seven (7) days following execution to revoke the Release (“Revocation Period”). Notwithstanding anything to the contrary contained herein or in your Employment Agreement, this Release will not be effective or enforceable, and the Separation Benefit is not payable and shall not be delivered or paid by the Company, until the Revocation Period has expired and provided that Employee has not revoked the Release. Employee agrees that any revocation shall be made in writing and delivered to , Vice President, Human Resources, Barnes & Noble, Inc., 122 Fifth Avenue, NY, NY 10011. Employee acknowledges that revocation of the Release will result in the Company’s not having an obligation to pay the Separation Benefit.

6. This Release and Separation Benefit are not intended to be, shall not be construed as and are not an admission or concession by any Releasee of any wrongdoing or illegal or actionable acts or omissions. Employee, as and on behalf of Releasor, hereby represents and agrees that Employee shall keep confidential and not disclose orally or in writing, to any person, except as may be required by law, any and all information concerning the existence or terms of this Release and the amount of any payments made hereunder. Employee further agrees that in consideration of the Separation Benefit, and except as shall be required by law, (a) Employee shall keep

confidential and not disclose orally or in writing directly or indirectly to any person (except Employee’s immediate family, attorneys and accountant), any and all information concerning any facts, claims or assertions relating or referring to any experiences of Employee or treatment Employee received by or on behalf of any Releasee through the date of this Release, and (b) Employee shall not make, either directly or by or through another person, any oral or written negative, disparaging or adverse statements or representations of or concerning any Releasee.

7. (a) Without limitation on the survival of any and all other terms of the Employment Agreement subsequent to the end of Employee’s employment, the expiration or termination of the Employment Agreement, and/or the execution and effectiveness of this Release, Employee and the Company expressly acknowledge that the terms of Sections 4 and 5 of the Employment Agreement survive and shall be in full force and effect subsequent to the end of Employee’s employment, the expiration or termination of the Employment Agreement, and/or the execution and effectiveness of this Release.

(b) If Employee is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information (as defined in Section 4.3 of the Employment Agreement), Employee will promptly notify the Company of such request or requirement so that the Company may seek to avoid or minimize the required disclosure and/or to obtain an appropriate protective order or other appropriate relief to ensure that any information so disclosed is maintained in confidence to the maximum extent possible by the agency or other person receiving the disclosure, or, in the discretion of the Company to waive compliance with the provisions of this Release. Employee will use reasonable efforts, in cooperation with the Company or otherwise, to avoid or minimize the required disclosure and/or to obtain such protective order or other relief. If, in the absence of a protective order or the receipt of a waiver hereunder, Employee is compelled to disclose the Confidential Information or else stand liable for contempt or suffer other sanction, censure or penalty, Employee will disclose only so much of the Confidential Information to the party compelling disclosure as he believes in good faith on the basis of advice of counsel is required by law and Employee shall give the Company prior notice of the Confidential Information he believes he is required to disclose.

8. Employee represents that Employee has returned to the Company, or that Employee shall do so prior to delivery of the Separation Benefit, all property of the Company which is or has been in Employee’s possession, custody, or control, including but not limited to computers and other equipment, company credit cards, identification cards, and access cards and keys.

9. Employee shall provide such reasonable cooperation the Company on behalf of itself or any Releasee, may request in connection with any pending or future lawsuit, arbitration, or proceeding between the Company and/or any Releasee and any third party; any pending or future regulatory or governmental inquiry or investigation concerning the Company and/or any Releasee; and any other legal, internal, or business matters of or concerning the Company and/or any Releasee. Such cooperation shall include, without limitation, meeting with and providing information the Company, any Releasee and/or its, their respective attorneys, auditors, or other representatives as reasonably requested by the Company.

10. The covenants, representations and acknowledgments made by Employee in this Release shall survive the execution and effectiveness of this Release and the delivery of the Separation Benefit, and this Release shall inure to the benefit of each Releasee, and the successors and assigns of each of them. Releasees shall be excused and released from any obligation to make payment of the Separation Benefit, and Employee shall be obligated to return to the Company the Separation Benefit, in the event that the Employee is found to have made a material misstatement in any term, condition, covenant, representation or acknowledgment in this Release, or Employee is found to have committed or commits a material breach of any term, condition or covenant in this Release.

11. This Release and the Employment Agreement constitute the sole and complete understanding and agreement between the parties with respect to the matters set forth herein and there are no other agreements or understandings, whether written or oral and whether made contemporaneously or otherwise. No term, condition, covenant, representation or acknowledgment contained in this Release may be amended unless in a writing signed by both parties. If any section of this Release is determined to be void, voidable or unenforceable, it shall have no effect on the remainder of the Release which shall remain in full force and effect, and the provisions so held invalid or unenforceable shall be deemed modified as to give such provisions maximum effect permitted by applicable law.

12. With respect to any claims or disputes under or in connection with this Release or any claims releases under paragraph 3 of this Release, Employee and the Company hereby acknowledge and agree that Section 5.7 of the Employment Agreement shall govern. Employee acknowledges if there is a breach or threatened breach of the provisions of this Release, the Company will have no adequate remedy in money or damages and accordingly shall be entitled to seek equitable relief, including without limitation, injunction and specific performance; Employee hereby waives any requirements for security or posting of any bond in connection with such relief. No specification in this Release of any particular remedy shall be construed as a waiver or prohibition of any other remedies (including claims for damages) in the event of a breach or threatened breach of this Release.

13. This Release shall in all respects be subject to, governed by and enforced and construed pursuant to and in accordance with the laws of the State of New York without regard to and excluding its choice of law rules.

14. Employee agrees and acknowledges that (a) Employee has had an adequate opportunity to review this Release and all of its terms; (b) Employee understands all of the terms of this Release, which are fair, reasonable and are not the result of any fraud, duress, coercion, pressure or undue influence exercised by or on behalf of any Releasee; and (c) Employee has agreed to and/or entered into this Release and all of the terms hereof, knowingly, freely and voluntarily.


Signature:		Date:
	Max J. Roberts

EX-10.6 7 d400022dex106.htm LETTER AGREEMENT - JAMIE IANNONE Letter Agreement - Jamie Iannone

EXHIBIT 10.6

LOGO

76 Ninth Avenue

New York, NY 10011

Tel: (212) 414-6000

March 29, 2009

Jamie Iannone

[Address on file with Company]

Dear Jamie:

As a follow up to our discussions, it is my pleasure to present you with this offer of employment to join Barnes & Noble.com as Executive Vice President, Shopping, Barnes & Noble.com & Barnes & Noble Digital. The following represents the key elements of our offer:


Position:		Executive Vice President, Shopping, BN.com & BN Digital

Reports to:		William J. Lynch, Jr., President

Start Date:		TBD

Base Salary:		$450,000 annually

Sign-On Bonus:		You will be paid a one-time payment of $260,000, (less appropriate tax withholding). This payment will be made on the first business day of the month after your employment commences with the Company. If you voluntarily terminate your employment within one year of your hire date, you agree to reimburse the Company the $260,000 Sign-on Bonus.

Incentive Compensation:		You will be eligible to participate in our Incentive Compensation Program for 2009. The target level bonus payment for your position is 40% of your base salary. Payments under this plan are based on Company and individual performance. Payment for 2009 is guaranteed at the full year target level and will be paid in the first quarter of 2010 provided that you are employed with the Company as of the payment date.

Restricted Stock Grant:		On the first day of the month following the month in which your employment with the Company commences, you shall be granted 75,000 shares of restricted stock of the Company in accordance with the Company’s 2004 Incentive Plan vesting in four equal annual installments on the first through fourth anniversaries of the date of grant.

		Should your employment terminate prior to the first anniversary of this grant for any reason other than your resignation or for “Cause” as defined below (see Severance Benefits) 18,750 shares of the 75,000 share grant detailed above shall vest immediately. All other terms and conditions of the grant remain the same.

Benefits:		You will be eligible to participate in the Barnes and Noble, Inc. Plan after sixty (60) days of continuous employment. An Employee Handbook with complete details of our Benefits program is enclosed.

Vacation:		You will be eligible for 20 days of vacation time annually after completion of six months of continuous service.

Page 2 – JAMIE IANNONE



Relocation:		You will be eligible for the Company’s Relocation Plan with the addition that you will be eligible for up to 90 days of temporary housing for you and your family with a maximum reimbursement of $20,000.

Severance Benefits:		Should your employment terminate for any reason other than your resignation or for “Cause” as defined below, prior to the second anniversary of your employment, you will receive a severance package that will be equal to Twelve (12) months of base salary and your annual target bonus for the year in which, your employment is terminated. Should your employment terminate for any reason other than your resignation or for “Cause” as defined below, on or after the second anniversary of your employment, you will receive a severance package that will consist of Twelve (12) months of base salary. You understand and agree that any severance benefits provided by Barnes & Noble.com are contingent on your executing a General Release in exchange for benefits at the time the severance benefits are offered. The term “Cause” shall mean (i) any act of fraud or embezzlement in respect to the Company or any of its interests, opportunities, property or assets, or any act of intentional dishonesty committed in the course of your employment, (ii) the commission by you of a felony under the laws of the United States or any state thereof, or of any crime involving moral turpitude or other wrongful act or omission causing material harm to the standing and reputation of the Company, (iii) any acts or omissions by you that (as determined by the Company in its reasonable discretion and judgment) are unlawful and/or that constitute fraud, dishonesty, breach of the duty of loyalty, gross negligence or any other misconduct in the course of your employment or otherwise, which could bring the Company into disrepute, could create civil or criminal liability for the Company or could adversely affect the Company’s business.

This offer is contingent upon verification of your identity and your ability to legally work for Barnes & Noble in the United States. In addition, this offer is contingent upon satisfactory references and verification of your employment record, academic credentials and any certifications represented on your employment application and/or resume.

If you wish to accept this offer of employment as set forth above, please call me at (212) 414-6172. Please then review, sign and return to me the enclosed confidentiality agreement along with an original signed copy (one of the two mailed to you) of your offer letter. If you do not contact me by June 1, 2009, the Company’s offer of employment shall be deemed to be rescinded and without effect. If you have any questions, please call me at your convenience.

