GameStop 2011 Annual Report Download

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Transforming for the Future
2011 ANNUAL REPORT

Table of contents

  • Page 1
    2011 ANNUAL REPORT Transforming f or the Future

  • Page 2
    ... has been executing against a strategic plan centered on maximizing our business and positioning the Company for future growth. 2011 was our most evolutionary year in recent history. With strategic acquisitions, exponential growth in PowerUp Rewards and TM buy-sell-trade expansion, GameStop is...

  • Page 3

  • Page 4
    ...and PC download technology with the acquisitions of Spawn Labs and Impulse. International Presence GameStop holds leading market share in most of the 15 countries where we operate. We will continue to rationalize our international store base, closing stores that are underperforming and opening new...

  • Page 5
    ...millions *Non-GAAP results; excludes restructuring, impairment and debt-retirement expenses D I G I TA L R E C E I P T S 2011 2010 2009 $453.4 $288.6 $179.7 $100 $200 $300 $400 $500 Receipts in millions PRE-OWNED SALES 2011 2010 2009 2008 $2,620.2 $2,469.8 $2,394.1 $2,026.6 $1,000 $1,500 $2,000...

  • Page 6
    ... executed our digital growth strategy with two important acquisitions: streaming technology company Spawn Labs and digital distribution service Impulse. These new technologies uniquely position GameStop to be the leader not only in the physical gaming space, but also in the digital delivery of video...

  • Page 7
    ... purchase of DLC, including cash and trade-ins, GameStop is making DLC more accessible to consumers. 315% growth 95+% sales initiated in stores 600,000+ Call of Duty ® ELITE memberships sold Kongregate.com Bringing gamers and developers together, Kongregate.com has thousands of free online games...

  • Page 8
    ... • PowerUp Rewards Pro members get a 10% points bonus on all purchases • • accessories and consoles put currency in our customers' hands that can then be used to purchase new games, downloadable content (DLC), digital PC games and pre-owned merchandise, including mobile devices. In 2011, we...

  • Page 9
    ...2011 and closed the year with 16 million members in the U.S. By reaching customers through multiple channels - our stores, the GameStop PC Download App, www.GameStop.com, Kongregate.com and Game Informer - PowerUp Rewards continues to be successful in increasing brand loyalty, aquiring new customers...

  • Page 10
    ... store or on www.GameStop.com, using a variety of payment options including trade-in credit. Throughout the year, we further integrated PC downloads with other aspects of the business, awarding PowerUp Rewards points and accepting GameStop gift cards for digital PC game purchases. Since acquiring...

  • Page 11
    ... recognized an opportunity to expand into some new areas. In 2011, GameStop launched Kongregate Arcade, developed a new mobile e-commerce site and iOS app, expanded our buy-sell-trade model into iDevices and added gaming-certified tablets to our product offerings. Shadowgun | Developer: Madfinger...

  • Page 12
    ... pre-orders on the Prime and quickly sold out, thanks in large part to the ï¬,exibility we offer customers to make any type of payment, including using trade-in credit. With the growth of mobile initiatives such as tablet and iDevice sales, we established a new mobile business unit to manage our...

  • Page 13
    ...Expand game catalog and functionality of the GameStop PC Download App to attract new digital PC customers and increase profitability E X PA N D O U R M O B I L E B U S I N E S S • • • Raise awareness of our pre-owned mobile device trade program to increase the number of stores that sell pre...

  • Page 14
    2011 Form 10-K Uncharted 3: Drake's Deception | Publisher: Sony Computer Entertainment

  • Page 15
    ...number, including area code: (817) 424-2000 Securities registered pursuant to Section 12(b) of the Act: (Title of Class) (Name of Exchange on Which Registered) Class A Common Stock, $.001 par value per share New York Stock Exchange Rights to Purchase Series A Junior Participating Preferred New York...

  • Page 16

  • Page 17
    ...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 Owners and Management and Related Stockholder...

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

  • Page 19
    ...believe the North American market for digital game sales, including mobile, social, console and PC games, was approximately $6 billion in 2011 and this market is expected to grow to approximately $10.6 billion by 2015. New Video Game Products. The Entertainment Software Association ("ESA") estimates...

