e10vq
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-Q
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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FOR THE QUARTERLY PERIOD ENDED
APRIL 30,
2011
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD
FROM TO
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COMMISSION FILE
NO. 1-32637
GameStop Corp.
(Exact name of registrant as
specified in its Charter)
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Delaware
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20-2733559
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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625 Westport Parkway,
Grapevine, Texas
(Address of principal
executive offices)
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76051
(Zip
Code)
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Registrants telephone number, including area code:
(817) 424-2000
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). Yes þ No o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated
filer þ
Accelerated
filer o
Non-accelerated
filer o
Smaller reporting company
o
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No þ
Number of shares of $.001 par value Class A Common
Stock outstanding as of June 1, 2011: 141,442,515
PART I
FINANCIAL INFORMATION
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ITEM 1.
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Financial
Statements
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GAMESTOP
CORP.
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April 30,
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May 1,
|
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January 29,
|
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2011
|
|
|
2010
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|
2011
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|
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|
(Unaudited)
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(Unaudited)
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(In millions, except per share data)
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ASSETS:
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Current assets:
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Cash and cash equivalents
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$
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395.8
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$
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431.9
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$
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710.8
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Receivables, net
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50.6
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36.0
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65.5
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Merchandise inventories, net
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1,306.1
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1,152.1
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|
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|
1,257.5
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Deferred income taxes current
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|
24.1
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|
16.6
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|
|
|
28.8
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Prepaid expenses
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|
83.3
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|
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|
69.2
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75.7
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Other current assets
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22.9
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|
30.6
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16.5
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Total current assets
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1,882.8
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1,736.4
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2,154.8
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Property and equipment:
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Land
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25.7
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11.7
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24.0
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Buildings and leasehold improvements
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590.8
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530.2
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577.2
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Fixtures and equipment
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|
840.7
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731.1
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|
817.8
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|
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|
|
|
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Total property and equipment
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|
1,457.2
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|
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|
1,273.0
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|
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|
1,419.0
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Less accumulated depreciation and amortization
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|
837.8
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|
697.7
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805.2
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|
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Net property and equipment
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|
619.4
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575.3
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613.8
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Goodwill, net
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2,081.2
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|
1,941.3
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|
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1,996.3
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Other intangible assets
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278.6
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245.7
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|
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|
254.6
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Other noncurrent assets
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65.4
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36.7
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44.3
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|
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|
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Total noncurrent assets
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|
3,044.6
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|
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|
2,799.0
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2,909.0
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|
|
|
|
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|
|
|
|
|
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Total assets
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|
$
|
4,927.4
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|
$
|
4,535.4
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|
$
|
5,063.8
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LIABILITIES AND STOCKHOLDERS EQUITY:
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Current liabilities:
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Accounts payable
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$
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872.2
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$
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767.5
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$
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1,028.1
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Accrued liabilities
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|
594.4
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|
|
|
485.8
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|
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|
657.0
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Taxes payable
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|
|
34.7
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|
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32.1
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62.7
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Total current liabilities
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1,501.3
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1,285.4
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1,747.8
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|
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Senior notes payable, long-term portion, net
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249.2
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447.5
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249.0
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Deferred taxes
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|
73.4
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|
|
|
19.9
|
|
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74.9
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Other long-term liabilities
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103.8
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102.7
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96.2
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|
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Total long-term liabilities
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|
|
426.4
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|
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|
570.1
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420.1
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|
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Total liabilities
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|
|
1,927.7
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|
|
|
1,855.5
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2,167.9
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Commitments and contingencies (Note 8)
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Stockholders equity:
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Preferred stock authorized 5.0 shares; no
shares issued or outstanding
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Class A common stock $.001 par value;
authorized 300.0 shares; 141.3, 152.9 and 146.0 shares
outstanding, respectively
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|
0.1
|
|
|
|
0.2
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|
|
|
0.1
|
|
Additional
paid-in-capital
|
|
|
823.1
|
|
|
|
1,091.9
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|
|
928.9
|
|
Accumulated other comprehensive income
|
|
|
292.3
|
|
|
|
115.4
|
|
|
|
162.5
|
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Retained earnings
|
|
|
1,886.2
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|
|
|
1,472.9
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|
|
|
1,805.8
|
|
|
|
|
|
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|
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Equity attributable to GameStop Corp. stockholders
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|
|
3,001.7
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2,680.4
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2,897.3
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Equity (deficit) attributable to noncontrolling interest
|
|
|
(2.0
|
)
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|
|
(0.5
|
)
|
|
|
(1.4
|
)
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|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
2,999.7
|
|
|
|
2,679.9
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|
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|
2,895.9
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|
|
|
|
|
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|
|
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Total liabilities and stockholders equity
|
|
$
|
4,927.4
|
|
|
$
|
4,535.4
|
|
|
$
|
5,063.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
2
GAMESTOP
CORP.
|
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|
13 Weeks Ended
|
|
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April 30,
|
|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(In millions, except per share data)
|
|
|
|
(Unaudited)
|
|
|
Sales
|
|
$
|
2,281.4
|
|
|
$
|
2,082.7
|
|
Cost of sales
|
|
|
1,661.2
|
|
|
|
1,511.9
|
|
|
|
|
|
|
|
|
|
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Gross profit
|
|
|
620.2
|
|
|
|
570.8
|
|
Selling, general and administrative expenses
|
|
|
442.7
|
|
|
|
403.8
|
|
Depreciation and amortization
|
|
|
46.4
|
|
|
|
42.5
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
131.1
|
|
|
|
124.5
|
|
Interest income
|
|
|
(0.2
|
)
|
|
|
(0.8
|
)
|
Interest expense
|
|
|
6.3
|
|
|
|
10.4
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax expense
|
|
|
125.0
|
|
|
|
114.9
|
|
Income tax expense
|
|
|
45.0
|
|
|
|
40.1
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income
|
|
|
80.0
|
|
|
|
74.8
|
|
Net loss attributable to noncontrolling interests
|
|
|
0.4
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income attributable to GameStop
|
|
$
|
80.4
|
|
|
$
|
75.2
|
|
|
|
|
|
|
|
|
|
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Basic net income per common share(1)
|
|
$
|
0.56
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per common share(1)
|
|
$
|
0.56
|
|
|
$
|
0.48
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock basic
|
|
|
142.7
|
|
|
|
153.6
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock diluted
|
|
|
143.7
|
|
|
|
156.5
|
|
|
|
|
|
|
|
|
|
|
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|
(1) |
|
Basic net income per share and diluted net income per share are
calculated based on consolidated net income attributable to
GameStop. |
See accompanying notes to condensed consolidated financial
statements.
3
GAMESTOP
CORP.
|
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|
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|
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|
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|
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|
|
GameStop Corp. Stockholders
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Common
|
|
|
Paid-in
|
|
|
Comprehensive
|
|
|
Retained
|
|
|
Noncontrolling
|
|
|
|
|
|
|
Shares
|
|
|
Stock
|
|
|
Capital
|
|
|
Income
|
|
|
Earnings
|
|
|
Interest
|
|
|
Total
|
|
|
|
(In millions)
|
|
|
|
(Unaudited)
|
|
|
Balance at January 29, 2011
|
|
|
146.0
|
|
|
$
|
0.1
|
|
|
$
|
928.9
|
|
|
$
|
162.5
|
|
|
$
|
1,805.8
|
|
|
$
|
(1.4
|
)
|
|
$
|
2,895.9
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the
13 weeks ended
April 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80.4
|
|
|
|
(0.4
|
)
|
|
|
80.0
|
|
Foreign currency
translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129.8
|
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
129.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
209.6
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.9
|
|
Purchase of treasury stock
|
|
|
(5.9
|
)
|
|
|
|
|
|
|
(117.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(117.7
|
)
|
Exercise of stock options and issuance of shares upon vesting of
restricted stock grants (including tax
expense of $0.2)
|
|
|
1.2
|
|
|
|
|
|
|
|
7.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 30, 2011
|
|
|
141.3
|
|
|
$
|
0.1
|
|
|
$
|
823.1
|
|
|
$
|
292.3
|
|
|
$
|
1,886.2
|
|
|
$
|
(2.0
|
)
|
|
$
|
2,999.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
4
GAMESTOP
CORP.
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
|
April 30,
|
|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(In millions) (Unaudited)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Consolidated net income
|
|
$
|
80.0
|
|
|
$
|
74.8
|
|
Adjustments to reconcile net income to net cash flows used in
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization (including amounts in cost of
sales)
|
|
|
46.9
|
|
|
|
43.0
|
|
Amortization and retirement of deferred financing fees and issue
discounts
|
|
|
0.6
|
|
|
|
0.8
|
|
Stock-based compensation expense
|
|
|
4.9
|
|
|
|
7.2
|
|
Deferred income taxes
|
|
|
0.7
|
|
|
|
1.8
|
|
Excess tax expense realized from exercise of stock-based awards
|
|
|
0.4
|
|
|
|
2.7
|
|
Loss on disposal of property and equipment
|
|
|
4.5
|
|
|
|
2.1
|
|
Changes in other long-term liabilities
|
|
|
5.7
|
|
|
|
(1.0
|
)
|
Changes in operating assets and liabilities, net:
|
|
|
|
|
|
|
|
|
Receivables, net
|
|
|
16.7
|
|
|
|
27.6
|
|
Merchandise inventories
|
|
|
(17.1
|
)
|
|
|
(101.9
|
)
|
Prepaid expenses and other current assets
|
|
|
(11.5
|
)
|
|
|
(18.0
|
)
|
Prepaid income taxes and accrued income taxes payable
|
|
|
(27.9
|
)
|
|
|
(32.8
|
)
|
Accounts payable and accrued liabilities
|
|
|
(236.4
|
)
|
|
|
(264.1
|
)
|
|
|
|
|
|
|
|
|
|
Net cash flows used in operating activities
|
|
|
(132.5
|
)
|
|
|
(257.8
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(42.4
|
)
|
|
|
(35.3
|
)
|
Acquisition, net of cash acquired
|
|
|
(11.4
|
)
|
|
|
|
|
Other
|
|
|
(6.3
|
)
|
|
|
(0.8
|
)
|
|
|
|
|
|
|
|
|
|
Net cash flows used in investing activities
|
|
|
(60.1
|
)
|
|
|
(36.1
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Purchase of treasury shares
|
|
|
(139.8
|
)
|
|
|
(188.9
|
)
|
Issuance of shares relating to stock options
|
|
|
7.2
|
|
|
|
1.0
|
|
Excess tax expense realized from exercise of stock-based awards
|
|
|
(0.4
|
)
|
|
|
(2.7
|
)
|
|
|
|
|
|
|
|
|
|
Net cash flows used in financing activities
|
|
|
(133.0
|
)
|
|
|
(190.6
|
)
|
|
|
|
|
|
|
|
|
|
Exchange rate effect on cash and cash equivalents
|
|
|
10.6
|
|
|
|
11.0
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(315.0
|
)
|
|
|
(473.5
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
710.8
|
|
|
|
905.4
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
395.8
|
|
|
$
|
431.9
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
5
GAMESTOP
CORP.
(Unaudited)
GameStop Corp. (together with its predecessor companies,
GameStop, we, us,
our, or the Company), a Delaware
corporation, is the worlds largest multichannel retailer
of video game products and PC entertainment software. The
unaudited consolidated financial statements include the accounts
of the Company and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
The unaudited condensed consolidated financial statements
included herein reflect all adjustments (consisting only of
normal, recurring adjustments) which are, in the opinion of the
Companys management, necessary for a fair presentation of
the information for the periods presented. These unaudited
condensed consolidated interim financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America (GAAP) for
interim financial information and the instructions to Quarterly
Report on
Form 10-Q
and Article 10 of
Regulation S-X.
Accordingly, they do not include all disclosures required under
GAAP for complete financial statements. These condensed
consolidated financial statements should be read in conjunction
with the Companys annual report on
Form 10-K
for the 52 weeks ended January 29, 2011 (fiscal
2010). The preparation of financial statements in
conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. In
preparing these financial statements, management has made its
best estimates and judgments of certain amounts included in the
financial statements, giving due consideration to materiality.
Changes in the estimates and assumptions used by management
could have significant impact on the Companys financial
results. Actual results could differ from those estimates.
Due to the seasonal nature of the business, the results of
operations for the 13 weeks ended April 30, 2011 are
not indicative of the results to be expected for the
52 weeks ending January 28, 2012 (fiscal
2011).
Certain reclassifications have been made to conform the prior
period data to the current interim period presentation.
|
|
2.
|
Accounting
for Stock-Based Compensation
|
For options granted, the Company records share-based
compensation expense in earnings based on the grant-date fair
value. The fair value of each option grant is estimated on the
date of grant using the Black-Scholes option pricing model. This
valuation model requires the use of subjective assumptions,
including expected option life, expected volatility and expected
employee forfeiture rate. The Company uses historical data to
estimate the option life and the employee forfeiture rate, and
uses historical volatility when estimating the stock price
volatility. There were no stock options granted during the
13 weeks ended April 30, 2011. There were 1,177,000
options to purchase common stock granted during the
13 weeks ended May 1, 2010, with a weighted-average
fair value estimated at $7.88, using the following assumptions:
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
May 1,
|
|
|
2010
|
|
Volatility
|
|
|
51.6
|
%
|
Risk-free interest rate
|
|
|
1.6
|
%
|
Expected life (years)
|
|
|
3.5
|
|
Expected dividend yield
|
|
|
0
|
%
|
In the 13 weeks ended April 30, 2011 and May 1,
2010, the Company included compensation expense relating to
stock option grants of $1.6 million and $3.0 million,
respectively, in selling, general and administrative expenses in
the accompanying condensed consolidated statements of
operations. As of April 30, 2011, the unrecognized
compensation expense related to the unvested portion of our
stock options was $7.6 million, which is expected to be
6
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
recognized over a weighted average period of 1.5 years. The
total intrinsic value of options exercised during the
13 weeks ended April 30, 2011 and May 1, 2010 was
$7.6 million and $1.1 million, respectively.
During the 13 weeks ended April 30, 2011,
448,000 shares of restricted stock were granted with a fair
market value of $20.85 per share. Of these shares, 368,000 vest
in equal annual installments over three years and 80,000 vest
over three years subject to performance targets based on fiscal
2011 operating results. The restricted stock granted during the
13 weeks ended May 1, 2010 was 683,000 shares
with a fair market value of $20.32 per share, which vest in
equal annual installments over three years. During the
13 weeks ended April 30, 2011 and May 1, 2010,
the Company included compensation expense relating to the
restricted share grants in the amount of $3.3 million and
$4.3 million, respectively, in selling, general and
administrative expenses in the accompanying condensed
consolidated statements of operations. As of April 30,
2011, there was $20.8 million of unrecognized compensation
expense related to nonvested restricted stock awards that is
expected to be recognized over a weighted average period of
2.1 years.
|
|
3.
|
Computation
of Net Income Per Common Share
|
A reconciliation of shares used in calculating basic and diluted
net income per common share is as follows:
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
|
April 30,
|
|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(In millions, except per share data)
|
|
|
Net income attributable to GameStop
|
|
$
|
80.4
|
|
|
$
|
75.2
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
142.7
|
|
|
|
153.6
|
|
Dilutive effect of options and restricted shares on common stock
|
|
|
1.0
|
|
|
|
2.9
|
|
|
|
|
|
|
|
|
|
|
Common shares and dilutive potential common shares
|
|
|
143.7
|
|
|
|
156.5
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.56
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.56
|
|
|
$
|
0.48
|
|
|
|
|
|
|
|
|
|
|
The following table contains information on restricted shares
and options to purchase shares of Class A common stock
which were excluded from the computation of diluted earnings per
share because they were anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-
|
|
Range of
|
|
|
|
|
Dilutive
|
|
Exercise
|
|
Expiration
|
|
|
Shares
|
|
Prices
|
|
Dates
|
|
|
(In millions, except per share data)
|
|
13 Weeks Ended April 30, 2011
|
|
|
3.9
|
|
|
$
|
20.32 - 49.95
|
|
|
|
2017 - 2020
|
|
13 Weeks Ended May 1, 2010
|
|
|
4.7
|
|
|
$
|
20.32 - 49.95
|
|
|
|
2010 - 2020
|
|
|
|
4.
|
Fair
Value Measurements and Financial Instruments
|
The Company defines fair value as the price that would be
received from selling an asset or paid to transfer a liability
in an orderly transaction between market participants at the
measurement date. Fair value accounting guidance applies to our
forward exchange contracts, foreign currency options and
cross-currency swaps (together, the Foreign Currency
Contracts), Company-owned life insurance policies with a
cash surrender value and certain nonqualified deferred
compensation liabilities that are measured at fair value on a
recurring basis in periods subsequent to initial recognition.
