e10vq
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-Q
|
|
|
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
FOR THE QUARTERLY PERIOD ENDED
AUGUST 1,
2009
|
OR
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
FOR THE TRANSITION PERIOD
FROM TO
|
COMMISSION FILE NO. 1-32637
GameStop Corp.
(Exact name of registrant as
specified in its Charter)
|
|
|
Delaware
|
|
20-2733559
|
(State or other jurisdiction
of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
625 Westport Parkway,
Grapevine, Texas
(Address of principal
executive offices)
|
|
76051
(Zip Code)
|
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 August 28, 2009: 164,676,215
PART I
FINANCIAL INFORMATION
|
|
ITEM 1.
|
Financial
Statements
|
GAMESTOP
CORP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
January 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
(In thousands, except per share data)
|
|
|
ASSETS:
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
197,856
|
|
|
$
|
539,898
|
|
|
$
|
578,141
|
|
Receivables, net
|
|
|
40,119
|
|
|
|
60,966
|
|
|
|
65,981
|
|
Merchandise inventories, net
|
|
|
1,099,325
|
|
|
|
970,057
|
|
|
|
1,075,792
|
|
Deferred income taxes current
|
|
|
22,137
|
|
|
|
26,893
|
|
|
|
23,615
|
|
Prepaid taxes
|
|
|
7,140
|
|
|
|
58,689
|
|
|
|
|
|
Prepaid expenses
|
|
|
64,450
|
|
|
|
64,048
|
|
|
|
59,101
|
|
Other current assets
|
|
|
13,308
|
|
|
|
4,422
|
|
|
|
15,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,444,335
|
|
|
|
1,724,973
|
|
|
|
1,818,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
11,590
|
|
|
|
12,033
|
|
|
|
10,397
|
|
Buildings and leasehold improvements
|
|
|
504,595
|
|
|
|
414,896
|
|
|
|
454,651
|
|
Fixtures and equipment
|
|
|
675,168
|
|
|
|
583,734
|
|
|
|
619,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property and equipment
|
|
|
1,191,353
|
|
|
|
1,010,663
|
|
|
|
1,084,893
|
|
Less accumulated depreciation and amortization
|
|
|
612,197
|
|
|
|
485,665
|
|
|
|
535,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property and equipment
|
|
|
579,156
|
|
|
|
524,998
|
|
|
|
549,254
|
|
Goodwill, net
|
|
|
1,914,979
|
|
|
|
1,447,572
|
|
|
|
1,862,107
|
|
Other intangible assets
|
|
|
273,269
|
|
|
|
15,405
|
|
|
|
247,790
|
|
Deferred taxes
|
|
|
|
|
|
|
31,863
|
|
|
|
|
|
Other noncurrent assets
|
|
|
37,198
|
|
|
|
27,586
|
|
|
|
35,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent assets
|
|
|
2,804,602
|
|
|
|
2,047,424
|
|
|
|
2,694,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,248,937
|
|
|
$
|
3,772,397
|
|
|
$
|
4,512,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY:
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
615,364
|
|
|
$
|
692,098
|
|
|
$
|
1,047,963
|
|
Accrued liabilities
|
|
|
480,287
|
|
|
|
389,009
|
|
|
|
498,253
|
|
Taxes payable
|
|
|
|
|
|
|
|
|
|
|
16,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,095,651
|
|
|
|
1,081,107
|
|
|
|
1,562,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes payable, long-term portion, net
|
|
|
495,807
|
|
|
|
545,220
|
|
|
|
545,712
|
|
Other long-term liabilities
|
|
|
113,493
|
|
|
|
82,299
|
|
|
|
104,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
|
609,300
|
|
|
|
627,519
|
|
|
|
650,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,704,951
|
|
|
|
1,708,626
|
|
|
|
2,212,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 10)
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock authorized 5,000 shares; no
shares issued or outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock $.001 par value;
authorized 300,000 shares; 164,661, 163,653 and
163,843 shares issued and outstanding, respectively
|
|
|
165
|
|
|
|
164
|
|
|
|
164
|
|
Additional
paid-in-capital
|
|
|
1,325,492
|
|
|
|
1,288,727
|
|
|
|
1,307,453
|
|
Accumulated other comprehensive income (loss)
|
|
|
88,721
|
|
|
|
33,384
|
|
|
|
(28,426
|
)
|
Retained earnings
|
|
|
1,129,608
|
|
|
|
741,496
|
|
|
|
1,020,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
2,543,986
|
|
|
|
2,063,771
|
|
|
|
2,299,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
4,248,937
|
|
|
$
|
3,772,397
|
|
|
$
|
4,512,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
2
GAMESTOP
CORP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands, except per share data)
|
|
|
|
(Unaudited)
|
|
|
Sales
|
|
$
|
1,738,504
|
|
|
$
|
1,804,420
|
|
|
$
|
3,719,257
|
|
|
$
|
3,618,037
|
|
Cost of sales
|
|
|
1,243,098
|
|
|
|
1,320,297
|
|
|
|
2,681,738
|
|
|
|
2,660,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
495,406
|
|
|
|
484,123
|
|
|
|
1,037,519
|
|
|
|
957,529
|
|
Selling, general and administrative expenses
|
|
|
384,773
|
|
|
|
347,745
|
|
|
|
760,605
|
|
|
|
676,412
|
|
Depreciation and amortization
|
|
|
39,677
|
|
|
|
36,309
|
|
|
|
77,504
|
|
|
|
71,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
70,956
|
|
|
|
100,069
|
|
|
|
199,410
|
|
|
|
209,972
|
|
Interest income
|
|
|
(462
|
)
|
|
|
(1,628
|
)
|
|
|
(979
|
)
|
|
|
(6,570
|
)
|
Interest expense
|
|
|
11,737
|
|
|
|
10,839
|
|
|
|
23,935
|
|
|
|
24,269
|
|
Debt extinguishment expense
|
|
|
|
|
|
|
|
|
|
|
2,862
|
|
|
|
2,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax expense
|
|
|
59,681
|
|
|
|
90,858
|
|
|
|
173,592
|
|
|
|
189,942
|
|
Income tax expense
|
|
|
20,996
|
|
|
|
33,695
|
|
|
|
64,474
|
|
|
|
70,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
38,685
|
|
|
$
|
57,163
|
|
|
$
|
109,118
|
|
|
$
|
119,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per common share-basic
|
|
$
|
0.23
|
|
|
$
|
0.35
|
|
|
$
|
0.66
|
|
|
$
|
0.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock-basic
|
|
|
164,636
|
|
|
|
163,390
|
|
|
|
164,555
|
|
|
|
162,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per common share-diluted
|
|
$
|
0.23
|
|
|
$
|
0.34
|
|
|
$
|
0.65
|
|
|
$
|
0.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock-diluted
|
|
|
167,857
|
|
|
|
168,067
|
|
|
|
167,915
|
|
|
|
167,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
3
GAMESTOP
CORP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Paid-in
|
|
|
Comprehensive
|
|
|
Retained
|
|
|
|
|
|
|
Shares
|
|
|
Stock
|
|
|
Capital
|
|
|
Income
|
|
|
Earnings
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
|
(Unaudited)
|
|
|
Balance at January 31, 2009
|
|
|
163,843
|
|
|
$
|
164
|
|
|
$
|
1,307,453
|
|
|
$
|
(28,426
|
)
|
|
$
|
1,020,490
|
|
|
$
|
2,299,681
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings for the 26 weeks ended August 1, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109,118
|
|
|
|
109,118
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117,147
|
|
|
|
|
|
|
|
117,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
226,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
15,251
|
|
|
|
|
|
|
|
|
|
|
|
15,251
|
|
Exercise of stock options and issuance of shares upon vesting of
restricted stock grants (including tax expense of $306)
|
|
|
818
|
|
|
|
1
|
|
|
|
2,788
|
|
|
|
|
|
|
|
|
|
|
|
2,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 1, 2009
|
|
|
164,661
|
|
|
$
|
165
|
|
|
$
|
1,325,492
|
|
|
$
|
88,721
|
|
|
$
|
1,129,608
|
|
|
$
|
2,543,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
4
GAMESTOP
CORP.
|
|
|
|
|
|
|
|
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
|
(Unaudited)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
109,118
|
|
|
$
|
119,288
|
|
Adjustments to reconcile net earnings to net cash flows used in
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization (including amounts in cost of
sales)
|
|
|
78,294
|
|
|
|
71,802
|
|
Amortization and retirement of deferred financing fees and issue
discounts
|
|
|
2,639
|
|
|
|
2,051
|
|
Stock-based compensation expense
|
|
|
15,251
|
|
|
|
20,068
|
|
Deferred income taxes
|
|
|
(1,532
|
)
|
|
|
(3,235
|
)
|
Excess tax (benefits) expense realized from exercise of
stock-based awards
|
|
|
346
|
|
|
|
(33,010
|
)
|
Loss on disposal of property and equipment
|
|
|
3,225
|
|
|
|
2,634
|
|
Changes in other long-term liabilities
|
|
|
8,198
|
|
|
|
6,152
|
|
Change in the value of foreign exchange contracts
|
|
|
14,728
|
|
|
|
(1,035
|
)
|
Changes in operating assets and liabilities, net
|
|
|
|
|
|
|
|
|
Receivables, net
|
|
|
28,647
|
|
|
|
(3,829
|
)
|
Merchandise inventories
|
|
|
42,566
|
|
|
|
(152,817
|
)
|
Prepaid expenses and other current assets
|
|
|
(3,015
|
)
|
|
|
(13,235
|
)
|
Prepaid income taxes and accrued income taxes payable
|
|
|
(24,666
|
)
|
|
|
(31,693
|
)
|
Accounts payable and accrued liabilities
|
|
|
(534,604
|
)
|
|
|
(193,340
|
)
|
|
|
|
|
|
|
|
|
|
Net cash flows used in operating activities
|
|
|
(260,805
|
)
|
|
|
(210,199
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(76,878
|
)
|
|
|
(81,540
|
)
|
Acquisitions, net of cash acquired
|
|
|
(4,667
|
)
|
|
|
(50,299
|
)
|
|
|
|
|
|
|
|
|
|
Net cash flows used in investing activities
|
|
|
(81,545
|
)
|
|
|
(131,839
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Repurchase of notes payable
|
|
|
(50,765
|
)
|
|
|
(30,000
|
)
|
Borrowings from the revolver
|
|
|
100,000
|
|
|
|
|
|
Repayments of revolver borrowings
|
|
|
(100,000
|
)
|
|
|
|
|
Issuance of shares relating to stock options
|
|
|
3,096
|
|
|
|
26,738
|
|
Excess tax benefits (expense) realized from exercise of
stock-based awards
|
|
|
(346
|
)
|
|
|
33,010
|
|
Net change in other noncurrent assets and other intangible assets
|
|
|
(10,417
|
)
|
|
|
(5,219
|
)
|
|
|
|
|
|
|
|
|
|
Net cash flows provided by (used in) financing activities
|
|
|
(58,432
|
)
|
|
|
24,529
|
|
|
|
|
|
|
|
|
|
|
Exchange rate effect on cash and cash equivalents
|
|
|
20,497
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(380,285
|
)
|
|
|
(317,516
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
578,141
|
|
|
|
857,414
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
197,856
|
|
|
$
|
539,898
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
5
GameStop Corp. (together with its predecessor companies,
GameStop, we, our, or the
Company), a Delaware corporation, is the
worlds largest retailer of video games and 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. All dollar and share amounts in the
consolidated financial statements and notes to the consolidated
financial statements are stated in thousands of
U.S. dollars unless otherwise indicated.
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 financial statements of the Company 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. 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 31, 2009
(fiscal 2008). 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 26 weeks ended August 1, 2009 are
not indicative of the results to be expected for the
52 weeks ending January 30, 2010 (fiscal
2009).
Certain reclassifications have been made to conform the prior
period data to the current interim period presentation.
The Company has evaluated subsequent events through
September 9, 2009, the date of the issuance of the
unaudited condensed consolidated financial statements.
|
|
2.
|
New
Accounting Pronouncements
|
In May 2009, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting
Standards No. 165, Subsequent Events
(SFAS 165), which establishes general
standards of accounting for and disclosure of events that occur
after the balance sheet date but before financial statements are
issued or are available to be issued. SFAS 165 is effective
for fiscal years and interim periods ending after June 15,
2009 and is applied prospectively. The Company adopted the new
disclosure requirements in the unaudited condensed consolidated
financial statements effective August 1, 2009.
In April 2009, the FASB issued FASB Staff Position
No. FAS 107-1
and Accounting Principles Board (APB)
28-1,
Interim Disclosures about Fair Value of Financial Instruments
(FSP 107-1).
FSP 107-1
requires additional disclosures about fair value of financial
instruments for interim reporting periods and amends APB Opinion
No. 28, Interim Financial Reporting, to require
those disclosures in summarized financial information at interim
reporting periods for publicly traded companies.
FSP 107-1
was effective for the Company for the period ended
August 1, 2009.
Effective on February 1, 2009, we adopted Statement of
Financial Accounting Standards No. 161, Disclosures
about Derivative Instruments and Hedging Activities
an amendment of FASB Statement No. 133
(SFAS 161). SFAS 161 requires certain
disclosures about the gains and losses associated with
derivative instruments and hedging
6
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
activities, the location of such gains and losses in the
financial statements, and a description of related trading
activities and their risks.
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.
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.
The fair values of derivative instruments not receiving hedge
accounting treatment in the condensed consolidated balance
sheets presented herein were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 1, 2009
|
|
|
August 2, 2008
|
|
|
January 31, 2009
|
|
|
|
(In thousands)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets
|
|
$
|
9,608
|
|
|
$
|
2,831
|
|
|
$
|
12,104
|
|
Other noncurrent assets
|
|
|
4
|
|
|
|
120
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued liabilities
|
|
|
(23,147
|
)
|
|
|
(10,897
|
)
|
|
|
(10,164
|
)
|
Other long-term liabilities
|
|
|
(1,068
|
)
|
|
|
(268
|
)
|
|
|
(1,602
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives
|
|
$
|
(14,603
|
)
|
|
$
|
(8,214
|
)
|
|
$
|
338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of August 1, 2009, the Company had a series of Forward
Currency Contracts outstanding, with a gross notional value of
$516,096 and a net notional value of $257,821. For the 13 and
26 week periods ended August 1, 2009, the Company
recognized losses of $12,255 and $12,841, respectively, in
selling, general and administrative expenses related to the
trading of derivative instruments. As of August 2, 2008,
the Company had a series of Forward Currency Contracts
outstanding, with a gross notional value of $445,416 and a net
notional value of $238,281. For the 13 and 26 week periods
ended August 2, 2008, the Company recognized losses of $743
and $8,110, respectively, in selling, general and administrative
expenses related to the trading of derivative instruments.
The Companys carrying value of financial instruments
approximate their fair value, except for differences with
respect to the senior notes. As of August 1, 2009, the
carrying value of the senior notes was $495,807 and the fair
value was $506,724.
In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 141 (revised 2007), Business
Combinations (SFAS 141(R)).
SFAS 141(R) amends the principles and requirements for how
an acquirer recognizes and measures in its financial statements
the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in the acquiree and the goodwill
acquired. SFAS 141(R) also establishes disclosure
requirements to enable the evaluation of the nature and
financial effects of the business combination. SFAS 141(R)
was effective for the Company on February 1, 2009, and the
Company will apply SFAS 141(R) prospectively to all
business combinations subsequent to the effective date. The
adoption of SFAS 141(R) did not have a significant impact
on our consolidated financial statements and the impact that its
adoption will have on our consolidated
7
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
financial statements in future periods will depend on the nature
and size of business combinations completed subsequent to the
date of adoption.
In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 160, Noncontrolling Interests
in Consolidated Financial Statements an amendment of
Accounting Research Bulletin No. 51
(SFAS 160). SFAS 160 establishes
accounting and reporting standards for noncontrolling interests
(previously referred to as minority interests) in subsidiaries.
SFAS 160 also establishes disclosure requirements that
clearly identify and distinguish between controlling and
noncontrolling interests and requires the separate disclosure of
income attributable to controlling and noncontrolling interests.
SFAS 160 was effective for the Company on February 1,
2009. The adoption of SFAS 160 did not have a significant
impact on our consolidated financial statements.
In September 2006, the FASB issued Statement of Financial
Accounting Standards No. 157, Fair Value Measurements
(SFAS 157), which defines fair value,
establishes a framework for measuring fair value, and expands
disclosures about fair value measurements. SFAS 157 applies
to other accounting pronouncements that require or permit fair
value measurements. SFAS 157 became effective for our
financial assets and liabilities on February 3, 2008 and
our non-financial assets and non-financial liabilities on
February 1, 2009 and did not result in a significant change
in the method of calculating fair value of assets or liabilities
or have a material impact on our consolidated financial
statements. The primary impact from adoption of SFAS 157
was additional disclosures.
