GameStop 2010 Annual Report Download

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Table of contents

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  • Page 15
    GameStop Corp. (GME) 10-K Annual report pursuant to section 13 and 15(d) Filed on 03/30/2011 Filed Period 01/29/2011

  • Page 16
    ...approximately $3,015,000,000, based upon the closing market price of $20.05 per share of Class A Common Stock on the New York Stock Exchange as of July 30, 2010. Number of shares of $.001 par value Class A Common Stock outstanding as of March 23, 2011: 140,700,393 DOCUMENTS INCORPORATED BY REFERENCE...

  • Page 17
    ... Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial...

  • Page 18
    ...video game products for store credits and apply those credits towards other merchandise, which in turn, increases sales. We also sell various types of products that relate to the digital category, including network point cards, prepaid digital and online timecards and digitally downloadable software...

  • Page 19
    ...game products, excluding sales of used video game products. International Development Group, a market research firm ("IDG"), estimates that retail sales of video game hardware and software and PC entertainment software totaled approximately $14.3 billion in Europe in 2010. The NPD Group has reported...

  • Page 20
    ... used video game hardware and software has developed. Based on reports published by the NPD Group, we believe that, as of December 2010, the installed base of video game hardware systems in the United States, based on original sales, totaled over 249 million units of handheld and console video game...

  • Page 21
    ... promote the GameStop PowerUp Rewards loyalty program and increase brand awareness over a broader demographic area in order to promote our unique buying experience in-store for new and used hardware and software, trade-ins of used video game products and to leverage our Web sites at www.gamestop.com...

  • Page 22
    ... and Nintendo network point cards, as well as prepaid digital and online timecards and digitally downloadable software. We operate an online video game platform called Kongregate.com which we acquired in August 2010. We continue to make significant investments in e-commerce, digital delivery systems...

  • Page 23
    ... inventory management systems enable us to maximize sales of new release titles and avoid markdowns as titles mature and utilize electronic point-of-sale equipment that provides corporate and regional headquarters with daily information regarding store-level sales and available inventory levels...

  • Page 24
    ..., Game Informer magazine, and the online video gaming Web sites www.kongregate.com and www.joltonline.com. Segment results for Canada include retail and e-commerce operations in stores throughout Canada and segment results for Australia include retail and e-commerce operations in Australia and New...

  • Page 25
    ... generate significantly higher gross margins than new video game products. Our trade-in program provides our customers with a unique value proposition which is generally unavailable at mass merchants, toy stores and consumer electronics retailers. This program provides us with an inventory of used...

  • Page 26
    ...Contents Locations. The table below sets forth the number of our stores located in the U.S., Canada, Europe and Australia as of January 29, 2011: United States Number of Stores... Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio...

  • Page 27
    ...670 We publish Game Informer magazine, a monthly video game magazine featuring reviews of new title releases, tips and secrets about existing games and news regarding current developments in the electronic game industry. Versions of the magazine are sold through subscription, digitally and through...

  • Page 28
    ...vendor pays to us an agreed amount. In fiscal 2010, we launched our new PowerUp Rewards loyalty program in the United States which gives our customers the ability to sign-up for a free or paid membership that offers points earned on purchases in our stores, on our U.S. Web site and on Kongregate.com...

  • Page 29
    ... on our e-commerce sites. The downloadable content typically available today consists of add-on content developed by publishers for existing games. Management Information Systems. Our proprietary inventory management systems and point-of-sale technology show daily sales and in-store stock by title...

  • Page 30
    ...and our stores in Australia and Canada each managed by a vice president. We also employ regional loss prevention managers who assist the stores in implementing security measures to prevent theft of our products. Customer Service Our store personnel provide value-added services to each customer, such...

  • Page 31
    ...chains; mail-order businesses; catalogs; direct sales by software publishers; and online retailers and game rental companies. In addition, video games are available for sale and rental from many video stores. Video game products are also distributed through other methods such as digital delivery. We...

  • Page 32
    ...-International. The loss of services of any of our key personnel could have a negative impact on our business. We depend upon the timely delivery of products. We depend on major hardware manufacturers, primarily Sony, Nintendo and Microsoft, to deliver new and existing video game platforms and new...

  • Page 33
    ... specialty stores located in malls and other locations, such as Game Group, Carrefour and Media Markt; toy retail chains; mail-order businesses; catalogs; direct sales by software publishers; and online retailers and game rental companies. Some of our competitors have longer operating histories and...

  • Page 34
    ..., sales and earnings could decline. While the Company is currently pursuing various strategies to integrate these new delivery methods and competing content into the Company's business model, including hiring employees with experience in digital gaming and making investments in and acquisitions of...

  • Page 35
    ...terms and transferring sales to other nearby GameStop locations. We believe that we can ultimately increase profitability by successfully transferring customers and sales to other stores by marketing directly to the PowerUp Rewards members who have shopped in the stores which we plan to close. If we...

  • Page 36
    ... of Contents inventory replenishment systems to track sales and inventory. Our ability to rapidly process incoming shipments of new release titles and deliver them to all of our stores, either that day or by the next morning, enables us to meet peak demand and replenish stores at least twice a week...

  • Page 37
    ... of the credit markets toward the video game business; • the highly competitive environment in the electronic game industry and the resulting pressure from our competitors potentially forcing us to reduce our prices or increase spending; • our ability to open and operate new stores; • our...

  • Page 38
    ...sale and leaseback transactions; make loans and investments; declare dividends, make payments or redeem or repurchase capital stock; engage in mergers, acquisitions and other business... finance our future operations or capital needs or to pursue available business opportunities. The senior credit ...

  • Page 39
    ... four years, in the following locations: Square Footage Owned or Leased Location Use United States Grapevine, Texas, USA Grapevine, Texas, USA Louisville, Kentucky, USA Minneapolis, Minnesota, USA West Chester, Pennsylvania, USA Canada Brampton, Ontario, Canada Brampton, Ontario, Canada Australia...

  • Page 40
    ... Purchases of Equity Securities Price Range of Common Stock The Company's Class A common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "GME." The following table sets forth, for the periods indicated, the high and low sales prices of the Class A common stock on the NYSE...

  • Page 41
    ... of Contents Issuer Purchases of Equity Securities Purchases by the Company of its equity securities during the fourth quarter of the fiscal year ended January 29, 2011 were as follows: (a) Total Number of Shares Purchased (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or...

  • Page 42
    ... of Contents GameStop Stock Comparative Performance Graph The following graph compares the cumulative total stockholder return on our Class A common stock for the period commencing January 27, 2006 through January 28, 2011 (the last trading date of fiscal 2010) with the cumulative total return on...

  • Page 43
    ... average shares outstanding - diluted(2) Store Operating Data: Number of stores by segment United States Canada Australia Europe Total Comparable store sales increase (decrease)(3) Inventory turnover Balance Sheet Data: Working capital Total assets Total debt, net Total liabilities Total equity...

  • Page 44
    ... through our GameStop, EB Games and Micromania stores. As of January 29, 2011, we operated 6,670 stores, in the United States, Australia, Canada and Europe, which are primarily located in major shopping malls and strip centers. We also operate electronic commerce Web sites www.gamestop.com, www...

  • Page 45
    ... of new video game platforms, sales of new video game hardware increase as a percentage of total sales in the first full year following introduction. As video game platforms mature, the sales mix attributable to complementary video game software and accessories, which generate higher gross margins...

  • Page 46
    ... units requires management to make significant judgments based on the Company's projected sales and gross margin, annual business plans, future business strategies and economic factors. Discount rates used in the analysis reflect the Company's weighted average cost of capital, current market rates...

  • Page 47
    ...than the current market rent at stores acquired as part of the Micromania acquisition or the EB merger. Favorable leasehold interests are amortized on a straight-line basis over their remaining lease term with no expected residual value. For additional information related to the Company's intangible...

  • Page 48
    ... 52 Weeks Ended January 29, 2011 52 Weeks Ended January 30, 2010 52 Weeks Ended January 31, 2009 Statement of Operations Data: Sales Cost of sales Gross profit Selling, general and administrative expenses Depreciation and amortization Merger-related expenses Operating earnings Interest expense, net...

