Barnes and Noble 2004 Annual Report Download - page 43

The weighted average fair value of the options granted
during the period ended May 27, 2004 and the fiscal
years ended December 31, 2003 and 2002 were
estimated at $2.00, $1.03 and $1.06, respectively, using
the Black-Scholes option pricing model with the
following assumptions:
Period Ended Fiscal Year Ended
May 27, Dec. 31, Dec. 31,
2004 2003 2002
Volatility 102% 102% 140%
Risk-free
interest rate 3.65% 3.65% 4.00%
Expected life 4 years 4 years 5 years
17. 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
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 2004 2003 (a) 2002 (a)
Minimum rentals $309,082 297,939 291,473
Percentage rentals 6,031 5,183 4,699
$315,113 303,122 296,172
(a) Restated to reflect certain adjustments as discussed in
Note 1 to the Notes to Consolidated Financial
Statements.
Future minimum annual rentals, excluding percentage
rentals, required under leases that had initial,
noncancelable lease terms greater than one year, as of
January 29, 2005 are:
Fiscal Year
2005......................................................................................$337,670
2006........................................................................................321,327
2007........................................................................................307,815
2008........................................................................................293,223
2009........................................................................................274,403
After 2009.............................................................................1,004,871
$2,539,309
The Company provides for minimum rent expense over
the lease terms (including the build-out period) on a
straight-line basis. The excess of such rent expense over
actual lease payments (net of tenant allowances) is
reflected primarily in other long-term liabilities in the
accompanying balance sheets.
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.
18. LEGAL PROCEEDINGS
There have been no material developments with respect
to previously reported legal proceedings, except as
follows:
On March 14, 2003, a Company employee filed a class
action lawsuit in the Superior Court of California,
Orange County against the Company. 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
[NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS continued ]
41 2004 Annual Report Barnes & Noble, Inc.