What changed in this filing

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Item 1. Financial Statements

2021-03-09 compared with 2020-12-08 · 231 added, 163 removed, 520 unchanged (43% of the section changed)

5 unchanged sentences

13 weeks ended 39 weeks ended

2020 October 26,

2019 October 31,

2020 October 26,

2021 January 25,

2020 January 30,

2021 January 25,

Product sales and other $ 373,502 $ 453,678 $ 1,118,544 $ 1,474,448

10 unchanged sentences

Restructuring and other charges 1,669 205 10,727 3,240

Operating income (loss) 6,733 56,431 ( 52,182 ) 12,619

Operating (loss) income ( 64,702 ) ( 2,971 ) ( 116,884 ) 9,648

Interest expense, net 2,311 1,904 5,876 5,882

Income before income taxes 5,821 54,985 ( 55,747 ) 8,641

(Loss) income before income taxes ( 67,013 ) ( 4,875 ) ( 122,760 ) 3,766

Income tax (benefit) expense ( 18,724 ) ( 3,182 ) ( 35,334 ) 1,683

Net income (loss) $ 7,515 $ 35,931 $ ( 39,137 ) $ 3,776

Income (Loss) per share of common stock:

Net (loss) income $ ( 48,289 ) $ ( 1,693 ) $ ( 87,426 ) $ 2,083

(Loss) Income per share of common stock:

Basic $ ( 0.96 ) $ ( 0.04 ) $ ( 1.78 ) $ 0.04

8 unchanged sentences

(In thousands, except per share data)

2020 October 26,

2021 January 25,

(unaudited) (unaudited) (audited)

44 unchanged sentences

39 weeks ended

2020 October 26,

2021 January 25,

Cash flows from operating activities:

7 unchanged sentences

Stock-based compensation expense 3,857 6,000

Changes in other long-term liabilities 1,773 ( 2,130 )

Changes in other long-term assets and liabilities, net 11,291 2,663

Changes in operating lease right-of-use assets and liabilities 11,937 9,890

8 unchanged sentences

Repayments of borrowings under Credit Agreement ( 571,500 ) ( 451,000 )

Sale of treasury shares 10,869 —

Purchase of treasury shares ( 894 ) ( 1,265 )

Net cash flows used in financing activities ( 13,925 ) ( 68,865 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 889 ) 10,588

Net increase (decrease) in cash, cash equivalents and restricted cash 1,673 ( 4,206 )

Cash, cash equivalents and restricted cash at beginning of period 9,008 14,768

28 unchanged sentences

Balance at October 26, 2019 52,139 $ 521 $ 730,501 $ ( 240,801 ) 3,842 $ ( 32,901 ) $ 457,320

Stock-based compensation expense

Net loss ( 1,693 ) ( 1,693 )

Balance at January 25, 2020 52,139 $ 521 $ 732,320 $ ( 242,494 ) 3,842 $ ( 32,901 ) $ 457,446

Common Stock Paid-In Accumulated Treasury Stock Total

15 unchanged sentences

Balance October 31, 2020 53,316 $ 533 $ 735,647 $ ( 321,964 ) 4,252 $ ( 33,782 ) $ 380,434

Stock-based compensation expense

Vested equity awards

Sale of treasury shares ( 3,784 ) ( 2,308 ) 14,653 10,869

Shares repurchased for tax withholdings for vested stock awards

4 ( 13 ) ( 13 )

Net loss ( 48,289 ) ( 48,289 )

Balance at January 30, 2021 53,327 $ 533 $ 733,019 $ ( 370,253 ) 1,948 $ ( 19,142 ) $ 344,157

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 3, 2020 and October 26, 2019

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

3 unchanged sentences

References to “Student Brands” refer to our direct-to-student subscription-based writing services business operated through our subsidiary Student Brands, LLC.

This Form 10-Q should be read in conjunction with our Audited Consolidated Financial Statements and accompanying Notes to consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended May 2, 2020, which includes consolidated financial statements for the Company for each of the three fiscal years ended May 2, 2020, April 27, 2019 and April 28, 2018 (Fiscal 2020, Fiscal 2019 and Fiscal 2018, respectively) and the unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the 13 weeks ended August 1, 2020.

This Form 10-Q should be read in conjunction with our Audited Consolidated Financial Statements and accompanying Notes to consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended May 2, 2020, which includes consolidated financial statements for the Company for each of the three fiscal years ended May 2, 2020, April 27, 2019 and April 28, 2018 (Fiscal 2020, Fiscal 2019 and Fiscal 2018, respectively), the unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the 13 weeks ended August 1, 2020, and the unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the 26 weeks ended October 31, 2020.

Description of Business

15 unchanged sentences

Segment Reporting in our Annual Report on Form 10-K for the fiscal year ended May 2, 2020 .

In Fiscal 2020, we retained Morgan Stanley & Co.

LLC to serve as a financial advisor in connection with our review of strategic opportunities.

The review was designed to accelerate the execution of customer-focused strategic initiatives and enhance value for our shareholders, including, but not limited to, continued execution of our current business plan, new partnerships, joint ventures and other potential opportunities.

On August 24, 2020, we announced that we had concluded our review of strategic opportunities.

After extensive evaluation and deliberation, and in consultation with its financial and legal advisors, the Board unanimously determined that the continued execution of the Company’s current business plan is the best path forward for the Company and its shareholders.

