GameStop 2007 Annual Report Download - page 56

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Contractual Obligations
The following table sets forth our contractual obligations as of February 2, 2008:
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)................. $ 812.0 $ 46.4 $ 92.8 $672.8 $ —
Operating Leases .................. 1,018.3 261.5 394.0 226.4 136.4
Purchase Obligations(2) ............. 609.0 609.0 — — —
Total ........................... $2,439.3 $916.9 $486.8 $899.2 $136.4
(1) The long-term debt consists of $580.0 million (principal value), which bears interest at 8.0% per annum.
Amounts include contractual interest payments.
(2) Purchase obligations represent outstanding purchase orders for merchandise from vendors. These purchase
orders are generally cancelable until shipment of the products.
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 continued
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. Each of
these employment agreements will automatically renew for a period of one year as no notice of non-renewals were
given. 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 2008 at $1,200,000, $960,000, $575,000 and $440,000, respectively.
As of February 2, 2008, we had standby letters of credit outstanding in the amount of $6.8 million and had bank
guarantees outstanding in the amount of $10.7 million, $7.9 million of which are cash collateralized.
As of February 2, 2008, the Company had $24.2 million of income tax liability, including accrued interest and
penalties related to unrecognized tax benefits in other long-term liabilities in its consolidated balance sheet. At the
time of this filing, the settlement period for the noncurrent portion of our income tax liability cannot be determined.
In addition, any payments related to unrecognized tax benefits would be partially offset by reductions in payments
in other jurisdictions.
In 2003, the Company purchased a 51% controlling interest in GameStop Group Limited. Under the terms of
the purchase agreement, the individual owners of the remaining 49% interest have the ability to require the
Company to purchase their remaining shares in incremental percentages at a price to be determined based partially
on the Company’s price to earnings ratio and GameStop Group Limited’s earnings. No additional shares have been
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