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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 Form 10-K
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 30, 2016February 2, 2019
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 
Commission File No. 1-32637
Commission File No. 1-32637
   
GameStop Corp.
(Exact name of registrant as specified in its Charter) 
Delaware 20-2733559
(State or other jurisdiction of
incorporation or organization)
gslogocolor2a25.jpg
(I.R.S. Employer
Identification No.)
  
625 Westport Parkway76051
Grapevine, Texas(Zip Code)
(Address of principal executive offices)  
Registrant’s telephone 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
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes þNo¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  Yes ¨Noþ
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YesþNo¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ No¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filerþ
 
Accelerated Filer¨
 
Non-accelerated Filer¨
 
Smaller reporting company¨
Emerging growth company ¨
(Do not check if a smaller reporting company)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes¨  No þ
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of August 3, 2018 was approximately $4.76$1.5 billion, based upon the closing market price of $45.85$14.85 per share of Class A Common Stock on the New York Stock Exchange as of August 1, 2015.Exchange. (For purposes of this calculation all of the registrant's directors and officers are deemed affiliates of the registrant.)
Number of shares of $.001 par value Class A Common Stock outstanding as of March 17, 2016:103,875,77221, 2019: 102,267,435
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement of the registrant to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, for the 20162019 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

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TABLE OF CONTENTS
 
  Page
PART I
Item 1.
Business
21
Item 1A.
Risk Factors
116
Item 1B.
Unresolved Staff Comments
1914
Item 2.
Properties
1914
Item 3.
Legal Proceedings
2015
Item 4.
Mine Safety Disclosures
2015
  
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
2116
Item 6.
Selected Financial Data
2417
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2719
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
4735
Item 8.
Financial Statements and Supplementary Data
4736
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
4736
Item 9A.
Controls and Procedures
4736
Item 9B.
Other Information
5040
   
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
5040
Item 11.
Executive Compensation
5040
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
5040
Item 13.
Certain Relationships and Related Transactions, and Director Independence
5040
Item 14.
Principal Accountant Fees and Services
5040
  
PART IV
Item 15.
Exhibits and Financial Statement Schedule
5141
Item 16.
Form 10-K Summary
41
SIGNATURES
5242
FINANCIAL STATEMENTS
F-1
EXHIBITS
 

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Disclosure Regarding Forward-looking Statements
This Annual Report on Form 10-K (“Form 10-K”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, forward-looking statements can be identified by the use of terms such as “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “pro forma,” “seeks,” “should,” “will” or similar expressions. These statements are only predictions based on current expectations and assumptions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. All forward-looking statements included in this Form 10-K are based upon information available to us as of the filing date of this Form 10-K, and we undertake no obligation to update or revise any of these forward-looking statements for any reason, whether as a result of new information, future events or otherwise after the date of this Form 10-K, except as required by law. You should not place undue reliance on these forward-looking statements. The forward-looking statements involve a number of risks and uncertainties. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. A number of factors could cause our actual results, performance, achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors,” which are incorporated herein by reference. You should carefully consider the risks and uncertainties described in this Form 10-K.

PART I
ItemITEM 1.BusinessBUSINESS
General
GameStop Corp. (“GameStop,” “we,” “us,” “our,” or the “Company”) is a global, family of specialty retail brands that makes the most popular technologies affordable and simple. Within our family of brands, we are the world’s largest omnichannelmultichannel video game and licensed consumer products retailer. We operate over 5,800 stores across 14 countries. Our consumer product network also includes www.gamestop.com; Game Informer® magazine, the world's leading print and digital video game publication; and ThinkGeek, www.thinkgeek.com, the premier retailer for the largest AT&T® (“AT&T”) authorized reseller ,global geek community featuring exclusive and unique video game and pop culture products, and Simply Mac, which sells the largest Apple© (“Apple”)full line of Apple products, including laptops, tablets, and smartphones and offers Apple certified products reseller, a Cricket WirelessTM reseller (“Cricket,” an AT&T brand)warranty and the owner of www.thinkgeek.com, one of the world’s largest sellers of collectible pop-culture themed products. As of January 30, 2016, GameStop's retail network and family of brands include 7,117 company-operated stores in the United States, Australia, Canada and Europe.repair services.
We are a Delaware corporation which, through a predecessor, began operations as a specialty retailer of video games in November 1996. Our corporate office is located in Grapevine, Texas.
Our fiscal year is composed of the 52 or 53 weeks ending on the Saturday closest to the last day of January. Fiscal year 2018 consisted of the 52 weeks ended on February 2, 2019 ("fiscal 2018"). Fiscal year 2017 consisted of the 53 weeks ended on February 3, 2018 ("fiscal 2017") and fiscal year 2016 consisted of the 52 weeks ended on January 28, 2017 ("fiscal 2016").
Divestiture of Spring Mobile
On January 16, 2019, we completed the sale of the Spring Mobile business to Prime Communications, L.P. for cash proceeds of $727.9 million, net of transaction costs and preliminary adjustments. The Spring Mobile business operated over 1,200 AT&T branded wireless retail stores that sold AT&T services and wireless products. See Note 2, "Discontinued Operations and Dispositions," to the consolidated financial statements, included in Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K ("Annual Report") for further information. Unless otherwise noted, information in this Annual Report excludes our former Spring Mobile business.
Reportable Segments
We operate our business in four Video Game Brandsgeographic segments: United States, Canada, Australia and Europe; and a Technology Brands segment.
Video Game Brands
The Video Game Brands segments include 6,081Europe. Each segment consists primarily of retail operations, with the significant majority of our stores 4,013 of which are includedengaged in the sale of new and pre-owned video game systems, software and accessories. As of February 2, 2019, we had a total of 5,830 stores across all of our segments; United States segment. There are 325, 444,(3,846), Canada (311), Australia (462) and 1,299 stores in the Canadian, Australian and European segments, respectively. The stores in our four Video Game Brands segmentsEurope (1,211). Our video game brands operate primarily under the names GameStopTM (“GameStop”), EB GamesTM (“EB Games”), and Micromania. EachWe operate e-commerce sites under the brand names of the Video Game Brands segments consists primarily of retail operations, with all stores engaged in the sale of newGameStop, EB Games, Micromania and pre-ownedThinkGeek. Our video game systems, software and accessories, which we refer to as video game products. Our Video Game Brandsbrands stores sell various types of digital products, including downloadable content, network points cards, prepaid digital, prepaid subscription cards and digitally downloadable software and also sell certain mobile and consumer electronics products and collectible products. Through our omnichannel sales process, our customers can buy video game products and other merchandise online, reserve merchandise online and then pick it up in stores, or order products that may not be in-stock in stores and have it shipped to their homes.



Our electronic commerce websites operate under the names www.gamestop.com, www.ebgames.com.au, www.ebgames.co.nz, www.gamestop.ca, www.gamestop.it, www.gamestop.ie, www.gamestop.de, www.gamestop.co.uk, www.micromania.fr and www.thinkgeek.com. The networksegments also includes: www.kongregate.com, a leading browser-based game site; Game InformerTM (“Game Informer”) magazine, the world's leading print and digital video game publication; and iOS and Android mobile applications. Within our Video Game Brands segments, we operate 35include 103 pop culture themed stores selling collectibles, apparel, gadgets, electronics, toys and other retail products for technology enthusiasts and general consumers, with 3262 collectibles

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stores in international markets operating under the Zing Pop Culture brand and three41 stores in the United States operating under the ThinkGeek brand.
Technology Brands Our video game brands also include Game InformerTM (“Game Informer”) magazine, the world's leading print and digital video game publication.
Our former Technology Brands segment includes ourhad been comprised of Spring Mobile, and Simply Mac businesses.and Cricket Wireless branded stores ("Cricket Wireless"). Cricket Wireless was sold in January 2018 and Spring Mobile operates 890 AT&T branded wireless retail storeswas sold in January 2019. Simply Mac and 70the historical results of Cricket branded pre-paid wireless stores.Wireless are reported in the United States segment in this Annual Report. The AT&T branded stores sell both pre and post-paid AT&T services, DirecTV service and wireless products,historical results of Spring Mobile, including the gain on sale, are reported as well as related accessories and other consumer electronics products. Pre-paid AT&T services, wireless devices and related accessories are sold through the Cricket branded stores.discontinued operations for all periods presented in this Annual Report. Simply Mac operates 7643 Simply Mac© branded stores which sell Apple products, including desktop computers, laptops, tablets and smart phones and related accessories and other consumer electronicselectronic products. As an authorized Apple reseller, Simply Mac also offers certified training, warranty and repair services to its customers.
AdditionalFinancial information including financial information, regardingabout our reportable segments can be foundis included in “Part II - Item 7. Management’s7, Management's Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-KOperations, and in Note 17,16, "Segment Information," of the notes to ourthe consolidated financial statements.
Our Strategy
During the past few years, we have transformed from the world’s largest specialty retailerstatements, included in Item 8, "Financial Statements and Supplementary Data" of physical video game products into a family of retail brands selling many of the world’s most popular technologies and pop-culture products. Our vision is to continue to expand our business as a global family of specialty retail brands. Our mission is to continue to be the world’s largest omnichannel retailer of new and pre-owned and value video game products, to continue to grow sales of digital products, to expand the sales of collectible products through our video game stores and www.thinkgeek.com, to increase the number of our pop culture-themed stores and to strategically grow our Technology Brands segment to further diversify our revenue streams. Our goal is to have 50% or more of our operating earnings for the 52 weeks ending February 1, 2020 (“fiscal 2019”) come from sources other than physical gaming.
Additionally, followingthis Annual Report on the success of extending our core competencies into our mobile business, we continue to seek other opportunities to extend these competencies to other businesses and retail categories to continue to grow our company. We have a broad-based executive management team with substantial experience in the retail sector in merchandising, marketing, supply chain management, store operations and real estate. Our strategy is to leverage our management team and core competencies to identify other retail concepts that we can acquire and rapidly expand. We believe our core competencies include the following:
Real estate knowledge, including extensive relationships with landlords, portfolio management, negotiating skills and risk mitigation;
Human resource management, including hiring, training, systems and processes, particularly in multi-unit management of small, limited staffing, specialty retail stores with expert staff in assisted-selling;
Knowledge of buy-sell-trade programs, including pricing algorithms, inventory balancing, refurbishment capabilities and secondhand dealer laws;
Customer retention programs, including using our loyalty programs to drive consumer awareness of new retail concepts and promote new products; and
The ability to deploy capital in ways that diversify the underlying business, manage financial risk and increase shareholder value, including finding acquisitions that have a high return on invested capital and are accretive to earnings.
Our competencies in real estate and human resource management stem from our experience in rapid growth retail environments with a history of opening 300-400 stores annually, including growing our Technology Brands segment by over 550 stores during the 52 weeks ended January 30, 2016 (“fiscal 2015”).
We have anchored our strategy and growth plans upon the following pillars:
Maximize brick and mortar stores. Our strategy regarding our retail stores includes growing our leading market share in video games, utilizing our stores to grow digital sales and applying our retail expertise to our Technology Brands businesses. Our growth strategy depends in part upon opening new stores and operating them profitably. We expect to open approximately 140 new stores in fiscal 2016, including 90 Video Game Brands stores (including 84 collectibles stores) and 50 Technology Brands stores. Our strategy also includes closing stores which are not meeting our performance standards or stores at the end of their lease terms and transferring sales to other nearby GameStop locations. We plan to close approximately 200 Video Game Brands stores worldwide in fiscal 2016.
In our video game stores, we provide a high level of customer service by hiring game enthusiasts and providing them with ongoing sales training, including training in the latest technical and functional elements of our products and services, making them the most knowledgeable associates in the video game retail market. We focus marketing efforts and store

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associates on driving the sale of new release video game products, both physical and digital. As the world’s largest retailer of video game products with a proven capability to capture market share immediately following new product launches, we believe we regularly receive larger allocations of popular new video game products than our competitors. To assist our customers in obtaining immediate access to new releases, we offer our customers the opportunity to pre-order products in our stores or through our websites prior to their release.
Our Technology Brands businesses center around two strategic relationships: a long-term partnership with AT&T under which we sell AT&T products and services in our Spring Mobile managed AT&T and Cricket branded stores and certain AT&T products and services in our Simply Mac stores, and an agreement with Apple under which we sell Apple products and services in our Simply Mac stores.
We acquired Spring Mobile in November 2013. Spring Mobile has grown from approximately 90 AT&T branded stores at the end of 2012 to 890 stores as of January 30, 2016, through a program with two primary focuses. The first of these is to acquire AT&T resellers. The second is opening what we refer to as “whitespace” stores, or new stores in retail locations identified by either AT&T or Spring Mobile management and agreed to by both parties. AT&T supports the opening of new whitespace stores by its resellers in an effort to increase the size of its retail distribution channel. Both of these represent opportunities for strong growth in the near term for Spring Mobile.
We began opening pre-paid wireless stores in a few markets in November 2013 and have expanded to 70 Cricket stores operated by Spring Mobile as of the end of fiscal 2015 and expect to continue to expand our prepaid stores with AT&T.
Simply Mac has grown from 8 stores in the fall of 2012, when we acquired 49.9% of the company, to 76 stores as of the end of fiscal 2015. We completed the acquisition of the remaining ownership in Simply Mac in November 2013. We intend to continue to open new Simply Mac stores in the coming years. Simply Mac’s primary focus for store expansion is in U.S. markets which generally do not have the size and demographics to make them attractive for an Apple-owned store.
In connection with the continued expansion of our Technology Brands business, Spring Mobile and Simply Mac completed acquisitions of several additional AT&T resellers and an authorized Apple retailer, respectively, in fiscal 2015. We continue to seek opportunities to extend core competencies to other products and retail categories in order to continue to grow and to help mitigate the financial impact from the cyclical nature of the video game console cycle.
In July 2015, we purchased ThinkGeek, an online and wholesale retailer and developer that sells pop culture themed collectibles, apparel, gadgets, electronics, toys and other retail products for technology enthusiasts and general consumers through the www.thinkgeek.com website and certain exclusive products to wholesale channel customers. The addition of ThinkGeek provides an expansion of our global omnichannel platform and enables us to broaden our product offering in the collectibles category, including standalone stores and deepen relationships with our existing customer base.
Expand our pre-owned business. We believe we are the largest retailer of pre-owned video game products in the world and carry the broadest selection of pre-owned and value video game products for both current and previous generation platforms, giving us a unique advantage in the video game retail industry. The opportunity to trade-in and purchase pre-owned video game products offers our customers a unique value proposition generally unavailable at most mass merchants, toy stores and consumer electronics retailers. We obtain most of our pre-owned video game products from trade-ins made in our stores by our customers. Pre-owned and value video game products generate significantly higher gross margins than new video game products. Our strategy consists of continuing to expand our product assortment to drive sales and gross profit growth, increasing consumer awareness of the benefits of trading in and buying pre-owned video game products through increased marketing activities and the use of both broad and targeted marketing to our loyalty program members. The supply of trade-ins of video game products, and the demand for resale of these products, is affected by overall demand for video game products and the introduction of new software and hardware by our suppliers. We expect the continued adoption of next-generation consoles and software to drive trade-ins of video game products, thereby expanding our supply of pre-owned video game products.
Our Simply Mac stores also offer customers the opportunity to trade-in and purchase pre-owned Apple products.
•
Own the customer. Sustaining and growing our existing customer base is dependent upon our ability to increase GameStop brand awareness, to drive membership in our loyalty programs, to engage with customers online, through social media and our mobile apps, and to expand our market leadership position by offering a variety of new and pre-owned video game products and continuing to enhance our mobile and digital product and service offerings. We operate loyalty programs in each of the countries in which we operate our Video Game Brands stores. Our U.S. loyalty program, called PowerUp RewardsTM ("PowerUp Rewards"), had over 33 million members as of January 30, 2016. Our loyalty programs in our video game stores in the remaining countries had over 13 million members as of January 30, 2016. Our loyalty programs generally offer our customers the ability to sign up for a free or paid membership which gives our customers access to exclusive video game related rewards. The programs' paid memberships may also include a subscription to Game Informer magazine, additional discounts on pre-owned merchandise in our stores and additional credit on trade-ins of pre-owned

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products. Approximately 6 million of the 33 million U.S. loyalty members were paying members. Our websites allow our customers to buy games online, reserve or pick up merchandise in our stores, order in-store for home delivery and to learn about the latest video game products and their availability in our stores. Together, our loyalty programs, websites, mobile applications, magazine and other properties are a part of our omnichannel retail strategy designed to enhance our relationships with our customers, making it easier for our customers to transact with us and increase loyalty.
Our store personnel provide value-added services to each customer, such as maintaining lists of regular customers and reserving new releases for customers with a down payment to ensure product availability. In addition, our store personnel readily provide product reviews and ratings to ensure customers are making informed purchasing decisions and inform customers of available resources, including Game Informer and our e-commerce sites, to increase a customer’s enjoyment of the product upon purchase.
Expand our digital growth strategy. Growth in the video game industry in recent years has been fueled by the proliferation of online game play, the sale of video games delivered in digital form and the expansion of other forms of digital gaming. The recent generations of video game consoles contain the technology to digitally download video game software content and a growing market has developed for the sale of digitally downloadable add-on content for physical games, which the video game industry calls “DLC” and, more recently, full game downloads. The digital game market also consists of both immersive and casual games delivered over the internet to computers, tablets, smart phones and other devices. We sell a variety of digitally downloadable content in our video game stores and on our websites, including DLC, full game downloads, network points cards, prepaid digital and prepaid subscription cards. We believe we are the only significant brick-and-mortar retail seller of DLC and that we are frequently the leading seller of DLC for most major game titles.
Additionally, we operate Kongregate, which is a leading platform for web and mobile gaming that has attracted over 4.9 billion web gameplays and over 2.0 billion mobile gameplays since its launch. Kongregate is also a publisher of mobile games and has several titles available in both the Apple and Google app stores, which have received over 65 million mobile installs. We intend to continue investing in the expansion of Kongregate's mobile game publishing platform through the development of new games designed to appeal to core gamers across the Kongregate and GameStop networks.
Maintain a disciplined capital allocation. Our objective in recent years has been to return a significant portion of our free cash flow to our shareholders through share repurchases and dividends unless more strategic opportunities arise that we believe would create more meaningful shareholder returns. In fiscal 2015, we paid dividends of $1.44 per share of Class A Common Stock, totaling approximately $154.1 million for the year. Additionally, on February 23, 2016, our Board of Directors authorized an increase in our annual cash dividend to $1.48 per share of Class A Common Stock, with the first quarterly dividend of fiscal 2016 of $0.37 per share of Class A Common Stock, payable on March 22, 2016 to stockholders of record on March 8, 2016. In fiscal 2015, we repurchased 5.2 million shares of our Class A Common Stock at an average price per share of $38.68 for a total of $202.0 million.
In order to create more meaningful shareholder returns, as we evaluate investments in strategic opportunities, we target internal rates of return (“IRR”) in excess of 20% for whitespace store expansion and acquisitions. The total consideration of the completed acquisitions of additional AT&T resellers and an authorized Apple retailer in fiscal 2015 was $141.5 million net of cash acquired. The total consideration paid for ThinkGeek in July 2015, was $126.0 million, net of $13.9 million of cash acquired.Form 10-K.
Market Size
Video Game Products. Based upon estimates compiled by various market research firms, including NPD Group, Inc. ("NPD") and, International Development Group ("IDG") and DFC Intelligence ("DFC"), we estimate that the combined market for new physical video game products and PC entertainment software was approximately $20.3$18 billion in 20152018 in the countries in which we operate. This estimated market excludes sales of pre-owned video game products, which are not currently measured by any third partythird-party research firms. Additionally, based on estimates compiled by various market research firms, we estimate that the market in North America for content in digital format (full game(full-game and add-on content downloads for console and PC, subscriptions, mobile games and social network games) was between $8$25 billion and $10$32 billion in 2015.2018.
Mobile and Consumer Electronics. The mobile and consumer electronics market, as we refer to it, consists primarily of wireless services, new and pre-owned mobile devices, such as smart phones and tablets, consumer electronics such as Apple products and services, non-gaming headsets and accessories. The market for wireless devices and services is estimated by CTIA - The Wireless Association® to be approximately $196 billion. We expect that the market for AT&T services and products and the wireless market in general will continue to grow as more and more wireless devices connect to the internet through wireless networks and as AT&T continues to broaden its offerings of content and services, such as DirecTV.

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Merchandise
We categorize our sale of products and services as follows:
New Video Game Hardware.  We offer the video game platforms from the major manufacturers. The current generation of all major manufacturers, includingconsoles include the Sony PlayStation 4 PlayStation 3, PlayStation Vita,(2013), Microsoft Xbox One Xbox 360 and Kinect(2013) and the Nintendo Wii U, WiiSwitch (March 2017). In 2016, Sony and DS line.Microsoft released refreshes to the PlayStation 4 and Xbox One, respectively. In November 2017, Microsoft released a further enhanced version of its current generation console, the Xbox One X. We also offer extended service agreements on video game hardware and software.agreements. Video game hardware sales are generally driven by the introduction of new platform technology and the reduction in price points as platforms mature. We are in a console cycle which began with the Nintendo Wii U launch in November 2012 and the launches of the PlayStation 4 and Xbox One in November 2013. We believe that selling video game hardware increases store traffic and promotes customer loyalty, leading to increased sales of video game software and accessories, which have higher gross margins than video game hardware.
New Video Game Software.  We purchaseoffer new video game software for current and certain prior generation consoles from the leading manufacturers, including Sony, Nintendo and Microsoft, as well as all other major third-party game publishers, such as Electronic Arts and Activision.Activision Blizzard. We are one of the largest customersretailers of video game titles sold by these publishers. We generally carry approximately 600 SKUs of new video game software at any given time across a variety of genres, including Sports, Action, Strategy, Adventure/Role Playingsports, action, strategy, adventure/role playing and Simulation.simulation.
Pre-owned and Value Video Game Products.  We provide our customers with an opportunity to trade in their pre-owned video game products in our stores in exchange for store credits which can be applied towards the purchase of other products, primarily new merchandise. We believe this process drives our higher market share, particularly at launch. We resell these pre-owned video game products and have the largest selection (approximately 3,000 SKUs) of pre-owned video game titles. In the U.S., pre-owned video game software titles which have an average price of $23 as$17, compared to an average price of $44$48 for new video game software titles, and which generate significantly higher gross margins than new video game products. Our highly-customized inventory management system allows us to actively manage the pricing and product availability of our pre-owned video game products across our store base and to reallocate our inventory as necessary. Our trade-in program also allows us to be one of the only suppliers of previous generation platforms and related video games. We also operate refurbishment centers in the U.S.,United States, Canada, Australia and Europe, where defective video game products can be tested, repaired, relabeled, repackaged and redistributed back to our stores.
Video Game Accessories. Video game accessories consist primarily of controllers, gaming headsets, virtual reality products, memory cards and other add-ons for use with video game hardware and software.
Digital.  The proliferation of online game play through Microsoft Xbox Live, the PlayStation Network and PC gaming websites has led to consumer demand for subscription, time and points cards (“digital currency”) as well as DLC,full-game downloads and digitally downloadable content (“DLC”), for existing console video games. We sell a wide variety of digital currency, and we have developed technology to sell DLC and full-game downloads in our stores and on our U.S. website. We believe we are the worldwide leading retailer of digital currency sales and the sale of DLC for Xbox Live and the PlayStation Network.
Mobile and Consumer Electronics.Collectibles  Our mobile and consumer electronics business consists primarily of the revenues generated in our Technology Brands segment through Spring Mobile managed AT&T and Cricket branded stores and Simply Mac stores from the sales of wireless products and services and Apple and other consumer electronics. This product category also includes the sale of headphones and accessories and buying, selling and trading of select pre-owned smart phones in a majority of stores in our U.S. and international markets. 
Other Products.  Our sales. Collectibles consist of licensed merchandise, and collectibles primarily related to the video game, television and movie industries and pop culture themes which are sold through our video game stores, ThinkGeek stores, Zing Pop Culture stores and www.thinkgeek.com.


www.thinkgeek.comOther Products.  have grown dramaticallyOther products primarily consist of PC entertainment software, gaming-related print media, mobile and consumer electronics, and revenues from PowerUp Pro loyalty members receiving Game Informer magazine in fiscal 2015 to over $300 million.print form. We also offer PC entertainment software from many of the largest PC publishers, including Electronic Arts, Take Two and Activision Blizzard across a variety of genres, including Sports, Action, Strategy, Adventure/Role Playingsports, action, strategy, adventure/role playing and Simulation.simulation. We also carry strategy guides, magazines and gaming-related toys,interactive game figures, such as Amiibos from Nintendo, Skylanders from Activision and Infinity from Disney.Nintendo.
The products in our Video Games Brands segments are substantially the same regardless of geographic location, with the primary differences in merchandise being the timing of release of new products in the various geographies, language translations and the timing of roll-outs of newly developed technology enabling the sale of new digital products. Our in-store video game product inventory generally consists of a constantly changing selection of over 5,000 SKUs. We have buying groups in each of our segments that negotiate terms, discounts and cooperative advertising allowances for the stores in their respective geographic areas. We use customer requests and feedback, pre-orders, industry magazines and product reviews to determine which new releases are expected to be hits. Pre-orders are tracked at individual stores to distribute titles and capture demand effectively. This merchandise management is essential because a significant portion of a game’s sales are usually generated in the first days and weeks following its release.
Store Operations
We design our video game stores to provide an electronic gaming atmosphere with an engaging and visually captivating layout, with an average size of 1,4001,700 square feet. Our video game stores are typically equipped with several video game sampling areas,

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which provide our customers the opportunity to play games before purchase, as well as equipment to play video game clips. We use store configuration, in-store signage and product demonstrations to produce marketing opportunities both for our vendors and for us.
Our Technology Brands stores vary in size, with an average size of approximately 1,800 square feet. Our Spring Mobile managed AT&T and Cricket branded stores carry wireless products and accessories, and our Simply Mac stores carry Apple and other consumer electronics.
Our stores are generally located in high-traffic “power strip centers,” local neighborhood strip centers, high-traffic shopping malls and pedestrian areas, primarily in major metropolitan areas. These locations provide easy access and high frequency of visits and, in the case of strip centers and high-traffic pedestrian stores, high visibility. We target strip centers that are conveniently located, have a mass merchant or supermarket anchor tenant and have a high volume of customers.
Site Selection and Locations
Site Selection.  Site selections for new stores are made after an extensive review of demographic data, including data from our PowerUp Rewards loyalty program, and other information relating to market potential, competitor access and visibility, compatible nearby tenants, accessible parking, location visibility, lease terms and the location of our other stores. Spring Mobile managed AT&T and Cricket branded stores are selected after approval from AT&T. Simply Mac stores are selected with input from Apple. In each of our geographic segments, we have a dedicated staff of real estate personnel experienced in selecting store locations.
Domestic Locations.  The table below sets forth the number and locations of our domestic stores included in the U.S. Video Game Brands and Technology Brands segmentsUnited States segment as of January 30, 2016:February 2, 2019:
Number of Stores Number of Stores Number of Stores
U.S. Video Game BrandsTechnology Brands U.S. Video Game BrandsTechnology Brands U.S. Video Game BrandsTechnology Brands
Alabama62
4
 Kentucky72
8
 Ohio173
10
61
 Kentucky71
 North Dakota8
Alaska7
—
 Louisiana68
2
 Oklahoma47
—
6
 Louisiana61
 Ohio169
Arizona77
27
 Maine10
—
 Oregon35
41
73
 Maine11
 Oklahoma48
Arkansas32
1
 Maryland91
11
 Pennsylvania192
32
31
 Maryland83
 Oregon41
California403
172
 Massachusetts80
22
 Puerto Rico35
—
374
 Massachusetts78
 Pennsylvania179
Colorado59
30
 Michigan105
4
 Rhode Island13
—
58
 Michigan101
 Rhode Island12
Connecticut51
30
 Minnesota48
21
 South Carolina71
7
47
 Minnesota44
 South Carolina68
Delaware15
11
 Mississippi45
2
 South Dakota10
2
15
 Mississippi44
 South Dakota11
District of Columbia—
3
 Missouri69
2
 Tennessee96
6
Florida257
61
 Montana10
10
 Texas363
67
242
 Missouri66
 Tennessee94
Georgia127
63
 Nebraska21
5
 Utah27
37
137
 Montana12
 Texas374
Guam2
—
 Nevada39
11
 Vermont5
—
2
 Nebraska21
 Utah32
Hawaii21
—
 New Hampshire24
1
 Virginia129
39
17
 Nevada38
 Vermont4
Idaho16
6
 New Jersey125
26
 Washington75
42
17
 New Hampshire26
 Virginia121
Illinois158
41
 New Mexico25
6
 West Virginia29
—
143
 New Jersey114
 Washington76
Indiana88
36
 New York235
71
 Wisconsin60
28
94
 New Mexico25
 West Virginia29
Iowa32
11
 North Carolina131
16
 Wyoming8
9
31
 New York211
 Wisconsin56
Kansas31
1
 North Dakota9
1
  31
 North Carolina131
 Wyoming8
     
Total Domestic Stores    4,013
1,036
Total Domestic Stores3,846

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International Locations.  The table below sets forth the number and locations of our international stores included in the Video Game Brands segments in Canada, Europe and Australia as of January 30, 2016:February 2, 2019:
 
Number
of Stores
Canada325311
   Total Stores - Canada Video Game Brands325311
  
Australia403419
New Zealand4143
Total Stores - Australia Video Game Brands444462
  
Austria2925
Denmark3634
Finland1816
France433420
Germany216208
Ireland5150
Italy400361
Norway3728
Sweden6052
Switzerland1917
Total Stores - Europe Video Game Brands1,2991,211
Total International Stores2,0681,984
Total Stores7,1175,830

PowerUp Rewards
We operate loyalty programs in each of the countries in which we operate our Video Game Brands stores. Our U.S. loyalty program, called PowerUp RewardsTM ("PowerUp Rewards"), had approximately 39.6 million members as of February 2, 2019, of which approximately 16.2 million members have purchased at GameStop in the past year. The PowerUp Rewards membership totals also include 5.6 million paying members and 20.5 million members that we market to on a regular basis. Our loyalty programs in our video game stores in the remaining countries had approximately 20.9 million members as of February 2, 2019. Our loyalty programs generally offer our customers the ability to sign up for a free or paid membership which gives our customers access to exclusive video game related rewards. The programs' paid memberships may also include a subscription to Game Informer magazine, additional discounts on pre-owned merchandise in our stores and additional credit on trade-ins of pre-owned products.
Game Informer
We publish Game Informer, the world’s largest print and digital video game publication and website featuring reviews of new title releases, game tips and news regarding current developments in the video game industry. Print and digital versions of the monthly magazine are sold through subscriptions, digitally and through displays in our stores throughout most of the world.domestic and international stores. Game Informer magazine is the fourthfifth largest consumer publication in the U.S. and for its December 20152018 issue, the magazine had approximately 6.86.6 million paid subscribers, including over 2.6more than 2.1 million paid digital magazine subscribers. The digital version of the magazine is the largest subscription digital magazine in the world.United States. Game Informer is a part of the PowerUp Rewards Pro loyalty program and is a key feature of each paid PowerUp Rewards membership. Operating results from the English version of Game Informer are included in the United States segment as this represents where the majority of subscriptions and sales are generated. Other international version results from Game Informer operations are included in the segment in which the sales are generated.
Omnichannel
We operate several electronic commerce websites in various countries, including www.gamestop.com, www.ebgames.com.au, www.ebgames.co.nz, www.gamestop.ca, www.gamestop.it, www.gamestop.ie, www.gamestop.de, www.gamestop.co.uk,www.micromania.fr and www.thinkgeek.com, that allow our customers to buy video game products and other merchandise online and allow customers to reserve merchandise online and then pick it up in stores, or order products that may not be in-stock in stores and have it shipped to their homes. The sites also offer customers information and content about available games, release dates for upcoming games, and access to store information, such as location and product availability. E-commerce results are included in the geographic segment where the sales originate. Additionally, with our GameStop mobile app, smart phone users can browse our extensive product selection and experience an enhanced PowerUp Rewards dashboard. We estimate that the GameStop mobile app has been installed over 6 million times.

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Kongregate
We operate Kongregate, which is a leading web and mobile gaming platform. Over 31,000 developers have uploaded more than 106,000 games to www.kongregate.com. The majority of Kongregate’s revenues come from its mobile apps and in-game transactions utilizing a proprietary virtual currency called Kreds. Kongregate’s mobile publishing division has several titles available in both the Apple and Google app stores.
Advertising
Given the high foot traffic drawn past our stores, we use in-store marketing efforts such as window displays and “coming soon” signs to attract customers, as well as to promote our products. Inside our stores, we feature selected products through the use of vendor displays, “coming soon” or preview videos, signs, catalogs, point-of-purchase materials and end-cap displays. These advertising efforts are designed to increase the initial sales of new titles upon their release.
On a global basis, we receive cooperative advertising and market development funds from most of our manufacturers, distributors, software publishers and accessory suppliers to promote their respective products. Generally, vendors agree to purchase advertising space in one of our advertising vehicles. Once we run the advertising, the vendor pays us an agreed amount.
Our loyalty programs are designed to incent our customers to shop more often at our stores and to allow us to market directly to our customers based on their individual tastes and preferences. Our loyalty programs provide members with the opportunity to earn unique video game related rewards not available through any other retailer. Vendors also participate in these programs to increase the sales of their individual products.
In the last several years, as part of our brand-building efforts and targeted growth strategies, we expanded our advertising and promotional activities in certain targeted markets at key times of the year. In addition, we expanded our use of television and radio advertising in certain markets to promote brand awareness, our pre-owned business and store openings. We expect our investment in advertising to increase.
Distribution and Information Management
Our operating strategy involves providing a broad merchandise selection to our customers as quickly and as cost-effectively as possible. We use our inventory management systems to maximize the efficiency of the flow of products to our stores, enhance store efficiency and optimize store in-stock and overall investment in inventory.
Distribution.  We operate distribution facilities in various locations throughout the world, with each location strategically located to support the operations in a particular country or region. In order to enhance our first-to-market distribution network, we also utilize the services of several off-site, third-party operated distribution centers that pick up products from our suppliers, repackage the products for each of our stores and ship those products to our stores by package carriers. Inventory is shipped to each store at least twice a week, or daily, if necessary, in order to keep stores in supply of products. Our distribution facilities also typically support refurbishment of pre-owned products to be redistributed to our stores.
We distribute video game products to our U.S. stores through a 353,000 square foot distribution center in Grapevine, Texas and a 260,000 square foot distribution center in Louisville, Kentucky. The technology used in the distribution centers allows for high-volume receiving and distributions to stores.
We distribute merchandise to our Canadian segment from two distribution centers in Brampton, Ontario. We have a distribution center near Brisbane, Australia which supports our Australian operations and a small distribution facility in New Zealand which supports the stores in New Zealand. European segment operations are supported by five regionally-located distribution centers in Milan, Italy; Memmingen, Germany; Arlov, Sweden; Dublin, Ireland; and Paris, France.
Digital Distribution.  We have developed proprietary technology to work in conjunction with developers, as well as Microsoft and Sony, to enable us to sell DLC and full-game downloads in our stores and on our e-commerce sites.
Management Information Systems.  Our proprietary inventory management systems and point-of-sale technology show daily sales and in-store stock by title by store. Our systems use this data to automatically generate replenishment shipments to each store from our distribution centers, enabling each store to carry a merchandise assortment uniquely tailored to its own sales mix and rate of sale. Our call lists and reservation system also provide our buying staff with information to determine order size and inventory management for store-by-store inventory allocation.
To support most of our operations, we use a large-scale, Intel-based computing environment with a state-of-the-art storage area network and a wired and wireless corporate network installed at our U.S. and regional international headquarters, and a secure, virtual private network to access and provide services to computing assets located in our stores, distribution centers and satellite offices and to our mobile workforce. This strategy has proven to minimize initial outlay of capital while allowing for flexibility and growth as operations expand. Regional communication links exist to each of our distribution centers and offices in international locations with connectivity to our U.S. data center as required by our international, distributed applications.

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Our proprietary point-of-sale system has been enhanced to facilitate trade-in transactions, including automatic look-up of trade-in prices and printing of machine-readable bar codes to facilitate in-store restocking of pre-owned video games. In addition, our central database of all pre-owned and value video game products allows us to actively manage the pricing and product availability of our pre-owned video game products across our store base and reallocate our pre-owned and value video game products as necessary.
Field Management and Staff
Each of our Video Game Brands stores employs, on average, one store leader, one assistant store leader and between two and ten sales associates, many of whom are part-time employees. Each store leader is responsible for managing their personnel and the economic performance of their store. We have cultivated a work environment that attracts employees who are actively interested in video games so that they are better able to assist customers. To encourage them to sell the full range of our products and to maximize our profitability, we provide our employees with targeted incentive programs to drive overall sales and sales of higher margin products.
Our stores communicate with our corporate offices daily via e-mail. This e-mail allows for better tracking of trends in upcoming titles, competitor strategies and in-stock inventory positions and the opportunity to communicate directly with our executives. We have invested in significant management training programs for our store leaders and our district leaders to enhance their business management skills. We also sponsor our annual store leaders’ conferences at which we conduct intense educational training programs to provide our video game store employees with information about the upcoming video game products that will be released by publishers during the holiday season. All video game software publishers and vendors are invited to attend the conferences.
Our Video Game Brands store operations are managed by market vice presidents or managing directors (in the case of international markets) who directly supervise regional leaders. The regions are further divided into districts, each with a district leader covering an average of 15 stores.
Our Technology Brands segment is managed by a senior vice president who manages a vice president for each of our three store concepts. We operate the AT&T branded, Cricket branded and Simply Mac branded stores with a field management and store management structure similar to that of our Video Game Brands stores.
Vendors
We purchase substantially all of our new products worldwide from over 80approximately 100 manufacturers, software publishers and several distributors. Purchases from the top ten vendors in our Video Game Brands segments accounted for approximately 96%78% of our new product purchases in fiscal 2015.2018. Nintendo, Sony, Microsoft, NintendoTake-Two Interactive and Electronic ArtsActivision Blizzard accounted for 27%23%, 19%22%, 11%10%, 6% and 10%4%, respectively, of our new product purchases in our video game brands during fiscal 2015.2018. We have established price protections with our primary video game product vendors in order to reduce our risk of inventory obsolescence.

In addition, we have few purchase contracts with video game trade vendors and generally conduct business on an order-by-order basis, a practice that is typical throughout the industry. We purchase collectibles merchandise from a broad base of domestic and international vendors. We believe that maintaining and strengthening our long-term relationships with our vendors is essential to our operations and continued expansion. We believe that we have very good relationships with our vendors.
Distribution and Information Management
Our operating strategy involves providing a broad merchandise selection to our customers as quickly and as cost-effectively as possible. We use our distribution facilities and inventory management systems to maximize the efficiency of the flow of products to our stores, enhance store efficiency and optimize store in-stock and overall investment in inventory.
Competition
The video game industry is intensely competitive and subject to rapid changes in consumer preferences and frequent 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; direct sales by software publishers; andthe online environments operated by Sony (PlayStation Network), Microsoft (XBox Live), Nintendo (Nintendo Switch Online), as well as other online retailers and game rental companies. Video game products are also distributed through other methods such as digital delivery. We also compete with sellers of pre-owned and value video game products. Additionally, we compete with other forms of entertainment activities, including casual and mobile games, movies, television, theater, sporting events and family entertainment centers.
In the U.S., we compete with Wal-Mart Stores, Inc. (“Wal-Mart”); Target Corporation (“Target”); Amazon.com, Inc. (“Amazon.com”); and Best Buy Co., Inc. (“Best Buy”), among others. Throughout Europe we compete with Sony, Microsoft, Nintendo, and major consumer electronics retailers such as Media Markt, Saturn and FNAC, major hypermarket chains like Carrefour and Auchan, and online retailer Amazon.com. Competitors in Canada include Wal-Mart and Best Buy. In Australia, competitors include K-Mart, Target and JB HiFi stores.
Our Spring Mobile AT&T branded stores compete with mass market retailers such as Wal-Mart, Best Buy and Target, among others, as well as other pre-paid and post-paid wireless carriers and their distribution channels, including Verizon, Sprint and T-Mobile. Our Simply Mac stores compete with mass-market retailers as noted above. Our Spring Mobile managed Cricket branded stores compete with the pre-paid and post-paid wireless service offerings of Verizon, T-Mobile, Sprint and other prepaid brands including Boost, GoPhone and MetroPCS.

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Seasonality
Our business, like that of many retailers, is seasonal, with the major portion of our sales and operating profit realized during the fourth fiscal quarter, which includes the holiday selling season. During fiscal 2015,2018 and 2017, we generated approximately 38% of our sales during the fourth quarter. During fiscal 2014, we generated approximately 37% and 39%, respectively, of our sales during the fourth quarter.
Trademarks
We have a number of trademarks and servicemarks, including “GameStop,” “Game Informer,” “EB Games,” “Electronics Boutique,” “ThinkGeek,” “Spring Mobile,” “Simply Mac,” “Kongregate,“Zing Pop Culture,” “Power to the PlayersTM” and “PowerUp Rewards,” which have been registered by us with the United StatesU.S. Patent and Trademark Office. For many of our trademarks and servicemarks, including “Micromania,” we also have registered or have registrations pending with the trademark authorities throughout the world. We maintain a policy of pursuing registration of our principal marks and opposing any infringement of our marks.
Employees
We have approximately 20,00016,000 full-time salaried and hourly employees and between 30,00023,000 and 62,00045,000 part-time hourly employees worldwide, depending on the time of year. Fluctuation in the number of part-time hourly employees is due to the seasonality of our business. We believe that our relationship with our employees is excellent. Some of our international employees are covered by collective bargaining agreements, while none of our U.S. employees are represented by a labor union or are members of a collective bargaining unit.
Sustainability
We are committed to sustainability and to operating our business in a manner that results in a positive impact to the environment and our communities. Through our trade-in program, we take in software (CDs), gaming consoles and consumer electronics that are otherwise destined for landfills and either refurbish them or recycle them. In 2018 alone, through our U.S. refurbishment center, the company refurbished over five million pieces of software (CDs) and over three million consumer electronic devices, and recycled over 2.7 million pounds of e-waste. In addition, we continuously measure, and look for cost-effective ways to reduce, our carbon emissions and have seen both our total emissions and emissions by store decrease over the past seven years. See the Social Responsibility section of our corporate website (http://news.gamestop.com) for further information on our sustainability efforts. We are not incorporating by reference into this Annual Report on Form 10-K information or materials contained on our website or that can be accessed through our website.

Available Information
We make available on our corporate website (www.gamestopcorp.com)(http://news.gamestop.com), under “Investor Relations — SEC Filings,Financial Information,” free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such material to the Securities and Exchange Commission (“SEC”). You may read and copy this information or obtain copies of this information by mail from the Public Reference Room of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. Further information on the operation of the SEC’s Public Reference Room in Washington, D.C. can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that contains reports, proxy statements and other information about issuers, like GameStop, who file electronically with the SEC. The address of that site is http://www.sec.gov. In addition to copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, our Code of Standards, Ethics and Conduct is available on our website under “Investor Relations — Corporate Governance” and is available to our stockholders in print, free of charge, upon written request to the Investor Relations Department at GameStop Corp., 625 Westport Parkway, Grapevine, Texas 76051. The contents of our corporate website are not part of this Annual Report on Form 10-K, or any other report we file, with, or furnish to, the SEC.

ItemITEM 1A.Risk FactorsRISK FACTORS
An investment in our company involves a high degree of risk. You should carefully consider the risks below, together with the other information contained in this report, before you make an investment decision with respect to our company. The risks described below are not the only ones facing us. Additional risks not presently known to us, or that we consider immaterial, may also impair our business operations. Any of the following risks could materially adversely affect our business, operating results or financial condition, and could cause a decline in the trading price of our common stock and the value of your investment.
Risks Related to Our Business
If economicEconomic conditions do not improve,in the U.S. and in certain international markets could adversely affect demand for the products we sell may decline.sell.
Sales of our products involve discretionary spending by consumers. Consumers are typically more likely to make discretionary purchases, including purchasing video game products, when there are favorable economic conditions. In recent years, poor worldwideConsumer spending may be affected by many economic factors outside of the Company's control. Some of these factors include consumer disposable income levels, consumer confidence in current and future economic conditions, have led consumers to delay or reduce discretionary spending, including purchaseslevels of employment, consumer credit availability, consumer debt levels, inflation, political conditions and the effect of weather, natural disasters, and civil disturbances. These and other economic factors could adversely affect demand for our products, we sell. If conditions do not continue to improve, or deteriorate, these delays or reductionswhich may continue, which could negatively impact our business, results of operations and financial condition.
The video game industry ishas historically been cyclical and is affected by the introduction of next-generation consoles, which could negatively impact the demand for existing products or our pre-owned business.
The video game industry has historically been cyclical in nature in response to the introduction and maturation of new technology. Following the introduction of new video game platforms, sales of these platforms and related software and accessories generally increase due to initial demand, while sales of older platforms and related products generally decrease as customers migrate toward the new platforms. AIn addition, the features of new consoles or changes to the existing generations of consoles, including any future restrictions or conditions or the ability to play prior generation video games on such consoles, may adversely affect our pre-owned business.
The current generation console cycle began when Nintendo launched the Wii U in November 2012 and Sony and Microsoft

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each launched their next generation of consoles, the PlayStation 4 and Xbox One respectively, in November 2013. Nintendo introduced the Nintendo Switch in March 2017. If the newcurrent video game platforms do not continue to be successful, our sales of video game products could decline. The introduction of these next-generationnew iterations or generations of consoles could negatively impact the demand for existing products or our pre-owned business, which could have a negative impact on our salesresults of operations and earnings.
The introduction of another new generation of consoles could negatively impact the demand for existing products or our pre-owned business.
The introduction of another new generation of consoles, the features of such consoles or changes to the existing generations of consoles, including any future restrictions or conditions that may adversely affect our pre-owned business or the ability to play prior generation video games on such consoles, and the impact on demand for existing products could have a negative impact on our sales and earnings.financial condition.
We depend upon the timely delivery of new and innovative products from our vendors.
We depend on major hardware manufacturers primarily Microsoft, Sony and Nintendo,publishers to deliver new and existing video game platformshardware, software, and new innovations on a timely basis andconsumer electronics in anticipated quantities.quantities sufficient to meet customer demand. In addition, we depend on softwarethese manufacturers and publishers to introduce new and updatedinnovative products and software titles.titles to drive industry sales. We have experienced sales declines in the past due to a reduction in the number of new software titles available for sale. Any material delay in the introduction or delivery, or limited allocations, of hardware platforms or software titles could result in reduced sales.

If we fail to keep pace with changing industry technology and consumer preferences, we will be at a competitive disadvantage.
The interactive entertainment industry is characterized by swiftly changing technology, evolving industry standards, frequent new and enhanced product introductions, rapidly changing consumer preferences and product obsolescence. Video games are now played on a wide variety of mediums, including mobile phones, tablets, social networking websites and other devices. The popularity of browser, mobile and social gaming has increased greatly and this popularity is expected to continue to grow. Browser, mobile and social gaming is accessed through hardware other than the consoles and traditional hand-held video game devices we currently sell.
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 resources to respond to these technological changes. Ifchanges and changes in consumer preferences. Our business and results of operations may be negatively impacted if we fail to keep pace with these changes, our business may suffer.changes.
Technological advances in 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 possibleThe current consoles from Sony, Nintendo, and Microsoft have facilitated download technology. In addition, disc-less consoles may be available to downloadconsumers in the near term from certain manufacturers. Downloading of video game content to the current generation video game systems downloading is somewhat constrained by bandwidth capacitycontinues to grow and take an increasing percentage of new video game file sizes. However, broadband speeds are increasing andsales. If consumers' preference for downloading technology is becoming more prevalent andvideo game content continues to evolve rapidly. The current consoles from Sony and Microsoft have facilitated download technology. Ifincrease or these consoles and other advances in technology continue to expand our customers’ ability to access and download the current format of video games and incremental content for their games through these and other sources, our customers may no longer choose to purchase video games in our stores or reduce their purchases in favor of other forms of game delivery. As a result, our business and results of operations may be negatively impacted.
Our sales of collectibles depend on popularity of and earnings could decline.trends in pop culture, and our ability to react to them.
We may not compete effectively as browser, mobileOur sales of collectibles are heavily dependent upon the continued demand by our customers for collectibles, apparel, toys, gadgets, electronics and social gaming becomes more popular.
Gaming continues to evolve rapidly.other retail products for pop culture and technology enthusiasts. The popularity of browser, mobilesuch products is often driven by movies, television shows, music, fashion and social gaming has increased greatlyother pop culture influences. The market for, and this popularity is expectedappeal of, particular types of music, movies, television shows, artists, actors, styles, trends and brands are constantly changing. Our failure to continueanticipate, identify and react appropriately to grow. Browser, mobilechanging trends and social gaming is accessed through hardwarepreferences of customers could lead to, among other thanthings, excess inventories and higher markdowns. There can be no assurance that the consolescollectibles and traditional hand-held video game devicesrelated products that we currently sell.sell will appeal to our customers.
We depend on licensed products for a substantial portion of our sales of collectibles and our inability to maintain such licenses and obtain new licensed products would adversely affect our sales of collectibles.
We license from others the rights to sell certain of our collectibles and many of these products contain a third party’s trademarks, designs and other intellectual property. If we are unable to respondmaintain current licenses or obtain new licensed products with comparable consumer demand, our sales of collectibles would decline. Furthermore, we may not be able to this growth in popularityprevent a licensor from choosing not to renew a license with us and/or from licensing a product to one 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. We have been and are currently pursuing various strategies to integrate these new forms of gaming into our business model, but we can provide no assurances that these strategies will be successful or profitable.competitors.
Our ability to obtain favorable terms from our suppliers may impact our financial results.
Our financial results depend significantly upon the business terms we can obtain from our suppliers, including competitive prices, unsold product return policies, advertising and market development allowances, freight charges and payment terms. We purchase substantially all of our products directly from manufacturers, software publishers and, in some cases, distributors. Our largest vendors worldwide are Nintendo, Sony, Microsoft, NintendoTake-Two Interactive and Electronic Arts,Activision Blizzard, which accounted for 27%23%, 19%22%, 11%10%, 6% and 10%4%, respectively, of our new product purchases in fiscal 2015.2018. If our suppliers do not provide us with favorable business terms, we may not be able to offer products to our customers at competitive prices.

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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 have typically provided retailers with significant marketing and merchandising support for their products. Additionally, AT&T and Apple provide our Technology Brands stores with similar support. As part of this support, we receive cooperative advertising and market development payments from these vendors. These cooperative advertising and market development paymentsvendors which enable us to actively promote and merchandise the products we sell and drive sales at our stores and on our websites. We cannot assure you that vendors will continue to provide this support at historical levels. If they fail to do so, our salesbusiness and earnings couldresults of operations may be negatively impacted.
The continued growth of our Technology Brands segment is dependent in large part on our relationship with AT&T and any material adverse change to this relationship would affect our results.
We continue to grow our Technology Brands segment as a way to diversify our business in order to continue to drive growth and to help mitigate the financial impact from the cyclical nature of the video game console business. Gross margins in our Technology Brands segment are higher than in our Video Game Brands segment and as a result, a growing portion of our profits is due to the growth of our Technology Brands segment. Our Technology Brands segment is primarily conducted through Spring Mobile, an authorized AT&T reseller currently operating 890 AT&T branded stores selling post-paid wireless services and products, and 70 Cricket branded stores selling pre-paid wireless services and products. Therefore, we depend in large part on our relationship with AT&T for the continued growth of our Technology Brands segment. In particular, we depend on AT&T for constant innovation and the timely delivery of products and services to our stores. Any material adverse change in our relationship with AT&T, including termination of the relationship (which is permissible upon a short notice period), the lack of innovation or failure to timely supply products or competitive service plans, or changes in the manner in which AT&T compensates its resellers, could materially affect the continued growth of our Technology Brands segment and our financial condition and results of operations.
Our growing relationship with AT&T could have an adverse impact on our business, including as a result of restrictions on our ability to offer products and services in the United States that compete with AT&T in wireless and wireline communications and a variety of technology businesses.
We are a significant reseller of AT&T products and services through our Technology Brands segment. We also sell certain AT&T products and services through our Video Game Brands stores. Our agreements with AT&T and its affiliates impose significant restrictions on our ability to offer products and services in the United States that compete with AT&T in wireless and wireline communications and a variety of technology businesses, including several that are adjacent to markets in which we participate or are considering entering, which could materially adversely impact this component of our business.
We have made and may make investments and acquisitions which could negatively impact our business if we fail to successfully complete and integrate them, or if they fail to perform in accordance with our expectations.
To enhance our efforts to grow and compete, we have made and continue to make investments and acquisitions. These activities include investments in and acquisitions of digital, browser, social and mobile gaming and technology-based companies as the delivery methods for video games continue to evolve, and investments in new retail categories like wireless and consumer electronics. Our plans to pursue future transactions are subject to our ability to identify potential candidates and negotiate favorable terms for these transactions. Accordingly, we cannot assure you that future investments or acquisitions will be completed. In addition, to facilitate future transactions, we may take actions that could dilute the equity interests of our stockholders, increase our debt or cause us to assume contingent liabilities, all of which may have a detrimental effect on the price of our common stock. Also, companies that we have acquired, and that we may acquire in the future, could have products that are in development, and there is no assurance that these products will be successfully developed. Finally, if any acquisitions are not successfully integrated with our business, or fail to perform in accordance with our expectations, our ongoing operations could be adversely affected. Integration of digital, browser, social and mobile gaming and mobile phone and technology-based companies or other retailers may be particularly challenging to us as these companies are outside of our historical operating expertise.
Pressure from our competitors may force us to reduce our prices or increase spending, which could decrease our profitability.
The retail environment is intensely competitive and subject to rapid changes in consumer preferences and frequent new product introductions. We compete with mass merchants and regional chains, including Wal-Mart and Target; computer product and consumer electronics stores, including Best Buy; internet-based retailers such as Amazon.com; other U.S. and international video game and PC software specialty stores located in malls and other locations, such as Carrefour and Media Markt; toy retail chains; direct sales by software publishers; andthe online environments operated by Sony (PlayStation Network), Microsoft (XBox Live), Nintendo (Nintendo Switch Online), as well as other online retailers and game rental companies. Some of our competitors have longer operating histories and may have greater financial resources than we do or other advantages, including non-taxability of sold merchandise.advantages. In addition, video game products and content are increasingly being digitally distributed and new competitors built to take advantage

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of these new capabilities are entering the marketplace, and other methods may emerge in the future. We also compete with other sellers of pre-owned video game products and other PC software distribution companies, including Steam. Certain of our mass-merchant competitors are expanding in the market for new and pre-owned video games through aggressive pricing which may negatively affect our margins, sales and earnings for these products. Additionally, we compete with other forms of entertainment activities, including browser, social and mobile games, movies, television, theater, sporting events and family entertainment centers. Our Technology Brands stores compete with a wide variety of other wireless carriers and retailers and consumer electronics retailers, including AT&T, which competes with our Spring Mobile managed AT&T and Cricket branded stores. If we lose customers to our competitors, or if we reduce our prices or increase our spending to maintain our customers, we may be less profitable.
We depend upon ourFailure to attract and retain executive officers and other key personnel and they would be difficult to replace.could materially adversely affect our financial performance.
Our success depends upon our ability to attract, motivate and retain a highly trained and engaged workforce, including key executives, management for our stores and skilled merchandising, marketing, financial and administrative personnel. The turnover rate in the retail industry is relatively high, and there is an ongoing need to recruit and train new store employees. Factors that affect our ability to maintain sufficient numbers of qualified employees include employee morale, our reputation, unemployment rates, competition from other employers and our ability to offer appropriate compensation packages. Additionally, we depend upon the continued services of our key executive officers, including our Executive Chairman, Chief Executive Officer, Chief Operating Officer and Executive Vice Presidents. Our inability to recruit a sufficient number of qualified individuals or our failure to retain key executive officers and other employees in the future may have a negative impact on our business.business and results of operations.
Damage to our reputation could adversely affect our business and our relationships with our customers.
Our continued success depends upon customers' perception of our Company. Any negative publicity relating to our vendors, products, practices or our Company could damage our reputation. The increased use of social media platforms allows for the rapid dispersal of information, including negative feedback or other commentary, which could negatively impact our reputation and result in declines in customer loyalty and adversely affect our results of operations.
International events could delay or prevent the delivery of products to our suppliers.
Our suppliers rely on foreign sources, primarily in Asia, to manufacture a portion of the products we purchase from them. As a result, any event causing a disruption of imports, including natural disasters or the imposition of import restrictions or trade restrictions in the form of tariffs or quotas, could increase the cost and reduce the supply of products available to us, which could lowermay negatively impact our salesbusiness and profitability.results of operations.
Our international operations expose us to numerous risks.
We have international retail operations in Australia, Canada and Europe. Because release schedules for hardware and software introduction in these markets can sometimes differ from release schedules in the United States, the timing of increases and decreases in foreign sales may differ from the timing of increases and decreases in domestic sales. We are also subject to a number of other factors that may affect our current or future international operations. These include:
economic downturns, specifically in the regions in which we operate;
currency exchange rate fluctuations;
international incidents;
natural disasters;
government instability; and
competitors entering our current and potential markets.
Our operations in Europe are also subject to risks associated with the current economic conditions and uncertainties in the European Union (“EU”). In June 2016, voters in the United Kingdom approved the exit of that country from the EU (“Brexit”). The Brexit vote and related developments have created significant economic uncertainty in Europe. In addition, European and global economic conditions have already been negatively impacted by the abilityinability of certain EU member states to service their sovereign debt obligations. Additionally, thereThere continues to be uncertainty over the possibility that other EU member states may experience similar financial troubles, the ultimate outcome of the EU governments’ financial support programs, the possible breakup or restructuring of the EU and the possible elimination or restructuring of the EU monetary system. These continued uncertainties could further disrupt

European and global economic conditions. Unfavorable economic conditions could negatively impact consumer demand for our products. These factors could have an adverse effect onnegatively impact our business, results of operations and financial condition.
WeOur international operations are also subject to risks that our operations outsidecompliance with the United States could be conducted by our employees, contractors, representatives or agents in ways that violate theU.S. Foreign Corrupt Practices Act orand other similar anti-bribery laws.laws applicable to our operations. While we have policies and procedures intended to ensure compliance with these laws, our employees, contractors, representatives and agents may take actions that violate our policies. Moreover, it may be more difficult to oversee the conduct of any such persons who are not our employees, potentially exposing us to greater risk from their actions. Any violations of those laws by any of those persons could have a negative impact on our business.