COVID-19 Business Impact

Our business experienced an unprecedented and significant impact as a result of COVID-19 related campus store closures.

Beginning in March 2020, colleges and universities nationwide began to close their campuses in light of safety concerns and as

Partnership with Fanatics and FLC

In December 2020, we entered into a new merchandising partnership with Fanatics Retail Group Fulfillment, LLC, Inc.

("Fanatics") and Fanatics Lids College, Inc.

Through this partnership, we will receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our high margin general merchandise business.

We will leverage Fanatics’ e-commerce technology and expertise for the operational management of the emblematic merchandise and gift sections of our campus store websites.

FLC will manage in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus stores.

FLC has agreed to purchase our logo and emblematic general merchandise inventory, which we expect to be finalized during our fiscal 2021 fourth quarter.

We will maintain our relationships with campus partners and remain responsible for staffing and managing the day-to-day operations of our campus bookstores.

We will also work closely with our campus partners to ensure that each campus store will maintain unique aspects of in-store merchandising, including localized product

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

a result of local and state issued stay-at-home orders.

assortments and specific styles and designs that reflect each campus’s brand.

We expect Fanatics and FLC to go live with this partnership beginning in the second calendar quarter of 2021.

Additionally, Fanatics, Inc.

and Lids Holdings, Inc.

jointly made a $ 15,000 strategic equity investment in BNED and received 2,307,692 common shares of BNED in exchange.

We expect to use these proceeds to for general corporate purposes.

For additional information, see Note 7.

Equity and Earnings Per Share.

Wolfram|Alpha Agreement

In December 2020, we entered into an agreement with Wolfram|Alpha to develop a math solver as a new feature in our bartleby suite of homework help and learning solutions.

Powered by Wolfram|Alpha’s best-in-class computation engine, the math solver will allow students to access an interactive digital calculator that provides real-time, step-by-step explanations for even the most advanced math problems.

COVID-19 Business Impact

Our business experienced an unprecedented and significant impact as a result of COVID-19 related campus store closures.

Beginning in March 2020, colleges and universities nationwide began to close their campuses in light of safety concerns and as a result of local and state issued stay-at-home orders.

By mid-March, during our fiscal 2020 fourth quarter, we closed the majority of our physical campus stores to protect the health and safety of our customers and employees.

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Colleges and universities in the United States continue to adjust their plans for each academic term, with some implementing shortened semesters or choosing to remain fully virtual in order to best protect students and faculty.

Our fiscal 2021 second quarter results were significantly impacted by the ongoing COVID-19 pandemic, as many schools continued to adjust their learning model and on-campus activities in response to the pandemic.

Fewer students returned to campus this fall, as many schools implemented a remote learning model and curtailed on-campus classes and activities.

Our fiscal 2021 results have been significantly impacted by the ongoing COVID-19 pandemic, as many schools continued to adjust their learning model and on-campus activities in response to the pandemic.

Fewer students have returned to campus, as many schools implemented a remote learning model and curtailed on-campus classes and activities.

While many big athletic conferences resumed their sport activities, fan attendance at the games was either eliminated or severely restricted, which further impacted the company’s high-margin general merchandise business.

Additionally, sales were impacted by overall enrollment declines in higher education.

Summary of Significant Accounting Policies - Evaluation of Goodwill and Other Long-Lived Assets related to the impairment loss (non-cash) recognized during the 13 weeks ended January 30, 3021.

The COVID-19 impact on higher education remains a fluid situation, and we are committed to supporting our campus partners through our flexible offerings and our ability to quickly pivot to ensure uninterrupted service as institutions manage the safety of their campuses.

There is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic.

If economic conditions caused by the pandemic do not recover as currently estimated by management or market factors currently in place change, there could be a further impact to our results of operations, financial condition and cash flows from operations.

If economic conditions caused by the pandemic do not recover as currently estimated by management or market factors currently in place change, there could be a further impact on our results of operations, financial condition and cash flows from operations.

Summary of Significant Accounting Policies

8 unchanged sentences

Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April.

Due to the seasonal nature of the business, the results of operations for the 13 and 26 weeks ended October 31, 2020 are not indicative of the results expected for the 52 weeks ending May 1, 2021 (Fiscal 2021).

Due to the seasonal nature of the business, the results of operations for the 13 and 39 weeks ended January 30, 2021 are not indicative of the results expected for the 52 weeks ending May 1, 2021 (Fiscal 2021).

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

For certain of our retail operations, sales are generally highest in the second and third fiscal quarters, when students purchase and rent textbooks and other course materials for the typical academic year, and lowest in the first and fourth fiscal quarters.

8 unchanged sentences

Reserves for non-returnable inventory are based on our history of liquidating non-returnable inventory.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

(Thousands of dollars, except share and per share data)

Cost is determined primarily by the retail inventory method for our Retail segment and last-in first out, or “LIFO”, method for our Wholesale segment.

18 unchanged sentences

Retail product revenue is recognized when the customer takes physical possession of our products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of our products by our customers for products ordered through our websites and virtual bookstores.

Wholesale product revenue is recognized upon shipment of physical textbooks at which point title passes and risk of loss is transferred to the customer.

Wholesale product revenue is recognized upon shipment of physical

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

textbooks at which point title passes and risk of loss is transferred to the customer.

