Barnes and Noble 2000 Annual Report Download - page 62

18. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
The Company leases space for its executive offices in
properties in which Leonard Riggio, chairman, chief
executive officer and principal stockholder of Barnes &
Noble, has a minority interest. The space was rented at
an aggregate annual rent including real estate taxes of
approximately $3,198, $2,753 and $1,316 in fiscal years
2000, 1999 and 1998, respectively.
The Company leases a 75,000 square foot office/
warehouse from a partnership in which Leonard Riggio
has a 50 percent interest, pursuant to a lease expiring in
2023. Pursuant to such lease, the Company paid $648,
$573 and $737 in fiscal years 2000, 1999 and 1998,
respectively.
The Company is provided with certain package shipping
services by the LTA Group, Inc. (LTA), a company in
which a brother of Leonard Riggio owns a 20 percent
interest. The Company paid LTA $16,661, $13,118 and
$12,571 for such services during fiscal years 2000, 1999
and 1998, respectively.
The Company leases retail space in a building in which
Barnes & Noble College Bookstores, Inc. (B&N College),
a company owned by Leonard Riggio, subleases space
for its executive offices from the Company. Occupancy
costs allocated by the Company to B&N College for
this space totaled $709, $686 and $725 for fiscal years
2000, 1999 and 1998, respectively.
B&N College allocated to the Company certain operating
costs B&N College incurred on the Company’s behalf.
These charges are included in the accompanying
consolidated statements of operations and approximated
$264, $193 and $48 for fiscal 2000, 1999 and 1998,
respectively. B&N College purchased $17,198, $16,125
and $12,061 of merchandise from the Company during
fiscal 2000, 1999 and 1998, respectively. The Company
charged B&N College $1,331, $1,042 and $972 for fiscal
years 2000, 1999 and 1998, respectively, for capital
expenditures, business insurance and other operating
costs incurred on its 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, insurance, personnel and other costs
approximated $2,401, $2,205 and $1,760 during fiscal
2000, 1999 and 1998, respectively, and are included in
the accompanying consolidated statements of operations.
On October 28, 1999, the Company acquired Babbage’s
Etc., one of the nation’s largest operators of video game
and entertainment software stores, a company majority
owned by Leonard Riggio, for $208,670. If financial
performance targets are met over fiscal year 2001, the
Company will make an additional payment of
approximately $10,000 in 2002.
Barnes & Noble.com purchased $110,462, $74,682 and
$33,444 of merchandise from the Company during fiscal
2000, 1999 and 1998, respectively, and Barnes &
Noble.com expects to source purchases through the
Company in the future. The Company has entered into
an agreement (the Supply Agreement) with Barnes &
Noble.com whereby the Company charges Barnes &
Noble.com the costs associated with such purchases plus
incremental overhead incurred by the Company in
connection with providing such inventory. The Supply
Agreement is subject to certain termination provisions.
The Company has entered into agreements whereby
Barnes & Noble.com receives various services from the
Company, including, among others, services for payroll
processing, benefits administration, insurance (property
and casualty, medical, dental and life), tax, traffic,
fulfillment and telecommunications. In accordance with
the terms of such agreements the Company has received,
and expects to continue to receive, fees in an amount
equal to the direct costs plus incremental expenses
associated with providing such services. The Company
received $1,699, $2,037 and $856 for such services
during fiscal 2000, 1999 and 1998, respectively.
The Company subleases to Barnes & Noble.com
approximately one-third of a 300,000 square foot
warehouse facility located in New Jersey. The Company
has received from Barnes & Noble.com $489, $473 and
$310 for such subleased space during fiscal 2000, 1999
and 1998, respectively.
Since 1993, the Company has used the music distributor
AEC One Stop Group, Inc. (AEC) as its primary music
and video supplier and to provide a music and video
database. In 1999, AEC’s parent corporation was
acquired by an investor group in which Leonard Riggio
was a minority investor. The Company paid AEC
$159,179 and $126,241 in connection with this
agreement during fiscal 2000 and fiscal 1999,
respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued