Barnes and Noble 1997 Annual Report Download - page 36

periods. The agreements, which have been classified as operating
leases, generally provide for both minimum and percentage rentals
and require the Company to pay all insurance, taxes and other
maintenance costs. Percentage rentals are based on sales perfor-
mance in excess of specified minimums at various stores.
Rental expense under operating leases are as follows:
FISCAL YEAR 1997 1996 1995
Minimum rentals $ 253,472 222,700 179,941
Percentage rentals 3,216 2,750 2,532
$ 256,688 225,450 182,473
Future minimum annual rentals, excluding percentage
rentals, required under leases that had initial, noncancelable lease
terms greater than one year, as of January 31, 1998 are:
FISCAL YEAR
1998 $ 256,588
1999 250,230
2000 240,798
2001 235,819
2002 222,158
After 2002 1,471,425
$ 2,677,018
Future minimum annual rentals for stores scheduled for
closing pursuant to the Company’s restructuring plan are included
in the preceding table. Future rental payments representing the
exit costs associated with these store closings were included in the
Company’s non-cash restructuring charge of $123,768 recorded
during fiscal 1995 and, therefore, do not represent future operat-
ing expenses. Minimum rental obligations may decline in the
future, as the leases for these stores subject to the restructuring
plan are terminated or the restructuring plan is otherwise completed.
11. LITIGATION
Various claims and lawsuits arising in the normal course of
business are pending against the Company. The subject matter
of these proceedings primarily includes commercial disputes and
employment issues. The results of these proceedings are not
expected to have a material adverse effect on the Company’s con-
solidated financial position or results of operations.
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases space for its executive offices in proper-
ties in which a principal shareholder/director/executive officer
of the Company has a minority interest. The space was rented
at an aggregate annual rent including real estate taxes of approxi-
mately $1,309, $1,307 and $1,376 in fiscal years 1997, 1996 and
1995, respectively.
Marboro Books Corp., the Company’s mail-order subsidiary,
leases a 76,000 square foot office/warehouse from a partnership in
which a principal shareholder/director/executive officer of the
Company has a 50% interest, pursuant to a lease expiring in 2023.
Pursuant to such lease, the Company paid $743, $665 and $664 in
fiscal years 1997, 1996 and 1995, respectively.
The Company is provided with certain package shipping
services by the LTA Group, Inc. (LTA), a company in which the
brother of a principal shareholder/director/executive officer of the
Company acquired a 20% interest during fiscal 1996. The
Company paid LTA $11,528 and $9,100 for such services during
fiscal years 1997 and 1996, respectively.
The Company leases retail space in a building in which
Barnes & Noble College Bookstores, Inc. (B&N College), a
company owned by a principal shareholder/director/executive
officer of the Company, subleases space for its executive offices.
Occupancy costs allocated by the Company to B&N College for
this space totaled $634 and $544 for the fiscal years ended January
31, 1998 and February 1, 1997, respectively. In connection with
the space, the Company reimbursed B&N College during fiscal
1997, for a landmark tax credit totaling $726.
B&N College also allocated certain expenses it incurred on
behalf of the Company for salaries, employee benefit plan
expenses and office support services. These charges are included
in selling and administrative expenses in the accompanying con-
solidated statements of operations and approximated $75, $115,
and $1,219 for fiscal 1997, 1996 and 1995, respectively. The
Company charged B&N College $473 during fiscal 1997 for capi-
tal expenditures, business insurance and other operating costs
incurred on their behalf.
The Company uses a jet aircraft owned by B&N College
and pays for the costs and expenses of operating the aircraft based
upon the Company’s usage. Such costs, which include fuel, insur-
ance, personnel and other costs, approximate $1,910, $1,685 and
$1,298 during fiscal 1997, 1996 and 1995, respectively, and are
included in the accompanying consolidated statements
of operations.
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Notes to Consolidated Financial Statements continued