What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-06-29 compared with 2021-06-30 · 402 added, 362 removed, 971 unchanged (44% of the section changed)

2 unchanged sentences

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm, on the consolidated financial statements of Barnes & Noble Education, Inc.

for the years ended May 1, 2021, May 2, 2020, and April 27, 2019

Consolidated Statements of Operations for the years ended May 1, 2021, May 2, 2020, and April 27, 2019

Consolidated Balance Sheets as of May 1, 2021 and May 2, 2020

Consolidated Statements of Cash Flows for the years ended May 1, 2021, May 2, 2020, and April 27, 2019

Consolidated Statements of Equity for the years ended May 1, 2021, May 2, 2020, and April 27, 2019

for the years ended April 30, 2022, May 1, 2021 (Restated), and May 2, 2020 (PCAOB ID 42 )

Consolidated Statements of Operations for the years ended April 30, 2022, May 1, 2021 (Restated), and May 2, 2020

Consolidated Balance Sheets as of April 30, 2022 and May 1, 2021 (Restated)

Consolidated Statements of Cash Flows for the years ended April 30, 2022, May 1, 2021 (Restated), and May 2, 2020

Consolidated Statements of Equity for the years ended April 30, 2022, May 1, 2021 (Restated), and May 2, 2020

Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies

Recent Accounting Pronouncements

Segment Reporting

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Commitments and Contingencies

Subsequent Event

Financial Statement Schedule

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We have audited the accompanying consolidated balance sheets of Barnes & Noble Education, Inc.

and subsidiaries (the Company) as of May 1, 2021 and May 2, 2020, the related consolidated statements of operations, equity and cash flows for each of the three years in the period ended May 1, 2021 and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at May 1, 2021 and May 2, 2020, and the results of its operations and its cash flows for each of the three years in the period ended May 1, 2021, in conformity with U.S.

and subsidiaries (the Company) as of April 30, 2022 and May 1, 2021, the related consolidated statements of operations, equity and cash flows for each of the three years in the period ended April 30, 2022 and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 30, 2022 and May 1, 2021, and the results of its operations and its cash flows for each of the three years in the period ended April 30, 2022, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of May 1, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated June 30, 2021 expressed an unqualified opinion thereon.

Adoption of Accounting Standards Update (ASU) No.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method for accounting for leases in the fiscal year ended May 2, 2020 due to the adoption of ASU 2016-02, Leases and associated amendments (Topic 842), using the modified retrospective approach.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of April 30, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated June 29, 2022 expressed an adverse opinion thereon.

Restatement of fiscal 2021 Financial Statements

As discussed in Note 2, Restatement - Fiscal 2021 Consolidated Financial Statements, the fiscal 2021 consolidated financial statements have been restated to correct a misstatement.

Basis for Opinion

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52 weeks ended

May 1, 2021 53 weeks ended

April 30, 2022 52 weeks ended

May 1, 2021 53 weeks ended

April 27, 2019

Product sales and other $ 1,398,046 $ 1,299,740 $ 1,671,200

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Total sales 1,531,400 1,433,890 1,851,063

Cost of sales:

Cost of sales (exclusive of depreciation and amortization expense):

Product and other cost of sales 1,081,981 1,093,989 1,303,702

6 unchanged sentences

Restructuring and other charges 944 10,678 18,567

Transaction costs — — 654

Operating loss ( 67,416 ) ( 176,894 ) ( 42,783 )

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See accompanying notes to consolidated financial statements.

(a) We identified certain out of period adjustments related primarily to Income tax benefit, as well as Restructuring and other charges, for the 52 weeks ended May 1, 2021.

Refer to Note 2.

Summary of Significant Accounting Policies for further information.

Index to Form 10-K Index to FS

3 unchanged sentences

(In thousands, except per share data)

May 1, 2021 May 2, 2020

April 30, 2022 May 1, 2021

Current assets:

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Total current liabilities 415,320 373,680

Long-term deferred taxes, net 1,430 —

Long-term operating lease liabilities 219,594 184,780

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See accompanying notes to consolidated financial statements.

(a) We identified certain out of period adjustments related to Deferred tax assets, net and Accrued liabilities as of May 1, 2021.

Refer to Note 2.

Summary of Significant Accounting Policies for further information.

Index to Form 10-K Index to FS

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AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

Consolidated Statements of Cash Flows (In thousands)

52 weeks ended

May 1, 2021 53 weeks ended

April 30, 2022 52 weeks ended

May 1, 2021 53 weeks ended

April 27, 2019

Cash flows from operating activities:

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Purchases of property and equipment ( 43,533 ) ( 37,223 ) ( 36,192 )

Acquisition of business, net of cash and restricted cash acquired — — ( 10,000 )

Changes in other noncurrent assets and other 872 335 ( 827 )

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Purchase of treasury shares ( 2,370 ) ( 894 ) ( 1,265 )

Proceeds from the exercise of stock options, net 256 — —

Net cash flows provided by (used in) financing activities 45,721 11,799 39,935

14 unchanged sentences

See accompanying notes to consolidated financial statements.

(a) We identified certain out of period adjustments related to Deferred tax assets and Accrued liabilities as of May 1, 2021.

Refer to Note 2.

Summary of Significant Accounting Policies for further information.

Index to Form 10-K Index to FS

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( 38,250 ) ( 38,250 )

Balance at April 27, 2019

51,030 $ 510 $ 726,331 $ ( 244,577 ) 3,467 $ ( 31,636 ) $ 450,628

Balance at May 2, 2020 52,140 $ 521 $ 732,958 $ ( 282,827 ) 3,842 $ ( 32,901 ) $ 417,751

Stock-based compensation expense

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1,187 12 ( 12 ) —

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

Shares repurchased for tax withholdings for vested stock awards

414 ( 894 ) ( 894 )

Net loss - Restated (a)

( 139,810 ) ( 139,810 )

Balance at May 2, 2020

Balance at May 1, 2021 - Restated (a)

53,327 $ 533 $ 734,257 $ ( 422,637 ) 1,948 $ ( 19,142 ) $ 293,011

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Vested equity awards 829 8 ( 8 ) —

1,187 12 ( 12 ) —

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

Shares repurchased for tax withholdings for vested stock awards

240 ( 2,370 ) ( 2,370 )

Issuance of common stock upon exercise of stock options 78 1 256 257

( 68,857 ) ( 68,857 )

Balance at May 1, 2021 53,327 $ 533 $ 734,257 $ ( 414,614 ) 1,948 $ ( 19,142 ) $ 301,034

Balance at April 30, 2022 54,234 $ 542 $ 740,838 $ ( 491,494 ) 2,188 $ ( 21,512 ) $ 228,374

See accompanying notes to consolidated financial statements.

(a) We identified certain out of period adjustments related to related primarily to Income tax benefit, as well as Restructuring and other charges, for the 52 weeks ended May 1, 2021.

Refer to Note 2.

Summary of Significant Accounting Policies for further information.

Index to Form 10-K Index to FS

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References to “MBS” refer to our virtual bookstore and wholesale textbook distribution business operated through our subsidiary MBS Textbook Exchange, LLC.

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

Description of Business

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We are also one of the largest textbook wholesalers, inventory management hardware and software providers, and a leading provider of digital education solutions.

We operate 1,417 physical, virtual, and custom bookstores and serve more than 6 million students, delivering essential educational content and tools within a dynamic omni channel retail environment.

We operate 1,427 physical, virtual, and custom bookstores and serve more than 6 million students, delivering essential educational content, tools and general merchandise within a dynamic omnichannel retail environment.

Additionally, we offer direct-to-student products and services to help students study more effectively and improve academic performance.

The strengths of our business include our ability to compete by developing new products and solutions to meet market needs, our large operating footprint with direct access to students and faculty, our well-established, deep relationships with academic partners and stable, long-term contracts and our well-recognized brands.

We expect to continue to introduce scalable and advanced digital solutions focused largely on the student, expand our e-commerce capabilities and accelerate such capabilities through our recent Fanatics Partnership, increase market share with new accounts, and expand our strategic opportunities through acquisitions and partnerships.

We expect general merchandise sales to increase over the long term, as our product assortments continue to emphasize and reflect changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online, which we expect to be further enhanced and accelerated through our partnership with Fanatics Retail Group Fulfillment, LLC, Inc.

and Fanatics Lids College, Inc.

(collectively referred to herein as the “FLC Partnership”).

We expect to continue to introduce scalable and advanced digital solutions focused largely on the student, expand our e-commerce capabilities and accelerate such capabilities through our merchandising partnership with Fanatics Retail Group Fulfillment, LLC, Inc.

(“Fanatics”) and Fanatics Lids College, Inc.

(“FLC”) (collectively referred to herein as the “FLC Partnership”), increase market share with new accounts, and expand our strategic opportunities through acquisitions and partnerships.

We expect gross general merchandise sales to increase over the long term, as our product assortments continue to emphasize and reflect changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online, which we expect to be further enhanced and accelerated through the FLC Partnership.

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

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Segment Reporting.

First Day Inclusive Access Programs

We provide product and service offerings designed to address the most pressing issues in higher education, including equitable access, enhanced convenience and improved affordability through innovative course material delivery models designed to drive improved student experiences and outcomes.

We offer our BNC First Day ® inclusive access programs, consisting of First Day and First Day Complete , in which course materials, including both physical and digital content, are offered at a reduced price through a course fee or included in tuition, and delivered to students on or before the first day of class.

• Through First Day , digital course materials are adopted by a faculty member for a single course, and students receive their materials through their learning management system.

• First Day Complete is adopted by an institution and includes all classes, providing students both physical and digital materials.

The First Day Complete model drives substantially greater unit sell-through for the bookstore.

Offering courseware sales through our inclusive access First Day and First Day Complete models is a key, and increasingly important strategic initiative of ours to meet the market demands of substantially reduced pricing to students, as well as the opportunity to improve student outcomes, while, at the same time, increasing our market share, revenue and relative gross profits of courseware sales given the higher volumes of units sold in such models as compared to historical sales models

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

that rely on individual student marketing and sales.

We expect these programs to allow us to ultimately reverse historical long-term trends in courseware revenue declines, which has occurred at those schools where such programs have been adopted.

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.

In December 2020, we entered into the FLC Partnership.

Fanatics’ cutting-edge e-commerce and technology expertise offers our campus stores expanded product selection, a world-class online and mobile experience, and a progressive direct-to-consumer platform.

Coupled with FLC, the leading standalone brick and mortar retailer focused exclusively on licensed fan and alumni products, our campus stores have improved access to trend and sales performance data on licensees, product styles, and design treatments.

Coupled with Lids (FLC's parent company), the leading standalone brick and mortar retailer focused exclusively on licensed fan and alumni products, our campus stores have improved access to trend and sales performance data on licensees, product styles, and design treatments.

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

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jointly made a strategic equity investment in BNED.

On April 4, 2021, as contemplated by the merchandising partnership agreement, we closed on the sale of our logo and emblematic general merchandise inventory to FLC.