SFAS 157 applies to our 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.
SFAS 157 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.
8
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 1, 2009
|
|
|
August 2, 2008
|
|
|
January 31, 2009
|
|
|
|
Level 2
|
|
|
Level 2
|
|
|
Level 2
|
|
|
|
(In thousands)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
$
|
9,612
|
|
|
$
|
2,951
|
|
|
$
|
12,104
|
|
Company-owned life insurance
|
|
|
2,420
|
|
|
|
3,220
|
|
|
|
2,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
12,032
|
|
|
$
|
6,171
|
|
|
$
|
14,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts
|
|
$
|
24,215
|
|
|
$
|
11,165
|
|
|
$
|
11,766
|
|
Nonqualified deferred compensation
|
|
|
963
|
|
|
|
1,424
|
|
|
|
905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
25,178
|
|
|
$
|
12,589
|
|
|
$
|
12,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
Business
Combinations and Goodwill
|
On November 17, 2008, GameStop France SAS, a wholly-owned
subsidiary of the Company, completed the acquisition of
substantially all of the outstanding capital stock of Micromania
for $580,407, net of cash acquired. Micromania is a leading
retailer of video and computer games in France with 348
locations, 328 of which were operating on the date of the
acquisition. The purpose of the acquisition was to expand the
Companys presence in Europe.
The condensed consolidated financial statements include the
results of Micromania from the date of acquisition and are
reported in the European segment. The purchase price has been
allocated based on estimated fair values as of the acquisition
date. The purchase price was allocated as follows:
|
|
|
|
|
|
|
November 17, 2008
|
|
|
|
(In thousands)
|
|
|
Current assets
|
|
$
|
187,661
|
|
Property, plant & equipment
|
|
|
34,164
|
|
Goodwill
|
|
|
412,325
|
|
Intangible assets:
|
|
|
|
|
Tradename
|
|
|
131,560
|
|
Leasehold rights and interests
|
|
|
103,955
|
|
|
|
|
|
|
Total intangible assets
|
|
|
235,515
|
|
Other long-term assets
|
|
|
7,786
|
|
Current liabilities
|
|
|
(220,237
|
)
|
Long-term liabilities
|
|
|
(76,807
|
)
|
|
|
|
|
|
Total purchase price
|
|
$
|
580,407
|
|
|
|
|
|
|
The purchase price allocation has been prepared on a preliminary
basis based on the information that was available to the Company
at the time the condensed consolidated financial statements were
prepared, and revisions to the preliminary purchase price
allocation may result as additional information becomes
available.
In determining the purchase price allocation, management
considered, among other factors, the Companys intention to
use the acquired assets. The total weighted-average amortization
period for the intangible assets, excluding goodwill and the
Micromania tradename, is approximately ten years. The intangible
assets are being
9
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
amortized based upon the pattern in which the economic benefits
of the intangible assets are being utilized, with no expected
residual value. None of the goodwill is deductible for income
tax purposes.
On April 5, 2008, the Company purchased all the outstanding
stock of Free Record Shop Norway AS, a Norwegian private limited
liability company (FRS), for $21,006, net of cash
acquired. An initial payment of $16,995 was made in the first
quarter of fiscal 2008, with the remaining balance paid in the
second quarter of fiscal 2008. FRS operated 49 record stores in
Norway. The Company has converted the FRS stores into video game
stores with an inventory assortment similar to its other stores
in Norway. The acquisition was accounted for using the purchase
method of accounting, with the excess of the purchase price over
the net assets acquired, in the amount of $17,981, recorded as
goodwill. The Company has included the results of operations of
FRS, which were not material, in its financial statements
beginning on the closing date of the acquisition on
April 5, 2008.
In 2003, the Company purchased a 51% controlling interest in
GameStop Group Limited, which operates stores in Ireland and the
United Kingdom. Under the terms of the purchase agreement, the
minority interest owners of the remaining 49% have the ability
to require the Company to purchase their remaining shares in
incremental percentages at a price to be determined based
partially on the Companys price to earnings ratio and
GameStop Group Limiteds earnings. Shares representing
approximately 16% were purchased in June 2008 for $27,383 and in
July 2009 an additional 16% was purchased for $4,667, bringing
the Companys total interest in GameStop Group Limited to
approximately 84%. The Company already consolidates the results
of GameStop Group Limited; therefore, any additional amounts
acquired will not have a material effect on the Companys
financial statements.
During July 2008, the Company purchased certain assets and Web
site operations from The Gamesman Limited, a video game and
entertainment software retailer, including eight stores in New
Zealand for $1,910. The acquisition was accounted for using the
purchase method of accounting, with the excess of the purchase
price over the net assets acquired, in the amount of $605,
recorded as goodwill.
The pro forma effect assuming the acquisitions of Micromania,
FRS and The Gamesman Limited at the beginning of fiscal 2008 is
not material to the Companys consolidated financial
statements.
|
|
4.
|
Accounting
for Stock-Based Compensation
|
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 the
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 options to purchase common stock
granted during the 13 weeks ended August 1, 2009 and
August 2, 2008. The options to purchase common stock
granted during the 26 weeks ended August 1, 2009 and
August 2, 2008 were 1,419 and 1,362, respectively, with a
weighted-average fair value estimated at $9.45 and $15.45 per
share, respectively, using the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
Volatility
|
|
|
47.9
|
%
|
|
|
38.2
|
%
|
Risk-free interest rate
|
|
|
1.5
|
%
|
|
|
2.4
|
%
|
Expected life (years)
|
|
|
3.5
|
|
|
|
3.5
|
|
Expected dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
In the 13 weeks ended August 1, 2009 and
August 2, 2008, the Company included compensation expense
relating to stock option grants of $3,030 and $3,998,
respectively, in selling, general and administrative expenses in
the accompanying condensed consolidated statements of
operations. In the 26 weeks ended August 1, 2009 and
August 2, 2008, the Company included compensation expense
relating to stock option grants of $5,442 and $8,818,
respectively, in selling, general and administrative expenses.
As of August 1, 2009, the unrecognized compensation
10
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
expense related to the unvested portion of our stock options was
$19,392 which is expected to be recognized over a weighted
average period of 2.0 years. The total intrinsic value of
options exercised during the 13 weeks ended August 1,
2009 and August 2, 2008 were $529 and $10,584,
respectively. The total intrinsic value of options exercised
during the 26 weeks ended August 1, 2009 and
August 2, 2008 were $2,727 and $83,745, respectively.
There were no restricted stock shares granted during the
13 weeks ended August 1, 2009 and August 2, 2008.
During the 26 weeks ended August 1, 2009 and
August 2, 2008, the Company granted 571 shares and
534 shares, respectively, of restricted stock. The shares
had a fair market value of $26.02 and $49.95 per share,
respectively, and vest in equal annual installments over three
years. During the 13 weeks ended August 1, 2009 and
August 2, 2008, the Company included compensation expense
relating to the restricted share grants in the amount of $4,884
and $4,304, respectively, in selling, general and administrative
expenses in the accompanying condensed consolidated statements
of operations. During the 26 weeks ended August 1,
2009 and August 2, 2008, the Company included compensation
expense relating to the restricted share grants in the amount of
$9,808 and $11,251, respectively, in selling, general and
administrative expenses. As of August 1, 2009, there was
$28,487 of unrecognized compensation expense related to
nonvested restricted stock awards that is expected to be
recognized over a weighted average period of 1.9 years.
|
|
5.
|
Computation
of Net Earnings per Common Share
|
The Company has Class A common stock outstanding and
computes earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, Earnings per
Share. A reconciliation of shares used in calculating basic
and diluted net earnings per common share follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands, except per share data)
|
|
|
Net earnings
|
|
$
|
38,685
|
|
|
$
|
57,163
|
|
|
$
|
109,118
|
|
|
$
|
119,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
164,636
|
|
|
|
163,390
|
|
|
|
164,555
|
|
|
|
162,607
|
|
Dilutive effect of options and restricted shares on common stock
|
|
|
3,221
|
|
|
|
4,677
|
|
|
|
3,360
|
|
|
|
5,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares and dilutive potential common shares
|
|
|
167,857
|
|
|
|
168,067
|
|
|
|
167,915
|
|
|
|
167,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.23
|
|
|
$
|
0.35
|
|
|
$
|
0.66
|
|
|
$
|
0.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.23
|
|
|
$
|
0.34
|
|
|
$
|
0.65
|
|
|
$
|
0.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 thousands, except per share data)
|
|
|
13 Weeks Ended August 1, 2009
|
|
|
3,654
|
|
|
$
|
26.02 - 49.95
|
|
|
|
2010 - 2019
|
|
13 Weeks Ended August 2, 2008
|
|
|
1,362
|
|
|
$
|
49.95
|
|
|
|
2018
|
|
11
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In October 2005, the Company entered into a five-year, $400,000
Credit Agreement (the Revolver), including a $50,000
letter of credit
sub-limit,
secured by the assets of the Company and its
U.S. subsidiaries. The Revolver places certain restrictions
on the Company and its subsidiaries, including limitations on
asset sales, additional liens and the incurrence of additional
indebtedness. In April 2007, the Company amended the Revolver to
extend the maturity date from October 11, 2010 to
April 25, 2012, reduce the LIBO interest rate margin,
reduce and fix the rate of the unused commitment fee and modify
or delete certain other covenants. The extension of the Revolver
to 2012 reduces our exposure to the current tightening in the
credit markets.
The availability under the Revolver is limited to a borrowing
base which allows the Company to borrow up to the lesser of
(x) approximately 70% of eligible inventory and
(y) 90% of the appraisal value of the inventory, in each
case plus 85% 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 prohibited, except that if availability under the
Revolver is, or will be after any such payment, equal to or
greater than 25% of the borrowing base, the Company may
repurchase its capital stock and pay cash dividends. In
addition, in the event that credit extensions under the Revolver
at any time exceed 80% of the lesser of the total commitment or
the borrowing base, the Company will be subject to a fixed
charge coverage ratio covenant of 1.5:1.0.
The per annum interest rate on the Revolver is variable and, at
the Companys option, is calculated by applying a margin of
(1) 0.0% to 0.25% above the higher of the prime rate of the
administrative agent or the federal funds effective rate plus
0.50% or (2) 1.00% to 1.50% above the LIBO rate. The
applicable margin is determined quarterly as a function of the
Companys consolidated leverage ratio. As of August 1,
2009, the applicable margin was 0.0% for prime rate loans and
1.00% for LIBO rate loans. In addition, the Company is required
to pay a commitment fee of 0.25% for any unused portion of the
total commitment under the Revolver. During the 13 weeks
ended August 1, 2009, the Company borrowed and repaid
$100,000 under the Revolver. As of August 1, 2009, there
were no borrowings outstanding under the Revolver and letters of
credit outstanding totaled $8,271.
In September 2007, the Companys Luxembourg subsidiary
entered into a discretionary $20,000 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
August 1, 2009, there were $287 of cash overdrafts
outstanding under the Line of Credit and bank guarantees
outstanding totaled $5,682.
In September 2005, the Company, along with GameStop, Inc. as
co-issuer (together with the Company, the Issuers),
completed the offering of $650,000 aggregate principal amount of
Senior Notes due 2012 (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).
The 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 $8,528. The discount is being
amortized using the effective interest method. As of
August 1, 2009, the unamortized original issue discount was
$3,428. The Issuers pay interest on the 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 August 1, 2009, the
Company was in compliance with all covenants associated with the
Revolver and the Indenture.
12
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
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 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 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 August 2, 2008 and August 1, 2009, the only
long-term debt outstanding was related to the Notes.
Between May 2006 and August 2007, the Company repurchased
$70,000 of the Notes under previously announced buybacks
authorized by its Board of Directors. All of the authorized
amounts were repurchased and the Notes were delivered to the
Trustee for cancellation.
On February 7, 2008, the Company announced that its Board
of Directors authorized the buyback of up to an aggregate of an
additional $130,000 of the Notes. The timing and amount of the
repurchases will be determined by the Companys management
based on their evaluation of market conditions and other
factors. In addition, the repurchases may be suspended or
discontinued at any time. As of August 2, 2008, the Company
had repurchased $30,000 of the Notes pursuant to this
authorization. The associated loss on retirement of debt was
$2,331, which consisted of the premium paid to retire the Notes
and the write-off of the deferred financing fees and the
original issue discount on the Notes. The Company did not
repurchase any other Notes during fiscal 2008. In the
26 weeks ended August 1, 2009, the Company repurchased
$50,765 of the Notes pursuant to this authorization. The
associated loss on retirement of debt was $2,862, which
consisted of the premium paid to retire the Notes and the
write-off of the deferred financing fees and the original issue
discount on the Notes. All Notes repurchased in fiscal 2008 and
fiscal 2009 were delivered to the Trustee for cancellation.
Comprehensive income is net earnings, plus certain other items
that are recorded directly to stockholders equity and
consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Net earnings
|
|
$
|
38,685
|
|
|
$
|
57,163
|
|
|
$
|
109,118
|
|
|
$
|
119,288
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
75,124
|
|
|
|
(1,453
|
)
|
|
|
117,147
|
|
|
|
1,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
$
|
113,809
|
|
|
$
|
55,710
|
|
|
$
|
226,265
|
|
|
$
|
121,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 tax authorities for
years before and including the fiscal year ended
January 31, 2004. The Internal Revenue Service
(IRS) completed examination of the Companys
U.S. income tax returns for the fiscal years ended
January 29, 2005 and January 28, 2006 during fiscal
2008. The Company did not record any material adjustments to its
condensed consolidated financial statements as a result of these
audits.
13
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Our effective tax rates for the 13 weeks ended
August 1, 2009 and August 2, 2008 include $2,423 and
$436 of net tax expense, respectively, related to amounts
recorded for changes in our uncertain tax positions, including
interest and penalties. Our effective tax rates for the
26 weeks ended August 1, 2009 and August 2, 2008
include $6,400 and $493, respectively, of net tax expense
related to amounts recorded for changes in our uncertain tax
positions, including interest and penalties. The components of
the net change in uncertain tax positions were individually
insignificant.
It is reasonably possible that the amount of the unrecognized
benefit with respect to certain of our unrecognized tax
positions could significantly increase or decrease within the
next 12 months as a result of settlements of ongoing audits
and statutes of limitations expiring. At this time, an estimate
of the range of the reasonably possible outcomes cannot be made.
The tax provisions for the 13 weeks and 26 weeks ended
August 1, 2009 and August 2, 2008 are based upon
managements estimate of the Companys annualized
effective tax rate.
|
|
9.
|
Certain
Relationships and Related Transactions
|
The Company operates departments within eight bookstores
operated by 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 pays a license
fee to Barnes & Noble on the gross sales of such
departments. The Company deems the license fee to be reasonable
and based upon terms equivalent to those that would prevail in
an arms length transaction. During the 13 weeks ended
August 1, 2009 and August 2, 2008, these charges
amounted to $210 and $290, respectively. During the
26 weeks ended August 1, 2009 and August 2, 2008,
these charges amounted to $460 and $584, respectively.
In May 2005, the Company entered into an arrangement with
Barnes & Noble under which www.gamestop.com
became the exclusive specialty video game retailer listed on
www.bn.com, Barnes & Nobles
e-commerce
site. Under the terms of this agreement, the Company pays a fee
to Barnes & Noble for sales of video game or PC
entertainment products sold through www.bn.com. The fee
to Barnes & Noble was $38 and $72 for the
13 weeks ended August 1, 2009 and August 2, 2008,
respectively, and $120 and $143 for the 26 weeks ended
August 1, 2009 and August 2, 2008, respectively.
Until June 2005, GameStop participated in Barnes &
Nobles workers compensation, property and general
liability insurance programs. The costs incurred by
Barnes & Noble under these programs were allocated to
GameStop based upon total payroll expense, property and
equipment, and insurance claim history of GameStop. Although
GameStop secured its own insurance coverage, costs will likely
continue to be incurred by Barnes & Noble on insurance
claims which were incurred under its programs prior to June 2005
and any such costs applicable to insurance claims against
GameStop will be allocated to the Company. During the
13 weeks ended August 1, 2009 and August 2, 2008,
these allocated charges amounted to $43 and $31, respectively.