Additional revenue is recognized for shipping charges billed to customers and shipping costs are accounted for as fulfillment costs within cost of goods sold.

10 unchanged sentences

For sales and rentals involving third-party products, we evaluate whether we are acting as a principal or an agent.

Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring them to the

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

(Thousands of dollars, except share and per share data)

Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring them to the customer.

There are significant judgments involved in determining whether we control the specified goods or services prior to transferring them to the customer including whether we have the ability to direct the use of the good or service and obtain substantially all of the remaining benefits from the good or service.

15 unchanged sentences

Our selling and administrative expenses consist primarily of store payroll and store operating expenses.

Selling and administrative expenses also include long-term incentive plan compensation expense and general office expenses, such as merchandising, procurement, field support, finance and accounting, and operating costs related to our DSS segment subscription-based services business.

Shared-service costs such as human resources, legal, treasury, information technology, and various other corporate level expenses and other governance functions, are not allocated to any specific reporting segment and are recorded in Corporate Services.

Evaluation of Goodwill and Other Long-Lived Assets

As of October 31, 2020, we had $ 0 , $ 0 and $ 4,700 of goodwill on our condensed consolidated balance sheet related to our Retail, Wholesale and DSS reporting units, respectively.

In accordance with ASC 350-10, Intangibles - Goodwill and Other, we complete our annual goodwill impairment test as of the first day of the third quarter of each fiscal year, or whenever events or changes in circumstances indicate that the carrying amount of the reporting unit exceeds its fair value.

Our other long-lived assets include property and equipment and amortizable intangibles.

As of October 31, 2020, we had $ 93,130 and $ 166,140 of property and equipment and amortizable intangible assets, net of depreciation and amortization, respectively, on our condensed consolidated balance sheet.

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long -Lived Assets .

During the fourth quarter of Fiscal 2020, in conjunction with COVID-19 related campus store closures, we evaluated certain of our long-lived assets associated with our Retail and Wholesale segments for impairment.

Based on the results of the tests, for the Retail segment, we recognized an impairment loss of $587 during the fourth quarter of Fiscal 2020, related to store-level assets in restructuring and other charges on the condensed consolidated statement of operations.

These long-lived

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

assets were not recoverable and had a de minimis fair value, as determined using an income approach (Level 3 input), resulting in a non-cash impairment charge for the full carrying value of those long-lived assets.

During the 26 weeks ended October 31, 2020, COVID-19 related closed campus stores began to re-open with sales fulfilled either from the stores, from our Wholesale operations, or drop ship programs, as well as online direct-to-student services.

We believe indicators of impairment do not exist and the carrying amount of our long-lived assets and property and equipment are recoverable and the fair value of the DSS reporting unit continues to exceed the carrying value of the reporting unit.

During the 26 weeks ended October 26, 2019, we recorded an impairment loss (non-cash) of $ 433 in the Retail segment related to net capitalized development costs for a project which are not recoverable.

As of October 31, 2020, other long-term liabilities includes $ 25,748 related to the long-term tax payable associated with the LIFO reserve.

subscription-based services business.

Evaluation of Goodwill and Other Long-Lived Assets

As of January 30, 2021, we had $ 0 , $ 0 and $ 4,700 of goodwill on our condensed consolidated balance sheet related to our Retail, Wholesale and DSS reporting units, respectively.

We completed our annual goodwill impairment test as of the first day of the third quarter of Fiscal 2021.

In performing the valuation, we used cash flows that reflected management’s forecasts and discount rates that included risk adjustments consistent with the current market conditions.

The fair value of the DSS reporting unit was determined to exceed the carrying value of the reporting unit;

therefore, no goodwill impairment was recognized.

As of January 30, 2021, our other long-lived assets include property and equipment, operating lease right-of-use assets, amortizable intangibles, and other noncurrent assets of $ 87,405 , $ 242,937 , $ 155,536 , and $ 27,195 , respectively, on our condensed consolidated balance sheet.

Our fiscal 2021 results have been significantly impacted by the ongoing COVID-19 pandemic, as many schools continued to adjust their learning models and on-campus activities during the Spring semester of fiscal 2021.

Many of the trends observed during the Fall semester continued into the Spring semester, as fewer students have returned to campus for the Spring semester, many colleges and universities continued with remote learning models and on-campus classes and activities have been further curtailed, including many big athletic conferences that have been either eliminated or severely restricted.

These combined events continue to impact the Company’s course materials and general merchandise business.

During the 13 weeks ended January 30, 2021, we evaluated certain of our store-level long-lived assets in the Retail segment for impairment.

Based on the results of the impairment tests, we recognized an impairment loss (non-cash) of $ 27,630 , $ 20,506 after-tax, comprised of $ 5,085 , $ 13,328 , $ 6,278 and $ 2,939 of property and equipment, operating lease right-of-use assets, amortizable intangibles, and other noncurrent assets, respectively, on the condensed consolidated statement of operations.

The fair value of the impaired long-lived assets were determined using an income approach (Level 3 input), using the Company’s best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations.

For additional information, see Note 8.

Fair Value Measurements .

During the 39 weeks ended January 25, 2020, we recorded an impairment loss (non-cash) of $ 433 in the Retail segment related to net capitalized development costs for a project which were not recoverable.

As of January 30, 2021, other long-term liabilities includes $ 25,748 related to the long-term tax payable associated with the LIFO reserve.

