GameStop 2009 Annual Report Download - page 90

The availability under the Revolver is limited to a borrowing base which allows the Company to borrow up to
the lesser of (x) approximately 70% of eligible inventory and (y) 90% of the appraisal value of the inventory, in each
case plus 85% of eligible credit card receivables, net of certain reserves. Letters of credit reduce the amount
available to borrow by their face value. The Company’s ability to pay cash dividends, redeem options and
repurchase shares is generally prohibited, except that if availability under the Revolver is, or will be after any such
payment, equal to or greater than 25% of the borrowing base, the Company may repurchase its capital stock and pay
cash dividends. In addition, in the event that credit extensions under the Revolver at any time exceed 80% of the
lesser of the total commitment or the borrowing base, the Company will be subject to a fixed charge coverage ratio
covenant of 1.5:1.0.
The per annum interest rate on the Revolver is variable and, at the Company’s option, is calculated by applying
a margin of (1) 0.0% to 0.25% above the higher of the prime rate of the administrative agent or the federal funds
effective rate plus 0.50% or (2) 1.00% to 1.50% above the LIBO rate. The applicable margin is determined quarterly
as a function of the Company’s consolidated leverage ratio. As of January 30, 2010, the applicable margin was 0.0%
for prime rate loans and 1.00% for LIBO rate loans. In addition, the Company is required to pay a commitment fee
of 0.25% for any unused portion of the total commitment under the Revolver. During the 2009 fiscal year, the
Company borrowed and repaid $115,000 under the Revolver. As of January 30, 2010, there were no borrowings
outstanding under the Revolver and letters of credit outstanding totaled $8,821.
In September 2007, the Company’s Luxembourg subsidiary entered into a discretionary $20,000 Uncommitted
Line of Credit (the “Line of Credit”) with Bank of America. There is no term associated with the Line of Credit and
Bank of America may withdraw the facility at any time without notice. The Line of Credit will be made available to
the Company’s foreign subsidiaries for use primarily as a bank overdraft facility for short-term liquidity needs and
for the issuance of bank guarantees and letters of credit to support operations. As of January 30, 2010, there were no
cash overdrafts outstanding under the Line of Credit and bank guarantees outstanding totaled $15,983.
In September 2005, the Company, along with GameStop, Inc. as co-issuer (together with the Company, the
“Issuers”), completed the offering of $300,000 aggregate principal amount of Senior Floating Rate Notes due 2011
(the “Senior Floating Rate Notes”) and $650,000 aggregate principal amount of Senior Notes due 2012 (the “Senior
Notes” and, together with the Senior Floating Rate Notes, the “Notes”). The Notes were issued under an Indenture,
dated September 28, 2005 (the “Indenture”), by and among the Issuers, the subsidiary guarantors party thereto, and
Citibank, N.A., as trustee (the “Trustee”). The net proceeds of the offering were used to pay the cash portion of the
merger consideration paid to the stockholders of EB in connection with the EB merger. In November 2006,
Wilmington Trust Company was appointed as the new Trustee for the Notes.
The Senior Notes bear interest at 8.0% per annum, mature on October 1, 2012 and were priced at 98.688%,
resulting in a discount at the time of issue of $8,528. The discount is being amortized using the effective interest
method. As of January 30, 2010, the unamortized original issue discount was $2,657. The Issuers pay interest on the
Senior Notes semi-annually, in arrears, every April 1 and October 1, to holders of record on the immediately
preceding March 15 and September 15, and at maturity.
The Indenture contains affirmative and negative covenants customary for such financings, including, among
other things, limitations on (1) the incurrence of additional debt, (2) restricted payments, (3) liens, (4) sale and
leaseback transactions and (5) asset sales. Events of default provided for in the Indenture include, among other
things, failure to pay interest or principal on the Notes, other breaches of covenants in the Indenture, and certain
events of bankruptcy and insolvency. As of January 30, 2010, the Company was in compliance with all covenants
associated with the Revolver and the Indenture.
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 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
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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)