7
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Fair value accounting guidance requires disclosures that
categorize assets and liabilities measured at fair value into
one of three different levels depending on the observability of
the inputs employed in the measurement. Level 1 inputs are
quoted prices in active markets for identical assets or
liabilities. Level 2 inputs are observable inputs other
than quoted prices included within Level 1 for the asset or
liability, either directly or indirectly through
market-corroborated inputs. Level 3 inputs are unobservable
inputs for the asset or liability reflecting our assumptions
about pricing by market participants.
We value our Foreign Currency Contracts, Company-owned life
insurance policies with cash surrender values and certain
nonqualified deferred compensation liabilities based on
Level 2 inputs using quotations provided by major market
news services, such as Bloomberg and The Wall Street Journal,
and industry-standard models that consider various assumptions,
including quoted forward prices, time value, volatility factors,
and contractual prices for the underlying instruments, as well
as other relevant economic measures. When appropriate,
valuations are adjusted to reflect credit considerations,
generally based on available market evidence.
The following table provides the fair value of our assets and
liabilities measured on a recurring basis and recorded on our
condensed consolidated balance sheets (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2011
|
|
|
May 1, 2010
|
|
|
January 29, 2011
|
|
|
|
Level 2
|
|
|
Level 2
|
|
|
Level 2
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
$
|
21.4
|
|
|
$
|
27.3
|
|
|
$
|
14.0
|
|
Company-owned life insurance
|
|
|
3.3
|
|
|
|
2.8
|
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
24.7
|
|
|
$
|
30.1
|
|
|
$
|
17.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
$
|
27.7
|
|
|
$
|
6.6
|
|
|
$
|
12.8
|
|
Nonqualified deferred compensation
|
|
|
1.0
|
|
|
|
0.8
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
28.7
|
|
|
$
|
7.4
|
|
|
$
|
13.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company uses Foreign Currency Contracts to manage currency
risk primarily related to intercompany loans denominated in
non-functional currencies and certain foreign currency assets
and liabilities. These Foreign Currency Contracts are not
designated as hedges and, therefore, changes in the fair values
of these derivatives are recognized in earnings, thereby
offsetting the current earnings effect of the re-measurement of
related intercompany loans and foreign currency assets and
liabilities. We do not use derivative financial instruments for
trading or speculative purposes. We are exposed to counterparty
credit risk on all of our derivative financial instruments and
cash equivalent investments. The Company manages counterparty
risk according to the guidelines and controls established under
comprehensive risk management and investment policies. We
continuously monitor our counterparty credit risk and utilize a
number of different counterparties to minimize our exposure to
potential defaults. We do not require collateral under
derivative or investment agreements.
8
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The fair values of derivative instruments not receiving hedge
accounting treatment in the condensed consolidated balance
sheets presented herein were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2011
|
|
|
May 1, 2010
|
|
|
January 29, 2011
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets
|
|
$
|
19.0
|
|
|
$
|
27.2
|
|
|
$
|
13.0
|
|
Other noncurrent assets
|
|
|
2.4
|
|
|
|
0.1
|
|
|
|
1.0
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued liabilities
|
|
|
(23.0
|
)
|
|
|
(6.5
|
)
|
|
|
(11.2
|
)
|
Other long-term liabilities
|
|
|
(4.7
|
)
|
|
|
(0.1
|
)
|
|
|
(1.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives
|
|
$
|
(6.3
|
)
|
|
$
|
20.7
|
|
|
$
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of April 30, 2011, the Company had a series of Foreign
Currency Contracts outstanding, with a gross notional value of
$486.5 million and a net notional value of
$177.9 million. For the 13 weeks ended April 30,
2011, the Company recognized a $9.3 million loss in
selling, general and administrative expenses related to the
trading of derivative instruments. As of May 1, 2010, the
Company had a series of Foreign Currency Contracts outstanding,
with a gross notional value of $465.9 million and a net
notional value of $306.5 million. For the 13 weeks
ended May 1, 2010, the Company recognized an
$11.9 million gain in selling, general and administrative
expenses related to the trading of derivative instruments.
The Companys carrying value of financial instruments
approximates their fair value, except for differences with
respect to the senior notes. The fair value of the
Companys senior notes payable in the accompanying
consolidated balance sheets is estimated based on recent quotes
from brokers. As of April 30, 2011, the senior notes
payable had a carrying value of $249.2 million and a fair
value of $254.7 million. As of May 1, 2010, the senior
notes payable had a carrying value of $447.6 million and a
fair value of $463.5 million.
On January 4, 2011, the Company entered into a
$400 million credit agreement (the Revolver),
which amended and restated, in its entirety, the Companys
prior credit agreement entered into on October 11, 2005
(the Credit Agreement). The Revolver provides for a
five-year, $400 million asset-based facility, including a
$50 million letter of credit sublimit, secured by
substantially all of the Companys and its domestic
subsidiaries assets. The Company has the ability to
increase the facility, which matures in January 2016, by
$150 million under certain circumstances. The extension of
the Revolver to 2016 reduces our exposure to potential
tightening in the credit markets.
The availability under the Revolver is limited to a borrowing
base which allows the Company to borrow up to 90% of the
appraisal value of the inventory, in each case plus 90% of
eligible credit card receivables, net of certain reserves.
Letters of credit reduce the amount available to borrow by their
face value. The Companys ability to pay cash dividends,
redeem options and repurchase shares is generally permitted,
except under certain circumstances, including if Revolver excess
availability is less than 20%, or is projected to be within
12 months after such payment. In addition, if Revolver
usage is projected to be equal to or greater than 25% of the
borrowing base during the prospective
12-month
period, the Company is subject to meeting a fixed charge
coverage ratio of 1.1:1.0 prior to making such payments. In the
event that excess availability under the Revolver is at any time
less than the greater of (1) $40.0 million or
(2) 12.5% of the lesser of the total commitment or the
borrowing base, the Company will be subject to a fixed charge
coverage ratio covenant of 1.1:1.0.
9
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Revolver places certain restrictions on the Company and its
subsidiaries, including limitations on asset sales, additional
liens, investments, loans, guarantees, acquisitions and the
incurrence of additional indebtedness. The per annum interest
rate under the Revolver is variable and is calculated by
applying a margin (1) for prime rate loans of 1.25% to
1.50% above the highest of (a) the prime rate of the
administrative agent, (b) the federal funds effective rate
plus 0.50% and (c) the LIBO rate for a
30-day
interest period as determined on such day plus 1.00%, and
(2) for LIBO rate loans of 2.25% to 2.50% above the LIBO
rate. The applicable margin is determined quarterly as a
function of the Companys average daily excess availability
under the facility and is set at 1.25% for prime rate loans and
2.25% for LIBO rate loans until the first day of the fiscal
quarter of the borrowers commencing on May 1, 2011. In
addition, the Company is required to pay a commitment fee of
0.375% or 0.50%, depending on facility usage, for any unused
portion of the total commitment under the Revolver. As of
April 30, 2011, the applicable margin was 1.25% for prime
rate loans and 2.25% for LIBO rate loans, while the required
commitment fee was 0.50% for the unused portion of the Revolver.
The Revolver provides for customary events of default with
corresponding grace periods, including failure to pay any
principal or interest when due, failure to comply with
covenants, any material representation or warranty made by the
Company or the borrowers proving to be false in any material
respect, certain bankruptcy, insolvency or receivership events
affecting the Company or its subsidiaries, defaults relating to
certain other indebtedness, imposition of certain judgments and
mergers or the liquidation of the Company or certain of its
subsidiaries.
As of April 30, 2011, there were no borrowings outstanding
under the Revolver and letters of credit outstanding totaled
$8.5 million.
In September 2007, the Companys Luxembourg subsidiary
entered into a discretionary $20.0 million Uncommitted Line
of Credit (the Line of Credit) with Bank of America.
There is no term associated with the Line of Credit and Bank of
America may withdraw the facility at any time without notice.
The Line of Credit will be made available to the Companys
foreign subsidiaries for use primarily as a bank overdraft
facility for short-term liquidity needs and for the issuance of
bank guarantees and letters of credit to support operations. As
of April 30, 2011, there were no cash overdrafts
outstanding under the Line of Credit and bank guarantees
outstanding totaled $6.2 million.
In September 2005, the Company, along with GameStop, Inc. as
co-issuer (together with the Company, the Issuers),
completed the offering of $300 million aggregate principal
amount of Senior Floating Rate Notes due 2011 (the Senior
Floating Rate Notes) and $650 million aggregate
principal amount of Senior Notes due 2012 (the Senior
Notes and, together with the Senior Floating Rate Notes,
the Notes). The Notes were issued under an
Indenture, dated September 28, 2005 (the
Indenture), by and among the Issuers, the subsidiary
guarantors party thereto, and Citibank, N.A., as trustee (the
Trustee). In November 2006, Wilmington
Trust Company was appointed as the new Trustee for the
Notes.
The Senior Notes bear interest at 8.0% per annum, mature on
October 1, 2012 and were priced at 98.688%, resulting in a
discount at the time of issue of $8.5 million. The discount
is being amortized using the effective interest method. As of
April 30, 2011, the unamortized original issue discount was
$0.8 million. The Issuers pay interest on the Senior Notes
semi-annually, in arrears, every April 1 and October 1, to
holders of record on the immediately preceding March 15 and
September 15, and at maturity.
The Indenture contains affirmative and negative covenants
customary for such financings, including, among other things,
limitations on (1) the incurrence of additional debt,
(2) restricted payments, (3) liens, (4) sale and
leaseback transactions and (5) asset sales. Events of
default provided for in the Indenture include, among other
things, failure to pay interest or principal on the Notes, other
breaches of covenants in the Indenture, and certain events of
bankruptcy and insolvency. As of April 30, 2011, the
Company was in compliance with all covenants associated with the
Revolver and the Indenture.
Under certain conditions, the Issuers may on any one or more
occasions prior to maturity redeem up to 100% of the aggregate
principal amount of Senior Notes issued under the Indenture at
redemption prices at or in excess of
10
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
100% of the principal amount thereof plus accrued and unpaid
interest, if any, to the redemption date. The circumstances
which would limit the percentage of the Notes which may be
redeemed or which would require the Company to pay a premium in
excess of 100% of the principal amount are defined in the
Indenture. Upon a Change of Control (as defined in the
Indenture), the Issuers are required to offer to purchase all of
the Notes then outstanding at 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of
purchase. The Issuers may acquire Senior Notes by means other
than redemption, whether by tender offer, open market purchases,
negotiated transactions or otherwise, in accordance with
applicable securities laws, so long as such acquisitions do not
otherwise violate the terms of the Indenture.
Between May 2006 and October 2010, the Company repurchased and
redeemed the $300 million of Senior Floating Rate Notes and
$400 million of Senior Notes under previously announced
buybacks authorized by the Companys Board of Directors.
The repurchased Notes were delivered to the Trustee for
cancellation. None of the debt was retired or redeemed during
the 13-week periods ended May 1, 2010 or April 30,
2011.
On February 4, 2011, the Board of Directors authorized the
Company to use $500 million to repurchase shares of the
Companys common stock
and/or
retire the Companys Senior Notes. Under the repurchase
program, the Company may purchase the Companys Senior
Notes and/or
shares of issued and outstanding Class A Common Stock
through open market purchases, debt calls or privately
negotiated transactions. The timing and actual amount of debt or
share repurchases will be determined by the Companys
management based on their evaluation of market conditions and
other factors. In addition, repurchases may be suspended or
discontinued at any time. As of April 30, 2011, no amount
of the $500 million repurchase plan has been used to retire
the Senior Notes and $382.3 million remains under the
outstanding authorization.
As of April 30, 2011 and May 1, 2010, the only
long-term debt outstanding was the Senior Notes. The
$250 million in Senior Notes outstanding as of
April 30, 2011, gross of the unamortized original issue
discount of $0.8 million, matures in the fiscal year ending
January 2013.
The Company and its subsidiaries file income tax returns in the
U.S. federal jurisdiction and various states and foreign
jurisdictions. The Company is no longer subject to
U.S. federal income tax examination by the Internal Revenue
Service for years before and including the fiscal year ended
January 28, 2006.
We accrue for the effects of uncertain tax positions and the
related potential penalties and interest. There were no net
material adjustments to our recorded liability for unrecognized
tax benefits during the 13 weeks ended April 30, 2011.
It is reasonably possible that the amount of the unrecognized
tax benefit with respect to certain of our unrecognized tax
positions could significantly increase or decrease during the
next 12 months. At this time, an estimate of the range of
the reasonably possible outcomes cannot be made.
The tax provisions for the 13 weeks ended April 30,
2011 and May 1, 2010 are based upon managements
estimate of the Companys annualized effective tax rate.
|
|
7.
|
Certain
Relationships and Related Transactions
|
The Company has various relationships with Barnes &
Noble, Inc. (Barnes & Noble), a related
party through a common stockholder who is the Chairman of the
Board of Directors of Barnes & Noble and a member of
the Companys Board of Directors. The Company operates
departments within eight bookstores operated by
Barnes & Noble, whereby the Company pays a license fee
to Barnes & Noble on the gross sales of such
departments. Additionally, until April 30, 2011,
www.gamestop.com was the exclusive specialty video game
retailer listed on www.bn.com, Barnes &
Nobles
e-commerce
site whereby the Company paid a fee to Barnes & Noble
for sales of video game or PC entertainment products sold
through www.bn.com. The Company also continues to incur
costs related to its participation in Barnes &
Nobles workers compensation, property and general
liability insurance
11
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
programs prior to June 2005. During the 13 weeks ended
April 30, 2011 and May 1, 2010, the aggregate charges
related to these transactions amounted to $0.3 million for
each period.
|
|
8.
|
Commitments
and Contingencies
|
In the ordinary course of the Companys business, the
Company is, from time to time, subject to various legal
proceedings, including matters involving wage and hour employee
class actions. The Company may enter into discussions regarding
settlement of these and other types of lawsuits, and may enter
into settlement agreements, if it believes settlement is in the
best interest of the Companys stockholders. Management
does not believe that any such existing legal proceedings or
settlements, individually or in the aggregate, will have a
material adverse effect on the Companys financial
condition, results of operations or liquidity.