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TableChanges to tariff and import/export regulations may negatively impact our future financial condition and results of Contentsoperations.
The United States and other countries have from time to time proposed and enacted protectionist trade policies that could increase the cost or reduce the availability of certain merchandise. In particular, the current U.S. administration has made certain changes to import/export tariffs and international trade agreements. The changes announced and made to date do not impact the merchandise that we offer. Any measures that could impact the cost or availability of the merchandise we offer could have an adverse impact on our business because a significant portion of the products we offer are purchased from foreign vendors and manufactured in foreign countries.

Unfavorable changes in our global tax rate could have a negative impact on our business, results of operations and cash flows.
As a result of our operations in many foreign countries, our global tax rate is derived from a combination of applicable tax rates in the various jurisdictions in which we operate. Depending upon the sources of our income, any agreements we may have with taxing authorities in various jurisdictions and the tax filing positions we take in various jurisdictions, our overall tax rate may be higher than other companies or higher than our tax rates have been in the past. 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 business and to estimates of the amount of income to be derived in any given jurisdiction. A change in the mix of our business from year to year and from country to country, changes in rules related to accounting for income taxes, changes in tax laws in any of the multiple jurisdictions in which we operate or adverse outcomes from the tax audits that regularly are in process in any jurisdiction in which we operate could result in an unfavorable change in our overall tax rate, which could have a material adverse effectimpact on our business and results of our operations.
If we are unable to renew or enter into new leases on favorable terms, our revenue growth may decline.
All of our retail stores are located in leased premises. If the cost of leasing existing stores increases, we cannot assure you that we will be able to maintain our existing store locations as leases expire. In addition, we may not be able to enter into new leases on favorable terms or at all, or we may not be able to locate suitable alternative sites or additional sites for new store expansion in a timely manner. Our revenues and earnings may decline if we fail to maintain existing store locations, enter into new leases, locate alternative sites or find additional sites for new store expansion.
Restrictions on our ability to take trade-ins ofpurchase and sell pre-owned video game products or pre-owned mobile devices could negatively affect our financial condition and results of operations.
Our financial results depend on our ability to take trade-ins of,purchase and sell pre-owned video game products and pre-owned mobile devices within our stores. Actions by manufacturers or publishers of video game products or mobile devices, wireless carriers or governmental authorities to prohibit or limit our ability to take trade-inspurchase or sell pre-owned video game products or mobile devices, or to limit the ability of consumers to play pre-owned video games or use pre-owned mobile devices, could have a negative impact on our sales and earnings.results of operations.
Sales of video games containing graphic violence may decrease as a result of actual violent events or other reasons, and our financial results may be adversely affected as a result.
Many popular video games contain material with graphic violence. These games receive an “M” or “T” rating from the Entertainment Software Ratings Board. As actual violent events occur and are publicized, or for other reasons, public acceptance of graphic violence in video games may decline. Consumer advocacy groups may increase their efforts to oppose sales of graphically-violent video games and may seek legislation prohibiting their sales. As a result, our sales of those games may decrease, which could adversely affectnegatively impact our financial results.results of operations.
An adverse trend in sales during the holiday selling season could impact our financial results.
Our business, like that of many retailers, is seasonal, with the major portion of our sales and operating profit realized during the fourth fiscal quarter, which includes the holiday selling season. During fiscal 2015,2018, we generated approximately 38%37% of our sales during the fourth quarter. Any adverse trend in sales during the holiday selling season could lower our results of operations for the fourth quarter and the entire fiscal year.
Our results of operations may fluctuate from quarter to quarter.
Our results of operations may fluctuate from quarter to quarter depending upon several factors, some of which are beyond our control. These factors include, but are not limited to:
the timing and allocations of new product releases including new console launches;
the timing of new store openings or closings;

shifts in the timing or content of certain promotions or service offerings;
the effect of changes in tax rates in the jurisdictions in which we operate;
acquisition costs and the integration of companies we acquire or invest in;
the mix of earnings in the countries in which we operate;
the costs associated with the exit of unprofitable markets, businesses or stores; and

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changes in foreign currency exchange rates.
These and other factors could affect our business, financial condition and results of operations, and this makes the prediction of our financial results on a quarterly basis difficult. Also, it is possible that our quarterly financial results may be below the expectations of public market analysts.
Failure to effectively manage our new store openings could lower our sales and profitability.
Our growth strategy depends in part upon opening new stores and operating them profitably. We opened 85 Video Game Brands stores (including 31 collectibles stores) and opened or acquired 568 Technology Brands stores in fiscal 2015. We expect to open approximately 140 new stores in fiscal 2016, including 90 Video Game Brands stores (including 84 collectibles stores) and 50 Technology Brands stores. Our ability to open new stores and operate them profitably depends upon a number of factors, some of which may be beyond our control. These factors include:
the ability to identify new store locations, negotiate suitable leases and build out the stores in a timely and cost efficient manner;
the ability to hire and train skilled associates;
the ability to integrate new stores into our existing operations; and
the ability to increase sales at new store locations.
If we fail to manage new store openings in a timely and cost efficient manner, our growth or profits may decrease.
Failure to successfully execute our strategy to close stores and transfer customers and sales from closed stores due to under performance to nearby stores could adversely impact our financial results.
Our strategy includes closingWe regularly assess stores whichfor closure that are not meeting our performance standards or stores at the end of their lease terms andwith the intent of transferring sales to other nearby GameStop locations. We closed approximately 210 Video Game Brands stores worldwide in fiscal 2015 and plan to close approximately 200 Video Game Brands stores worldwide in fiscal 2016. 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 that we plan to close. If we are unsuccessful in marketing to customers of the stores that we plan to close or in transferring sales to nearby stores, our sales and profitabilityresults of operations could be negatively impacted.
If we are unable to renew or enter into new leases on favorable terms, our revenue may be adversely affected.
All of our retail stores are located in leased premises. If the cost of leasing existing stores increases, we cannot assure you that we will be able to maintain our existing store locations as leases expire. In addition, we may not be able to enter into new leases on favorable terms or at all, or we may not be able to locate suitable alternative sites or additional sites for new store expansion in a timely manner. Our revenues and earnings may decline if we fail to maintain existing store locations, enter into new leases, locate alternative sites or find additional sites for new store expansion.
We rely on centralized facilities for refurbishment of our pre-owned products. Any disruption to these facilities could adversely affect our profitability.
We rely on centralized facilities for the refurbishment of allmany of the pre-owned products that we sell. If any disruption occurred at these facilities, whether due to natural disaster or severe weather, or events such as fire, accidents, power outages, systems failures, or other unforeseen causes, sales of our pre-owned products could decrease. Since we generally obtain higher margins on our pre-owned products, any adverse effect on their sales could adversely affect our profitability.
If our management information systems fail to perform or are inadequate, our ability to manage our business could be disrupted.
We rely on computerized inventory and management systems to coordinate and manage the activities in our distribution centers, as well as to communicate distribution information to the off-site, third-party operated distribution centers with which we work. The third-party distribution centers pick up products from our suppliers, repackage the products for each of our stores and ship those products to our stores by package carriers. We use 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, to keep our stores in stock at optimum levels and to move inventory efficiently. Our systems are subject to damage or interruption from power outages, telecommunications failures, cyber-attacks, security breaches and catastrophic events.If our inventory or management information systems fail to adequately perform thesetheir functions, our business could be adversely affected. In addition, if operations in any of our distribution centers were to shut down or be disrupted for a prolonged period of time or if these centers were unable to accommodate the continued store growthstores in a particular region, our business and results of operations may be negatively impacted.

If we do not maintain the security of our member, customer, employee or company information, we could suffer.damage our reputation, incur substantial additional costs and become subject to litigation.
DataAn important part of our business involves the receipt, processing and storage of personal information of our customers, members and employees, including, in the case of customers, payment information. We have systems and processes in place that are designed to protect against security and data breaches involvingand unauthorized access to confidential information. Nevertheless, cyber-security risks such as malicious software and attempts to gain unauthorized access to data are rapidly evolving and becoming increasingly sophisticated. Techniques or software used to gain unauthorized access, and/or disable, degrade or harm our systems may be difficult to detect for prolonged periods of time, and we may be unable to anticipate these techniques or put in place protective or preventive measures. These attempts to gain unauthorized access could lead to disruptions in our systems, unauthorized release of confidential or otherwise protected information or corruption of data. If individuals are successful in infiltrating, breaking into, disrupting, damaging or otherwise stealing from the computer systems of the Company or its third-party providers, we may have to make a significant investment to fix or replace them, and may suffer interruptions in our operations in the interim, including interruptions in our ability to accept payment from customers and our ability to issue and redeem loyalty points under our Power Up Rewards program. Such an event may also expose us to costly litigation, government investigations, government enforcement actions, fines and/or lawsuits and may significantly harm our reputation with our members and customers. We are continuously working to upgrade our information technology systems and provide employee awareness training around phishing, malware, and other cyber risks to protect our member, customer, employee, and company data against cyber risks and security breaches. Despite these efforts, we have experienced cybersecurity attacks in the past and there is no guarantee that the procedures that we have implemented to protect against unauthorized access to secured data are adequate to safeguard against future data security breaches. While past cybersecurity attacks have not resulted in material losses, a data security breach or employee data storedany failure by us to comply with applicable privacy and information security laws and regulations could materially impact our business and our results of operations. Moreover, a data security breach or change in applicable privacy or security laws or regulations could require us to devote significant management resources to address the problems created by the breach or such change in laws or regulations and to expend significant additional resources to upgrade further the security measures that we employ to guard against such breaches or to comply with such change in laws or regulations, which could disrupt our business, operations and financial condition.
If our internal control over financial reporting is ineffective, our business may be adversely affected and we may lose market confidence in our reported financial information which could adversely impact our business and stock price.
Effective internal control over financial reporting can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements and may not prevent or detect misstatements because of inherent limitations. These limitations include, among others, the possibility of human error, inadequacy or circumvention of controls and fraud.
During the fourth quarter of fiscal 2018, we identified material weaknesses in internal control related to the principles associated with the control activities component of the Internal Control—Integrated Framework (2013), specifically related to our information technology general control environment. Refer to Part II, Item 9A for additional information. We have been implementing and will continue to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated; however, we cannot provide assurance that these measures will be successful. If we are unable to remediate the material weaknesses or are unable to otherwise maintain effective internal control over financial reporting, our ability to report financial information timely and accurately could be adversely affected. As a result, we could lose investor confidence and become subject to litigation or investigations, which could adversely affect our reputation and revenues.
We store confidential information with respect to our customers and employees. A compromise of our data security systems or those of businesses with which we interact could result in information related to our customers or employees being obtained by unauthorized persons. Any such breach of our systems could lead to fraudulent activity resulting in claims and lawsuits against us or other operational problems or interruptions in connection with such breaches. Consequently, despite our efforts, our security

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measures have been breached in the past and may be breached in the future due to cyber attack, team member error, malfeasance, fraudulent inducement or other acts; and unauthorized parties have in the past obtained, and may in the future obtain, access to our data or our customers’ data. While costs associated with past security breaches have not been significant, any breach or unauthorized access in the future could result in significant legal and financial exposure and damage to our reputation that could potentially have an adverse effect on our business. While we also seek to obtain assurances that others with whom we interact will protect confidential information, there is a risk the confidentiality of data held or accessed by others may be compromised. If a compromise of our data security or function of our computer systems or website were to occur, it could have a material adverse effect on our operating results andbusiness, operations, financial condition and possibly, subject us to additional legal, regulatory and operating costs and damage our reputation in the marketplace.
Also, the interpretation and enforcement of data protection laws in the United States, Europe and elsewhere are uncertain and, in certain circumstances, contradictory. These laws may be interpreted and enforced in a manner that is inconsistent with our policies and practices. If we are subject to data security breaches or government-imposed fines, we may have a loss in sales or be forced to pay damages or other amounts, which could adversely affect profitability, or be subject to substantial costs related to compliance.stock price.
Litigation and the outcomes of such litigation could negatively impact our future financial condition and results of operations.
In the ordinary course of our business, we are, from time to time, subject to various litigation and legal proceedings. In the future, the costs or resultsproceedings, including matters involving wage and hour employee class actions, stockholder and consumer class actions, tax audits and unclaimed property audits by states. The outcome of suchlitigation and other legal proceedings individuallyand the magnitude of potential losses therefrom, particularly class action lawsuits and regulatory actions, is difficult to assess or in the aggregate, could havequantify. Certain of these legal proceedings, if decided adversely to us or settled by us, may require changes to our business operations that negatively impact our operating results or involve significant liability awards that impact our financial condition. The cost to defend litigation may be significant. As a negative impact onresult, legal proceedings may adversely affect our business, financial condition, results of operations and cash flows.or liquidity. See Item 3. “Legal Proceedings.”

Legislative actions and changes in accounting rules may cause our general and administrative and compliance costs to increase and impact our future financial condition and results of operations.
In order to comply with laws adopted by the U.S. government or other U.S. or foreign regulatory bodies, we may be required to increase our expenditures and hire additional personnel and additional outside legal, accounting and advisory services, all of which may cause our general and administrative and compliance costs to increase. Significant workforce-related legislative changes could increase our expenses and adversely affect our operations. Examples of possible workforce-related legislative changes include changes to an employer's obligation to recognize collective bargaining units, the process by which collective bargaining agreements are negotiated or imposed, minimum wage requirements, and health care mandates. In addition, changes in the regulatory environment affecting Medicare reimbursements, product safety, supply chain transparency, and increased compliance costs related to enforcement of federal and state wage and hour statutes and common law related to overtime, among others, could cause our expenses to increase without an ability to pass through any increased expenses through higher prices. Environmental legislation or other regulatory changes could impose unexpected costs or impact us more directly than other companies due to our operations as a global retailer. Specifically, environmental legislation or international agreements affecting energy, carbon emissions, and water or product materials are continually being explored by governing bodies. Increasing energy and fuel costs, supply chain disruptions and other potential risks to our business, as well as any significant rule making or passage of any such legislation, could materially increase the cost to transport our goods and materially adversely affect our results of operations. Additionally, regulatory and enforcement activity focused on the retail industry has increased in recent years, increasing the risk of fines and additional operational costs associated with compliance. 
As a seller of certain consumer products, we are subject to various federal, state, local and international laws, regulations, and statutes relating to product safety and consumer protection.
While we take steps to comply with these laws, there can be no assurance that we will be in compliance, and failure to comply with these laws could result in litigation, regulatory action and penalties which could have a negative impact on our business, financial condition and results of operations. WeIn addition, our suppliers might not adhere to product safety requirements and the Company and those suppliers may alsotherefore be subject to involuntary or voluntary product recalls or product liability lawsuits. Direct costs, orlost sales and reputational damage associated with product recalls, government enforcement actions or product liability lawsuits, individually or in the aggregate, could have a negative impact on future revenues and results of operations.
Our Board of Directors could change our dividend policy at any time.
We initiated our first cash dividend on our common stock during fiscal 2012. Notwithstanding the foregoing, there is no assurance that we will continue to pay cash dividends on our common stock in the future. Certain provisions in our credit facility and covenants under the indentures for our 5.50% Senior Notes due October 1, 2019 (the “2019 Senior Notes”) and our 6.75% Senior Notes due March 15, 2021 (the "2021 Senior Notes" and, together, the “Senior Notes”), restrict our ability to pay dividends in certain circumstances. In addition, subject to any financial covenants in current or future financing agreements that directly or indirectly restrict our ability to pay dividends, the payment of dividends is within the discretion of our Board of Directors and will

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depend upon our future earnings and cash flow from operations, our capital requirements, our financial condition and any other factors that the Board of Directors may consider. Unless we continue to pay cash dividends on our common stock in the future, the success of an investment in our common stock will depend entirely upon its future appreciation. Our common stock may not appreciate in value or even maintain the price at which it was purchased.
We may record future goodwillrecognized substantial impairment charges or other assetin fiscal 2018 and any future impairment charges whichon our goodwill and intangible assets could negatively impact our future results of operations and financial condition.operations.
In recent periodsfiscal 2018, we recorded impairment charges totaling $970.7 million and $43.1 million associated with our goodwill and intangible assets, respectively. Our consolidated balance sheet at February 2, 2019 included goodwill and intangible assets, net totaling $397.4 million. Goodwill and certain intangible assets arise from acquisitions and are not amortized as they have recorded significant non-cash charges relatingindefinite useful lives. Other intangible assets are amortized over their estimated economic useful lives. We are required to the impairment ofevaluate goodwill and other tangibleintangible assets not subject to amortization for impairment at least annually or when circumstances indicate the carrying value of the goodwill or other intangible assets might be impaired. The impairment tests require numerous assumptions such as, among others, future sales trends, operating margins, store count and capital expenditures. In addition, changes in our market capitalization may impact certain assumptions in our annual impairment test. If our actual financial results in the future are below our projections or if our stock price experiences a sustained decline, we may be required to record significant impairment charges associated with our goodwill and intangible assets, that had a material adverse effect onwhich would negatively impact our consolidated statements of operations and consolidated balance sheets. Because we have grown in part through acquisitions, goodwill and other acquired intangible assets represent a substantial portion of our assets. We also have long-lived assets consisting of property and equipment and other identifiable intangible assets which we review both on an annual basis as well as when events or circumstances indicate that the carrying amount of an asset may not be recoverable. If a determination is made that a significant impairment in value of goodwill, other intangible assets or long-lived assets has occurred, such determination could require us to impair a substantial portion of our assets. Asset impairments could have a material adverse effect on our financial condition and results of operations. See "Goodwill" and "Indefinite-lived Intangible Assets" in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Use of Estimates” for additional information.

