Barnes and Noble 2011 Annual Report Download - page 63

and expires in 2013; the second location is leased from
an entity in which Leonard Riggio has a minority interest
and expires in 2016. The space was rented at an aggregate
annual rent including real estate taxes of approximately
$4,868, $4,889, $1,198 and $4,681 during fi scal 2011, fi scal
2010, the transition period and fi scal 2008, respectively.
The Company leases one of its B&N College stores from a
partnership owned by Leonard and Stephen Riggio, pursu-
ant to a lease expiring in 2014. Rent of $862 and $512 was
paid during fi scal 2011 and fi scal 2010 from the date of the
Acquisition, respectively.
The Company leases an offi ce/warehouse from a partner-
ship in which Leonard Riggio has a 50% interest, pursuant
to a lease expiring in 2023. The space was rented at an
annual rent of $763, $759, $186 and $810 during fi scal 2011,
fi scal 2010, the transition period and fi scal 2008, respec-
tively. Net of subtenant income, the Company paid $246,
$241, $57 and $307 during fi scal 2011, fi scal 2010, the
transition period and fi scal 2008, respectively.
Prior to the Acquisition, the Company leased retail space
in a building in which B&N College subleased space from
the Company, pursuant to a sublease expiring in 2020.
Pursuant to such sublease, the Company charged B&N
College $347, $206 and $773 for such subleased space
and other operating costs incurred on its behalf during
fi scal year 2010 prior to the Acquisition, the transition
period and fi scal 2008, respectively. The amount paid by
B&N College to the Company exceeded the cost per square
foot paid by the Company to its unaffi liated third-party
landlord.
Prior to the Acquisition, the Company reimbursed B&N
College certain operating costs B&N College incurred
on the Company’s behalf. These charges were $71, $34
and $235 during fi scal 2010 prior to the Acquisition, the
transition period and fi scal 2008, respectively. Prior to the
Acquisition, B&N College purchased inventory, at cost plus
an incremental fee, of $25,187, $2,742 and $49,172 from the
Company during fi scal 2010 prior to the Acquisition, the
transition period and fi scal 2008, respectively. Also prior
to the Acquisition, B&N College reimbursed the Company
$2,700, $926 and $3,506 for fi scal year 2010 prior to the
Acquisition, the transition period and fi scal 2008, respec-
tively, for capital expenditures, business insurance and
other operating costs incurred on its behalf.
GameStop Corp. (GameStop), a company in which Leonard
Riggio is a member of the Board of Directors and a minor-
ity shareholder, operates departments within some of the
Company’s bookstores. GameStop pays a license fee to
the Company in an amount equal to 7% of the gross sales
of such departments, which totaled $989, $1,061, $250
and $1,250, during fi scal 2011, fi scal 2010, the transition
period and fi scal 2008, respectively. GameStop sells new
and used video games and consoles on the Barnes & Noble.
com website. Barnes & Noble.com receives a commission
on sales made by GameStop. For fi scal 2011, fi scal 2010,
the transition period and fi scal 2008, the commission
earned by Barnes & Noble.com was $356, $334, $76 and
$531, respectively. Until June 2005, GameStop participated
in the Company’s worker’s compensation, property and
general liability insurance programs. The costs incurred
by the Company under these programs were allocated to
GameStop based upon GameStop’s total payroll expense,
property and equipment, and insurance claim history.
GameStop reimbursed the Company for these services
$51, $128, $62 and $162 during fi scal 2011, fi scal 2010, the
transition period and fi scal 2008, respectively. Although
GameStop secured its own insurance coverage, costs are
continuing to be incurred by the Company on insurance
claims which were made under its programs prior to June
2005 and any such costs applicable to insurance claims
against GameStop will be charged to GameStop at the time
incurred.
The Company is provided with national freight distribu-
tion, including trucking services by Argix Direct Inc.
(Argix), a company in which a brother of Leonard and
Stephen Riggio owns a 20% interest, pursuant to a trans-
portation agreement expiring in 2012. The Company
paid Argix $15,890, $16,536, $3,820 and $16,981 for such
services during fi scal 2011, fi scal 2010, the transition
period and fi scal 2008, respectively. At the time of the
agreement, the cost of freight delivered to the stores by
Argix was comparable to the prices charged by publishers
and the Company’s other third party freight distributors.
However, due to higher contracted fuel surcharge and
transportation costs, Argix’s rates are now higher than
the Company’s other third party freight distributors. As a
result, the Company amended its existing agreement with
Argix eff ective January 1, 2009. The amendment provides
the Company with a $3,000 annual credit to its freight and
transportation costs for the remaining life of the existing
agreement. Argix provides B&N College with transporta-
tion services under a separate agreement expiring in 2011.
The Company believes that the transportation costs that
B&N College paid to Argix are comparable to the trans-
portation costs charged by third party distributors. B&N
College paid Argix $1,477 and $658 for such services during
2011 Annual Report 61