GameStop 2012 Annual Report Download - page 65

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minimum and, in some cases, percentage rentals and require the Company to pay all insurance, taxes and other
maintenance costs. Percentage rentals are based on sales performance in excess of specified minimums at various
stores. The Company does not have leases with capital improvement funding.
The Company has entered into employment agreements with Daniel A. DeMatteo, Executive Chairman;
J. Paul Raines, Chief Executive Officer; Tony D. Bartel, President; Robert A. Lloyd, Executive Vice President
and Chief Financial Officer; and Michael K. Mauler, Executive Vice President, GameStop International. The
term of the employment agreement with Mr. DeMatteo commenced on April 11, 2005, when he was
Chief Operating Officer of the Company, and was renewed in April 2010 with an expiration date of March 3,
2013. On March 1, 2013, his contract was renewed until June 2, 2013. The term of the employment agreement
for Mr. Raines commenced on September 7, 2008 and was amended on June 2, 2010 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. The term of the
employment agreement for Mr. Mauler 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. The minimum annual salaries
during the term of employment under the amended and restated employment agreements for Messrs. Raines,
Bartel, Lloyd and Mauler shall be no less than $1,000,000, $750,000, $500,000 and $400,000, respectively. The
Board of Directors of the Company has set the annual salaries of Messrs. DeMatteo, Raines, Bartel, Lloyd and
Mauler for fiscal 2013 at $900,000, $1,060,000, $830,000, $636,000 and $530,000, respectively.
As of February 2, 2013, we had standby letters of credit outstanding in the amount of $9.0 million and had
bank guarantees outstanding in the amount of $21.0 million, $14.9 million of which are cash collateralized.
As of February 2, 2013, the Company had $28.7 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.
Off-Balance Sheet Arrangements
As of February 2, 2013, 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 February 2013, an accounting standard update was issued regarding disclosure of amounts reclassified
out of accumulated other comprehensive income by component. An entity is required to present either on the face
of the statement of operations or in the notes, significant amounts reclassified out of accumulated other
comprehensive income by the respective line items of net income but only if the amount reclassified is required
to be reclassified to net income in its entirety in the same reporting period. For amounts not reclassified in their
entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail
about those amounts. This accounting standard update is effective prospectively for annual and interim periods
beginning after December 15, 2012. The Company is evaluating the effect this accounting standard update will
have on its consolidated financial statements.
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