During the 26 weeks ended August 1, 2009 and
August 2, 2008, these allocated charges amounted to $105
and $104, respectively.
|
|
10.
|
Commitments
and Contingencies
|
On February 14, 2005, and as amended, Steve Strickland, as
personal representative of the Estate of Arnold Strickland,
deceased, Henry Mealer, as personal representative of the Estate
of Ace Mealer, deceased, and Willie Crump, as personal
representative of the Estate of James Crump, deceased, filed a
wrongful death lawsuit against GameStop, Sony, Take-Two
Interactive, Rock Star Games and Wal-Mart (collectively, the
Defendants) and Devin Moore, alleging that
Defendants actions in designing, manufacturing, marketing
and supplying Defendant Moore with violent video games were
negligent and contributed to Defendant Moore killing
Arnold Strickland, Ace Mealer and James Crump. Moore was
found guilty of capital murder in a criminal trial and was
sentenced to death in August 2005.
14
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Plaintiffs counsel named an expert, a psychologist who
testified at the criminal trial on behalf of the criminal
defendant, who plaintiffs indicated would testify that violent
video games were a substantial factor in causing the murders.
This same testimony from this same expert was excluded in the
criminal trial from the same judge hearing this case. The
testimony of plaintiffs psychologist expert was heard by
the Court on October 30, 2008, and the motion to exclude
that testimony was argued on December 12, 2008.
On July 30, 2009, the trial court entered its Order
granting summary judgment for all defendants, dismissing the
case with prejudice on the grounds that plaintiffs
experts testimony did not satisfy the Frye standard for
expert admissibility. Subsequent to the entry of the Order, the
plaintiffs filed a notice of appeal.
The Company does not believe there is sufficient information to
estimate the amount of the possible loss, if any, resulting from
the lawsuit if the plaintiffs appeal is successful.
In the ordinary course of the Companys business, the
Company is, from time to time, subject to various other legal
proceedings. Management does not believe that any such other
legal proceedings, individually or in the aggregate, will have a
material adverse effect on the Companys financial
condition, results of operations or liquidity.
In 2003, the Company purchased a 51% controlling interest in
GameStop Group Limited, which operates stores in Ireland and the
United Kingdom. Under the terms of the purchase agreement, the
minority interest owners of the remaining 49% have the ability
to require the Company to purchase their remaining shares in
incremental percentages at a price to be determined based
partially on the Companys price to earnings ratio and
GameStop Group Limiteds earnings. Shares representing
approximately 16% were purchased in June 2008 for $27,383 and in
July 2009 an additional 16% was purchased for $4,667, bringing
the Companys total interest in GameStop Group Limited to
approximately 84%. The Company already consolidates the results
of GameStop Group Limited; therefore, any additional amounts
acquired will not have a material effect on the Companys
financial statements.
|
|
11.
|
Significant
Product Information
|
The Company is principally engaged in the sale of new and used
video game systems and software, personal computer entertainment
software and related accessories. The following table sets forth
sales (in millions) by significant product category for the
periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
Sales
|
|
|
of Total
|
|
|
Sales
|
|
|
of Total
|
|
|
Sales
|
|
|
of Total
|
|
|
Sales
|
|
|
of Total
|
|
|
|
(Unaudited)
|
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game hardware
|
|
$
|
301.3
|
|
|
|
17.3
|
%
|
|
$
|
379.7
|
|
|
|
21.0
|
%
|
|
$
|
697.2
|
|
|
|
18.7
|
%
|
|
$
|
718.7
|
|
|
|
19.9
|
%
|
New video game software
|
|
|
629.8
|
|
|
|
36.2
|
%
|
|
|
705.0
|
|
|
|
39.1
|
%
|
|
|
1,400.3
|
|
|
|
37.7
|
%
|
|
|
1,497.8
|
|
|
|
41.4
|
%
|
Used video game products
|
|
|
560.8
|
|
|
|
32.3
|
%
|
|
|
471.5
|
|
|
|
26.1
|
%
|
|
|
1,109.3
|
|
|
|
29.8
|
%
|
|
|
887.2
|
|
|
|
24.5
|
%
|
Other
|
|
|
246.6
|
|
|
|
14.2
|
%
|
|
|
248.2
|
|
|
|
13.8
|
%
|
|
|
512.5
|
|
|
|
13.8
|
%
|
|
|
514.3
|
|
|
|
14.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,738.5
|
|
|
|
100.0
|
%
|
|
$
|
1,804.4
|
|
|
|
100.0
|
%
|
|
$
|
3,719.3
|
|
|
|
100.0
|
%
|
|
$
|
3,618.0
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other products include PC entertainment and other software,
accessories and magazines.
15
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table sets forth gross profit (in millions) and
gross profit percentages by significant product category for the
periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
Gross
|
|
|
Profit
|
|
|
Gross
|
|
|
Profit
|
|
|
Gross
|
|
|
Profit
|
|
|
Gross
|
|
|
Profit
|
|
|
|
Profit
|
|
|
Percent
|
|
|
Profit
|
|
|
Percent
|
|
|
Profit
|
|
|
Percent
|
|
|
Profit
|
|
|
Percent
|
|
|
|
(Unaudited)
|
|
|
Gross Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game hardware
|
|
$
|
21.6
|
|
|
|
7.2
|
%
|
|
$
|
22.6
|
|
|
|
6.0
|
%
|
|
$
|
45.7
|
|
|
|
6.6
|
%
|
|
$
|
43.0
|
|
|
|
6.0
|
%
|
New video game software
|
|
|
133.6
|
|
|
|
21.2
|
%
|
|
|
145.3
|
|
|
|
20.6
|
%
|
|
|
299.1
|
|
|
|
21.4
|
%
|
|
|
301.9
|
|
|
|
20.2
|
%
|
Used video game products
|
|
|
256.9
|
|
|
|
45.8
|
%
|
|
|
234.1
|
|
|
|
49.7
|
%
|
|
|
520.5
|
|
|
|
46.9
|
%
|
|
|
438.2
|
|
|
|
49.4
|
%
|
Other
|
|
|
83.3
|
|
|
|
33.8
|
%
|
|
|
82.1
|
|
|
|
33.1
|
%
|
|
|
172.2
|
|
|
|
33.6
|
%
|
|
|
174.4
|
|
|
|
33.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
495.4
|
|
|
|
28.5
|
%
|
|
$
|
484.1
|
|
|
|
26.8
|
%
|
|
$
|
1,037.5
|
|
|
|
27.9
|
%
|
|
$
|
957.5
|
|
|
|
26.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 50 states,
the District of Columbia, Guam and Puerto Rico, the electronic
commerce Web site www.gamestop.com and Game Informer
magazine. Segment results for Canada include retail
operations in Canada and segment results for Australia include
retail operations in Australia and New Zealand. Segment results
for Europe include retail operations in 13 European countries.
The fiscal 2009 results of the European segment include
Micromanias results.
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. The basis of segmentation and the measurement of segment
profit or loss have not changed since the end of fiscal 2008 and
there has been no material change in total assets by segment
since January 31, 2009. Transactions between reportable
segments consist primarily of royalties, management fees,
intersegment loans and related interest. Information on segments
appears in the following tables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
|
(Unaudited)
|
|
|
Sales by operating segment were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
1,182,177
|
|
|
$
|
1,316,912
|
|
|
$
|
2,656,935
|
|
|
$
|
2,694,043
|
|
Canada
|
|
|
90,635
|
|
|
|
114,725
|
|
|
|
187,867
|
|
|
|
243,628
|
|
Australia
|
|
|
122,915
|
|
|
|
147,977
|
|
|
|
214,517
|
|
|
|
251,408
|
|
Europe
|
|
|
342,777
|
|
|
|
224,806
|
|
|
|
659,938
|
|
|
|
428,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,738,504
|
|
|
$
|
1,804,420
|
|
|
$
|
3,719,257
|
|
|
$
|
3,618,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating earnings (loss) were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
63,767
|
|
|
$
|
82,411
|
|
|
$
|
176,313
|
|
|
$
|
175,168
|
|
Canada
|
|
|
3,399
|
|
|
|
5,670
|
|
|
|
8,203
|
|
|
|
11,472
|
|
Australia
|
|
|
8,804
|
|
|
|
13,733
|
|
|
|
14,427
|
|
|
|
21,547
|
|
Europe
|
|
|
(5,014
|
)
|
|
|
(1,745
|
)
|
|
|
467
|
|
|
|
1,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
70,956
|
|
|
$
|
100,069
|
|
|
$
|
199,410
|
|
|
$
|
209,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
13.
|
Supplemental
Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands) (Unaudited)
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
23,414
|
|
|
$
|
25,216
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
$
|
81,859
|
|
|
$
|
103,571
|
|
|
|
|
|
|
|
|
|
|
|
|
14.
|
Consolidating
Financial Statements
|
As described in Note 6, on September 28, 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 Notes on a
senior unsecured basis with unconditional guarantees.
The following condensed consolidating financial statements
present the financial position as of August 1, 2009,
August 2, 2008 and January 31, 2009 and results of
operations for the 13 and 26 weeks ended August 1,
2009 and August 2, 2008 and cash flows for the
26 weeks ended August 1, 2009 and August 2, 2008
of the Companys guarantor and non-guarantor subsidiaries.
17
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
GameStop
Corp.
Condensed Consolidating Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
August 1,
|
|
|
August 1,
|
|
|
|
|
|
August 1,
|
|
|
|
2009
|
|
|
2009
|
|
|
Eliminations
|
|
|
2009
|
|
|
|
(Amounts in thousands, except per share amounts)
|
|
|
|
(Unaudited)
|
|
|
ASSETS:
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
71,110
|
|
|
$
|
126,746
|
|
|
$
|
|
|
|
$
|
197,856
|
|
Receivables, net
|
|
|
269,377
|
|
|
|
671,834
|
|
|
|
(901,092
|
)
|
|
|
40,119
|
|
Merchandise inventories, net
|
|
|
615,577
|
|
|
|
483,748
|
|
|
|
|
|
|
|
1,099,325
|
|
Deferred income taxes current
|
|
|
19,246
|
|
|
|
2,891
|
|
|
|
|
|
|
|
22,137
|
|
Prepaid taxes
|
|
|
(3,122
|
)
|
|
|
10,262
|
|
|
|
|
|
|
|
7,140
|
|
Prepaid expenses
|
|
|
41,555
|
|
|
|
22,895
|
|
|
|
|
|
|
|
64,450
|
|
Other current assets
|
|
|
1,007
|
|
|
|
12,301
|
|
|
|
|
|
|
|
13,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,014,750
|
|
|
|
1,330,677
|
|
|
|
(901,092
|
)
|
|
|
1,444,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
2,670
|
|
|
|
8,920
|
|
|
|
|
|
|
|
11,590
|
|
Buildings and leasehold improvements
|
|
|
292,430
|
|
|
|
212,165
|
|
|
|
|
|
|
|
504,595
|
|
Fixtures and equipment
|
|
|
539,222
|
|
|
|
135,946
|
|
|
|
|
|
|
|
675,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property and equipment
|
|
|
834,322
|
|
|
|
357,031
|
|
|
|
|
|
|
|
1,191,353
|
|
Less accumulated depreciation and amortization
|
|
|
472,896
|
|
|
|
139,301
|
|
|
|
|
|
|
|
612,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property and equipment
|
|
|
361,426
|
|
|
|
217,730
|
|
|
|
|
|
|
|
579,156
|
|
Investment
|
|
|
1,988,773
|
|
|
|
|
|
|
|
(1,988,773
|
)
|
|
|
|
|
Goodwill, net
|
|
|
1,096,622
|
|
|
|
818,357
|
|
|
|
|
|
|
|
1,914,979
|
|
Other intangible assets
|
|
|
|
|
|
|
273,269
|
|
|
|
|
|
|
|
273,269
|
|
Other noncurrent assets
|
|
|
16,272
|
|
|
|
20,926
|
|
|
|
|
|
|
|
37,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent assets
|
|
|
3,463,093
|
|
|
|
1,330,282
|
|
|
|
(1,988,773
|
)
|
|
|
2,804,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,477,843
|
|
|
$
|
2,660,959
|
|
|
$
|
(2,889,865
|
)
|
|
$
|
4,248,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY:
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
400,914
|
|
|
$
|
214,450
|
|
|
$
|
|
|
|
$
|
615,364
|
|
Accrued liabilities
|
|
|
982,277
|
|
|
|
399,102
|
|
|
|
(901,092
|
)
|
|
|
480,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,383,191
|
|
|
|
613,552
|
|
|
|
(901,092
|
)
|
|
|
1,095,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes payable, long-term portion, net
|
|
|
495,807
|
|
|
|
|
|
|
|
|
|
|
|
495,807
|
|
Other long-term liabilities
|
|
|
54,859
|
|
|
|
58,634
|
|
|
|
|
|
|
|
113,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
|
550,666
|
|
|
|
58,634
|
|
|
|
|
|
|
|
609,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,933,857
|
|
|
|
672,186
|
|
|
|
(901,092
|
)
|
|
|
1,704,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock authorized 5,000 shares; no
shares issued or outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock $.001 par value;
authorized 300,000 shares; 164,661 shares issued and
outstanding
|
|
|
165
|
|
|
|
|
|
|
|
|
|
|
|
165
|
|
Additional
paid-in-capital
|
|
|
1,325,492
|
|
|
|
1,756,667
|
|
|
|
(1,756,667
|
)
|
|
|
1,325,492
|
|
Accumulated other comprehensive income
|
|
|
88,721
|
|
|
|
30,966
|
|
|
|
(30,966
|
)
|
|
|
88,721
|
|
Retained earnings
|
|
|
1,129,608
|
|
|
|
201,140
|
|
|
|
(201,140
|
)
|
|
|
1,129,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
2,543,986
|
|
|
|
1,988,773
|
|
|
|
(1,988,773
|
)
|
|
|
2,543,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
4,477,843
|
|
|
$
|
2,660,959
|
|
|
$
|
(2,889,865
|
)
|
|
$
|
4,248,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
GameStop
Corp.
Condensed Consolidating Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
August 2,
|
|
|
August 2,
|
|
|
|
|
|
August 2,
|
|
|
|
2008
|
|
|
2008
|
|
|
Eliminations
|
|
|
2008
|
|
|
|
(Amounts in thousands, except per share amounts)
|
|
|
|
(Unaudited)
|
|
|
ASSETS:
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
461,690
|
|
|
$
|
78,208
|
|
|
$
|
|
|
|
$
|
539,898
|
|
Receivables, net
|
|
|
260,476
|
|
|
|
25,345
|
|
|
|
(224,855
|
)
|
|
|
60,966
|
|
Merchandise inventories, net
|
|
|
611,605
|
|
|
|
358,452
|
|
|
|
|
|
|
|
970,057
|
|
Deferred income taxes current
|
|
|
23,680
|
|
|
|
3,213
|
|
|
|
|
|
|
|
26,893
|
|
Prepaid taxes
|
|
|
62,886
|
|
|
|
(4,197
|
)
|
|
|
|
|
|
|
58,689
|
|
Prepaid expenses
|
|
|
42,748
|
|
|
|
21,300
|
|
|
|
|
|
|
|
64,048
|
|
Other current assets
|
|
|
502
|
|
|
|
3,920
|
|
|
|
|
|
|
|
4,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,463,587
|
|
|
|
486,241
|
|
|
|
(224,855
|
)
|
|
|
1,724,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
2,670
|
|
|
|
9,363
|
|
|
|
|
|
|
|
12,033
|
|
Buildings and leasehold improvements
|
|
|
262,740
|
|
|
|
152,156
|
|
|
|
|
|
|
|
414,896
|
|
Fixtures and equipment
|
|
|
459,365
|
|
|
|
124,369
|
|
|
|
|
|
|
|
583,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property and equipment
|
|
|
724,775
|
|
|
|
285,888
|
|
|
|
|
|
|
|
1,010,663
|
|
Less accumulated depreciation and amortization
|
|
|
379,721
|
|
|
|
105,944
|
|
|
|
|
|
|
|
485,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property and equipment
|
|
|
345,054
|
|
|
|
179,944
|
|
|
|
|
|
|
|
524,998
|
|
Investment
|
|
|
589,832
|
|
|
|
|
|
|
|
(589,832
|
)
|
|
|
|
|
Goodwill, net
|
|
|
1,096,622
|
|
|
|
350,950
|
|
|
|
|
|
|
|
1,447,572
|
|
Other intangible assets
|
|
|
10,636
|
|
|
|
4,769
|
|
|
|
|
|
|
|
15,405
|
|
Deferred taxes
|
|
|
7,378
|
|
|
|
24,485
|
|
|
|
|
|
|
|
31,863
|
|
Other noncurrent assets
|
|
|
12,340
|
|
|
|
15,246
|
|
|
|
|
|
|
|
27,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent assets
|
|
|
2,061,862
|
|
|
|
575,394
|
|
|
|
(589,832
|
)
|
|
|
2,047,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,525,449
|
|
|
$
|
1,061,635
|
|
|
$
|
(814,687
|
)
|
|
$
|
3,772,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY:
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
549,020
|
|
|
$
|
143,078
|
|
|
$
|
|
|
|
$
|
692,098
|
|
Accrued liabilities
|
|
|
296,736
|
|
|
|
317,128
|
|
|
|
(224,855
|
)
|
|
|
389,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
845,756
|
|
|
|
460,206
|
|
|
|
(224,855
|
)
|
|
|
1,081,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes payable, long-term portion, net
|
|
|
545,220
|
|
|
|
|
|
|
|
|
|
|
|
545,220
|
|
Other long-term liabilities
|
|
|
70,702
|
|
|
|
11,597
|
|
|
|
|
|
|
|
82,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
|
615,922
|
|
|
|
11,597
|
|
|
|
|
|
|
|
627,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,461,678
|
|
|
|
471,803
|
|
|
|
(224,855
|
)
|
|
|
1,708,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock authorized 5,000 shares; no
shares issued or outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock $.001 par value;
authorized 300,000 shares; 163,653 shares issued and
outstanding
|
|
|
164
|
|
|
|
|
|
|
|
|
|
|
|
164
|
|
Additional
paid-in-capital
|
|
|
1,288,727
|
|
|
|
420,191
|
|
|
|
(420,191
|
)
|
|
|
1,288,727
|
|
Accumulated other comprehensive income
|
|
|
33,384
|
|
|
|
10,349
|
|
|
|
(10,349
|
)
|
|
|
33,384
|
|
Retained earnings
|
|
|
741,496
|
|
|
|
159,292
|
|
|
|
(159,292
|
)
|
|
|
741,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
2,063,771
|
|
|
|
589,832
|
|
|
|
(589,832
|
)
|
|
|
2,063,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
3,525,449
|
|
|
$
|
1,061,635
|
|
|
$
|
(814,687
|
)
|
|
$
|
3,772,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
GameStop
Corp.
