GameStop 2011 Annual Report Download - page 64

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with an expiration date of June 2, 2013. The term of the employment agreement for Mr. Bartel commenced on
October 24, 2008 and was amended on June 2, 2010 with an expiration date of June 2, 2013. The term of the
employment agreement for Mr. Lloyd commenced on June 2, 2010 and continues for a period of three years
thereafter.
Each of the employment agreements was amended on February 9, 2011 to eliminate the right of each
executive to terminate his employment agreement as a result of a change-in-control of the Company. The
amendments also eliminated the automatic renewal provision of each agreement, except for Mr. Fontaine, whose
agreement does not contain an automatic renewal provision. The minimum annual salaries during the term of
employment under the amended and restated employment agreements for Messrs. Fontaine, Raines, Bartel and
Lloyd shall be no less than $600,000, $1,000,000, $750,000 and $500,000, respectively. The Board of Directors
of the Company has set the annual salaries of Messrs. DeMatteo, Raines, Bartel and Lloyd for fiscal 2012 at
$900,000, $1,030,000, $806,000 and $600,000, respectively. The employment agreement for Mr. Fontaine
stipulates that his annual salary for the period between March 27, 2011 and March 3, 2013 will be $600,000.
As of January 28, 2012, we had standby letters of credit outstanding in the amount of $8.8 million and had
bank guarantees outstanding in the amount of $18.2 million, $12.6 million of which are cash collateralized.
As of January 28, 2012, the Company had $25.4 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, which operates
stores in Ireland and the United Kingdom. Under the terms of the purchase agreement, the minority interest
owners 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. Shares representing 16%, 16% and 7% were purchased in June 2008, July 2009 and 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-Balance Sheet Arrangements
As of January 28, 2012, the Company had no off-balance sheet arrangements as defined in Item 303 of
Regulation S-K.
Impact of Inflation
We do not believe that inflation has had a material effect on our net sales or results of operations.
Recent Accounting Standards and Pronouncements
In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, which amends the current fair value
measurement and disclosure guidance to include increased transparency around valuation inputs and investment
categorization. This guidance will be effective beginning in fiscal 2012. The adoption of ASU 2011-04 is not
expected to have a material impact on the Company’s consolidated net earnings, cash flows or financial position.
In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of
Comprehensive Income, which revises the current practice of including other comprehensive income within the
equity section of the statement of financial position and requires disclosure of other comprehensive income either
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