  • Page 49
    ... month of operation and exclude the effect of changes in foreign exchange rates. New video game hardware sales decreased $36.5 million, or 2.1%, from fiscal 2009 to fiscal 2010, primarily due to a decrease in hardware unit sell-through, primarily in the Nintendo Wii and DSi and Sony PSP, and price...

  • Page 50
    ... fiscal 2010, primarily due to the increase in the availability of hardware and software associated with the current generation hardware platforms as those platforms age and expand and the additional sales at new stores added since fiscal 2009. As a percentage of sales, used video game product sales...

  • Page 51
    ...due to an increase in the availability of hardware and software associated with the current generation hardware platforms as those platforms age and expand, the strong growth of used video game product sales internationally, as well as the addition of sales at the new and acquired stores added since...

  • Page 52
    ...and how we divide management responsibility. Each of the segments consists primarily of retail operations, with all stores engaged in the sale of new and used video game systems, software and accessories (which we refer to as video game products) and PC entertainment software and related accessories...

  • Page 53
    ...the electronic commerce Web site www.gamestop.com, Game Informer magazine and www.kongregate.com, an online video gaming site. As of January 29, 2011, the United States segment included 4,536 GameStop stores, compared to 4,429 stores on January 30, 2010. Sales for fiscal 2010 increased 6.5% compared...

  • Page 54
    ... operations and e-commerce sites in Australia and New Zealand. As of January 29, 2011, the Australian segment included 405 stores, compared to 388 stores as of January 30, 2010. Sales for the 52 weeks ended January 29, 2011 increased 6.6% compared to the 52 weeks ended January 30, 2010. The increase...

  • Page 55
    ...the prior year was primarily due to an increase in gross margin, driven by an increase in used product sales and the favorable impact of changes in exchange rates which had the effect of increasing operating earnings by $1.2 million when compared to fiscal 2008. Australia As of January 30, 2010, the...

  • Page 56
    ... to open 388 new stores and to invest in information systems. In addition, the Company used $8.4 million on acquisitions. During fiscal 2008, the Company used $580.4 million, net of cash acquired, to purchase Micromania and $50.3 million, net of cash acquired, to acquire Free Record Shop Norway...

  • Page 57
    ... the London Interbank Offered ("LIBO") rate for a 30-day interest period as determined on such day plus 1.00%, and (2) for LIBO rate loans of 2.25% to 2.50% above the LIBO rate. The applicable margin is determined quarterly as a function of the Company's average daily excess availability under the...

  • Page 58
    ...bank guarantees and letters of credit to support operations. As of January 29, 2011, there were $11.0 million of cash overdrafts outstanding under the Line of Credit and bank guarantees outstanding totaled $5.6 million. In September 2005, the Company, along with GameStop, Inc. as co-issuer (together...

  • Page 59
    ... Contents Uses of Capital Our future capital requirements will depend on the number of new stores we open and the timing of those openings within a given fiscal year. We opened 359 stores in fiscal 2010. We expect to open approximately 300 stores in fiscal 2011. Capital expenditures for fiscal 2011...

  • Page 60
    ... 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...

  • Page 61
    ... & Noble on the gross sales of such departments. Additionally, www.gamestop.com is the exclusive specialty video game retailer listed on www.bn.com, Barnes & Noble's e-commerce site whereby the Company pays a fee to Barnes & Noble for sales of video game or PC entertainment products sold through www...

  • Page 62
    ...store openings, sales contributed by new stores, increases or decreases in comparable store sales, adverse weather conditions, shifts in the timing of certain holidays or promotions and changes in our merchandise mix. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate...

  • Page 63
    ... quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. Item 9B. None. Other Information PART III Item 10. Directors, Executive Officers and Corporate Governance* Code of Ethics The Company has adopted a Code...

  • Page 64
    ... with respect to any of the executive officers listed in the paragraph above, on the Company's Web site (www.gamestop.com) within four business days following such amendment or waiver. Item 11. Item 12. Item 13. Item 14. Executive Compensation* Security Ownership of Certain Beneficial Owners and...

  • Page 65
    ... dated as of January 4, 2011, among GameStop Corp., as Lead Borrower for: GameStop Corp., GameStop, Inc., Sunrise Publications, Inc., Electronics Boutique Holdings Corp., ELBO Inc., EB International Holdings, Inc., Kongregate Inc., GameStop Texas Ltd., Marketing Control Services, Inc., SOCOM LLC and...