The following table sets forth sales (in millions) by
significant product category for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
|
April 30,
|
|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
Sales
|
|
|
of Total
|
|
|
Sales
|
|
|
of Total
|
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game hardware
|
|
$
|
432.4
|
|
|
|
19.0
|
%
|
|
$
|
348.3
|
|
|
|
16.7
|
%
|
New video game software
|
|
|
914.7
|
|
|
|
40.1
|
%
|
|
|
873.1
|
|
|
|
41.9
|
%
|
Used video game products
|
|
|
625.0
|
|
|
|
27.4
|
%
|
|
|
570.8
|
|
|
|
27.4
|
%
|
Other
|
|
|
309.3
|
|
|
|
13.5
|
%
|
|
|
290.5
|
|
|
|
14.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,281.4
|
|
|
|
100.0
|
%
|
|
$
|
2,082.7
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth gross profit (in millions) and
gross profit percentages by significant product category for the
periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
|
April 30,
|
|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
Gross
|
|
|
Profit
|
|
|
Gross
|
|
|
Profit
|
|
|
|
Profit
|
|
|
Percent
|
|
|
Profit
|
|
|
Percent
|
|
|
Gross Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game hardware
|
|
$
|
30.1
|
|
|
|
7.0
|
%
|
|
$
|
21.2
|
|
|
|
6.1
|
%
|
New video game software
|
|
|
174.9
|
|
|
|
19.1
|
%
|
|
|
174.5
|
|
|
|
20.0
|
%
|
Used video game products
|
|
|
300.0
|
|
|
|
48.0
|
%
|
|
|
274.4
|
|
|
|
48.1
|
%
|
Other
|
|
|
115.2
|
|
|
|
37.2
|
%
|
|
|
100.7
|
|
|
|
34.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
620.2
|
|
|
|
27.2
|
%
|
|
$
|
570.8
|
|
|
|
27.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company operates its business in the following segments:
United States, Canada, Australia and Europe. Segment results for
the United States include retail operations in all
50 states, the District of Columbia, Guam and Puerto Rico,
the electronic commerce Web site www.gamestop.com,
Game Informer magazine, and the online video gaming Web
site www.kongregate.com. Segment results for Canada
include retail and
e-commerce
operations in Canada and segment results for Australia include
retail and
e-commerce
operations in Australia and
12
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
New Zealand. Segment results for Europe include retail
operations in 13 European countries and
e-commerce
operations in five countries. The Company measures segment
profit using operating earnings, which is defined as income from
continuing operations before intercompany royalty fees, net
interest expense and income taxes. There has been no material
change in total assets by segment since January 29, 2011.
Transactions between reportable segments consist primarily of
royalties, management fees, intersegment loans and related
interest. Information on segments appears in the following
tables:
Net sales by operating segment were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
|
April 30,
|
|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
United States
|
|
$
|
1,700.8
|
|
|
$
|
1,531.2
|
|
Canada
|
|
|
108.1
|
|
|
|
104.3
|
|
Australia
|
|
|
118.8
|
|
|
|
107.2
|
|
Europe
|
|
|
353.7
|
|
|
|
340.0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,281.4
|
|
|
$
|
2,082.7
|
|
|
|
|
|
|
|
|
|
|
Segment operating earnings (loss) were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
|
April 30,
|
|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
United States
|
|
$
|
131.2
|
|
|
$
|
118.6
|
|
Canada
|
|
|
0.3
|
|
|
|
3.8
|
|
Australia
|
|
|
3.7
|
|
|
|
2.6
|
|
Europe
|
|
|
(4.1
|
)
|
|
|
(0.5
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
131.1
|
|
|
$
|
124.5
|
|
|
|
|
|
|
|
|
|
|
|
|
11.
|
Supplemental
Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
|
April 30,
|
|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(In millions)
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
10.6
|
|
|
$
|
18.3
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
$
|
72.0
|
|
|
$
|
71.2
|
|
|
|
|
|
|
|
|
|
|
|
|
12.
|
Consolidating
Financial Statements
|
As described in Note 5, in September 2005 the Company,
along with GameStop, Inc. as co-issuer, completed the offering
of the Notes. The direct and indirect U.S. wholly-owned
subsidiaries of the Company, excluding GameStop, Inc., as
co-issuer, have guaranteed the Senior Notes on a senior
unsecured basis with unconditional guarantees.
The following condensed consolidating financial statements
present the financial position of the Company as of
April 30, 2011, May 1, 2010 and January 29, 2011
and results of operations and cash flows for the 13 weeks
ended April 30, 2011 and May 1, 2010 of the
Companys guarantor and non-guarantor subsidiaries.
13
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
GameStop
Corp.
Condensed Consolidating Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
April 30,
|
|
|
April 30,
|
|
|
|
|
|
April 30,
|
|
|
|
2011
|
|
|
2011
|
|
|
Eliminations
|
|
|
2011
|
|
|
|
(Amounts in millions, except per share amounts)
|
|
|
|
(Unaudited)
|
|
|
ASSETS:
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
247.8
|
|
|
$
|
148.0
|
|
|
$
|
|
|
|
$
|
395.8
|
|
Receivables, net
|
|
|
147.7
|
|
|
|
632.4
|
|
|
|
(729.5
|
)
|
|
|
50.6
|
|
Merchandise inventories, net
|
|
|
728.9
|
|
|
|
577.2
|
|
|
|
|
|
|
|
1,306.1
|
|
Deferred income taxes current
|
|
|
19.2
|
|
|
|
4.9
|
|
|
|
|
|
|
|
24.1
|
|
Prepaid expenses
|
|
|
34.2
|
|
|
|
49.1
|
|
|
|
|
|
|
|
83.3
|
|
Other current assets
|
|
|
17.4
|
|
|
|
5.5
|
|
|
|
|
|
|
|
22.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,195.2
|
|
|
|
1,417.1
|
|
|
|
(729.5
|
)
|
|
|
1,882.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
4.6
|
|
|
|
21.1
|
|
|
|
|
|
|
|
25.7
|
|
Buildings and leasehold improvements
|
|
|
314.4
|
|
|
|
276.4
|
|
|
|
|
|
|
|
590.8
|
|
Fixtures and equipment
|
|
|
665.7
|
|
|
|
175.0
|
|
|
|
|
|
|
|
840.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property and equipment
|
|
|
984.7
|
|
|
|
472.5
|
|
|
|
|
|
|
|
1,457.2
|
|
Less accumulated depreciation and amortization
|
|
|
600.4
|
|
|
|
237.4
|
|
|
|
|
|
|
|
837.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property and equipment
|
|
|
384.3
|
|
|
|
235.1
|
|
|
|
|
|
|
|
619.4
|
|
Investment
|
|
|
2,282.8
|
|
|
|
596.4
|
|
|
|
(2,879.2
|
)
|
|
|
|
|
Goodwill, net
|
|
|
1,133.9
|
|
|
|
947.3
|
|
|
|
|
|
|
|
2,081.2
|
|
Other intangible assets
|
|
|
15.6
|
|
|
|
263.0
|
|
|
|
|
|
|
|
278.6
|
|
Other noncurrent assets
|
|
|
25.2
|
|
|
|
40.2
|
|
|
|
|
|
|
|
65.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent assets
|
|
|
3,841.8
|
|
|
|
2,082.0
|
|
|
|
(2,879.2
|
)
|
|
|
3,044.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
5,037.0
|
|
|
$
|
3,499.1
|
|
|
$
|
(3,608.7
|
)
|
|
$
|
4,927.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY:
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
623.2
|
|
|
$
|
249.0
|
|
|
$
|
|
|
|
$
|
872.2
|
|
Accrued liabilities
|
|
|
1,002.6
|
|
|
|
321.3
|
|
|
|
(729.5
|
)
|
|
|
594.4
|
|
Taxes payable
|
|
|
39.6
|
|
|
|
(4.9
|
)
|
|
|
|
|
|
|
34.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,665.4
|
|
|
|
565.4
|
|
|
|
(729.5
|
)
|
|
|
1,501.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes payable, long-term portion, net
|
|
|
249.2
|
|
|
|
|
|
|
|
|
|
|
|
249.2
|
|
Deferred taxes
|
|
|
40.4
|
|
|
|
33.0
|
|
|
|
|
|
|
|
73.4
|
|
Other long-term liabilities
|
|
|
82.3
|
|
|
|
21.5
|
|
|
|
|
|
|
|
103.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
|
371.9
|
|
|
|
54.5
|
|
|
|
|
|
|
|
426.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,037.3
|
|
|
|
619.9
|
|
|
|
(729.5
|
)
|
|
|
1,927.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock authorized 5.0 shares; no
shares issued or outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock $.001 par value;
authorized 300.0 shares; 141.3 shares outstanding
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
Additional
paid-in-capital
|
|
|
821.1
|
|
|
|
2,461.6
|
|
|
|
(2,459.6
|
)
|
|
|
823.1
|
|
Accumulated other comprehensive income (loss)
|
|
|
292.3
|
|
|
|
134.7
|
|
|
|
(134.7
|
)
|
|
|
292.3
|
|
Retained earnings
|
|
|
1,886.2
|
|
|
|
284.9
|
|
|
|
(284.9
|
)
|
|
|
1,886.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to GameStop Corp. stockholders
|
|
|
2,999.7
|
|
|
|
2,881.2
|
|
|
|
(2,879.2
|
)
|
|
|
3,001.7
|
|
Equity (deficit) attributable to noncontrolling interest
|
|
|
|
|
|
|
(2.0
|
)
|
|
|
|
|
|
|
(2.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
2,999.7
|
|
|
|
2,879.2
|
|
|
|
(2,879.2
|
)
|
|
|
2,999.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
5,037.0
|
|
|
$
|
3,499.1
|
|
|
$
|
(3,608.7
|
)
|
|
$
|
4,927.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
GameStop
Corp.
Condensed Consolidating Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
May 1,
|
|
|
May 1,
|
|
|
|
|
|
May 1,
|
|
|
|
2010
|
|
|
2010
|
|
|
Eliminations
|
|
|
2010
|
|
|
|
(Amounts in millions, except per share amounts)
|
|
|
|
(Unaudited)
|
|
|
ASSETS:
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
298.8
|
|
|
$
|
133.1
|
|
|
$
|
|
|
|
$
|
431.9
|
|
Receivables, net
|
|
|
151.5
|
|
|
|
619.4
|
|
|
|
(734.9
|
)
|
|
|
36.0
|
|
Merchandise inventories, net
|
|
|
673.5
|
|
|
|
478.6
|
|
|
|
|
|
|
|
1,152.1
|
|
Deferred income taxes current
|
|
|
13.2
|
|
|
|
3.4
|
|
|
|
|
|
|
|
16.6
|
|
Prepaid expenses
|
|
|
44.7
|
|
|
|
24.5
|
|
|
|
|
|
|
|
69.2
|
|
Other current assets
|
|
|
5.9
|
|
|
|
24.7
|
|
|
|
|
|
|
|
30.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,187.6
|
|
|
|
1,283.7
|
|
|
|
(734.9
|
)
|
|
|
1,736.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
2.7
|
|
|
|
9.0
|
|
|
|
|
|
|
|
11.7
|
|
Buildings and leasehold improvements
|
|
|
301.8
|
|
|
|
228.4
|
|
|
|
|
|
|
|
530.2
|
|
Fixtures and equipment
|
|
|
586.3
|
|
|
|
144.8
|
|
|
|
|
|
|
|
731.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property and equipment
|
|
|
890.8
|
|
|
|
382.2
|
|
|
|
|
|
|
|
1,273.0
|
|
Less accumulated depreciation and amortization
|
|
|
522.1
|
|
|
|
175.6
|
|
|
|
|
|
|
|
697.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property and equipment
|
|
|
368.7
|
|
|
|
206.6
|
|
|
|
|
|
|
|
575.3
|
|
Investment
|
|
|
2,060.7
|
|
|
|
596.0
|
|
|
|
(2,656.7
|
)
|
|
|
|
|
Goodwill, net
|
|
|
1,096.6
|
|
|
|
844.7
|
|
|
|
|
|
|
|
1,941.3
|
|
Other intangible assets
|
|
|
2.5
|
|
|
|
243.2
|
|
|
|
|
|
|
|
245.7
|
|
Other noncurrent assets
|
|
|
9.1
|
|
|
|
27.6
|
|
|
|
|
|
|
|
36.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent assets
|
|
|
3,537.6
|
|
|
|
1,918.1
|
|
|
|
(2,656.7
|
)
|
|
|
2,799.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,725.2
|
|
|
$
|
3,201.8
|
|
|
$
|
(3,391.6
|
)
|
|
$
|
4,535.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY:
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
559.9
|
|
|
$
|
207.6
|
|
|
$
|
|
|
|
$
|
767.5
|
|
Accrued liabilities
|
|
|
927.6
|
|
|
|
293.1
|
|
|
|
(734.9
|
)
|
|
|
485.8
|
|
Taxes payable
|
|
|
38.8
|
|
|
|
(6.7
|
)
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,526.3
|
|
|
|
494.0
|
|
|
|
(734.9
|
)
|
|
|
1,285.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes payable, long-term portion, net
|
|
|
447.5
|
|
|
|
|
|
|
|
|
|
|
|
447.5
|
|
Deferred taxes
|
|
|
(15.4
|
)
|
|
|
35.3
|
|
|
|
|
|
|
|
19.9
|
|
Other long-term liabilities
|
|
|
86.4
|
|
|
|
16.3
|
|
|
|
|
|
|
|
102.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
|
518.5
|
|
|
|
51.6
|
|
|
|
|
|
|
|
570.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,044.8
|
|
|
|
545.6
|
|
|
|
(734.9
|
)
|
|
|
1,855.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock authorized 5.0 shares; no
shares issued or outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock $.001 par value;
authorized 300.0 shares; 152.9 shares outstanding
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
Additional
paid-in-capital
|
|
|
1,091.9
|
|
|
|
2,408.8
|
|
|
|
(2,408.8
|
)
|
|
|
1,091.9
|
|
Accumulated other comprehensive income (loss)
|
|
|
115.4
|
|
|
|
2.0
|
|
|
|
(2.0
|
)
|
|
|
115.4
|
|
Retained earnings
|
|
|
1,472.9
|
|
|
|
245.9
|
|
|
|
(245.9
|
)
|
|
|
1,472.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to GameStop Corp. stockholders
|
|
|
2,680.4
|
|
|
|
2,656.7
|
|
|
|
(2,656.7
|
)
|
|
|
2,680.4
|
|
Equity (deficit) attributable to noncontrolling interest
|
|
|
|
|
|
|
(0.5
|
)
|
|
|
|
|
|
|
(0.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
2,680.4
|
|
|
|
2,656.2
|
|
|
|
(2,656.7
|
)
|
|
|
2,679.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
4,725.2
|
|
|
$
|
3,201.8
|
|
|
$
|
(3,391.6
|
)
|
|
$
|
4,535.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
GameStop
Corp.