The LIFO reserve is impacted by changes in the consumer price index (“CPI”) and is dependent on the inventory levels at the end of our tax year (on or about January 31st) which is in the middle of our second largest selling cycle.

7 unchanged sentences

These changes may result in earlier recognition of credit losses.

We adopted this guidance during the first quarter of Fiscal 2021 with no cumulative-effect adjustment to retained earnings.

We adopted this

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

guidance during the first quarter of Fiscal 2021 with no cumulative-effect adjustment to retained earnings.

The guidance does not have a material impact on our condensed consolidated financial statements.

5 unchanged sentences

1) requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, 2) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction, 3) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements (although the entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority), 4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date and 5) making minor improvements for income tax accounting related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method.

This guidance will be effective for fiscal years and interim periods beginning after December 15, 2020.

Different components of the guidance require retrospective, modified retrospective or prospective adoption, and early adoption is permitted.

We are currently assessing whether we will early adopt this guidance, and the impact on our condensed consolidated financial statements is not currently estimable.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

(Thousands of dollars, except share and per share data)

We adopted ASU 2019-12 during the current quarter (third quarter of fiscal 2021).

As a result of adopting this standard, we did not record a cumulative adjustment and there was not a material impact on our condensed consolidated financial statements.

Revenue from sales of our products and services is recognized either at the point in time when control of the products is transferred to our customers or over time as services are provided in an amount that reflects the consideration we expect to be entitled to in exchange for the products or services.

4 unchanged sentences

13 weeks ended 39 weeks ended

October 31, 2020 October 26, 2019 October 31, 2020 October 26, 2019

January 30, 2021 January 25, 2020 January 30, 2021 January 25, 2020

Product Sales $ 338,495 $ 400,170 $ 998,158 $ 1,320,587

12 unchanged sentences

(c) The sales eliminations represent the elimination of Wholesale sales and fulfillment service fees to Retail and the elimination of Retail commissions earned from Wholesale.

Contract Assets and Contract Liabilities

Contract assets represent the sale of goods or services to a customer before we have the right to obtain consideration from the customer.

Contract assets consist of unbilled amounts at the reporting date and are transferred to accounts receivable when the rights become unconditional.

Contract assets (unbilled receivables) were $ 0 as of October 31, 2020, October 26, 2019 and May 2, 2020 on our condensed consolidated balance sheets.

Contract liabilities represent an obligation to transfer goods or services to a customer for which we have received consideration and consists of our deferred revenue liability (deferred revenue).

Deferred revenue primarily consists of advanced payments from customers related to textbook rental and subscription-based performance obligations that have not yet been satisfied, as well as unsatisfied performance obligations associated with partnership marketing services.

Deferred revenue is recognized ratably over the terms of the related rental or subscription periods, or when the contracted services are provided to our partnership marketing customers.

Deferred revenue of $ 32,844 , $ 48,994 , and $ 13,373 is recorded within Accrued Liabilities on our condensed consolidated balance sheets for the periods ended October 31, 2020, October 26, 2019 and May 2, 2020, respectively.

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

Contract Assets and Contract Liabilities

Contract assets represent the sale of goods or services to a customer before we have the right to obtain consideration from the customer.

Contract assets consist of unbilled amounts at the reporting date and are transferred to accounts receivable when the rights become unconditional.

Contract assets (unbilled receivables) were $ 0 as of January 30, 2021, January 25, 2020 and May 2, 2020 on our condensed consolidated balance sheets.

Contract liabilities represent an obligation to transfer goods or services to a customer for which we have received consideration and consists of our deferred revenue liability (deferred revenue).

Deferred revenue consists of the following:

• advanced payments from customers related to textbook rental and subscription-based performance obligations, which are recognized ratably over the terms of the related rental or subscription periods;

• unsatisfied performance obligations associated with partnership marketing services, which are recognized when the contracted services are provided to our partnership marketing customers;

• unsatisfied performance obligations associated with the premium paid for the sale of treasury shares, which are expected to be recognized over the term of the merchandising contracts for Fanatics and FLC as discussed in Note 1.

Organization - Partnership with Fanatics and FLC and Note 7.

Equity and Earnings Per Share - Sale of Treasury Shares.

Deferred revenue of $ 47,166 , $ 60,708 , and $ 13,373 is recorded in accrued liabilities and $ 3,956 , $ 0 , and $ 0 is recorded in other long-term liabilities on our condensed consolidated balance sheets for the periods ended January 30, 2021, January 25, 2020 and May 2, 2020, respectively.

As of January 30, 2021, we expect to recognize $ 47,166 of the deferred revenue balance within the next 12 months.

The following table presents changes in contract liabilities:

39 weeks ended

October 31, 2020 October 26, 2019

January 30, 2021 January 25, 2020

Deferred revenue at the beginning of period $ 13,373 $ 20,418

2 unchanged sentences

Deferred revenue balance at the end of period $ 51,122 $ 60,708

As of October 31, 2020, we expect to recognize $ 32,844 of the deferred revenue balance within the next 12 months.

We recognize lease assets and lease liabilities on the condensed consolidated balance sheets for substantially all lease arrangements as required by FASB ASC 842, Leases (Topic 842).

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Our lease agreements do not contain any material residual value guarantees, material restrictions or covenants.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

We used our incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable.