  • Page 20
    ... of new and used video game products and PC entertainment software and expand our business into the mobile device category to provide the best video game content to our customers anytime, anywhere and on any device. We plan to strengthen that position by executing the following strategies: Increase...

  • 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
    ...selection of value-priced used video game products. Our stores offer the opportunity to trade in used video game products in exchange for store credits applicable to future purchases, which, in turn, drives more sales. Our online properties, including e-commerce sites and Kongregate.com, continue to...

  • Page 23
    ...to pre-order products in our stores or through our Web sites prior to their release. Expand our Mobile Business. In 2011, we began a new category of business which we refer to as Mobile. We define the mobile category as buy-sell-trade of mobile devices, including gaming tablets, and related services...

  • Page 24
    ...physical product. Our product offerings consist of new and used video game products, PC entertainment software, and related products, such as video game accessories and strategy guides, as well as new and used mobile devices such as tablets, phones and music players. Our in-store inventory generally...

  • Page 25
    ... margins than new video game and PC entertainment products. Mobile Products. In 2011, we began a new category of business which we refer to as Mobile. We began to take trades of pre-owned iPods®, iPhones® and iPads® in our U.S. stores and in certain stores in other markets. We also began selling...

  • Page 26
    .... The table below sets forth the number of our stores located in the U.S., Canada, Europe and Australia as of January 28, 2012: United States Number of Stores Alabama ...Alaska ...Arizona ...Arkansas ...California ...Colorado ...Connecticut ...Delaware ...District of Columbia ...Florida ...Georgia...

  • Page 27
    ... PowerUp Rewards membership. We also operate the Web site www.gameinformer.com, which is the premier destination for moment-by-moment news, features and reviews related to video gaming. In 2011, the Web site averaged over 2.1 million monthly unique visitors. Game Informer revenues are also generated...

  • Page 28
    ...access to store information, such as location and product availability. E-commerce results are included in the geographic segment where the sales originate. Kongregate In August 2010, we purchased Kongregate Inc., the operator of online video gaming site www.kongregate.com, which offers free-to-play...

  • Page 29
    ... on Kongregate.com, which can be redeemed for discounts or merchandise. The program's paid tier also includes a subscription to Game Informer magazine, additional discounts on selected merchandise and additional credit on trade-ins in our stores. This program is designed to incent our customers to...

  • Page 30
    ... their business management skills. We also sponsor annual store managers' conferences at which we operate intense educational training programs to provide our employees with information about the video game products that will be released by publishers in the holiday season. All video game software...

  • Page 31
    ... new product introductions. We compete with mass merchants and regional chains; computer product and consumer electronics stores; other video game and PC software specialty stores; toy retail chains; mail-order businesses; catalogs; direct sales by software publishers; and online retailers and game...

  • Page 32
    ... none of our U.S. employees are represented by a labor union or are members of a collective bargaining unit. Available Information We make available on our corporate Web site (www.gamestopcorp.com), under "Investor Relations - SEC Filings," free of charge, our annual reports on Form 10-K, quarterly...

  • Page 33
    ... business terms, we may not be able to offer products to our customers at competitive prices. If our vendors fail to provide marketing and merchandising support at historical levels, our sales and earnings could be negatively impacted. The manufacturers of video game hardware and software and PC...

  • Page 34
    ....com; other U.S. and international video game and PC software 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...

  • Page 35
    ... including mobile phones, tablets, social networking Web sites and other devices. In order to continue to compete effectively in the video game industry, we need to respond quickly to technological changes and to understand their impact on our customers' preferences. It may take significant time and...

  • Page 36
    ... the delivery and types of video games and PC entertainment software, as well as changes in consumer behavior related to these new technologies, could lower our sales. While it is currently only possible to download a limited amount of video game content to the current generation video game systems...

  • Page 37
    ... fail to manage new store openings in a timely and cost efficient manner, our growth or profits may decrease. Failure to execute our strategy to close stores and transfer customers and sales to nearby stores could adversely impact our financial results. Our strategy includes closing stores which are...

  • Page 38
    ... hand-held devices we currently sell. If we are unable to respond to this growth in popularity of browser, mobile and social games and transition our business to take advantage of these new forms of gaming, our financial position and results of operations could suffer. The Company has been...

  • Page 39
    ... agreements; • engage in 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 combinations; • prepay, redeem or purchase certain indebtedness; • amend...