Condensed Consolidating Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
January 29,
|
|
|
January 29,
|
|
|
|
|
|
January 29,
|
|
|
|
2011
|
|
|
2011
|
|
|
Eliminations
|
|
|
2011
|
|
|
|
(Amounts in millions, except per share amounts)
|
|
|
ASSETS:
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
378.7
|
|
|
$
|
332.1
|
|
|
$
|
|
|
|
$
|
710.8
|
|
Receivables, net
|
|
|
161.3
|
|
|
|
629.8
|
|
|
|
(725.6
|
)
|
|
|
65.5
|
|
Merchandise inventories, net
|
|
|
783.4
|
|
|
|
474.1
|
|
|
|
|
|
|
|
1,257.5
|
|
Deferred income taxes current
|
|
|
24.4
|
|
|
|
4.4
|
|
|
|
|
|
|
|
28.8
|
|
Prepaid expenses
|
|
|
40.5
|
|
|
|
35.2
|
|
|
|
|
|
|
|
75.7
|
|
Other current assets
|
|
|
10.1
|
|
|
|
6.4
|
|
|
|
|
|
|
|
16.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,398.4
|
|
|
|
1,482.0
|
|
|
|
(725.6
|
)
|
|
|
2,154.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
4.7
|
|
|
|
19.3
|
|
|
|
|
|
|
|
24.0
|
|
Buildings and leasehold improvements
|
|
|
323.3
|
|
|
|
253.9
|
|
|
|
|
|
|
|
577.2
|
|
Fixtures and equipment
|
|
|
663.9
|
|
|
|
153.9
|
|
|
|
|
|
|
|
817.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property and equipment
|
|
|
991.9
|
|
|
|
427.1
|
|
|
|
|
|
|
|
1,419.0
|
|
Less accumulated depreciation and amortization
|
|
|
595.2
|
|
|
|
210.0
|
|
|
|
|
|
|
|
805.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property and equipment
|
|
|
396.7
|
|
|
|
217.1
|
|
|
|
|
|
|
|
613.8
|
|
Investment
|
|
|
2,161.4
|
|
|
|
595.1
|
|
|
|
(2,756.5
|
)
|
|
|
|
|
Goodwill, net
|
|
|
1,125.1
|
|
|
|
871.2
|
|
|
|
|
|
|
|
1,996.3
|
|
Other intangible assets
|
|
|
11.4
|
|
|
|
243.2
|
|
|
|
|
|
|
|
254.6
|
|
Other noncurrent assets
|
|
|
10.8
|
|
|
|
33.5
|
|
|
|
|
|
|
|
44.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent assets
|
|
|
3,705.4
|
|
|
|
1,960.1
|
|
|
|
(2,756.5
|
)
|
|
|
2,909.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
5,103.8
|
|
|
$
|
3,442.1
|
|
|
$
|
(3,482.1
|
)
|
|
$
|
5,063.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY:
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
725.7
|
|
|
$
|
302.4
|
|
|
$
|
|
|
|
$
|
1,028.1
|
|
Accrued liabilities
|
|
|
1,047.7
|
|
|
|
334.9
|
|
|
|
(725.6
|
)
|
|
|
657.0
|
|
Taxes payable
|
|
|
63.3
|
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
62.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,836.7
|
|
|
|
636.7
|
|
|
|
(725.6
|
)
|
|
|
1,747.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes payable, long-term portion, net
|
|
|
249.0
|
|
|
|
|
|
|
|
|
|
|
|
249.0
|
|
Deferred taxes
|
|
|
40.5
|
|
|
|
34.4
|
|
|
|
|
|
|
|
74.9
|
|
Other long-term liabilities
|
|
|
80.3
|
|
|
|
15.9
|
|
|
|
|
|
|
|
96.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
|
369.8
|
|
|
|
50.3
|
|
|
|
|
|
|
|
420.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,206.5
|
|
|
|
687.0
|
|
|
|
(725.6
|
)
|
|
|
2,167.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock authorized 5.0 shares; no
shares issued or outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock $.001 par value;
authorized 300.0 shares; 146.0 shares outstanding
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
Additional
paid-in-capital
|
|
|
928.9
|
|
|
|
2,430.7
|
|
|
|
(2,430.7
|
)
|
|
|
928.9
|
|
Accumulated other comprehensive income (loss)
|
|
|
162.5
|
|
|
|
34.4
|
|
|
|
(34.4
|
)
|
|
|
162.5
|
|
Retained earnings
|
|
|
1,805.8
|
|
|
|
291.4
|
|
|
|
(291.4
|
)
|
|
|
1,805.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to GameStop Corp. stockholders
|
|
|
2,897.3
|
|
|
|
2,756.5
|
|
|
|
(2,756.5
|
)
|
|
|
2,897.3
|
|
Equity (deficit) attributable to noncontrolling interest
|
|
|
|
|
|
|
(1.4
|
)
|
|
|
|
|
|
|
(1.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
2,897.3
|
|
|
|
2,755.1
|
|
|
|
(2,756.5
|
)
|
|
|
2,895.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
5,103.8
|
|
|
$
|
3,442.1
|
|
|
$
|
(3,482.1
|
)
|
|
$
|
5,063.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
GameStop
Corp.
Condensed Consolidating Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
April 30,
|
|
|
April 30,
|
|
|
|
|
|
April 30,
|
|
For the 13 Weeks Ended April 30, 2011
|
|
2011
|
|
|
2011
|
|
|
Eliminations
|
|
|
2011
|
|
|
|
(Amounts in millions)
|
|
|
|
(Unaudited)
|
|
|
Sales
|
|
$
|
1,700.8
|
|
|
$
|
580.6
|
|
|
$
|
|
|
|
$
|
2,281.4
|
|
Cost of sales
|
|
|
1,244.5
|
|
|
|
416.7
|
|
|
|
|
|
|
|
1,661.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
456.3
|
|
|
|
163.9
|
|
|
|
|
|
|
|
620.2
|
|
Selling, general and administrative expenses
|
|
|
293.8
|
|
|
|
148.9
|
|
|
|
|
|
|
|
442.7
|
|
Depreciation and amortization
|
|
|
31.2
|
|
|
|
15.2
|
|
|
|
|
|
|
|
46.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (loss)
|
|
|
131.3
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
131.1
|
|
Interest income
|
|
|
(9.1
|
)
|
|
|
(4.7
|
)
|
|
|
13.6
|
|
|
|
(0.2
|
)
|
Interest expense
|
|
|
6.0
|
|
|
|
13.9
|
|
|
|
(13.6
|
)
|
|
|
6.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income tax expense
|
|
|
134.4
|
|
|
|
(9.4
|
)
|
|
|
|
|
|
|
125.0
|
|
Income tax expense (benefit)
|
|
|
47.5
|
|
|
|
(2.5
|
)
|
|
|
|
|
|
|
45.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income (loss)
|
|
|
86.9
|
|
|
|
(6.9
|
)
|
|
|
|
|
|
|
80.0
|
|
Net loss attributable to noncontrolling interests
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income (loss) attributable to GameStop
|
|
$
|
86.9
|
|
|
$
|
(6.5
|
)
|
|
$
|
|
|
|
$
|
80.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GameStop
Corp.
Condensed Consolidating Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
May 1,
|
|
|
May 1,
|
|
|
|
|
|
May 1,
|
|
For the 13 Weeks Ended May 1, 2010
|
|
2010
|
|
|
2010
|
|
|
Eliminations
|
|
|
2010
|
|
|
|
(Amounts in millions)
|
|
|
|
(Unaudited)
|
|
|
Sales
|
|
$
|
1,531.1
|
|
|
$
|
551.6
|
|
|
$
|
|
|
|
$
|
2,082.7
|
|
Cost of sales
|
|
|
1,112.2
|
|
|
|
399.7
|
|
|
|
|
|
|
|
1,511.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
418.9
|
|
|
|
151.9
|
|
|
|
|
|
|
|
570.8
|
|
Selling, general and administrative expenses
|
|
|
271.8
|
|
|
|
132.0
|
|
|
|
|
|
|
|
403.8
|
|
Depreciation and amortization
|
|
|
27.1
|
|
|
|
15.4
|
|
|
|
|
|
|
|
42.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
120.0
|
|
|
|
4.5
|
|
|
|
|
|
|
|
124.5
|
|
Interest income
|
|
|
(9.6
|
)
|
|
|
(4.0
|
)
|
|
|
12.8
|
|
|
|
(0.8
|
)
|
Interest expense
|
|
|
10.1
|
|
|
|
13.1
|
|
|
|
(12.8
|
)
|
|
|
10.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax expense
|
|
|
119.5
|
|
|
|
(4.6
|
)
|
|
|
|
|
|
|
114.9
|
|
Income tax expense (benefit)
|
|
|
48.7
|
|
|
|
(8.6
|
)
|
|
|
|
|
|
|
40.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income
|
|
|
70.8
|
|
|
|
4.0
|
|
|
|
|
|
|
|
74.8
|
|
Net loss attributable to noncontrolling interests
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income attributable to GameStop
|
|
$
|
70.8
|
|
|
$
|
4.4
|
|
|
$
|
|
|
|
$
|
75.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
GameStop
Corp.
Condensed Consolidating Statement of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
April 30,
|
|
|
April 30,
|
|
|
|
|
|
April 30,
|
|
For the 13 Weeks Ended April 30, 2011
|
|
2011
|
|
|
2011
|
|
|
Eliminations
|
|
|
2011
|
|
|
|
(Amounts in millions)
|
|
|
|
(Unaudited)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income
|
|
$
|
86.9
|
|
|
$
|
(6.9
|
)
|
|
$
|
|
|
|
$
|
80.0
|
|
Adjustments to reconcile net earnings to net cash flows used in
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (including amounts in cost of
sales)
|
|
|
31.7
|
|
|
|
15.2
|
|
|
|
|
|
|
|
46.9
|
|
Amortization and retirement of deferred financing fees and issue
discounts
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
0.6
|
|
Stock-based compensation expense
|
|
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|
4.9
|
|
Deferred income taxes
|
|
|
5.1
|
|
|
|
(4.4
|
)
|
|
|
|
|
|
|
0.7
|
|
Excess tax expense realized from exercise of stock-based awards
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Loss on disposal of property and equipment
|
|
|
2.4
|
|
|
|
2.1
|
|
|
|
|
|
|
|
4.5
|
|
Changes in other long-term liabilities
|
|
|
1.7
|
|
|
|
4.0
|
|
|
|
|
|
|
|
5.7
|
|
Changes in operating assets and liabilities, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables, net
|
|
|
12.7
|
|
|
|
4.0
|
|
|
|
|
|
|
|
16.7
|
|
Merchandise inventories
|
|
|
41.7
|
|
|
|
(58.8
|
)
|
|
|
|
|
|
|
(17.1
|
)
|
Prepaid expenses and other current assets
|
|
|
(1.1
|
)
|
|
|
(10.4
|
)
|
|
|
|
|
|
|
(11.5
|
)
|
Prepaid income taxes and accrued income taxes payable
|
|
|
(24.1
|
)
|
|
|
(3.8
|
)
|
|
|
|
|
|
|
(27.9
|
)
|
Accounts payable and accrued liabilities
|
|
|
(120.1
|
)
|
|
|
(116.3
|
)
|
|
|
|
|
|
|
(236.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows provided by (used in) operating activities
|
|
|
42.8
|
|
|
|
(175.3
|
)
|
|
|
|
|
|
|
(132.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(27.8
|
)
|
|
|
(14.6
|
)
|
|
|
|
|
|
|
(42.4
|
)
|
Acquisition, net of cash acquired
|
|
|
(11.4
|
)
|
|
|
|
|
|
|
|
|
|
|
(11.4
|
)
|
Other
|
|
|
(1.5
|
)
|
|
|
(4.8
|
)
|
|
|
|
|
|
|
(6.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in investing activities
|
|
|
(40.7
|
)
|
|
|
(19.4
|
)
|
|
|
|
|
|
|
(60.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of treasury shares
|
|
|
(139.8
|
)
|
|
|
|
|
|
|
|
|
|
|
(139.8
|
)
|
Issuance of shares relating to stock options
|
|
|
7.2
|
|
|
|
|
|
|
|
|
|
|
|
7.2
|
|
Excess tax expense realized from exercise of stock-based awards
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in financing activities
|
|
|
(133.0
|
)
|
|
|
|
|
|
|
|
|
|
|
(133.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange rate effect on cash and cash equivalents
|
|
|
|
|
|
|
10.6
|
|
|
|
|
|
|
|
10.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(130.9
|
)
|
|
|
(184.1
|
)
|
|
|
|
|
|
|
(315.0
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
378.7
|
|
|
|
332.1
|
|
|
|
|
|
|
|
710.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
247.8
|
|
|
$
|
148.0
|
|
|
$
|
|
|
|
$
|
395.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
GameStop
Corp.
Condensed Consolidating Statement of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
May 1,
|
|
|
May 1,
|
|
|
|
|
|
May 1,
|
|
For the 13 Weeks Ended May 1, 2010
|
|
2010
|
|
|
2010
|
|
|
Eliminations
|
|
|
2010
|
|
|
|
(Amounts in millions)
|
|
|
|
(Unaudited)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income
|
|
$
|
70.8
|
|
|
$
|
4.0
|
|
|
$
|
|
|
|
$
|
74.8
|
|
Adjustments to reconcile net earnings to net cash flows used in
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (including amounts in cost of
sales)
|
|
|
27.5
|
|
|
|
15.5
|
|
|
|
|
|
|
|
43.0
|
|
Amortization and retirement of deferred financing fees and issue
discounts
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
Stock-based compensation expense
|
|
|
7.2
|
|
|
|
|
|
|
|
|
|
|
|
7.2
|
|
Deferred income taxes
|
|
|
4.9
|
|
|
|
(3.1
|
)
|
|
|
|
|
|
|
1.8
|
|
Excess tax expense realized from exercise of stock-based awards
|
|
|
2.7
|
|
|
|
|
|
|
|
|
|
|
|
2.7
|
|
Loss on disposal of property and equipment
|
|
|
0.8
|
|
|
|
1.3
|
|
|
|
|
|
|
|
2.1
|
|
Changes in other long-term liabilities
|
|
|
(0.9
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
(1.0
|
)
|
Changes in operating assets and liabilities, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables, net
|
|
|
14.6
|
|
|
|
13.0
|
|
|
|
|
|
|
|
27.6
|
|
Merchandise inventories
|
|
|
(103.2
|
)
|
|
|
1.3
|
|
|
|
|
|
|
|
(101.9
|
)
|
Prepaid expenses and other current assets
|
|
|
(6.9
|
)
|
|
|
(11.1
|
)
|
|
|
|
|
|
|
(18.0
|
)
|
Prepaid income taxes and accrued income taxes payable
|
|
|
(28.2
|
)
|
|
|
(4.6
|
)
|
|
|
|
|
|
|
(32.8
|
)
|
Accounts payable and accrued liabilities
|
|
|
(127.7
|
)
|
|
|
(136.4
|
)
|
|
|
|
|
|
|
(264.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in operating activities
|
|
|
(137.6
|
)
|
|
|
(120.2
|
)
|
|
|
|
|
|
|
(257.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(26.0
|
)
|
|
|
(9.3
|
)
|
|
|
|
|
|
|
(35.3
|
)
|
Other
|
|
|
|
|
|
|
(0.8
|
)
|
|
|
|
|
|
|
(0.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in investing activities
|
|
|
(26.0
|
)
|
|
|
(10.1
|
)
|
|
|
|
|
|
|
(36.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of treasury shares
|
|
|
(188.9
|
)
|
|
|
|
|
|
|
|
|
|
|
(188.9
|
)
|
Issuance of shares relating to stock options
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
1.0
|
|
Excess tax expense realized from exercise of stock-based awards
|
|
|
(2.7
|
)
|
|
|
|
|
|
|
|
|
|
|
(2.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in financing activities
|
|
|
(190.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(190.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange rate effect on cash and cash equivalents
|
|
|
|
|
|
|
11.0
|
|
|
|
|
|
|
|
11.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(354.2
|
)
|
|
|
(119.3
|
)
|
|
|
|
|
|
|
(473.5
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
653.0
|
|
|
|
252.4
|
|
|
|
|
|
|
|
905.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
298.8
|
|
|
$
|
133.1
|
|
|
$
|
|
|
|
$
|
431.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
ITEM 2.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
The following discussion should be read in conjunction with
the information contained in our consolidated financial
statements, including the notes thereto. Statements regarding
future economic performance, managements plans and
objectives, and any statements concerning assumptions related to
the foregoing contained in Managements Discussion and
Analysis of Financial Condition and Results of Operations
constitute forward-looking statements. Certain factors, which
may cause actual results to vary materially from these
forward-looking statements, accompany such statements or appear
in GameStops Annual Report on
Form 10-K
for the fiscal year ended January 29, 2011 filed with the
Securities and Exchange Commission (the SEC) on
March 30, 2011 (the
Form 10-K),
including the factors disclosed under Item 1A. Risk
Factors.