2 unchanged sentences

13 weeks ended 39 weeks ended

October 31, 2020 October 26, 2019 October 31, 2020 October 26, 2019

January 30, 2021 January 25, 2020 January 30, 2021 January 25, 2020

Variable lease expense $ 27,399 $ 23,402 $ 62,081 $ 54,412

2 unchanged sentences

The decrease in lease expense is primarily due to lower sales for contracts based on a percentage of revenue and the impact of the timing and reduction of minimum contractual guarantees.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

(Thousands of dollars, except share and per share data)

The following table summarizes our minimum fixed lease obligations, excluding variable commissions, as of October 31, 2020:

October 31, 2020

The following table summarizes our minimum fixed lease obligations, excluding variable commissions, as of January 30, 2021:

January 30, 2021

Remainder of Fiscal 2021 $ 84,074

7 unchanged sentences

Operating lease liabilities at period end $ 296,077

Future lease payment obligations related to leases that were entered into, but did not commence as of October 31, 2020, were not material.

Future lease payment obligations related to leases that were entered into, but did not commence as of January 30, 2021, were not material.

The following summarizes additional information related to our operating leases:

October 31, 2020

January 30, 2021

Weighted average remaining lease term (in years) 5.5 years

3 unchanged sentences

ROU assets obtained in exchange for lease liabilities from initial recognition $ 108,873

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

Segment Reporting

11 unchanged sentences

Additionally, the Retail Segment offers a suite of digital content and services to colleges and universities, including a variety of open educational resource-based courseware.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

(Thousands of dollars, except share and per share data)

The Wholesale Segment is comprised of our wholesale textbook business and is one of the largest textbook wholesalers in the country.

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Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

1 unchanged sentence

13 weeks ended 39 weeks ended

2020 October 26,

2019 October 31,

2020 October 26,

2021 January 25,

2020 January 30,

2021 January 25,

Retail $ 387,669 $ 457,988 $ 1,122,959 $ 1,474,413

14 unchanged sentences

Total Depreciation and Amortization $ 13,307 $ 15,117 $ 40,563 $ 46,542

Operating Income (Loss)

Operating (Loss) Income

Retail $ ( 59,996 ) $ ( 3,747 ) $ ( 107,740 ) $ 11,478

3 unchanged sentences

Elimination 604 ( 644 ) ( 1,704 ) ( 1,071 )

Total Operating Income (Loss) $ 6,733 $ 56,431 $ ( 52,182 ) $ 12,619

Total Operating (Loss) Income $ ( 64,702 ) $ ( 2,971 ) $ ( 116,884 ) $ 9,648

13 weeks ended 39 weeks ended

2020 October 26,

2019 October 31,

2020 October 26,

The following is a reconciliation of segment Operating Income (Loss) to consolidated Income (Loss) Before Income Taxes:

Total Operating Income (Loss) $ 6,733 $ 56,431 $ ( 52,182 ) $ 12,619

2021 January 25,

2020 January 30,

2021 January 25,

The following is a reconciliation of segment Operating (Loss) Income to consolidated (Loss) Income Before Income Taxes:

Total Operating (Loss) Income $ ( 64,702 ) $ ( 2,971 ) $ ( 116,884 ) $ 9,648

Interest Expense, net 2,311 1,904 5,876 5,882

Income (Loss) Before Income Taxes $ 5,821 $ 54,985 $ ( 55,747 ) $ 8,641

(Loss) Income Before Income Taxes $ ( 67,013 ) $ ( 4,875 ) $ ( 122,760 ) $ 3,766

During the 13 and 39 weeks ended January 30, 2021, we recognized an impairment loss (non-cash) of $ 27,630 , $ 20,506 after-tax, in the Retail segment on the condensed consolidated statement of operations.

For additional information, see Note 2.

Summary of Significant Accounting Policies.

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

5 unchanged sentences

Any repurchased shares will be held as treasury stock and will be available for general corporate purposes.

During the 26 weeks ended October 31, 2020, we did not repurchase shares of our Common Stock under the program and as of October 31, 2020, approximately $ 26,669 remains available under the stock repurchase program.

During the 26 weeks ended October 31, 2020, we repurchased 410,560 shares of our Common Stock outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.

During the 39 weeks ended January 30, 2021, we did not repurchase shares of our Common Stock under the program and as of January 30, 2021, approximately $ 26,669 remains available under the stock repurchase program.

During the 39 weeks ended January 30, 2021, we repurchased 414,174 shares of our Common Stock outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.

Sale of Treasury Shares

In December 2020, we entered into a new merchandising partnership with Fanatics and FLC which included a strategic equity investment in the Company.

Fanatics, Inc.

and Lids Holdings, Inc.

jointly purchased an aggregate 2,307,692 of our common shares (issued from treasury shares) for $ 15,000 , representing a share price of $ 6.50 per share.

The premium price paid above the fair market value of our common stock at closing was approximately $ 4,131 and was recorded as a contract liability ($ 175 in accrued liabilities and $ 3,956 in other long-term liabilities our condensed consolidated balance sheet) which is expected to be recognized over the term of the merchandising contracts for Fanatics and FLC, as discussed in Note 1.

Organization - Partnership with Fanatics and FLC .

We expect to use these proceeds for general corporate purposes.

Earnings Per Share

5 unchanged sentences

During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company.

During the 13 weeks ended October 31, 2020 and October 26, 2019, average shares of 1,932,628 and 1,218,994 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively.

