GameStop 2006 Annual Report Download - page 56

Contractual Obligations
The following table sets forth our contractual obligations (in millions) as of February 3, 2007:
Contractual Obligations Total
Less Than
1 Year 1-3 Years 3-5 Years
More Than
5 Years
Payments Due by Period
(In millions)
Long-Term Debt(1)................. $1,242.8 $ 83.7 $142.6 $384.5 $632.0
Operating Leases .................. $ 858.8 $219.0 $333.1 $169.7 $137.0
Purchase Obligations(2) ............. $ 626.0 $626.0 $ — $ — $ —
Involuntary Employment Termination
Costs(3) ....................... $ 1.2 $ 1.2 $ — $ — $ —
Total ........................... $2,728.8 $929.9 $475.7 $554.2 $769.0
(1) The long-term debt consists of $600.0 million (principal value), which bears interest at 8.0%, $250.0 million of
floating rate notes which bore interest at 9.235% as of February 3, 2007 and $12.2 million which bears interest
at 5.5%. Amounts include contractual interest payments (using the interest rate as of February 3, 2007 for the
floating rate notes).
(2) Purchase obligations represent outstanding purchase orders for merchandise from vendors. These purchase
orders are generally cancelable until shipment of the products.
(3) Involuntary employment termination costs include known, remaining amounts committed to former employ-
ees, primarily in general and administrative functions in EB’s Pennsylvania corporate office and distribution
center and Nevada call center, which were closed in the first half of fiscal 2006.
In addition to minimum rentals, the operating leases generally require the Company to pay all insurance, taxes
and other maintenance costs and may provide for percentage rentals. Percentage rentals are based on sales
performance in excess of specified minimums at various stores. Leases with step rent provisions, escalation clauses
or other lease concessions are accounted for on a straight-line basis over the lease term, including renewal options
for those leases in which it is reasonably assured that the Company will exercise the renewal option. The Company
does not have leases with capital improvement funding.
The Company has entered into employment agreements with R. Richard Fontaine, Daniel A. DeMatteo,
Steven R. Morgan and David W. Carlson. The terms of the employment agreement for Mr. Fontaine and
Mr. DeMatteo commenced on April 11, 2005 and continue for a period of three years thereafter, with automatic
annual renewals thereafter unless either party gives notice of non-renewal at least six months prior to automatic
renewal. The term of the employment agreement for Mr. Morgan commenced on December 9, 2005 and continues
through February 12, 2008, with automatic annual renewals thereafter unless either party gives notice of non-
renewal at least six months prior to automatic renewal. The term of the employment agreement for Mr. Carlson
commenced on April 3, 2006 and continues for a period of two years thereafter, with automatic annual renewals
thereafter unless either party gives notice of non-renewal at least six months prior to automatic renewal.
Mr. Fontaine’s minimum annual salary during the term of his employment under the employment agreement
shall be no less than $650,000. Mr. DeMatteo’s minimum annual salary during the term of his employment under
the employment agreement shall be no less than $535,000. Mr. Morgan’s minimum annual salary during the term of
his employment under the employment agreement shall be no less than $450,000. Mr. Carlson’s minimum annual
salary during the term of his employment under the employment agreement shall be no less than $350,000. The
Board of Directors of the Company has set Mr. Fontaine’s, Mr. DeMatteo’s, Mr. Morgan’s and Mr. Carlson’s salaries
for fiscal 2007 at $1,000,000, $800,000, $500,000 and $400,000, respectively.
As of February 3, 2007, we had standby letters of credit outstanding in the amount of $4.3 million and had cash
collateralized bank guarantees outstanding in the amount of $4.1 million. The Company had no standby repurchase
obligations outstanding as of February 3, 2007.
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