Risks Relating to Indebtedness
Because of our floating rate credit facility, we may be adversely affected by interest rate changes.
Our financial position may be affected by fluctuations in interest rates, as our senior credit facility is subject to floating interest rates.
Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. If we were to borrow against our senior credit facility, a significant increase in interest rates could have an adverse effecta negative impact on our financial position and results of operations.operations and financial condition.
The terms of our Senior Notes and senior credit facility may impose significant operating and financial restrictions on us.
The terms of our Senior Notes and our senior credit facility may impose significant operating and financial restrictions on us in certain circumstances. These restrictions, among other things, limit our ability to:
incur, assume or permit to exist additional indebtedness or guaranty obligations;
incur liens or agree to negative pledges in other 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 or otherwise alter the terms of our organizational documents and indebtedness;
sell assets; and
engage in transactions with affiliates.
We cannot assure that these covenants will not adversely affect our ability to finance our future operations or capital needs or to pursue available business opportunities and may affect our ability to grow in accordance with our strategy.opportunities. A breach of the covenants or restrictions under the indentures for the Senior Notes, or under our senior credit facility, could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the repayment of the related debt and may result in the acceleration of the repayment of any other debt to which a cross-acceleration or cross-default provision applied. In addition, an event of default under our senior credit facility would permit the lenders to terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under our senior credit facility, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event that our lenders or noteholders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. See Note 10, "Debt," to our consolidated financial statements for a description of our Senior Notes and senior credit facility.

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To service our indebtedness, we will require a significant amount of cash. We may not be able to generate sufficient cash flow to meet our debt service obligations.
Our ability to generate sufficient cash flow from operations to make scheduled payments on our indebtedness, including without limitation any payments required to be made under our senior credit facility or to holders of our Senior Notes, and to fund our operations, will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. If we do not generate sufficient cash flow from operations to satisfy our debt obligations, including interest payments and the payment of principal at maturity, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, including the Senior Notes, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot provide assurance that any refinancing would be possible, that any assets could be sold, or, if sold, of the timing of the sales and the amount of proceeds realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or if that additional financing would be permitted under the terms of our various debt instruments, then in effect.
Our senior credit facility and the indentures governing the Senior Notes restrict our ability to dispose of assets and use the proceeds from those sales and raise debt or equity to meet any debt service obligations then due. Our ability to refinance would also depend upon the condition of the finance and credit markets. Our inability to generate sufficient cash flow to satisfy our debt obligations, including the Senior Notes, or to refinance our obligations on commercially reasonable terms or on a timely basis, would have an adverse effectnegative impact on our business, results of operations and financial condition.

Despite current indebtedness levels, we and our subsidiaries may still be able to incur additional debt. This could further increase the risks associated with our leverage.
We are able to incur additional indebtedness. Although our senior credit facility and the indentures for our Senior Notes contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. Such future indebtedness or obligations may have restrictions similar to, or more restrictive than, those included in the indentures for our Senior Notes or our senior credit facility. The incurrence of additional indebtedness could impact our financial condition and results of operations.
ItemITEM 1B.Unresolved Staff CommentsUNRESOLVED STAFF COMMENTS
None.
ItemITEM 2.PropertiesPROPERTIES
All of our stores are leased. Store leases typically provide for an initiala lease term of threeone to five years, plus renewal options. This arrangement gives us the flexibility to pursue extension or relocation opportunities that arise from changing market conditions. We believe that, as current leases expire, we will be able to obtain either renewals at present locations, leases for equivalent locations in the same area, or be able to close the stores with expiring leases and transfer enough of the sales to other nearby stores to improve, if not at least maintain, profitability.
The terms of the store leases, including reasonably assured options, for the 7,1175,830 leased stores open as of January 30, 2016February 2, 2019 expire as follows:
Lease Terms to Expire During (12 Months Ending on or About January 30) 
Number
of Stores
2017 1,184
2018 1,782
2019 1,435
2020 1,251
2021 and later 1,465
Total 7,117
Lease Terms to Expire During(1)
Number
of Stores
Fiscal 20192,004
Fiscal 20201,040
Fiscal 2021766
Fiscal 2022646
Fiscal 2023 and later1,374
Total5,830

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(1)
Our fiscal year is composed of the 52 or 53 weeks ending on the Saturday closest to January 31st.
As of January 30, 2016,February 2, 2019, we owned eightseven and leased 1413 office and distribution facilities, totaling approximately 1.82.3 million square feet. The lease expiration dates for the leased facilities range from 20162019 to 2024,2028, with an average remaining lease life, including reasonably assured options, of approximately fivesix years. Our principal facilities are as follows:
Location 
Square
Footage
 
Owned or
Leased
 Use
Grapevine, Texas, USA 519,000
 Owned Distribution and administration
Grapevine, Texas, USA 182,000
 Owned Manufacturing and distribution
Louisville,Shepherdsville, Kentucky, USA(1)
 260,000631,000
 Leased Distribution
Brampton, Ontario, Canada 119,000
 Owned Distribution and administration
Eagle Farm, Queensland, Australia 185,000
 Owned Distribution and administration
Milan, Italy��123,000
 Owned Distribution and administration
(1) We will be relocating from this distribution center during the first half of fiscal 2016. During the fourth quarter of fiscal 2015, we executed a lease for a 631,000 square foot facility in Shepherdsville, Kentucky.
Additional information regarding our properties can be found in “Item 1. Business - Item 1, “Business—Store Operations” and “Item 1. Business - Item 1, “Business—Site Selection and Locations” elsewhere in this Form 10-K.

ItemITEM 3.Legal ProceedingsLEGAL PROCEEDINGS
In the ordinary course of business, we are, from time to time, subject to various legal proceedings, including matters involving wage and hour employee class actions, stockholder and consumer class actions.actions, tax audits and unclaimed property audits by states. We may enter into discussions regarding settlement of these and other types of lawsuits,legal proceedings, and may enter into settlement agreements, if we believe settlement is in the best interest of our stockholders. We do not believe that any such existing legal proceedings or settlements, individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or cash flows.liquidity.
Certain of our French subsidiaries havehad been under audit by the French Tax Administration (the "FTA") for fiscal years 2008 through 2012.2015. We received a tax reassessment notice on December 23, 2015,notices pursuant to which the FTA asserted that the French subsidiaries were ineligible to claim certain tax deductions from November 4, 2008, through January 31, 2010, resulting2013, which resulted in a potential additional tax chargecollection notice received on January 16, 2018 in the amount of approximately €23.0€80.0 million.  We may receive additionalBased on the nature of the tax reassessmentsdeductions being challenged, collection notices through fiscal year 2018 were anticipated. During fiscal 2018, we settled this matter with the FTA and as a result recognized charges totaling $30.3 million in material amounts for subsequentincome tax expense. The final settlement covers fiscal years including those years currently under audit. We filed a response to the reassessment notice on February 19, 2016, and we intend to vigorously contest the reassessment2008 through administrative procedures.  If we are unable to resolve this matter through administrative remedies at the FTA, we plan to pursue judicial remedies. We believe our tax positions will be sustained and have not taken a reserve for any potential adjustment based on the reassessment.  If we were not to prevail, then the adjustment to our income tax provision could be material.2018.

ItemITEM 4.Mine Safety DisclosuresMINE SAFETY DISCLOSURES
Not applicable.

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PART II
ItemITEM 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Price Range of Common Stock
Our 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 Composite Tape:
  Fiscal 2015
  High Low
Fourth Quarter $47.48
 $24.33
Third Quarter $47.83
 $38.66
Second Quarter $47.76
 $38.47
First Quarter $42.67
 $34.52
  Fiscal 2014
  High Low
Fourth Quarter $44.84
 $31.69
Third Quarter $45.45
 $35.82
Second Quarter $46.59
 $35.10
First Quarter $45.48
 $33.10
Approximate Number of Holders of Common Equity
As of March 17, 2016,21, 2019, there were approximately 1,4481,383 record holders of our Class A Common Stock.
Dividends
During fiscal 2014, weWe have historically paid quarterly dividends of $0.33 per share of Class A Common Stock during each of the four fiscal quarters. During fiscal 2015, we paid quarterly dividends of $0.36 per share of Class A Common Stock during each of the four fiscal quarters.
On February 23, 2016, our Board of Directors authorized an increase in our annual cash dividend from $1.44 to $1.48 per share of Class A Common Stock.dividends. Our payment of dividends is and will continue to be restricted by or subject to, among other limitations, applicable provisions of federal and state laws, our earnings and various business considerations, including our financial condition, results of operations, cash flow, the level of our capital expenditures, our future business prospects, our status as a holding company and such other matters that our Board of Directors deems relevant. In addition, the terms of the senior credit facility and of the indentures governing our Senior Notes restrict our ability to pay dividends under certain circumstances. See “Item 7. Management’sItem 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Operations—Liquidity and Capital Resources” herein for further information regarding restrictions on our dividend payments.

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Issuer Purchases of Equity Securities
Our purchases of our equity securities during the fourth quarter of the fiscal year ended January 30, 2016 were as follows:
Period 
Total
Number of
Shares
Purchased
 
Average
Price Paid per
Share
 
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs
 
Approximate Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans or
Programs (1)
    (In millions of dollars)
November 1, 2015 through November 29, 2015 297,000
 $40.25
 297,000
 $283.4
November 30, 2015 through January 2, 2016 921,100
 $30.52
 921,100
 $255.3
January 3, 2016 through January 30, 2016 382,405
 $26.15
 382,405
 $245.3
Total 1,600,505
 $31.28
 1,600,505
  
___________________
(1)
In November 2014, the Board of Directors authorized $500 million to be used for share repurchases, replacing the previous November 2013 authorization. The November 2014 authorization has no expiration date.

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 28, 201131, 2014 through January 29, 2016February 1, 2019 (the last trading date of fiscal 2015)2018) 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 on cumulative total return assuming (i) the investment of $100 in our Class A Common Stock, the S&P 500 and the Dow Jones Specialty Retailers Index on January 28, 201131, 2014 and (ii) reinvestment of dividends.

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The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor should such information be incorporated by reference into any future filings under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference in such filing.


fy18stockgraphxgme.jpg
  1/28/2011  1/27/2012  2/1/2013  1/31/2014  1/30/15  1/29/161/31/2014 1/30/2015 1/29/2016 1/27/2017 2/2/2018 2/1/2019
GME  $100.00  $115.92  $122.12  $178.91  $186.10  $143.47$100.00
 $104.02
 $80.19
 $78.41
 $56.24
 $43.08
S&P 500 Index  100.00  103.13  118.56  139.66  156.31  152.02$100.00
 $114.21
 $113.44
 $137.11
 $168.40
 $168.30
Dow Jones Specialty Retailers Index  100.00  109.29  116.12  148.41  184.80  159.76$100.00
 $125.19
 $128.98
 $149.77
 $192.75
 $220.95
Securities Authorized for Issuance under Equity Compensation Plans
For information regarding securities authorized for issuance under equity compensation plans, refer to “Part III —Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

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ItemITEM 6.Selected Financial DataSELECTED FINANCIAL DATA
The following table sets forth our selected consolidated financial and operating data for the periods ended and as of the dates indicated. Our fiscal year is composed of 52 or 53 weeks ending on the Saturday closest to January 31. The fiscal years ended February 2, 2019 ("fiscal 2018"), January 28, 2017 ("fiscal 2016"), January 30, 2016 ("fiscal 2015"), and January 31, 2015 ("fiscal 2014") consisted of 52 weeks. The fiscal year ended February 2, 20133, 2018 ("fiscal 2017") consisted of 53 weeks. The fiscal years ended January 30, 2016, January 31, 2015, February 1, 2014 and January 28, 2012 consisted of 52 weeks. The “Statement of Operations Data” for the fiscal years ended January 30,2018, fiscal 2017 and fiscal 2016 January 31, 2015 and February 1, 2014 and the “Balance Sheet Data” as of January 30, 2016February 2, 2019 and January 31, 2015February 3, 2018 are derived from our audited consolidated financial statements which are included elsewhere in this Form 10-K.Annual Report. The “Statement of Operations Data” for fiscal years ended February 2, 20132015 and January 28, 2012fiscal 2014, and the “Balance Sheet Data” as of February 1, 2014, February 2, 2013January 28, 2017, January 30, 2016 and January 28, 201231, 2015 are derived from unaudited consolidated financial statements not included in this Annual Report. The unaudited consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements which are not included elsewhereand, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of this Form 10-K.data.
The selected financial data set forth below should be read in conjunction with “Item 7. Management’sItem 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included in this Annual Report on Form 10-K.

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  52 Weeks Ended January 30, 2016 52 Weeks Ended January 31, 2015 52 Weeks Ended February 1, 2014 53 Weeks Ended February 2, 2013 52 Weeks Ended
January 29,
2012
  (In millions, except per share data and statistical data)
Statement of Operations Data:          
Net sales $9,363.8
 $9,296.0
 $9,039.5
 $8,886.7
 $9,550.5
Cost of sales 6,445.5
 6,520.1
 6,378.4
 6,235.2
 6,871.0
Gross profit 2,918.3
 2,775.9
 2,661.1
 2,651.5
 2,679.5
Selling, general and administrative expenses 2,108.9
 2,001.0
 1,892.4
 1,835.9
 1,842.1
Depreciation and amortization 156.6
 154.4
 166.5
 176.5
 186.3
Goodwill impairments(1)
 —
 —
 10.2
 627.0
 —
Asset impairments and restructuring charges(2)
 4.6
 2.2
 18.5
 53.7
 81.2
Operating earnings (loss) 648.2
 618.3
 573.5
 (41.6) 569.9
Interest expense, net 23.0
 10.0
 4.7
 3.3
 19.8
Debt extinguishment expense —
 —
 —
 —
 1.0
Earnings (loss) before income tax expense 625.2
 608.3
 568.8
 (44.9) 549.1
Income tax expense 222.4
 215.2
 214.6
 224.9
 210.6
Net income (loss) 402.8
 393.1
 354.2
 (269.8) 338.5
Net loss attributable to noncontrolling interests —
 —
 —
 0.1
 1.4
Net income (loss) attributable to GameStop Corp. $402.8
 $393.1
 $354.2
 $(269.7) $339.9
Basic net income (loss) per common share $3.80
 $3.50
 $3.02
 $(2.13) $2.43
Diluted net income (loss) per common share $3.78
 $3.47
 $2.99
 $(2.13) $2.41
Dividends per common share $1.44
 $1.32
 $1.10
 $0.80
 $—
Weighted-average common shares outstanding —basic 106.0
 112.2
 117.2
 126.4
 139.9
Weighted-average common shares outstanding —diluted 106.7
 113.2
 118.4
 126.4
 141.0
Store Operating Data:          
Number of stores by segment          
United States 4,013
 4,138
 4,249
 4,425
 4,503
Canada 325
 331
 335
 336
 346
Australia 444
 421
 418
 416
 411
Europe 1,299
 1,316
 1,455
 1,425
 1,423
Technology Brands 1,036
 484
 218
 —
 —
Total 7,117
 6,690
 6,675
 6,602
 6,683
Comparable store sales increase (decrease)(3)
 4.3% 3.4% 3.8% (8.0)% (2.1)%
Inventory turnover 5.2
 5.7
 5.3
 5.0
 5.1
Balance Sheet Data:          
Working capital $144.4
 $422.8
 $223.6
 $295.6
 $363.4
Total assets 4,334.9
 4,246.3
 4,091.4
 3,872.2
 4,608.2
Total debt(4)
 350.4
 355.7
 4.0
 —
 —
Total liabilities 2,253.9
 2,178.6
 1,840.0
 1,585.9
 1,568.0
Total equity 2,081.0
 2,067.7
 2,251.4
 2,286.3
 3,040.2
 Fiscal Year
 2018 2017 2016 2015 2014
 (In millions, except statistical and per share data)
Statement of Operations Data:(1)
         
Net sales$8,285.3
 $8,547.1
 $7,965.0
 $9,018.9
 $9,084.0
Cost of sales5,977.2
 6,062.2
 5,465.1
 6,359.1
 6,448.0
Gross profit2,308.1
 2,484.9
 2,499.9
 2,659.8
 2,636.0
Selling, general and administrative expenses1,888.6
 1,909.6
 1,861.9
 1,905.5
 1,906.6
Depreciation and amortization105.6
 122.3
 136.7
 141.0
 149.6
Goodwill impairments(2)
970.7
 —
 —
 —
 —
Asset impairments(3)
45.2
 13.8
 19.6
 4.6
 2.2
Operating (loss) earnings(702.0) 439.2
 481.7
 608.7
 577.6
Interest expense, net51.1
 55.3
 53.0
 23.0
 10.0
(Loss) earnings from continuing operations before income tax expense(753.1) 383.9
 428.7
 585.7
 567.6
Income tax expense41.7
 153.5
 124.2
 206.5
 198.5
Net (loss) income from continuing operations(794.8) 230.4
 304.5
 379.2
 369.1
Income (loss) from discontinued operations, net of tax121.8
 (195.7) 48.7
 23.6
 24.0
Net (loss) income$(673.0) $34.7
 $353.2
 $402.8
 $393.1
Diluted Per Share Data:(4)
         