  • Page 40
    ...Company owned or leased office and distribution facilities, with lease expiration dates ranging from 2012 to 2021 and an average remaining lease life of approximately four years, in the following locations: Location Square Footage Owned or Leased Use United States Grapevine, Texas, USA ...Grapevine...

  • Page 41
    ... 4. Mine Safety Disclosures Not applicable. PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer 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...

  • Page 42
    ... Securities Purchases by the Company of its equity securities during the fourth quarter of the fiscal year ended January 28, 2012 were as follows: (a) Total Number of Shares Purchased (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Approximate Dollar Value...

  • Page 43
    ... last trading date of fiscal 2011) with the cumulative total return on the Standard & Poor's 500 Stock Index (the "S&P 500") and the Dow Jones Retailers, Other Specialty Industry Group Index (the "Dow Jones Specialty Retailers Index") over the same period. Total return values were calculated based...

  • Page 44
    ... 2011 2010 2009 2008 (In millions, except per share data and statistical data) Statement of Operations Data: Sales ...Cost of sales ...Gross profit ...Selling, general and administrative expenses ...Depreciation and amortization ...Asset impairments and restructuring charges(1) ...Merger-related...

  • Page 45
    ... and used video game hardware, physical and digital video game software, accessories, as well as PC entertainment software and other merchandise primarily through our GameStop, EB Games and Micromania stores. As of January 28, 2012, we operated 6,683 stores, in the United States, Australia, Canada...

  • Page 46
    ... forms of gaming. We currently sell various types of products that relate to the digital category, including digitally downloaded software, Xbox LIVE, PlayStation and Nintendo network point cards, as well as prepaid digital and online timecards. We expect our sales of digital products to increase...

  • Page 47
    ... current cost is added to the existing cost of product on-hand and this amount is re-averaged 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 48
    ... ads on the Company's digital Web sites and are amortized on a straight-line basis over 10 years. Favorable leasehold interests represent the value of the contractual monthly rental payments that are less than the current market rent at stores acquired as part of the Micromania acquisition or the EB...

  • Page 49
    .... The PowerUp Rewards loyalty program allows enrolled members to earn points on purchases in the Company's stores and on some of the Company's Web sites that can be redeemed for rewards that include discounts or merchandise. The Company estimates the net cost of the rewards that will be issued and...

  • Page 50
    .... We base our estimate of an annual effective tax rate at any given point in time on a calculated mix of the tax rates applicable to our Company and to estimates of the amount of income to be derived in any given jurisdiction. We file our tax returns based on our understanding of the appropriate...

  • Page 51
    ..., our gross margins are not comparable to those retailers that include purchasing, receiving and distribution costs in cost of sales and include processing fees associated with purchases made by check and credit cards in selling, general and administrative expenses. The net effect of these...

  • Page 52
    ... pre-purchased product, recorded as revenue at the retail price, to non-inventoriable digitally downloadable content, recorded as revenue on a commission basis, offset partially by changes in foreign exchange rates. As a percentage of sales, new video game software sales and used video game product...

  • Page 53
    ...digital products, some of which are recorded on a commission basis at 100% margin, and growth in sales of PowerUp Rewards Pro memberships and related Game Informer subscriptions that also have higher margins than PC entertainment software and accessories. Selling, general and administrative expenses...

  • Page 54
    ... an increase in product replacement plan sales. Gross profit as a percentage of sales on new video game software decreased from 21.3% in fiscal 2009 to 20.7% in fiscal 2010, primarily due to a decrease in vendor allowances received, net of advertising expenses. Advertising expenses increased, due in...

  • Page 55
    ... our segment reporting. 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. These products are...

  • Page 56
    ... before intercompany royalty fees, net interest expense and income taxes, in U.S. dollars were as follows (in millions): 52 Weeks Ended January 28, 2012 52 Weeks Ended January 29, 2011 52 Weeks Ended January 30, 2010 United States ...Canada ...Australia ...Europe ...Total ... $501.9 12.4 35...

  • Page 57
    ...commerce Web site www.gamestop.com, Game Informer magazine, www.kongregate.com, a digital PC game distribution platform available at www.gamestop.com/pcgames and Spawn Labs. As of January 28, 2012, the United States segment included 4,503 GameStop stores, compared to 4,536 stores on January 29, 2011...