Condensed Consolidating Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
January 31,
|
|
|
January 31,
|
|
|
|
|
|
January 31,
|
|
|
|
2009
|
|
|
2009
|
|
|
Eliminations
|
|
|
2009
|
|
|
|
(Amounts in thousands, except per share amounts)
|
|
|
ASSETS:
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
373,178
|
|
|
$
|
204,963
|
|
|
$
|
|
|
|
$
|
578,141
|
|
Receivables, net
|
|
|
195,677
|
|
|
|
678,203
|
|
|
|
(807,899
|
)
|
|
|
65,981
|
|
Merchandise inventories, net
|
|
|
637,257
|
|
|
|
438,535
|
|
|
|
|
|
|
|
1,075,792
|
|
Deferred income taxes current
|
|
|
21,088
|
|
|
|
2,527
|
|
|
|
|
|
|
|
23,615
|
|
Prepaid expenses
|
|
|
40,957
|
|
|
|
18,144
|
|
|
|
|
|
|
|
59,101
|
|
Other current assets
|
|
|
6,262
|
|
|
|
9,149
|
|
|
|
|
|
|
|
15,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,274,419
|
|
|
|
1,351,521
|
|
|
|
(807,899
|
)
|
|
|
1,818,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
2,670
|
|
|
|
7,727
|
|
|
|
|
|
|
|
10,397
|
|
Buildings and leasehold improvements
|
|
|
281,481
|
|
|
|
173,170
|
|
|
|
|
|
|
|
454,651
|
|
Fixtures and equipment
|
|
|
509,585
|
|
|
|
110,260
|
|
|
|
|
|
|
|
619,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property and equipment
|
|
|
793,736
|
|
|
|
291,157
|
|
|
|
|
|
|
|
1,084,893
|
|
Less accumulated depreciation and amortization
|
|
|
436,068
|
|
|
|
99,571
|
|
|
|
|
|
|
|
535,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property and equipment
|
|
|
357,668
|
|
|
|
191,586
|
|
|
|
|
|
|
|
549,254
|
|
Investment
|
|
|
1,870,083
|
|
|
|
|
|
|
|
(1,870,083
|
)
|
|
|
|
|
Goodwill, net
|
|
|
1,096,622
|
|
|
|
765,485
|
|
|
|
|
|
|
|
1,862,107
|
|
Other intangible assets
|
|
|
|
|
|
|
247,790
|
|
|
|
|
|
|
|
247,790
|
|
Other noncurrent assets
|
|
|
5,621
|
|
|
|
29,777
|
|
|
|
|
|
|
|
35,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent assets
|
|
|
3,329,994
|
|
|
|
1,234,638
|
|
|
|
(1,870,083
|
)
|
|
|
2,694,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,604,413
|
|
|
$
|
2,586,159
|
|
|
$
|
(2,677,982
|
)
|
|
$
|
4,512,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY:
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
736,805
|
|
|
$
|
311,158
|
|
|
$
|
|
|
|
$
|
1,047,963
|
|
Accrued liabilities
|
|
|
985,240
|
|
|
|
320,912
|
|
|
|
(807,899
|
)
|
|
|
498,253
|
|
Taxes payable
|
|
|
2,971
|
|
|
|
13,524
|
|
|
|
|
|
|
|
16,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,725,016
|
|
|
|
645,594
|
|
|
|
(807,899
|
)
|
|
|
1,562,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes payable, long-term portion, net
|
|
|
545,712
|
|
|
|
|
|
|
|
|
|
|
|
545,712
|
|
Other long-term liabilities
|
|
|
34,004
|
|
|
|
70,482
|
|
|
|
|
|
|
|
104,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
|
579,716
|
|
|
|
70,482
|
|
|
|
|
|
|
|
650,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,304,732
|
|
|
|
716,076
|
|
|
|
(807,899
|
)
|
|
|
2,212,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock authorized 5,000 shares; no
shares issued or outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock $.001 par value;
authorized 300,000 shares; 163,843 shares issued and
outstanding
|
|
|
164
|
|
|
|
|
|
|
|
|
|
|
|
164
|
|
Additional
paid-in-capital
|
|
|
1,307,453
|
|
|
|
1,699,630
|
|
|
|
(1,699,630
|
)
|
|
|
1,307,453
|
|
Accumulated other comprehensive income (loss)
|
|
|
(28,426
|
)
|
|
|
(33,800
|
)
|
|
|
33,800
|
|
|
|
(28,426
|
)
|
Retained earnings
|
|
|
1,020,490
|
|
|
|
204,253
|
|
|
|
(204,253
|
)
|
|
|
1,020,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
2,299,681
|
|
|
|
1,870,083
|
|
|
|
(1,870,083
|
)
|
|
|
2,299,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
4,604,413
|
|
|
$
|
2,586,159
|
|
|
$
|
(2,677,982
|
)
|
|
$
|
4,512,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
GameStop
Corp.
Condensed Consolidating Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
August 1,
|
|
|
August 1,
|
|
|
|
|
|
August 1,
|
|
For the 13 Weeks Ended August 1, 2009
|
|
2009
|
|
|
2009
|
|
|
Eliminations
|
|
|
2009
|
|
|
|
(Amounts in thousands)
|
|
|
|
(Unaudited)
|
|
|
Sales
|
|
$
|
1,182,177
|
|
|
$
|
556,327
|
|
|
$
|
|
|
|
$
|
1,738,504
|
|
Cost of sales
|
|
|
831,045
|
|
|
|
412,053
|
|
|
|
|
|
|
|
1,243,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
351,132
|
|
|
|
144,274
|
|
|
|
|
|
|
|
495,406
|
|
Selling, general and administrative expenses
|
|
|
262,351
|
|
|
|
122,422
|
|
|
|
|
|
|
|
384,773
|
|
Depreciation and amortization
|
|
|
25,039
|
|
|
|
14,638
|
|
|
|
|
|
|
|
39,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
63,742
|
|
|
|
7,214
|
|
|
|
|
|
|
|
70,956
|
|
Interest income
|
|
|
(14,215
|
)
|
|
|
(528
|
)
|
|
|
14,281
|
|
|
|
(462
|
)
|
Interest expense
|
|
|
11,448
|
|
|
|
14,570
|
|
|
|
(14,281
|
)
|
|
|
11,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax expense
|
|
|
66,509
|
|
|
|
(6,828
|
)
|
|
|
|
|
|
|
59,681
|
|
Income tax expense
|
|
|
20,797
|
|
|
|
199
|
|
|
|
|
|
|
|
20,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
45,712
|
|
|
$
|
(7,027
|
)
|
|
$
|
|
|
|
$
|
38,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GameStop
Corp.
Condensed Consolidating Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
August 2,
|
|
|
August 2,
|
|
|
|
|
|
August 2,
|
|
For the 13 Weeks Ended August 2, 2008
|
|
2008
|
|
|
2008
|
|
|
Eliminations
|
|
|
2008
|
|
|
|
(Amounts in thousands)
|
|
|
|
(Unaudited)
|
|
|
Sales
|
|
$
|
1,316,912
|
|
|
$
|
487,508
|
|
|
$
|
|
|
|
$
|
1,804,420
|
|
Cost of sales
|
|
|
953,602
|
|
|
|
366,695
|
|
|
|
|
|
|
|
1,320,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
363,310
|
|
|
|
120,813
|
|
|
|
|
|
|
|
484,123
|
|
Selling, general and administrative expenses
|
|
|
254,517
|
|
|
|
93,228
|
|
|
|
|
|
|
|
347,745
|
|
Depreciation and amortization
|
|
|
26,382
|
|
|
|
9,927
|
|
|
|
|
|
|
|
36,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
82,411
|
|
|
|
17,658
|
|
|
|
|
|
|
|
100,069
|
|
Interest income
|
|
|
(6,750
|
)
|
|
|
(6,477
|
)
|
|
|
11,599
|
|
|
|
(1,628
|
)
|
Interest expense
|
|
|
12,387
|
|
|
|
10,051
|
|
|
|
(11,599
|
)
|
|
|
10,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax expense
|
|
|
76,774
|
|
|
|
14,084
|
|
|
|
|
|
|
|
90,858
|
|
Income tax expense
|
|
|
28,449
|
|
|
|
5,246
|
|
|
|
|
|
|
|
33,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
48,325
|
|
|
$
|
8,838
|
|
|
$
|
|
|
|
$
|
57,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
GAMESTOP
CORP.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
GameStop
Corp.
Condensed Consolidating Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
August 1,
|
|
|
August 1,
|
|
|
|
|
|
August 1,
|
|
For the 26 Weeks Ended August 1, 2009
|
|
2009
|
|
|
2009
|
|
|
Eliminations
|
|
|
2009
|
|
|
|
(Amounts in thousands)
|
|
|
|
(Unaudited)
|
|
|
Sales
|
|
$
|
2,656,935
|
|
|
$
|
1,062,322
|
|
|
$
|
|
|
|
$
|
3,719,257
|
|
Cost of sales
|
|
|
1,899,732
|
|
|
|
782,006
|
|
|
|
|
|
|
|
2,681,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
757,203
|
|
|
|
280,316
|
|
|
|
|
|
|
|
1,037,519
|
|
Selling, general and administrative expenses
|
|
|
531,159
|
|
|
|
229,446
|
|
|
|
|
|
|
|
760,605
|
|
Depreciation and amortization
|
|
|
49,751
|
|
|
|
27,753
|
|
|
|
|
|
|
|
77,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
176,293
|
|
|
|
23,117
|
|
|
|
|
|
|
|
199,410
|
|
Interest income
|
|
|
(22,206
|
)
|
|
|
(1,159
|
)
|
|
|
22,386
|
|
|
|
(979
|
)
|
Interest expense
|
|
|
23,481
|
|
|
|
22,840
|
|
|
|
(22,386
|
)
|
|
|
23,935
|
|
Debt extinguishment expense
|
|
|
2,862
|
|
|
|
|
|
|
|
|
|
|
|
2,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax expense
|
|
|
172,156
|
|
|
|
1,436
|
|
|
|
|
|
|
|
173,592
|
|
Income tax expense
|
|
|
59,929
|
|
|
|
4,545
|
|
|
|
|
|
|
|
64,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
112,227
|
|
|
$
|
(3,109
|
)
|
|
$
|
|
|
|
$
|
109,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GameStop
Corp.