  • Page 66
    Table of Contents Exhibit Number Description 10.13 Amended and Restated Pledge Agreement, dated January 4, 2011, by and among GameStop Corp.,... 5, 2010, between GameStop Corp. and Daniel A. DeMatteo.(18) 10.25 Third Amendment, dated as of February 9, 2011, to Amended and Restated Executive Employment...

  • Page 67
    ... dated as of February 9, 2011, to Executive Employment Agreement, dated as of June 2, 2010, between GameStop Corp. and Robert Lloyd.(20) 12.1 Computation of Ratio of Earnings to Fixed Charges. 14.1 Code of Ethics for Senior Financial and Executive Officers. 14.2 Code of Standards, Ethics and Conduct...

  • Page 68
    ...Incorporated by reference to the Registrant's Form 8-K filed with the Securities and Exchange Commission on June 2, 2010. (19) Incorporated by reference to the Registrant's Form 8-K filed with the Securities and Exchange Commission on January 6, 2011. (20) Incorporated by reference to the Registrant...

  • Page 69
    ... has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. GAMESTOP CORP. By: /s/ J. Paul Raines J. Paul Raines Chief Executive Officer Date: March 30, 2011 Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-K has been...

  • Page 70
    Table of Contents Name Capacity Date /s/ Stanley P. Steinberg Stanley P. Steinberg /s/ Gerald R. Szczepanski Gerald R. Szczepanski /s/ Edward A. Volkwein Edward A. Volkwein /s/ Lawrence S. Zilavy Lawrence S. Zilavy 54 Director Director Director Director March 30, 2011 March 30, 2011 March 30, ...

  • Page 71
    Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page GameStop Corp. Consolidated Financial Statements: Reports of Independent Registered Public Accounting Firm Consolidated Financial Statements: Balance Sheets Statements of Operations Statements of Changes in Equity Statements of Cash...

  • Page 72
    Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders GameStop Corp. Grapevine, Texas We have audited the accompanying consolidated balance sheets of GameStop Corp. as of January 29, 2011 and January 30, 2010 and the related consolidated ...

  • Page 73
    ...standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of GameStop Corp. as of January 29, 2011 and January 30, 2010, and the related consolidated statements of operations, stockholders' equity, and cash flows for the 52 week periods ended January...

  • Page 74
    Table of Contents GAMESTOP CORP. CONSOLIDATED BALANCE SHEETS January 29, January 30, 2011 2010 (In millions) ASSETS Current assets: Cash and cash equivalents Receivables, net Merchandise inventories, net Deferred income taxes - current Prepaid expenses Other current assets Total current assets ...

  • Page 75
    ... OF OPERATIONS 52 Weeks Ended January 29, 2011 52 Weeks 52 Weeks Ended Ended January 30, January 31, 2010 2009 (In millions, except per share data) Sales Cost of sales Gross profit Selling, general and administrative expenses Depreciation and amortization Merger-related expenses Operating earnings...

  • Page 76
    ... tax expense of $0.3) Balance at January 30, 2010 Comprehensive income: Net income (loss) for the 52 weeks ended January 29, 2011 Foreign currency translation Total comprehensive income Stock-based compensation Purchase of treasury stock Exercise of employee stock options and issuance of shares upon...

  • Page 77
    ...revolver borrowings Borrowings for acquisition Repayments of acquisition borrowings Issuance of shares relating to stock options Excess tax benefits (expense) realized from exercise of stock-based awards Other Net cash flows provided by (used in) financing activities Exchange rate effect on cash and...

  • Page 78
    ... GameStop, EB Games and Micromania stores. The Company's stores, which totaled 6,670 at January 29, 2011, are located in major regional shopping malls and strip centers. We also operate electronic commerce Web sites www.gamestop.com, www.ebgames.com.au, www.gamestop.ca, www.gamestop.it, www.gamestop...

  • Page 79
    ... current cost is added to the existing cost of product on-hand and this amount is reaveraged over the cumulative units. Used video game products traded in by customers are recorded as inventory at the amount of the store credit given to the customer. In valuing inventory, management is required to...