General
GameStop Corp. (together with its predecessor companies,
GameStop, we, us,
our, or the Company) is the worlds
largest multichannel retailer of video game products and PC
entertainment software. We sell new and used video game
hardware, video game software and accessories, as well as PC
entertainment software and other merchandise. As of
April 30, 2011, we operated 6,573 stores in the United
States, Australia, Canada and Europe, primarily under the names
GameStop, EB Games and Micromania. We also operate electronic
commerce Web sites www.gamestop.com,
www.ebgames.com.au, www.gamestop.ca,
www.gamestop.it, www.gamestop.es,
www.gamestop.ie, www.gamestop.de and
www.micromania.fr. In addition, we publish Game
Informer magazine, the industrys largest
multi-platform video game magazine in the United States based on
circulation, and operate the online video gaming Web site
www.kongregate.com.
Our fiscal year is composed of 52 or 53 weeks ending on the
Saturday closest to January 31. The fiscal years ending
January 28, 2012 (fiscal 2011) and ended
January 29, 2011 (fiscal 2010) consist of
52 weeks.
Growth in the video game industry is generally driven by the
introduction of new technology. The current generation of
hardware consoles (the Sony PlayStation 3, the Microsoft Xbox
360 and the Nintendo Wii) were introduced between 2005 and 2007.
The Sony PlayStation Portable was introduced in 2005. The
Nintendo DSi XL was introduced in early 2010 and the Nintendo
3DS was introduced in March 2011. Typically, following the
introduction of new video game platforms, sales of new video
game hardware increase as a percentage of total sales in the
first full year following introduction. As video game platforms
mature, the sales mix attributable to complementary video game
software and accessories, which generate higher gross margins,
generally increases in the subsequent years. The net effect is
generally a decline in gross margins in the first full year
following new platform releases and an increase in gross margins
in the years subsequent to the first full year following the
launch period. Unit sales of maturing video game platforms are
typically also driven by manufacturer-funded retail price
reductions, further driving sales of related software and
accessories. We expect that the installed base of the hardware
platforms listed above and sales of related software and
accessories will increase in the future.
We expect that future growth in the video game industry will
also be driven by the sale of video games delivered in digital
form and the expansion of other forms of gaming. We currently
sell various types of products that relate to the digital
category, including Xbox live, PlayStation and Nintendo network
point cards, as well as prepaid digital and online timecards and
digitally downloaded software. We continue to make significant
investments in
e-commerce,
online game development, digital kiosks and in-store and Web
site functionality to enable our customers to access digital
content and eliminate friction in the digital sales and delivery
process. We plan to continue to invest in these types of
processes and channels to grow our digital sales base and
enhance our market leadership position in the video game
industry and in the digital aggregation and distribution
category. We also intend to continue to invest in customer
loyalty programs designed to attract and retain customers.
Critical
Accounting Policies
Our consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America (GAAP) for interim
financial information and do not include all disclosures
required under GAAP for complete financial statements.
Preparation of these statements requires management to make
judgments and estimates. Some accounting policies have a
significant impact on amounts reported in these financial
statements. For a summary of significant accounting policies and
the means by which we
20
develop estimates thereon, see Item 7.
Managements Discussion and Analysis of Financial Condition
and Results of Operations in our
Form 10-K.
Consolidated
Results of Operations
The following table sets forth certain statement of operations
items as a percentage of sales for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
|
April 30,
|
|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
Sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Cost of sales
|
|
|
72.8
|
|
|
|
72.6
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
27.2
|
|
|
|
27.4
|
|
Selling, general and administrative expenses
|
|
|
19.4
|
|
|
|
19.4
|
|
Depreciation and amortization
|
|
|
2.0
|
|
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
5.8
|
|
|
|
6.0
|
|
Interest expense, net
|
|
|
0.3
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax expense
|
|
|
5.5
|
|
|
|
5.5
|
|
Income tax expense
|
|
|
2.0
|
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income
|
|
|
3.5
|
|
|
|
3.6
|
|
Net loss attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income attributable to GameStop
|
|
|
3.5
|
%
|
|
|
3.6
|
%
|
|
|
|
|
|
|
|
|
|
The Company includes purchasing, receiving and distribution
costs in selling, general and administrative expenses, rather
than cost of sales, in the statement of operations. The Company
includes processing fees associated with purchases made by check
and credit cards in cost of sales, rather than selling, general
and administrative expenses, in the statement of operations. As
a result of these classifications, our gross margins are not
comparable to those retailers that include purchasing, receiving
and distribution costs in cost of sales and include processing
fees associated with purchases made by check and credit cards in
selling, general and administrative expenses. The net effect of
these classifications as a percentage of sales has not
historically been material.
The following table sets forth sales (in millions) by
significant product category for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
|
April 30,
|
|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
Sales
|
|
|
of Total
|
|
|
Sales
|
|
|
of Total
|
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game hardware
|
|
$
|
432.4
|
|
|
|
19.0
|
%
|
|
$
|
348.3
|
|
|
|
16.7
|
%
|
New video game software
|
|
|
914.7
|
|
|
|
40.1
|
%
|
|
|
873.1
|
|
|
|
41.9
|
%
|
Used video game products
|
|
|
625.0
|
|
|
|
27.4
|
%
|
|
|
570.8
|
|
|
|
27.4
|
%
|
Other
|
|
|
309.3
|
|
|
|
13.5
|
%
|
|
|
290.5
|
|
|
|
14.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,281.4
|
|
|
|
100.0
|
%
|
|
$
|
2,082.7
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other products include PC entertainment and other software,
digital products and currency, accessories and magazines.
21
The following table sets forth gross profit (in millions) and
gross profit percentages by significant product category for the
periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
|
April 30,
|
|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
Gross
|
|
|
Gross Profit
|
|
|
Gross
|
|
|
Gross Profit
|
|
|
|
Profit
|
|
|
Percent
|
|
|
Profit
|
|
|
Percent
|
|
|
Gross Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game hardware
|
|
$
|
30.1
|
|
|
|
7.0
|
%
|
|
$
|
21.2
|
|
|
|
6.1
|
%
|
New video game software
|
|
|
174.9
|
|
|
|
19.1
|
%
|
|
|
174.5
|
|
|
|
20.0
|
%
|
Used video game products
|
|
|
300.0
|
|
|
|
48.0
|
%
|
|
|
274.4
|
|
|
|
48.1
|
%
|
Other
|
|
|
115.2
|
|
|
|
37.2
|
%
|
|
|
100.7
|
|
|
|
34.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
620.2
|
|
|
|
27.2
|
%
|
|
$
|
570.8
|
|
|
|
27.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks
ended April 30, 2011 compared with the 13 weeks ended
May 1, 2010
Sales increased by $198.7 million, or 9.5%, from
$2,082.7 million in the 13 weeks ended May 1,
2010 to $2,281.4 million in the 13 weeks ended
April 30, 2011. The increase in sales was primarily
attributable to an increase in comparable store sales of 5.3%,
the addition of non-comparable store sales from the 421 stores
opened since January 30, 2010, and changes related to
foreign exchange rates, which had the effect of increasing sales
by $32.4 million when compared to the first quarter of
fiscal 2010. The increase in comparable store sales was
primarily due to an increase in new video game hardware sales
and an increase in used video game product sales in fiscal 2011
when compared to fiscal 2010. Stores are included in our
comparable store sales base beginning in the thirteenth month of
operation and exclude the effect of changes in foreign exchange
rates.
New video game hardware sales increased $84.1 million, or
24.1%, from $348.3 million in the 13 weeks ended
May 1, 2010 to $432.4 million in the 13 weeks
ended April 30, 2011, primarily due to the launch of the
Nintendo 3DS in the first quarter of fiscal 2011. New video game
software sales increased $41.6 million, or 4.8%, from
$873.1 million in the 13 weeks ended May 1, 2010
to $914.7 million in the 13 weeks ended April 30,
2011, primarily due to the strong sales of new release video
game titles in fiscal 2011, as well as the increase in sales
from new stores added since fiscal 2010. Used video game product
sales increased $54.2 million, or 9.5%, from
$570.8 million in the 13 weeks ended May 1, 2010
to $625.0 million in the 13 weeks ended April 30,
2011. Used video game product sales grew due to an increase in
the availability of hardware and software associated with the
current generation hardware platforms, the growth of used video
game product sales internationally, as well as the addition of
sales at the new stores added since fiscal 2010. Other video
game product sales increased by $18.8 million, or 6.5%,
from $290.5 million in the 13 weeks ended May 1,
2010 to $309.3 million in the 13 weeks ended
April 30, 2011. The increase in other product sales was
primarily due to the increase in video game accessory sales
internationally.
As a percentage of sales, new video game hardware sales
increased and new video game software and other product sales
decreased in the 13 weeks ended April 30, 2011
compared to the 13 weeks ended May 1, 2010. The change
in the mix of sales was primarily due to the increase in new
video game hardware sales as a result of the launch of the
Nintendo 3DS. As a percentage of sales, the used video game
product sales category remained the same in the 13 weeks
ended April 30, 2011 compared to the 13 weeks ended
May 1, 2010.
Cost of sales increased by $149.3 million, or 9.9%, from
$1,511.9 million in the 13 weeks ended May 1,
2010 to $1,661.2 million in the 13 weeks ended
April 30, 2011 as a result of an increase in sales and the
changes in gross profit discussed below.
Gross profit increased by $49.4 million, or 8.7%, from
$570.8 million in the 13 weeks ended May 1, 2010
to $620.2 million in the 13 weeks ended April 30,
2011. Gross profit as a percentage of sales decreased from 27.4%
in the 13 weeks ended May 1, 2010 to 27.2% in the
13 weeks ended April 30, 2011. The gross profit
percentage decrease was caused primarily by the increase in
hardware product sales which have a lower gross margin
percentage than other product categories. Gross profit as a
percentage of sales on new video game hardware
22
increased from 6.1% in the 13 weeks ended May 1, 2010
to 7.0% in the 13 weeks ended April 30, 2011,
primarily due to higher international gross margin recognized
during the first quarter of fiscal 2011 as a result of lower
promotional activities when compared to the prior year. Gross
profit as a percentage of sales on new video game software
decreased from 20.0% to 19.1% in the 13 weeks ended
April 30, 2011 compared to the 13 weeks ended
May 1, 2010, primarily due to the decrease in international
new software sales, which have a higher gross margin percentage
than U.S. new software sales, and increased promotional
activities during the 13 weeks ended April 30, 2011.
Gross profit as a percentage of sales on used video game
products decreased slightly from 48.1% to 48.0% in the
13 weeks ended April 30, 2011 compared to the
13 weeks ended May 1, 2010. Gross profit as a
percentage of sales on other product sales increased from 34.7%
to 37.2% in the 13 weeks ended April 30, 2011 compared
to the 13 weeks ended May 1, 2010, due to a shift in
sales to higher margin digital product sales, some of which are
recorded on a commission basis at 100% margin.
Selling, general and administrative expenses increased by
$38.9 million, or 9.6%, from $403.8 million in the
13 weeks ended May 1, 2010 to $442.7 million in
the 13 weeks ended April 30, 2011. This increase was
primarily attributable to the increase in the number of stores
in operation and the related increases in store, distribution
and corporate office operating expenses, as well as expenses
incurred in our digital and loyalty initiatives. Selling,
general and administrative expenses as a percentage of sales did
not change from the 13 weeks ended May 1, 2010 to the
13 weeks ended April 30, 2011. Included in selling,
general and administrative expenses is $4.9 million and
$7.2 million in stock-based compensation expense for the
13 weeks ended April 30, 2011 and May 1, 2010,
respectively.
Depreciation and amortization expense increased
$3.9 million from $42.5 million in the 13 weeks
ended May 1, 2010 to $46.4 million in the
13 weeks ended April 30, 2011. This increase was
primarily due to capital expenditures associated with the
opening of 62 new stores during the first quarter of fiscal 2011
and investments in information systems and
e-commerce,
digital and loyalty program initiatives.
Interest income from the investment of excess cash balances
decreased from $0.8 million in the 13 weeks ended
May 1, 2010 to $0.2 million in the 13 weeks ended
April 30, 2011, due primarily to lower invested cash
balances. Interest expense decreased from $10.4 million in
the 13 weeks ended May 1, 2010 to $6.3 million in
the 13 weeks ended April 30, 2011, primarily due to
the retirement of $200.0 million of the Companys
senior notes since January 30, 2010.
Income tax expense for the 13 weeks ended May 1, 2010
and the 13 weeks ended April 30, 2011 was based upon
managements estimate of the Companys annualized
effective tax rate. Income tax expense was $45.0 million,
or 36.0% of earnings before income tax expense, for the
13 weeks ended April 30, 2011 compared to
$40.1 million, or 34.9% of earnings before income tax
expense, for the 13 weeks ended May 1, 2010. The
increase in the income tax rate was due primarily to the
variability in the accounting for the Companys uncertain
tax positions.
The factors described above led to an increase in operating
earnings of $6.6 million, or 5.3%, from $124.5 million
in the 13 weeks ended May 1, 2010 to
$131.1 million in the 13 weeks ended April 30,
2011, and an increase in consolidated net income of
$5.2 million, or 7.0%, from $74.8 million in the
13 weeks ended May 1, 2010 to $80.0 million in
the 13 weeks ended April 30, 2011.
The $0.4 million increase in consolidated net income
attributable to GameStop stockholders during the 13 weeks
ended May 1, 2010 and the 13 weeks ended
April 30, 2011 represents the portion of the minority
interest stockholders net loss of the Companys
non-wholly owned subsidiaries.
23
Segment
Performance
The Company operates its business in the following segments:
United States, Australia, Canada and Europe. The following
tables provide a summary of our sales and operating earnings by
reportable segment:
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|
|
|
|
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13 Weeks Ended
|
|
|
|
April 30,
|
|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(In millions)
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|
|
|
(Unaudited)
|
|
|
Sales by operating segment are as follows:
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|
|
|
|
|
|
|
|
United States
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|
$
|
1,700.8
|
|
|
$
|
1,531.2
|
|
Canada
|
|
|
108.1
|
|
|
|
104.3
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|
Australia
|
|
|
118.8
|
|
|
|
107.2
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|
Europe
|
|
|
353.7
|
|
|
|
340.0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,281.4
|
|
|
$
|
2,082.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
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|
|
|
April 30,
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|
|
May 1,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(In millions)
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|
|
|
(Unaudited)
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|
|
Operating earnings (loss) by operating segment are as follows:
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|
|
|
|
|
|
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|
United States
|
|
$
|
131.2
|
|
|
$
|
118.6
|
|
Canada
|
|
|
0.3
|
|
|
|
3.8
|
|
Australia
|
|
|
3.7
|
|
|
|
2.6
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|
Europe
|
|
|
(4.1
|
)
|
|
|
(0.5
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
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$
|
131.1
|
|
|
$
|
124.5
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|
|
|
|
|
|
|
|
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|
United
States
Segment results for the United States include retail operations
in all 50 states, the District of Columbia, Puerto Rico and
Guam, the electronic commerce Web site www.gamestop.com,
Game Informer magazine and www.kongregate.com, an
online video gaming site. As of April 30, 2011, the United
States segment included 4,434 GameStop stores compared to 4,443
stores on May 1, 2010. Sales for the first quarter of
fiscal 2011 increased $169.6 million, or 11.1%, compared to
the first quarter of fiscal 2010 as a result of increased sales
at existing stores and the opening of 264 new stores since
January 30, 2010, including 37 stores in the first quarter
of fiscal 2011. Sales at existing stores increased due to the
strong sales of new hardware, including the launch of the
Nintendo 3DS and strong sales of new release video game software
and used video game products during the first quarter of fiscal
2011 compared to the first quarter of 2010. Segment operating
income increased by 10.6% in the first quarter of fiscal 2011
compared to the first quarter of fiscal 2010, driven primarily
by the increase in sales and related margin discussed above.