Page 3 – JAMIE IANNONE

We are delighted with your interest In Barnes & Noble.com and we are eager to have you join our team. The challenge, opportunity, and rewards that lie ahead for Barnes & Noble.com are unique and incredibly exciting. I look forward to hearing from you after you have had a chance to review this offer.

Very truly yours,

LOGO

John J. Heaney

Vice President, Human Resources

Barnes & Noble.com


ACCEPTED AND AGREED:

		6/1/09
Jamie Iannone		Date

AGREEMENT REGARDING CERTAIN TERMS AND CONDITIONS OF EMPLOYMENT

This agreement is by and between Barnes & Noble.com, llc. (“Company”) and Jamie Iannone (“Employee”). In consideration of the Employee’s being hired by the Company, the Company’s providing Employee access to Confidential Information that is necessary to perform his/her work, the payment by the Company of Employee’s compensation and for other good and valuable consideration, the Company and Employee agree as follows:

At-Will Employment

Duty of Loyalty

2. Employee acknowledges that he/she owes a duty of loyalty to the Company, which Employee acknowledges means, among other things, that while an employee of the Company Employee must act on the best interests of the Company. Employee therefore agrees that, without limitation, (a) he/she shall devote his/her best efforts and undivided time, effort and loyalty to the business of the Company; (a) he/she shall discharge all of his/her duties and responsibilities that are or may be assigned to him by the Company, conscientiously, in good faith and to the best of his/her ability, giving to the Company the full benefit of his/her knowledge, expertise, skill and judgment; (b) he/she shall not engage in any illegal or unethical conduct in the performance of his/her duties and responsibilities; and (c) he/she shall not engage in any conduct that creates an actual, potential or apparent conflict between Employee’s personal interests and the Company’s interest, or which otherwise may adversely affect Employee’s judgment or ability to act in the Company’s best interests.

Confidential Information and Company Property

Page 2, IANNONE

(continued) Confidential Information and Company Property

6. Employee further agrees that “Company Property” shall also include, and Employee shall promptly disclose and provide to the Company, all Inventions (as defined below), whether or not any such Inventions also may be included within “Confidential Information” as defined under this Agreement, or are patentable, copyrightable or protective as trade secrets. As used herein, an “Invention” shall mean any original work of authorship, design, formula, process, improvement, composition of matter, computer software program, data, information or database, method, procedure or other invention, development or improvement of any kind that Employee conceives, originates, develops, improves, modifies and/or creates, solely or jointly with others, during the period of Employee’s employment either as a result of such employment or as a result of access to Company Property including residuals thereof. The term “residuals” as used herein shall mean information in non-tangible form, which may be retained by Employee after access to Company Property, including ideas, concepts, know-how or techniques contained therein. Employee shall give Company all reasonable assistance and execute all documents necessary to assist and enable Company to perfect, preserve, register and record its rights in any such Invention.

Page 3, IANNONE

(continued) Confidential Information and Company Property

Page 4, IANNONE

(continued) Confidential Information and Company Property

Non-Competition and Non-Solicitation

Page 5, IANNONE

(continued) Confidential Information and Company Property

15. For purposes of the foregoing paragraph, a business shall be deemed to be in competition with the Company if it is principally involved in any E-Commerce company, or other entity, related to merchandising books and related products. Nothing in the foregoing paragraph shall be construed so as to preclude Employee from investing directly or indirectly in any publicly traded equity securities, provided that no such investment in any class of securities may exceed 5% of the outstanding securities of such class.

Arbitration

(b) The Claims subject to this arbitration provision are and shall be those claims concerning (i) any term, condition, covenant, representation or acknowledgement contained in this Agreement; or (ii) any other aspect of Employee’s employment or the termination thereof, including without limitation, any and all actual or potential claims under any applicable federal, state, local or other statues, orders, laws, ordinances, regulations or the like, or case law, that relate to employment or employment practices and/or, specifically, that prohibit discrimination based upon age, race, religion, sex, national origin, disability or any other unlawful bases, including without limitation, the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as amended, the Age Discrimination in Employment Act of 1967, as amended , the Americans with Disabilities Act of 1990, as amended, the Family Medical Leave Act of 1993, as amended, the Employee Retirement Income Security Act of 1990, as amended, the Fair Labor Standards Act, as amended, the Vietnam Era Veterans’ Readjustment Assistance Act, as amended, the Equal Pay Act, as amended, and any similar applicable statues, orders, laws, ordinances, regulations or the like, or case law, of any State. The parties further agree that the Claims subject to arbitration shall exclude any claims required by an applicable Federal, State, local or other statute to be submitted to another forum (for example, a workers compensation claim or a claim for unemployment insurance benefits).

Page 6, IANNONE

(continued) Arbitration

Applicable Law

Successors

19. This Agreement shall inure to the benefit of the Company, its subsidiaries and affiliates, and the successors and assigns of each of them.

Amendment

20. No term, condition, covenant, representation or acknowledgement contained in this Agreement may be amended or modified unless in a writing signed by both parties, and no course of conduct shall be deemed a waiver of its provisions.

Severability

Complete Agreement

Page 7, IANNONE

Employee Review of Agreement

23. Employee understands that he/she has the right to consult an attorney prior to the signing of this Agreement and acknowledges that his/her signature below signifies that he/she has fully reviewed and understands all of the terms of this Agreement and that he/she has agreed to those terms.


		6/1/09
Jamie Iannone		Date

Barnes & Noble.com, llc

By:		5/29/09
	Name: John J. Heaney	Date
	Title: Vice President, Human Resources

EX-15.1 8 d400022dex151.htm LETTER FROM BDO USA, LLP Letter from BDO USA, LLP

Exhibit 15.1

August 31, 2012

Securities and Exchange Commission

450 Fifth Street N.W.

Washington, D.C. 20549

We are aware that Barnes & Noble, Inc. has incorporated by reference in its Registration Statements on Form S-3 (No. 333-23855, No. 333-69731, No. 333-62210, No. 33-84826 and No. 33-89258) and Form S-8 (No. 333-27033, No. 33-89260, No. 333-90538, No. 333-116382, No. 333-59111 and No. 333-160560) our report dated September 6, 2012, relating to the Company’s unaudited interim consolidated financial statements appearing in its quarterly report on Form 10-Q for the quarter ended July 28, 2012. Pursuant to Regulation C under the Securities Act of 1933 (the “Act”), that report is not considered a part of the registration statement prepared or certified by our firm or a report prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. It should be noted that we have not performed any procedures subsequent to August 31, 2012.

/s/ BDO USA, LLP

BDO USA, LLP

New York, New York

EX-31.1 9 d400022dex311.htm CERTIFICATION BY THE C.E.O. PURSUANT TO SECTION 302 Certification by the C.E.O. pursuant to Section 302

Exhibit 31.1

CERTIFICATION BY THE

CHIEF EXECUTIVE OFFICER PURSUANT TO

17 CFR 240.13a-14(a)/15(d)-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William J. Lynch, Jr., certify that:

I have reviewed this report on Form 10-Q for the quarterly period ended July 28, 2012 of Barnes & Noble, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 31, 2012

By:

/s/ William J. Lynch, Jr.

William J. Lynch, Jr.

Chief Executive Officer

Barnes & Noble, Inc.

EX-31.2 10 d400022dex312.htm CERTIFICATION BY THE C.F.O. PURSUANT TO SECTION 302 Certification by the C.F.O. pursuant to Section 302

Exhibit 31.2

CERTIFICATION BY THE

CHIEF FINANCIAL OFFICER PURSUANT TO

17 CFR 240.13a-14(a)/15(d)-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael P. Huseby, certify that:

I have reviewed this report on Form 10-Q for the quarterly period ended July 28, 2012 of Barnes & Noble, Inc.;

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 31, 2012

By:

/s/ Michael P. Huseby

Michael P. Huseby

Chief Financial Officer

Barnes & Noble, Inc.

EX-32.1 11 d400022dex321.htm CERTIFICATION OF C.E.O. PURSUANT TO SECTION 906 Certification of C.E.O. pursuant to Section 906

Exhibit 32.1

CERTIFICATION PURSUANT TO

RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

AND 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Barnes & Noble, Inc. (the “Company”) on Form 10-Q for the period ended July 28, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. Lynch, Jr., Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William J. Lynch, Jr.

William J. Lynch, Jr.

Chief Executive Officer

Barnes & Noble, Inc.

August 31, 2012

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 12 d400022dex322.htm CERTIFICATION OF C.F.O. PURSUANT TO SECTION 906 Certification of C.F.O. pursuant to Section 906

Exhibit 32.2

CERTIFICATION PURSUANT TO

RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

AND 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Barnes & Noble, Inc. (the “Company”) on Form 10-Q for the period ended July 28, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael P. Huseby, Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael P. Huseby

Michael P. Huseby

Chief Financial Officer

Barnes & Noble, Inc.

August 31, 2012

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On October 4, 2011, the Court granted defendants' motion to dismiss, but also granted plaintiff leave to replead within 30 days.