  • Page 80
    ... stated net of sales discounts. The sales of used video game products are recorded at the retail price charged to the customer. Sales returns (which are not significant) are recognized at the time returns are made. Subscription and advertising revenues are recorded upon release of magazines for sale...

  • Page 81
    ...to download software or play games on the internet. Certain of these products do not require the Company to purchase inventory or take physical possession of, or take title to, inventory. When purchasing these products from the Company, consumers pay a retail price and the Company earns a commission...

  • Page 82
    ...transaction loss in the 52 weeks ended January 31, 2009 included a $3.5 million net loss related to the change in foreign exchange rates related to the funding of the Micromania acquisition recorded in merger-related expenses. The Company uses forward exchange contracts, foreign currency options and...

  • Page 83
    .... The Company uses historical data to estimate the option life and the employee forfeiture rate, and uses historical volatility when estimating the stock price volatility. The weighted-average fair values of the options granted during the 52 weeks ended January 29, 2011, January 30, 2010 and January...

  • Page 84
    ...of cash acquired. Micromania is a leading retailer of video and computer games in France with 379 locations, 328 of which were operating upon acquisition. The Company funded the transaction with cash on hand, funds drawn against its then existing $400 million revolving credit agreement totaling $275...

  • Page 85
    ...related to the change in foreign exchange rates related to the funding of the Micromania acquisition and other costs considered to be of a one-time or short-term nature which are included in operating earnings. The acquisition of Micromania was an important part of the Company's European and overall...

  • Page 86
    ..., 2011. The amounts deferred as a reduction in inventory were $0.7 million and $3.2 million for the 52 weeks ended January 30, 2010 and January 31, 2009, respectively. 4. Computation of Net Income per Common Share The Company has Class A common stock outstanding. A reconciliation of shares used in...

  • Page 87
    ... - 49.95 2017 - 2020 2011 - 2019 2010 - 2018 The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value accounting guidance applies to our Foreign...

  • Page 88
    ... 52 weeks ended January 29, 2011, the Company recognized losses of $7.1 million in selling, general and administrative expenses related to the trading of derivative instruments. As of January 30, 2010, the Company had a series of Foreign Currency Contracts outstanding, with a gross notional value of...

  • Page 89
    ....2 632.1 The changes in the carrying amount of goodwill for the Company's business segments for the 52 weeks ended January 30, 2010 and the 52 weeks ended January 29, 2011 were as follows: United States Canada Australia (In millions) Europe Total Balance at January 31, 2009 Goodwill acquired, net...

  • Page 90
    ...currency translation Amortization for the 52 weeks ended January 30, 2010 Balance at January 30, 2010 Addition for revolving credit facility amendment Write-off of deferred financing fees remaining on repurchased senior notes (see Note 9) Addition of acquired intangible assets Adjustment for foreign...

  • Page 91
    ... each case plus 90% 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 permitted, except under certain circumstances...

  • Page 92
    ... of the premium paid to retire the Notes and the write-off of the deferred financing fees and the original issue discount on the Notes. The changes in the carrying amount of the Senior Notes for the Company for the 52 weeks ended January 30, 2010 and the 52 weeks ended January 29, 2011 were as...

  • Page 93
    ... The Company does not have leases with capital improvement funding. Percentage rentals are based on sales performance in excess of specified minimums at various stores. Approximate rental expenses under operating leases were as follows: 52 Weeks Ended January 29, 2011 52 Weeks Ended January 30, 2010...

  • Page 94
    ... tax consisted of the following: 52 Weeks Ended January 29, 2011 52 Weeks Ended January 30, 2010 (In millions) 52 Weeks Ended January 31, 2009 Current tax expense: Federal State Foreign Deferred tax expense (benefit): Federal State Foreign Total income tax expense $ 133.3 13.3 29.8 176.4 $ 162...

  • Page 95
    ...): January 29, 2011 January 30, 2010 Deferred tax asset: Fixed assets Inventory obsolescence reserve Deferred rents Stock-based compensation Net operating losses Other Total deferred tax assets Deferred tax liabilities: Fixed Assets Goodwill Prepaid expenses Acquired intangible assets Valuation...