  • Page 58
    ...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 59
    ... increase in the operating income was primarily due to an increase in gross margin, driven by an increase in used product sales, partially offset by the unfavorable impact of changes in exchange rates, which had the effect of decreasing operating earnings by $6.5 million when compared to fiscal 2009...

  • Page 60
    ... in cash used for working capital purposes of $49.6 million, primarily driven by lower inventory purchases in fiscal 2011 and the related effects on payments of accounts payable. The lower inventory purchases were due to lower hardware sales in fiscal 2011, and inventory management initiatives...

  • Page 61
    ...90% of the appraisal value of the inventory, in 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...

  • Page 62
    ..., to be used primarily to fund continued digital initiatives, new store openings, store remodels and invest in distribution and information systems in support of operations. Between May 2006 and December 2011, the Company repurchased and redeemed the $300 million of Senior Floating Rate Notes and...

  • Page 63
    ... current operating plans, we believe that available cash balances, cash generated from our operating activities and funds available under the Revolver will be sufficient to fund our operations, digital initiatives, store expansion and remodeling activities and corporate capital expenditure programs...

  • Page 64
    ...July 2011, respectively, bringing the Company's total interest in GameStop Group Limited to approximately 91%. The Company already consolidates the results of GameStop Group Limited; therefore, any additional amounts acquired will not have a material effect on the Company's financial statements. Off...

  • Page 65
    ... in selling, general and administrative expenses related to the trading of derivative instruments. The aggregate fair value of the Foreign Currency Contracts as of January 28, 2012 was a net asset of $14.5 million as measured by observable inputs obtained from market news reporting services, such...

  • Page 66
    risk management and investment policies. We continuously monitor our counterparty credit risk and utilize a number of different counterparties to minimize our exposure to potential defaults. We do not require collateral under derivative or investment agreements. Item 8. Financial Statements and ...

  • Page 67
    ...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. Executive Compensation* Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters...

  • Page 68
    ...information not otherwise provided herein that is required by Items 10, 11, 12, 13 and 14 will be set forth in the definitive proxy statement relating to the 2012 Annual Meeting of Stockholders of the Company, which is to be filed with the SEC pursuant to Regulation 14A under the Securities Exchange...

  • Page 69
    ... Credit Agreement, 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...

  • Page 70
    ... Security Agreement, dated as of November 12, 2008, by and among GameStop Corp. (f/k/a GSC Holdings Corp.), certain subsidiaries of GameStop ... 5, 2010, between GameStop Corp. and Daniel A. DeMatteo.(18) Third Amendment, dated as of February 9, 2011, to Amended and Restated Executive Employment...

  • Page 71
    ... 2, 2010, between GameStop Corp. and Robert Lloyd.(21) Code of Ethics for Senior Financial and Executive Officers. Code of Standards, Ethics and Conduct. Subsidiaries. Consent of BDO USA, LLP. Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange...

  • Page 72
    ...24, 2002. Incorporated by reference to Appendix A to the Registrant's Proxy Statement for 2008 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on May 23, 2008. Incorporated by reference to GameStop Holdings Corp.'s Form 10-K for the fiscal year ended January 29, 2005...

  • Page 73
    ... its behalf by the undersigned, thereunto duly authorized. GAMESTOP CORP. By: /s/ J. PAUL RAINES J. Paul Raines Chief Executive Officer Date: March 27, 2012 Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-K has been signed below by the following persons on behalf of...

  • Page 74
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  • Page 75
    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 Flows ...

  • Page 76
    ...of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and...

  • Page 77
    ... in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our...

  • Page 78
    GAMESTOP CORP. CONSOLIDATED BALANCE SHEETS January 28, January 29, 2012 2011 (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 79
    GAMESTOP CORP. CONSOLIDATED STATEMENTS OF OPERATIONS 52 Weeks 52 Weeks 52 Weeks Ended Ended Ended January 28, January 29, January 30, 2012 2011 2010 (In millions, except per share data) Sales ...Cost of sales ...Gross profit ...Selling, general and administrative expenses ...Depreciation and ...

  • Page 80
    ... 30, 2010 ...- Foreign currency translation ...- Total comprehensive income ...Stock-based compensation ...Purchase of treasury stock ...Exercise of employee stock options and issuance of shares upon vesting of restricted stock grants (including tax expense of $0.3) ...- (6.1) $ 0.2 - $1,307...