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<div> (4) Research and Development Costs for Software Products The Company follows the guidance in ASC 985-20, Cost of Software to Be Sold, Leased or Marketed, regarding software development costs to be sold, leased, or otherwise marketed. Capitalization of software development costs begins upon the establishment of technological feasibility and is discontinued when the product is available for sale. A certain amount of judgment and estimation is required to assess when technological feasibility is established, as well as the ongoing assessment of the recoverability of capitalized costs. The Company’s products reach technological feasibility shortly before the products are released and therefore research and development costs are generally expensed as incurred. </div>

-7650000

<div> The following is a reconciliation of the Company’s basic and diluted loss per share calculation:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr> <td width="86%"></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Numerator for basic loss per share: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Net loss </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(40,980</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(56,606</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Preferred stock dividends </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(3,942</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Accretion of dividends on preferred stock </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(316</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net loss available to common shareholders </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(45,238</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(56,606</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td valign="top"> Numerator for diluted loss per share: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net loss available to common shareholders </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(45,238</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(56,606</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td valign="top"> Denominator for basic and diluted loss per share: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Basic weighted average common shares </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">58,021</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">57,153</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Average dilutive options </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Diluted weighted average common shares </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">58,021</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">57,153</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Loss per common share </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Basic </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.78</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(0.99</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td valign="top"> Diluted </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.78</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(0.99</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> </table> </div>

1039619000

<div> (17) Shareholders’ Equity On November 17, 2009, the Board of Directors of the Company declared a dividend, payable to stockholders of record on November 27, 2009 of one right (a Right) per each share of outstanding Common Stock of the Company, par value $0.001 per share (Common Stock), to purchase 1/1000th of a share of Series I Preferred Stock, par value $0.001 per share, of the Company (the Preferred Stock), at a price of $100.00 per share (such amount, as may be adjusted from time to time as provided in the Rights Agreement described below, the Purchase Price). In connection therewith, on November 17, 2009, the Company entered into a Rights Agreement, dated November 17, 2009 (as amended February 17, 2010, June 23, 2010, October 29, 2010 and August 18, 2011 and as may be further amended from time to time, the Rights Agreement) with Mellon Investor Services LLC, as Rights Agent. The Rights will be exercisable upon the earlier of (i) such date the Company learns that a person or group, without Board approval, acquires or obtains the right to acquire beneficial ownership of 20% or more of the Company’s outstanding common stock or a person or group that already beneficially owns 20% or more of the Company’s outstanding common stock at the time the Rights Agreement was entered into, without Board approval, acquires any additional shares (other than pursuant to the Company’s compensation or benefit plans) (any person or group specified in this sentence, an Acquiring Person) and (ii) such date a person or group announces an intention to commence or following the commencement of (as designated by the Board) a tender or exchange offer which could result in the beneficial ownership of 20% or more of the Company’s outstanding common stock. The Rights will expire on November 17, 2012, unless earlier redeemed or canceled by the Company. If a person or group becomes an Acquiring Person, each Rights holder (other than the Acquiring Person) will be entitled to receive, upon exercise of the Right and payment of the Purchase Price, that number of 1/1000ths of a share of Preferred Stock equal to the number of shares of Common Stock which at the time of the applicable triggering transaction would have a market value of twice the Purchase Price. In the event the Company is acquired in a merger or other business combination by an Acquiring Person, or 50% or more of the Company’s assets are sold to an Acquiring Person, each Right will entitle its holder (other than an Acquiring Person) to purchase common shares in the surviving entity at 50% of the market price. </div>

-54202000

62000

5040000

316000

-40980000

<div> (2) Reclassifications Certain prior period amounts have been reclassified to conform to the current presentation. </div>

59381000

<div> (5) Earnings (Loss) per Share In accordance with ASC 260-10-45, Share-Based Payment Arrangements and Participating Securities and the Two-Class Method, the Company’s unvested restricted shares, unvested restricted stock units and shares issuable under the Company’s deferred compensation plan are considered participating securities. During periods of net income, the calculation of earnings per share for common stock are reclassified to exclude the income attributable to unvested restricted shares, unvested restricted stock units and shares issuable under the Company’s deferred compensation plan from the numerator and exclude the dilutive impact of those shares from the denominator. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. Due to the net loss during the 13 weeks ended July 28, 2012 and July 30, 2011, participating securities in the amounts of 2,921,248 and 3,469,589, respectively, were excluded from the calculation of loss per share using the two-class method because the effect would be antidilutive. The Company’s outstanding stock options and accretion/payments of dividends on preferred shares were also excluded from the calculation of loss per share using the two-class method because the effect would be antidilutive.   The following is a reconciliation of the Company’s basic and diluted loss per share calculation:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr> <td width="86%"></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Numerator for basic loss per share: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Net loss </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(40,980</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(56,606</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Preferred stock dividends </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(3,942</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Accretion of dividends on preferred stock </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(316</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net loss available to common shareholders </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(45,238</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(56,606</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td valign="top"> Numerator for diluted loss per share: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net loss available to common shareholders </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(45,238</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(56,606</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td valign="top"> Denominator for basic and diluted loss per share: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Basic weighted average common shares </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">58,021</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">57,153</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Average dilutive options </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Diluted weighted average common shares </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">58,021</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">57,153</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Loss per common share </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Basic </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.78</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(0.99</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td valign="top"> Diluted </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.78</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(0.99</td> <td valign="bottom" nowrap="nowrap">)</td> </tr> </table> </div>

5040000

-0.78

342976000

26457000

3942000

153000

<div> (11) Fair Values of Financial Instruments In accordance with ASC 820, Fair Value Measurements and Disclosures, the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="8%" align="left">Level 1 –</td> <td valign="top" align="left">Observable inputs that reflect quoted prices in active markets</td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="8%" align="left">Level 2 –</td> <td valign="top" align="left">Inputs other than quoted prices in active markets that are either directly or indirectly observable</td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="8%" align="left">Level 3 –</td> <td valign="top" align="left">Unobservable inputs in which little or no market data exists, therefore requiring the Company to develop its own assumptions</td> </tr> </table> The Company’s financial instruments include cash, receivables and accounts payable. The fair values of cash, receivables and accounts payable approximated carrying values because of the short-term nature of these instruments. The Company believes that its credit facility approximates fair value since interest rates are adjusted to reflect current rates. The Company believes that the terms and conditions of the Seller Note are consistent with comparable market debt issues. </div>

<div> A reconciliation of operating profit from reportable segments to income (loss) from operations before taxes in the consolidated financial statements is as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="82%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Reportable segments operating loss </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(54,202</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(79,231</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td valign="top"> Interest expense, net and amortization of deferred financing costs </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8,941</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">9,442</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Consolidated loss before taxes </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(63,143</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(88,673</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

357000

745000

58035000

<div> Summarized financial information concerning the Company’s reportable segments is presented below: Sales   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="78%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> B&N Retail </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,119,387</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,097,252</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> B&N College </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">220,718</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">220,494</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> NOOK </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">191,975</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">191,412</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Elimination  (a) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(78,573</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(90,754</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,453,507</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,418,404</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> Sales by Product Line   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="86%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center">July 28,</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" colspan="2" align="center">July 30,</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Media (b) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">62</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">61</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr> <td valign="top"> Digital (c) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">18</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">20</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Other (d) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">20</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">19</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">100</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">100</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   Depreciation and Amortization   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="84%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> B&N Retail </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">40,940</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">39,485</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> B&N College </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">11,715</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">10,849</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> NOOK </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,380</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,337</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">58,035</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">55,671</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> Operating Profit (Loss)   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="82%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> B&N Retail </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">33,621</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">211</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> B&N College </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(25,747</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(23,053</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> NOOK </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(62,076</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(56,389</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(54,202</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(79,231</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> Capital Expenditures   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="84%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> B&N Retail </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">9,616</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">12,390</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> B&N College </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">9,533</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8,933</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> NOOK </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">7,308</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,302</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">26,457</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">26,625</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> Total Assets (e)   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="78%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> B&N Retail </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,242,167</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,005,773</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> B&N College </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,385,414</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,506,871</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> NOOK </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">417,103</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">459,013</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">4,044,684</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,971,657</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(a)</td> <td valign="top" align="left">Represents the elimination of intercompany sales from NOOK to Barnes & Noble Retail and Barnes & Noble College on a sell through basis.</td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(b)</td> <td valign="top" align="left">Includes tangible books, music, movies, rentals and newsstand.</td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(c)</td> <td valign="top" align="left"> Includes NOOK®, related accessories, eContent and warranties. </td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(d)</td> <td valign="top" align="left">Includes toys & games, café products, college apparel, gifts and miscellaneous other.</td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(e)</td> <td valign="top" align="left">Excludes intercompany balances.</td> </tr> </table> </div>

1816000

1980000

<div> (14) Pension and Other Postretirement Benefit Plans As of December 31, 1999, substantially all employees of the Company were covered under a noncontributory defined benefit pension plan (the Pension Plan). As of January 1, 2000, the Pension Plan was amended so that employees no longer earn benefits for subsequent service. Effective December 31, 2004, the barnesandnoble.com llc (Barnes & Noble.com) Employees’ Retirement Plan (the B&N.com Retirement Plan) was merged with the Pension Plan. Substantially all employees of Barnes & Noble.com were covered under the B&N.com Retirement Plan. As of July 1, 2000, the B&N.com Retirement Plan was amended so that employees no longer earn benefits for subsequent service. Subsequent service continues to be the basis for vesting of benefits not yet vested at December 31, 1999 and June 30, 2000 for the Pension Plan and the B&N.com Retirement Plan, respectively, and the Pension Plan will continue to hold assets and pay benefits. The actuarial assumptions used to calculate pension costs are reviewed annually. Pension expense was $745 and $515 for the 13 weeks ended July 28, 2012 and July 30, 2011, respectively. The Company provides certain health care and life insurance benefits (the Postretirement Plan) to certain retired employees, limited to those receiving benefits or retired as of April 1, 1993. Total Company contributions charged to employee benefit expenses for the Postretirement Plan were $38 for the 13 weeks ended July 28, 2012 and July 30, 2011, respectively. </div>

19177000

-33500000

357000

316000

26457000

-33910000

6045000

-29008000

21000

58021000

1980000

<div> (7) Changes in Intangible Assets and Goodwill   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="63%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="10" align="center">As of July 28, 2012</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> Amortizable Intangible Assets </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Useful Life</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Gross Carrying Amount</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Accumulated Amortization</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Customer relationships and other acquired intangible assets </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right">3-25</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">271,938</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(36,814</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">235,124</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Author contracts </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right">10</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">18,461</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(17,511</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">950</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Technology </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right">3-10</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">9,950</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,856</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">7,094</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Distribution contracts </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right">10</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8,325</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(5,089</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,236</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Other </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right">3-10</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">6,188</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(4,806</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,382</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">314,862</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(67,076</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">247,786</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td height="16"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> Unamortizable Intangible Assets </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Trade name </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">293,400</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Publishing contracts </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">21,336</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">314,736</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total intangible assets </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">562,522</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> Amortizable intangible assets are generally amortized over their useful life on a straight-line basis, with the exception of certain items such as customer relationships and other acquired intangible assets, which are amortized on an accelerated basis.   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="89%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> Aggregate Amortization Expense: </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> For the 13 weeks ended July 28, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">5,641</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> For the 13 weeks ended July 30, 2011 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,544</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="88%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> Estimated Amortization Expense: </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> (12 months ending on or about April 30) </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> 2013 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">20,720</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2014 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">18,583</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2015 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">14,647</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2016 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">11,355</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2017 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">10,875</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> </table> 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 for the 13 weeks ended July 28, 2012 was $1,816. The changes in the carrying amount of goodwill by segment for the 13 weeks ended July 28, 2012 are as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="61%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">B&N Retail</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">B&N College</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">NOOK</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total Company</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance as of April 28, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">225,336</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">274,070</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">20,279</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">519,685</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Benefit of excess tax amortization (a) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(1,107</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(1,107</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance as of July 28, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">224,229</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">274,070</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">20,279</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">518,578</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(a)</td> <td valign="top" align="left">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.</td> </tr> </table> </div>

