GameStop 2005 Annual Report Download - page 47

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Guarantors assumed all the obligations of a subsidiary guarantor under the Purchase Agreement and the Regis-
tration Rights Agreement.
Under certain conditions, the Issuers may on any one or more occasions prior to maturity redeem up to 100% of
the aggregate principal amount of Senior Floating Rate Notes and/or Senior Notes issued under the Indenture at
redemption prices at or in excess of 100% of the principal amount thereof plus accrued and unpaid interest, if any, to
the redemption date. The circumstances which would limit the percentage of the Notes which may be redeemed or
which would require the Company to pay a premium in excess of 100% of the principal amount are defined in the
Indenture. The Issuers may acquire Senior Floating Rate Notes and Senior Notes by means other than redemption,
whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable
securities laws, so long as such acquisitions do not otherwise violate the terms of the Indenture.
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 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.
On May 25, 2005, a subsidiary of EB closed on a 10-year, $9.5 million mortgage agreement collateralized by a
new 315,000 square foot distribution facility located in Sadsbury Township, Pennsylvania. Interest is fixed at a rate
of 5.4% per annum. As of January 28, 2006, the outstanding principal balance under the mortgage was approx-
imately $9.3 million.
In March 2003, the Board of Directors of Historical GameStop authorized a common stock repurchase
program for the purchase of up to $50.0 million of Historical GameStop’s Class A common shares. Historical
GameStop had the right to repurchase shares from time to time in the open market or through privately negotiated
transactions, depending on prevailing market conditions and other factors. During the 52 weeks ended January 29,
2005, Historical GameStop repurchased 959,000 shares at an average share price of $15.64. During the 52 weeks
ended January 30, 2004, Historical GameStop repurchased 2,304,000 shares at an average share price of $15.19.
From the inception of this repurchase program through January 29, 2005, Historical GameStop repurchased
3,263,000 shares at an average share price of $15.32, totaling $50.0 million, and, as of January 29, 2005, had no
amount remaining available for purchases under this repurchase program. The repurchased shares were held in
treasury until the consummation of the mergers, at which time the shares were retired and all outstanding shares of
Historical GameStop were exchanged for shares of common stock of the Company.
In October 2004, the Board of Directors of Historical GameStop authorized a repurchase of Historical
GameStop Class B common stock held by Barnes & Noble. Historical GameStop repurchased 6,107,000 shares of
Class B common stock at a price equal to $18.26 per share for aggregate consideration of $111.5 million. Historical
GameStop paid $37.5 million in cash and issued a promissory note in the principal amount of $74.0 million.
Scheduled principal payments of $37.5 million and $12.2 million were made in January 2005 and October 2005,
respectively. The note also requires payments of $12.2 million each due in October 2006 and October 2007. The
note is unsecured and bears interest at 5.5% per annum, payable when principal installments are due. The
repurchased shares were immediately retired.
Based on our current operating plans, we believe that available cash balances, cash generated from our
operating activities and funds available under the Senior Credit Facility will be sufficient to fund our operations,
required interest payments on the Notes and our note payable to Barnes & Noble, store expansion and remodeling
activities and corporate capital expenditure programs for at least the next 12 months.
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