  • Page 81
    ... ...Purchase of treasury shares ...Borrowings from the revolver ...Repayments of revolver borrowings ...Issuance of shares relating to stock options ...Excess tax benefits (expense) realized from exercise of stock-based awards ...Other ...Net cash flows used in financing activities ...Exchange rate...

  • Page 82
    ... the online video gaming Web site www.kongregate.com, operate Spawn Labs, a streaming technology company, and operate a digital PC game distribution platform available at www.gamestop.com/pcgames. The Company operates in four business segments, which are the United States, Australia, Canada and...

  • Page 83
    ... current cost is added to the existing cost of product on-hand and this amount is re-averaged 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 84
    ... ads on the Company's digital Web sites and are amortized on a straight-line basis over 10 years. Favorable leasehold interests represent the value of the contractual monthly rental payments that are less than the current market rent at stores acquired as part of the Micromania acquisition or the EB...

  • Page 85
    ... cards sold to customers are recognized as a liability on the balance sheet until redeemed. The Company sells a variety of digital products which generally allow consumers to download software or play games on the internet. Certain of these products do not require the Company to purchase inventory...

  • Page 86
    ... Loyalty Expenses The PowerUp Rewards loyalty program, introduced in May 2010, allows enrolled members to earn points on purchases in the Company's stores and on some of the Company's Web sites that can be redeemed for rewards that include discounts or merchandise. The Company estimates the net cost...

  • Page 87
    ... in the value of the U.S. dollar compared to the euro, the Canadian dollar and the Australian dollar. The Company uses forward exchange contracts, foreign currency options and cross-currency swaps (together, the "Foreign Currency Contracts") to manage currency risk primarily related to intercompany...

  • Page 88
    ... a use of cash in the operating section and a source of cash in the financing section of the Statement of Cash Flows. Note 14 provides additional information regarding the Company's stock incentive plan. Fair Values of Financial Instruments The carrying values of cash and cash equivalents, accounts...

  • Page 89
    ... as a result of the Company's annual impairment test of its Micromania trade name. In addition, $22.7 million was recorded related to the impairment of investments in non-core businesses, primarily a small retail movie chain of stores owned by the Company until fiscal 2011. The Company also incurred...

  • Page 90
    ..., product training and promotion at the Company's annual store managers conference. The allowance for each event is negotiated with the vendor and requires specific performance by the Company to be earned. Specific, incremental and identifiable advertising and promotional costs were $120.9 million...

  • Page 91
    ...assumptions about pricing by market participants. We value our Foreign Currency Contracts, Company-owned life insurance policies with cash surrender values and certain nonqualified deferred compensation liabilities based on Level 2 inputs using quotations provided by major market news services, such...

  • Page 92
    ... ...Total ... $ 13.5 (14.1) $ (0.6) $(7.1) 9.6 $ 2.5 $ 8.7 (4.8) $ 3.9 We do not use derivative financial instruments for trading or speculative purposes. We are exposed to counterparty credit risk on all of our derivative financial instruments and cash equivalent investments. The Company manages...

  • Page 93
    ... receivables include receivables from Game Informer magazine advertising customers, receivables from landlords for tenant allowances and receivables from vendors for merchandise returns, vendor marketing allowances and various other programs. An allowance for doubtful accounts has been recorded to...

  • Page 94
    ... Fees The changes in the carrying amount of goodwill for the Company's business segments for the 52 weeks ended January 29, 2011 and the 52 weeks ended January 28, 2012 were as follows: United States Canada Australia (In millions) Europe Total Balance at January 30, 2010 ...Goodwill acquired...

  • Page 95
    GAMESTOP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) the revolving credit facility. Prior to the retirement of the senior notes in December 2011, deferred financing fees associated with the senior notes were included in other noncurrent assets in the consolidated balance sheet and...

  • Page 96
    ...90% of the appraisal value of the inventory, in 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...

  • Page 97
    ... Trust Company was appointed as the new trustee for the Notes (the "Trustee"). The Senior Notes bore interest at 8.0% per annum, were to mature on October 1, 2012 and were priced at 98.688%, resulting in a discount at the time of issue of $8.5 million. The discount was amortized using the effective...