1453507000

38000

-63143000

2943000

-0.78

-19587000

<div> (18) Legal Proceedings The Company is involved in a variety of claims, suits, investigations and proceedings that arise from time to time in the ordinary course of its business, including actions with respect to contracts, intellectual property, taxation, employment, benefits, securities, personal injuries and other matters. The results of these proceedings in the ordinary course of business are not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations. The Company records a liability when it believes that it is both probable that a liability will be incurred, and the amount of loss can be reasonably estimated. The Company evaluates, at least quarterly, developments in its legal matters that could affect the amount of liability that has been previously accrued and makes adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount of a loss or potential loss. The Company may be unable to reasonably estimate the reasonably possible loss or range of loss for a particular legal contingency for various reasons, including, among others: (i) if the damages sought are indeterminate; (ii) if proceedings are in the early stages; (iii) if there is uncertainty as to the outcome of pending proceedings (including motions and appeals); (iv) if there is uncertainty as to the likelihood of settlement and the outcome of any negotiations with respect thereto; (v) if there are significant factual issues to be determined or resolved; (vi) if the proceedings involve a large number of parties; (vii) if relevant law is unsettled or novel or untested legal theories are presented; or (viii) if the proceedings are taking place in jurisdictions where the laws are complex or unclear. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any. With respect to the legal matters described below, the Company has determined, based on its current knowledge, that the amount of loss or range of loss, that is reasonably possible including any reasonably possible losses in excess of amounts already accrued, is not reasonably estimable. However, legal matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond the Company’s control. As such, there can be no assurance that the final outcome of these matters will not materially and adversely affect the Company’s business, financial condition, results of operations, or cash flows. The following is a discussion of the material legal matters involving the Company. In re Barnes & Noble Stockholder Derivative Litigation (Consolidated Cases Formerly Captioned Separately as: Louisiana Municipal Police Employees Retirement System v. Riggio et al.; Southeastern Pennsylvania Transportation Authority v. Riggio et al.; City of Ann Arbor Employees’ Retirement System v. Riggio et al.; Louise Schuman v. Riggio et al.; Virgin Islands Government Employees’ Retirement System v. Riggio et al.; Electrical Workers Pension Fund, Local 103, I.B.E.W. v. Riggio et al.) Between August 17, 2009 and August 31, 2009, five putative shareholder derivative complaints were filed in Delaware Court of Chancery against the Company’s directors. The complaints generally allege breach of fiduciary duty, waste of corporate assets and unjust enrichment in connection with the Company’s entry into a definitive agreement to purchase Barnes & Noble College Booksellers, which was announced on August 10, 2009 (the Transaction). The complaints generally seek damages in favor of the Company in an unspecified amount; costs, fees and interest; disgorgement; restitution; and equitable relief, including injunctive relief. On September 1, 2009, the Delaware Court of Chancery issued an Order of Consolidation consolidating the five lawsuits (the Consolidated Cases) and directing plaintiffs to file a consolidated amended complaint. In a related development, on August 27, 2009, the Company received a demand pursuant to Delaware General Corporation Law, Section 220, on behalf of the Electrical Workers Pension Fund, Local 103, I.B.E.W., a shareholder, seeking to inspect certain books and records related to the Transaction. On September 18, 2009, this shareholder filed a shareholder derivative complaint in Delaware Court of Chancery against certain of the Company’s directors alleging breach of fiduciary duty and unjust enrichment and seeking to enjoin the consummation of the Transaction. On October 6, 2009, the plaintiffs in the Consolidated Cases filed a motion seeking to consolidate the later-filed sixth case with the Consolidated Cases. On November 3, 2009, a Consolidated Complaint was filed in the Consolidated Cases. On December 11, 2009, the court entered an order consolidating all actions and appointing co-lead counsel for plaintiffs. The Company and defendants filed motions to dismiss the Consolidated Complaint on January 12, 2010. Plaintiffs filed an Amended Consolidated Complaint on March 16, 2010. The Company and defendants filed motions to dismiss the Amended Consolidated Complaint on April 30, 2010. Plaintiffs filed their response to the motion to dismiss on June 2, 2010. Oral argument on the motions to dismiss was held on October 21, 2010. Following those arguments, the Court denied the Company’s motion to dismiss, denied in part and granted in part the motion to dismiss filed by Defendants Leonard Riggio, Stephen Riggio and Lawrence Zilavy, and denied in part and granted in part the motion to dismiss filed by the remaining defendants, dismissing all claims asserted against Directors George Campbell, Jr. and Patricia Higgins. All defendants except Leonard Riggio moved for summary judgment on December 21, 2011. Briefing on those motions was completed by March 2, 2012. The Court ruled on those motions on March 27, 2012, denying summary judgment as to Defendants Lawrence Zilavy and Michael Del Giudice and granting summary judgment as to, and dismissing all claims against, Defendants Stephen Riggio, Irene R. Miller, Margaret T. Monaco and William Dillard, II. On June 13, 2012, all remaining defendants agreed to settle all remaining claims, subject to receipt of court approval (the Settlement). In the Settlement, the sellers in the Transaction have agreed to waive $22,750 of the purchase price by waiving a corresponding principal amount (and interest on) of the Junior Seller Note issued by the Company to the sellers as part of the purchase price of the Transaction. A hearing will be held on September 4, 2012 to approve the Settlement and what, if any, attorney’s fees will be paid by the Company to plaintiffs. If the Settlement Agreement is approved by the Delaware Court of Chancery, the Consolidated Cases will be dismissed, on the merits, with prejudice. Upon approval, the $22,750 reduction in purchase price will be recorded as a credit to additional paid in capital. Whitney Parker v. Leonard Riggio, et al. (formerly Stephen Strugala v. Leonard Riggio, et al.) On December 21, 2010, a complaint was filed in the United States District Court for the Southern District of New York by Stephen Strugala against the Company’s current directors and former directors Lawrence Zilavy and Michael Del Giudice. The complaint is purportedly brought both directly, on behalf of a putative class of shareholders, and derivatively, on behalf of the Company. The complaint generally alleges breaches of fiduciary duties, waste and unjust enrichment in connection with the Company’s acquisition of Barnes & Noble College Booksellers, the adoption of the Shareholder Rights Plan, and other unspecified instances of alleged mismanagement and alleged wrongful conduct. The complaint also generally alleges violations of Section 14(a) of the 1934 Act in connection with the issuance of various proxy statements by the Company. The complaint generally seeks declaratory and equitable relief, including injunctive relief, and costs and fees. On January 19, 2011, the Court granted the parties’ Stipulation and Order. On February 18, 2011, the plaintiff filed a Notice of Voluntary Dismissal of Claim, dismissing without prejudice his putative class claim for violations of Section 14(a) of the 1934 Act. On March 8, 2011, defendants filed a motion to dismiss all claims in the litigation. On October 4, 2011, the Court granted defendants’ motion to dismiss, but also granted plaintiff leave to replead within 30 days. On November 3, 2011, plaintiff requested a pre-motion conference with the Court to discuss an anticipated motion to substitute a new plaintiff, Ms. Whitney Parker, for Mr. Strugala, and simultaneously filed an amended complaint on behalf of Ms. Parker containing substantially the same claims asserted in Mr. Strugala’s original complaint. The Court held a pre-motion conference on December 9, 2011, at which the parties agreed that Ms. Parker could be substituted for Mr. Strugala without prejudice to any of defendants’ rights. On January 20, 2012, defendants moved to dismiss the amended complaint. Briefing on that motion was completed on May 4, 2012. On August 3, 2012, the Court granted defendants’ motion to dismiss, dismissing the complaint in its entirety and denying plaintiff’s request for leave to replead. Lina v. Barnes & Noble, Inc., and Barnes & Noble Booksellers, Inc. et al. On August 5, 2011, a purported class action complaint was filed against Barnes & Noble, Inc. and Barnes & Noble Booksellers, Inc. in the Superior Court for the State of California making the following allegations against defendants with respect to salaried Store Managers at Barnes & Noble stores located in the State of California from the period of August 5, 2007 to present: (1) failure to pay wages and overtime; (2) failure to pay for missed meal and/or rest breaks; (3) waiting time penalties; (4) failure to pay minimum wage; (5) failure to provide reimbursement for business expenses; and (6) failure to provide itemized wage statements. The claims are generally derivative of the allegation that these salaried managers were improperly classified as exempt from California’s wage and hour laws. The complaint contains no allegations concerning the number of any such alleged violations or the amount of recovery sought on behalf the purported class. The Company was served with the complaint on August 11, 2011. On August 30, 2011, the Company filed an answer in state court, and on August 31, 2011 it removed the action to federal court pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d). On October 28, 2011, the district court granted plaintiff’s motion to remand the action back to state court, over the Company’s opposition. On November 7, 2011, the Company petitioned the Ninth Circuit for an appeal of the district court’s remand order. The Ninth Circuit affirmed the district court’s remand order on May 18, 2012. The parties are currently engaged in pre-certification discovery. The Court has not yet set a date for plaintiff’s anticipated motion for class certification, and it has not yet set a trial date. Barnes & Noble, Inc. and Barnesandnoble.com llc v. LSI Corporation and Agere Systems, Inc. On June 6, 2011, Barnes & Noble, Inc. filed a complaint against LSI Corporation (LSI) in the United States District Court for the Northern District of California, Case No. 11-CV-2709 EMC. The complaint sought a declaratory judgment that Barnes & Noble, Inc. does not infringe U.S. Patent Nos. 5,546,420; 5,670,730; 5,862,182; 5,920,552; 6,044,073; 6,119,091; 6,404,732; 6,452,958; 6,707,867 and 7,583,582. Barnes & Noble, Inc. amended the complaint on August 10, 2011 to add barnesandnoble.com llc as a plaintiff, to add Agere Systems, Inc. (Agere) as a defendant, to add a cause of action seeking a declaratory judgment that neither Barnes & Noble, Inc. nor barnesandnoble.com llc infringes U.S. Patent No. 7,477,633, and to add causes of action seeking a declaratory judgment that each of the eleven patents-in-suit is invalid. On November 1, 2011, LSI and Agere answered the amended complaint and asserted counterclaims against Barnes & Noble, Inc. and barnesandnoble.com llc, alleging infringement of the eleven patents-in-suit. On November 28, 2011, Barnes & Noble, Inc. and barnesandnoble.com llc answered the counterclaims and asserted several affirmative defenses, including the defense that seven of the patents-in-suit are unenforceable as a result of standard-setting misconduct. As required by the Court’s Local Patent Rules, LSI and Agere served their Disclosure of Asserted Claims and Infringement Contentions on July 2, 2012. In that disclosure, LSI and Agere asserted infringement of only six of the eleven patents that it had previously accused Barnes & Noble, Inc. and barnesandnoble.com llc of infringing. The Court has set certain pretrial dates in the case, including a claim construction hearing on March 11, 2013. The Court has not yet set a trial date in the case. Dustin Torrez, an individual, on behalf of himself and all others similarly situated v. Barnes & Noble, Inc. On October 11, 2011, a complaint was filed in the Superior Court for the State of California, County of San Francisco against the Company. The complaint is styled as a California state-wide class action. It alleges violations of California Civil Code section 1747.08 (the Song-Beverly Credit Card Act of 1971) due to the Company’s alleged improper requesting and recording of zip codes from California customers who used credit cards as payment. The complaint was re-filed in the Superior Court for the State of California, County of San Francisco on December 23, 2011 as a separate action. The Summons and Complaint have not been served on the Company for either action. On February 10, 2012, the plaintiff filed a request that the action filed in December be dismissed with prejudice. Kevin Khoa Nguyen, an individual, on behalf of himself and all others similarly situated v. Barnes & Noble, Inc.  On April 17, 2012, a complaint was filed in the Superior Court for the State of California, County of Orange against the Company. The complaint is styled as a nationwide class action and includes a California state-wide subclass based on alleged cancellations of orders for HP TouchPad Tablets placed on the Company’s website in August 2011. The lawsuit alleges claims for unfair business practices and false advertising under both New York and California state law, violation of the Consumer Legal Remedies Act under California law, and breach of contract. The complaint demands specific performance of the alleged contracts to sell HP TouchPad Tablets at a specified price, injunctive relief, and monetary relief, but does not specify an amount. The Company submitted its initial response to the complaint on May 18, 2012, and moved to compel plaintiff to arbitrate his claims on an individual basis pursuant to a contractual arbitration provision on May 25, 2012. The Company also moved to stay all proceedings pending final resolution of the motion to compel arbitration on July 20, 2012. The Court has not yet ruled on the motion to compel arbitration or the motion to stay.   Deep9 Corporation v. Barnes & Noble, Inc. and barnesandnoble.com llc On January 1, 2011, Deep9 Corporation (Deep9) filed a complaint against Barnes & Noble, Inc. and barnesandnoble.com llc in the United States District Court for the Western District of Washington. The complaint alleges that Barnes & Noble, Inc. and barnesandnoble.com llc infringe U.S. Patent Nos. 5,937,405 and 6,377,951. On February 1, 2011, Barnes & Noble, Inc. and barnesandnoble.com llc filed an answer denying infringement and asserting several affirmative defenses. At the same time, Barnes & Noble, Inc. and barnesandnoble.com llc filed counterclaims seeking a declaratory judgment that neither Barnes & Noble, Inc. nor barnesandnoble.com llc infringes the patents-in-suit and that each of the two patents-in-suit is invalid. The Court issued an order regarding claim construction on January 10, 2012 and amended that order on January 24, 2012. On July 19, 2012, each party filed motions for summary judgment, and Barnes & Noble, Inc. and barnesandnoble.com llc filed motions to exclude as unreliable certain opinions of Deep9’s technical expert and to preclude Deep9’s damages expert from testifying at trial. Briefing on those motions was completed on August 10, 2012. On August 2, 2012, Deep9 filed a Daubert motion to preclude Barnes & Noble, Inc. and barnesandnoble.com llc’s damages expert from testifying at trial, which Barnes & Noble, Inc. and barnesandnoble.com llc are opposing. Briefing on Deep9’s Daubert motion was completed on August 13, 2012. The Court has not yet ruled on any of the pending summary judgment or Daubert motions. A five day jury trial is scheduled to begin on October 22, 2012. </div>

