GameStop 2006 Annual Report Download - page 98

15. Certain Relationships and Related Transactions
The Company operates departments within ten bookstores operated by Barnes & Noble, a stockholder of
Historical GameStop until November 2004 and an affiliate through a common stockholder who is the chairman of
the board of directors of Barnes & Noble and a member of the Company’s board of directors. The Company pays a
license fee to Barnes & Noble on the gross sales of such departments. Management deems the license fee to be
reasonable and based upon terms equivalent to those that would prevail in an arm’s length transaction. During the
53 weeks ended February 3, 2007 and the 52 weeks ended January 28, 2006 and January 29, 2005, these charges
amounted to $996, $857 and $859, respectively.
Until June 2005, Historical GameStop participated in Barnes & Noble’s workers’ compensation, property and
general liability insurance programs. The costs incurred by Barnes & Noble under these programs were allocated to
Historical GameStop based upon total payroll expense, property and equipment, and insurance claim history of
Historical GameStop. Management deemed the allocation methodology to be reasonable. Although Historical
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 Historical GameStop will be allocated to the Company. During the 53 weeks ended
February 3, 2007 and the 52 weeks ended January 28, 2006 and January 29, 2005, these allocated charges amounted
to $812, $1,726 and $2,662, respectively.
In October 2004, the Board of Directors of Historical GameStop authorized a repurchase of Historical
GameStop common stock held by Barnes & Noble. Historical GameStop repurchased 12,214 shares of common
stock at a price equal to $9.13 per share for aggregate consideration before expenses of $111,520. The repurchase
price per share was determined by using a discount of 3.5% on the last reported trade of Historical GameStop’s
common stock on the New York Stock Exchange prior to the time of the transaction. Historical GameStop paid
$37,500 in cash and issued a promissory note in the principal amount of $74,020, which is payable in installments
and bears interest at 5.5% per annum, payable when principal installments are due. The Company made scheduled
principal payments of $37,500, $12,173 and $12,173 on the promissory note in January 2005, October 2005 and
October 2006, respectively. Interest expense on the promissory note for the 53 weeks ended February 3, 2007 and
the 52 weeks ended January 28, 2006 and January 29, 2005 totaled $1,148, $1,785 and $1,271, respectively.
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 www.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 www.bn.com. For the 53 weeks ended February 3, 2007 and the 52 weeks ended January 28, 2006, the
fee to Barnes & Noble totaled $348 and $255, respectively.
16. Significant Products
The following table sets forth sales (in millions) by significant product category for the periods indicated:
Sales
Percent
of Total Sales
Percent
of Total Sales
Percent
of Total
53 Weeks
Ended
February 3,
2007
52 Weeks
Ended
January 28,
2006
52 Weeks
Ended
January 29,
2005
Sales:
New video game hardware ...... $1,073.7 20.2% $ 503.2 16.3% $ 209.2 11.4%
New video game software ....... 2,012.5 37.8% 1,244.9 40.3% 776.7 42.1%
Used video game products ....... 1,316.0 24.8% 808.0 26.1% 511.8 27.8%
Other ...................... 916.7 17.2% 535.7 17.3% 345.1 18.7%
Total ..................... $5,318.9 100.0% $3,091.8 100.0% $1,842.8 100.0%
F-30
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)