Condensed Consolidating Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers and
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
|
|
|
Consolidated
|
|
|
|
August 2,
|
|
|
August 2,
|
|
|
|
|
|
August 2,
|
|
For the 26 Weeks Ended August 2, 2008
|
|
2008
|
|
|
2008
|
|
|
Eliminations
|
|
|
2008
|
|
|
|
(Amounts in thousands)
|
|
|
|
(Unaudited)
|
|
|
Sales
|
|
$
|
2,694,043
|
|
|
$
|
923,994
|
|
|
$
|
|
|
|
$
|
3,618,037
|
|
Cost of sales
|
|
|
1,966,803
|
|
|
|
693,705
|
|
|
|
|
|
|
|
2,660,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
727,240
|
|
|
|
230,289
|
|
|
|
|
|
|
|
957,529
|
|
Selling, general and administrative expenses
|
|
|
500,105
|
|
|
|
176,307
|
|
|
|
|
|
|
|
676,412
|
|
Depreciation and amortization
|
|
|
51,967
|
|
|
|
19,178
|
|
|
|
|
|
|
|
71,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
175,168
|
|
|
|
34,804
|
|
|
|
|
|
|
|
209,972
|
|
Interest income
|
|
|
(12,874
|
)
|
|
|
(13,522
|
)
|
|
|
19,826
|
|
|
|
(6,570
|
)
|
Interest expense
|
|
|
24,681
|
|
|
|
19,414
|
|
|
|
(19,826
|
)
|
|
|
24,269
|
|
Debt extinguishment expense
|
|
|
2,331
|
|
|
|
|
|
|
|
|
|
|
|
2,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax expense
|
|
|
161,030
|
|
|
|
28,912
|
|
|
|
|
|
|
|
189,942
|
|
Income tax expense
|
|
|
59,321
|
|
|
|
11,333
|
|
|
|
|
|
|
|
70,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
101,709
|
|
|
$
|
17,579
|
|
|
$
|
|
|
|
$
|
119,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
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
|
|
|
|
August 1,
|
|
|
August 1,
|
|
|
|
|
|
August 1,
|
|
For the 26 Weeks Ended August 1, 2009
|
|
2009
|
|
|
2009
|
|
|
Eliminations
|
|
|
2009
|
|
|
|
|
|
|
(Amounts in thousands) (Unaudited)
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
$
|
112,227
|
|
|
$
|
(3,109
|
)
|
|
$
|
|
|
|
$
|
109,118
|
|
Adjustments to reconcile net earnings (loss) to net cash flows
used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (including amounts in cost of
sales)
|
|
|
50,505
|
|
|
|
27,789
|
|
|
|
|
|
|
|
78,294
|
|
Amortization and retirement of deferred financing fees and issue
discounts
|
|
|
2,639
|
|
|
|
|
|
|
|
|
|
|
|
2,639
|
|
Stock-based compensation expense
|
|
|
15,251
|
|
|
|
|
|
|
|
|
|
|
|
15,251
|
|
Deferred income taxes
|
|
|
1,842
|
|
|
|
(3,374
|
)
|
|
|
|
|
|
|
(1,532
|
)
|
Excess tax expense realized from exercise of stock-based awards
|
|
|
346
|
|
|
|
|
|
|
|
|
|
|
|
346
|
|
Loss on disposal of property and equipment
|
|
|
1,106
|
|
|
|
2,119
|
|
|
|
|
|
|
|
3,225
|
|
Changes in other long-term liabilities
|
|
|
6,493
|
|
|
|
1,705
|
|
|
|
|
|
|
|
8,198
|
|
Change in the value of foreign exchange contracts
|
|
|
20,014
|
|
|
|
(5,286
|
)
|
|
|
|
|
|
|
14,728
|
|
Changes in operating assets and liabilities, net
Receivables, net
|
|
|
15,906
|
|
|
|
12,741
|
|
|
|
|
|
|
|
28,647
|
|
Merchandise inventories
|
|
|
21,681
|
|
|
|
20,885
|
|
|
|
|
|
|
|
42,566
|
|
Prepaid expenses and other current assets
|
|
|
(597
|
)
|
|
|
(2,418
|
)
|
|
|
|
|
|
|
(3,015
|
)
|
Prepaid income taxes and accrued income taxes payable
|
|
|
(156
|
)
|
|
|
(24,510
|
)
|
|
|
|
|
|
|
(24,666
|
)
|
Accounts payable and accrued liabilities
|
|
|
(446,933
|
)
|
|
|
(87,671
|
)
|
|
|
|
|
|
|
(534,604
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in operating activities
|
|
|
(199,676
|
)
|
|
|
(61,129
|
)
|
|
|
|
|
|
|
(260,805
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(54,277
|
)
|
|
|
(22,601
|
)
|
|
|
|
|
|
|
(76,878
|
)
|
Acquisitions, net of cash acquired
|
|
|
|
|
|
|
(4,667
|
)
|
|
|
|
|
|
|
(4,667
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in investing activities
|
|
|
(54,277
|
)
|
|
|
(27,268
|
)
|
|
|
|
|
|
|
(81,545
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of notes payable
|
|
|
(50,765
|
)
|
|
|
|
|
|
|
|
|
|
|
(50,765
|
)
|
Borrowings from the revolver
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
Repayments of revolver borrowings
|
|
|
(100,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(100,000
|
)
|
Issuance of shares relating to stock options
|
|
|
3,096
|
|
|
|
|
|
|
|
|
|
|
|
3,096
|
|
Excess tax expense realized from exercise of stock-based awards
|
|
|
(346
|
)
|
|
|
|
|
|
|
|
|
|
|
(346
|
)
|
Net change in other noncurrent assets and other intangible assets
|
|
|
(100
|
)
|
|
|
(10,317
|
)
|
|
|
|
|
|
|
(10,417
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in financing activities
|
|
|
(48,115
|
)
|
|
|
(10,317
|
)
|
|
|
|
|
|
|
(58,432
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange rate effect on cash and cash equivalents
|
|
|
|
|
|
|
20,497
|
|
|
|
|
|
|
|
20,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(302,068
|
)
|
|
|
(78,217
|
)
|
|
|
|
|
|
|
(380,285
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
373,178
|
|
|
|
204,963
|
|
|
|
|
|
|
|
578,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
71,110
|
|
|
$
|
126,746
|
|
|
$
|
|
|
|
$
|
197,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
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
|
|
|
|
August 2,
|
|
|
August 2,
|
|
|
|
|
|
August 2,
|
|
For the 26 Weeks Ended August 2, 2008
|
|
2008
|
|
|
2008
|
|
|
Eliminations
|
|
|
2008
|
|
|
|
(Amounts in thousands)
|
|
|
|
(Unaudited)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
101,709
|
|
|
$
|
17,579
|
|
|
$
|
|
|
|
$
|
119,288
|
|
Adjustments to reconcile net earnings to net cash flows used in
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (including amounts in cost of
sales)
|
|
|
52,591
|
|
|
|
19,211
|
|
|
|
|
|
|
|
71,802
|
|
Amortization and retirement of deferred financing fees and issue
discounts
|
|
|
2,051
|
|
|
|
|
|
|
|
|
|
|
|
2,051
|
|
Stock-based compensation expense
|
|
|
20,068
|
|
|
|
|
|
|
|
|
|
|
|
20,068
|
|
Deferred income taxes
|
|
|
473
|
|
|
|
(3,708
|
)
|
|
|
|
|
|
|
(3,235
|
)
|
Excess tax benefits realized from exercise of stock-based awards
|
|
|
(33,010
|
)
|
|
|
|
|
|
|
|
|
|
|
(33,010
|
)
|
Loss on disposal of property and equipment
|
|
|
1,039
|
|
|
|
1,595
|
|
|
|
|
|
|
|
2,634
|
|
Changes in other long-term liabilities
|
|
|
4,667
|
|
|
|
1,485
|
|
|
|
|
|
|
|
6,152
|
|
Change in the value of foreign exchange contracts
|
|
|
(278
|
)
|
|
|
(757
|
)
|
|
|
|
|
|
|
(1,035
|
)
|
Changes in operating assets and liabilities, net Receivables, net
|
|
|
(2,219
|
)
|
|
|
(1,610
|
)
|
|
|
|
|
|
|
(3,829
|
)
|
Merchandise inventories
|
|
|
(109,745
|
)
|
|
|
(43,072
|
)
|
|
|
|
|
|
|
(152,817
|
)
|
Prepaid expenses and other current assets
|
|
|
(5,646
|
)
|
|
|
(7,589
|
)
|
|
|
|
|
|
|
(13,235
|
)
|
Prepaid income taxes and accrued income taxes payable
|
|
|
(20,595
|
)
|
|
|
(11,098
|
)
|
|
|
|
|
|
|
(31,693
|
)
|
Accounts payable and accrued liabilities
|
|
|
(196,120
|
)
|
|
|
2,780
|
|
|
|
|
|
|
|
(193,340
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in operating activities
|
|
|
(185,015
|
)
|
|
|
(25,184
|
)
|
|
|
|
|
|
|
(210,199
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(51,946
|
)
|
|
|
(29,594
|
)
|
|
|
|
|
|
|
(81,540
|
)
|
Acquisitions, net of cash acquired
|
|
|
|
|
|
|
(50,299
|
)
|
|
|
|
|
|
|
(50,299
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in investing activities
|
|
|
(51,946
|
)
|
|
|
(79,893
|
)
|
|
|
|
|
|
|
(131,839
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of notes payable
|
|
|
(30,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(30,000
|
)
|
Issuance of shares relating to stock options
|
|
|
26,738
|
|
|
|
|
|
|
|
|
|
|
|
26,738
|
|
Excess tax benefits realized from exercise of stock-based awards
|
|
|
33,010
|
|
|
|
|
|
|
|
|
|
|
|
33,010
|
|
Net change in other noncurrent assets and other intangible assets
|
|
|
(2,430
|
)
|
|
|
(2,789
|
)
|
|
|
|
|
|
|
(5,219
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows provided by (used in) financing activities
|
|
|
27,318
|
|
|
|
(2,789
|
)
|
|
|
|
|
|
|
24,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange rate effect on cash and cash equivalents
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(209,643
|
)
|
|
|
(107,873
|
)
|
|
|
|
|
|
|
(317,516
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
671,333
|
|
|
|
186,081
|
|
|
|
|
|
|
|
857,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
461,690
|
|
|
$
|
78,208
|
|
|
$
|
|
|
|
$
|
539,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsequent to August 1, 2009, the Company purchased $17,253
of outstanding Notes under the previously announced buyback.
24
|
|
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 31, 2009 filed with the
Securities and Exchange Commission (the SEC) on
April 1, 2009 (the
Form 10-K),
including the factors disclosed under Item 1A. Risk
Factors.
General
GameStop Corp. (together with its predecessor companies,
GameStop, we, our, or the
Company) is the worlds largest 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 related
accessories and other merchandise. As of August 1, 2009, we
operated 6,333 stores in the United States, Australia, Canada
and Europe, primarily under the names GameStop and EB Games. We
also operate an electronic commerce Web site under the name
www.gamestop.com and publish Game Informer, the
industrys largest multi-platform video game magazine in
the United States based on circulation.
Our fiscal year is composed of 52 or 53 weeks ending on the
Saturday closest to January 31. The fiscal years ending
January 30, 2010 (fiscal 2009) and ended
January 31, 2009 (fiscal 2008) consist of
52 weeks.
On November 17, 2008, GameStop France SAS, a wholly-owned
subsidiary of the Company, completed the acquisition of
substantially all of the outstanding capital stock of SFMI
Micromania SAS (Micromania) for $580.4 million,
net of cash acquired in the transaction (the Micromania
acquisition). Micromania is a leading retailer of video
and computer games in France with 348 locations, 328 of which
were operating on the date of acquisition. The Companys
operating results for the 13 and 26 week periods ended
August 1, 2009 include Micromanias results, whereas
the operating results of the comparable periods of fiscal 2008
exclude Micromanias results.
Growth in the video game industry is driven by the introduction
of new technology. In 2005 in the North American markets,
Sony introduced the PlayStation Portable (the PSP)
in March and Microsoft introduced the Xbox 360 in November. In
November 2006, Nintendo introduced the Wii hardware platform
worldwide and Sony introduced the PlayStation 3 hardware
platform in the North American markets. Sony introduced the
PlayStation 3 platform in the Australian and European markets in
March 2007. 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, subject to the timing of the release of new video
game titles and the impact of the overall worldwide economy.
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 develop estimates thereon, see
Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations in our 2008
Annual Report on
Form 10-K.
25
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
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Cost of sales
|
|
|
71.5
|
|
|
|
73.2
|
|
|
|
72.1
|
|
|
|
73.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
28.5
|
|
|
|
26.8
|
|
|
|
27.9
|
|
|
|
26.5
|
|
Selling, general and administrative expenses
|
|
|
22.1
|
|
|
|
19.3
|
|
|
|
20.4
|
|
|
|
18.7
|
|
Depreciation and amortization
|
|
|
2.3
|
|
|
|
2.0
|
|
|
|
2.1
|
|
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
4.1
|
|
|
|
5.5
|
|
|
|
5.4
|
|
|
|
5.8
|
|
Interest expense, net
|
|
|
0.7
|
|
|
|
0.5
|
|
|
|
0.6
|
|
|
|
0.5
|
|
Debt extinguishment expense
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax expense
|
|
|
3.4
|
|
|
|
5.0
|
|
|
|
4.7
|
|
|
|
5.2
|
|
Income tax expense
|
|
|
1.2
|
|
|
|
1.8
|
|
|
|
1.8
|
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
2.2
|
%
|
|
|
3.2
|
%
|
|
|
2.9
|
%
|
|
|
3.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company continually reviews the financial performance of its
stores and seeks to increase profitability by relocating or
closing selected stores. During the 26 weeks ended
August 1, 2009, the Company closed 98 stores, 21 of
which were in the second quarter. The store closings included
many locations in which we operated a GameStop store and a
former EB Games store in very close proximity and the
determination was made to close one of the locations upon the
expiration of the store lease.
The Company includes purchasing, receiving and distribution
costs in selling, general and administrative expenses, rather
than cost of goods sold, in the statement of operations. For the
13 weeks ended August 1, 2009 and August 2, 2008,
these purchasing, receiving and distribution costs amounted to
$14.9 million and $13.8 million, respectively. For the
26 weeks ended August 1, 2009 and August 2, 2008,
these purchasing, receiving and distribution costs amounted to
$29.6 million and $25.9 million, respectively. 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. For the 13 weeks ended August 1, 2009 and
August 2, 2008, these processing fees amounted to
$11.1 million and $13.6 million, respectively. For the
26 weeks ended August 1, 2009 and August 2,
2008, these processing fees amounted to $24.6 million and
$26.5 million, respectively. 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 reclassifications had
no material net effect on the 13 weeks and 26 weeks
ended August 1, 2009 and August 2, 2008.
26
The following table sets forth sales (in millions) by
significant product category for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
Sales
|
|
|
of Total
|
|
|
Sales
|
|
|
of Total
|
|
|
Sales
|
|
|
of Total
|
|
|
Sales
|
|
|
of Total
|
|
|
|
(Unaudited)
|
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game hardware
|
|
$
|
301.3
|
|
|
|
17.3
|
%
|
|
$
|
379.7
|
|
|
|
21.0
|
%
|
|
$
|
697.2
|
|
|
|
18.7
|
%
|
|
$
|
718.7
|
|
|
|
19.9
|
%
|
New video game software
|
|
|
629.8
|
|
|
|
36.2
|
%
|
|
|
705.0
|
|
|
|
39.1
|
%
|
|
|
1,400.3
|
|
|
|
37.7
|
%
|
|
|
1,497.8
|
|
|
|
41.4
|
%
|
Used video game products
|
|
|
560.8
|
|
|
|
32.3
|
%
|
|
|
471.5
|
|
|
|
26.1
|
%
|
|
|
1,109.3
|
|
|
|
29.8
|
%
|
|
|
887.2
|
|
|
|
24.5
|
%
|
Other
|
|
|
246.6
|
|
|
|
14.2
|
%
|
|
|
248.2
|
|
|
|
13.8
|
%
|
|
|
512.5
|
|
|
|
13.8
|
%
|
|
|
514.3
|
|
|
|
14.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,738.5
|
|
|
|
100.0
|
%
|
|
$
|
1,804.4
|
|
|
|
100.0
|
%
|
|
$
|
3,719.3
|
|
|
|
100.0
|
%
|
|
$
|
3,618.0
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other products include PC entertainment and other software,
accessories and magazines.
The following table sets forth gross profit (in millions) and
gross profit percentages by significant product category for the
periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
Gross
|
|
|
Profit
|
|
|
Gross
|
|
|
Profit
|
|
|
Gross
|
|
|
Profit
|
|
|
Gross
|
|
|
Profit
|
|
|
|
Profit
|
|
|
Percent
|
|
|
Profit
|
|
|
Percent
|
|
|
Profit
|
|
|
Percent
|
|
|
Profit
|
|
|
Percent
|
|
|
|
(Unaudited)
|
|
|
Gross Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New video game hardware
|
|
$
|
21.6
|
|
|
|
7.2
|
%
|
|
$
|
22.6
|
|
|
|
6.0
|
%
|
|
$
|
45.7
|
|
|
|
6.6
|
%
|
|
$
|
43.0
|
|
|
|
6.0
|
%
|
New video game software
|
|
|
133.6
|
|
|
|
21.2
|
%
|
|
|
145.3
|
|
|
|
20.6
|
%
|
|
|
299.1
|
|
|
|
21.4
|
%
|
|
|
301.9
|
|
|
|
20.2
|
%
|
Used video game products
|
|
|
256.9
|
|
|
|
45.8
|
%
|
|
|
234.1
|
|
|
|
49.7
|
%
|
|
|
520.5
|
|
|
|
46.9
|
%
|
|
|
438.2
|
|
|
|
49.4
|
%
|
Other
|
|
|
83.3
|
|
|
|
33.8
|
%
|
|
|
82.1
|
|
|
|
33.1
|
%
|
|
|
172.2
|
|
|
|
33.6
|
%
|
|
|
174.4
|
|
|
|
33.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
495.4
|
|
|
|
28.5
|
%
|
|
$
|
484.1
|
|
|
|
26.8
|
%
|
|
$
|
1,037.5
|
|
|
|
27.9
|
%
|
|
$
|
957.5
|
|
|
|
26.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks
ended August 1, 2009 compared with the 13 weeks ended
August 2, 2008
Sales decreased by $65.9 million, or 3.7%, from
$1,804.4 million in the 13 weeks ended August 2,
2008 to $1,738.5 million in the 13 weeks ended
August 1, 2009. The decrease in sales was primarily
attributable to the comparable store sales decrease of 14.1% for
the second quarter of fiscal 2009 and the decreases in sales
related to changes in foreign exchange rates of
$63.3 million when compared to the second quarter of fiscal
2008. These decreases were partially offset by the addition of
non-comparable store sales from the 668 stores opened since
May 3, 2008 combined with the additional sales from the
Micromania acquisition for an approximate total of
$229.4 million. 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. The
decrease in comparable store sales was due to weak consumer
traffic worldwide, a slow-down in hardware unit sell-through and
a lack of new game titles in the second quarter of fiscal 2009.
New video game hardware sales decreased $78.4 million, or
20.6%, from $379.7 million in the 13 weeks ended
August 2, 2008 to $301.3 million in the 13 weeks
ended August 1, 2009, primarily due to a decrease in
consumer traffic as a result of the continued macro-economic
weakness, partially offset by increases related to new and
acquired stores. New video game software sales decreased
$75.2 million, or 10.7%, from $705.0 million in the
13 weeks ended August 2, 2008 to $629.8 million
in the 13 weeks ended August 1, 2009, primarily due to
a decrease in consumer traffic and a lack of strong new video
game titles released in the second quarter of fiscal 2009,
partially offset by increases related to new and acquired
stores. Used video game product sales increased
$89.3 million, or 18.9%, from $471.5 million in the
13 weeks ended August 2, 2008 to $560.8 million
in the 13 weeks ended
27
August 1, 2009. Used video game product sales increased as
a lack of new video game releases and increased promotional
activity drove customers to the lower-priced used product
category. Sales of other product categories declined 0.6%, or
$1.6 million, from the 13 weeks ended August 2,
2008 to the 13 weeks ended August 1, 2009.
As a percentage of sales, used video game products and other
sales increased and new video game hardware and new video game
software decreased in the 13 weeks ended August 1,
2009 compared to the 13 weeks ended August 2, 2008.
This was primarily due to a lack of new video game title
releases and a slow-down in hardware unit sell-through, as well
as increased promotional activity related to the used video game
products category.
Cost of sales decreased by $77.2 million, or 5.8%, from
$1,320.3 million in the 13 weeks ended August 2,
2008 to $1,243.1 million in the 13 weeks ended
August 1, 2009 as a result of the decrease in sales and the
changes in gross profit discussed below.
Gross profit increased by $11.3 million, or 2.3%, from
$484.1 million in the 13 weeks ended August 2,
2008 to $495.4 million in the 13 weeks ended
August 1, 2009. Gross profit as a percentage of sales
increased from 26.8% in the 13 weeks ended August 2,
2008 to 28.5% in the 13 weeks ended August 1, 2009.