12621000

<div> (15) Microsoft On April 27, 2012, the Company entered into an investment agreement among the Company, Morrison Investment Holdings, Inc. (Morrison), and Microsoft Corporation (Microsoft) pursuant to which the Company will form a Delaware limited liability company (NewCo), and transfer to NewCo the Company’s digital device, digital content and college bookstore businesses and NewCo will sell to Morrison, and Morrison will purchase, 300,000 convertible preferred membership interests in NewCo (Series A Preferred) for an aggregate purchase price of $300,000. Concurrently with its entry into this agreement, the Company has also entered into a commercial agreement with Microsoft, pursuant to which, among other things, NewCo will develop and distribute a Windows 8 application for e-reading and digital content purchases, and an intellectual property license and settlement agreement with Microsoft and Microsoft Licensing GP. The closing conditions are set forth in the definitive documents between the parties. While there can be no assurance that the transaction will close or close by a particular date certain, the Company is actively pursuing work in connection with the closing conditions and is working to try and complete the required conditions in this Fall and, in any event, prior to the required date set forth in the definitive agreement. Investment Agreement Pursuant to the agreement, Microsoft would invest $300,000 in NewCo in exchange for 300,000 Series A Preferred interest, representing approximately 17.6% of the common membership interest in NewCo on an as-converted basis. Following Microsoft’s investment, the Company would retain the common membership interest in NewCo, representing approximately 82.4% of the common membership interests in NewCo (after giving effect to the conversion of the Series A Preferred interests into common membership interests). Commercial Agreement Under the commercial agreement, NewCo will develop certain applications for Windows 8 for purchasing and consumption of digital reading content. The commercial agreement also requires NewCo to use its good faith efforts to undertake an international expansion of the digital business. As part of the commercial agreement, NewCo and Microsoft would share in the revenues, net of certain items, from digital content purchased from NewCo by customers using the NewCo Windows 8 applications or through certain Microsoft products and services that may be developed in the future and are designed to interact with the NewCo online bookstore. Microsoft will make certain nonrefundable advance payments to NewCo in connection with such revenue sharing. For each of the first three years after the launch of such application for Windows 8, these advance payments would be equal to $60,000 per year. These advance payments would be subject to deferral under certain circumstances. Microsoft would also pay to NewCo $25,000 each year for the first five years of the term for purposes of assisting NewCo in acquiring local digital reading content and technology development in the performance of NewCo’s obligations under the commercial agreement. Settlement and License Agreement The patent agreement provides for Microsoft and its subsidiaries to license to the Company and its affiliates certain intellectual property in exchange for royalty payments based on sales of certain devices. Additionally, the Company and Microsoft will dismiss certain outstanding patent litigation between the Company, Microsoft and their respective affiliates in accordance with the settlement and license agreement. </div>

58021000

<div> (10) Income Taxes As of July 28, 2012, the Company had $17,129 of unrecognized tax benefits, all of which, if recognized, would affect the Company’s effective tax rate. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. The Company had $4,034 accrued for interest and penalties, which is included in the $17,129 of unrecognized tax benefits noted above. The Company is subject to U.S. federal income tax as well as income tax in jurisdictions of each state having an income tax. The tax years that remain subject to examination are primarily 2007 and forward. Some earlier years remain open for a small minority of states. </div>

385581000

<div> (1) Merchandise Inventories Merchandise inventories are stated at the lower of cost or market. Cost is determined primarily by the retail inventory method under both the first-in, first-out (FIFO) basis and the last-in, first-out (LIFO) basis. B&N College’s textbook and trade book inventories are valued using the LIFO method, where the related reserve was not material to the recorded amount of the Company’s inventories or results of operations. Market is determined based on the estimated net realizable value, which is generally the selling price. Reserves for non-returnable inventory are based on the Company’s history of liquidating non-returnable inventory. The Company also estimates and accrues shortage for the period between the last physical count of inventory and the balance sheet date. Shortage rates are estimated and accrued based on historical rates and can be affected by changes in merchandise mix and changes in actual shortage trends. </div>

1660000

4100000

-40000

2009-11-27

413888000

2009-11-17

<div> (12) Credit Facility On April 27, 2012, the Company entered into an amendment (the 2012 Amended Credit Facility) to its existing agreement with Bank of America, N.A. entered into on April 29, 2011, as administrative agent, collateral agent and swing line lender, and other lenders in order to permit the transactions contemplated by the investment agreement among the Company, Morrison Investment Holdings, Inc., and Microsoft Corporation and to make certain other changes to the Company’s 2011 Amended Credit Agreement in connection therewith. On April 29, 2011, the Company entered into an amended and restated credit agreement (the 2011 Amended Credit Agreement) with Bank of America, N.A., as administrative agent, collateral agent and swing line lender, and other lenders, which amended and restated the credit agreement (the 2009 Credit Agreement) entered into on September 30, 2009 with Bank of America, N.A., as administrative agent, collateral agent and swing line lender, and other lenders. Under the 2011 Amended Credit Agreement, Lenders are providing up to $1,000,000 in aggregate commitments under a five-year asset-backed revolving credit facility, which is secured by eligible inventory with the ability to include eligible real estate and accounts receivable and related assets. Borrowings under the 2011 Amended Credit Agreement are limited to a specified percentage of eligible inventories and accounts receivable and accrued interest, at the election of the Company, at Base Rate or LIBO Rate, plus, in each case, an Applicable Margin (each term as defined in the 2011 Amended Credit Agreement). In addition, the Company has the option to request an increase in commitments under the 2011 Amended Credit Agreement by up to $300,000, subject to certain restrictions. The 2011 Amended Credit Agreement requires Availability (as defined in the 2011 Amended Credit Agreement) to be greater than the greater of (i) 10% of the Loan Cap (as defined in the 2011 Amended Credit Agreement) and (ii) $50,000. In addition, the 2011 Amended Credit Agreement contains covenants that limit, among other things, the Company’s ability to incur indebtedness, create liens, make investments, make restricted payments, merge or acquire assets, and contains default provisions that are typical for this type of financing, among other things. Proceeds from the 2011 Amended Credit Agreement are used for general corporate purposes, including seasonal working capital needs.   As a result of the 2011 Amended Credit Agreement, $6,580 of deferred financing fees related to the 2009 Credit Facility were written off in fiscal 2011, and included in net interest expenses. The remaining unamortized deferred costs of $16,341 and new charges of $10,180 relating to the Company’s 2011 Amended Credit Facility were deferred and are being amortized over the five-year term of the 2011 Amended Credit Facility. The Company had $302,800 of outstanding debt under the 2012 Amended Credit Facility as of July 28, 2012 compared with $509,600 as of July 30, 2011. The Company had $35,067 of outstanding letters of credit under its 2012 Amended Credit Facility as of July 28, 2012 compared with $31,214 as of July 30, 2011. </div>