Canada
Segment results for Canada include retail operations in Canada
and their
e-commerce
site. Sales in the Canadian segment in the first quarter of
fiscal 2011 increased $3.8 million, or 3.6%, compared to
the first quarter of fiscal 2010. The increase in sales was
primarily attributable to the favorable exchange rates
recognized in the first quarter of fiscal 2011 when compared to
the first quarter of fiscal 2010, which had the effect of
increasing sales by $5.5 million. Excluding the impact of
changes in exchange rates, sales in the Canadian segment
decreased by 1.6%. The decrease in sales was primarily due to a
decrease in sales at existing stores, which was driven by weak
consumer traffic when compared to the first quarter of fiscal
2010. As of April 30, 2011, the Canadian segment had 346
stores compared to 339 stores as of May 1, 2010. Segment
operating income decreased by $3.5 million to
$0.3 million compared to $3.8 million in the first
quarter of fiscal 2010. The decrease in operating income was
primarily due to the decrease in sales at existing stores and
the deleveraging of selling, general and administrative expenses.
24
Australia
Segment results for Australia include retail operations and
e-commerce
sites in Australia and New Zealand. As of April 30, 2011,
the Australian segment included 408 stores, compared to 391
stores as of May 1, 2010. Sales in the first quarter of
fiscal 2011 increased 10.8% to $118.8 million compared to
first quarter fiscal 2010 sales of $107.2 million. The increase
in sales was primarily due to the favorable exchange rates
recognized in the first quarter of fiscal 2011 compared to the
first quarter of fiscal 2010, which had the effect of increasing
sales by $13.2 million, as well as the additional sales at
the 24 stores added since January 30, 2010. Excluding the
impact of changes in exchange rates, sales in the Australian
segment decreased 1.5%. The decrease in sales was primarily due
to lower sales at existing stores due to weak consumer traffic
when compared to the first quarter of fiscal 2010. Segment
operating income increased $1.1 million to
$3.7 million in the first quarter of fiscal 2011 compared
to $2.6 million in the first quarter of fiscal 2010. The
increase in operating earnings was primarily due to increased
sales in the used and other product categories which carry
higher margins than other sales categories. In addition, the
favorable impact of changes in exchange rates had the effect of
increasing operating earnings by $0.4 million for the
13 weeks ended April 30, 2011 when compared to the
13 weeks ended May 1, 2010.
Europe
Segment results for Europe include retail operations in 13
European countries and
e-commerce
sites in five countries. As of April 30, 2011, the European
segment operated 1,385 stores compared to 1,313 stores as of
May 1, 2010. For the 13 weeks ended April 30,
2011, European sales increased $13.7 million, or 4.0%,
compared to the 13 weeks ended May 1, 2010. The
increase in sales was primarily due to the additional sales at
the 121 stores opened since January 30, 2010 and the
favorable impact of changes in exchange rates recognized in the
first quarter of fiscal 2011, which had the effect of increasing
sales by $14.2 million when compared to the first quarter
of fiscal 2010. This increase in sales was partially offset by a
decrease in sales at existing stores, which was primarily driven
by weak consumer traffic due to the continued macroeconomic
weakness when compared to the first quarter of fiscal 2010.
The segment operating loss in Europe was $4.1 million in
the first quarter of fiscal 2011 compared to an operating loss
of $0.5 million in the first quarter of fiscal 2010. The
increase in the operating loss in the first quarter of fiscal
2011 was primarily driven by the decreased sales at existing
stores and the increase in selling, general and administrative
expenses associated with the increase in the number of stores in
operation, as well as the impact of changes in exchange rates
recognized in the first quarter of fiscal 2011, which had the
effect of increasing the operating loss by $0.6 million
when compared to fiscal 2010. The first quarter of fiscal 2011
also includes charges related to our continued efforts to
improve long-term operating results in Europe, including costs
incurred during the quarter associated with closing
underperforming stores.
Seasonality
The Companys business, like that of many retailers, is
seasonal, with the major portion of the sales and operating
profit realized during the fourth fiscal quarter which includes
the holiday selling season.
Liquidity
and Capital Resources
Cash
Flows
During the 13 weeks ended April 30, 2011, cash used in
operations was $132.5 million, compared to cash used in
operations of $257.8 million during the 13 weeks ended
May 1, 2010. The decrease in cash used in operations of
$125.3 million was primarily due to a decrease in cash used
for working capital purposes of $113.0 million, primarily
driven by lower inventory purchases in the first quarter of
fiscal 2011 and the related effects on accounts payable
payments. The lower inventory purchases were due to better
in-stock positions coming out of the fiscal 2010 holiday selling
season, particularly hardware inventory which was in short
supply at the end of the 52 weeks ended January 30,
2010 (fiscal 2009).
Cash used in investing activities was $60.1 million and
$36.1 million during the 13 weeks ended April 30,
2011 and May 1, 2010, respectively. During the
13 weeks ended April 30, 2011, $42.4 million of
cash was used primarily to invest in information systems and
e-commerce,
digital and loyalty program initiatives and to open new stores
in
25
the U.S. and internationally. In addition, the Company used
$11.4 million for acquisitions in support of the
Companys digital initiatives. During the 13 weeks
ended May 1, 2010, $35.3 million of cash was used
primarily to open new stores in the U.S. and
internationally and to invest in information systems and
e-commerce,
digital and loyalty program initiatives.
Cash used in financing activities was $133.0 million and
$190.6 million for the 13 weeks ended April 30,
2011 and May 1, 2010, respectively. The cash used in
financing activities for the 13 weeks ended April 30,
2011 was primarily due to the purchase of $139.8 million of
treasury shares pursuant to the Board of Directors
$500 million authorization in February 2011, offset by the
issuance of shares relating to stock option exercises of
$7.2 million. The cash used in financing activities for the
13 weeks ended May 1, 2010 was primarily due to the
purchase of $188.9 million of treasury shares pursuant to
the Board of Directors $300 million authorization in
January 2010 and $2.7 million for the realization of tax
expense relating to the stock option exercises and vested
restricted stock.
Sources
of Liquidity
We utilize cash generated from operations and have funds
available to us under our revolving credit facility to cover
seasonal fluctuations in cash flows and to support our various
growth initiatives. Our cash and cash equivalents are carried at
cost, which approximates market value, and consist primarily of
time deposits with highly rated commercial banks and money
market investment funds holding direct U.S. Treasury
obligations.
On January 4, 2011, the Company entered into a
$400 million credit agreement (the Revolver),
which amended and restated, in its entirety, the Companys
prior credit agreement entered into on October 11, 2005
(the Credit Agreement). The Revolver provides for a
five-year, $400 million asset-based facility, including a
$50 million letter of credit sublimit, secured by
substantially all of the Companys and its domestic
subsidiaries assets. The Company has the ability to
increase the facility, which matures in January 2016, by
$150 million under certain circumstances. The extension of
the Revolver to 2016 reduces our exposure to potential
tightening in the credit markets.
The availability under the Revolver is limited to a borrowing
base which allows the Company to borrow up to 90% of the
appraisal value of the inventory, in each case plus 90% of
eligible credit card receivables, net of certain reserves.
Letters of credit reduce the amount available to borrow by their
face value. The Companys ability to pay cash dividends,
redeem options and repurchase shares is generally permitted,
except under certain circumstances, including if Revolver excess
availability is less than 20%, or is projected to be within
12 months after such payment. In addition, if Revolver
usage is projected to be equal to or greater than 25% of the
borrowing base during the prospective
12-month
period, the Company is subject to meeting a fixed charge
coverage ratio of 1.1:1.0 prior to making such payments. In the
event that excess availability under the Revolver is at any time
less than the greater of (1) $40.0 million or
(2) 12.5% of the lesser of the total commitment or the
borrowing base, the Company will be subject to a fixed charge
coverage ratio covenant of 1.1:1.0.
The Revolver places certain restrictions on the Company and its
subsidiaries, including limitations on asset sales, additional
liens, investments, loans, guarantees, acquisitions and the
incurrence of additional indebtedness. The per annum interest
rate under the Revolver is variable and is calculated by
applying a margin (1) for prime rate loans of 1.25% to
1.50% above the highest of (a) the prime rate of the
administrative agent, (b) the federal funds effective rate
plus 0.50% and (c) the LIBO rate for a
30-day
interest period as determined on such day plus 1.00%, and
(2) for LIBO rate loans of 2.25% to 2.50% above the LIBO
rate. The applicable margin is determined quarterly as a
function of the Companys average daily excess availability
under the facility and is set at 1.25% for prime rate loans and
2.25% for LIBO rate loans until the first day of the fiscal
quarter of the borrowers commencing on May 1, 2011. In
addition, the Company is required to pay a commitment fee of
0.375% or 0.50%, depending on facility usage, for any unused
portion of the total commitment under the Revolver. As of
April 30, 2011 the applicable margin was 1.25% for prime
rate loans and 2.25% for LIBO rate loans, while the required
commitment fee was 0.50% for the unused portion of the Revolver.
The Revolver provides for customary events of default with
corresponding grace periods, including failure to pay any
principal or interest when due, failure to comply with
covenants, any material representation or warranty made by the
Company or the borrowers proving to be false in any material
respect, certain bankruptcy, insolvency or receivership events
affecting the Company or its subsidiaries, defaults relating to
certain other indebtedness,
26
imposition of certain judgments and mergers or the liquidation
of the Company or certain of its subsidiaries. As of
April 30, 2011, there were no borrowings outstanding under
the Revolver and letters of credit outstanding totaled
$8.5 million.
In September 2007, the Companys Luxembourg subsidiary
entered into a discretionary $20.0 million Uncommitted Line
of Credit (the Line of Credit) with Bank of America.
There is no term associated with the Line of Credit and Bank of
America may withdraw the facility at any time without notice.
The Line of Credit will be made available to the Companys
foreign subsidiaries for use primarily as a bank overdraft
facility for short-term liquidity needs and for the issuance of
bank guarantees and letters of credit to support operations. As
of April 30, 2011, there were no cash overdrafts
outstanding under the Line of Credit and bank guarantees
outstanding totaled $6.2 million.
In September 2005, the Company, along with GameStop, Inc. as
co-issuer (together with the Company, the Issuers),
completed the offering of $300 million aggregate principal
amount of Senior Floating Rate Notes due 2011 (the Senior
Floating Rate Notes) and $650 million aggregate
principal amount of Senior Notes due 2012 (the Senior
Notes and, together with the Senior Floating Rate Notes,
the Notes). The Notes were issued under an
Indenture, dated September 28, 2005 (the
Indenture), by and among the Issuers, the subsidiary
guarantors party thereto, and Citibank, N.A., as trustee (the
Trustee). In November 2006, Wilmington
Trust Company was appointed as the new Trustee for the
Notes.
The Senior Notes bear interest at 8.0% per annum, mature on
October 1, 2012 and were priced at 98.688%, resulting in a
discount at the time of issue of $8.5 million. The discount
is being amortized using the effective interest method. As of
April 30, 2011, the unamortized original issue discount was
$0.8 million. The Issuers pay interest on the Senior Notes
semi-annually, in arrears, every April 1 and October 1, to
holders of record on the immediately preceding March 15 and
September 15, and at maturity.
The Indenture contains affirmative and negative covenants
customary for such financings, including, among other things,
limitations on (1) the incurrence of additional debt,
(2) restricted payments, (3) liens, (4) sale and
leaseback transactions and (5) asset sales. Events of
default provided for in the Indenture include, among other
things, failure to pay interest or principal on the Notes, other
breaches of covenants in the Indenture, and certain events of
bankruptcy and insolvency. As of April 30, 2011, the
Company was in compliance with all covenants associated with the
Revolver and the Indenture.
Under certain conditions, the Issuers may on any one or more
occasions prior to maturity redeem up to 100% of the aggregate
principal amount of Senior Notes issued under the Indenture at
redemption prices at or in excess of 100% of the principal
amount thereof plus accrued and unpaid interest, if any, to the
redemption date. The circumstances which would limit the
percentage of the Notes which may be redeemed or which would
require the Company to pay a premium in excess of 100% of the
principal amount are defined in the Indenture. Upon a Change of
Control (as defined in the Indenture), the Issuers are required
to offer to purchase all of the Notes then outstanding at 101%
of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase. The Issuers may
acquire Senior Notes by means other than redemption, whether by
tender offer, open market purchases, negotiated transactions or
otherwise, in accordance with applicable securities laws, so
long as such acquisitions do not otherwise violate the terms of
the Indenture.
As of April 30, 2011 and May 1, 2010, the only
long-term debt outstanding was the Senior Notes. The
$250 million in Senior Notes outstanding as of
April 30, 2011, gross of the unamortized original issue
discount of $0.8 million, matures in the fiscal year ending
January 2013.
Uses
of Capital
Our future capital requirements will depend on the number of new
stores opened and the timing of those openings within a given
fiscal year. The Company opened 62 stores in the 13 weeks
ended April 30, 2011 and expects to open approximately 300
stores in fiscal 2011. Capital expenditures for fiscal 2011 are
projected to be approximately $170 million, to be used
primarily to fund new store openings, store remodels and invest
in distribution and information systems in support of
operations. In addition, in fiscal 2011 we have allocated
approximately $100 million for acquisitions in support of
our
e-commerce
and digital initiatives.
27
Between May 2006 and October 2010, the Company repurchased and
redeemed the $300 million of Senior Floating Rate Notes and
$400 million of Senior Notes under previously announced
buybacks authorized by the Companys Board of Directors.
The repurchased Notes were delivered to the Trustee for
cancellation. None of the debt was retired or redeemed during
the 13-week periods ended May 1, 2010 or April 30,
2011.
On January 11, 2010, the Board of Directors of the Company
approved a $300 million share repurchase program
authorizing the Company to repurchase its common stock. For
fiscal 2009, the number of shares repurchased were
6.1 million for an average price per share of $20.12. Of
these shares, $64.6 million of treasury share purchases
were settled at the beginning of fiscal 2010. For the first
quarter of fiscal 2010, the Company purchased an additional
6.5 million shares for an average price per share of
$19.03. In September 2010, the Board of Directors of the Company
approved an additional $300 million share repurchase
program authorizing the Company to repurchase its common stock.
For the remainder of fiscal 2010, the Company purchased an
additional 10.5 million shares for an average price per
share of $20.35. Of these shares, $22.0 million of treasury
share purchases were settled at the beginning of fiscal 2011.
On February 4, 2011, the Board of Directors authorized the
Company to use $500 million to repurchase shares of the
Companys common stock
and/or
retire the Companys Senior Notes. Under the repurchase
program, the Company may purchase the Companys Senior
Notes and/or
shares of issued and outstanding Class A Common Stock
through open market purchases, debt calls or privately
negotiated transactions. The timing and actual amount of debt or
share repurchases will be determined by the Companys
management based on their evaluation of market conditions and
other factors. In addition, repurchases may be suspended or
discontinued at any time. During the 13 weeks ended
April 30, 2011, the Company repurchased 5.9 million
shares at an average price per share of $19.88. As of
April 30, 2011, no amount of the $500 million
repurchase plan has been used to retire the Senior Notes and
$382.3 million remains available in the plan.
Based on our current operating plans, we believe that available
cash balances, cash generated from our operating activities and
funds available under the Revolver will be sufficient to fund
our operations, required payments on the Senior Notes, digital
initiatives, store expansion and remodeling activities and
corporate capital expenditure programs for at least the next
12 months.
Disclosure
Regarding Forward-looking Statements
This report on
Form 10-Q
and other oral and written statements made by the Company to the
public contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended (the Exchange Act). The forward-looking
statements involve a number of risks and uncertainties. A number
of factors could cause our actual results, performance,
achievements or industry results to be materially different from
any future results, performance or achievements expressed or
implied by these forward-looking statements. These factors
include, but are not limited to:
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our reliance on suppliers and vendors for sufficient quantities
of their products and for new product releases;
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|
general economic conditions in the U.S. and internationally
and specifically, economic conditions affecting the electronic
game industry, the retail industry and the banking and financial
services market;
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|
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|
alternate sources of distribution of video game software and
content;
|
|
|
|
alternate means to play video games;
|
|
|
|
the competitive environment in the electronic game industry;
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|
|
|
the growth of mobile, social and browser gaming;
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|
our ability to open and operate new stores;
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|
our ability to attract and retain qualified personnel;
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|
|
|
our ability to effectively integrate acquired companies,
including digital gaming and technology-based companies that are
outside of the Companys historical operating expertise;
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28
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|
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|
|
the impact and costs of litigation and regulatory compliance;
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|
unanticipated litigation results, including third-party
litigation;
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|
the risks involved with our international operations; and
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|
other factors described in the
Form 10-K,
including those set forth under the caption Item 1A.
Risk Factors.
|
In some cases, forward-looking statements can be identified by
the use of terms such as anticipates,
believes, continues, could,
estimates, expects, intends,
may, plans, potential,
predicts, pro forma, should,
seeks, will or similar expressions.
These statements are only predictions based on current
expectations and assumptions and involve known and unknown
risks, uncertainties and other factors that may cause our or our
industrys actual results, levels of activity, performance
or achievements to be materially different from any future
results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. You
should not place undue reliance on these forward-looking
statements.
Although we believe that the expectations reflected in our
forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise after the date of this
Form 10-Q.
In light of these risks and uncertainties, the forward-looking
events and circumstances contained in this
Form 10-Q
may not occur, causing actual results to differ materially from
those anticipated or implied by our forward-looking statements.
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|
ITEM 3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
Interest
Rate Exposure
We do not use derivative financial instruments to hedge interest
rate exposure. We limit our interest rate risks by investing our
excess cash balances in short-term, highly-liquid instruments
with a maturity of one year or less. In addition, the Senior
Notes outstanding carry a fixed interest rate. We do not expect
any material losses from our invested cash balances, and we
believe that our interest rate exposure is modest.
Foreign
Currency Risk
The Company uses forward exchange contracts, foreign currency
options and cross-currency swaps (together, the Foreign
Currency Contracts) to manage currency risk primarily
related to intercompany loans denominated in non-functional
currencies and certain foreign currency assets and liabilities.
The Foreign Currency Contracts are not designated as hedges and,
therefore, changes in the fair values of these derivatives are
recognized in earnings, thereby offsetting the current earnings
effect of the re-measurement of related intercompany loans and
foreign currency assets and liabilities. For the fiscal quarter
ended April 30, 2011, the Company recognized a
$9.3 million loss in selling, general and administrative
expenses related to the trading of derivative instruments. The
aggregate fair value of the Foreign Currency Contracts as of
April 30, 2011 was a net liability of $6.3 million as
measured by observable inputs obtained from market news
reporting services, such as Bloomberg and The Wall Street
Journal, and industry-standard models that consider various
assumptions, including quoted forward prices, time value,
volatility factors, and contractual prices for the underlying
instruments, as well as other relevant economic measures. A
hypothetical strengthening or weakening of 10% in the foreign
exchange rates underlying the Foreign Currency Contracts from
the market rate as of April 30, 2011 would result in a
(loss) or gain in value of the forwards, options and swaps of
($18.7) million or $18.7 million, respectively.
We do not use derivative financial instruments for trading or
speculative purposes. We are exposed to counterparty credit risk
on all of our derivative financial instruments and cash
equivalent investments. The Company manages counterparty risk
according to the guidelines and controls established under
comprehensive risk management and investment policies. We
continuously monitor our counterparty credit risk and utilize a
number of different counterparties to minimize our exposure to
potential defaults. We do not require collateral under
derivative or investment agreements.
29
|
|
ITEM 4.
|
Controls
and Procedures
|
(a) Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the
Companys management conducted an evaluation, under the
supervision and with the participation of the principal
executive officer and principal financial officer, of the
Companys disclosure controls and procedures (as defined in
Rules 13a-15(e)
and
15d-15(e)
under the Exchange Act) at the reasonable assurance level. Based
on this evaluation, the principal executive officer and
principal financial officer concluded that, as of the end of the
period covered by this report, the Companys disclosure
controls and procedures are designed to provide reasonable
assurance of achieving their objectives and that the
Companys disclosure controls and procedures are effective
at the reasonable assurance level. Notwithstanding the
foregoing, a control system, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance
that it will detect or uncover failures within the Company to
disclose material information otherwise required to be set forth
in the Companys periodic reports.
(b) Changes in Internal Control Over Financial Reporting
There was no change in the Companys internal control over
financial reporting (as such term is defined in
Rules 13a-15(f)
and
15d-15(f)
under the Exchange Act) during the Companys most recently
completed fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Companys
internal control over financial reporting.
PART II
OTHER INFORMATION
|
|
ITEM 1.
|
Legal
Proceedings
|
In the ordinary course of the Companys business, the
Company is, from time to time, subject to various legal
proceedings, including matters involving wage and hour employee
class actions. The Company may enter into discussions regarding
settlement of these and other types of lawsuits, and may enter
into settlement agreements, if we believe settlement is in the
best interest of the Companys stockholders. Management
does not believe that any such existing legal proceedings or
settlements, individually or in the aggregate, will have a
material adverse effect on the Companys financial
condition, results of operations or liquidity.
There have been no material developments in previously reported
legal proceedings during the fiscal quarter covered by this
Form 10-Q.
In addition to the other information set forth in this
Form 10-Q,
you should carefully consider the factors discussed in
Item 1A. Risk Factors in our
Form 10-K
for the fiscal year ended January 29, 2011 filed with the
SEC on March 30, 2011. These risks could materially and
adversely affect our business, financial condition and results
of operations. The risks described in our
Form 10-K
have not changed materially, however, they are not the only
risks we face. Our operations could also be affected by
additional factors that are not presently known to us or by
factors that we currently consider immaterial to our business.
30
|
|
ITEM 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
Purchases by the Company of its equity securities during the
first quarter of the fiscal year ending January 28, 2012
were as follows:
ISSUER
PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
(d)
|
|
|
|
(a)
|
|
|
|
|
|
Total Number of
|
|
|
Approximate Dollar
|
|
|
|
Total
|
|
|
(b)
|
|
|
Shares Purchased
|
|
|
Value of Shares that
|
|
|
|
Number of
|
|
|
Average
|
|
|
as Part of Publicly
|
|
|
May Yet Be Purchased
|
|
|
|
Shares
|
|
|
Price Paid per
|
|
|
Announced Plans or
|
|
|
Under the Plans or
|
|
|
|
Purchased
|
|
|
Share
|
|
|
Programs
|
|
|
Programs(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of dollars)
|
|
|
January 30 through February 26, 2011
|
|
|
2,461,800
|
|
|
$
|
19.83
|
|
|
|
2,461,800
|
|
|
$
|
451.2
|
|
February 27 through April 2, 2011
|
|
|
3,459,700
|
|
|
$
|
19.92
|
|
|
|
3,459,700
|
|
|
$
|
382.3
|
|
April 3 through April 30, 2011
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
382.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,921,500
|
|
|
$
|
19.88
|
|
|
|
5,921,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
On February 4, 2011, our Board of Directors authorized
$500 million to be used for share repurchases and/or
retirement of the Companys senior notes due 2012. The
$500 million plan has no expiration date. |
Exhibits
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
2
|
.1
|
|
Agreement and Plan of Merger, dated as of April 17, 2005, among
GameStop Corp. (f/k/a GSC Holdings Corp.), Electronics Boutique
Holdings Corp., GameStop, Inc., GameStop Holdings Corp. (f/k/a
GameStop Corp.), Cowboy Subsidiary LLC and Eagle Subsidiary
LLC.(1)
|
|
2
|
.2
|
|
Sale and Purchase Agreement, dated September 30, 2008, between
EB International Holdings, Inc. and L Capital, LV Capital,
Europ@Web and other Micromania shareholders.(2)
|
|
2
|
.3
|
|
Amendment, dated November 17, 2008, to Sale and Purchase
Agreement for Micromania Acquisition listed as Exhibit 2.2
above.(3)
|
|
3
|
.1
|
|
Second Amended and Restated Certificate of Incorporation.(4)
|
|
3
|
.2
|
|
Amended and Restated Bylaws.(5)
|
|
3
|
.3
|
|
Amendment to Amended and Restated Bylaws.(6)
|
|
4
|
.1
|
|
Indenture, dated September 28, 2005, by and among GameStop Corp.
(f/k/a GSC Holdings Corp.), GameStop, Inc., the subsidiary
guarantors party thereto, and Citibank N.A., as trustee.(7)
|
|
4
|
.2
|
|
First Supplemental Indenture, dated October 8, 2005, by and
among GameStop Corp. (f/k/a GSC Holdings Corp.), GameStop, Inc.,
the subsidiary guarantors party thereto, and Citibank N.A., as
trustee.(8)
|
|
4
|
.3
|
|
Rights Agreement, dated as of June 27, 2005, between GameStop
Corp. (f/k/a GSC Holdings Corp.) and The Bank of New York, as
Rights Agent.(5)
|
|
4
|
.4
|
|
Form of Indenture.(9)
|
|
10
|
.1
|
|
Insurance Agreement, dated as of January 1, 2002, between Barnes
& Noble, Inc. and GameStop Holdings Corp. (f/k/a GameStop
Corp.).(10)
|
|
10
|
.2
|
|
Operating Agreement, dated as of January 1, 2002, between Barnes
& Noble, Inc. and GameStop Holdings Corp. (f/k/a GameStop
Corp.).(10)
|
|
10
|
.3
|
|
Fourth Amended and Restated 2001 Incentive Plan.(11)
|
|
10
|
.4
|
|
Second Amended and Restated Supplemental Compensation Plan.(12)
|
|
10
|
.5
|
|
Form of Option Agreement.(13)
|
|
10
|
.6
|
|
Form of Restricted Share Agreement.(14)
|
31
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
10
|
.7
|
|
Amended and Restated Credit Agreement, dated as of January 4,
2011, among GameStop Corp., as Lead Borrower for: GameStop
Corp., GameStop, Inc., Sunrise Publications, Inc., Electronics
Boutique Holdings Corp., ELBO Inc., EB International Holdings,
Inc., Kongregate Inc., GameStop Texas Ltd., Marketing Control
Services, Inc., SOCOM LLC and Bank of America, N.A., as Issuing
Bank, Bank of America, N.A., as Administrative Agent and
Collateral Agent, Wells Fargo Capital Finance, LLC, as
Syndication Agent, U.S. Bank National Association and Regions
Bank, as Co-Documentation Agents, and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as Sole Lead Arranger and Sole
Bookrunner.(15)
|
|
10
|
.8
|
|
Guaranty, dated as of October 11, 2005, by GameStop Corp. (f/k/a
GSC Holdings Corp.) and certain subsidiaries of GameStop Corp.
in favor of the agents and lenders.(16)
|
|
10
|
.9
|
|
Amended and Restated Security Agreement, dated January 4, 2011,
among GameStop Corp., as Lead Borrower, the Subsidiary Borrowers
party thereto, and Bank of America, N.A., as Collateral
Agent.(15)
|
|
10
|
.10
|
|
Amended and Restated Patent and Trademark Security Agreement,
dated January 4, 2011, among GameStop Corp., as Lead Borrower,
the Subsidiary Borrowers party thereto, and Bank of America,
N.A., as Collateral Agent.(15)
|
|
10
|
.11
|
|
Mortgage, Security Agreement, and Assignment and Deeds of Trust,
dated October 11, 2005, between GameStop of Texas, L.P. and Bank
of America, N.A., as Collateral Agent.(16)
|
|
10
|
.12
|
|
Mortgage, Security Agreement, and Assignment and Deeds of Trust,
dated October 11, 2005, between Electronics Boutique of America,
Inc. and Bank of America, N.A., as Collateral Agent.(16)
|
|
10
|
.13
|
|
Amended and Restated Pledge Agreement, dated January 4, 2011, by
and among GameStop Corp., as Lead Borrower, the Subsidiary
Borrowers party thereto, and Bank of America, N.A., as
Collateral Agent.(15)
|
|
10
|
.14
|
|
Term Loan Agreement, dated November 12, 2008, by and among
GameStop Corp. (f/k/a GSC Holdings Corp.), certain subsidiaries
of GameStop Corp., Bank of America, N.A., as lender, Bank of
America, N.A., as Administrative Agent and Collateral Agent, and
Banc of America Securities LLC, as Sole Arranger and
Bookrunner.(3)
|
|
10
|
.15
|
|
Security Agreement, dated November 12, 2008, by and among
GameStop Corp. (f/k/a GSC Holdings Corp.), certain subsidiaries
of GameStop Corp., Bank of America, N.A., as lender and Bank of
America, N.A., as Collateral Agent.(3)
|
|
10
|
.16
|
|
Patent and Trademark Security Agreement, dated as of November
12, 2008, by and among GameStop Corp. (f/k/a GSC Holdings
Corp.), certain subsidiaries of GameStop Corp., Bank of America,
N.A., as lender, and Bank of America, N.A., as Collateral
Agent.(3)
|
|
10
|
.17
|
|
Securities Collateral Pledge Agreement, dated November 12, 2008,
by and among GameStop Corp. (f/k/a GSC Holdings Corp.), certain
subsidiaries of GameStop Corp., Bank of America, N.A., as
lender, and Bank of America, N.A., as Collateral Agent.(3)
|
|
10
|
.18
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and R. Richard
Fontaine.(17)
|
|
10
|
.19
|
|
Amendment, dated as of April 5, 2010, to Amended and Restated
Executive Employment Agreement, dated as of December 31, 2008,
between GameStop Corp. and R. Richard Fontaine.(18)
|
|
10
|
.20
|
|
Second Amendment, dated as of June 2, 2010, to Amended and
Restated Executive Employment Agreement, dated as of December
31, 2008, as amended by a First Amendment dated as of April 5,
2010, between GameStop Corp. and R. Richard Fontaine.(19)
|
|
10
|
.21
|
|
Third Amendment, dated as of February 9, 2011, to Amended and
Restated Executive Employment Agreement, dated as of December
31, 2008, as amended by a First Amendment dated as of April 5,
2010 and a Second Amendment dated as of June 2, 2010, between
GameStop Corp. and R. Richard Fontaine.(20)
|
|
10
|
.22
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and Daniel A.