As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

recognize commission revenue earned for these sales on a net basis.

On April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, we sold our logo and emblematic general merchandise inventory to FLC, which was finalized during the first quarter of Fiscal 2022.

As contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products during the first quarter of Fiscal 2022.

As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our consolidated financial statements, as compared to the recognition of logo and emblematic general merchandise sales on a gross basis prior to April 4, 2021.

For additional information, see Part II - Item 8.

Financial Statements and Supplementary Data - Note 2.

Summary of Significant Accounting Policies - Merchandise Inventories and Note 6.

Summary of Significant Accounting Policies and Note 5.

Equity and Earnings Per Share .

COVID-19 Business Impact

During Fiscal 2021 and the fourth quarter of Fiscal 2020, our business was significantly negatively impacted by the COVID-19 pandemic, resulting in an unprecedented material decline in revenue.

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

Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve.

We cannot accurately predict the duration or extent of the impact of COVID-19 on enrollments, university budgets, athletics and other areas that directly affect our business operations .

Although most schools expect to return to a traditional on-campus environment for learning in the upcoming Fall semester, as well as host traditional on campus sporting activities, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic.

We will continue to assess our operations and will continue to consider the guidance of local governments to determine when our operations can begin returning to normal levels of business.

We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including variants, on enrollments, campus activities, university budgets, athletics and other areas that directly affect our business operations .

Although most four year schools returned to a traditional on-campus environment, as well as hosted traditional on campus sporting activities, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and its effect on our ability to source products, including textbooks and general merchandise offerings.

Please see our Part II - Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion.

See Part II - Item 8.

Financial Statements and Supplementary Data - Note 2.

Summary of Significant Accounting Policies - Other Long-Lived Assets related to the impairment loss (non-cash) recognized during Fiscal 2021.

Summary of Significant Accounting Policies

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

The fiscal year periods for each of the last three fiscal years consisted of the 52 weeks ended May 1, 2021 (“Fiscal 2021”), 53 weeks ended May 2, 2020 (“Fiscal 2020”), and 52 weeks ended April 27, 2019 (“Fiscal 2019”).

The fiscal year periods for each of the last three fiscal years consisted of the 52 weeks ended April 30, 2022 (“Fiscal 2022”), 52 weeks ended May 1, 2021 (“Fiscal 2021”), and 53 weeks ended May 2, 2020 (“Fiscal 2020”).

Our business is highly seasonal.

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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.

Sales attributable to our wholesale business are generally highest in our first, second and third quarters, as MBS sells textbooks and other course materials for retail distribution.

Sales attributable to our wholesale business are generally highest in our first, second and third quarters, as

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

MBS sells textbooks and other course materials for retail distribution.

Our DSS segment sales and operating profit are realized relatively consistently throughout the year.

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The impact of the COVID-19 pandemic on our operations affects the comparability of our results of operations and cash flows.

Consolidation

The results of operations reflected in our consolidated financial statements are presented on a consolidated basis.

All material intercompany accounts and transactions have been eliminated in consolidation.

Acquisition - PaperRater

On August 21, 2018, we acquired the assets of PaperRater in the DSS Segment.

PaperRater is a leading website that offers students a suite of writing services aimed at improving multiple facets of writing.

PaperRater's services include plagiarism detection, grammar feedback, and an AI-based writing score predictor, and are highly complementary to Student Brands' existing writing service offerings.

PaperRater adds millions of pieces of content, from essays and dissertations to personal narratives and speeches, to our growing digital content library.

We completed the purchase for cash consideration of $ 10,000 and the transaction was funded from cash on-hand and availability under our existing Credit Agreement.

The final purchase price was allocated primarily as follows:

$ 5,300 intangible assets (primarily content with an estimated useful life of 5 years) and $ 4,700 goodwill.

This acquisition is not material to our

Restatement - Fiscal 2021 Consolidated Financial Statements

We identified certain out of period adjustments related primarily to the recognition of Income tax benefit related to the recording of an additional deferred tax valuation allowance, and Restructuring and other charges related to severance costs, for the 52 weeks ended May 1, 2021, the 13 weeks ended July 31, 2021, the 26 weeks ended October 30, 2021 and the 39 weeks ended January 29, 2022.

The adjustments did not impact Net cash flows provided by operating activities, Net cash flows used in investing activities, or Net cash flows used in financing activities for the periods noted.

The impact of the adjustments identified are disclosed as follows:

Fiscal 2021 52 weeks ended May 1, 2021

As Reported Adjustment Restated

Statement of Operations

Restructuring and other charges $ 9,960 $ 718 $ 10,678

Operating loss $ ( 176,176 ) $ ( 718 ) $ ( 176,894 )

Loss before income taxes $ ( 184,263 ) $ ( 718 ) $ ( 184,981 )

Income tax benefit $ ( 52,476 ) $ 7,305 $ ( 45,171 )

Net loss $ ( 131,787 ) $ ( 8,023 ) $ ( 139,810 )

Basic EPS $ ( 2.65 ) $ ( 0.16 ) $ ( 2.81 )

Diluted EPS $ ( 2.65 ) $ ( 0.16 ) $ ( 2.81 )

As of May 1, 2021

Balance Sheet As Reported Adjustment Restated

Deferred tax assets, net $ 23,248 $ ( 7,305 ) $ 15,943

Total assets $ 1,038,418 $ ( 7,305 ) $ 1,031,113

Accrued liabilities $ 92,871 $ 718 $ 93,589

Total current liabilities $ 372,962 $ 718 $ 373,680

Total liabilities $ 737,384 $ 718 $ 738,102

Accumulated deficit $ ( 414,614 ) $ ( 8,023 ) $ ( 422,637 )

Total stockholders' equity $ 301,034 $ ( 8,023 ) $ 293,011

Total liabilities and stockholders' equity $ 1,038,418 $ ( 7,305 ) $ 1,031,113

Restatement - Fiscal 2022 Interim Financial Statements (Unaudited)

Fiscal 2022 13 weeks ended July 31, 2021 26 weeks ended October 30, 2021 39 weeks ended January 29, 2022

Reported Adjustment Restated As

Reported Adjustment Restated

Statement of Operations

Restructuring and other charges $ 2,623 $ ( 718 ) $ 1,905 $ 3,739 $ ( 718 ) $ 3,021 $ 3,785 $ ( 718 ) $ 3,067

Operating loss $ ( 41,453 ) $ 718 $ ( 40,735 ) $ ( 16,864 ) $ 718 $ ( 16,146 ) $ ( 49,999 ) $ 718 $ ( 49,281 )

Loss before income taxes $ ( 43,947 ) $ 718 $ ( 43,229 ) $ ( 21,622 ) $ 718 $ ( 20,904 ) $ ( 57,808 ) $ 718 $ ( 57,090 )

Net loss $ ( 44,346 ) $ 718 $ ( 43,628 ) $ ( 21,818 ) $ 718 $ ( 21,100 ) $ ( 58,619 ) $ 718 $ ( 57,901 )

Basic EPS $ ( 0.86 ) $ 0.01 $ ( 0.85 ) $ ( 0.42 ) $ 0.01 $ ( 0.41 ) $ ( 1.13 ) $ 0.01 $ ( 1.12 )

Diluted EPS $ ( 0.86 ) $ 0.01 $ ( 0.85 ) $ ( 0.42 ) $ 0.01 $ ( 0.41 ) $ ( 1.13 ) $ 0.01 $ ( 1.12 )

Index to Form 10-K Index to FS

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

consolidated financial statements and therefore, disclosure of pro forma financial information has not been presented.

The results of operations reflect the period of ownership of the acquired business.

As of July 31, 2021 As of October 30, 2021 As of January 29, 2022

Balance Sheet As

Reported Adjustment Restated As

Reported Adjustment Restated

Deferred tax assets, net $ 23,248 $ ( 7,305 ) $ 15,943 $ 23,248 $ ( 7,305 ) $ 15,943 $ 22,918 $ ( 7,305 ) $ 15,613

Total assets $ 1,251,315 $ ( 7,305 ) $ 1,244,010 $ 1,259,515 $ ( 7,305 ) $ 1,252,210 $ 1,274,035 $ ( 7,305 ) $ 1,266,730

Accumulated deficit $ ( 458,960 ) $ ( 7,305 ) $ ( 466,265 ) $ ( 436,432 ) $ ( 7,305 ) $ ( 443,737 ) $ ( 473,233 ) $ ( 7,305 ) $ ( 480,538 )

Total stockholders' equity $ 256,595 $ ( 7,305 ) $ 249,290 $ 279,494 $ ( 7,305 ) $ 272,189 $ 244,765 $ ( 7,305 ) $ 237,460

Total liabilities and stockholders' equity $ 1,251,315 $ ( 7,305 ) $ 1,244,010 $ 1,259,515 $ ( 7,305 ) $ 1,252,210 $ 1,274,035 $ ( 7,305 ) $ 1,266,730

Consolidation

The results of operations reflected in our consolidated financial statements are presented on a consolidated basis.

All material intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

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Restricted Cash

As of April 30, 2022, we had restricted cash of $ 11,545 , comprised of $ 10,649 in prepaid and other current assets in the consolidated balance sheet related to segregated funds for commission due to FLC for logo merchandise sales as per the FLC Partnership's merchandising agreement and $ 897 in other noncurrent assets in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.

As of May 1, 2021, we had restricted cash of $ 8,790 , comprised of $ 7,893 in prepaid and other current assets in the consolidated balance sheet related to segregated funds for commission due to FLC for logo merchandise sales as per the merchandising partnership agreement and $ 897 in other noncurrent assets in the consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.

For additional information, see Part II - Item 8.

Financial Statements and Supplementary Data - Note 1.

Organization.

As of May 2, 2020, we had restricted cash of $ 766 included in other noncurrent assets in the consolidated balance sheet for amounts held in trust for future distributions related to employee benefit plans.

Accounts Receivable

Receivables represent customer, private and public institutional and government billings (colleges, universities and other financial aid providers), credit/debit card receivables, advances for book buybacks, advertising and other receivables due within one year.

The increase in trade accounts receivable is primarily due to the growth of our of First Day inclusive access offerings, where cash collection from the school generally occurs after the student drop/add dates, which is later in the working capital cycle, as compared to direct-to-student point-of-sale transactions where cash is generally collected during the point-of-sale transaction or within a few days from the credit card processor.

The increase in other receivables is primarily due to vendor reimbursements.

Components of accounts receivables are as follows:

May 1, 2021 May 2, 2020

April 30, 2022 May 1, 2021

Trade accounts $ 102,358 $ 99,583

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Total receivables, net $ 137,039 $ 121,072

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

Accounts receivable are presented on our consolidated balance sheets net of allowances.

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We write-off uncollectible trade receivables once collection efforts have been exhausted and record bad debt expenses related to textbook rentals that are not returned and we are unable to successfully charge the customer.

Allowance for doubtful accounts were $ 3,594 , and $ 1,986 as of May 1, 2021 and May 2, 2020, respectively.