(Loss) earnings per share from continuing operations$(7.79) $2.27
 $2.93
 $3.55
 $3.26
Earnings (loss) per share from discontinued operations1.19
 (1.93) 0.47
 0.22
 0.21
Diluted (loss) earnings per share$(6.59) $0.34
 $3.40
 $3.78
 $3.47
Dividends per common share$1.52
 $1.52
 $1.48
 $1.44
 $1.32
Weighted-average common shares outstanding:         
Basic102.1
 101.4
 103.4
 106.0
 112.2
Diluted102.1
 101.5
 103.8
 106.7
 113.2
Store Operating Data:         
Comparable store sales (decrease) increase (5)
(0.3)% 5.8% (11.0)% 4.3% 3.4%
Inventory turnover4.5
 5.0
 4.7
 5.3
 5.2
Number of stores at fiscal year end5,830
 5,947
 6,132
 6,227
 6,329
Balance Sheet Data at Fiscal Year End:         
Working capital (6)
$946.6
 $478.4
 $208.2
 $40.5
 $387.5
Total assets$4,044.3
 $5,041.6
 $4,975.9
 $4,330.3
 $4,240.4
Total debt, net (7)
$820.8
 $817.9
 $815.0
 $345.4
 $344.7
Total liabilities$2,708.1
 $2,827.1
 $2,721.8
 $2,249.3
 $2,172.7
Total stockholders' equity$1,336.2
 $2,214.5
 $2,254.1
 $2,081.0
 $2,067.7

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___________________
(1)
ResultsWe completed the previously announced sale of our Spring Mobile business in January 2019. The historical results of Spring Mobile, including the gain on sale, are reported as discontinued operations for all periods presented.
(2)In fiscal 2013 include a2018, we recognized goodwill impairment charge of $10.2charges totaling $795.6 million, related to our decision to abandon our investment in Spawn Labs. Results$28.8 million, $66.4 million and $79.9 million for fiscal 2012 include charges related to goodwill impairments of $627.0 million resulting from our interim goodwill impairment tests performed during the third quarter of fiscal 2012.United States, Canada, Australia and Europe segments, respectively. See Note 9,7, "Goodwill and Intangible Assets," to our consolidated financial statements for further information regarding our goodwill impairment charges.additional information.
(2)
(3)		Results for fiscal 2015 includeAsset impairment charges of $4.6 million, comprised of $4.4 million ofprimarily relate to intangible assets and store-level property and equipment impairments and $0.2 million ofequipment. We recognized intangible asset impairments. Results for fiscal 2014 include impairment charges of $2.2totaling $43.1 million, comprised of $1.9 million of property and equipment impairments and $0.3 million of intangible asset impairments. Results for fiscal 2013 include impairments of $18.5 million, of which $7.4$11.0 million and $2.1$14.4 million were relatedin fiscal 2018, 2017 and 2016. See Note 7, "Goodwill and Intangible Assets," to certain technology assets and other intangible assets, respectively, as a result of our decision to abandon our investment in Spawn Labs and the remaining $9.0 million was related to property and equipment impairments resulting from our evaluation of store property, equipment and other assets. Resultsconsolidated financial statements for fiscal 2012 include charges related to asset impairments of $53.7 million, of which $44.9 million relates to the impairment of the Micromania trade name and $8.8 million relates to other impairment charges from the evaluations of store property, equipment and other assets. Results for fiscal 2011 include charges related to asset impairments and restructuring charges of $81.2 million, of which $37.8 million relates to the impairment of the Micromania trade name, $22.7 million relates to the impairment of investments in non-core businesses and $20.7 million relates to other impairments, termination benefits and facility closure costs.additional information.
(3)
(4)		The sum of (loss) earnings per share for continuing operations and discontinued operations may not necessarily total to consolidated (loss) earnings per share as amounts are calculated based on whole numbers.
(5)Comparable store sales is a measure commonly used in the retail industry and indicates store performance by measuring the growth in sales for certain stores for a particular period over the corresponding period in the prior year. Our comparable store sales are comprised of sales from our Video Game Brandsvideo game brands stores, including stand-alone collectible stores, operating for at least 12 full months as well as sales related to our websites and sales we earn from sales of pre-owned merchandise to wholesalers or dealers. Comparable store sales for our international operating segments exclude the effect of changes in foreign currency exchange rates. The calculation of comparable store sales for the 52 weeks ended January 30, 2016 compares the 52 weeks for the periodfiscal year ended January 30, 2016 to the most closely comparable weeks for the prior year period. The method of calculating comparable store sales varies across the retail industry. As a result, our method of calculating comparable store sales may not be the same as other retailers’ methods. Our Technology Brands stores are excluded from the calculation of comparable store sales. We do not consider comparable store sales to be a meaningful metric in evaluating the performance of our Technology Brands stores due to the frequently changing nature of revenue streams and commission structures associated with this segment of our business. We believe our calculation of comparable store sales best represents our strategy as an omnichannel retailer who provides its consumers several ways to access its products.
(4)
(6)		OnNet working capital excludes held-for-sale assets and liabilities related to our Spring Mobile business, which was sold in January 2019.
(7)In March 2016, we issued $475 million aggregate principal of 6.75% unsecured senior notes due in March 2021. In September 24, 2014, we issued $350.0 million aggregate principal amountof 5.50% unsecured senior notes due in October 2019. On March 4, 2019, we issued a notice of redemption to redeem all of our unsecured 5.50% 2019 Senior Notes. The 2019 Senior Notes bear interest at the rate of 5.50% per annum with interest payable semi-annually in arrears on April 1 and October 1 of each year beginning on April 1, 2015. The 2019 Senior Notes were sold in a private placement and are not registered under the U.S. Securities Act of 1933. The 2019 Senior Notes were offered in the U.S. to “qualified institutional buyers” pursuant to the exemption from registration under Rule 144A of the Securities Act and in exempted offshore transactions pursuant to Regulation S under the Securities Act.4, 2019. See Note 10, "Debt," to our consolidated financial statements for additional information regarding the 2019 Senior Notes.information.

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ItemITEM 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the information contained in our consolidated financial statements, including the notes thereto. Statements regarding future economic performance, management’s plans and objectives, and any statements concerning assumptions related to the foregoing contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations constitute forward-looking statements. Certain factors, which may cause actual results to vary materially from these forward-looking statements, accompany such statements or appear elsewhere in this Form 10-K, including the factors disclosed under “PartPart I, — Item 1A. Risk1A, “Risk Factors.”
Overview
We areOVERVIEW
GameStop Corp. (“GameStop,” “we,” “us,” “our,” or the “Company”) is a global, family of specialty retail brands that makes the most popular technologies affordable and simple. As the world's largest omnichannelmultichannel video game retailer, we sell new and pre-owned video game hardware, physical and digital video game software, video game accessories, as well as new and pre-owned mobile and consumer electronics products and other merchandise primarily through our GameStop, EB Games and Micromania stores. As of January 30, 2016, we operated 7,117retailer. We operate over 5,800 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 websites www.gamestop.com, www.ebgames.com.au, www.ebgames.co.nz, www.gamestop.ca, www.gamestop.it, www.gamestop.ie, www.gamestop.de, www.gamestop.co.uk and www.micromania.fr. Theacross 14 countries. Our consumer product network also includes: www.kongregate.com , our leading web and mobile gaming platform; includes www.gamestop.com; Game InformerInformer® magazine, the world's leading print and digital video game publication; and iOSThinkGeek, www.thinkgeek.com, the premier retailer for the global geek community featuring exclusive and Android mobile applications. In addition, over the last two years, we have expanded our in-store selection of licensed merchandiseunique video game and our collectibles business. In 2014, we introduced a stand-alone concept branded Zing Pop Culture to sell pop culture themed merchandise. To further expand our offering, we recently acquired Geeknet, Inc., an onlineproducts, and wholesale retailer thatSimply Mac, which sells collectibles, apparel, gadgets, electronics, toysthe full line of Apple products, including laptops, tablets, and other retail products for technology enthusiastssmartphones and general consumers under the name ThinkGeek through the www.thinkgeek.com website. ThinkGeek also sells certain exclusive products to wholesale channel customers. We now have 32 collectibles stores internationally branded Zing Pop Cultureoffers Apple certified warranty and three ThinkGeek stores in the United States. We also own and operate Spring Mobile, an authorized AT&T reseller operating AT&T branded wireless retail stores and pre-paid wireless stores under the name Cricket (an AT&T brand) in the United States, as well as a certified Apple reseller selling Apple consumer electronic products in the United States under the name Simply Mac. repair services.
We operate our business in four Video Game Brandsgeographic segments: United States, Canada, Australia and Europe; and aEurope. Our former Technology Brands segment which includeshad been comprised of Spring Mobile, Simply Mac and Cricket Wireless branded stores ("Cricket Wireless"). Cricket Wireless was sold in January 2018, and Spring Mobile was sold in January 2019. Simply Mac and the historical results of Cricket Wireless are reported in the United States segment in this Annual Report. The historical results of Spring Mobile, including the gain on sale, are reported as discontinued operations for all periods presented in this Annual Report. The discussion and analysis of our Spring Mobile managed AT&T and Cricket branded stores and our Simply Mac business.results of operations refers to continuing operations unless otherwise noted.
Our fiscal year is composed of the 52 or 53 weeks ending on the Saturday closest to the last day of January. Fiscal 2015year 2018 consisted of the 52 weeks ended on February 2, 2019 ("fiscal 2018"). Fiscal year 2017 consisted of the 53 weeks ended on February 3, 2018 ("fiscal 2017") and fiscal year 2016 consisted of the 52 weeks ended on January 30, 201628, 2017 ("fiscal 2015"). Fiscal 2014 consisted of the 52 weeks ended on January 31, 2015 ("fiscal 2014"). Fiscal 2013 consisted of the 52 weeks ended on February 1, 2014 ("fiscal 2013"2016").
Growth in the video game industry is generally driven by the introduction of new technology. Gaming consoles are typically launched in cycles as technological developments provide significant improvements in graphics, audio quality, game play, internet connectivity and other entertainment capabilities beyond video gaming. The current generation of consoles (the Sony PlayStation 4, the Microsoft Xbox One and the Nintendo Wii U) was introduced between November 2012 and November 2013. With the introduction of the new consoles in the fourth quarter of fiscal 2013, sales of new hardware have increased; however, sales ofinclude the Sony PlayStation 4 and the(2013), Microsoft Xbox One negatively impacted our gross margin percentage in fiscal 2014(2013) and fiscal 2015.the Nintendo Switch (March 2017). In 2016, Sony and Microsoft released refreshes to the PlayStation 4 and Xbox One, respectively, and Sony also released the PlayStation VR. In November 2017, Microsoft released a further enhanced version of its current generation console, the Xbox One X.
We expect that future growth in the video game industry will also be driven by theThe sale of video games delivered inthrough digital formchannels and the expansion of other forms of gaming. gaming continue to grow and take an increasing percentage of physical video game sales.We currently sell various types of products that relate to the digital category, including digitally downloadable content (“DLC”), full gamefull-game downloads, Xbox LIVE, PlayStation Plus and Nintendo network points cards, as well as prepaid digital and prepaid subscription cards. We have made significant investments in e-commerce and in-store and website functionality to enable our customers to conveniently access digital content easily andto facilitate the digital sales and delivery process. We plan to continue to invest in these types of processes and channels to grow our digital sales base and enhance our market leadership position in the video game industry and in the digital aggregation and distribution category.
We continue to diversifyIn our business by seeking out opportunities to extend our core competencies to other businesses and retail categories, including mobile and consumer electronics and collectibles, to continue to grow and to help mitigate the financial impact from the cyclical naturediscussion of the results of operations, we refer to comparable store sales, which is a measure commonly used in the retail industry and indicates store performance by measuring the growth in sales for certain stores for a particular period over the corresponding period in the prior year. Our comparable store sales are comprised of sales from our video game console cyclebrands stores, including stand-alone collectible stores, operating for at least 12 full months as well as sales related to our websites and regularly evaluate potential acquisition opportunities, somesales we earn from sales of which couldpre-owned merchandise to wholesalers or dealers. Comparable store sales for our international operating segments exclude the effect of changes in foreign currency exchange rates. The calculation of comparable store sales compares the fiscal year ended to the most closely comparable weeks for the prior year period. The method of calculating comparable store sales varies across the retail industry. As a result, our method of calculating comparable store sales may not be material. In fiscal 2013, we completedthe same as other retailers’ methods. We believe our acquisitionscalculation of Simply Mac,comparable store sales best represents our strategy as an authorized Apple reseller currently operating in 76 stores, and Spring Mobile, an authorized AT&T reseller currently operating in 890 AT&T branded stores and 70 Cricket branded stores. We intendomnichannel retailer that provides its consumers several ways to continue to expandaccess its products.


STORE COUNT INFORMATION
The following table presents the number of stores and the number of stores opened, acquired and closed during fiscal 2018:
 February 3, 2018 Opened/Acquired Disposed February 2, 2019
Video Game Stores5,796
 24
 (136) 5,684
Collectibles Stores103
 4
 (4) 103
Simply Mac48
 —
 (5) 43
Total Stores5,947
 28
 (145) 5,830
SEASONALITY
Our business, like that of many retailers, is seasonal, with the major portion of sales and operating profit realized during the fourth quarter which includes the holiday selling season. Results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year. Quarterly results may fluctuate materially depending upon, among other factors, the timing of new product introductions and new store openings, sales contributed by new stores, increases or decreases in comparable store sales, the nature and timing of acquisitions, adverse weather conditions, shifts in the timing of certain holidays or promotions and changes in our Technologymerchandise mix.
CONSOLIDATED RESULTS OF OPERATIONS
The following table sets forth certain statement of operations items (in millions) and as a percentage of net sales, for the periods indicated: 
  Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016
  Amount Percent of Net Sales Amount Percent of Net Sales Amount Percent of Net Sales
Net sales $8,285.3
 100.0 % $8,547.1
 100.0 % $7,965.0
 100.0%
Cost of sales 5,977.2
 72.1
 6,062.2
 70.9
 5,465.1
 68.6
Gross profit 2,308.1
 27.9
 2,484.9
 29.1
 2,499.9
 31.4
Selling, general and administrative expenses 1,888.6
 22.9
 1,909.6
 22.4
 1,861.9
 23.4
Depreciation and amortization 105.6
 1.3
 122.3
 1.4
 136.7
 1.7
Goodwill impairments 970.7
 11.7
 —
 —
 —
 —
Asset impairments 45.2
 0.5
 13.8
 0.2
 19.6
 0.2
Operating (loss) earnings (702.0) (8.5) 439.2
 5.1
 481.7
 6.1
Interest expense, net 51.1
 0.6
 55.3
 0.6
 53.0
 0.7
(Loss) earnings from continuing operations before income taxes (753.1) (9.1) 383.9
 4.5
 428.7
 5.4
Income tax expense 41.7
 0.5
 153.5
 1.8
 124.2
 1.6
Net (loss) income from continuing operations (794.8) (9.6) 230.4
 2.7
 304.5
 3.8
Income (loss) from discontinued operations, net of tax 121.8
 1.5
 (195.7) (2.3) 48.7
 0.6
Net (loss) income $(673.0) (8.1)% $34.7
 0.4 % $353.2
 4.4%
We include certain purchasing, receiving and distribution costs in selling, general and administrative expenses ("SG&A") in the statement of operations. We include processing fees associated with purchases made by check and credit cards in cost of sales in the statement of operations. As a result of these classifications, 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 SG&A. The net effect of these classifications as a percentage of sales has not historically been material.

The following tables set forth, by significant product category, net sales and gross profit information for the periods indicated (dollars in millions):
  Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016
  Net Sales Percent of Net Sales Net Sales Percent of Net Sales Net Sales Percent of Net Sales
New video game hardware(1)
 $1,767.8
 21.3% $1,791.8
 21.0% $1,396.7
 17.5%
New video game software 2,449.7
 29.6
 2,582.0
 30.2
 2,493.4
 31.3
Pre-owned and value video game products 1,866.3
 22.5
 2,149.6
 25.2
 2,254.1
 28.3
Video game accessories 956.5
 11.5
 784.3
 9.2
 676.7
 8.5
Digital 194.0
 2.3
 189.2
 2.2
 181.0
 2.3
Collectibles 707.5
 8.5
 636.2
 7.4
 494.1
 6.2
Other(2)
 343.5
 4.3
 414.0
 4.8
 469.0
 5.9
Total $8,285.3
 100.0% $8,547.1
 100.0% $7,965.0
 100.0%

  Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016
  
Gross
Profit
 
Gross
Profit
Percent
 
Gross
Profit
 
Gross
Profit
Percent
 
Gross
Profit
 
Gross
Profit
Percent
New video game hardware(1)
 $150.0
 8.5% $163.1
 9.1% $154.2
 11.0%
New video game software 525.6
 21.5
 590.3
 22.9
 600.4
 24.1
Pre-owned and value video game products 810.4
 43.4
 977.1
 45.5
 1,044.1
 46.3
Video game accessories 312.5
 32.7
 255.0
 32.5
 235.2
 34.8
Digital 171.6
 88.5
 162.4
 85.8
 155.5
 85.9
Collectibles 233.3
 33.0
 208.2
 32.7
 171.6
 34.7
Other(2)
 104.7
 30.5
 128.8
 31.1
 138.9
 29.6
Total $2,308.1
 27.9% $2,484.9
 29.1% $2,499.9
 31.4%
___________________
(1)Includes sales of hardware bundles, in which physical hardware and digital or physical software are sold together as a single SKU.
(2)Includes the operations of our Simply Mac stores and Cricket Wireless branded stores. We sold our Cricket Wireless branded stores in January 2018. Also includes sales of PC entertainment software, interactive game figures, strategy guides, mobile and consumer electronics sold through our video game brands, and revenues from PowerUp Pro loyalty members receiving Game Informer magazine in print form.