DeMatteo.(17)
|
|
10
|
.23
|
|
Amendment, dated as of April 5, 2010, to Amended and Restated
Executive Employment Agreement, dated as of December 31, 2008,
between GameStop Corp. and Daniel A. DeMatteo.(18)
|
32
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
10
|
.24
|
|
Second Amendment, dated as of June 2, 2010, to Amended and
Restated Executive Employment Agreement, dated as of December
31, 2008, as amended by a First Amendment dated as of April 5,
2010, between GameStop Corp. and Daniel A. DeMatteo.(19)
|
|
10
|
.25
|
|
Third Amendment, dated as of February 9, 2011, to Amended and
Restated Executive Employment Agreement, dated as of December
31, 2008, as amended by a First Amendment dated as of April 5,
2010 and a Second Amendment dated as of June 2, 2010, between
GameStop Corp. and Daniel A. DeMatteo.(20)
|
|
10
|
.26
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and Tony Bartel.(17)
|
|
10
|
.27
|
|
Amendment, dated as of June 2, 2010, to Amended and Restated
Executive Employment Agreement, dated as of December 31, 2008,
between GameStop Corp. and Tony Bartel.(19)
|
|
10
|
.28
|
|
Second Amendment, dated as of February 9, 2011, to Amended and
Restated Executive Employment Agreement, dated as of December
31, 2008, as amended by a First Amendment dated as of June 2,
2010, between GameStop Corp. and Tony Bartel.(20)
|
|
10
|
.29
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and Paul Raines.(17)
|
|
10
|
.30
|
|
Amendment, dated as of June 2, 2010, to Amended and Restated
Executive Employment Agreement, dated as of December 31, 2008,
between GameStop Corp. and Paul Raines.(19)
|
|
10
|
.31
|
|
Second Amendment, dated as of February 9, 2011, to Amended and
Restated Executive Employment Agreement, dated as of December
31, 2008, as amended by a First Amendment dated as of June 2,
2010, between GameStop Corp. and Paul Raines.(20)
|
|
10
|
.32
|
|
Executive Employment Agreement, dated as of June 2, 2010,
between GameStop Corp. and Robert Lloyd.(19)
|
|
10
|
.33
|
|
Amendment, dated as of February 9, 2011, to Executive Employment
Agreement, dated as of June 2, 2010, between GameStop Corp. and
Robert Lloyd.(20)
|
|
31
|
.1
|
|
Certification of Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31
|
.2
|
|
Certification of Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32
|
.1
|
|
Certification of Chief Executive Officer pursuant to Rule
13a-14(b) under the Securities Exchange Act of 1934 and
18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
|
|
32
|
.2
|
|
Certification of Chief Financial Officer pursuant to Rule
13a-14(b) under the Securities Exchange Act of 1934 and
18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
|
|
101
|
.INS
|
|
XBRL Instance Document
|
|
101
|
.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
101
|
.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
101
|
.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
101
|
.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
101
|
.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
(1) |
|
Incorporated by reference to GameStop Holdings Corp.s
Form 8-K
filed with the Securities and Exchange Commission on
April 18, 2005. |
|
(2) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
October 2, 2008. |
|
(3) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
November 18, 2008. |
33
|
|
|
(4) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
February 7, 2007. |
|
(5) |
|
Incorporated by reference to the Registrants Amendment
No. 1 to
Form S-4
filed with the Securities and Exchange Commission on
July 8, 2005. |
|
(6) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
February 8, 2011. |
|
(7) |
|
Incorporated by reference to GameStop Holdings Corp.s
Form 8-K
filed with the Securities and Exchange Commission on
September 30, 2005. |
|
(8) |
|
Incorporated by reference to the Registrants
Form 10-Q
for the fiscal quarter ended October 29, 2005 filed with
the Securities and Exchange Commission on December 8, 2005. |
|
(9) |
|
Incorporated by reference to the Registrants
Form S-3ASR
filed with the Securities and Exchange Commission on
April 10, 2006. |
|
(10) |
|
Incorporated by reference to GameStop Holdings Corp.s
Amendment No. 3 to
Form S-1
filed with the Securities and Exchange Commission on
January 24, 2002. |
|
(11) |
|
Incorporated by reference to Appendix A to the
Registrants Proxy Statement for 2009 Annual Meeting of
Stockholders filed with the Securities and Exchange Commission
on May 22, 2009. |
|
(12) |
|
Incorporated by reference to Appendix A to the
Registrants Proxy Statement for 2008 Annual Meeting of
Stockholders filed with the Securities and Exchange Commission
on May 23, 2008. |
|
(13) |
|
Incorporated by reference to GameStop Holdings Corp.s
Form 10-K
for the fiscal year ended January 29, 2005 filed with the
Securities and Exchange Commission on April 11, 2005. |
|
(14) |
|
Incorporated by reference to GameStop Holdings Corp.s
Form 8-K
filed with the Securities and Exchange Commission on
September 12, 2005. |
|
(15) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
January 6, 2011. |
|
(16) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
October 12, 2005. |
|
(17) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
January 7, 2009. |
|
(18) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
April 9, 2010. |
|
(19) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
June 2, 2010. |
|
(20) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
February 9, 2011. |
34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GAMESTOP CORP.
Robert A. Lloyd
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: June 8, 2011
GAMESTOP CORP.
Troy W. Crawford
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Date: June 8, 2011
35
GAMESTOP
CORP.
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
2
|
.1
|
|
Agreement and Plan of Merger, dated as of April 17, 2005, among
GameStop Corp. (f/k/a GSC Holdings Corp.), Electronics Boutique
Holdings Corp., GameStop, Inc., GameStop Holdings Corp. (f/k/a
GameStop Corp.), Cowboy Subsidiary LLC and Eagle Subsidiary
LLC.(1)
|
|
2
|
.2
|
|
Sale and Purchase Agreement, dated September 30, 2008, between
EB International Holdings, Inc. and L Capital, LV Capital,
Europ@Web and other Micromania shareholders.(2)
|
|
2
|
.3
|
|
Amendment, dated November 17, 2008, to Sale and Purchase
Agreement for Micromania Acquisition listed as Exhibit 2.2
above.(3)
|
|
3
|
.1
|
|
Second Amended and Restated Certificate of Incorporation.(4)
|
|
3
|
.2
|
|
Amended and Restated Bylaws.(5)
|
|
3
|
.3
|
|
Amendment to Amended and Restated Bylaws.(6)
|
|
4
|
.1
|
|
Indenture, dated September 28, 2005, by and among GameStop Corp.
(f/k/a GSC Holdings Corp.), GameStop, Inc., the subsidiary
guarantors party thereto, and Citibank N.A., as trustee.(7)
|
|
4
|
.2
|
|
First Supplemental Indenture, dated October 8, 2005, by and
among GameStop Corp. (f/k/a GSC Holdings Corp.), GameStop, Inc.,
the subsidiary guarantors party thereto, and Citibank N.A., as
trustee.(8)
|
|
4
|
.3
|
|
Rights Agreement, dated as of June 27, 2005, between GameStop
Corp. (f/k/a GSC Holdings Corp.) and The Bank of New York, as
Rights Agent.(5)
|
|
4
|
.4
|
|
Form of Indenture.(9)
|
|
10
|
.1
|
|
Insurance Agreement, dated as of January 1, 2002, between Barnes
& Noble, Inc. and GameStop Holdings Corp. (f/k/a GameStop
Corp.).(10)
|
|
10
|
.2
|
|
Operating Agreement, dated as of January 1, 2002, between Barnes
& Noble, Inc. and GameStop Holdings Corp. (f/k/a GameStop
Corp.).(10)
|
|
10
|
.3
|
|
Fourth Amended and Restated 2001 Incentive Plan.(11)
|
|
10
|
.4
|
|
Second Amended and Restated Supplemental Compensation Plan.(12)
|
|
10
|
.5
|
|
Form of Option Agreement.(13)
|
|
10
|
.6
|
|
Form of Restricted Share Agreement.(14)
|
|
10
|
.7
|
|
Amended and Restated Credit Agreement, dated as of January 4,
2011, among GameStop Corp., as Lead Borrower for: GameStop
Corp., GameStop, Inc., Sunrise Publications, Inc., Electronics
Boutique Holdings Corp., ELBO Inc., EB International Holdings,
Inc., Kongregate Inc., GameStop Texas Ltd., Marketing Control
Services, Inc., SOCOM LLC and Bank of America, N.A., as Issuing
Bank, Bank of America, N.A., as Administrative Agent and
Collateral Agent, Wells Fargo Capital Finance, LLC, as
Syndication Agent, U.S. Bank National Association and Regions
Bank, as Co-Documentation Agents, and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as Sole Lead Arranger and Sole
Bookrunner.(15)
|
|
10
|
.8
|
|
Guaranty, dated as of October 11, 2005, by GameStop Corp. (f/k/a
GSC Holdings Corp.) and certain subsidiaries of GameStop Corp.
in favor of the agents and lenders.(16)
|
|
10
|
.9
|
|
Amended and Restated Security Agreement, dated January 4, 2011,
among GameStop Corp., as Lead Borrower, the Subsidiary Borrowers
party thereto, and Bank of America, N.A., as Collateral
Agent.(15)
|
|
10
|
.10
|
|
Amended and Restated Patent and Trademark Security Agreement,
dated January 4, 2011, among GameStop Corp., as Lead Borrower,
the Subsidiary Borrowers party thereto, and Bank of America,
N.A., as Collateral Agent.(15)
|
|
10
|
.11
|
|
Mortgage, Security Agreement, and Assignment and Deeds of Trust,
dated October 11, 2005, between GameStop of Texas, L.P. and Bank
of America, N.A., as Collateral Agent.(16)
|
|
10
|
.12
|
|
Mortgage, Security Agreement, and Assignment and Deeds of Trust,
dated October 11, 2005, between Electronics Boutique of America,
Inc. and Bank of America, N.A., as Collateral Agent.(16)
|
|
10
|
.13
|
|
Amended and Restated Pledge Agreement, dated January 4, 2011, by
and among GameStop Corp., as Lead Borrower, the Subsidiary
Borrowers party thereto, and Bank of America, N.A., as
Collateral Agent.(15)
|
|
10
|
.14
|
|
Term Loan Agreement, dated November 12, 2008, by and among
GameStop Corp. (f/k/a GSC Holdings Corp.), certain subsidiaries
of GameStop Corp., Bank of America, N.A., as lender, Bank of
America, N.A., as Administrative Agent and Collateral Agent, and
Banc of America Securities LLC, as Sole Arranger and
Bookrunner.(3)
|
36
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
10
|
.15
|
|
Security Agreement, dated November 12, 2008, by and among
GameStop Corp. (f/k/a GSC Holdings Corp.), certain subsidiaries
of GameStop Corp., Bank of America, N.A., as lender and Bank of
America, N.A., as Collateral Agent.(3)
|
|
10
|
.16
|
|
Patent and Trademark Security Agreement, dated as of November
12, 2008, by and among GameStop Corp. (f/k/a GSC Holdings
Corp.), certain subsidiaries of GameStop Corp., Bank of America,
N.A., as lender, and Bank of America, N.A., as Collateral
Agent.(3)
|
|
10
|
.17
|
|
Securities Collateral Pledge Agreement, dated November 12, 2008,
by and among GameStop Corp. (f/k/a GSC Holdings Corp.), certain
subsidiaries of GameStop Corp., Bank of America, N.A., as
lender, and Bank of America, N.A., as Collateral Agent.(3)
|
|
10
|
.18
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and R. Richard
Fontaine.(17)
|
|
10
|
.19
|
|
Amendment, dated as of April 5, 2010, to Amended and Restated
Executive Employment Agreement, dated as of December 31, 2008,
between GameStop Corp. and R. Richard Fontaine.(18)
|
|
10
|
.20
|
|
Second Amendment, dated as of June 2, 2010, to Amended and
Restated Executive Employment Agreement, dated as of December
31, 2008, as amended by a First Amendment dated as of April 5,
2010, between GameStop Corp. and R. Richard Fontaine.(19)
|
|
10
|
.21
|
|
Third Amendment, dated as of February 9, 2011, to Amended and
Restated Executive Employment Agreement, dated as of December
31, 2008, as amended by a First Amendment dated as of April 5,
2010 and a Second Amendment dated as of June 2, 2010, between
GameStop Corp. and R. Richard Fontaine.(20)
|
|
10
|
.22
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and Daniel A.
DeMatteo.(17)
|
|
10
|
.23
|
|
Amendment, dated as of April 5, 2010, to Amended and Restated
Executive Employment Agreement, dated as of December 31, 2008,
between GameStop Corp. and Daniel A. DeMatteo.(18)
|
|
10
|
.24
|
|
Second Amendment, dated as of June 2, 2010, to Amended and
Restated Executive Employment Agreement, dated as of December
31, 2008, as amended by a First Amendment dated as of April 5,
2010, between GameStop Corp. and Daniel A. DeMatteo.(19)
|
|
10
|
.25
|
|
Third Amendment, dated as of February 9, 2011, to Amended and
Restated Executive Employment Agreement, dated as of December
31, 2008, as amended by a First Amendment dated as of April 5,
2010 and a Second Amendment dated as of June 2, 2010, between
GameStop Corp. and Daniel A. DeMatteo.(20)
|
|
10
|
.26
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and Tony Bartel.(17)
|
|
10
|
.27
|
|
Amendment, dated as of June 2, 2010, to Amended and Restated
Executive Employment Agreement, dated as of December 31, 2008,
between GameStop Corp. and Tony Bartel.(19)
|
|
10
|
.28
|
|
Second Amendment, dated as of February 9, 2011, to Amended and
Restated Executive Employment Agreement, dated as of December
31, 2008, as amended by a First Amendment dated as of June 2,
2010, between GameStop Corp. and Tony Bartel.(20)
|
|
10
|
.29
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and Paul Raines.(17)
|
|
10
|
.30
|
|
Amendment, dated as of June 2, 2010, to Amended and Restated
Executive Employment Agreement, dated as of December 31, 2008,
between GameStop Corp. and Paul Raines.(19)
|
|
10
|
.31
|
|
Second Amendment, dated as of February 9, 2011, to Amended and
Restated Executive Employment Agreement, dated as of December
31, 2008, as amended by a First Amendment dated as of June 2,
2010, between GameStop Corp. and Paul Raines.(20)
|
|
10
|
.32
|
|
Executive Employment Agreement, dated as of June 2, 2010,
between GameStop Corp. and Robert Lloyd.(19)
|
|
10
|
.33
|
|
Amendment, dated as of February 9, 2011, to Executive Employment
Agreement, dated as of June 2, 2010, between GameStop Corp. and
Robert Lloyd.(20)
|
|
31
|
.1
|
|
Certification of Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31
|
.2
|
|
Certification of Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32
|
.1
|
|
Certification of Chief Executive Officer pursuant to Rule
13a-14(b) under the Securities Exchange Act of 1934 and
18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
|
37
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
32
|
.2
|
|
Certification of Chief Financial Officer pursuant to Rule
13a-14(b) under the Securities Exchange Act of 1934 and
18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
|
|
101
|
.INS
|
|
XBRL Instance Document
|
|
101
|
.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
101
|
.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
101
|
.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
101
|
.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
101
|
.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
(1) |
|
Incorporated by reference to GameStop Holdings Corp.s
Form 8-K
filed with the Securities and Exchange Commission on
April 18, 2005. |
|
(2) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
October 2, 2008. |
|
(3) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
November 18, 2008. |
|
(4) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
February 7, 2007. |
|
(5) |
|
Incorporated by reference to the Registrants Amendment
No. 1 to
Form S-4
filed with the Securities and Exchange Commission on
July 8, 2005. |
|
(6) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
February 8, 2011. |
|
(7) |
|
Incorporated by reference to GameStop Holdings Corp.s
Form 8-K
filed with the Securities and Exchange Commission on
September 30, 2005. |
|
(8) |
|
Incorporated by reference to the Registrants
Form 10-Q
for the fiscal quarter ended October 29, 2005 filed with
the Securities and Exchange Commission on December 8, 2005. |
|
(9) |
|
Incorporated by reference to the Registrants
Form S-3ASR
filed with the Securities and Exchange Commission on
April 10, 2006. |
|
(10) |
|
Incorporated by reference to GameStop Holdings Corp.s
Amendment No. 3 to
Form S-1
filed with the Securities and Exchange Commission on
January 24, 2002. |
|
(11) |
|
Incorporated by reference to Appendix A to the
Registrants Proxy Statement for 2009 Annual Meeting of
Stockholders filed with the Securities and Exchange Commission
on May 22, 2009. |
|
(12) |
|
Incorporated by reference to Appendix A to the
Registrants Proxy Statement for 2008 Annual Meeting of
Stockholders filed with the Securities and Exchange Commission
on May 23, 2008. |
|
(13) |
|
Incorporated by reference to GameStop Holdings Corp.s
Form 10-K
for the fiscal year ended January 29, 2005 filed with the
Securities and Exchange Commission on April 11, 2005. |
|
(14) |
|
Incorporated by reference GameStop Holdings Corp.s
Form 8-K
filed with the Securities and Exchange Commission on
September 12, 2005. |
|
(15) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
January 6, 2011. |
|
(16) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
October 12, 2005. |
|
(17) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
January 7, 2009. |
|
(18) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
April 9, 2010. |
|
(19) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
June 2, 2010. |
|
(20) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
February 9, 2011. |
38