  • Page 96
    ... of the changes in the gross balances of unrecognized tax benefits follows (in millions): January 29, 2011 January 30, 2010 January 31, 2009 Beginning balance of unrecognized tax benefits Increases related to current period tax positions Increases related to prior period tax positions Reductions as...

  • Page 97
    ...the Company's stock options is presented below: WeightedAverage Exercise Price (Millions of shares) Shares Balance, February 2, 2008 Granted Exercised Forfeited Balance, January 31, 2009 Granted Exercised Forfeited Balance, January 30, 2010 Granted Exercised Forfeited Balance, January 29, 2011 10...

  • Page 98
    ... 52 weeks ended January 29, 2011, January 30, 2010 and January 31, 2009 vest in equal annual installments over three years. During the 52 weeks ended January 29, 2011, January 30, 2010 and January 31, 2009, the Company included compensation expense relating to the grant of these restricted shares in...

  • Page 99
    ... periods indicated: 52 Weeks Ended January 29, 2011 Percent Sales of Total 52 Weeks Ended January 30, 2010 Percent Sales of Total 52 Weeks Ended January 31, 2009 Percent Sales of Total Sales: New video game hardware New video game software Used video game products Other Total $ $ 1,720.0 3,968...

  • Page 100
    ..., Game Informer magazine, and the online video gaming Web site www.kongregate.com. Segment results for Canada include retail and e-commerce operations in Canada and segment results for Australia include retail and e-commerce operations in Australia and New Zealand. Segment results for Europe include...

  • Page 101
    Table of Contents GAMESTOP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) United States Fiscal Year Ended January 30, 2010 Canada Australia Europe Other Consolidated Sales Depreciation and amortization Operating earnings Interest income Interest expense Earnings before income...

  • Page 102
    ... price, a number of the acquiring company's common shares having a market value at that time of twice the exercise price of the Right. Furthermore, at any time after a person or group acquires 15% or more of the voting power of the outstanding common stock of the Company but prior to the acquisition...

  • Page 103
    ... million share repurchase program authorized in September 2010 which had $138.4 million remaining. As of March 24, 2011, the Company has purchased an additional 5.9 million shares for an average price per share of $19.88. 20. Consolidating Financial Statements In order to finance the EB merger, as...

  • Page 104
    ... the financial position as of January 29, 2011 and January 30, 2010 and results of operations and cash flows for the fiscal years ended January 29, 2011, January 30, 2010 and January 31, 2009 of the Company's guarantor and nonguarantor subsidiaries. GAMESTOP CORP. CONSOLIDATING BALANCE SHEET Issuers...

  • Page 105
    ... January 30, 2010 Eliminations 2010 (Amounts in millions, except per share amounts) ASSETS: Current assets: Cash and cash equivalents Receivables, net Merchandise inventories, net Deferred income taxes - current Prepaid expenses Other current assets Total current assets Property and equipment: Land...

  • Page 106
    ...in millions) For the 52 Weeks Ended January 30, 2010 Consolidated January 30, 2010 Sales Cost of sales Gross profit Selling, general and administrative expenses Depreciation and amortization Operating earnings Interest income Interest expense Debt extinguishment expense Earnings before income tax...

  • Page 107
    ... the 52 Weeks Ended January 31, 2009 Non-Guarantor Subsidiaries January 31, 2009 Eliminations (Amounts in millions) Consolidated January 31, 2009 Sales Cost of sales Gross profit Selling, general and administrative expenses Depreciation and amortization Merger-related expenses Operating earnings...

  • Page 108
    ... and equipment Acquisitions, net of cash acquired Other Net cash flows used in investing activities Cash flows from financing activities: Repurchase of notes payable Purchase of treasury shares Borrowings from the revolver Repayment of revolver borrowings Issuance of shares relating to stock options...

  • Page 109
    ... and equipment Acquisitions, net of cash acquired Other Net cash flows used in investing activities Cash flows from financing activities: Repurchase of notes payable Purchase of treasury shares Borrowings from the revolver Repayment of revolver borrowings Issuance of shares relating to stock options...