Allowance for doubtful accounts were $ 2,243 , and $ 3,594 as of April 30, 2022 and May 1, 2021, respectively.

Merchandise Inventories

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There were no LIFO adjustments in Fiscal 2022, Fiscal 2021 and Fiscal 2020.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

For our physical bookstores, we also estimate and accrue shortage for the period between the last physical count of inventory and the balance sheet date.

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After internal sourcing, the bookstore purchases textbooks from outside suppliers and publishers.

The Retail Segments four largest suppliers, excluding the supply sourced from our Wholesale Segment, accounted for approximately 35 % of our merchandise purchased during the 52 weeks ended May 1, 2021.

For our Wholesale Segment, the four largest suppliers, excluding textbooks purchased from students at our Retail Segment's bookstores, accounted for approximately 32 % of merchandise purchases during the 52 weeks ended May 1, 2021.

On April 4, 2021, as contemplated by the merchandising partnership agreement, we closed on the sale of our logo and emblematic general merchandise inventory to FLC and received proceeds of $ 41,773 , and recognized a merchandise inventory loss on the sale of $ 10,262 in cost of goods sold during the 52 weeks ended May 1, 2021 in the statement of operations for the Retail Segment.

The final inventory purchase price will be determined during the first quarter of Fiscal 2022.

The Retail Segment's four largest suppliers, excluding the supply sourced from our Wholesale Segment, accounted for approximately 30 % of our merchandise purchased during the 52 weeks ended April 30, 2022.

For our Wholesale Segment, the four largest suppliers, excluding textbooks purchased from students at our Retail Segment's bookstores, accounted for approximately 27 % of merchandise purchases during the 52 weeks ended April 30, 2022.

As contemplated by the merchandising partnership agreement, we sold our logo and emblematic general merchandise inventory to FLC and received proceeds of $ 41,773 , and recognized a merchandise inventory loss on the sale of $ 10,262 in cost of goods sold in the consolidated statement of operations during the 52 weeks ended May 1, 2021 for the Retail Segment.

The final inventory sale price was determined during the first quarter of Fiscal 2022, at which time, we received additional proceeds of $ 1,906 , and recognized a merchandise inventory loss on the sale of $ 434 in cost of goods sold in the condensed consolidated statement of operations for the Retail Segment.

For additional information, see Part II - Item 8.

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Organization.

During the 52 weeks ended May 1, 2021, we also recognized a merchandise inventory write-off of $ 4,698 in cost of goods sold in the statement of operations for the Retail Segment related to our initiative to exit certain product offerings and streamline/rationalize our overall non-logo general merchandise product assortment resulting from the centralization of our merchandising decision-making during the year.

Additionally, during the 52 weeks ended May 1, 2021, we also recognized a merchandise inventory write-off of $ 4,698 in cost of goods sold in the statement of operations for the Retail Segment related to our initiative to exit certain product offerings and streamline/rationalize our overall non-logo general merchandise product assortment resulting from the centralization of our merchandising decision-making during the year.

Textbook Rental Inventories

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Cloud Computing Arrangements

We adopted ASU No.

2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15") effective April 28, 2019 (first day of Fiscal 2020) prospectively for all implementation costs incurred in a cloud computing arrangement (or hosting arrangement) that is a service contract.

The guidance requires implementation costs incurred in a cloud computing arrangement (or hosting arrangement) that is a service contract to be amortized to hosting expense over the term of the arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use.

Prior to adoption, we capitalized certain implementation costs, primarily related to digital and consumer data platforms, to property and equipment on the consolidated balance sheets and depreciated these implementation costs to depreciation and amortization expense in the consolidated statement of operations over the term of the service contract once the asset was ready for its intended use.

Subsequent to adoption, implementation costs which were previously capitalized and depreciated as described above, are included in prepaid expenses and other assets in the consolidated balance sheets and amortized to selling and administrative expense in the consolidated statement of operations.

Implementation costs incurred in cloud computing arrangements reflected in prepaid and other assets in the consolidated balance sheets were $ 10,516 and $ 4,262 as of May 1, 2021 and May 2, 2020, respectively.

We had $ 283 , $ 96 , and $ 0 of amortization of implementation costs in selling and administrative expense in the consolidated statement of operations, for the 52 weeks ended May 1, 2021, 53 weeks ended May 2, 2020, and 52 weeks ended April 27, 2019, respectively.

Property and Equipment

Property and equipment are carried at cost, less accumulated depreciation and amortization.

Depreciation and amortization is computed using the straight-line method over estimated useful lives.

Maintenance and repairs are expensed as incurred, however major maintenance and remodeling costs are capitalized if they extend the useful life of the asset.

We had $ 35,024 , $ 42,550 , and $ 44,550 , of depreciation expense in the consolidated statement of operations for the 52 weeks ended May 1, 2021, 53 weeks ended May 2, 2020, and 52 weeks ended April 27, 2019, respectively.

Implementation costs incurred in a cloud computing arrangement (or hosting arrangement) that is a service contract are amortized to hosting expense over the term of the arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use.

Implementation costs are included in prepaid expenses and other assets in the consolidated balance sheets and amortized to selling and administrative expense in the consolidated statement of operations.

Implementation costs incurred in cloud computing arrangements reflected in prepaid and other assets in the consolidated

Index to Form 10-K Index to FS

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

balance sheets were $ 13,294 and $ 10,516 as of April 30, 2022 and May 1, 2021, respectively.

We had $ 3,179 , $ 283 , and $ 96 of amortization of implementation costs in selling and administrative expense in the consolidated statement of operations, for the 52 weeks ended April 30, 2022, 52 weeks ended May 1, 2021, and 53 weeks ended May 2, 2020, respectively.

Property and Equipment

Property and equipment are carried at cost, less accumulated depreciation and amortization.

Depreciation and amortization is computed using the straight-line method over estimated useful lives.

Maintenance and repairs are expensed as incurred, however major maintenance and remodeling costs are capitalized if they extend the useful life of the asset.

We had $ 31,785 , $ 35,024 , and $ 42,550 , of depreciation expense in the consolidated statement of operations for the 52 weeks ended April 30, 2022, 52 weeks ended May 1, 2021, and 53 weeks ended May 2, 2020, respectively.

Content development costs are primarily related to bartleby.com textbook solutions which was launched in Fiscal 2019.

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Amortization of content development costs is recorded to cost of goods sold.

We had $ 5,034 , $ 4,082 , and $ 1,096 , of content amortization expense in the consolidated statement of operations for the 52 weeks ended May 1, 2021, 53 weeks ended May 2, 2020, and 52 weeks ended April 27, 2019, respectively.

We had $ 5,454 , $ 5,034 , and $ 4,082 , of content amortization expense in the consolidated statement of operations for the 52 weeks ended April 30, 2022, 52 weeks ended May 1, 2021, and 53 weeks ended May 2, 2020, respectively.

Components of property and equipment are as follows:

Useful Life May 1, 2021 May 2, 2020

Useful Life April 30, 2022 May 1, 2021

Property and equipment:

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Intangible Assets

Amortizable intangible assets as of May 1, 2021 and May 2, 2020 are as follows:

As of May 1, 2021

Amortizable intangible assets as of April 30, 2022 and May 1, 2021 are as follows:

As of April 30, 2022

Amortizable intangible assets Remaining

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$ 253,528 $ ( 128,229 ) $ 125,299

Content 1 - 2

19,400 ( 17,375 ) 2,025

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$ 291,165 $ ( 161,541 ) $ 129,624

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

As of May 1, 2021

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(a) Other consists of recognized intangibles for non-compete agreements, trade names, and favorable leasehold interests.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

All amortizable intangible assets are being amortized over their useful life on a straight-line basis.

Aggregate Amortization Expense:

For the 52 weeks ended April 30, 2022 $ 17,596

For the 52 weeks ended May 1, 2021 $ 17,943

For the 53 weeks ended May 2, 2020 $ 19,310

For the 52 weeks ended April 27, 2019 $ 21,314

Estimated Amortization Expense:

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Summary of Significant Accounting Policies .

Effective April 28, 2019, we adopted Accounting Standards Codification ("ASC") Topic 842, Leases , and recognized lease assets and lease liabilities on the consolidated balance sheet for all operating lease arrangements based on the present value of future lease payments.

We recognize lease assets and lease liabilities on the consolidated balance sheet for all operating lease arrangements based on the present value of future lease payments as required by FASB ASC 842, Leases (Topic 842).

We do not recognize lease assets or lease liabilities for short-term leases (i.e., those with a term of twelve months or less).

We recognize lease expense on a straight-line basis over the lease term for contracts with fixed lease payments, including those with fixed annual minimums, or over a rolling twelve-month period for leases where the annual guarantee resets at the start of each contract year, in order to best reflect the pattern of usage of the underlying leased asset.

As a result of adopting ASC Topic 842, we recorded an initial operating lease right-of-use asset of $ 277,006 (inclusive of prepaid assets and accrued liabilities related to existing leases) and an operating lease liability of $ 294,727 as of April 28, 2019 for all leases that were not completed and with lease terms in excess of twelve months at that date.

For additional information, see Part II - Item 8.

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Impairment of Long-Lived Assets

As of May 1, 2021, our other long-lived assets include property and equipment, operating lease right-of-use assets, amortizable intangibles, and other noncurrent assets of $ 89,172 , $ 240,456 , $ 150,904 , and $ 29,105 , respectively, on our consolidated balance sheet.

As of April 30, 2022, our other long-lived assets include property and equipment, operating lease right-of-use assets, amortizable intangibles, and other noncurrent assets of $ 94,072 , $ 286,584 , $ 129,624 , and $ 23,971 , respectively, on our consolidated balance sheet.

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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 and consider market participants in accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets .

We evaluate the long-lived assets of the reporting units for impairment at the lowest asset group level for which individual cash flows can be identified.

When evaluating long-lived assets for potential impairment, we first compared the carrying amount of the asset group to the estimated future undiscounted cash flows.

The impairment loss calculation compares the carrying amount of the assets to the fair value based on estimated discounted future cash flows.

If required, an impairment loss is recorded for that portion of the asset’s carrying value in excess of fair value.

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 2020 semester continued into the Spring 2021 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

We evaluate the long-lived

Index to Form 10-K Index to FS

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

have been further curtailed, including many athletic conferences that have been either eliminated or severely restricted.

These combined events impacted the Company’s course materials and general merchandise business.

assets of the reporting units for impairment at the lowest asset group level for which individual cash flows can be identified.

When evaluating long-lived assets for potential impairment, we first compared the carrying amount of the asset group to the estimated future undiscounted cash flows.

The impairment loss calculation compares the carrying amount of the assets to the fair value based on estimated discounted future cash flows.

If required, an impairment loss is recorded for that portion of the asset’s carrying value in excess of fair value.

Our business has been significantly negatively impacted by the ongoing COVID-19 pandemic during Fiscal 2022 and Fiscal 2021, as many schools continued to adjust their learning models and on-campus activities.

Many of the trends observed during Fiscal 2021 continued into Fiscal 2022, as fewer students returned to campus and enrollments declined, including enrollments at community colleges and by international students.