During the 26 weeks ended October 31, 2020 and October 26, 2019, average shares of 2,849,291 and 1,529,877 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively.

During the 13 weeks ended January 30, 2021 and January 25, 2020, average shares of 4,005,236 and 3,682,169 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively.

During the 39 weeks ended January 30, 2021 and January 25, 2020, average shares of 3,234,606 and 1,348,949 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively.

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

1 unchanged sentence

13 weeks ended 39 weeks ended

(shares in thousands) October 31,

2020 October 26,

2019 October 31,

2020 October 26,

(shares in thousands) January 30,

2021 January 25,

2020 January 30,

2021 January 25,

Numerator for basic earnings per share:

Net income (loss) available to common shareholders $ 7,515 $ 35,931 $ ( 39,137 ) $ 3,776

Net (loss) income available to common shareholders $ ( 48,289 ) $ ( 1,693 ) $ ( 87,426 ) $ 2,083

Less allocation of earnings to participating securities — — — ( 1 )

Net income (loss) available to common shareholders $ 7,509 $ 35,910 $ ( 39,137 ) $ 3,774

Net (loss) income available to common shareholders $ ( 48,289 ) $ ( 1,693 ) $ ( 87,426 ) $ 2,082

Numerator for diluted earnings per share:

Net income (loss) available to common shareholders $ 7,509 $ 35,910 $ ( 39,137 ) $ 3,774

Net (loss) income available to common shareholders $ ( 48,289 ) $ ( 1,693 ) $ ( 87,426 ) $ 2,082

Allocation of earnings to participating securities — — — 1

Less diluted allocation of earnings to participating securities — — — ( 1 )

Net income (loss) available to common shareholders $ 7,509 $ 35,911 $ ( 39,137 ) $ 3,774

Net (loss) income available to common shareholders $ ( 48,289 ) $ ( 1,693 ) $ ( 87,426 ) $ 2,082

Denominator for basic earnings per share:

8 unchanged sentences

Diluted weighted average shares of Common Stock 50,082 48,298 49,099 48,767

Earnings (Loss) per share of Common Stock:

(Loss) Earnings per share of Common Stock:

Basic $ ( 0.96 ) $ ( 0.04 ) $ ( 1.78 ) $ 0.04

Diluted $ ( 0.96 ) $ ( 0.04 ) $ ( 1.78 ) $ 0.04

Fair Values of Financial Instruments

Fair Value Measurements

In accordance with ASC No.

12 unchanged sentences

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

Non-Financial Assets and Liabilities

Our non-financial assets include goodwill, property and equipment, operating lease right-of-use assets, and intangible assets.

Such assets are reported at their carrying values and are not subject to recurring fair value measurements.

During the 13 weeks ended January 30, 2021, we evaluated certain of our store-level long-lived assets in the Retail segment for impairment.

Based on the results of the impairment tests, we recognized an impairment loss (non-cash) of $ 27,630 , $ 20,506 after-tax, on the condensed consolidated statement of operations.

For additional information, see Note 2.

Summary of Significant Accounting Policies.

The fair value of the impaired long-lived assets were determined using an income approach (Level 3 input), using our best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations.

The following table shows the fair values of our non-financial assets and liabilities that were required to be remeasured at fair value on a non-recurring basis during the 13 and 39 weeks ended January 30, 2021 and the 39 weeks ended January 25, 2020, and the total impairments recorded as a result of the remeasurement process:

13 and 39 weeks ended January 30, 2021 39 weeks ended January 25, 2020

Carrying Value

Prior to Impairment Fair Value Impairment Loss

(non-cash) Carrying Value Prior to Impairment Fair Value Impairment Loss

Receivables, net $ — $ — $ — $ 245 $ — $ 245

Property and equipment, net 5,505 420 5,085 300 — 300

Operating lease right-of-use assets 26,427 13,099 13,328 — — —

Intangible assets, net 7,723 1,445 6,278 — — —

Other noncurrent assets 3,539 600 2,939 — — —

Accrued liabilities — — — ( 112 ) — ( 112 )

Total $ 43,194 $ 15,564 $ 27,630 $ 433 $ — $ 433

Non-Financial Liabilities

We granted phantom share units as long-term incentive awards which are settled in cash based on the fair market value of a share of common stock of the Company at each vesting date.

The fair value of the liability for the cash-settled phantom share unit awards will be remeasured at the end of each reporting period through settlement to reflect current risk-free rate and volatility assumptions.

As of October 31, 2020, we recorded a liability of $ 224 (Level 2 input) which is reflected in accrued liabilities ($ 130 ) and other long-term liabilities ($ 94 ) on the condensed consolidated balance sheet.

As of January 30, 2021, we recorded a liability of $ 1,729 (Level 2 input) which is reflected in accrued liabilities ($ 1,093 ) and other long-term liabilities ($ 636 ) on the condensed consolidated balance sheet.

For additional information, see Note 12.

5 unchanged sentences

The agreement includes an incremental first in, last out seasonal loan facility (the “FILO Facility”) for a $ 100,000 incremental facility maintaining the maximum availability under the Credit Agreement at $ 500,000 .

On March 2, 2020, we were granted a waiver to the condition to the upcoming draw under the FILO Facility, scheduled for April 2020, that Consolidated EBITDA (as defined in the Credit Agreement) minus Restricted Payments (as defined in the Credit Agreement) equal at least $90,000.

