Barnes and Noble 2002 Annual Report Download - page 48

2002, the Company and the other defendants filed a
motion for summary judgment. A hearing on that
motion was held on March 22, 2002. The Company
intends to vigorously defend this action.
On March 14, 2003, a Company employee filed a class
action lawsuit against the Company in the Superior
Court of California for the County of Orange (Case No.
03CC00088). The complaint alleges that the Company
improperly classified the assistant store managers,
department managers and receiving managers working
in its California stores as salaried exempt employees.
The complaint alleges that these employees spent more
than 50 percent of their time performing non-exempt
work and should have been classified as non-exempt
employees. The complaint alleges violations of the
California Labor Code and California Business and
Professions Code and seeks relief, including unpaid
overtime compensation, prejudgment interest, penalties,
attorneys' fees and costs. The Company intends to
vigorously defend this action, including contesting its
certification as a class action.
In addition to the above actions, 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, personal injury claims and employment issues.
The results of these proceedings are not expected to
have a material adverse effect on the Company’s
consolidated financial position or results of operations.
20. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The Company believes that the transactions and
agreements discussed below (including renewals of any
existing agreements) between the Company and its
affiliates are at least as favorable to the Company as
could be obtained from unaffiliated parties. The Board
of Directors and the Audit Committee are designated to
approve in advance any new proposed transaction or
agreement with affiliates and will utilize procedures in
evaluating the terms and provisions of such proposed
transaction or agreement as are appropriate in light of
the fiduciary duties of directors under Delaware law.
The Company leases space for its executive offices in
properties in which Leonard Riggio has a minority
interest. The space was rented at an aggregate annual
rent including real estate taxes of approximately $4,043,
$3,966 and $3,378 in fiscal years 2002, 2001 and 2000,
respectively. Rent per square foot is approximately $28.00,
which is below market.
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 $752,
$490 and $648 in fiscal years 2001, 2000 and 1999,
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 $771, $748 and $709 for fiscal years
2002, 2001 and 2000, respectively. The amount paid by
B&N College to the Company approximates the cost
per square foot paid by the Company to its unaffiliated
third-party landlord.
The Company subleased warehouse space from Barnes
& Noble.com in Reno, Nevada. The Company paid
Barnes & Noble.com $279, $1,838 and $1,401 for such
subleased space during fiscal 2002, 2001 and 2000,
respectively. Additionally, in January 2001, the
Company purchased $6,186 of warehouse equipment
(valued at original cost) from Barnes & Noble.com’s
Reno warehouse. In January 2002, Barnes & Noble.com
determined it could not effectively utilize the full
capacity of the Reno, Nevada distribution center. As
a result, Barnes & Noble.com’s Board of Directors
approved the transfer of the Reno warehouse lease and
the sale of inventory located in Reno to the Company.
The Company purchased the inventory from Barnes
& Noble.com at cost for $9,877. In addition, the
Company spent $1,755 to refurbish the facility. The
Company’s Board of Directors also approved the
Company’s assumption of the lease, which expires in
2010, and the hiring of all of the employees at the Reno
facility. The Reno lease assignment and the transfer of
the Reno facility to the Company was completed in
April 2002. The Company intends to use the Reno
facility to facilitate distribution to its current and future
West Coast stores. In connection with the transition,
Barnes & Noble.com agreed to pay one-half of the rent
for the Reno facility through December 31, 2002.
Barnes & Noble.com paid $905 in relation to these
expenses for fiscal year 2002.
[NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS continued ]
47 2002 Annual Report Barnes & Noble, Inc.