-2603000

10259000

<div> (6) Segment Reporting Through the third quarter of fiscal 2012, the Company reported an operating segment titled B&N.com which included both its digital business and eCommerce operations. Due to the increased focus on the digital business and the Company’s recently developed 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 (focusing 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 determined that the segment previously referred to as B&N.com is no longer applicable and created a new segment titled NOOK to report upon its digital business, moving the eCommerce business (i.e., sales of physical merchandise over the Internet) into the B&N Retail segment. Also as a result of this assessment, certain corporate office and other costs have been allocated to all three segments. The Company’s three operating segments are: B&N Retail, B&N College and NOOK. B&N Retail This segment includes 689 bookstores as of July 28, 2012, primarily under the Barnes & Noble Booksellers trade name. The 689 Barnes & Noble stores generally offer a NOOK® department, boutique, counter, a comprehensive trade book title base, a café, a Children’s department, a Toys & Games department, a DVDs/BluRay department, a music department, a gift department, a magazine department, bargain department and a calendar of ongoing events, including author appearances and children’s activities. The B&N Retail segment also includes the Company’s eCommerce website, barnesandnoble.com, and the publishing operation, Sterling Publishing. B&N College This segment includes 667 stores as of July 28, 2012 that are primarily school-owned stores operated under contracts by B&N College and sales of digital content within the higher education marketplace through NOOK Study™. The 667 B&N College stores generally offer new, used, rental and digital textbooks, course-related materials, emblematic apparel and gifts, trade books, computer products and NOOK® products and related accessories, school and dorm supplies, and convenience and café items. NOOK This segment includes the Company’s digital business, including the development and support of the Company’s NOOK® product offerings. The digital business includes digital content such as eBooks, digital newsstand, apps and sales of NOOK® devices and accessories to third party distribution partners, B&N Retail and B&N College. Summarized financial information concerning the Company’s reportable segments is presented below: Sales   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="78%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> B&N Retail </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,119,387</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,097,252</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> B&N College </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">220,718</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">220,494</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> NOOK </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">191,975</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">191,412</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Elimination  (a) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(78,573</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(90,754</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,453,507</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,418,404</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> Sales by Product Line   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="86%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center">July 28,</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" colspan="2" align="center">July 30,</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Media (b) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">62</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">61</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr> <td valign="top"> Digital (c) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">18</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">20</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Other (d) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">20</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">19</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">100</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">100</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   Depreciation and Amortization   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="84%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> B&N Retail </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">40,940</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">39,485</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> B&N College </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">11,715</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">10,849</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> NOOK </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,380</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,337</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">58,035</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">55,671</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> Operating Profit (Loss)   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="82%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> B&N Retail </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">33,621</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">211</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> B&N College </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(25,747</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(23,053</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> NOOK </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(62,076</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(56,389</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(54,202</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(79,231</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> Capital Expenditures   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="84%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> B&N Retail </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">9,616</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">12,390</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> B&N College </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">9,533</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8,933</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> NOOK </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">7,308</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,302</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">26,457</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">26,625</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> Total Assets (e)   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="78%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> B&N Retail </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,242,167</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,005,773</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> B&N College </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,385,414</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,506,871</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> NOOK </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">417,103</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">459,013</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">4,044,684</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,971,657</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(a)</td> <td valign="top" align="left">Represents the elimination of intercompany sales from NOOK to Barnes & Noble Retail and Barnes & Noble College on a sell through basis.</td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(b)</td> <td valign="top" align="left">Includes tangible books, music, movies, rentals and newsstand.</td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(c)</td> <td valign="top" align="left"> Includes NOOK®, related accessories, eContent and warranties. </td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(d)</td> <td valign="top" align="left">Includes toys & games, café products, college apparel, gifts and miscellaneous other.</td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(e)</td> <td valign="top" align="left">Excludes intercompany balances.</td> </tr> </table>   A reconciliation of operating profit from reportable segments to income (loss) from operations before taxes in the consolidated financial statements is as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="82%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Reportable segments operating loss </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(54,202</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(79,231</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr> <td valign="top"> Interest expense, net and amortization of deferred financing costs </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8,941</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">9,442</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Consolidated loss before taxes </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(63,143</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(88,673</td> <td valign="bottom" nowrap="nowrap">)</td> </tr> </table> </div>

743000

21400000

2921248

<div> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="88%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> Estimated Amortization Expense: </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> (12 months ending on or about April 30) </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> 2013 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">20,720</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2014 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">18,583</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2015 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">14,647</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2016 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">11,355</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> 2017 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">10,875</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> </table> </div>

-40980000

190000

410055000

P3Y

<div> For the 13 weeks ended July 28, 2012 and July 30, 2011, the Company recognized stock-based compensation expense in selling and administrative expenses as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="86%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Restricted stock expense </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,628</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,080</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Restricted stock unit expense </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">705</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">371</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Stock option expense </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">707</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">238</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Stock-based compensation expense </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">5,040</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,689</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

-16200000

-22163000

-45238000

<div> The unaudited consolidated financial statements include the accounts of Barnes & Noble, Inc. and its subsidiaries (collectively, Barnes & Noble or the Company). In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements of the Company contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its consolidated financial position as of July 28, 2012 and the results of its operations and its cash flows for the 13 weeks then ended. These consolidated financial statements are condensed and therefore do not include all of the information and footnotes required by generally accepted accounting principles. The consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the 52 weeks ended April 28, 2012 (fiscal 2012). Due to the seasonal nature of the business, the results of operations for the 13 weeks ended July 28, 2012 are not indicative of the results to be expected for the 52 weeks ending April 27, 2013 (fiscal 2013). </div>

<div> (13) Stock-Based Compensation For the 13 weeks ended July 28, 2012 and July 30, 2011, the Company recognized stock-based compensation expense in selling and administrative expenses as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="86%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">13 weeks ended</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Restricted stock expense </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,628</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,080</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Restricted stock unit expense </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">705</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">371</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Stock option expense </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">707</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">238</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Stock-based compensation expense </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">5,040</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,689</td> </tr> </table> </div>

5641000

<div> (9) Other Long-Term Liabilities Other long-term liabilities consist primarily of deferred rent and obligations under a junior seller note related to the acquisition of B&N College. The Company provides for minimum rent expense over the lease terms (including the build-out period) on a straight-line basis. The excess of such rent expense over actual lease payments (net of tenant allowances) is classified as deferred rent. Other long-term liabilities also include accrued pension liabilities, store closing expenses and long-term deferred revenues. The Company had the following long-term liabilities at July 28, 2012, July 30, 2011 and April 28, 2012:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="84%" align="center"> <tr> <td width="70%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">April 28, 2012</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Deferred rent </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">212,603</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">257,899</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">220,875</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Junior seller note </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">150,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">150,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">150,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Other </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">34,812</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">26,435</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">34,190</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total long-term liabilities </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">397,415</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">434,334</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">405,065</td> </tr> </table> </div>

-45238000

<div> (3) Revenue Recognition Revenue from sales of the Company’s products is recognized at the time of sale, other than those with multiple elements and FOB destination point shipping terms. The Company’s products are considered delivered once they have been shipped and title and risk of loss have transferred. While the majority of the Company’s shipping terms are FOB shipping point, there are certain third party distribution partners with shipping terms of FOB destination point. Certain of the Company sales agreements with these distribution partners contain rights of inspection or acceptance provisions as is standard in the Company’s industry. The Company accrues for estimated sales returns in the period in which the related revenue is recognized based on historical experience and industry standards. Sales taxes collected from retail customers are excluded from reported revenues. All of the Company’s sales are recognized as revenue on a “net” basis, including sales in connection with any periodic promotions offered to customers. The Company does not treat any promotional offers as expenses.   In accordance with Accounting Standards Codification (ASC) 605-25, Revenue Recognition, Multiple Element Arrangements and Accounting Standards Updates (ASU) 2009-13 and 2009-14, for multiple-element arrangements that involve tangible products that contain software that is essential to the tangible product’s functionality, undelivered software elements that relate to the tangible product’s essential software and other separable elements, the Company allocates revenue to all deliverables using the relative selling-price method. Under this method, revenue is allocated at the time of sale to all deliverables based on their relative selling price using a specific hierarchy. The hierarchy is as follows: vendor-specific objective evidence, third-party evidence of selling price, or best estimate of selling price. NOOK® (references to NOOK® include the Company’s NOOK 1st Edition™, NOOK Wi-Fi 1st Edition™, NOOK Color™, NOOK Simple Touch™, NOOK Tablet™ and NOOK Simple Touch™ with GlowLightTM eBook Reader devices) eBook Reader revenue is recognized at the segment point of sale. The Company includes post-service customer support (PCS) in the form of software updates and potential increased functionality on a when-and-if-available basis, as well as wireless access and wireless connectivity with the purchase of NOOK® devices from the Company. Using the relative selling price described above, the Company allocates revenue based on the best estimate of selling price for the deliverables as no vendor-specific objective evidence or third-party evidence exists for any of the elements. Revenue allocated to NOOK® and the software essential to its functionality is recognized at the time of sale, provided all other conditions for revenue recognition are met. Revenue allocated to the PCS and the wireless access is deferred and recognized on a straight-line basis over the 2-year estimated life of NOOK®. The average percentage of a NOOK®’s sales price that is deferred for undelivered items and recognized over its 2-year estimated life ranges between 2% and 5%, depending on the type of device sold. The amount of NOOK®-related deferred revenue as of July 28, 2012, July 30, 2011 and April 28, 2012 was $18,171, $18,338 and $19,785, respectively. These amounts are classified on the Company’s balance sheet in accrued liabilities for the portion that is subject to deferral for one year or less and other long-term liabilities for the portion that is subject to deferral for more than one year. The Company also pays certain vendors who distribute NOOK® a commission on the content sales sold through that device. The Company accounts for these transactions as a reduction in the sales price of the NOOK® based on historical trends of content sales and a liability is established for the estimated commission expected to be paid over the life of the product. The Company recognizes revenue of the content at the point of sale of the content. The Company records revenue from sales of digital content, sales of third-party extended warranties, service contracts and other products, for which the Company is not obligated to perform, and for which the Company does not meet the criteria for gross revenue recognition under ASC 605-45-45, Reporting Revenue Gross as a Principal versus Net as an Agent, on a net basis. All other revenue is recognized on a gross basis.   NOOK acquires the rights to distribute digital content from publishers and distributes the content on barnesandnoble.com, NOOK® devices and other eBookstore platforms. Certain digital content is distributed under an agency pricing model in which the publishers set fixed prices for eBooks and NOOK receives a fixed commission on content sold through the eBookstore. The majority of the Company’s eBook sales are sold under the agency model. The Barnes & Noble Member Program offers members greater discounts and other benefits for products and services, as well as exclusive offers and promotions via e-mail or direct mail for an annual fee of $25.00, which is non-refundable after the first 30 days. Revenue is recognized over the twelve-month period based upon historical spending patterns for Barnes & Noble Members. </div> <div> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="63%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="10" align="center">As of July 28, 2012</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> Amortizable Intangible Assets </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Useful Life</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Gross Carrying Amount</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Accumulated Amortization</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Customer relationships and other acquired intangible assets </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right">3-25</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">271,938</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(36,814</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">235,124</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Author contracts </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right">10</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">18,461</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(17,511</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">950</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Technology </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right">3-10</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">9,950</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,856</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">7,094</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Distribution contracts </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right">10</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8,325</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(5,089</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,236</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Other </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right">3-10</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">6,188</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(4,806</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,382</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">314,862</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(67,076</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">247,786</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td height="16"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> <td height="16" colspan="4"></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> Unamortizable Intangible Assets </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Trade name </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">293,400</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Publishing contracts </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">21,336</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">314,736</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total intangible assets </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">562,522</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div> 1.00 20 8941000 3942000 <div> (8) Gift Cards The Company sells gift cards which can be used in its stores or on Barnes & Noble.com. The Company does not charge administrative or dormancy fees on gift cards and gift cards have no expiration dates. Upon the purchase of a gift card, a liability is established for its cash value. Revenue associated with gift cards is deferred until redemption of the gift card. Over time, some portion of the gift cards issued are not redeemed. The Company estimates the portion of the gift card liability for which the likelihood of redemption is remote based upon the Company’s historical redemption patterns. The Company records this amount in income on a straight-line basis over a 12-month period beginning in the 13th month after the month the gift card was originally sold. If actual redemption patterns vary from the Company’s estimates, actual gift card breakage may differ from the amounts recorded. The Company recognized gift card breakage of $6,045 and $5,295 during the 13 weeks ended July 28, 2012 and July 30, 2011, respectively. The Company had gift card liabilities of $312,855 and $301,249 as of July 28, 2012 and July 30, 2011, respectively. </div> 1.50 0.20 2 November 17, 2012 <div> (16) Liberty Investment On August 18, 2011, the Company entered into an investment agreement between the Company and Liberty GIC, Inc. (Liberty), a subsidiary of Liberty Media Corporation, pursuant to which the Company issued and sold to Liberty, and Liberty purchased, 204,000 shares of the Company’s Series J Preferred Stock, par value $0.001 per share (Preferred Stock), for an aggregate purchase price of $204,000, in a private placement exempt from the registration requirements of the 1933 Act. The shares of Preferred Stock will be convertible, at the option of the holders, into shares of Common Stock representing 16.6% of the Common Stock outstanding as of August 29, 2011, (after giving pro forma effect to the issuance of the Preferred Stock), based on the initial conversion rate. The initial conversion rate reflects an initial conversion price of $17.00 and is subject to adjustment in certain circumstances. The initial dividend rate for the Preferred Stock is equal to 7.75% per annum of the initial liquidation preference of the Preferred Stock, to be paid quarterly and subject to adjustment in certain circumstances. The Preferred Stock is mandatorily redeemable on August 18, 2021 and may be redeemed at the discretion of the Company anytime after August 17, 2016. Starting August 18, 2013, if the closing price of the Common Stock exceeds 150% of the then-applicable conversion price of the Preferred Stock for 20 consecutive trading days, the Company may require conversion of all the Preferred Stock to Common Stock. The holders of shares of Series J Preferred Stock will be entitled to vote on all matters presented to the holders of common stock (as a single class with such holders), on an as-converted basis. In addition, for so long as Liberty and its affiliates continue to meet certain ownership requirements, the holders of the Series J Preferred Stock voting as a separate class will be entitled to elect two directors to the Board, and Liberty will have consent rights under the investment agreement over certain matters. The entry into the investment agreement and the issuance and sale of the Preferred Stock was approved by the Company’s Board of Directors following a recommendation made by a Special Committee of the Board of Directors. In light of the investment by Liberty, the Company and Liberty Media Corporation ceased discussions regarding Liberty Media Corporation’s previously announced acquisition proposal. The terms, rights, obligations and preferences of the Preferred Stock are set forth in a Certificate of Designations of the Company, which was filed with the Secretary of State of the State of Delaware on August 18, 2011. On August 18, 2011, the Company amended the Rights Agreement to reflect the issuance of the Preferred Stock.   The Preferred Stock does not meet the categories of ASC 480-10, Distinguishing Liabilities from Equity, and is therefore reported as temporary equity for classification purposes. The related issuance costs, which include advisory, legal and accounting fees, of $12,621 were recorded in temporary equity as a reduction of the proceeds from the Liberty investment. The Company will be required to accrete these fees on a straight line basis as dividends over the ten year term. This is in line with ASC 480-10-S99 for SEC registrants, which requires shares to be classified outside of permanent equity as temporary equity or mezzanine equity when there are events not solely within the control of the issuer that could trigger redemption. The Company has determined that the various embedded options did not require bifurcation from the Preferred Stock. Additionally, the Company concluded that a beneficial conversion feature did not exist as the effective conversion price was greater than the Company’s share price on the commitment date. </div> 0.50 <div> The changes in the carrying amount of goodwill by segment for the 13 weeks ended July 28, 2012 are as follows:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="61%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">B&N Retail</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">B&N College</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">NOOK</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total Company</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance as of April 28, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">225,336</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">274,070</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">20,279</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">519,685</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Benefit of excess tax amortization (a) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(1,107</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(1,107</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance as of July 28, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">224,229</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">274,070</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">20,279</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">518,578</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(a)</td> <td valign="top" align="left">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 $96,576. In accordance with ASC 740-10-30, Accounting for Income Taxes, the Company is recognizing the tax benefits of amortizing such excess as a reduction of goodwill as it is realized on the Company’s income tax return.</td> </tr> </table> </div> 0.50 1107000 1/1000th <div> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="89%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> Aggregate Amortization Expense: </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> For the 13 weeks ended July 28, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">5,641</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> For the 13 weeks ended July 30, 2011 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,544</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> </table> </div> <div> (19) Recent Accounting Pronouncements In July 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-02, Intangibles-Goodwill and Other (ASU 2012-02). ASU 2012-02 will allow the Company the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that an indefinite-lived intangible asset is impaired. Determining that it is more likely than not that an indefinite-lived intangible asset is impaired will require quantitative impairment testing, otherwise, no further action will be required. This ASU is effective for annual and interim impairment tests performed for fiscal years beginning after September 18, 2012, with early adoption permitted. The adoption is not expected to have an impact on the Company’s Fiscal 2014 Consolidated Financial Statements. </div> <div> The Company had the following long-term liabilities at July 28, 2012, July 30, 2011 and April 28, 2012:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="84%" align="center"> <tr> <td width="70%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 28, 2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">July 30, 2011</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">April 28, 2012</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Deferred rent </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">212,603</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">257,899</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">220,875</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Junior seller note </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">150,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">150,000</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">150,000</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Other </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">34,812</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">26,435</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">34,190</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Total long-term liabilities </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">397,415</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">434,334</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">405,065</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

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Reconciliation of Operating Profit From Reportable Segments to Income (Loss) From Operations Before Taxes in Consolidated Financial Statements (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 28, 2012	Jul. 30, 2011
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Reportable segments operating loss	$ (54,202)	$ (79,231)
Interest expense, net and amortization of deferred financing costs	8,941	9,442
Consolidated loss before taxes	$ (63,143)	$ (88,673)

Shareholders' Equity - Additional Information (Detail) (USD $)	3 Months Ended
	Jul. 28, 2012	Apr. 28, 2012	Jul. 30, 2011
Class of Stock [Line Items]
Dividend declared date	Nov. 17, 2009
Dividend payable, record date	Nov. 27, 2009
Common stock, par value	$ 0.001	$ 0.001	$ 0.001
Proportion of preferred stock in common stock	1/1000th
Preferred stock price per share	$ 100.00
Rights expiry date	November 17, 2012
Beneficial ownership threshold	20.00%
Percent of assets sold to acquiring entity, threshold for discounted share purchase	50.00%
Rate of discounted share purchase	50.00%
Series I Preferred Stock
Class of Stock [Line Items]
Preferred stock, par value per share	$ 0.001

Income Taxes - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	Jul. 28, 2012
Income Taxes [Line Items]
Unrecognized tax benefits, all of which, if recognized, would affect effective tax rate	$ 17,129
Accrued interest and penalties included in unrecognized tax benefits	4,034
Unrecognized tax benefits	$ 17,129

Legal Proceedings - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	1 Months Ended
	Jun. 13, 2012 Stockholder Derivative Litigation	Sep. 30, 2009 Stockholder Derivative Litigation	Oct. 06, 2009 Stockholder Derivative Litigation	Aug. 31, 2009 Stockholder Derivative Litigation	Oct. 04, 2011 Strugala	Dec. 21, 2010 Strugala	Aug. 05, 2011 Lina	Jun. 06, 2011 LSI Corporation	Oct. 11, 2011 Dustin Torrez	Apr. 17, 2012 Kevin Khoa Nguyen	Jan. 01, 2011 Deep9
Loss Contingencies [Line Items]
Number of putative shareholder derivative complaints filed			1	5		1	1	1	1	1	1
Consolidated cases, number of lawsuits		5
Purchase price waived in litigation settlement	$ 22,750
Adjustment to additional paid in capital on purchase price waived if the Settlement Agreement approved	$ 22,750
Loss contingency, actions taken by Court					On October 4, 2011, the Court granted defendants' motion to dismiss, but also granted plaintiff leave to replead within 30 days.

