GameStop 2005 Annual Report Download - page 66

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amendment to any tax return, the determination and payment of any amounts owed relating to periods prior to the
date of the offering and in the conduct of any tax audits, litigation or appeals.
We and Barnes & Noble have agreed to indemnify each other for tax or other liabilities resulting from the
failure to pay any taxes required to be paid under the tax disaffiliation agreement, tax or other liabilities resulting
from negligence in supplying inaccurate or incomplete information or the failure to cooperate with the preparation
of any tax return or the conduct of any tax audits, litigation or appeals. The tax disaffiliation agreement requires us to
retain records, documents and other information necessary for the audit of tax returns relating to periods prior to the
date we ceased to be a member of Barnes & Noble’s consolidated tax group and to provide reasonable access to
Barnes & Noble with respect to such records, documents and information.
Other Transactions and Relationships
We paid the legal fees and expenses of one of our directors, Leonard Riggio, in connection with the mergers,
including Mr. Riggio’s legal fees and expenses incurred in connection with the preparation and filing of Mr. Riggio’s
notification and report form under the Hart-Scott Rodino Antitrust Improvements Act of 1976 (including the filing
fee). These legal fees and expenses were approximately $150,000.
In July 2003, the Company purchased an airplane from a company controlled by a member of the Board of
Directors. The purchase price was $9.5 million and was negotiated through an independent third party following an
independent appraisal.
In October 2004, Historical GameStop’s Board of Directors authorized a repurchase of Class B common stock
held by Barnes & Noble. Historical GameStop repurchased 6,107,000 shares of its Class B common stock at a price
equal to $18.26 per share for aggregate consideration of $111.5 million. The repurchase price per share was
determined by using a discount of 3.5% on the last reported trade of the Company’s Class A common stock on the
New York Stock Exchange prior to the time of the transaction. Historical GameStop paid $37.5 million in cash and
issued a promissory note in the principal amount of $74.0 million, payable in installments over three years and
bearing interest at 5.5% per annum, payable when principal installments are due. The Company made principal
payments of $37.5 million and $12.2 million on the promissory note as scheduled in January 2005 and October
2005, respectively. Interest expense on the promissory note for the 52 weeks ended January 28, 2006 totaled
$1.8 million.
In May 2005, we entered into an arrangement with Barnes & Noble under which www.gamestop.com is the
exclusive specialty video game retailer listed on bn.com, Barnes & Noble’s 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 bn.com. For the 52 weeks ended January 28, 2006, the fee to Barnes & Noble totaled $255,000.
On November 2, 2002, EB sold its BC Sports Collectibles business to SCAC for $2.2 million in cash and the
assumption of lease related liabilities in excess of $13.0 million. The purchaser, SCAC, is owned by the family of
James J. Kim, Chairman of EB at the time and currently one of the Company’s directors. The transaction was
negotiated and approved by a committee of EB’s Board of Directors comprised solely of independent directors with
the assistance of an investment banking firm engaged to solicit offers for the BC Sports Collectibles business. As EB
remains contingently liable for the BC store leases, Mr. Kim has agreed to indemnify EB against any liabilities
associated with these leases.
Michael N. Rosen, our Secretary and one of our directors, is a partner of Bryan Cave LLP, which is counsel to
us.
Item 14. Principal Accountant Fees and Services
Registered Independent Public Accounting Firm
The firm of BDO Seidman, LLP (“BDO Seidman”) has been selected as the registered independent public
accounting firm for the Company.
The independent accountants examine annual financial statements and provide other permissible non-audit
and tax-related services for the Company. The Company and the Audit Committee have considered whether the
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