Barnes and Noble 2012 Annual Report Download - page 61
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GameStop Corp. (GameStop), a company in which Leonard
Riggio was a member of the Board of Directors and is a
minority shareholder, operates departments within some
of the Company’s bookstores. GameStop pays a license fee
to the Company in an amount equal to of the gross sales
of such departments, which totaled , and ,
during fi scal , fi scal and fi scal , respectively.
GameStop sold new and used video games and consoles on
the Barnes & Noble.com website up until May , , when
the agreement between GameStop and Barnes & Noble.com
terminated. Barnes & Noble.com received a commission
on sales made by GameStop. For fi scal , fi scal and
fi scal , the commission earned by Barnes & Noble.
com was (from residual activity after the agreement
terminated), and , respectively. Until June ,
GameStop participated in the Company’s workers’ compen-
sation, 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 , and during fi scal , fi scal
and fi scal , 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 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 dis-
tribution, including trucking services by Argix Direct
Inc. (Argix), a company in which a brother of Leonard
and Stephen Riggio owns a interest, pursuant to a
transportation agreement expiring in (following an
automatic renewal of the agreement by its terms in
for an additional two-year term, although at all times
the agreement requires a two-year notice to terminate).
The Company paid Argix ,, , and ,
for such services during fi scal , fi scal and fi scal
, 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 were higher than the Company’s other third party
freight distributors. As a result, the Company amended its
existing agreement with Argix eff ective January , .
The amendment provides the Company with a ,
annual credit to its freight and transportation costs for
the remaining life of the existing agreement. The ,
annual credit expired with the April , renewal of the
agreement. Argix provides B&N College with transporta-
tion services under a separate agreement that expired and
was renewed in . The renewed agreement expires
in . The Company believes that the transportation
costs that B&N College paid to Argix are comparable to
the transportation costs charged by third party distribu-
tors. B&N College paid Argix ,, , and
for such services during fi scal , fi scal and fi scal
from the date of Acquisition, respectively. Argix also
leased offi ce and warehouse space from the Company in
Jamesburg, New Jersey, pursuant to a lease expiring in
. This lease was renewed for additional space in .
However, the Company subsequently sold the warehouse
on December , (see Note ). The Company charged
Argix ,, , and , for such leased space and
other operating costs incurred on its behalf prior to the sale
of the warehouse during fi scal , fi scal and fi scal
, respectively.
The Company used Source Interlink Companies, Inc.
(Source Interlink) as its primary supplier of music and
DVD/video, as well as magazines and newspapers. Leonard
Riggio is an investor in an investment company that
formerly owned a minority interest in Source Interlink.
Pursuant to the confi rmation order of the United States
Bankruptcy Court of the District of Delaware, as of June
, (the Discharge Date) the equity interests held
by the then owners of Source Interlink were discharged,
cancelled, released and extinguished. The Company paid
Source Interlink , for merchandise purchased at
market prices during fi scal prior to the Discharge
Date. In addition, Source Interlink purchases certain data
related to magazine sales of the Company. Source Interlink
paid the Company during fi scal prior to the
Discharge Date.
The Company uses Digital on Demand as its provider of
music and video database equipment and services. Leonard
Riggio owns a minority interest in Digital on Demand
through the same investment company through which
he owned a minority interest in Source Interlink. The
Company paid Digital on Demand , , and ,
for music and video database equipment and services
during fi scal , fi scal and fi scal , respectively.
This agreement was terminated on May , .
2012 Annual Report 59