  • Page 98
    GAMESTOP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) minimum and, in some cases, percentage rentals and require the Company to pay all insurance, taxes and other maintenance costs. Leases with step rent provisions, escalation clauses or other lease concessions are accounted for on...

  • Page 99
    ... amounts acquired will not have a material effect on the Company's financial statements. 13. Income Taxes The provision for income tax consisted of the following: 52 Weeks Ended January 28, 2012 52 Weeks Ended January 29, 2011 (In millions) 52 Weeks Ended January 30, 2010 Current tax expense...

  • Page 100
    GAMESTOP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Differences between financial accounting principles and tax laws cause differences between the bases of certain assets and liabilities for financial reporting purposes and tax purposes. The tax effects of these differences, to ...

  • Page 101
    ... be a benefit to the Company's effective tax rate of approximately $16.4 million, exclusive of any benefits related to interest and penalties. A reconciliation of the changes in the gross balances of unrecognized tax benefits follows (in millions): January 28, 2012 January 29, 2011 January 30, 2010...

  • Page 102
    GAMESTOP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Company's Class A common stock. The 2001 Incentive Plan provides a maximum aggregate amount of 46.5 million shares of Class A common stock with respect to which options may be granted and provides for the granting of incentive ...

  • Page 103
    ... fair value of each option is recognized as compensation expense on a straight-line basis between the grant date and the date the options become fully vested. During the 52 weeks ended January 28, 2012, January 29, 2011 and January 30, 2010, the Company included compensation expense relating to the...

  • Page 104
    ...: 52 Weeks Ended January 28, 2012 Percent Sales of Total 52 Weeks Ended January 29, 2011 Percent Sales of Total 52 Weeks Ended January 30, 2010 Percent Sales of Total Sales: New video game hardware ...New video game software ...Used video game products ...Other ...Total ... $1,611.6 4,048.2 2,620...

  • Page 105
    ... commerce Web site www.gamestop.com, Game Informer magazine, the online video gaming Web site www.kongregate.com, a digital PC game distribution platform available at www.gamestop.com/pcgames and the streaming technology company Spawn Labs. Segment results for Canada include retail and e-commerce...

  • Page 106
    ... FINANCIAL STATEMENTS - (Continued) United States Fiscal Year Ended January 29, 2011 Canada Australia Europe Other Consolidated Sales ...Depreciation and amortization ...Asset impairment and restructuring charges ...Operating earnings ...Interest income ...Interest expense ...Earnings...

  • Page 107
    ... 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 108
    ...be used for share repurchases and/or retirement of the Company's Senior Notes, replacing the $180.1 million remaining at the time of the authorization. For fiscal 2011, the number of shares repurchased was 11.2 million for an average price per share of $21.38. As of January 28, 2012, the Company had...

  • Page 109
    ...500 million authorization announced in November 2011, which had $253.4 million remaining at the time of the new authorization. Under the new repurchase program, the Company may purchase shares of issued and outstanding common stock through open market purchases. The timing and actual amount of share...

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    ... Credit Agreement, 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...

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    ... 2005, between GameStop of Texas, L.P. and Bank of America, N.A., as Collateral Agent.(11) Mortgage, Security Agreement, and Assignment...April 5, 2010, between GameStop Corp. and Daniel A. DeMatteo.(18) Third Amendment, dated as of February 9, 2011, to Amended and Restated Executive Employment ...

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    ... 2, 2010, between GameStop Corp. and Robert Lloyd.(21) Code of Ethics for Senior Financial and Executive Officers. Code of Standards, Ethics and Conduct. Subsidiaries. Consent of BDO USA, LLP. Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange...

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    ...24, 2002. Incorporated by reference to Appendix A to the Registrant's Proxy Statement for 2008 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on May 23, 2008. Incorporated by reference to GameStop Holdings Corp.'s Form 10-K for the fiscal year ended January 29, 2005...

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    ...Counsel Listed on the New York Stock Exchange Symbol: GME Bryan Cave LLP New York, NY GameStop, EB Games, Electronics Boutique, Game Informer magazine, Micromania, Kongregate.com, Spawn Labs, PowerUp Rewards and Respect the Ratings are trademarks of GameStop, Inc. Products and characters named in...

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