Fiscal 2018 Compared to Fiscal 2017
  Fiscal Year Change
  2018 2017 $ %
  ($ in millions)    
Net sales $8,285.3
 $8,547.1
 $(261.8) (3.1)%
Cost of sales 5,977.2
 6,062.2
 (85.0) (1.4)
Gross profit 2,308.1
 2,484.9
 (176.8) (7.1)
Selling, general and administrative expenses 1,888.6
 1,909.6
 (21.0) (1.1)
Depreciation and amortization 105.6
 122.3
 (16.7) (13.7)
Goodwill impairments 970.7
 —
 970.7
 —
Asset impairments 45.2
 13.8
 31.4
 227.5
Operating (loss) earnings (702.0) 439.2
 (1,141.2) (259.8)
Interest expense, net 51.1
 55.3
 (4.2) (7.6)
(Loss) earnings from continuing operations before income taxes (753.1) 383.9
 (1,137.0) (296.2)
Income tax expense 41.7
 153.5
��(111.8) (72.8)
Net (loss) income from continuing operations (794.8) 230.4
 (1,025.2) (445.0)%
Income (loss) from discontinued operations, net of tax 121.8
 (195.7) 317.5
 (162.2)%
Net (loss) income $(673.0) $34.7
 $(707.7) (2,039.5)%
  Net Sales Change
  Fiscal Year 2018 Fiscal Year 2017 $ %
  ($ in millions)    
New video game hardware(1)
 $1,767.8
 $1,791.8
 $(24.0) (1.3)%
New video game software 2,449.7
 2,582.0
 (132.3) (5.1)
Pre-owned and value video game products 1,866.3
 2,149.6
 (283.3) (13.2)
Video game accessories 956.5
 784.3
 172.2
 22.0
Digital 194.0
 189.2
 4.8
 2.5
Collectibles 707.5
 636.2
 71.3
 11.2
Other(2)
 343.5
 414.0
 (70.5) (17.0)
Total $8,285.3
 $8,547.1
 $(261.8) (3.1)%
  Gross Profit Change
  Fiscal Year 2018 Fiscal Year 2017 $ %
  ($ in millions)    
New video game hardware(1)
 $150.0
 $163.1
 $(13.1) (8.0)%
New video game software 525.6
 590.3
 (64.7) (11.0)
Pre-owned and value video game products 810.4
 977.1
 (166.7) (17.1)
Video game accessories 312.5
 255.0
 57.5
 22.5
Digital 171.6
 162.4
 9.2
 5.7
Collectibles 233.3
 208.2
 25.1
 12.1
Other(2)
 104.7
 128.8
 (24.1) (18.7)
Total $2,308.1
 $2,484.9
 $(176.8) (7.1)%
___________________
(1)Includes sales of hardware bundles, in which physical hardware and digital or physical software are sold together as a single SKU.
(2)Includes the operations of our Simply Mac stores and Cricket Wireless branded stores. We sold our Cricket Wireless branded stores in January 2018. Also includes sales of PC entertainment software, interactive game figures, strategy guides, mobile and consumer electronics sold through our video game brands, and revenues from PowerUp Pro loyalty members receiving Game Informer magazine in print form.


Net Sales
Net sales decreased $261.8 million, or 3.1%, in fiscal 2018 compared to fiscal 2017. The decrease in net sales was primarily attributable to fiscal 2017 including 53 weeks compared to 52 weeks in fiscal 2018, the impact of 117 store closures (net of openings), the negative impact of foreign exchange rate fluctuations and a decrease in comparable stores sales of 0.3%. Sales for the 53rd week included in fiscal 2017 were approximately $132.7 million. The decrease in comparable store sales was primarily the result of a decrease in sales of pre-owned and value video game products and new video game software, partially offset by an increase in sales of video game accessories and collectibles.
The decrease in net sales was primarily driven by the following:
•
Pre-owned and value video game product sales decreased $283.3 million, or 13.2%, for fiscal 2018 as compared to fiscal 2017. Pre-owned and value video game product sales for the 53rd week included in fiscal 2017 were approximately $37.7 million. The decrease in fiscal 2018 compared to fiscal 2017 was primarily due to a decline in pre-owned software, partially offset by an increase in sales of pre-owned hardware. The decline in pre-owned software sales is primarily due to fewer new title releases and a decline in new video game software sales in the first six months of fiscal 2018, which affects pre-owned inventory levels, weakening demand as a result of increasing digital adoption, including digital access to older titles, and lower promotional activity in fiscal 2018.
•
New video game software sales decreased $132.3 million, or 5.1%, for fiscal 2018 as compared to fiscal 2017. New video game software sales for the 53rd week included in fiscal 2017 were approximately $36.4 million. The decline was primarily due to weaker new title releases in the first six months of fiscal 2018, which was partially offset by an increase in sales of Nintendo Switch titles due to the expansion of the hardware install base and the increase of new release titles.
The decreases described above were partially offset by the following:
Video game accessories increased $172.2 million, or 22.0%, for fiscal 2018 as compared to fiscal 2017, due to growth in sales of audio-related and other accessories primarily associated with the battle royale gaming genre.
Collectibles sales increased $71.3 million, or 11.2%, for fiscal 2018 as compared to fiscal 2017, primarily driven by new and improved product offerings.
Cost of Sales
Cost of sales decreased $85.0 million, or 1.4%, in fiscal 2018 compared to fiscal 2017, primarily as a result of the change in net sales discussed above as well as the changes in gross profit discussed below.
Gross Profit
Gross profit decreased $176.8 million, or 7.1%, in fiscal 2018 compared to fiscal 2017, and gross profit as a percentage of net sales decreased to 27.9% in fiscal 2018 compared to 29.1% in fiscal 2017. Gross profit for the 53rd week included in fiscal 2017 was approximately $34.7 million. The decrease in gross profit was primarily driven by decreases of $166.7 million in pre-owned and value video game products and $64.7 million in new video game software, which were partially offset by increases of $57.5 million in video game accessories and $25.1 million in collectibles.
The net decrease in gross profit as a percentage of net sales was primarily due to product mix shift between categories and the following product margin rate variances:
Pre-owned and value video game products decreased to 43.4% in fiscal 2018 from 45.5% in fiscal 2017 due to a greater mix of sales of pre-owned hardware, which carry lower gross margin than pre-owned software.
New video game software decreased to 21.5% in fiscal 2018 from 22.9% in fiscal 2017, primarily due to higher promotional activity in the fiscal 2018 holiday season.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses decreased $21.0 million, or 1.1%, in fiscal 2018 compared to fiscal 2017, primarily due to the impact of the 53rd week in fiscal 2017 and the positive impact of foreign exchange rate fluctuations.
Depreciation and Amortization
Depreciation and amortization expense decreased $16.7 million, or 13.7%, in fiscal 2018 compared to fiscal 2017, primarily due to declining capital expenditures over the past several years.

Goodwill and Asset Impairments
During fiscal 2018, we recognized goodwill impairment charges totaling $970.7 million and asset impairment charges totaling $45.2 million. The impairment charges were primarily the result of a sustained decline in our market capitalization and lower forecasted cash flows. During fiscal 2017, we recognized asset impairment charges of $13.8 million, which was primarily comprised of an $11.0 million impairment of our Simply Mac dealer agreement intangible asset. No goodwill impairment charges were recognized during fiscal 2017. See Note 7, “Goodwill and Intangible Assets,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information.
Income Tax
Income tax expense was $41.7 million, representing an effective tax rate of (5.5)% in fiscal 2018, compared to $153.5 million, representing an effective tax rate of 40.0% in fiscal 2017. The decrease in the effective income tax rate compared to the prior year was primarily driven by non-deductible impairment charges, the settlement of the tax dispute in France, tax reform, revisions to transition taxes and the relative mix of earnings across the jurisdictions within which we operate. See Note 8, "Income Taxes," and Note 12, "Commitments and Contingencies," to our consolidated financial statements included elsewhere in this Annual Report for additional information.
Operating (Loss) Earnings and Net (Loss) Income from Continuing Operations
The factors described above led to an operating loss of $702.0 million for fiscal 2018, compared to operating earnings of $439.2 million for fiscal 2017. Net loss from continuing operations was $794.8 million for fiscal 2018 compared to net income from continuing operations of $230.4 million for fiscal 2017.
Income (Loss) from Discontinued Operations, Net of Tax
On January 16, 2019, we completed the previously announced sale of all of the equity interest in our wholly-owned subsidiary Spring Communications Holding, Inc. ("Spring Mobile") to Prime Acquisition Company, LLC, a wholly-owned subsidiary of Prime Communications, L.P., pursuant to an Equity Purchase Agreement dated as of November 21, 2018. The net cash proceeds received from the sale totaled $727.9 million, which is subject to customary post-closing adjustments. We recognized a gain on sale of $100.8 million ($65.4 million, net of tax) during fiscal 2018. The historical results of Spring Mobile, including the gain on sale, is reported as discontinued operations. Except for customary post-closing adjustments and transition services, we have no contingencies or continuing involvement with Spring Mobile subsequent to the completion of the sale.
Income from discontinued operations, net of tax, totaled $121.8 million in fiscal 2018 compared to a net loss of $195.7 million in fiscal 2017. Income from discontinued operations, net of tax, in fiscal 2018 includes the gain on sale, net of tax, of $65.4 million. Loss from discontinued operations, net of tax, in fiscal 2017 includes goodwill and asset impairment charges totaling $377.0 million. Refer to Note 2, "Discontinued Operations and Dispositions," to our consolidated financial statements for additional information.
Fiscal 2017 Compared to Fiscal 2016
  Fiscal Year Change
  2017 2016 $ %
  ($ in millions)    
Net sales $8,547.1
 $7,965.0
 $582.1
 7.3 %
Cost of sales 6,062.2
 5,465.1
 597.1
 10.9
Gross profit 2,484.9
 2,499.9
 (15.0) (0.6)
Selling, general and administrative expenses 1,909.6
 1,861.9
 47.7
 2.6
Depreciation and amortization 122.3
 136.7
 (14.4) (10.5)
Asset impairments 13.8
 19.6
 (5.8) (29.6)
Operating earnings 439.2
 481.7
 (42.5) (8.8)
Interest expense, net 55.3
 53.0
 2.3
 4.3
Earnings from continuing operations before income taxes 383.9
 428.7
 (44.8) (10.5)
Income tax expense 153.5
 124.2
 29.3
 23.6
Net income from continuing operations 230.4
 304.5
 (74.1) (24.3)
(Loss) income from discontinued operations, net of tax (195.7) 48.7
 (244.4) (501.8)
Net income $34.7
 $353.2
 $(318.5) (90.2)%

  Net Sales Change
  Fiscal Year 2017 Fiscal Year 2016 $ %
  ($ in millions)    
New video game hardware(1)
 $1,791.8
 $1,396.7
 $395.1
 28.3 %
New video game software 2,582.0
 2,493.4
 88.6
 3.6
Pre-owned and value video game products 2,149.6
 2,254.1
 (104.5) (4.6)
Video game accessories 784.3
 676.7
 107.6
 15.9
Digital 189.2
 181.0
 8.2
 4.5
Collectibles 636.2
 494.1
 142.1
 28.8
Other(2)
 414.0
 469.0
 (55.0) (11.7)
Total $8,547.1
 $7,965.0
 $582.1
 7.3 %
  Gross Profit Change
  Fiscal Year 2017 Fiscal Year 2016 $ %
  ($ in millions)    
New video game hardware(1)
 $163.1
 $154.2
 $8.9
 5.8 %
New video game software 590.3
 600.4
 (10.1) (1.7)
Pre-owned and value video game products 977.1
 1,044.1
 (67.0) (6.4)
Video game accessories 255.0
 235.2
 19.8
 8.4
Digital 162.4
 155.5
 6.9
 4.4
Collectibles 208.2
 171.6
 36.6
 21.3
Other(2)
 128.8
 138.9
 (10.1) (7.3)
Total $2,484.9
 $2,499.9
 $(15.0) (0.6)%
___________________
(1)Includes sales of hardware bundles, in which physical hardware and digital or physical software are sold together as a single SKU.
(2)Includes the operations of our Simply Mac stores and Cricket Wireless branded stores. We sold our Cricket Wireless branded stores in January 2018. Also includes sales of PC entertainment software, interactive game figures, strategy guides, mobile and consumer electronics sold through our video game brands, and revenues from PowerUp Pro loyalty members receiving Game Informer magazine in print form.
Net Sales
Net sales increased $582.1 million, or 7.3%, in fiscal 2017 compared to fiscal 2016. Sales for the 53rd week included in fiscal 2017 were approximately $132.7 million. The increase in net sales was primarily attributable to an increase in comparable store sales of 5.8% compared to the prior year and the positive impact of foreign exchange rate fluctuations of $104.6 million. The increase in comparable store sales was primarily the result of an increase in sales of new video game hardware, collectibles, video game accessories and new video game software. The increase in sales in collectibles are a result of the Company's diversification strategy. These increases were partially offset by a decrease in sales in pre-owned and value video game products.
The increase in net sales was due to the following:
New video game hardware sales increased $395.1 million, or 28.3%, for fiscal 2017 as compared to fiscal 2016, primarily due to the launch of the Nintendo Switch in March 2017, which was partially offset by decreases in sales of other consoles as their cycles mature.
Collectibles sales increased $142.1 million, or 28.8%, for fiscal 2017 as compared to fiscal 2016, due to the growth of collectibles sales in our Video Game Brands stores and the growth in the near future.number of stand-alone collectibles stores.
Video game accessories increased $107.6 million, or 15.9%, for fiscal 2017 as compared to fiscal 2016, primarily due to the recent release of the Nintendo Switch.
New video game software sales increased $88.6 million, or 3.6%, for fiscal 2017 as compared to fiscal 2016, primarily due to the recent release of the Nintendo Switch.
The increases described above were partially offset by a decrease in pre-owned and value video game product sales of $104.5 million, or 4.6%, for fiscal 2017 as compared to fiscal 2016, primarily due to the decrease in store traffic as a result of weaker new release titles mainly in the first half of the current fiscal year.


Cost of Sales
Cost of sales increased $597.1 million, or 10.9%, in fiscal 2017 compared to fiscal 2016, primarily as a result of the change in net sales discussed above as well as the changes in gross profit discussed below.
Gross Profit
Gross profit decreased $15.0 million, or 0.6%, in fiscal 2017 compared to fiscal 2016, and gross profit as a percentage of net sales decreased to 29.1% in fiscal 2017 compared to 31.4% in fiscal 2016. The decrease in gross profit was driven by decreases of $67.0 million in pre-owned and value video game products and $10.1 million in new video game software, partially offset by increases of $36.6 million in collectibles and $19.8 million in video game accessories.
The net decrease in gross profit as a percentage of net sales was due to product mix shift between categories and the following product margin rate variances:
New video game hardware decreased to 9.1% in fiscal 2017 from 11.0% in fiscal 2016, primarily due to product mix shift in console sales.
New video game software decreased to 22.9% in fiscal 2017 from 24.1% in fiscal 2016, primarily due to lower cooperative advertising funds as a percentage of sales combined with higher promotional activity in the fiscal 2017 holiday season.
Pre-owned and value video game products decreased to 45.5% in fiscal 2017 from 46.3% in fiscal 2016 due to a greater mix of sales of current generation products, which carry lower gross margin than previous generation products.
Video game accessories decreased to 32.5% in fiscal 2017 from 34.8% in fiscal 2016, due to a shift in product mix including PlayStation VR which carry lower margin.
Collectibles decreased to 32.7% in fiscal 2017 from 34.7% in fiscal 2016, primarily due to increased promotional activity in the fiscal 2017 holiday season.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") increased $47.7 million, or 2.6%, in fiscal 2017 compared to fiscal 2016. The increase was primarily due to the impact of the 53rd week in fiscal 2017 and the negative impact of foreign exchange rate fluctuations.
Depreciation and Amortization
Depreciation and amortization expense decreased $14.4 million, or 10.5%, in fiscal 2017 compared to fiscal 2016, primarily due to certain corporate assets being fully depreciated and certain intangible assets being fully amortized.
Asset Impairments
During fiscal 2017, we recorded asset impairment charges of $13.8 million, primarily associated with the impairment of Simply Mac's dealer agreement intangible asset. In fiscal 2016, we recognized asset impairment charges primarily consisting of a $7.4 million impairment of our Micromania trade name intangible asset, and a $7.0 million impairment to our Simply Mac dealer agreement intangible asset and $5.2 million impairment to store-level property and equipment . The Micromania trade name is associated with our operations in France.
Income Tax
Income tax expense was $153.5 million, representing an effective tax rate of 40.0% in fiscal 2017, compared to $124.2 million, representing an effective tax rate of 29.0% in fiscal 2016. The increase in the effective income tax rate compared to the prior year was primarily driven by tax reform, the impairment of goodwill, changes in uncertain tax positions and the relative mix of earnings across the jurisdictions in which we operate. Refer to Note 8, "Income Taxes," to our consolidated financial statements for additional information.
Operating Earnings and Net Income from Continuing Operations
The factors described above led to operating earnings of $439.2 million for fiscal 2017, or an 8.8% decrease from operating earnings of $481.7 million for fiscal 2016. Additionally, net income from continuing operations was $230.4 million for fiscal 2017, which represented a 24.3% decrease from net income from continuing operations of $304.5 million for fiscal 2016. The impact of the 53rd week in fiscal 2017 was an increase to operating earnings of approximately $12.0 million.

SEGMENT PERFORMANCE
We report our business in four geographic segments: United States, Canada, Australia and Europe. We identified these segments based on a combination of geographic areas, the methods with which we analyze performance, the way in which our sales and profits are derived and how we divide management responsibility. Our sales and profits are driven through our physical stores which are highly integrated with our e-commerce, digital and mobile businesses. Due to this integration, our physical stores are the basis for our segment reporting. Each of the Video Game Brands segments consists primarily of retail operations, with all stores engaged in the sale of new and pre-owned video game systems, software and accessories (which we refer to as video game products). These products are substantially the same regardless of geographic location, with the primary differences in merchandise carried being the timing of the release of new products or technologies in the various segments.
With our presence in international markets, we have operations in several foreign currencies, including the Euro, Australian dollar, New Zealand dollar, Canadian dollar, Swiss franc, Danish kroner, Swedish krona and the Norwegian kroner.
Operating earnings (loss) by operating segment, defined as income from operations before intercompany royalty fees, net interest expense and income taxes, and net sales by reportable segment in U.S. dollars were as follows (in millions):
As of and for the Fiscal Year Ended February 2, 2019
United
States
 Canada Australia Europe Consolidated
Net sales$5,800.2
 $434.5
 $645.4
 $1,405.2
 $8,285.3
Goodwill impairments$795.6
 $28.8
 $66.4
 $79.9
 $970.7
Operating loss$(533.9) $(19.3) $(46.5) $(102.3) $(702.0)
Segment Operating data:         
Store count3,846
 311
 462
 1,211
 5,830
Comparable store sales1.8% 3.1% (3.4)% (7.7)% (0.3)%
As of and for the Fiscal Year Ended February 3, 2018
United
States
 Canada Australia Europe Consolidated
Net sales$5,876.0
 $434.9
 $702.2
 $1,534.0
 $8,547.1
Operating earnings$332.8
 $18.5
 $34.9
 $53.0
 $439.2
Segment Operating data:         
Store count3,912
 321
 467
 1,247
 5,947
Comparable store sales4.3% 10.0% 8.2% 9.5% 5.8%
As of and for the Fiscal Year Ended January 28, 2017
United
States
 Canada Australia Europe Consolidated
Net sales$5,660.0
 $382.0
 $609.5
 $1,313.5
 $7,965.0
Operating earnings$398.4
 $22.4
 $34.9
 $26.0
 $481.7
Segment Operating data:         
Store count4,063
 322
 464
 1,283
 6,132
Comparable store sales(13.5)% (12.6)% (2.0)% (2.7)% (11.0)%
Fiscal 2018 Compared to Fiscal 2017
Video Game Brands
United States
Segment results for the United States include retail operations in 50 states and Guam; our e-commerce websites www.gamestop.com and www.thinkgeek.com; Game Informer magazine; Simply Mac; Kongregate, a web and mobile gaming platform which we sold in July 2017; and Cricket Wireless, which we sold in January 2018. Net sales for fiscal 2018 decreased $75.8 million, or 1.3%, compared to fiscal 2017, primarily due to the impact of the 53rd week in fiscal 2017 of approximately $91.1 million, the impact of 66 store closures (net of openings) and the divestiture of our Cricket Wireless stores in January 2018; which were partially offset by a 1.8% increase in comparable store sales. The increase in comparable store sales was primarily driven by increases in sales of video game accessories, new video game hardware and collectibles. These increases were partially offset by decreases in sales of pre-owned and value video game products and new video game software.