For additional information including interest terms and covenant requirements related to the Credit Facility, refer to Part II - Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity in our Annual Report on Form 10-K for the fiscal year ended May 2, 2020.

During the 26 weeks ended October 31, 2020, we borrowed $ 330,800 and repaid $ 406,000 under the Credit Agreement, with $ 99,500 of outstanding borrowings as of October 31, 2020, comprised entirely of borrowings under the Credit Facility.

During the 26 weeks ended October 26, 2019, we borrowed $ 150,000 and repaid $ 283,500 under the Credit Agreement, with no outstanding borrowings as of October 26, 2019.

As of both October 31, 2020 and October 26, 2019, we have issued $ 4,759 in letters of credit under the Credit Facility.

During the 39 weeks ended January 30, 2021, we borrowed $ 547,600 and repaid $ 571,500 under the Credit Agreement, with $ 150,800 of outstanding borrowings as of January 30, 3021, comprised entirely of borrowings under the Credit Facility.

During the 39 weeks ended January 25, 2020, we borrowed $ 383,400 and repaid $ 451,000 under the Credit Agreement, with

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

$65,900 of outstanding borrowings as of January 25,2020, comprised entirely of borrowings under the Credit Facility.

As of both January 30, 2021 and January 25, 2020, we have issued $ 4,759 in letters of credit under the Credit Facility.

Supplementary Information

1 unchanged sentence

During the 26 weeks ended October 26, 2019, we recognized an impairment loss (non-cash) of $ 433 in the Retail segment related to net capitalized development costs for a project which are not recoverable.

During the 13 and 39 weeks ended January 30, 2021, we evaluated certain of our store-level long-lived assets in the Retail segment for impairment.

For additional information, see Note 2.

Summary of Significant Accounting Policies and Note 8.

Fair Value Measurements .

During the 39 weeks ended January 25, 2020, we recognized an impairment loss (non-cash) of $ 433 in the Retail segment related to net capitalized development costs for a project which were not recoverable.

Restructuring and other charges

During the 13 and 26 weeks ended October 31, 2020, we recognized restructuring and other charges totaling $ 3,387 and $ 9,058 , respectively, comprised primarily of $ 1,075 and $ 4,471 , respectively, for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives ($ 7,092 is included in accrued liabilities in the consolidated balance sheet as of October 31, 2020), $ 2,255 and $ 4,472 , respectively, for professional service costs related to restructuring, process improvements, the financial advisor strategic review process, and shareholder activist activities, and $ 57 and $ 114 , respectively, related to liabilities for a facility closure.

During the 13 and 26 weeks ended October 26, 2019, we recognized restructuring and other charges totaling $ 1,569 and $ 3,035 , respectively, comprised primarily of $ 88 and $ 819 , respectively, for severance and other employee termination and benefit costs associated with several management changes and the elimination of various positions as part of cost reduction objectives, and $ 1,481 and $ 2,216 , respectively, for professional service costs related to restructuring and process improvements.

During the 13 and 39 weeks ended January 30, 2021, we recognized restructuring and other charges totaling $ 1,669 and $ 10,727 , respectively, comprised primarily of $ 1,285 and $ 5,756 , respectively, for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives ($ 4,660 is included in accrued liabilities in the consolidated balance sheet as of January 30, 2021), $ 172 and $ 4,644 , respectively, for professional service costs related to restructuring, process improvements, the financial advisor strategic review process, costs related to development and integration associated with the Fanatics and FLC partnership agreements and shareholder activist activities, and $ 212 and $ 327 , respectively, related to liabilities for a facility closure.

During the 13 and 39 weeks ended January 25, 2020, we recognized restructuring and other charges totaling $ 205 and $ 3,240 , respectively, comprised primarily of $ 0 and $ 791 , respectively, for severance and other employee termination and benefit costs associated with several management changes and the elimination of various positions as part of cost reduction objectives, and $ 205 and $ 2,249 , respectively, for professional service costs related to restructuring, process improvements, and shareholder activities.

Employee Benefit Plans

2 unchanged sentences

For all plans, we are responsible to fund the employer contributions directly.

Total employee benefit expense for these plans was $ 0 and $ 1,301 during the 13 weeks

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

(Thousands of dollars, except share and per share data)

ended October 31, 2020 and October 26, 2019, respectively.

Total employee benefit expense for these plans was $ 0 and $ 2,839 during the 26 weeks ended October 31, 2020 and October 26, 2019, respectively.

Effective April 2020, due to the significant impact as a result of COVID-19 related campus store closures, we have temporarily suspended employer matching contributions into our 401(k) plans through the end of December 2020 (the first 9 months of Fiscal 2021).

Total employee benefit expense for these plans was $ 0 and $ 844 during the 13 weeks ended January 30, 2021 and January 25, 2020, respectively.

Total employee benefit expense for these plans was $ 0 and $ 2,683 during the 39 weeks ended January 30, 2021 and January 25, 2020, respectively.

Long-Term Incentive Plan Compensation Expense

3 unchanged sentences

For those awards with market conditions, we have determined the grant date fair value using the Monte Carlo simulation model and compensation expense is recognized ratably over the requisite service period regardless of whether the market condition is satisfied.

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

For stock options granted with an "at market" exercise price, we determined the grant fair value using the Black-Scholes model and for stock options granted with "a premium" exercise price, we determined the grant date fair value using the Monte Carlo simulation model.