Although many academic institutions have reopened, some are providing alternatives to traditional in-person instruction, including online and hybrid learning options and significantly reduced classroom sizes.

As we entered the Spring rush period in early January 2022, we continued to experience the ongoing effects of COVID-19 with the surge of the Omicron variant further impacting students return to campus and on-campus activities.

In early January, while the majority of schools brought students back to campus, some schools chose to conduct classes virtually for the beginning of the semester, while other schools chose to delay their start dates (and some schools both delayed the start of the semester and started classes virtually), thus reducing and/or delaying sales.

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

During the third quarter of Fiscal 2022, 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 $ 6,411 (both pre-tax and after-tax), comprised of $ 739 , $ 1,793 , $ 3,668 and $ 211 of property and equipment, operating lease right-of-use assets, amortizable intangibles, and other noncurrent assets, respectively, on the consolidated statement of operations.

During the third quarter of Fiscal 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 consolidated statement of operations.

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These long-lived 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 fourth quarter of Fiscal 2019, in conjunction with the change to reporting segments and the interim goodwill impairment test noted below, as well as operational changes in certain long-lived asset groups, we evaluated certain of our long-lived assets for impairment and recognized an impairment loss of $ 8,466 , comprised of $ 8,138 of intangible assets, primarily acquired technology, and $ 328 of property and equipment related to our LoudCloud and Promoversity operations.

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

See Part II - Item 8.

Financial Statements and Supplementary Data - Note 2.

Significant Accounting Policies - Intangible Assets.

The costs in excess of net assets of businesses acquired are carried as goodwill in the accompanying consolidated balance sheets.

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.

As of both May 1, 2021 and May 2, 2020, we had $ 0 , $ 0 and $ 4,700 of goodwill on our consolidated balance sheets related to our Retail, Wholesale, and DSS reporting units, respectively.

During the third quarter of both Fiscal 2021 and Fiscal 2020, we completed our annual goodwill impairment test and concluded that the fair value of the DSS reporting unit was determined to exceed the carrying value of the reporting unit;

As of both April 30, 2022 and May 1, 2021, we had $ 0 , $ 0 and $ 4,700 of goodwill on our consolidated balance sheets related to our Retail, Wholesale, and DSS reporting units, respectively.

During the third quarter of Fiscal 2022, Fiscal 2021 and Fiscal 2020, we completed our annual goodwill impairment test and concluded that 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.

During the third quarter of Fiscal 2019, we completed our annual goodwill impairment test and concluded that the fair value of the MBS and DSS reporting units, as they existed at that time, each exceeded their respective carrying values and no goodwill impairment was recognized.

In the fourth quarter of Fiscal 2019, due to the change in our reporting units identified as a result of the change in our reportable segments, we recognized a total goodwill impairment (non-cash impairment loss) of $ 49,282 associated with the MBS reporting unit (as it existed at that date) and allocated $ 20,538 of goodwill to the Retail Segment and $ 28,744 of goodwill to the Wholesale Segment.

As of May 1, 2021, goodwill of approximately $ 67,015 was deductible for federal income tax purposes.

This is higher than the goodwill balance reflected on the consolidated balance sheet as of May 1, 2021 due to impairment losses recorded in Fiscal 2018 and Fiscal 2019.

As of April 30, 2022, goodwill of approximately $ 60,910 was deductible for federal income tax purposes.

This is higher than the goodwill balance reflected on the consolidated balance sheet as of April 30, 2022 due to impairment losses recorded in Fiscal 2018 and Fiscal 2019.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

Application of the goodwill impairment test requires judgment, including:

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We estimated the fair value of our reporting units using a weighting of fair values derived from the income approach.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

Under the income approach, we calculate the fair value of the reporting unit based on the present value of estimated future cash flows.

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For those transactions where we are the principal, we record revenue on a gross basis, and for those transactions where we are an agent to a third-party, we record revenue on a net basis.

Effective April 4, 2021, as per the FLC merchandising partnership agreement, logo and emblematic general merchandise sales were fulfilled by FLC and we recognized commission revenue earned for these sales on a net basis.

We do not have gift card or customer loyalty programs.

We do not treat any promotional offers as expenses.

Sales tax collected from our customers is excluded from reported revenues.

Our payment terms are generally 30 days and do not extend beyond one year.

Effective April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement and e-commerce agreement, we began to transition the fulfillment of logo and emblematic general merchandise sales to FLC and Fanatics.

As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic sales on a gross basis in the periods prior to April 4, 2021.

Index to Form 10-K Index to FS

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

We do not have gift card or customer loyalty programs.

We do not treat any promotional offers as expenses.

Sales tax collected from our customers is excluded from reported revenues.

Our payment terms are generally 30 days and do not extend beyond one year.

Service and other revenue

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720-35, Advertising Costs .

Advertising costs charged to selling and administrative expenses were $ 12,916 , $ 10,349 , and $ 10,636 in the consolidated statement of operations for the 52 weeks ended May 1, 2021, 53 weeks ended May 2, 2020, and 52 weeks ended April 27, 2019, respectively.

Advertising costs charged to selling and administrative expenses were $ 13,206 , $ 12,916 , and $ 10,349 in the consolidated statement of operations for the 52 weeks ended April 30, 2022, 52 weeks ended May 1, 2021, and 53 weeks ended May 2, 2020, respectively.

The provision for income taxes includes federal, state and local income taxes currently payable and those deferred because of temporary differences between the financial statement and tax basis of assets and liabilities.

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Income Taxes .

As of May 1, 2021, other long-term liabilities includes $ 25,335 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.

At the end of the most recent tax year, inventory levels declined as compared to the prior year resulting in approximately $ 745 of the LIFO reserve becoming currently payable.

Given recent trends relating to the pricing and rental of textbooks, management believes

Index to Form 10-K Index to FS

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

that an additional portion of the remaining long-term tax payable associated with the LIFO reserve could be payable within the next twelve months.

We are unable to predict future trends for CPI and inventory levels, therefore it is difficult to project with reasonable certainty how much of this liability will become payable within the next twelve months.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13 , Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

The ASU replaces the existing incurred loss impairment model for trade receivables with an expected loss model which requires the use of forward-looking information to calculate expected credit loss estimates.

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.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

The guidance seeks to simplify the accounting for income taxes by removing the following exceptions:

1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, 2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, 3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary and 4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.

Additionally, the guidance seeks to further simplify the accounting for income taxes by:

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.

We adopted ASU 2019-12 during the 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 consolidated financial statements.

For the fiscal year ended April 30, 2022, the Company intends to file an application to change its tax year from January to April under the automatic consent provisions.

As a result of the tax year-end change, there is no longer a long-term tax payable associated with the LIFO reserve in other long-term liabilities.

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.

Summary of Significant Accounting Policies for additional information related to our revenue recognition policies and Note 5.

Segment Reporting for a description of each segment's product and service offerings.

See Part II - Item 8.

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Segment Reporting for a description of each segments product and service offerings.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

Disaggregation of Revenue

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52 weeks ended

May 1, 2021 53 weeks ended

April 30, 2022 52 weeks ended

May 1, 2021 53 weeks ended

April 27, 2019

Product Sales $ 1,157,115 $ 1,493,044 $ 1,645,357

Rental Income 134,150 179,863 195,883

Service and Other Revenue (a)

Course Materials Product Sales $ 710,665 $ 657,279 $ 752,505

General Merchandise Product Sales (a)

558,818 499,836 740,539

Service and Other Revenue (b)

36,827 39,205 39,985

Retail Product and Other Sales sub-total 1,306,310 1,196,320 1,533,029

Course Materials Rental Income 133,354 134,150 179,863

Retail Total Sales $ 1,439,664 $ 1,330,470 $ 1,712,892

Wholesale Sales $ 112,246 $ 165,825 $ 198,353

DSS Sales (b)

DSS Sales (c)

$ 35,666 $ 27,374 $ 23,661

Eliminations (c)

Eliminations (d)

$ ( 56,176 ) $ ( 89,779 ) $ ( 83,843 )

Total Sales $ 1,531,400 $ 1,433,890 $ 1,851,063

(a) Service and other revenue primarily relates to brand partnerships and other service revenues.

(b) DSS sales primarily relate to direct-to-student subscription-based revenue.

(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.

(a) Effective April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement and e-commerce agreement, we began to transition the fulfillment of logo and emblematic general merchandise sales to FLC and Fanatics.

(b) Service and other revenue primarily relates to brand partnerships and other service revenues.

(d) 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

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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 both May 1, 2021 and May 2, 2020 on our consolidated balance sheets.

Contract assets (unbilled receivables) were $ 0 as of both April 30, 2022 and May 1, 2021 on our 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).

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• 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 Part II - Item 8.

Financial Statements and Supplementary Data - Note 1.

Organization - Partnership with Fanatics and FLC and Note 6.

Equity and Earnings Per Share - Sale of Treasury Shares.

Deferred revenue of $ 13,469 and $ 4,670 is recorded within accrued liabilities and other long-term liabilities on our consolidated balance sheet, respectively, as of May 1, 2021 and $ 13,373 is recorded within accrued liabilities on our consolidated balance sheet as of May 2, 2020.

Index to Form 10-K Index to FS

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

The following table presents changes in contract liabilities during the fiscal year ended May 1, 2021:

Deferred revenue as of April 27, 2019 $ 20,418

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

Financial Statements and Supplementary Data - Note 1.

Organization - Partnership with Fanatics and FLC and Note 5.

Equity and Earnings Per Share - Sale of Treasury Shares.

Deferred revenue of $ 14,946 and $ 4,776 is recorded within accrued liabilities and other long-term liabilities on our consolidated balance sheet, respectively, as of April 30, 2022 and $ 13,469 and $ 4,670 is recorded within accrued liabilities and other long-term liabilities on our consolidated balance sheet, respectively, as of May 1, 2021.

As of April 30, 2022 we expect to recognize $ 14,946 of the deferred revenue balance within in the next 12 months.

The following table presents changes in contract liabilities during the fiscal year ended April 30, 2022:

Deferred revenue balance as of May 2, 2020 $ 13,373

Additions to deferred revenue during the period 171,834

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Reductions to deferred revenue for revenue recognized during the period ( 162,014 )

Deferred revenue balance as of May 1, 2021 $ 18,139

As of May 1, 2021 we expect to recognize $ 13,469 of the deferred revenue balance within in the next 12 months.

Deferred revenue balance as of April 30, 2022 $ 19,722

Segment Reporting

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Additionally, the Wholesale Segment sells hardware and a software suite of applications that provides inventory management and point-of-sale solutions to approximately 350 college bookstores.

The Digital Student Solutions (“DSS”) Segment includes direct-to-student products and services to assist students to study more effectively and improve academic performance.

The DSS Segment is comprised of the operations of Student Brands, LLC, a leading direct-to-student subscription-based writing services business, and bartleby ® , a direct-to-student subscription-based offering providing textbook solutions, expert questions and answers, writing and tutoring.

Corporate Services

Corporate Services represents unallocated shared-service costs which include corporate level expenses and other governance functions, including executive functions, such as accounting, legal, treasury, information technology, and human resources.

Index to Form 10-K Index to FS

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

The Digital Student Solutions (“DSS”) Segment includes products and services to assist students to study more effectively and improve academic performance.

The DSS Segment is comprised of the operations of Student Brands, LLC, a leading direct-to-student subscription-based writing services business, and bartleby ® , an institutional and direct-to-student subscription-based offering providing textbook solutions, expert questions and answers, writing and tutoring.

Corporate Services

The eliminations are primarily related to the following intercompany activities:

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Our international operations are not material and the majority of the revenue and total assets are within the United States.

May 1, 2021 May 2, 2020

April 30, 2022 May 1, 2021

Retail $ 875,569 $ 792,707

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Total Assets $ 1,071,553 $ 1,031,113

As of both May 1, 2021 and May 2, 2020, we had $ 0 , $ 0 and $ 4,700 of goodwill on our consolidated balance sheets related to our Retail, Wholesale, and DSS reporting units, respectively.

As of both April 30, 2022 and May 1, 2021, we had $ 0 , $ 0 and $ 4,700 of goodwill on our consolidated balance sheets related to our Retail, Wholesale, and DSS reporting units, respectively.

52 weeks ended

May 1, 2021 53 weeks ended

April 30, 2022 52 weeks ended

May 1, 2021 53 weeks ended

April 27, 2019

Capital Expenditures

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Total Capital Expenditures $ 43,533 $ 37,223 $ 36,192

(a) Primarily comprised of content development costs for bartleby.com textbook solutions which was launched in Fiscal 2019.

(a) Primarily comprised of content development costs for bartleby.com .

Index to Form 10-K Index to FS

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52 weeks ended

May 1, 2021 (a)

April 30, 2022 (a)

52 weeks ended

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53 weeks ended

April 27, 2019

May 2, 2020 (a)

Retail $ 1,439,664 $ 1,330,470 $ 1,712,892

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Total Loss Before Income Taxes $ ( 77,512 ) $ ( 184,981 ) $ ( 50,228 )

(a) In Fiscal 2021 and Fiscal 2020, our business experienced an unprecedented and significant impact as a result of the COVID-19 pandemic.

(a) In Fiscal 2022, Fiscal 2021 and Fiscal 2020, our business experienced an unprecedented and significant impact as a result of the COVID-19 pandemic.

The impact of which affects the comparability of our results of operations and cash flows.

(b) In Fiscal 2021, gross margin includes a merchandise inventory loss and write-off of $ 14,960 in the Retail Segment.

(b) In Fiscal 2022 and 2021, gross margin includes a merchandise inventory loss and write-off of $ 434 and $ 14,960 , respectively, in the Retail Segment.

See Part II - Item 8.

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Summary of Significant Accounting Policies - Merchandise Inventories .

(c) In Fiscal 2021, we recognized an impairment loss (non-cash) of $ 27,630 , $ 20,506 after-tax, in the Retail segment related to certain of our store-level long-lived assets.

(c) In Fiscal 2022, we recognized an impairment loss (non-cash) of $ 6,411 , both before-tax and after-tax, in the Retail segment related to certain of our store-level long-lived assets.

In Fiscal 2021, we recognized an impairment loss (non-cash) of $ 27,630 , $ 20,506 after-tax, in the Retail segment related to certain of our store-level long-lived assets.

In Fiscal 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.

In Fiscal 2019, we recorded an impairment loss (non-cash) of $ 57,748 , comprised of $ 49,282 of goodwill ($ 20,538 and $ 28,744 in our Retail and Wholesale Segments, respectively).and $ 8,466 of long-lived assets.

See Part II - Item 8.

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Our authorized capital stock consists of 200,000,000 shares of common stock, par value $ 0.01 per share, and 5,000,000 shares of preferred stock, par value $ 0.01 per share.

As of May 1, 2021, 51,378,913 shares of our common stock and 0 shares of our preferred stock were issued and outstanding.

As of April 30, 2022, 54,234,055 shares and 52,045,951 shares of our common stock were issued and outstanding, respectively, and 0 shares of our preferred stock were both issued and outstanding.

Our common stock trades on the NYSE under the symbol “BNED”.

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The holders of our common stock do not have preemptive rights or preferential rights to subscribe for shares of our capital stock.

We have reserved 10,409,345 shares of common stock for future grants in accordance with the Barnes & Noble Education Inc.

Following our shareholders approval of an amendment to the Equity Incentive Plan to increase the number of shares available for issuance by an additional 3,000,000 shares of our Common Stock, we have reserved an aggregate of 13,409,345 shares of common stock for future grants in accordance with the Barnes & Noble Education Inc.

Equity Incentive Plan.

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

During the Fiscal 2021, 2020, and Fiscal 2019, we did not purchase shares under the stock repurchase program.

As of May 1, 2021, approximately $ 26,669 remains available under the stock repurchase program.

During the Fiscal 2022, Fiscal 2021 and Fiscal 2020, we did not purchase shares under the stock repurchase program.

As of April 30, 2022, approximately $ 26,669 remains available under the stock repurchase program.

During the Fiscal 2022, Fiscal 2021 and Fiscal 2020, we also repurchased 239,751 , 414,174 shares, and 374,733 shares of our common stock in connection with employee tax withholding obligations for vested stock awards, respectively.

4 unchanged sentences

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 consolidated balance sheet) which is expected to be recognized over the term of the merchandising contracts for Fanatics and FLC, as discussed in Part II - Item 8.

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 which is recognized over the term of the merchandising contracts for Fanatics and FLC ($ 211 and $ 202 , respectively, in accrued liabilities, and $ 3,709 and $ 3,920 , respectively, as of April 30, 2022 and May 1, 2021, in other long-term liabilities our consolidated balance sheet) which is expected to be recognized over the term of the merchandising contracts for Fanatics and FLC, as discussed in Part II - Item 8.

Financial Statements and Supplementary Data - Note 1.

1 unchanged sentence

We paid no other dividends to common stockholders during Fiscal 2022, Fiscal 2021 and Fiscal 2020.

We do not intend to pay dividends on our common stock in the foreseeable future.

We do not intend to pay dividends on our common stock in the foreseeable future and dividend payments are not permitted under current or future financing arrangements.

On June 7, 2022, subsequent to the end of Fiscal 2022, we entered into a Term Loan Credit Agreement with TopLids LendCo, LLC and Vital Fundco, LLC and we entered an amendment to the Credit Agreement.

See Part II - Item 8.

Financial Statements and Supplementary Data - Note 7 - Credit Facility and Note 16.

Subsequent Event for details.

Earnings Per Share

3 unchanged sentences

Our participating securities consist solely of unvested restricted stock awards, which have contractual participation rights equivalent to those of stockholders of unrestricted common stock.

The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities.

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 Fiscal 2021, Fiscal 2020 and Fiscal 2019, average shares of 3,387,185 , 3,795,603 , and 2,939,089 , respectively, were excluded from the diluted earnings per share calculation using the two-class method as their inclusion would have been antidilutive.

The two-class method of computing earnings per share is an allocation method that calculates earnings per share

Index to Form 10-K Index to FS

3 unchanged sentences

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

for common stock and participating securities.

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 Fiscal 2022, Fiscal 2021 and Fiscal 2020, average shares of 3,995,990 , 3,387,185 , and 3,795,603 , respectively, were excluded from the diluted earnings per share calculation using the two-class method as their inclusion would have been antidilutive.

The following is a reconciliation of the basic and diluted earnings per share calculation:

(shares in thousands) 52 weeks ended

May 1, 2021 53 weeks ended

April 30, 2022 52 weeks ended

May 1, 2021 53 weeks ended

April 27, 2019

Numerator for basic and diluted earnings per share:

20 unchanged sentences

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 52 weeks ended May 1, 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 consolidated statement of operations.

During the 52 weeks ended April 30, 2022, we evaluated certain of our store-level long-lived assets in the Retail segment for impairment, and we recognized an impairment loss (non-cash) of $ 6,411 , both pre-tax and after-tax, on the consolidated statement of operations.

During the 52 weeks ended May 1, 2021, we evaluated certain of our store-level long-lived assets in the Retail segment for impairment, and we recognized an impairment loss (non-cash) of $ 27,630 , $ 20,506 after-tax, on the consolidated statement of operations.

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.

During the 53 weeks ended May 2, 2020, 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 52 weeks ended April 27, 2019, we recorded an impairment loss (non-cash) of $ 57,748 , comprised of $ 49,282 of goodwill and $ 8,466 of long-lived assets, comprised of $ 8,138 of intangible assets, primarily acquired technology, and $ 328 of property and equipment related to our LoudCloud and Promoversity operations.

For additional information, see Part II - Item 8.

Financial Statements and Supplementary Data - Note 2.

Summary of Significant Accounting Policies.

Index to Form 10-K Index to FS

3 unchanged sentences

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

For additional information, see Part II - Item 8.

Financial Statements and Supplementary Data - Note 2.

Summary of Significant Accounting Policies.

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 and the total impairments recorded as a result of the remeasurement process:

52 weeks ended May 1, 2021 53 weeks ended May 2, 2020

52 weeks ended April 30, 2022 52 weeks ended May 1, 2021 53 weeks ended May 2, 2020

Carrying Value

Prior to Impairment Fair Value Impairment Loss

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

(non-cash) Carrying Value

Prior to Impairment Fair Value Impairment Loss

(non-cash) Carrying Value

Prior to Impairment Fair Value Impairment Loss

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

8 unchanged sentences

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 April 30, 2022, we recorded a liability of $ 2,774 (Level 2 input) which is reflected in accrued liabilities ($ 1,726 ) and other long-term liabilities ($ 1,048 ) on the consolidated balance sheet.

As of May 1, 2021, we recorded a liability of $ 3,845 (Level 2 input) which is reflected in accrued liabilities ($ 2,509 ) and other long-term liabilities ($ 1,336 ) on the consolidated balance sheet.

3 unchanged sentences

Credit Facility

We have a credit agreement (the “Credit Agreement”), amended March 31, 2021 and March 1, 2019, under which the lenders committed to provide us with a 5 year asset-backed revolving credit facility in an aggregate committed principal amount of $ 400,000 (the “Credit Facility”) effective from the date of the amendment.

We have a credit agreement (the “Credit Agreement”), under which the lenders committed to provide us with a 5 year asset-backed revolving credit facility in an aggregate committed principal amount of $ 400,000 (the “Credit Facility”) effective from the date of the amendment.

We have the option to request an increase in commitments under the Credit Facility of up to $ 100,000 , subject to certain restrictions.

1 unchanged sentence

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 31, 2021, we were granted a waiver to the condition to the current draw under the FILO Facility.

During the 52 weeks ended May 1, 2021, we borrowed $ 722,600 and repaid $ 719,700 under the Credit Agreement, and had outstanding borrowings of $ 127,600 and $ 50,000 under the Credit Facility and FILO Facility, respectively, as of May 1, 2021.

During the 53 weeks ended May 2, 2020, we borrowed $ 600,900 and repaid $ 559,700 under the Credit Agreement, and had outstanding borrowings of $ 99,700 and $ 75,000 under the Credit Facility and FILO Facility, respectively, as of May 2, 2020.

During 52 weeks ended April 27, 2019, we borrowed $ 521,200 and repaid $ 584,100 under the Credit Agreement, and had outstanding borrowings of $ 33,500 and $ 100,000 under the Credit Facility and FILO Facility, respectively, as of April 27, 2019.

As of both May 1, 2021 and May 2, 2020, we issued $ 4,759 in letters of credit under the Credit Facility, respectively.

During 52 weeks ended May 1, 2021, we incurred debt issuance costs totaling $ 1,076 related to the March 31, 2021 Credit Facility amendment.

The debt issuance costs have been deferred and are presented as prepaid and other current assets and other noncurrent assets in the consolidated balance sheets, and subsequently amortized ratably over the term of the credit agreement.

The Credit Facility is secured by substantially all of the inventory, accounts receivable and related assets of the borrowers under the Credit Facility.

This is considered an all asset lien (inclusive of proceeds from tax refunds payable to the Company and a pledge of equity from subsidiaries, exclusive of real estate).

Interest under the Credit Facility accrues, at our election, at a LIBOR or alternate base rate, plus, in each case, an applicable interest rate margin, which is determined by reference to the level of excess availability under the Credit Facility.

Loans will initially bear interest at LIBOR plus 2.00% per annum, in the case of LIBOR borrowings, or at the alternate base rate plus 1.00% per annum, in the alternative, and thereafter the interest rate will fluctuate between LIBOR plus 2.00% per annum and LIBOR plus 1.50% per annum (or between the alternate base rate plus 1.00% per annum and the alternate base rate plus 0.50% per annum), based upon the excess availability under the Credit Facility at such time.

On March 4, 2022, we were granted a waiver to the condition to the upcoming draw under the FILO Facility, scheduled for April 2022, that Consolidated EBITDA (as defined in the Credit Agreement) minus Restricted Payments (as defined in the Credit Agreement) equal at least $110,000.

Under the waiver amendment, the commitment under the FILO Facility of $25,000 was increased to $40,000, with all remaining terms unchanged.

On June 7, 2022, subsequent to the end of Fiscal 2022, we entered into a Term Loan Credit Agreement with TopLids LendCo, LLC and Vital Fundco, LLC and we entered an amendment to the Credit Agreement.

See Part II - Item 8.

Financial Statements and Supplementary Data - Note 16.

Subsequent Event for details.

On June 28, 2022, we obtained limited waivers with respect to the Credit Agreement and the Term Loan Credit Agreement, pursuant to which the requisite lenders thereunder waived any potential default or event of default under such agreements solely to the extent arising from the restatement of Fiscal 2021 consolidated financial statements as described in Part II - Item 8.

Financial Statements and Supplementary Data - Note 2.

Summary of Significant Accounting Policies and Note 16.

Subsequent Events .

Index to Form 10-K Index to FS

3 unchanged sentences

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

Loans under the FILO Facility will bear interest at a rate equal to the LIBOR rate, plus 3.750%.

During the 52 weeks ended April 30, 2022, we borrowed $ 632,220 and repaid $ 584,120 under the Credit Agreement, and had outstanding borrowings of $ 185,700 and $ 40,000 under the Credit Facility and FILO Facility, respectively, as of April 30, 2022.

As of both April 30, 2022 and May 1, 2021, we issued $ 4,759 in letters of credit under the Credit Facility, respectively.

During the 52 weeks ended April 30, 2022 and May 1, 2021, we incurred debt issuance costs totaling $ 265 and $ 1,076 related to the March 4, 2022 waiver and March 31, 2021 Credit Facility amendment.

The Credit Facility is secured by substantially all of the inventory, accounts receivable and related assets of the borrowers under the Credit Facility.

This is considered an all asset lien (inclusive of proceeds from tax refunds payable to the Company and a pledge of equity from subsidiaries, exclusive of real estate).

Interest under the Credit Facility accrues, at our election, at a Secured Overnight Financing Rate ("SOFR") or alternate base rate, plus, in each case, an applicable interest rate margin, which is determined by reference to the level of excess availability under the Credit Facility.

Loans will initially bear interest at SOFR plus 2.00% per annum, in the case of SOFR borrowings, or at the alternate base rate plus 1.00% per annum, in the alternative, and thereafter the interest rate will fluctuate between SOFR plus 2.00% per annum and SOFR plus 1.50% per annum (or between the alternate base rate plus 1.00% per annum and the alternate base rate plus 0.50% per annum), based upon the excess availability under the Credit Facility at such time.

Loans under the FILO Facility will bear interest at a rate equal to the SOFR rate, plus 3.750%.

In connection with the waiver, the applicable margin for credit extensions made under the FILO Facility after March 31, 2021 through the end of 2021 was increased by 0.50% (to 3.75% per annum for LIBO rate loans and 2.75% for base rate loans).

1 unchanged sentence

We are required to borrow 100% of the aggregate commitments under the FILO Facility on April 1 of each year, and the loans must be repaid in full (including interest and fees) on July 31 of each year.

The commitments under the FILO Facility will decrease from $50,000 to $25,000 on August 1, 2021.

We will pay a commitment fee of 0.375% on the daily unused portion of the FILO Facility.

4 unchanged sentences

The Credit Facility also contains customary affirmative covenants and representations and warranties.

We are in compliance with all covenants, representations and warranties under the Credit Facility as of May 1, 2021.

We believe that our future cash from operations, access to borrowings under the Credit Facility, FILO Facility and short-term vendor financing will provide adequate resources to fund our operating and financing needs for the foreseeable future.

We are in compliance with all covenants, representations and warranties under the Credit Facility as of April 30, 2022.

We believe that our future cash from operations, access to borrowings under the Credit Facility, FILO Facility and short-term financings will provide adequate resources to fund our operating and financing needs for the foreseeable future.

Our future capital requirements will depend on many factors, including, but not limited to, the economy and the outlook for and pace of sustainable growth in our markets, the levels at which we maintain inventory, the number and timing of new store openings, and any potential acquisitions of other brands or companies including digital properties.

2 unchanged sentences

There can be no assurances that we will have access to capital markets on acceptable terms.

Effective the first quarter of Fiscal 2020 (April 28, 2019), we adopted FASB ASC 842, Leases (Topic 842), which required us to recognize lease assets and lease liabilities on the consolidated balance sheets for substantially all lease arrangements.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

We recognize lease assets and lease liabilities on the consolidated balance sheets for substantially all lease arrangements based on the present value of future lease payments as required by FASB ASC 842, Leases (Topic 842).

Our portfolio of leases consists of operating leases comprised of operations agreements which grant us the right to operate on-campus bookstores at colleges and universities;

11 unchanged sentences

We utilized an estimated collateralized incremental borrowing rate as of the effective date or the commencement date of the lease, whichever is later.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

The following table summarizes lease expense:

52 weeks ended

April 30, 2022 52 weeks ended

May 1, 2021 53 weeks ended

2 unchanged sentences

Net lease expense $ 192,771 $ 177,793 $ 232,744

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.

The following table summarizes our minimum fixed lease obligations, excluding variable commissions, as of May 1, 2021:

The increase in lease expense is primarily due to higher sales for contracts based on a percentage of revenue and the impact of the timing and reduction of minimum contractual guarantees due to temporary store closings due to the COVID pandemic during the prior year.

The following table summarizes our minimum fixed lease obligations, excluding variable commissions, as of April 30, 2022:

April 30, 2022

Fiscal 2023 $ 104,681

7 unchanged sentences

Operating lease liabilities at period end $ 316,737

Future lease payment obligations related to leases that were entered into, but did not commence as of May 1, 2021, were not material.

Future lease payment obligations related to leases that were entered into, but did not commence as of April 30, 2022, were not material.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

The following summarizes additional information related to our operating leases:

May 1, 2021 May 2, 2020

Weighted average remaining lease term (in years) 5.5 years 5.2 years

April 30, 2022 May 1, 2021 May 2, 2020

Weighted average remaining lease term (in years) 6.2 years 5.5 years 5.2 years

Weighted average discount rate 4.7 % 4.9 % 4.6 %

8 unchanged sentences

Summary of Significant Accounting Policies .

During the 52 weeks ended April 30, 2022, we evaluated certain of our store-level long-lived assets in the Retail segment for impairment.

During the 52 weeks ended May 1, 2021, we recognized an impairment loss (non-cash) of $ 27,630 , $ 20,506 after-tax, in the Retail segment 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 consolidated statement of operations.

During the 53 weeks ended May 2, 2020, 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 52 weeks ended April 27, 2019, we recorded an impairment loss (non-cash) of $ 57,748 , comprised of $ 49,282 of goodwill ($ 20,538 and $ 28,744 in our Retail and Wholesale Segments, respectively).and $ 8,466 of long-lived assets,

Restructuring and Other Charges

During the 52 weeks ended April 30, 2022, we recognized restructuring and other charges totaling $ 944 , comprised primarily of $ 1,250 for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives ($ 71 is included in accrued liabilities in the consolidated balance sheet as of April 30, 2022) and $ 1,825 for costs associated with professional service costs for restructuring, process improvements, development and integration associated with the FLC Partnership, shareholder activist activities, and liabilities for a facility closure, partially offset by a $ 2,131 in an actuarial gain related to a frozen retirement benefit plan (non-cash).

During the 52 weeks ended May 1, 2021, we recognized restructuring and other charges totaling $ 10,678 (Restated), comprised primarily of $ 6,606 for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives ($ 3,246 is included in accrued liabilities in the consolidated balance sheet as of May 1, 2021), $ 5,213 for professional service costs related to restructuring, process improvements, the financial advisor strategic review process, costs related to development and integration associated with the FLC Partnership and shareholder activist activities, and $ 454 related to liabilities for a facility closure, partially offset by a $ 1,595 in an actuarial gain related to a frozen retirement benefit plan (non-cash).

During the 53 weeks ended May 2, 2020, we recognized restructuring and other charges totaling $ 18,567 comprised of $ 12,667 for severance and other employee termination and benefit costs associated with several management changes ($ 10,370 is included in accrued liabilities in the consolidated balance sheet as of May 2, 2020), the elimination of various positions as part of cost reduction objectives, and professional service costs for process improvements, and $ 2,695 related to an actuarial loss for a frozen retirement benefit plan (non-cash), $ 2,841 for professional service costs for shareholder activist activities, and $ 587 related to a store-level asset impairment charge, offset by $ 223 related to reduction of liabilities for a facility closure.

Index to Form 10-K Index to FS

3 unchanged sentences

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

comprised of $ 8,138 of intangible assets, primarily acquired technology, and $ 328 of property and equipment related to our LoudCloud and Promoversity operations.

Restructuring and Other Charges

During the 52 weeks ended May 1, 2021, we recognized restructuring and other charges totaling $ 9,960 , comprised primarily of $ 5,888 for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives ($ 3,246 is included in accrued liabilities in the consolidated balance sheet as of May 1, 2021), $ 5,213 for professional service costs related to restructuring, process improvements, the financial advisor strategic review process, costs related to development and integration associated with Fanatics and FLC partnership agreements and shareholder activist activities, and $ 454 related to liabilities for a facility closure, partially offset by a $ 1,595 in an actuarial gain related to a frozen retirement benefit plan (non-cash).

During the 52 weeks ended April 27, 2019, we recognized restructuring and other charges totaling $ 7,233 comprised of $ 4,554 for severance and transition payments related to senior management changes, other employee termination and benefit costs, and other charges totaling $ 2,679 , primarily comprised of $ 2,274 in an actuarial loss for a frozen retirement benefit plan (non-cash), $ 281 related to additional liabilities for a facility closure, and a write-off of $ 118 of existing unamortized debt issuance costs.

Related Party Transactions

7 unchanged sentences

Rent payments to MBS Realty Partners L.P.

were approximately $ 1,380 in Fiscal 2021, Fiscal 2020 and Fiscal 2019.

were approximately $ 1,380 during each of the 52 weeks ended April 30, 2022, May 1, 2021, and May 2, 2020.

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 , $ 5,015 , and $ 6,702 during 52 weeks ended May 1, 2021, 53 weeks ended May 2, 2020, and 52 weeks ended April 27, 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 Fiscal 2021.

Total employee benefit expense for these plans was $ 3,287 , $ 0 , and $ 5,015 , during the 52 weeks ended April 30, 2022, May 1, 2021, and May 2, 2020, respectively.

Effective April 2020, due to the significant impact as a result of COVID-19 related campus store closures, we temporarily suspended employer matching contributions into our 401(k) plans.

The matching contributions were reinstated effective July 25, 2021.

Long-Term Incentive Compensation Expense

2 unchanged sentences

Types of equity awards that can be granted under the Equity Incentive Plan include options, restricted stock (“RS”), restricted stock units (“RSU”), performance shares (“PS”), performance share units (“PSU”), and stock options.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

We recognize compensation expense for restricted stock awards and performance share awards ratably over the requisite service period of the award, which is generally three years.

14 unchanged sentences

Restricted stock units generally vest over a period of three years, but will have a minimum vesting period of one year.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

Performance Share Awards

12 unchanged sentences

Holders are not entitled to receive dividends (if any) prior to vesting and exercise of the options.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

The following summarizes the stock option fair value assumptions:

14 unchanged sentences

During Fiscal 2022, we granted 183,348 phantom share units granted to employees.

Each phantom share represents the economic equivalent to one share of the Company's common stock and will be settled in cash based on the fair market value of a share of common stock at each vesting date in an amount not to exceed three times the grant date stock price.

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 estimated using the Black-Scholes model.

The average fair value on the date of grant was determined based on using risk-free rates and annual volatility rates for each the three tranches within the respective grant as detailed in the table below based upon their vesting dates and remaining time to maturity.

The following summarizes the phantom share fair value assumptions:

Phantom Share Grant #1 Phantom Share Grant #2

Grant Date Stock Price $ 2.46 $ 7.63

Stock Price Cap $ 7.38 $ 22.89

Valuation method utilized Black-Scholes Black-Scholes

Grant Date Risk Free Rate Range 0.12% - 0.15% 0.07% - 0.31%

Grant Date Volatility Range 86% - 114% 90% - 110 %

Average Grant date fair value per award $ 1.88 $ 5.79

As of May 1, 2021, we recorded a liability of $ 3,845 (Level 2 input) of which $ 2,509 and $ 1,336 is reflected in accrued liabilities and other long-term liabilities on the consolidated balance sheet, respectively.

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

Index to Form 10-K Index to FS

3 unchanged sentences

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

the Black-Scholes model.

The average fair value on the date of grant was $ 8.50 per phantom share using risk-free rates ranging from 0.08%-0.53% for the three tranches and annual volatility ranging from 78%-92% for the three tranches.

As of April 30, 2022, we recorded a liability of $ 2,774 (Level 2 input) related to phantom share units grants of which $ 1,726 and $ 1,048 is reflected in accrued liabilities and other long-term liabilities, respectively, on the consolidated balance sheet.

As of May 1, 2021, we recorded a liability of $ 3,845 (Level 2 input) related to phantom share units grants of which $ 2,509 and $ 1,336 is reflected in accrued liabilities and other long-term liabilities, respectively, on the consolidated balance sheet, respectively.

Long-Term Incentive Compensation Activity

The following table presents a summary of awards activity related to our current Equity Incentive Plan:

Restricted Stock Awards Restricted Stock Units Performance Share Units

Restricted Stock Awards Restricted Stock Units

Shares Weighted

1 unchanged sentence

Shares Weighted

Grant Date Fair Value Number of

Shares Weighted

Grant Date Fair Value

4 unchanged sentences

— $ — ( 40,402 ) $ 3.67

Balance, May 1, 2021 146,343 $ 2.40 1,199,851 $ 3.56 595,233 $ 2.23

Stock Options Phantom Shares

Balance, April 30, 2022 35,412 $ 10.59 1,205,079 $ 8.71

Performance Share Units Phantom Shares

Shares Weighted

Fair Value Number of

Grant Date Fair Value Number of

Shares Weighted

1 unchanged sentence

Granted — $ — 183,348 $ 8.50

Exercised/Vested — $ — — $ —

Forfeited ( 310,046 ) $ 1.43 ( 193,090 ) $ 1.88

Vested — $ — ( 734,945 ) $ 1.97

Forfeited (a)

( 66,666 ) $ 2.23 ( 114,239 ) $ 2.34

Balance, April 30, 2022 528,567 $ 2.23 1,539,027 $ 2.72

Stock Options

Shares Weighted

Fair Value Weighted

Exercise Price

Balance, May 1, 2021 2,190,990 $ 1.43 $ 3.73

Granted 671,218 $ 6.91 $ 12.10

Exercised (b)

( 77,883 ) $ 1.48 $ 3.29

Forfeited ( 81,388 ) $ 1.43 $ 3.73

Balance, April 30, 2022 2,702,937 $ 2.79 $ 5.82

Exercisable, April 30, 2022 469,859 $ 1.42 $ 3.80

(a) The PSUs forfeitures reflect a cumulative adjustment to reflect changes to the expected level of achievement of the respective grants.

Total fair value of vested share awards since the inception of the Equity Incentive Plan is $ 42,125 .

(b) During the period ended April 30, 2022, 77,883 options were exercised with a total intrinsic value of $ 369 .

The aggregate grant date fair value of stock options that vested during the period ending April 30, 2022 was $ 783 .

There were no stock options that vested during the periods ended May 1, 2021 and May 2, 2020.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

Total fair value of vested share awards during the periods ended April 30, 2022, May 1, 2021, and May 2, 2020 was $9,651, $6,631, and $8,130, respectively.

Long-Term Incentive Compensation Expense

1 unchanged sentence

52 weeks ended

May 1, 2021 53 weeks ended

April 30, 2022 52 weeks ended

May 1, 2021 53 weeks ended

April 27, 2019

Stock-based awards

10 unchanged sentences

(a) Long-term incentive compensation expense reflects cumulative adjustments to reflect changes to the expected level of achievement of the respective grants.

Total unrecognized compensation cost related to unvested awards as of May 1, 2021 was $ 11,099 and is expected to be recognized over a weighted-average period of 2.28 years.

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

Total unrecognized compensation cost related to unvested awards as of April 30, 2022 was $ 14,448 and is expected to be recognized over a weighted-average period of 2.50 years.

For Fiscal 2022, Fiscal 2021 and Fiscal 2020, we had no material revenue or expense in jurisdictions outside the United States.

Impact of U.S.

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017.

The Act reduces the U.S.

federal corporate income tax rate from 35 % to 21 % and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, among other provisions.

In accordance with SAB 118, “ Income Tax Accounting Implications of the Tax Cuts and Jobs Act ” (SAB 118), we completed our accounting for the tax effects of the enactment of the Act within the provisional period as of April 27, 2019.

We recorded measurement period adjustments during Fiscal 2019 to reduce our net deferred tax liability by $ 3,911 , which primarily related to the acceleration of certain deductions as permitted by the U.S.

The most significant impact of the legislation for the Company was a $ 20,425 reduction of the value of our net deferred (which represents future tax liabilities) and long-term tax liabilities as a result of lowering the U.S.

corporate income tax rate from 35 % to 21 %, which was recorded in Fiscal 2018.

We also recorded a liability associated with the one-time transition tax, however, such amount is not material.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (The “CARES Act”) was enacted.

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The most significant impact of the legislation for the Company was an income tax benefit of $ 7,164 for the carryback of NOLs to higher tax rate years, recorded in Fiscal 2021.

As of May 1, 2021, we recognized a current income tax receivable for NOL carrybacks of $ 30,492 in prepaid and other current assets on the consolidate balance sheet.

As of May 1, 2021, we recognized a current income tax receivable for NOL carrybacks of $ 30,492 in prepaid and other current assets on the consolidated balance sheet.

We received a $ 7,841 refund in the second quarter of Fiscal 2022 and expect to receive additional refunds of approximately $ 22,651 .

Income tax benefits for Fiscal 2022, Fiscal 2021 and Fiscal 2020 are as follows:

52 weeks ended

May 1, 2021 53 weeks ended

April 30, 2022 52 weeks ended

May 1, 2021 53 weeks ended

April 27, 2019

Federal $ ( 1,138 ) $ ( 36,187 ) $ ( 5,471 )

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Total $ ( 8,655 ) $ ( 45,171 ) $ ( 11,978 )

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

Reconciliation between the effective income tax rate and the federal statutory income tax rate is as follows:

52 weeks ended

May 1, 2021 53 weeks ended

April 30, 2022 52 weeks ended

May 1, 2021 53 weeks ended

April 27, 2019

Federal statutory income tax rate (a)

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Permanent book / tax differences ( 0.7 ) ( 0.9 ) ( 2.9 )

CARES Act NOL Carry-back 3.9 — —

Provisional remeasurement due to Tax Legislation — — 10.4

CARES Act NOL Carryback — 3.9 —

Valuation allowance ( 13.4 ) ( 4.0 ) —

Credits — — 0.5

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Effective income tax rate 11.2 % 24.4 % 23.8 %

Index to Form 10-K Index to FS

BARNES & NOBLE EDUCATION, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements - Continued

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

The effective tax rate for Fiscal 2021 is significantly lower as compared to the comparable prior year period due to various permanent differences and the impact of the CARES Act recorded.

(a) We identified certain out of period adjustments related primarily to the recognition of Income tax benefit related to the recording of an additional deferred tax valuation allowance for the 52 weeks ended May 1, 2021.

Refer to Note 2.

Summary of Significant Accounting Policies for further information.

The effective tax rate for Fiscal 2022 is significantly lower as compared to the prior year comparable period due to the change in pre-tax loss and the change in the assessment of the realization of deferred tax assets as compared to the prior year loss carrybacks.

One percentage point on our Fiscal 2022 effective tax rate is approximately $ 775 .

The permanent book / tax differences are principally comprised of non-deductible compensation, non-deductible meals and entertainment costs, and federal income tax credits.

The permanent book / tax differences are principally comprised of non-deductible compensation, and non-deductible meals and entertainment costs.

We account for income taxes using the asset and liability method.

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The significant components of our deferred taxes consisted of the following:

May 1, 2021 May 2, 2020

April 30, 2022 May 1, 2021

Deferred tax assets:

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Operating lease right-of-use assets ( 73,224 ) ( 61,896 )

LIFO inventory valuation ( 29,916 ) ( 9,571 )

Property and equipment ( 7,638 ) ( 5,894 )

Gross deferred tax liabilities ( 132,656 ) ( 110,908 )

Net deferred tax asset $ 23,248 $ 7,805

Net deferred tax (liability) asset $ ( 1,430 ) $ 15,943

Index to Form 10-K Index to FS

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

As of May 1, 2021, we had $ 0 of unrecognized tax benefits, all of which, if recognized, would affect our effective tax rate.

Refer to Note 2.

Summary of Significant Accounting Policies for further information.

As of April 30, 2022, we had $ 0 of unrecognized tax benefits.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

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Other reductions for tax positions of prior periods ( 39 )

Balance at April 27, 2019 $ 91

Balance at May 2, 2020 $ 52

Additions for tax positions of the current period —

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Other reductions for tax positions of prior periods —

Balance at May 1, 2021 $ —

Balance at April 30, 2022 $ —

Our policy is to recognize interest and penalties related to income tax matters in income tax expense.

As of May 1, 2021 and May 2, 2020, we had accrued $ 0 and $ 3 , respectively, for net interest and penalties.

The change in the amount accrued for net interest and penalties includes $ 3 in reductions for net interest and penalties recognized in income tax expense in our Fiscal 2021 consolidated statement of operations.

As of both April 30, 2022 and May 1, 2021, we had accrued $ 0 for net interest and penalties.

In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized.

In evaluating our ability to utilize our deferred tax assets, we considered all available evidence, both positive and negative, in determining future taxable income on a jurisdiction by jurisdiction basis.

We have recorded a valuation allowance of $ 1,202 and $ 1,231 for May 1, 2021 and May 2, 2020, respectively.

As of May 1, 2021, and based on our tax year ended January 2021, we had state net operating loss carryforwards (“NOLs”) of approximately $ 196,180 that are available to offset taxable income in our respective taxing jurisdiction beginning in the current period and that expire beginning in 2030.

We had net state tax credit carryforwards totaling $ 548 , which expire beginning in 2022.

As of May 2, 2021, we recorded $ 200 of foreign withholding tax related to repatriations of earnings from certain foreign subsidiaries.

As of April 30, 2022, we recorded a valuation allowance of $ 43,550 compared to $ 8,692 as of May 1, 2021.

As of April 30, 2022, we had state net operating loss carryforwards (“NOLs”) of approximately $ 348,201 which will begin to expire in 2030, state tax credit carryforwards totaling $ 440 which will begin to expire in 2023, and federal NOLs of approximately $ 166,118 which have an indefinite carryforward period.

As of April 30, 2022, we recorded $ 200 of foreign withholding tax related to repatriations of earnings from certain foreign subsidiaries.

If additional earnings in these foreign subsidiaries were repatriated in the future, additional income and withholding tax expense would be incurred.

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We are involved in a variety of claims, suits, investigations and proceedings that arise from time to time in the ordinary course of our business, including actions with respect to contracts, intellectual property, taxation, employment, benefits, personal injuries and other matters.

We record a liability when we believe that it is both probable that a loss has been incurred and the amount of loss can be reasonably estimated.

Based on our current knowledge, we do not believe that there is a reasonable possibility that the final outcome of any pending or threatened legal proceedings to which we or any of our subsidiaries are a party, either individually or in the aggregate, will have a material adverse effect on our future financial results.

However, legal matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond our

The results of these proceedings in the ordinary course of business are not expected to have a material adverse effect on our condensed consolidated financial position, results of operations, or cash flows.

Index to Form 10-K Index to FS

3 unchanged sentences

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

As such, there can be no assurance that the final outcome of these matters will not materially and adversely affect our business, financial condition, results of operations or cash flows.

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 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.

§ 1), Section 2 of the Sherman Act (15 U.S.C.

§ 2), Section 13(a) of the Robinson-Patman Act (15 U.S.C.

§13(a)), and various state antitrust and unfair trade practices laws for alleged activities in connection with inclusive access and the sale of course materials to universities and their students.

The United States Judicial Panel on Multidistrict Litigation has consolidated these and other related cases in a consolidated proceeding before the Hon.

Cote of the United States District Court for the Southern District of New York.

On October 16, 2020, three named student plaintiffs filed a Consolidated Amended Complaint, as did the retailer plaintiffs.

The student plaintiffs and retailer plaintiffs each filed a Second Consolidated Amended Complaint on December 18, 2020, which all Defendants jointly moved to dismiss on January 22, 2021.

On June 14, 2021, the Court ordered both cases dismissed with prejudice.

Should Plaintiffs pursue an appeal, we intend to vigorously defend this matter.

We are currently unable to estimate any potential losses.

Commitments and Contingencies

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We account for these service agreements for our physical bookstores under lease accounting.

Prior to the adoption of FASB ASC 842, Leases (Topic 842) ("ASC 842") as discussed below, the excess of such minimum contract expense over actual contract payments (net of school allowances) was reflected in other long-term liabilities and accrued liabilities in the consolidated balance sheets.

Effective the first quarter of Fiscal 2020 (April 28, 2019), we adopted ASC 842, which requires us to recognize lease assets and lease liabilities on the consolidated balance sheets for substantially all fixed lease arrangements (excluding variable obligations) with a term greater than twelve months.

Prior to the adoption of FASB ASC 842, Leases (Topic 842) ("ASC 842"), the excess of such minimum contract expense over actual contract payments (net of school allowances) was reflected in other long-term liabilities and accrued liabilities in the consolidated balance sheets.

We recognize lease assets and lease liabilities on the consolidated balance sheets for substantially all fixed lease arrangements (excluding variable obligations) with a term greater than twelve months.

For additional information on lease expense and minimum fixed lease obligations, excluding variable commissions, see Part II - Item 8.

Financial Statements and Supplementary Data - Note 8.

The expense related to our college and university contracts for physical bookstores, including rent expense, and other facility costs in the consolidated statements of operations for periods prior to adoption of ASC 842 in Fiscal 2020 are as follows:

52 weeks ended

April 27, 2019

Minimum contract expense $ 169,131

Percentage contract expense 73,368

Total expense $ 242,499

Purchase obligations, which includes information technology contracts and inventory purchase commitments, as of May 1, 2021 are as follows:

Purchase obligations, which includes information technology contracts, as of April 30, 2022 are as follows:

Less Than 1 Year $ 11,617

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Total $ 22,269

Subsequent Event

On June 7, 2022, we entered into a Term Loan Credit Agreement (the “Term Loan Credit Agreement”) with TopLids LendCo, LLC and Vital Fundco, LLC and we entered an amendment to our existing Credit Agreement.

For additional information, see the Company’s Report on Form 8-K dated June 7, 2022 and filed with the SEC on June 10, 2022.

See Part II - Item 8.

Financial Statements and Supplementary Data - Note 7.

Credit Facility for Credit Agreement details.

The Term Loan Credit Agreement provides for term loans in an amount equal to $30,000 (the “Term Loan Facility” and, the loans thereunder, the “Term Loans”).

The proceeds of the Term Loans are being used to finance working capital, and to pay fees and expenses related to the Term Loan Facility.

The Term Loans accrue interest at a rate equal to 11.25% and mature on June 7, 2024.

We have the right, through December 31, 2022, to pay all or a portion of the interest on the Term Loans in kind.

The Term Loans do not amortize prior to maturity.

Solely to the extent that any Term Loans remain outstanding on June 7, 2023, we must pay a fee of 1.5% of the outstanding principal amount of the Term Loans on such date.

The Term Loans are required to be repaid (i) after repayment of the FILO Facility under the Credit Agreement, with up to 100% of the proceeds of the sale of a non-core business line of the Company generating net proceeds in excess of $1,000, other than ordinary course dispositions and (ii) in full in connection with a debt or equity financing transaction generating net proceeds in excess of an amount sufficient to repay the FILO Facility under the Credit Agreement.

The Term Loan Credit Agreement does not contain a financial covenant, but otherwise contains representations and warranties, covenants and events of default that are substantially the same as those in the Credit Agreement, including restrictions on the ability of the Company and its subsidiaries to incur additional debt, incur or permit liens on assets, make investments and acquisitions, consolidate or merge with any other company, engage in asset sales and make dividends and distributions.

The Term Loan Facility is secured by second-priority liens on all assets securing the obligations under the Credit Agreement, which is all of the assets of the Company and the Guarantors, subject to customary exclusions and limitations set forth in the Term Loan Credit Agreement and the other loan documents executed in connection therewith.

The Credit Agreement amendment permits us to incur the Term Loan Facility and also provides that, upon repayment of the Term Loan Credit Agreement (and, if applicable, any replacement credit facility thereof), we may incur second lien secured debt in an aggregate principal amount not to exceed $75,000.

Financial Statements and Supplementary Data - Note 2.

Summary of Significant Accounting Policies.

Index to Form 10-K Index to FS

2 unchanged sentences

(In thousands)

For the 52 weeks ended May 1, 2021, 53 weeks ended May 2, 2020, and 52 weeks ended April 27, 2019:

For the 52 weeks ended April 30, 2022, 52 weeks ended May 1, 2021, and 53 weeks ended May 2, 2020:

of period Charge

2 unchanged sentences

Allowance for Doubtful Accounts

April 30, 2022 $ 3,594 $ 2,750 $ ( 4,101 ) $ 2,243

May 1, 2021 $ 1,986 $ 4,600 $ ( 2,992 ) $ 3,594

May 2, 2020 $ 2,135 $ 1,710 $ ( 1,859 ) $ 1,986

April 27, 2019 $ 2,083 $ 2,670 $ ( 2,618 ) $ 2,135

of period Addition

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Sales Returns Reserves

April 30, 2022 $ 3,331 $ 123,559 $ ( 124,167 ) $ 2,723

May 1, 2021 $ 5,063 $ 145,595 $ ( 147,327 ) $ 3,331

May 2, 2020 $ 5,282 $ 186,305 $ ( 186,524 ) $ 5,063

April 27, 2019 $ 5,229 $ 197,799 $ ( 197,746 ) $ 5,282

All other schedules are omitted because the conditions requiring their filing do not exist, or because the required information is provided in the consolidated financial statements, including the notes thereto.

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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-K

Item 8. Financial Statements and Supplementary Data