Stock-Based Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 28, 2012	Jul. 30, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 5,040	$ 4,689
Selling And Administrative Expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Restricted stock expense	3,628	4,080
Restricted stock unit expense	705	371
Stock option expense	707	238
Stock-based compensation expense	$ 5,040	$ 4,689

Estimated Amortization Expense (Detail) (USD $) In Thousands, unless otherwise specified	Jul. 28, 2012
Changes In Intangible Assets And Goodwill [Abstract]
2013	$ 20,720
2014	18,583
2015	14,647
2016	11,355
2017	$ 10,875

Segment Reporting - Additional Information (Detail)	3 Months Ended
Segment Reporting - Additional Information (Detail)	Jul. 28, 2012 Segment
Segment Reporting Information [Line Items]
Number of operating segments	3
B&N Retail
Segment Reporting Information [Line Items]
Number of stores	689
B&N College
Segment Reporting Information [Line Items]
Number of stores	667

Microsoft Investment - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		1 Months Ended
	Jul. 28, 2012 Microsoft Commitment	Jul. 28, 2012 Microsoft Other Commitment	Apr. 27, 2012 NewCo	Apr. 27, 2012 NewCo Morrison Series A Preferred	Apr. 27, 2012 NewCo Microsoft	Apr. 27, 2012 NewCo Microsoft Series A Preferred
Subsidiary, Sale of Stock [Line Items]
Preferred stock issued				300,000		300,000
Preferred stock issued, aggregate purchase price				$ 300,000		$ 300,000
Percentage of common membership interest					17.60%
Percentage of common membership interest owned by NewCo			82.40%
Advance payments term	3 years	5 years
Advance payments	$ 60,000	$ 25,000

Long-Term Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Jul. 28, 2012	Apr. 28, 2012	Jul. 30, 2011
Other Long-Term Liabilities [Abstract]
Deferred rent	$ 212,603	$ 220,875	$ 257,899
Junior seller note	150,000	150,000	150,000
Other	34,812	34,190	26,435
Total long-term liabilities	$ 397,415	$ 405,065	$ 434,334

Changes in Intangible Assets and Goodwill - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 28, 2012	Oct. 17, 2011
Acquired Finite-Lived Intangible Assets [Line Items]
Intellectual property assets		$ 14,528
Intellectual property assets, useful life	3 years
Amortization expense related to acquisition	$ 1,816

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 28, 2012	Jul. 30, 2011
Cash flows from operating activities:
Net loss	$ (40,980)	$ (56,606)
Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities:
Depreciation and amortization (including amortization of deferred financing fees)	59,381	57,006
Stock-based compensation expense	5,040	4,689
Deferred taxes	743	691
Loss on disposal of property and equipment	40	111
Decrease in other long-term liabilities	(7,650)	(14,313)
Changes in operating assets and liabilities, net	2,603	(194,898)
Net cash flows provided by (used in) operating activities	19,177	(203,320)
Cash flows used in investing activities:
Purchases of property and equipment	(26,457)	(26,625)
Net increase in other noncurrent assets	(2,943)	(3,847)
Other investing activities, net	(4,100)
Net cash flows used in investing activities	(33,500)	(30,472)
Cash flows (used in) provided by financing activities:
Net (decrease) increase in credit facility	(21,400)	196,500
Proceeds from exercise of common stock options	1,980	678
Purchase of treasury stock	(357)	(607)
Excess tax benefit from stock-based compensation	190	145
Net cash flows (used in) provided by financing activities	(19,587)	196,716
Net decrease in cash and cash equivalents	(33,910)	(37,076)
Cash and cash equivalents at beginning of period	54,131	59,429
Cash and cash equivalents at end of period	20,221	22,353
Changes in operating assets and liabilities, net:
Receivables, net	16,200	(6,249)
Merchandise inventories	(385,581)	(439,074)
Prepaid expenses and other current assets	29,008	5,304
Accounts payable and accrued liabilities	342,976	245,121
Changes in operating assets and liabilities, net	2,603	(194,898)
Cash paid during the period for:
Interest paid	10,259	10,296
Income taxes (net of refunds)	1,660	1,872
Non-cash financing activity:
Accrued dividend on redeemable preferred stock	$ 3,942

Liberty Investment - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Jul. 28, 2012 Day	Jul. 28, 2012 Private Placement	Aug. 29, 2011 Private Placement	Aug. 18, 2011 Private Placement Series J Preferred Stock
Subsidiary, Sale of Stock [Line Items]
Preferred stock issued, shares				204,000
Preferred stock, par value per share				$ 0.001
Aggregate purchase price of Preferred Stock				$ 204,000
Percentage representation of common stock outstanding upon conversion			16.60%
Preferred stock, initial conversion price		$ 17.00
Initial dividend rate for the preferred stock		7.75%
Percentage of conversion price of the preferred stock	150.00%
Number of consecutive trading days applicable to the conversion of preferred stock	20
Issuance cost of investment agreement related to advisory, legal and accounting fees	$ 12,621
Professional fees as dividend, accretion period	10 years

Changes In Carrying Amount of Goodwill by Segment (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Jul. 28, 2012
Goodwill [Line Items]
Tax basis of goodwill in excess of related basis	$ 96,576

Consolidated Statement of Changes in Shareholders' Equity (USD $) In Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Losses	Retained Earnings	Treasury Stock at Cost
Balance at Apr. 28, 2012	$ 747,657	$ 91	$ 1,340,909	$ (16,635)	$ 481,574	$ (1,058,282)
Net loss	(40,980)				(40,980)
Exercise of 153 common stock options	1,980	1	1,979
Stock options and restricted stock tax benefits	62		62
Stock-based compensation expense	5,040		5,040
Accretive dividend on preferred stockholders	(316)				(316)
Accrued/paid dividends for preferred stockholders	(3,942)				(3,942)
Treasury stock acquired, 21 shares	(357)					(357)
Balance at Jul. 28, 2012	$ 709,144	$ 92	$ 1,347,990	$ (16,635)	$ 436,336	$ (1,058,639)

Earnings (Loss) per Share - Additional Information (Detail)	3 Months Ended
	Jul. 28, 2012	Jul. 30, 2011
Earnings (Loss) Per Share [Line Items]
Participating securities excluded from the calculation of earnings per share	2,921,248	3,469,589

Consolidated Statement of Changes in Shareholders' Equity (Parenthetical) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 28, 2012
Common stock options exercised, shares	153
Treasury stock acquired, shares	21

Document and Entity Information	3 Months Ended
Document and Entity Information	Jul. 28, 2012	Jul. 31, 2012
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jul. 28, 2012
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Trading Symbol	BKS
Entity Registrant Name	BARNES & NOBLE INC
Entity Central Index Key	0000890491
Current Fiscal Year End Date	--04-27
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		59,956,047

Reclassifications	3 Months Ended
Reclassifications	Jul. 28, 2012
Reclassifications	(2) Reclassifications Certain prior period amounts have been reclassified to conform to the current presentation.

Revenue Recognition - Additional Information (Detail) (USD $)	3 Months Ended					3 Months Ended
	Jul. 28, 2012 Year	Jul. 28, 2012 Annual Fee	Jul. 28, 2012 Nook	Apr. 28, 2012 Nook	Jul. 30, 2011 Nook	Jul. 28, 2012 Nook Minimum	Jul. 28, 2012 Nook Maximum
Deferred Revenue Arrangement [Line Items]
Estimated life of NOOK, years	2
Average Percent, NOOK's Sales price						2.00%	5.00%
Deferred Revenue			$ 18,171,000	$ 19,785,000	$ 18,338,000
Non-refundable, after first 30 days, annual fee		$ 25.00

Pension And Other Postretirement Benefit Plans - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 28, 2012	Jul. 30, 2011
Pension and Other Postretirement Benefit Plans [Line Items]
Pension expense	$ 745	$ 515
Company contributions for postretirement plan	$ 38	$ 38

Credit Facility - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified			1 Months Ended	3 Months Ended
	Jul. 28, 2012	Jul. 30, 2011	Apr. 29, 2011 Amended Credit Agreement Year	Jul. 28, 2012 Amended Credit Agreement	Jul. 28, 2012 2009 Credit Facility
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity			$ 1,000,000
Credit facility maturity term, in years			5
Increase in commitments under credit agreement, maximum			300,000
Percentage of Loan Cap under Amended Credit Agreement			10.00%
Amount of Loan Cap under Amended Credit Agreement			50,000
Amortization of deferred financing fees				10,180	6,580
Unamortized deferred costs					16,341
Deferred financing amortization term				5 years
Line of credit facility, amount outstanding	302,800	509,600
Letters of credit, outstanding amount	$ 35,067	$ 31,214

Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Jul. 28, 2012	Apr. 28, 2012	Jul. 30, 2011
Redeemable Preferred Shares, par value	$ 0.001	$ 0.001	$ 0.001
Redeemable Preferred Shares, shares authorized	5,000	5,000	5,000
Redeemable Preferred Shares, shares issued	204	204	0
Common stock, par value	$ 0.001	$ 0.001	$ 0.001
Common stock, shares authorized	300,000	300,000	300,000
Common stock, shares issued	91,833	91,376	90,641
Treasury stock, shares	33,743	33,722	33,453