The gross profit percentage increase was caused primarily by the
increase in higher margin used video game product sales as a
percentage of total sales in the second quarter of fiscal 2009
and the decrease in sales of new video game hardware and new
video game software as a percentage of total sales. Gross profit
as a percentage of sales on new video game hardware increased
from 6.0% in the prior year quarter to 7.2% of sales this
quarter, primarily due to a change in the mix of hardware units
sold and an increase in sales of product replacement plans
during the second quarter of fiscal 2009. Gross profit as a
percentage of sales on new video game software increased from
20.6% in the 13 weeks ended August 2, 2008 to 21.2% in
the 13 weeks ended August 1, 2009, primarily due to an
increase in vendor allowances received in excess of advertising
expenses and the mix of software and margin in the various
countries in which we operate. Gross profit as a percentage of
sales on used video game products decreased from 49.7% in the
13 weeks ended August 2, 2008 to 45.8% in the
13 weeks ended August 1, 2009 due to increased
promotional activities during the second quarter of fiscal 2009.
Selling, general and administrative expenses increased by
$37.1 million, or 10.7%, from $347.7 million in the
13 weeks ended August 2, 2008 to $384.8 million
in the 13 weeks ended August 1, 2009. 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. Selling,
general and administrative expenses as a percentage of sales
increased from 19.3% in the 13 weeks ended August 2,
2008 to 22.1% in the 13 weeks ended August 1, 2009.
The increase in selling, general and administrative expenses as
a percentage of sales was primarily due to deleveraging of fixed
costs as a result of the decrease in comparable store sales in
the second quarter of fiscal 2009. Included in selling, general
and administrative expenses are $7.9 million and
$8.3 million in stock-based compensation expense for the
13 weeks ended August 1, 2009 and August 2, 2008,
respectively.
Depreciation and amortization expense increased
$3.4 million from $36.3 million for the 13 weeks
ended August 2, 2008 to $39.7 million in the
13 weeks ended August 1, 2009. This increase was
primarily due to the acquisition of Micromania, capital
expenditures associated with the opening of 110 new stores
during the second quarter of fiscal 2009 and investments in
management information systems.
Interest income resulting from the investment of excess cash
balances decreased from $1.6 million in the 13 weeks
ended August 2, 2008 to $0.5 million in the
13 weeks ended August 1, 2009 due primarily to lower
invested cash balances and lower interest rates. Interest
expense increased slightly from $10.8 million in the
13 weeks ended August 2, 2008 to $11.7 million in
the 13 weeks ended August 1, 2009 primarily due to the
short-term borrowings on the revolver offset by the retirement
of $50.8 million of the Companys senior notes since
August 2, 2008.
Income tax expense for the 13 weeks ended August 2,
2008 and the 13 weeks ended August 1, 2009 was based
upon managements estimate of the Companys annualized
effective tax rate. Income tax expense was $33.7 million
for the 13 weeks ended August 2, 2008 compared to
$21.0 million for the 13 weeks ended August 1,
2009.
The factors described above led to a decrease in operating
earnings of $29.1 million, or 29.1%, from
$100.1 million in the 13 weeks ended August 2,
2008 to $71.0 million in the 13 weeks ended
August 1, 2009, and a
28
decrease in net earnings of $18.5 million, or 32.3%, from
$57.2 million in the 13 weeks ended August 2,
2008 to $38.7 million in the 13 weeks ended
August 1, 2009.
26 weeks
ended August 1, 2009 compared with the 26 weeks ended
August 2, 2008
Sales increased by $101.3 million, or 2.8%, from
$3,618.0 million in the 26 weeks ended August 2,
2008 to $3,719.3 million in the 26 weeks ended
August 1, 2009. The increase in sales was attributable to
the addition of non-comparable store sales from the 878 stores
opened since February 3, 2008, combined with the additional
sales from the Micromania acquisition for an approximate total
of $485.5 million, offset by a decrease in comparable store
sales of 7.8% and decreases related to changes in foreign
exchange rates of $147.5 million for the 26-week period
ended August 1, 2009 when compared to the 26-week period
ended August 2, 2008. 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. The
decrease in comparable store sales was due to weaker new title
releases in fiscal 2009 when compared to fiscal 2008, which
included several strong video game titles, weak consumer traffic
worldwide and a slow-down in hardware unit sell-through.
New video game hardware sales decreased $21.5 million, or
3.0%, from $718.7 million in the 26 weeks ended
August 2, 2008 to $697.2 million in the 26 weeks
ended August 1, 2009, primarily due to a decrease in
consumer traffic as a result of the continued macro-economic
weakness, partially offset by the Nintendo DSi launch in
April 2009 and the additional sales at the new stores added
since last year through growth and acquisitions. New video game
software sales decreased $97.5 million, or 6.5%, from
$1,497.8 million in the 26 weeks ended August 2,
2008 to $1,400.3 million in the 26 weeks ended
August 1, 2009, primarily due to a decrease in consumer
traffic and a lack of new video game titles released in fiscal
2009, compared to fiscal 2008 which included several strong
titles, offset by sales from new and acquired stores since last
year. Used video game product sales increased
$222.1 million, or 25.0%, from $887.2 million in the
26 weeks ended August 2, 2008 to $1,109.3 million
in the 26 weeks ended August 1, 2009. Used video game
product sales increased as a lack of new video game title
releases and increased promotional activity drove customers to
the lower-priced used product category. Sales of other product
categories declined slightly by 0.3%, or $1.8 million, from
the 26 weeks ended August 2, 2008 to the 26 weeks
ended August 1, 2009.
As a percentage of sales, used video game products increased and
new video game hardware, new video game software and other
product sales decreased in the 26 weeks ended
August 1, 2009 compared to the 26 weeks ended
August 2, 2008. This was primarily due to a decrease in
sales of new video game software due to a lack of new software
titles released in fiscal 2009 when compared to fiscal 2008, a
slow-down in hardware unit sell-through, as well as an increase
in sales of used video game products due to increased
promotional activity and the value pricing of our used products.
Cost of sales increased by $21.2 million, or 0.8%, from
$2,660.5 million in the 26 weeks ended August 2,
2008 to $2,681.7 million in the 26 weeks ended
August 1, 2009, primarily as a result of the increase in
sales and the changes in gross profit discussed below.
Gross profit increased by $80.0 million, or 8.4%, from
$957.5 million in the 26 weeks ended August 2,
2008 to $1,037.5 million in the 26 weeks ended
August 1, 2009. Gross profit as a percentage of sales
increased from 26.5% in the 26 weeks ended August 2,
2008 to 27.9% in the 26 weeks ended August 1, 2009.
The gross profit percentage increase was caused primarily by the
increase in higher margin used video game product sales as a
percentage of total sales in the 26 weeks ended
August 1, 2009 when compared to the 26 weeks ended
August 2, 2008. Gross profit as a percentage of sales on
new video game hardware increased from 6.0% of sales for the
26 weeks ended August 2, 2008 to 6.6% of sales for the
26 weeks ended August 1, 2009 due to a change in the
mix of hardware units sold and an increase in sales of product
replacement plans during fiscal 2009. Gross profit as a
percentage of sales on new video game software increased from
20.2% in the 26 weeks ended August 2, 2008 to 21.4% in
the 26 weeks ended August 1, 2009, primarily due to an
increase in vendor allowances received in excess of advertising
expenses and the mix of software sales and margin in the various
countries in which we operate. Gross profit as a percentage of
sales on used video game products decreased from 49.4% in the
26 weeks ended August 2, 2008 to 46.9% in the
26 weeks ended August 1, 2009, primarily due to
increased promotional activities during fiscal 2009. Gross
profit as a percentage of sales on the other product sales
category decreased slightly in fiscal 2009 when compared to
fiscal 2008.
29
Selling, general and administrative expenses increased by
$84.2 million, or 12.4%, from $676.4 million in the
26 weeks ended August 2, 2008 to $760.6 million
in the 26 weeks ended August 1, 2009. 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 during
fiscal 2009. Selling, general and administrative expenses as a
percentage of sales increased from 18.7% in the 26 weeks
ended August 2, 2008 to 20.4% in the 26 weeks ended
August 1, 2009. The increase in selling, general and
administrative expenses as a percentage of sales was primarily
due to deleveraging of fixed costs as a result of the decrease
in comparable store sales in fiscal 2009. Selling, general and
administrative expenses include $15.3 million and
$20.1 million in stock-based compensation expense for the
26 weeks ended August 1, 2009 and August 2, 2008,
respectively.
Depreciation and amortization expense increased
$6.4 million from $71.1 million for the 26 weeks
ended August 2, 2008 to $77.5 million in the
26 weeks ended August 1, 2009. This increase was
primarily due to the acquisition of Micromania, capital
expenditures associated with the opening of 224 new stores
during the 26 weeks ended August 1, 2009 and
investments in management information systems.
Interest income resulting from the investment of excess cash
balances decreased from $6.6 million in the 26 weeks
ended August 2, 2008 to $1.0 million in the
26 weeks ended August 1, 2009, due primarily to lower
invested cash balances and lower interest rates during fiscal
2009. Interest expense decreased from $24.3 million in the
26 weeks ended August 2, 2008 to $23.9 million in
the 26 weeks ended August 1, 2009, primarily due to
the retirement of $50.8 million of the Companys
senior notes since August 2, 2008 offset by short term
borrowings on the Revolver. Debt extinguishment expense of
$2.3 million and $2.9 million was recognized in the
26 weeks ended August 2, 2008 and August 1, 2009,
respectively, as a result of premiums paid related to debt
retirement and the write-off of deferred financing fees and
unamortized original issue discount.
Income tax expense for the 26 weeks ended August 2,
2008 and the 26 weeks ended August 1, 2009 was based
upon managements estimate of the Companys annualized
effective tax rate. Income tax expense was $70.7 million
for the 26 weeks ended August 2, 2008 compared to
$64.5 million for the 26 weeks ended August 1,
2009.
The factors described above led to a decrease in operating
earnings of $10.6 million, or 5.0%, from
$210.0 million in the 26 weeks ended August 2,
2008 to $199.4 million in the 26 weeks ended
August 1, 2009, and a decrease in net earnings of
$10.2 million, or 8.5%, from $119.3 million in the
26 weeks ended August 2, 2008 to $109.1 million
in the 26 weeks ended August 1, 2009.
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
(loss) by reportable segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
|
|
|
26 Weeks Ended
|
|
|
|
August 1,
|
|
|
August 2,
|
|
|
August 1,
|
|
|
August 2,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(In millions)
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Sales by operating segment are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
1,182.2
|
|
|
$
|
1,316.9
|
|
|
$
|
2,657.0
|
|
|
$
|
2,694.0
|
|
Canada
|
|
|
90.6
|
|
|
|
114.7
|
|
|
|
187.9
|
|
|
|
243.6
|
|
Australia
|
|
|
122.9
|
|
|
|
148.0
|
|
|
|
214.5
|
|
|
|
251.4
|
|
Europe
|
|
|
342.8
|
|
|
|
224.8
|
|
|
|
659.9
|
|
|
|
429.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,738.5
|
|
|
$
|
1,804.4
|
|
|
$
|
3,719.3
|
|
|
$
|
3,618.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (loss) by operating segment are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
63.8
|
|
|
$
|
82.4
|
|
|
$
|
176.3
|
|
|
$
|
175.2
|
|
Canada
|
|
|
3.4
|
|
|
|
5.7
|
|
|
|
8.2
|
|
|
|
11.5
|
|
Australia
|
|
|
8.8
|
|
|
|
13.7
|
|
|
|
14.4
|
|
|
|
21.5
|
|
Europe
|
|
|
(5.0
|
)
|
|
|
(1.7
|
)
|
|
|
0.5
|
|
|
|
1.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
71.0
|
|
|
$
|
100.1
|
|
|
$
|
199.4
|
|
|
$
|
210.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
United
States
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
and Game Informer magazine. As of August 1, 2009,
the United States segment included 4,377 GameStop stores,
compared to 4,180 on August 2, 2008. Sales for the 13 and
26 weeks ended August 1, 2009 decreased 10.2% and
1.4%, respectively, compared to the 13 and 26 weeks
ended August 2, 2008 as a result of decreased sales at
existing stores offset by the opening of 353 new stores
since May 3, 2008 and 439 stores since February 2,
2008, including 69 and 124 stores in the 13 and 26 weeks
ended August 1, 2009, respectively. Sales at existing
stores decreased partially due to a decrease in consumer traffic
as a result of the continued macro-economic weakness and a lack
of strong new video game titles released in fiscal 2009, offset
by an increase in used video game product sales as a result of
the new title weakness and increased promotional activities.
Segment operating income for the 13 weeks ended
August 1, 2009 decreased by 22.6%, compared to the
13 weeks ended August 2, 2008 due to the impact of
lower revenues for the quarter. Segment operating income for the
26 weeks ended August 1, 2009 increased slightly by
0.6%, compared to the 26 weeks ended August 2, 2008
due to the higher sales of used video game products as a
percentage of total sales and the resulting positive impact on
gross margin.
Canada
Sales in the Canadian segment in the 13 and 26 weeks ended
August 1, 2009 decreased 21.0% and 22.9%, respectively,
compared to the 13 and 26 weeks ended August 2, 2008.
The decrease in sales was primarily attributable to decreased
sales at existing stores and the unfavorable exchange rates
recognized in the 13 and 26 weeks ended August 1, 2009
compared to the prior year periods, which had the effect of
decreasing sales by $10.9 million and $33.9 million,
respectively, offset by the additional sales at the 27 and 52
stores opened since May 3, 2008 and February 2, 2008,
respectively. As of August 1, 2009, the Canadian segment
had 339 stores compared to 316 stores at August 2, 2008.
The decrease in sales at existing stores was primarily due to
weak consumer traffic, a slow-down in hardware unit sell-through
and a lack of new video game title releases in fiscal 2009.
Segment operating income for the 13 and 26 weeks ended
August 1, 2009 decreased by 40.4% and 28.7%, respectively,
compared to the 13 and 26 weeks ended August 2, 2008
driven by the decreased sales discussed above and the
unfavorable impact of changes in exchange rates, which had the
effect of decreasing operating earnings by $0.4 million and
$1.6 million, respectively, for the 13 and 26 weeks
ended August 1, 2009 when compared to the prior year.
Australia
Segment results for Australia include retail operations in
Australia and New Zealand. As of August 1, 2009, the
Australian segment included 370 stores, compared to 316 at
August 2, 2008. Sales for the 13 and 26 weeks ended
August 1, 2009 decreased 17.0% and 14.7%, respectively,
compared to the 13 and 26 weeks ended August 2, 2008.
The decrease in sales was primarily due to the unfavorable
exchange rates recognized in the 13 and 26 weeks ended
August 1, 2009 compared to the prior year periods, which
had the effect of decreasing sales by $25.0 million and
$58.0 million, respectively, as well as lower sales in
existing stores. The decrease in sales was partially offset by
the additional sales at the 80 and 92 stores opened since
May 3, 2008 and February 2, 2008, respectively.
Segment operating income in the 13 and 26 weeks ended
August 1, 2009 decreased by 35.8% and 33.0%, respectively,
when compared to the 13 and 26 weeks ended August 2,
2008. The decrease in segment operating income was due to the
decrease in 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
unfavorable changes in exchange rates for the 13 and
26 weeks ended August 1, 2009 when compared to
August 2, 2008 which had the effect of decreasing operating
earnings by $1.7 million and $3.7 million,
respectively.
Europe
Segment results for Europe include retail operations in 13
European countries. As of August 1, 2009, the European
segment operated 1,247 stores compared to 745 stores as of
August 2, 2008. For the 13 and 26 weeks ended
August 1, 2009, European sales increased 52.5% and 53.8%,
respectively, compared to the 13 and 26 weeks ended
August 2, 2008. The increase in sales was primarily due to
the increase in sales at existing stores and the
31
additional sales at the 556 and 643 stores opened since
May 3, 2008 and February 2, 2008, respectively,
including the 328 stores from the Micromania acquisition. This
increase in sales was offset by the unfavorable exchange rates
recognized in the 13 and 26 weeks ended August 1, 2009
compared to the prior year periods, which had the effect of
decreasing sales by $29.3 million and $65.1 million,
respectively, as well as a decrease in sales at existing stores.
The decrease in sales at existing stores was primarily driven by
weak consumer traffic due to continued macro-economic weakness,
a slow-down in hardware unit sell-through and a lack of new
video game title releases in fiscal 2009.
The segment operating loss in Europe was $5.0 million in
the 13 weeks ended August 1, 2009 compared to the
operating loss in the 13 weeks ended August 2, 2008 of
$1.7 million. The segment operating income in Europe for
the 26 weeks ended August 1, 2009 was
$0.5 million compared to the operating income in the
26 weeks ended August 2, 2008 of $1.8 million.
