Barnes and Noble 2013 Annual Report Download - page 57

16. ACQUISITION OF NONCONTROLLING INTEREST
Sterling Publishing had a 50% joint venture interest in
Begin Smart LLC (Begin Smart), to develop, sell, and
distribute books for infants, toddlers, and children under
the brand name BEGIN SMART®. During fiscal 2011, the
Company purchased the remaining 50% outside interest
in Begin Smart for $300. 100% of Begin Smart results of
operations for the period subsequent to the Begin Smart
acquisition date are included in the consolidated financial
statements.
17. SHAREHOLDERS’ EQUITY
On November 17, 2009, the Board of Directors of the
Company declared a dividend, payable to stockholders of
record on November 27, 2009 of one right (a Right) per
each share of outstanding Common Stock of the Company,
par value $0.001 per share (Common Stock), to purchase
1/1000th of a share of Series I Preferred Stock, par value
$0.001 per share, of the Company (the Preferred Stock),
at a price of $100.00 per share (such amount, as may
be adjusted from time to time as provided in the Rights
Agreement). In connection therewith, on November 17,
2009, the Company entered into a Rights Agreement, dated
November 17, 2009 (as amended February 17, 2010, June
23, 2010, October 29, 2010 and August 18, 2011, the Rights
Agreement) with Mellon Investor Services LLC, as Rights
Agent. The Rights expired on November 17, 2012.
On May 15, 2007, the Company’s Board of Directors autho-
rized a stock repurchase program for the purchase of up to
$400,000 of the Company’s common stock. The maximum
dollar value of common stock that may yet be purchased
under the current program is approximately $2,471 as
of April 27, 2013. Stock repurchases under this program
may be made through open market and privately negoti-
ated transactions from time to time and in such amounts
as management deems appropriate. As of April 27, 2013
the Company has repurchased 34,078,089 shares at a cost
of approximately $1,063,854 under its stock repurchase
programs. The repurchased shares are held in treasury.
18. COMMITMENTS AND CONTINGENCIES
The Company leases retail stores, warehouse facilities,
office space and equipment. Substantially all of the B&N
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.
B&N College’s contracts are typically for five to ten years,
although some extend beyond ten years. Many contracts
have a 90 to 120 day cancellation right by B&N College, or
by the college or university, without penalty.
The Company leases office space in New York, New York
and Palo Alto, California for its NOOK operations.
Rental expense under operating leases is as follows:
Fiscal 2013 Fiscal 2012 Fiscal 2011
Minimum rentals $ 413,751 382,386 394,199
Percentage rentals 101,960 107,127 102,735
$ 515,711 489,513 496,934
Future minimum annual rentals, excluding percentage
rentals, required under B&N Retail leases that had initial,
noncancelable lease terms greater than one year, under
B&N College and NOOK leases as of April 27, 2013 are:
Fiscal Year a
2014 $ 414,765
2015 346,215
2016 297,408
2017 250,765
2018 186,016
After 2018 343,873
$ 1,839,042
a Includes B&N College capital lease obligations of $997, $742, $232, $39,
$0 and $0 for 2014, 2015, 2016, 2017, 2018 and after 2018, respectively.
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 in other
long-term liabilities and accrued liabilities in the accom-
panying balance sheets.
On June 26, 2008, the Company exercised its purchase
option under a lease on one of its distribution facilities
located in South Brunswick, New Jersey from the New
Jersey Economic Development Authority. Under the terms
of the lease expiring in June 2011, the Company purchased
the distribution facility and equipment for approxi-
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