  • Page 110
    ... and equipment Acquisitions, net of cash acquired Other Net cash flows provided by (used in) investing activities Cash flows from financing activities: Repurchase of notes payable Borrowings for acquisition Repayments of acquisition borrowings Issuance of shares relating to stock options Excess...

  • Page 111
    ... Quarter Sales Gross profit Operating earnings Consolidated net income attributable to GameStop Basic net income per common share Diluted net income per common share $ 2,082.7 570.8 124.4 75.2 0.49 0.48 Fiscal Year Ended January 29, 2011 Fiscal Year Ended January 30, 2010 2nd 3rd 4th 1st 2nd 3rd 4th...

  • Page 112
    ... dated as of January 4, 2011, among GameStop Corp., as Lead Borrower for: GameStop Corp., GameStop, Inc., Sunrise Publications, Inc., Electronics Boutique Holdings Corp., ELBO Inc., EB International Holdings, Inc., Kongregate Inc., GameStop Texas Ltd., Marketing Control Services, Inc., SOCOM LLC and...

  • Page 113
    ...December 31, 2008, as amended by a First Amendment dated as of April 5, 2010, between GameStop Corp. and Daniel A. DeMatteo.(18) 10.25 Third Amendment, dated as of February 9, 2011, to Amended and Restated Executive Employment Agreement, dated as of December 31, 2008, as amended by a First Amendment...

  • Page 114
    ... dated as of February 9, 2011, to Executive Employment Agreement, dated as of June 2, 2010, between GameStop Corp. and Robert Lloyd.(20) 12.1 Computation of Ratio of Earnings to Fixed Charges. 14.1 Code of Ethics for Senior Financial and Executive Officers. 14.2 Code of Standards, Ethics and Conduct...

  • Page 115
    .... Incorporated by reference to the Registrant's Form 8-K filed with the Securities and Exchange Commission on June 2, 2010. Incorporated by reference to the Registrant's Form 8-K filed with the Securities and Exchange Commission on January 6, 2011. Incorporated by reference to the Registrant's Form...

  • Page 116
    ... 30, 2010 Fiscal Year Ended January 31, 2009 (Dollars in millions) Fiscal Year Ended February 2, 2008 Fiscal Year Ended February 3, 2007 Earnings: Earnings before income taxes Fixed charges Adjusted earnings Ratio of earnings to fixed charges Fixed Charges: Interest expense Amortization of issue...

  • Page 117
    ... file various periodic reports with the Securities and Exchange Commission. It is Company policy to make full, fair, accurate, timely and understandable disclosure in compliance with all applicable laws and regulations in all required periodic reports. As a Senior Financial and/or Executive Officer...

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    ... to make investments with a total value of no more than ten percent (10%) of your annual compensation in customers/clients or suppliers that are listed on a recognized securities exchange. • Business Arrangements with the Company and Corporate Opportunities Without the prior written approval...

  • Page 119
    ...market products or services in competition with the Company's current or potential business activities. It is your responsibility to consult with the Chief Executive Officer (or, with respect to the Chief Executive Officer...any governmentrelated position. • Family or Household Members Working in the...

  • Page 120
    ... will be disclosed as required under applicable law and regulations. No Rights Created This Code of Ethics is a statement of the fundamental principles and key policies and procedures that govern the Senior Financial and Executive Officers in the conduct of the Company's business. It is not intended...

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    ... to comply fully with the standards, policies and procedures contained in the Code of Ethics and the Company's related policies and procedures. I understand that I have an obligation to report to the Chief Executive Officer (or, with respect to the Chief Executive Officer, the Audit Committee of the...

  • Page 122
    ... of work time. It is GameStop's policy to provide equal employment opportunity for all, in compliance with all federal and state laws. ASSET PROTECTION All Associates are expected to share in the role of protecting GameStop's assets. Assets can include products, information, plans for the business...

  • Page 123
    ... not limited to, future strategies, financial data, sales figures, system passwords, marketing plans, advertising schedules, real estate and/or store opening/close information, operational procedures, customer lists or personnel and pay information. Confidential information of the Company as well as...

  • Page 124
    ... or stored on any of those systems; and the release, publication or disclosure of such messages or information, obtained for business reasons, may be undertaken by GameStop at its sole discretion. Passwords No Associate may use or share a password, PIN or any type of personal access code exclusively...