The increase in the operating loss for the 13 weeks ended
August 1, 2009 compared to the 13 weeks ended
August 2, 2008 and the decrease in operating earnings in
the 26 weeks ended August 1, 2009 compared to the
26 weeks ended August 2, 2008 were primarily due to
the weaker sales in Europe as discussed above and the increase
in selling, general and administrative expenses associated with
the increase in the number of stores in operation.
In addition, for the 13 and 26 weeks ended August 1,
2009, changes in exchange rates when compared to the prior year
had the effect of increasing operating earnings by
$1.1 million and $1.6 million, respectively.
Seasonality
The Companys business, like that of many retailers, is
seasonal, with the major portion of the sales and operating
profit realized during the fiscal quarter which includes the
holiday selling season.
Liquidity
and Capital Resources
Cash
Flows
During the 26 weeks ended August 1, 2009, cash used in
operations was $260.8 million, compared to cash used in
operations of $210.2 million during the 26 weeks ended
August 2, 2008. The increase of cash used in operations of
$50.6 million from the 26 weeks ended August 2,
2008 to the 26 weeks ended August 1, 2009 was
primarily due to an increase in cash used for working capital
purposes of $96.2 million primarily driven by the decrease
in accounts payable and accrued liabilities net of the decrease
in inventory. This increase was a result of decreased purchases
in the second quarter of fiscal 2009 when compared to fiscal
2008, primarily due to a decrease in hardware sales as a result
of the continued macro-economic weakness and the lack of new
titles available this year. Inventory turnover also decreased in
fiscal 2009 compared to fiscal 2008, primarily due to the growth
in the international segments which have lower inventory turns
compared to the United States segment due to their lower overall
store count and multiple warehouse facilities. Offsetting the
increase in cash used in working capital was an increase in cash
provided by net earnings, including the non-cash adjustments to
net earnings, in the 26 weeks ended August 1, 2009
when compared to the 26 weeks ended August 2, 2008 of
$12.2 million and an increase in the operating activities
adjustment related to the excess tax benefits realized from the
exercise of stock-based awards of $33.4 million.
Cash used in investing activities was $81.5 million and
$131.8 million during the 26 weeks ended
August 1, 2009 and August 2, 2008, respectively.
During the 26 weeks ended August 1, 2009,
approximately $76.9 million of cash was used primarily to
open new stores in the U.S. and internationally and to
invest in information systems. In addition, during the
26 weeks ended August 1, 2009, the Company used
$4.7 million to purchase an increased ownership interest in
GameStop Group Limited. For the 26 weeks ended
August 2, 2008, $81.5 million of cash was used
primarily to open new stores in the U.S. and
internationally and to invest in information systems. In
addition, the Company used $50.3 million, net of cash
acquired, to acquire Free Record Shop Norway AS, a Norwegian
private limited liability company (FRS), The
Gamesman Limited and an increased ownership interest in GameStop
Group Limited.
Cash used in financing activities was $58.4 million for the
26 weeks ended August 1, 2009 and cash provided by
financing activities for the 26 weeks ended August 2,
2008 was $24.5 million. The cash used in financing
activities for the 26 weeks ended August 1, 2009 was
primarily due to the repurchase of $50.8 million of
principal
32
value of the Companys senior notes. In addition, the
Company borrowed $100 million against its revolver during
the 26 weeks ended August 1, 2009 and subsequently
repaid the borrowings before August 1, 2009, with a maximum
of $75 million outstanding at any one time. The cash
provided by financing activities for the 26 weeks ended
August 2, 2008 was primarily due to the issuance of
shares relating to stock option exercises of $26.7 million
and $33.0 million for the realization of tax benefits
relating to the stock option exercises and vested restricted
stock, respectively. These inflows were offset by the repurchase
of $30.0 million of principal value of the Companys
senior notes.
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.
In October 2005, the Company entered into a five-year,
$400 million Credit Agreement (the Revolver),
including a $50 million letter of credit
sub-limit,
secured by the assets of the Company and its
U.S. subsidiaries. The Revolver places certain restrictions
on the Company and its subsidiaries, including limitations on
asset sales, additional liens and the incurrence of additional
indebtedness. In April 2007, the Company amended the Revolver to
extend the maturity date from October 11, 2010 to
April 25, 2012, reduce the LIBO interest rate margin,
reduce and fix the rate of the unused commitment fee and modify
or delete certain other covenants. The extension of the Revolver
to 2012 reduces our exposure to the current tightening in the
credit markets.
The availability under the Revolver is limited to a borrowing
base which allows the Company to borrow up to the lesser of
(x) approximately 70% of eligible inventory and
(y) 90% of the appraisal value of the inventory, in each
case plus 85% 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 prohibited, except that if availability under the
Revolver is or will be after any such payment equal to or
greater than 25% of the borrowing base, the Company may
repurchase its capital stock and pay cash dividends. In
addition, in the event that credit extensions under the Revolver
at any time exceed 80% of the lesser of the total commitment or
the borrowing base, the Company will be subject to a fixed
charge coverage ratio covenant of 1.5:1.0.
The per annum interest rate on the Revolver is variable and, at
the Companys option, is calculated by applying a margin of
(1) 0.0% to 0.25% above the higher of the prime rate of the
administrative agent or the federal funds effective rate plus
0.50% or (2) 1.00% to 1.50% above the LIBO rate. The
applicable margin is determined quarterly as a function of the
Companys consolidated leverage ratio. As of August 1,
2009, the applicable margin was 0.0% for prime rate loans and
1.00% for LIBO rate loans. In addition, the Company is required
to pay a commitment fee of 0.25% for any unused portion of the
total commitment under the Revolver. During the 13 weeks
ended August 1, 2009, the Company borrowed and repaid
$100 million under the Revolver. As of August 1, 2009,
there were no borrowings outstanding under the Revolver and
letters of credit outstanding totaled $8.3 million.
In September 2007, the Companys Luxembourg subsidiary
entered into a discretionary, $20 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 August 1, 2009, there were $0.3 million of cash
overdrafts outstanding under the Line of Credit and bank
guarantees outstanding totaled $5.7 million.
In September 2005, the Company, along with GameStop, Inc. as
co-issuer (together with the Company, the Issuers),
completed the offering of U.S. $650 million aggregate
principal amount of Senior Notes due 2012 (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).
33
The 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
August 1, 2009, the unamortized original issue discount was
$3.4 million. The Issuers pay interest on the 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 August 1, 2009, 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 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 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.
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 224 stores in the 26 weeks
ended August 1, 2009 and expects to open approximately 400
stores in total during fiscal 2009. Capital expenditures for
fiscal 2009 are projected to be approximately $170 million
to $180 million, to be used primarily to fund new store
openings and invest in distribution and information systems in
support of operations.
Between May 2006 and August 2007, the Company repurchased
$70 million of the Notes under previously announced
buybacks authorized by its Board of Directors. All of the
authorized amounts were repurchased and the Notes were delivered
to the Trustee for cancellation.
On February 7, 2008, the Company announced that its Board
of Directors authorized the buyback of up to an aggregate of an
additional $130 million of the Notes. The timing and amount
of the repurchases will be determined by the Companys
management based on their evaluation of market conditions and
other factors. In addition, the repurchases may be suspended or
discontinued at any time. As of August 2, 2008, the Company
had repurchased $30.0 million of the Notes pursuant to this
authorization. The associated loss on retirement of debt was
$2.3 million, which consisted of the premium paid to retire
the Notes and the write-off of the deferred financing fees and
the original issue discount on the Notes. The Company did not
repurchase any other Notes during fiscal 2008. In the
26 weeks ended August 1, 2009, the Company repurchased
$50.8 million of the Notes pursuant to this authorization.
The associated loss on retirement of debt was $2.9 million,
which consisted of the premium paid to retire the Notes and the
write-off of the deferred financing fees and the original issue
discount on the Notes. All Notes repurchased in fiscal 2008 and
fiscal 2009 were delivered to the Trustee for cancellation.
We used cash to expand the Company through acquisitions during
fiscal 2008. On April 5, 2008, the Company purchased all
the outstanding stock of FRS for $21.0 million, net of cash
acquired. FRS operated 49 record stores in Norway and also
operated office and warehouse facilities in Oslo, Norway. The
Company converted these stores into video game stores with an
inventory assortment similar to its other stores in Norway.
In 2003, the Company purchased a 51% controlling interest in
GameStop Group Limited which operates stores in Ireland and the
United Kingdom. Under the terms of the purchase agreement, the
minority interest owners of the remaining 49% have the ability
to require the Company to purchase their remaining shares in
incremental
34
percentages at a price to be determined based partially on the
Companys price to earnings ratio and GameStop Group
Limiteds earnings. On May 21, 2008, the minority
interest owners exercised their right to sell one-third of their
shares, or approximately 16% of GameStop Group Limited, to the
Company under the terms of the original purchase agreement for
$27.4 million. The transaction was completed in June 2008
and recorded in accordance with the provisions of the Statement
of Financial Accounting Standards No. 141, Business
Acquisitions. In July 2009 an additional 16% was purchased
for $4.7 million, bringing the Companys total
interest in GameStop Group Limited to approximately 84%.
On November 17, 2008, GameStop France SAS, a wholly owned
subsidiary of GameStop, completed the acquisition of
substantially all of the outstanding capital stock of SFMI
Micromania from L Capital, LV Capital, Europ@web and other
shareholders of Micromania for approximately
$580.4 million, net of cash acquired. Micromania is a
leading retailer of video and computer games in France with 348
stores as of August 1, 2009. The Company funded the
transaction with cash on hand, a draw on the Revolver totaling
$275.0 million, and a $150.0 million junior term loan
facility (the Term Loans). As of January 31,
2009, the Revolver and the Term Loans were repaid in full.
Based on our current operating plans and despite the continued
weakness of the overall economy, 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 Notes, store expansion and
remodeling activities and corporate capital expenditure programs
for at least the next 12 months.
Recent
Accounting Pronouncements
In May 2009, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting
Standards No. 165, Subsequent Events
(SFAS 165), which establishes general
standards of accounting for and disclosure of events that occur
after the balance sheet date but before financial statements are
issued or are available to be issued. SFAS 165 is effective
for fiscal years and interim periods ending after June 15,
2009 and is applied prospectively. The Company adopted the new
disclosure requirements in the unaudited condensed consolidated
financial statements effective August 1, 2009.
In April 2009, the FASB issued FASB Staff Position
No. FAS 107-1
and Accounting Principles Board (APB)
28-1,
Interim Disclosures about Fair Value of Financial Instruments
(FSP 107-1).
FSP 107-1
requires additional disclosures about fair value of financial
instruments for interim reporting periods and amends APB Opinion
No. 28, Interim Financial Reporting, to require
those disclosures in summarized financial information at interim
reporting periods for publicly traded companies.
FSP 107-1
was effective for the Company for the period ended
August 1, 2009.
In March 2008, the FASB issued Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative
Instruments and Hedging Activities an amendment of
FASB Statement No. 133 (SFAS 161).
SFAS 161 requires enhanced disclosures about how and why an
entity uses derivative instruments, how derivative instruments
and related hedged items are accounted for and their effect on
an entitys financial statements in each interim and annual
period. SFAS 161 was effective for the Company on
February 1, 2009 and has been applied prospectively. The
adoption of SFAS 161 did not have a significant impact on
our condensed consolidated financial statements.
In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 141 (revised 2007), Business
Combinations (SFAS 141(R)).
SFAS 141(R) amends the principles and requirements for how
an acquirer recognizes and measures in its financial statements
the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in the acquiree and the goodwill
acquired. SFAS 141(R) also establishes disclosure
requirements to enable the evaluation of the nature and
financial effects of the business combination. SFAS 141(R)
was effective for the Company on February 1, 2009, and the
Company will apply SFAS 141(R) prospectively to all
business combinations subsequent to the effective date. The
adoption of SFAS 141(R) did not have a significant impact
on our condensed consolidated financial statements and the
impact that its adoption will have on our consolidated financial
statements in future periods will depend on the nature and size
of business combinations completed subsequent to the date of
adoption.
35
In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 160, Noncontrolling Interests
in Consolidated Financial Statements an amendment of
Accounting Research Bulletin No. 51
(SFAS 160). SFAS 160 establishes
accounting and reporting standards for noncontrolling interests
(previously referred to as minority interests) in subsidiaries.
SFAS 160 also establishes disclosure requirements that
clearly identify and distinguish between controlling and
noncontrolling interests and requires the separate disclosure of
income attributable to controlling and noncontrolling interests.
SFAS 160 was effective for the Company on February 1,
2009. The adoption of SFAS 160 did not have a significant
impact on our condensed consolidated financial statements.
In September 2006, the FASB issued Statement of Financial
Accounting Standards No. 157, Fair Value Measurements
(SFAS 157), which defines fair value,
establishes a framework for measuring fair value, and expands
disclosures about fair value measurements. SFAS 157 applies
to other accounting pronouncements that require or permit fair
value measurements. SFAS 157 became effective for our
financial assets and liabilities on February 3, 2008 and on
our non-financial assets and non-financial liabilities on
February 1, 2009 and did not result in a significant change
in the method of calculating fair value of assets or liabilities
or have a material impact on our condensed consolidated
financial statements. The primary impact from adoption was
additional disclosure.
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 (the
Securities Act), 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:
|
|
|
|
|
our reliance on suppliers and vendors for sufficient quantities
of their products and for new product releases;
|
|
|
|
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;
|
|
|
|
the competitive environment in the electronic game industry;
|
|
|
|
our ability to open and operate new stores;
|
|
|
|
alternate sources of distribution of video game software;
|
|
|
|
our ability to attract and retain qualified personnel;
|
|
|
|
the impact and costs of litigation and regulatory compliance;
|
|
|
|
unanticipated litigation results;
|
|
|
|
the risks involved with our international operations; and
|
|
|
|
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
36
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.
|
|
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 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 follows the provisions of Statement of Financial
Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities
(SFAS 133), as amended by Statement of
Financial Accounting Standards No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging
Activities, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements
(SFAS 157) and Statement of Financial
Accounting Standards No. 161, Disclosures about
Derivative Instruments and Hedging Activities an
amendment of FASB Statement No. 133
(SFAS 161). SFAS 133 requires that all
derivative instruments be recorded on the balance sheet at fair
value, while SFAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about
fair value measurements. SFAS 161 requires certain
disclosures about the gains and losses associated with
derivative instruments and hedging activities, the location of
such gains and losses in the financial statements, and a
description of related trading activities and their risks.
Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income,
depending on whether the derivative is designated as part of a
hedge transaction, and if it is, depending on the type of hedge
transaction.
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 13 and
26 week periods ended August 1, 2009, the Company
recognized a $12.3 million and $12.8 million loss,
respectively, in selling, general and administrative expenses
related to the trading of derivative instruments. The aggregate
fair value of the Foreign Currency Contracts as of
August 1, 2009 was a liability of $14.6 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 August 1, 2009 would result in a
(loss) or gain in value of the forwards, options and swaps of
($27.0 million) or $27.0 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.
|
|
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
37
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. Micromania operates
on different information technology systems than the Company.
The Company is currently evaluating the internal control
processes at Micromania and changes to certain processes,
information technology systems, and other components of internal
controls resulting from this evaluation may occur.
PART II
OTHER INFORMATION
|
|
ITEM 1.
|
Legal
Proceedings
|
On February 14, 2005, and as amended, Steve Strickland, as
personal representative of the Estate of Arnold Strickland,
deceased, Henry Mealer, as personal representative of the Estate
of Ace Mealer, deceased, and Willie Crump, as personal
representative of the Estate of James Crump, deceased, filed a
wrongful death lawsuit against GameStop, Sony, Take-Two
Interactive, Rock Star Games and Wal-Mart (collectively, the
Defendants) and Devin Moore, alleging that
Defendants actions in designing, manufacturing, marketing
and supplying Defendant Moore with violent video games were
negligent and contributed to Defendant Moore killing
Arnold Strickland, Ace Mealer and James Crump. Moore was
found guilty of capital murder in a criminal trial and was
sentenced to death in August 2005.
Plaintiffs counsel named an expert, a psychologist who
testified at the criminal trial on behalf of the criminal
defendant, who plaintiffs indicated would testify that violent
video games were a substantial factor in causing the murders.
This same testimony from this same expert was excluded in the
criminal trial from the same judge hearing this case. The
testimony of plaintiffs psychologist expert was heard by
the Court on October 30, 2008, and the motion to exclude
that testimony was argued on December 12, 2008.
