GameStop 2006 Annual Report Download - page 55

the date the Notes were issued, and (3) use their commercially reasonable efforts to consummate the exchange offer
with respect to the Notes within 270 days from the date the Notes were issued. In April 2006, the Company filed a
registration statement on Form S-4 in order to register new notes (the “New Notes”) with the same terms and
conditions as the Notes in order to facilitate an exchange of the New Notes for the Notes. This registration statement
on Form S-4 was declared effective by the SEC on May 10, 2006 and the Company commenced an exchange offer to
exchange the New Notes for the Notes. This exchange offer was completed in June 2006 with 100% participation.
In November 2006, Citibank, N.A. resigned as Trustee for the Notes and Wilmington Trust Company was
appointed as the new Trustee for the Notes.
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. Upon a Change of Control (as defined in the Indenture), the Issuers are required to offer to purchase all of
the Notes then outstanding at 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase.
The Issuers may acquire Senior 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.
In May 2006, the Company announced that its Board of Directors authorized the buyback of up to an aggregate
of $100.0 million of its Senior Floating Rate Notes and Senior Notes. As of February 3, 2007, the Company had
repurchased the maximum authorized amount, having acquired $50.0 million of its Senior Notes, and $50.0 million
of its Senior Floating Rate Notes and delivered the Notes to the Trustee for cancellation. The associated loss on
retirement of debt is $6.1 million.
Subsequently, on February 9, 2007, the Company announced that its Board of Directors authorized the
buyback of up to an aggregate of an additional $150.0 million of its Senior Floating Rate Notes and Senior Notes.
The timing and amount of the repurchases will be determined by the Company’s management based on their
evaluation of market conditions and other factors. In addition, the repurchases may be suspended or discontinued at
any time. At the time of filing, the Company had repurchased $14.9 million of its Senior Notes and $64.6 million of
its Senior Floating Rate Notes pursuant to this new authorization and delivered the Notes to the Trustee for
cancellation. The associated loss on retirement of debt is $5.1 million.
In October 2004, Historical GameStop issued a promissory note in favor of Barnes & Noble in the principal
amount of $74.0 million in connection with the repurchase of Historical GameStop’s common shares held by
Barnes & Noble. Payments of $37.5 million, $12.2 million and $12.2 million were made in January 2005, October
2005 and October 2006, respectively, as required by the promissory note, which also requires a final payment of
$12.2 million in October 2007. The note is unsecured and bears interest at 5.5% per annum, payable when principal
installments are due.
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. In June 2006, the
outstanding principal balance under the mortgage of approximately $9.2 million was paid in full in conjunction with
the sale of the distribution facility.
Based on our current operating plans, we believe that available cash balances, cash generated from our
operating activities and funds available under the Revolver will be sufficient to fund our operations, required
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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