GameStop 2012 Annual Report Download - page 97

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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 counterparty risk according to the guidelines and controls established under comprehensive
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.
The fair values of derivative instruments not receiving hedge accounting treatment in the consolidated
balance sheets presented herein were as follows (in millions):
February 2, 2013 January 28, 2012
Assets
Foreign Currency Contracts
Other current assets ................................... $7.3 $12.3
Other noncurrent assets ................................ 0.9 4.7
Liabilities
Foreign Currency Contracts
Accrued liabilities ..................................... (9.1) (2.0)
Other long-term liabilities .............................. (4.4) (0.5)
Total derivatives ........................................ $(5.3) $14.5
Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records
certain assets and liabilities at fair value on a nonrecurring basis as required by GAAP. Assets and liabilities that
are measured at fair value on a nonrecurring basis relate primarily to our tangible property and equipment,
goodwill and other intangible assets, which are remeasured when the derived fair value is below carrying value
on our consolidated balance sheets. For these assets, we do not periodically adjust carrying value to fair value
except in the event of impairment. When we determine that impairment has occurred, the carrying value of the
asset is reduced to fair value and the difference is recorded within operating earnings in our consolidated
statements of operations. During fiscal 2012, the Company recorded a $680.7 million impairment charge related
to assets measured at fair value on a nonrecurring basis, comprised of $627.0 million of goodwill impairments,
$44.9 million of trade name impairment and $8.8 million of property and equipment impairments. During fiscal
2011, the Company recorded a $71.7 million impairment charge related to assets measured at fair value on a
nonrecurring basis, comprised of $37.8 million of trade name impairment, $22.7 million of the impairment of
investments in non-core businesses and $11.2 million of property and equipment impairments.
The fair value remeasurements included in the goodwill, trade name and property and equipment
impairments were primarily based on significant unobservable inputs (Level 3) developed using company-
specific information. Refer to Note 9, Goodwill, Intangible Assets and Deferred Financing Fees, for further
information associated with the goodwill and trade name impairments, as well as Note 2, Asset Impairments and
Restructuring Charges, for further information associated with the property and equipment impairments.
Other Fair Value Disclosures
The Company’s carrying value of financial instruments such as cash and cash equivalents, receivables, net
and accounts payable approximates their fair value, except for differences with respect to the Company’s senior
notes that were outstanding until December 2011. As of January 28, 2012, there were no senior notes payable.
F-22