On July 30, 2009, the trial court entered its Order
granting summary judgment for all defendants, dismissing the
case with prejudice on the grounds that plaintiffs
experts testimony did not satisfy the Frye standard for
expert admissibility. Subsequent to the entry of the Order, the
plaintiffs filed a notice of appeal.
The Company does not believe there is sufficient information to
estimate the amount of the possible loss, if any, resulting from
the lawsuit if the plaintiffs appeal is successful.
In the ordinary course of the Companys business, the
Company is, from time to time, subject to various other legal
proceedings. Management does not believe that any such other
legal proceedings, 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 other 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 31, 2009 filed with the
SEC on April 1, 2009. 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
38
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.
|
|
ITEM 4.
|
Submission
of Matters to a Vote of Security Holders
|
The Companys Annual Meeting of Stockholders was held on
June 23, 2009. At the close of business on the record date
for the meeting (which was May 1, 2009), there were
164,622,187 shares of Class A common stock outstanding
and entitled to vote at the meeting. Holders of
144,643,838 shares of Class A common stock (with one
vote per share) were present at the meeting, either in person or
by proxy.
The Companys stockholders approved, by the following vote,
the Fourth Amended and Restated GameStop Corp. 2001 Incentive
Plan which increases the maximum number of shares that may be
the subject of awards from 43,500,000 to 46,500,000 shares,
of which 6,500,000 shares may be issued solely pursuant to
options.
|
|
|
|
|
|
|
|
|
|
|
|
|
In Favor
|
|
Against
|
|
|
Abstained
|
|
|
Broker Non-Votes
|
|
|
117,716,628
|
|
|
12,966,275
|
|
|
|
516,679
|
|
|
|
13,444,256
|
|
The following individuals were elected to the Companys
Board of Directors to hold office for a term of three years and
until their respective successors are duly elected and
qualified, with the vote specified below:
|
|
|
|
|
|
|
|
|
Nominee
|
|
In Favor
|
|
|
Withheld
|
|
|
Daniel A. DeMatteo
|
|
|
142,685,402
|
|
|
|
1,958,436
|
|
Michael N. Rosen
|
|
|
135,642,707
|
|
|
|
9,001,131
|
|
Edward A. Volkwein
|
|
|
141,614,892
|
|
|
|
3,028,946
|
|
The following individuals continue to serve on the
Companys Board of Directors until the expiration of their
terms: R. Richard Fontaine, Jerome L. Davis, Steven R. Koonin,
Leonard Riggio, Stephanie M. Shern, Stanley (Mickey) Steinberg,
Gerald R. Szczepanski and Lawrence S. Zilavy.
The Companys stockholders also ratified the appointment of
BDO Seidman, LLP as the registered independent public accounting
firm of the Company for the fiscal year ending January 30,
2010 by the following vote:
|
|
|
|
|
|
|
|
|
In Favor
|
|
Against
|
|
|
Abstained
|
|
|
144,127,652
|
|
|
446,271
|
|
|
|
69,915
|
|
39
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)
|
|
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.(6)
|
|
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.(7)
|
|
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.(8)
|
|
10
|
.1
|
|
Insurance Agreement, dated as of January 1, 2002, between
Barnes & Noble, Inc. and GameStop Holdings Corp.
(f/k/a GameStop Corp.).(9)
|
|
10
|
.2
|
|
Operating Agreement, dated as of January 1, 2002, between
Barnes & Noble, Inc. and GameStop Holdings Corp.
(f/k/a GameStop Corp.).(9)
|
|
10
|
.3
|
|
Fourth Amended and Restated 2001 Incentive Plan.(17)
|
|
10
|
.4
|
|
Second Amended and Restated Supplemental Compensation Plan.(11)
|
|
10
|
.5
|
|
Form of Option Agreement.(12)
|
|
10
|
.6
|
|
Form of Restricted Share Agreement.(13)
|
|
10
|
.7
|
|
Credit Agreement, dated as of October 11, 2005, by and
among GameStop Corp. (f/k/a GSC Holdings Corp.), certain
subsidiaries of GameStop Corp., Bank of America, N.A. and the
other lending institutions listed in the Agreement, Bank of
America, N.A. and Citicorp North America, Inc., as Issuing
Banks, Bank of America, N.A., as Administrative Agent and
Collateral Agent, Citicorp North America, Inc., as
Syndication Agent, and Merrill Lynch Capital, a division of
Merrill Lynch Business Financial Services Inc., as Documentation
Agent.(14)
|
|
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.(14)
|
|
10
|
.9
|
|
Security Agreement, dated October 11, 2005, by GameStop
Corp. (f/k/a GSC Holdings Corp.) and certain subsidiaries of
GameStop Corp. in favor of Bank of America, N.A., as Collateral
Agent for the Secured Parties.(14)
|
|
10
|
.10
|
|
Patent and Trademark Security Agreement, dated as of
October 11, 2005 by GameStop Corp. (f/k/a GSC Holdings
Corp.) and certain subsidiaries of GameStop Corp. in favor of
Bank of America, N.A., as Collateral Agent.(14)
|
|
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.(14)
|
|
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.(14)
|
|
10
|
.13
|
|
Form of Securities Collateral Pledge Agreement, dated as of
October 11, 2005.(14)
|
40
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
10
|
.14
|
|
First Amendment, dated April 25, 2007, to Credit Agreement,
dated as of October 11, 2005, by and among GameStop Corp.
(f/k/a GSC Holdings Corp.), certain subsidiaries of GameStop
Corp., Bank of America, N.A. and the other lending institutions
listed in the Amendment, Bank of America, N.A. and Citicorp
North America, Inc., as Issuing Banks, Bank of America, N.A., as
Administrative Agent and Collateral Agent, Citicorp North
America, Inc., as Syndication Agent, and Merrill Lynch Capital,
a division of Merrill Lynch Business Financial Services Inc., as
Documentation Agent.(15)
|
|
10
|
.15
|
|
Second Amendment, dated as of October 23, 2008, to Credit
Agreement, dated as of October 11, 2005, by and among
GameStop Corp. (f/k/a GSC Holdings Corp.), certain subsidiaries
of GameStop Corp., Bank of America, N.A. and the other lending
institutions listed in the Amendment, Bank of America, N.A. and
Citicorp North America, Inc., as Issuing Banks, Bank of America,
N.A., as Administrative Agent and Collateral Agent, Citicorp
North America, Inc., as Syndication Agent, and GE Business
Financial Services, Inc., as Documentation Agent.(3)
|
|
10
|
.16
|
|
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
|
.17
|
|
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
|
.18
|
|
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
|
.19
|
|
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
|
.20
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and R. Richard
Fontaine.(10)
|
|
10
|
.21
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and Daniel A.
DeMatteo.(10)
|
|
10
|
.22
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and David W.
Carlson.(10)
|
|
10
|
.23
|
|
Amendment to Amended and Restated Executive Employment
Agreement, dated August 24, 2009, between GameStop Corp.
and David W. Carlson.(16)
|
|
10
|
.24
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and Tony
Bartel.(10)
|
|
10
|
.25
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and J. Paul
Raines.(10)
|
|
10
|
.26
|
|
Executive Employment Agreement, dated August 24, 2009,
between GameStop Corp. and Catherine Smith.(16)
|
|
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
|
41
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
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 GameStop Holdings Corp.s
Form 8-K
filed with the Securities and Exchange Commission on
September 30, 2005. |
|
(7) |
|
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. |
|
(8) |
|
Incorporated by reference to the Registrants
Form S-3ASR
filed with the Securities and Exchange Commission on
April 10, 2006. |
|
(9) |
|
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. |
|
(10) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
January 7, 2009. |
|
(11) |
|
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. |
|
(12) |
|
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. |
|
(13) |
|
Incorporated by reference to GameStop Holdings Corp.s
Form 8-K
filed with the Securities and Exchange Commission on
September 12, 2005. |
|
(14) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
October 12, 2005. |
|
(15) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
April 26, 2007. |
|
(16) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
August 25, 2009. |
|
(17) |
|
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. |
42
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.
|
|
|
|
By:
|
/s/ Catherine
R. Smith
|
Catherine R. Smith
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: September 9, 2009
GAMESTOP CORP.
Robert A. Lloyd
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Date: September 9, 2009
43
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)
|
|
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.(6)
|
|
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.(7)
|
|
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.(8)
|
|
10
|
.1
|
|
Insurance Agreement, dated as of January 1, 2002, between
Barnes & Noble, Inc. and GameStop Holdings Corp.
(f/k/a GameStop Corp.).(9)
|
|
10
|
.2
|
|
Operating Agreement, dated as of January 1, 2002, between
Barnes & Noble, Inc. and GameStop Holdings Corp.
(f/k/a GameStop Corp.).(9)
|
|
10
|
.3
|
|
Fourth Amended and Restated 2001 Incentive Plan.(17)
|
|
10
|
.4
|
|
Second Amended and Restated Supplemental Compensation Plan.(11)
|
|
10
|
.5
|
|
Form of Option Agreement.(12)
|
|
10
|
.6
|
|
Form of Restricted Share Agreement.(13)
|
|
10
|
.7
|
|
Credit Agreement, dated as of October 11, 2005, by and
among GameStop Corp. (f/k/a GSC Holdings Corp.), certain
subsidiaries of GameStop Corp., Bank of America, N.A. and the
other lending institutions listed in the Agreement, Bank of
America, N.A. and Citicorp North America, Inc., as Issuing
Banks, Bank of America, N.A., as Administrative Agent and
Collateral Agent, Citicorp North America, Inc., as
Syndication Agent, and Merrill Lynch Capital, a division of
Merrill Lynch Business Financial Services Inc., as Documentation
Agent.(14)
|
|
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.(14)
|
|
10
|
.9
|
|
Security Agreement, dated October 11, 2005, by GameStop
Corp. (f/k/a GSC Holdings Corp.) and certain subsidiaries of
GameStop Corp. in favor of Bank of America, N.A., as Collateral
Agent for the Secured Parties.(14)
|
|
10
|
.10
|
|
Patent and Trademark Security Agreement, dated as of
October 11, 2005 by GameStop Corp. (f/k/a GSC Holdings
Corp.) and certain subsidiaries of GameStop Corp. in favor of
Bank of America, N.A., as Collateral Agent.(14)
|
|
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.(14)
|
|
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.(14)
|
|
10
|
.13
|
|
Form of Securities Collateral Pledge Agreement, dated as of
October 11, 2005.(14)
|
44
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
10
|
.14
|
|
First Amendment, dated April 25, 2007, to Credit Agreement,
dated as of October 11, 2005, by and among GameStop Corp.
(f/k/a GSC Holdings Corp.), certain subsidiaries of GameStop
Corp., Bank of America, N.A. and the other lending institutions
listed in the Amendment, Bank of America, N.A. and Citicorp
North America, Inc., as Issuing Banks, Bank of America, N.A., as
Administrative Agent and Collateral Agent, Citicorp North
America, Inc., as Syndication Agent, and Merrill Lynch Capital,
a division of Merrill Lynch Business Financial Services Inc., as
Documentation Agent.(15)
|
|
10
|
.15
|
|
Second Amendment, dated as of October 23, 2008, to Credit
Agreement, dated as of October 11, 2005, by and among
GameStop Corp. (f/k/a GSC Holdings Corp.), certain subsidiaries
of GameStop Corp., Bank of America, N.A. and the other lending
institutions listed in the Amendment, Bank of America, N.A. and
Citicorp North America, Inc., as Issuing Banks, Bank of America,
N.A., as Administrative Agent and Collateral Agent, Citicorp
North America, Inc., as Syndication Agent, and GE Business
Financial Services, Inc., as Documentation Agent.(3)
|
|
10
|
.16
|
|
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
|
.17
|
|
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
|
.18
|
|
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
|
.19
|
|
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
|
.20
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and R. Richard
Fontaine.(10)
|
|
10
|
.21
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and Daniel A.
DeMatteo.(10)
|
|
10
|
.22
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and David W.
Carlson.(10)
|
|
10
|
.23
|
|
Amendment to Amended and Restated Executive Employment
Agreement, dated August 24, 2009, between GameStop Corp.
and David W. Carlson.(16)
|
|
10
|
.24
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and Tony
Bartel.(10)
|
|
10
|
.25
|
|
Amended and Restated Executive Employment Agreement, dated
December 31, 2008, between GameStop Corp. and J. Paul
Raines.(10)
|
|
10
|
.26
|
|
Executive Employment Agreement, dated August 24, 2009,
between GameStop Corp. and Catherine Smith.(16)
|
|
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.
|
45
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
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 GameStop Holdings Corp.s
Form 8-K
filed with the Securities and Exchange Commission on
September 30, 2005. |
|
(7) |
|
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. |
|
(8) |
|
Incorporated by reference to the Registrants
Form S-3ASR
filed with the Securities and Exchange Commission on
April 10, 2006. |
|
(9) |
|
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. |
|
(10) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
January 7, 2009. |
|
(11) |
|
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. |
|
(12) |
|
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. |
|
(13) |
|
Incorporated by reference to GameStop Holdings Corp.s
Form 8-K
filed with the Securities and Exchange Commission on
September 12, 2005. |
|
(14) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
October 12, 2005. |
|
(15) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
April 26, 2007. |
|
(16) |
|
Incorporated by reference to the Registrants
Form 8-K
filed with the Securities and Exchange Commission on
August 25, 2009. |
|
(17) |
|
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. |
46
exv31w1
Exhibit 31.1
CERTIFICATION
PURSUANT TO
17 CFR 240.13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Daniel A. DeMatteo, certify that:
1. I have reviewed this report on
Form 10-Q
of GameStop Corp.;
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrants other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act
Rules 13a-15(e)
and
15d-15(e))
and internal control over financial reporting (as defined in
Exchange Act
Rules 13a-15(f)
and
15d-15(f))
for the registrant and have:
a. Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being prepared;
b. Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrants
disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
d. Disclosed in this report any change in the
registrants internal control over financial reporting that
occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably
likely to materially affect, the registrants internal
control over financial reporting; and
5. The registrants other certifying officer and I
have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrants
auditors and the audit committee of the registrants board
of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrants ability to record, process, summarize and
report financial information; and
b. Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal control over financial reporting.
|
|
|
|
By:
|
/s/ Daniel
A. DeMatteo
|
Daniel A. DeMatteo
Chief Executive Officer
GameStop Corp.
Date: September 9, 2009
exv31w2
Exhibit 31.2
CERTIFICATION
PURSUANT TO
17 CFR 240.13a-14(a) /15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Catherine R. Smith, certify that:
1. I have reviewed this report on
Form 10-Q
of GameStop Corp.;
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrants other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act
Rules 13a-15(e)
and
15d-15(e))
and internal control over financial reporting (as defined in
Exchange Act
Rules 13a-15(f)
and
15d-15(f))
for the registrant and have:
a. Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being prepared;
b. Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrants
disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
d. Disclosed in this report any change in the
registrants internal control over financial reporting that
occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably
likely to materially affect, the registrants internal
control over financial reporting; and
5. The registrants other certifying officer and I
have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrants
auditors and the audit committee of the registrants board
of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrants ability to record, process, summarize and
report financial information; and
b. Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal control over financial reporting.
|
|
|
|
By:
|
/s/ Catherine
R. Smith
|
Catherine R. Smith
Executive Vice President and Chief Financial Officer GameStop
Corp.
Date: September 9, 2009
exv32w1
Exhibit 32.1
CERTIFICATION
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
In connection with the quarterly report of GameStop Corp. (the
Company) on
Form 10-Q
for the period ended August 1, 2009 as filed with the
Securities and Exchange Commission on the date hereof (the
Report), I, Daniel A. DeMatteo, Chief Executive
Officer of the Company, certify, to the best of my knowledge,
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, that:
(1) The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of the Company.
Daniel A. DeMatteo
Chief Executive Officer
GameStop Corp.
September 9, 2009
A signed original of this written statement required by
Section 906, or other document authenticating,
acknowledging, or otherwise adopting the signature that appears
in typed form within the electronic version of this written
statement required by Section 906, has been provided to the
Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.
exv32w2
Exhibit 32.2
CERTIFICATION
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
In connection with the quarterly report of GameStop Corp. (the
Company) on
Form 10-Q
for the period ended August 1, 2009 as filed with the
Securities and Exchange Commission on the date hereof (the
Report), I, Catherine R. Smith, Executive Vice
President and Chief Financial Officer of the Company, certify,
to the best of my knowledge, 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, that:
(1) The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of the Company.
Catherine R. Smith
Executive Vice President and
Chief Financial Officer
GameStop Corp.
September 9, 2009
A signed original of this written statement required by
Section 906, or other document authenticating,
acknowledging, or otherwise adopting the signature that appears
in typed form within the electronic version of this written
statement required by Section 906, has been provided to the
Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.