Barnes and Noble 2015 Annual Report Download - page 13

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B&N College generally operates its stores pursuant to
multi-year management service agreements under which
a school designates B&N College to operate the official
school bookstore on campus and B&N College provides the
school with regular payments that represent a percentage
of store sales and, in some cases, include a minimum fixed
guarantee.
B&N College’s business strategy is to maintain long-term
relationships with colleges and universities by providing
high-quality service to college administrators, faculty and
students. B&N College is poised for continued growth with
approximately  of college and university affiliated
bookstores in the United States being operated by their
respective educational institutions. B&N College believes
it will achieve this by increasing market share through new
account acquisition and through strategic planning and
outreach with its existing accounts to exploit opportunities
and grow market share.
NOOK
This segment includes the Company’s digital business,
which includes the Company’s eBookstore, digital news-
stand and sales of NOOK® devices and accessories through
B&N Retail, B&N College and third-party distribution part-
ners. The underlying strategy of the NOOK business is to
offer customers any digital book, newspaper or magazine,
anytime, on any device. The Company remains commit-
ted to delivering to customers the best digital bookstore
experience, while rationalizing its existing cost structure.
As part of this commitment, the Company entered into
a partnership on June , , to develop co-branded
Samsung Galaxy Tab®  NOOK® tablets that feature the
award-winning Barnes & Noble digital reading experience.
The co-branded devices combined the popular Samsung
Galaxy Tab®  hardware with customized NOOK software
to give customers powerful, full-featured tablets that are
designed for reading, with easy access to Barnes & Noble’s
expansive digital collection of approximately four million
eBooks, digital magazines and newspapers. The companies
introduced the Samsung Galaxy Tab® NOOK® in a -inch
version in the U.S. in August  and the -inch version
in October . The Company also intends to continue to
offer the best black-and-white eReaders on the market,
backed by quality customer service and technology support
for those devices. The Company will continue to sell its
existing device inventory as it segues into new products.
At the same time, it will leverage all Barnes & Noble retail,
digital and partnership assets, as well as existing NOOK
customer relationships. The Company intends to continue
to provide the resources necessary for quality customer
service and support sales of new devices and those in use by
NOOK’s existing customer base.
On June , , the Company entered into an Assignment
of Lease for its , square foot Palo Alto, California
campus. Employees were relocated to new state-of-the-art
facilities totaling , square feet. NOOK employees
were moved to a new facility in Santa Clara, California,
while Barnes & Noble College’s digital education employees
were relocated to a facility in Mountain View, California.
The relocations occurred during the first quarter of fiscal
. This action resulted in a net reduction of annual
occupancy expenses of approximately . million, reduc-
ing the Company’s future lease commitments by approxi-
mately . million. In the fourth quarter of fiscal ,
the Company recorded an asset impairment charge of .
million related to this relocation. In the first quarter of
fiscal , the Company recorded a benefit, net of clos-
ing related costs, of . million primarily driven by the
reversal of previously deferred rent liabilities upon exiting
the facility.
The digital products group has knowledgeable product
development and operational management teams in the
areas of reading software, digital content retailing and
mobile device development. NOOK’s development office
employs experienced engineers in its digital product area.
The NOOK digital products management team is cur-
rently focused on next generation digital reading products
to enhance the reading experience and help consumers
discover content in new and interesting ways. The Digital
Services team, which includes the Cloud and Commerce
groups, is responsible for maintaining and developing the
NOOK digital bookstore service.
2015 Annual Report 11