  • Page 125
    ...advertisements, Internet home page, electronic bulletin board posting, electronic mail message, voice mail message, or any other public representation about the Company or on behalf of the Company may be issued unless it has first been approved by Senior Management. • GameStop prohibits Associates...

  • Page 126
    ...who have investments in the businesses of customers, suppliers, other Associates or competitors or who plan to make such investments must file a disclosure form (see below). As a general rule, an Associate's investment in securities traded on a recognized stock exchange does not create a conflict of...

  • Page 127
    ... required under this policy must be directed in writing to the Associate's department head. The department head will promptly review the disclosure and determine which interests are in conflict and which, if any, can be resolved. Officers of GameStop and any Associates who purchase goods or services...

  • Page 128
    ... of GameStop must be signed by a GameStop department head or officer. A Contract Review Form must be completed for all contracts and legal agreements (regardless of amount and including any addendums or schedules) in support of GameStop's business worldwide, except for marketing co-op, store leases...

  • Page 129
    ... possessing confidential Company information cannot work in any capacity for any of GameStop's suppliers, customers, or competitors. Under no circumstances can outside employment involve use of GameStop's time, resources, facilities, or equipment. Violation of Outside Employment Policy Violation of...

  • Page 130
    ... the Chief Financial Officer or the Legal Department before initiating contact with a government agency with respect to any non-routine or nontrivial compliance matter. • Foreign Corrupt Practices Act (FCPA) The FCPA prohibits the making of a payment and/or the offering of anything of value to...

  • Page 131
    ...has GameStop's explicit written permission from the Chief Executive Officer or the Chairman to do so. Associates running for, or elected to, public office can retain their jobs only if they can continue to provide full attention to their work duties. Associates seeking election to a full-time office...

  • Page 132
    ... interest. Officers of GameStop and any Associates who purchase goods or services for GameStop or who enter into and administer contracts on behalf of GameStop must complete and file this form annually. Associates who are responsible for sensitive or confidential information may also be required to...

  • Page 133
    ...current or a future year, remuneration for services in excess of $1000 from an organization with which: a). GameStop has had business dealings during the past year; or b). GameStop might have business dealings in the next year? YES NO If "YES," please provide the following information: Type and Amt...

  • Page 134
    ... FORM Name: Office/Department: Date: 1. Instructions Associates are required to file a Gift Receipt Approval Form when situations arise that create an actual, potential, or apparent conflict of interest. Officers of GameStop and any Associates who purchase goods or services for GameStop or who enter...

  • Page 135
    ... Online Gaming Limited (Ireland). Electronics Boutique Australia Pty. Ltd., an Australian company, is a wholly-owned subsidiary of EB International Holdings, Inc. Electronics Boutique Canada Inc., a Canadian corporation, is a wholly-owned subsidiary of EB International Holdings, Inc. GameStop Europe...

  • Page 136
    ... Games SAS, a French company, is a wholly-owned subsidiary of Micromania France SAS. Micromania Online SAS, a French company, is a wholly-owned subsidiary of Micromania France SAS. GameStop Deutschland GmbH, a German company, is a wholly-owned subsidiary of GameStop Europe Holdings Sarl. GameStop...

  • Page 137
    ... Corp. of our reports dated March 30, 2011, relating to the consolidated financial statements and financial statement schedule and the effectiveness of GameStop Corp.'s internal control over financial reporting, which appear in this Form 10K. /s/ BDO USA, LLP BDO USA, LLP Dallas, Texas March 30...

  • Page 138
    ... financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ J. Paul Raines J. Paul Raines Chief Executive Officer GameStop Corp. Date: March 30, 2011

  • Page 139
    ...any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ Robert A. Lloyd Robert A. Lloyd Executive Vice President and Chief Financial Officer GameStop Corp. Date: March 30, 2011

  • Page 140
    ...annual report of GameStop Corp. (the "Company") on Form 10-K for the period ended January 29, 2011 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, J. Paul Raines, Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to Rule...

  • Page 141
    ... January 29, 2011 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert A. Lloyd, Executive Vice President and Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to Rule 13a-14(b) under the Securities Exchange Act of...

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