The fair value models for stock options use assumptions that include the risk-free interest rate, expected volatility, expected dividend yield and expected term of the options.

During the 26 weeks ended October 31, 2020, we granted the following awards:

During the 39 weeks ended January 30, 2021, we granted the following awards:

• 243,905 restricted stock units ("RSU") awards and 146,343 restricted stock ("RS") awards with a one year vesting period to the Board of Directors ("BOD") members for annual compensation.

19 unchanged sentences

The phantom shares vest and will be settled in three equal installments commencing one year after the date of grant.

The fair value of the phantom shares was determined using the closing stock price on the date of the award less the fair value of the call option which was

The fair value of the phantom shares was determined using the closing stock price on the date of the award less the fair value of the call option which was estimated using the Black-Scholes model.

The average fair value on the date of grant was $ 1.88 per phantom share using risk-free rates ranging from 0.12%-0.15% for the three tranches and annual volatility ranging from 86%-114% for the three tranches.

As of January 30, 2021, we recorded a liability of $ 1,729 (Level 2 input) which is reflected in accrued liabilities and other long-term liabilities on the condensed consolidated balance sheet.

BARNES & NOBLE EDUCATION, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

For the 39 weeks ended January 30, 2021 and January 25, 2020

(Thousands of dollars, except share and per share data)

estimated using the Black-Scholes model.

As of October 31, 2020, we recorded a liability of $ 224 (Level 2 input) which is reflected in accrued liabilities and other long-term liabilities on the condensed consolidated balance sheet.

We recognized compensation expense for long-term incentive plan awards in selling and administrative expenses as follows:

13 weeks ended 39 weeks ended

2020 October 26,

2019 October 31,

2020 October 26,

2021 January 25,

2020 January 30,

2021 January 25,

Stock-based awards

9 unchanged sentences

Total compensation expense for long-term incentive awards $ 2,661 $ 1,819 $ 5,586 $ 6,000

Total unrecognized compensation cost related to unvested awards as of October 31, 2020 was $ 12,261 and is expected to be recognized over a weighted-average period of 2.5 years.

We recorded an income tax benefit of $( 1,694 ) on pre-tax income of $ 5,821 during the 13 weeks ended October 31, 2020, which represented an effective income tax rate of ( 29.1 )% and income tax expense of $ 19,054 on pre-tax income of $ 54,985 during the 13 weeks ended October 26, 2019, which represented an effective income tax rate of 34.7 %.

We recorded an income tax benefit of $( 16,610 ) on pre-tax loss of $( 55,747 ) during the 26 weeks ended October 31, 2020, which represented an effective income tax rate of 29.8 % and income tax expense of $ 4,865 on pre-tax income of $ 8,641 during the 26 weeks ended October 26, 2019, which represented an effective income tax rate of 56.3 %.

The effective tax rate for the 13 and 26 weeks ended October 31, 2020 is lower as compared to the prior year comparable period due to permanent differences and the impact of benefits available to the Company as a result of the CARES Act in the current year.

Total unrecognized compensation cost related to unvested awards as of January 30, 2021 was $ 12,318 and is expected to be recognized over a weighted-average period of 2.4 years.

We recorded an income tax benefit of $( 18,724 ) on a pre-tax loss of $( 67,013 ) during the 13 weeks ended January 30, 2021, which represented an effective income tax rate of 27.9 % and income tax benefit of $( 3,182 ) on a pre-tax loss of $( 4,875 ) during the 13 weeks ended January 25, 2020, which represented an effective income tax rate of 65.3 %.

We recorded an income tax benefit of $( 35,334 ) on a pre-tax loss of $( 122,760 ) during the 39 weeks ended January 30, 2021, which represented an effective income tax rate of 28.8 % and income tax expense of $ 1,683 on pre-tax income of $ 3,766 during the 39 weeks ended January 25, 2020, which represented an effective income tax rate of 44.7 %.

The effective tax rate for the 13 and 39 weeks ended January 30, 2021 is lower as compared to the prior year comparable period due to permanent differences.

Legal Proceedings

2 unchanged sentences

Between January 22, 2020 and June 15, 2020, thirteen purported class action complaints were filed in the United States District Court for the District of Delaware, the United States District Court for the District of New Jersey, and the United States District Court for the Northern District of Illinois against the Company, along with several publishers, another collegiate bookstore retailer, and an industry association.

The plaintiffs are retailers of collegiate course materials or current or former

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 31, 2020 and October 26, 2019

(Thousands of dollars, except share and per share data)

college students.

The plaintiffs are retailers of collegiate course materials or current or former college students.

Although the specific allegations vary, the plaintiffs generally claim, on their own behalf and on behalf of the purported classes, that the Company and the other defendants violated Section 1 of the Sherman Act (15 U.S.C.

6 unchanged sentences

We intend to vigorously defend this matter and are currently unable to estimate any potential losses.

Subsequent Event

On November 9, 2020, the Company's Executive Vice President, Corporate Development and President, Digital Student Solutions resigned as an officer of the Company, effective as of November 30, 2020, in conjunction with the consolidation and elimination of the role.

In connection with the resignation and resignation letter agreement, the former officer will receive a lump sum payment totaling $ 1,142 .

For additional information, see the Form 8-K filed with the SEC on November 12, 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements