Barnes and Noble 2002 Annual Report Download - page 47

The weighted-average fair value of the options granted
during the 52 weeks ended February 1, 2003, the 52
weeks ended February 2, 2002, and the 53 weeks ended
February 3, 2001 were estimated at $8.08, $2.75 and
$1.60, respectively, using the Black-Scholes option
pricing model with the following assumptions:
Fiscal Year 2002 2001 2000
Volatility 62% 61% 61%
Risk-free interest rate 4.60% 4.97% 5.56%
Expected life 6 years 6 years 6 years
18. COMMITMENTS AND CONTINGENCIES
The Company leases retail stores, warehouse facilities,
office space and equipment. Substantially all of the
retail stores are leased under noncancelable agreements
which expire at various dates through 2036 with
various renewal options for additional 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 performance in
excess of specified minimums at various stores.
Rental expense under operating leases are as follows:
Fiscal Year 2002 2001 2000
Minimum rentals $ 370,746 358,522 338,922
Percentage rentals 15,404 14,274 10,782
$386,150 372,796 349,704
Future minimum annual rentals, excluding percentage
rentals, required under leases that had initial,
noncancelable lease terms greater than one year, as of
February 1, 2003 are:
Fiscal Year
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 369,730
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339,622
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318,430
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294,286
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276,825
After 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,283,225
$ 2,882,118
The Company leases one of its distribution facilities
located in South Brunswick, New Jersey from the New
Jersey Economic Development Authority (NJEDA) under
the terms of an operating lease expiring in June 2011.
Under the terms of this lease, the Company provides a
residual value guarantee to the NJEDA, in an amount
not to exceed $5,000, relating to the fair market value
of this distribution facility calculated at the conclusion of
the lease term. The Company believes that the possibility
that any such payment would be required under this
guarantee is remote.
19. LEGAL PROCEEDINGS
In August 1998, The Intimate Bookshop, Inc. and its
owner, Wallace Kuralt, filed a lawsuit in the United
States District Court for the Southern District of New
York against the Company, Borders Group, Inc. and
others, alleging violation of the Robinson-Patman Act
and other federal law, New York statutes governing
trade practices and common law. In March 2000, a
Second Amended Complaint was served on the
Company and other defendants alleging a single cause
of action for violations of the Robinson-Patman Act.
The Second Amended Complaint claims that The
Intimate Bookshop, Inc. has suffered damages of
$11,250 or more and requests treble damages, costs,
attorneys’ fees and interest, as well as declaratory and
injunctive relief prohibiting the defendants from
violating the Robinson-Patman Act. The Company
served an Answer in April 2000 denying the material
allegations of the Second Amended Complaint and
asserting various affirmative defenses. On January 11,
[NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS continued ]
46 2002 Annual ReportBarnes & Noble, Inc.