The operating loss for fiscal 2018 was $533.9 million compared to operating earnings of $332.8 million for fiscal 2017. The operating loss in fiscal 2018 includes goodwill impairment charges totaling $795.6 million and an intangible asset charge of $11.2 million. Excluding these impairment charges, operating earnings would have declined to $272.9 million for fiscal 2018, primarily as a result of the decline in net sales and gross margin, which were partially offset by lower SG&A expense. The decline in gross margin is primarily due to a shift in sales mix to lower margin categories and higher promotional activity in fiscal 2018.
Canada
Segment results for Canada include retail and e-commerce in Canada. Net sales of $434.5 million for fiscal 2018 was essentially flat compared to net sales of $434.9 million in fiscal 2017. Comparable store sales increased by 3.1%, which was offset by the negative impact of foreign exchange rate fluctuations of $9.2 million and the impact of the 53rd week in fiscal 2017 of approximately $6.4 million. The increase in comparable store sales was primarily driven by increases in sales of collectibles and video game accessories, partially offset by a decline in sales of pre-owned and value video game products and new video game hardware. The operating loss for fiscal 2018 was $19.3 million compared to operating earnings of $18.5 million for fiscal 2017. The operating loss for fiscal 2018 includes goodwill impairment charges totaling $28.8 million. Excluding the goodwill impairment charge, operating earnings would have declined to $9.5 million for fiscal 2018, primarily as a result of a decline in gross profit due to a shift in sales mix to lower margin categories and higher SG&A driven by government-mandated pay increases.
Australia
Segment results for Australia include retail and e-commerce operations in Australia and New Zealand. Net sales for fiscal 2018 decreased $56.8 million, or 8.1%, compared to fiscal 2017. The decrease in net sales was primarily the result of the negative impact of foreign exchange rate fluctuations of $30.6 million, the decrease in comparable store sales of 3.4% and the impact of the 53rd week in fiscal 2017 of approximately $10.1 million. The decrease in comparable store sales was primarily driven by decreases in the sales of new video game software, new video game hardware, collectibles and pre-owned and value video game products; partially offset by an increase in sales of video game accessories. The operating loss for fiscal 2018 was $46.5 million compared to operating earnings of $34.9 million for fiscal 2017. The operating loss for fiscal 2018 includes goodwill impairment charges totaling $66.4 million. Excluding the goodwill impairment charge, operating earnings would have declined to $19.9 million for fiscal 2018, primarily as a result of the decline in net sales.
Europe
Segment results for Europe include retail and e-commerce operations in 10 European countries. Net sales for fiscal 2018 decreased $128.8 million, or 8.4%, compared to fiscal 2017, primarily due to the 7.7% decrease in comparable store sales and the impact of the 53rd week in fiscal 2017 of approximately $25.1 million, partially offset by the positive impact of foreign exchange rate fluctuations of $13.6 million. The decrease in comparable store sales was primarily driven by decreases in sales of new video game hardware, new video game software and pre-owned and value video game products, partially offset by an increase in collectibles sales. The operating loss for fiscal 2018 was $102.3 million compared to operating earnings of $53.0 million for fiscal 2017. The operating loss for fiscal 2018 includes goodwill impairment charges totaling $79.9 million, an intangible asset impairment charge of $31.9 million and the write-off of an investment asset of $6.8 million. Excluding these charges, operating earnings would have declined to $16.3 million for fiscal 2018, primarily as a result of the decline in net sales and higher SG&A expense driven by government-mandates pay increases.
Fiscal 2017 Compared to Fiscal 2016
United States
Segment results for Video Game Brands in the United States include retail GameStop operations in 50 states and Guam, the electronic commerce websites www.gamestop.com and www.thinkgeek.com, Game Informer magazine; Simply Mac; Kongregate, a web and mobile gaming platform which we sold in July 2017; and Cricket Wireless, which we sold in January 2018. Net sales for fiscal 2017 increased $216.0 million, or 3.8%, compared to fiscal 2016, primarily due to the 4.3% increase in comparable store sales and the impact of the 53rd week in fiscal 2017 of approximately $91.1 million. The increase in comparable store sales was primarily driven by the launch of the Nintendo Switch as well as increases in sales of collectibles and video game accessories. These increases were partially offset by a decrease of sales in pre-owned and value video game products. Operating earnings for fiscal 2017 decreased $65.6 million compared to fiscal 2016, primarily driven by declines in gross margin due to a shift in product mix from higher margin pre-owned products to lower margin products, such as hardware, and declines in gross margin rates in several product categories as described previously.

Canada
Segment results for Canada include retail and e-commerce in Canada. Net sales in the Canadian segment for fiscal 2017 increased $52.9 million, or 13.8%, compared to fiscal 2016, primarily due to a increase in comparable store sales of 10.0%, the positive impact of foreign exchange rate fluctuations of $11.6 million and the impact of the 53rd week in fiscal 2017 of approximately $6.4 million. The increase in comparable store sales was primarily driven by the launch of the Nintendo Switch as well as an increase in sales of collectibles, partially offset by a decline in sales of pre-owned and value video game products. Operating earnings for fiscal 2017 decreased $3.9 million, or 17.4% primarily driven by a decline in gross profit as a percentage of sales associated with a decline in pre-owned and value video game sales and their gross margin.
Australia
Segment results for Australia include retail and e-commerce operations in Australia and New Zealand. Net sales in the Australian segment for fiscal 2017 increased $92.7 million, or 15.2%, compared to fiscal 2016. The increase in net sales was primarily the result of the increase in comparable store sales of 8.2%, the positive impact of foreign exchange rate fluctuations of $20.6 million, the impact of the 53rd week in fiscal 2017 of approximately $10.1 million. The increase in comparable store sales was primarily driven by the launch of the Nintendo Switch and an increase in the sales of collectibles. Operating earnings for fiscal 2017 were relatively flat at $34.9 million when compared to prior year, as a result of declines in gross profit as a percentage of sales due to a shift in product mix.
Europe
Segment results for Europe include retail and e-commerce operations in 10 European countries. Net sales in the European segment for fiscal 2017 increased $220.5 million, or 16.8%, compared to fiscal 2016, primarily due to the 9.5% increase in comparable store sales, the positive impact of foreign exchange rate fluctuations of $72.4 million and the impact of 53rd week in fiscal 2017 of approximately $25.1 million. The increase in comparable store sales was primarily driven by the launch of the Nintendo Switch and an increase in sales of collectibles, video game accessories and pre-owned and value video game products. Operating earnings for fiscal 2017 increased by $27.0 million compared to the prior year, primarily due to the increase in net sales and a $7.4 million impairment of our Micromania trade name recorded in fiscal 2016.
LIQUIDITY AND CAPITAL RESOURCES
Overview
In September 2018, we announced that our Board of Directors was conducting a comprehensive review of strategic and financial alternatives to enhance stockholder value, including, but not limited to, a potential sale of the Company. On January 29, 2019, we announced that our Board of Directors terminated its efforts to pursue a sale of the Company. As of April 2, 2019, our Board of Directors has concluded its formal review of strategic and financial alternatives. In connection with this review, we have taken the following actions:
On January 16, 2019, we completed the sale of Spring Mobile for cash proceeds of $727.9 million, net of transaction costs and preliminary adjustments;
On March 4, 2019, we announced that our Board of Directors approved a new $300.0 million share repurchase authorization to replace the previous share repurchase authorization, which had $170.2 million remaining; and
We issued a notice of redemption to redeem all of our $350.0 million unsecured senior notes due October 2019. The redemption date will be April 4, 2019, and we expect to use cash on hand.
On an ongoing basis, we evaluate and consider strategic acquisitions, divestitures, repurchasing shares of our common stock or our outstanding debt obligations, as well as other transactions that we believe may enhance stockholder value. The amount, nature and timing of any borrowings or sales of debt or equity securities will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed by our current credit arrangements; and overall market conditions.
As of February 2, 2019, we had total cash on hand of $1.6 billion and an additional $385.1 million of available borrowing capacity under our revolving credit facility. Our cash on hand attributable to foreign operations totaled $288.6 million as of February 2, 2019. Although we may, from time to time, evaluate strategies and alternatives with respect to the cash attributable to our foreign operations, we currently anticipate that this cash will remain in those foreign jurisdictions and it therefore may not be available for immediate use in the United States.
Based on our current operating plans, we believe that available cash balances, cash generated from our operating activities and funds available under our $420.0 million asset-based revolving credit facility together will provide sufficient liquidity to fund our operations, capital expenditures, store openings and remodeling activities and corporate capital allocation programs, share and debt repurchases and the payment of dividends (if any) declared by the Board of Directors, for at least the next 12 months.


Cash Flows
During fiscal 2018, cash provided by operations was $325.1 million, compared to cash provided by operations of $434.9 million in fiscal 2017. The decrease in cash provided by operations of $109.8 million was primarily due to lower earnings, adjusted for non-cash items, in fiscal 2018 compared to the prior year.
During fiscal 2017, cash provided by operations was $434.9 million, compared to cash provided by operations of $537.1 million in fiscal 2016. The decrease in cash provided by operations of $102.2 million from fiscal 2016 to fiscal 2017 was primarily due to the timing of vendor payments and lower earnings in fiscal 2017.
Cash provided by investing activities was $635.5 million in fiscal 2018 compared to cash used in investing activities of $60.6 million in fiscal 2017 and $577.4 million in fiscal 2016. The increase in cash provided by investing activities in fiscal 2018 compared to fiscal 2017 was primarily due to the $727.9 million in proceeds from the sale of Spring Mobile. The decrease in cash used in investing activities in fiscal 2017 compared to 2016 was due to lower acquisition activity and $55.0 million in proceeds from the sale of Kongregate in fiscal 2017. Cash paid for acquisitions totaled $8.5 million in fiscal 2017 and $441.2 million in fiscal 2016 of which the significant majority was related to the Spring Mobile business. We had no acquisitions in fiscal 2018. Capital expenditures totaled $93.7 million, $113.4 million and $142.7 million in fiscal 2018, fiscal 2017 and fiscal 2016, respectively.
In fiscal 2018, our financing activities were a net cash outflow of $174.7 million consisting primarily of dividends paid of $157.4 million and repayment of acquisition-related debt of $12.2 million. The cash flows used in financing activities in fiscal 2017 consisted primarily of dividends paid of $155.2 million, the settlement of share repurchases of $22.0 million that were initiated in fiscal 2016 and repayment of acquisition-related debt of $21.8 million. The cash flows provided by financing activities in fiscal 2016 primarily consisted of $466.9 million in proceeds, net of financing costs, from the issuance of our 2021 Senior Notes, partially offset by dividends paid of $155.5 million and share repurchases of $63.1 million.
Sources of Liquidity
We utilize cash generated from operations and have funds available to us under our revolving credit facility to cover seasonal fluctuations in cash flows and to support our various initiatives. Our cash and cash equivalents are carried at cost and consist primarily of time deposits with commercial banks.
We maintain an asset-based revolving credit facility (the "Revolver") with a borrowing base capacity of $420 million and a maturity date of November 2022. The Revolver has a $200 million expansion feature and $50 million letter of credit sublimit, and allows for an incremental $50 million first-in, last-out facility. The applicable margins for prime rate loans range from 0.25% to 0.50% and, for London Interbank Offered ("LIBO") rate loans, range from 1.25% to 1.50%. The Revolver is secured by substantially all of our assets and the assets of our domestic subsidiaries. We are required to pay a commitment fee of 0.25% for any unused portion of the total commitment under the Amended Revolver. As of February 2, 2019, the applicable margin was 0.25% for prime rate loans and 1.25% for LIBO rate loans. As of February 2, 2019, total availability under the Revolver was $385.1 million, with no outstanding borrowings and outstanding standby letters of credit of $7.2 million.
In March 2016, we issued $475.0 million aggregate principal amount of unsecured 6.75% senior notes due March 15, 2021 (the "2021 Senior Notes"). Interest is payable semi-annually in arrears on March 15 and September 15 of each year. The net proceeds from the offering were used for general corporate purposes, including acquisitions and dividends.
In September 2014, we issued $350.0 million aggregate principal amount of unsecured 5.50% senior notes due October 1, 2019 (the "2019 Senior Notes," and together with the 2021 Senior Notes, the “Senior Notes”). Interest is payable semi-annually in arrears on April 1 and October 1 of each year. The net proceeds from the offering were used for general corporate purposes, including acquisitions and dividends. On March 4, 2019, we issued a notice of redemption to redeem all of our $350.0 million unsecured senior notes due October 2019. The redemption date will be April 4, 2019 and the redemption price will be equal to $1,000 per $1,000 principal amount of the 2019 Senior Notes, representing 100.0% of the aggregate principal amount being redeemed, plus accrued but unpaid interest. We expect to use cash on hand for the redemption of the 2019 Senior Notes.
The agreement governing our Revolver and the indentures governing our Senior Notes place certain restrictions on us and our subsidiaries, including, among others, limitations on asset sales, additional liens, investments, incurrence of additional debt and share repurchases. In addition, the indentures governing our Revolver and Senior Notes contain customary events of default, including, among others, payment defaults, breaches of covenants and certain events of bankruptcy, insolvency and reorganization. The Revolver is also subject to a fixed charge coverage ratio covenant if excess availability is below certain thresholds. We are currently in compliance with all covenants under our indentures governing the Senior Notes and our Revolver.
See Note 10, “Debt,” to our consolidated financial statements for additional information related to our Revolver and Senior Notes.

Our Luxembourg subsidiary maintains a discretionary $20.0 million Uncommitted Line of Credit (the “Line of Credit”) with Bank of America. There is no term associated with the Line of Credit and Bank of America may withdraw the facility at any time without notice. The Line of Credit is available to our foreign subsidiaries for use primarily as a bank overdraft facility for short-term liquidity needs and for the issuance of bank guarantees and letters of credit to support operations. As of February 2, 2019, there were no cash overdrafts outstanding under the Line of Credit and bank guarantees outstanding totaled $9.4 million.
Share Repurchase Program
From time to time, we intendhave repurchased our common shares through open market transactions under share repurchase authorizations approved by our Board of Directors. We have not repurchased any shares of common stock since fiscal 2016. Our share repurchase authorizations do not require us to acquire any specific number of shares and may be terminated at any time. Shares repurchased have been subsequently retired. On March 4, 2019, our Board of Directors approved a new share repurchase authorization allowing our management to repurchase up to $300 million of our Class A Common Stock with no expiration date. The new share repurchase authorization replaces the previous share repurchase authorization, which had $170.2 million remaining. We did not repurchase shares during fiscal 2018 or fiscal 2017. Share repurchase activity for fiscal 2016 is as follows (in millions, except for per share data):
  Fiscal Year 2016
Total number of shares purchased 3.0
Average price per share $24.94
Aggregate value of shares purchased $75.1
Dividends
We paid cash dividends of $157.4 million, $155.2 million and $155.5 million in fiscal 2018, 2017 and 2016. On March 4, 2019, our Board of Directors authorized a quarterly cash dividend of $0.38 per share of Class A Common Stock. The first quarterly dividend of fiscal 2019 was paid on March 29, 2019 to stockholders of record on March 15, 2019. Future dividends will be subject to approval by our Board of Directors. Our payment of dividends is and will continue to investbe restricted by or subject to, among other limitations, applicable provisions of federal and state laws, our earnings and various business considerations, including our financial condition, results of operations, cash flow, the level of our capital expenditures, our future business prospects, our status as a holding company and such other matters that our Board of Directors deems relevant. In addition, the terms of the senior credit facility and of the indentures governing our Senior Notes restrict our ability to pay dividends under certain circumstances as stated above. See Note 10, "Debt," to our consolidated financial statements for further information regarding our Senior Notes.
CONTRACTUAL OBLIGATIONS
The following table sets forth our contractual obligations as of February 2, 2019 (in millions):
  Payments Due by Period
  Total 
Less Than
1 Year
 1-3 Years 3-5 Years 
More Than
5 Years
Operating leases $947.0
 $296.2
 $357.8
 $176.8
 $116.2
Purchase obligations(1)
 595.8
 595.7
 0.1
 —
 —
2019 Senior Notes 350.0
 350.0
 —
 —
 —
2021 Senior Notes 475.0
 —
 475.0
 —
 —
Interest payments on senior notes 99.4
 51.3
 48.1
 —
 —
Total(2)
 $2,467.2
 $1,293.2
 $881.0
 $176.8
 $116.2
___________________
(1)Purchase obligations represent outstanding purchase orders for merchandise from vendors. These purchase orders are generally cancelable until shipment of the products.
(2)As of February 2, 2019, we had $17.7 million of income tax liability related to unrecognized tax benefits in other long-term liabilities in our consolidated balance sheet. At the time of this filing, the settlement period for the noncurrent portion of our income tax liability (and the timing of any related payments) cannot be reasonably determined and therefore these liabilities are excluded from the table above. In addition, certain payments related to unrecognized tax benefits would be partially offset by reductions in payments in other jurisdictions. See Note 8, "Income Taxes," to our consolidated financial statements for further information regarding our uncertain tax positions.
We lease retail stores, warehouse facilities, office space and equipment. These are generally leased under noncancelable agreements that expire at various dates with various renewal options for additional periods. The agreements, which have been classified as operating leases, generally provide for minimum and, in customer loyalty programs designedsome cases, percentage rentals and require us to attractpay all insurance, taxes and retain our customers. Additionally,other maintenance costs. Percentage rentals are based on sales performance in 2014,excess of specified minimums at various stores.

As of February 2, 2019, we introduced stand-alone collectibles storeshad standby letters of credit outstanding in the amount of $7.2 million and expandedhad bank guarantees outstanding in the selectionamount of collectible products$24.1 million, $8.1 million of which are cash collateralized.
OFF-BALANCE SHEET ARRANGEMENTS
Other than operating leases entered into in our stores. To further expand

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our collectibles business, we recently acquired ThinkGeek, and we plan to continue investing in this category going forward. We continue to seek to invest in other retail concepts and product lines with the intentionhad no material off-balance sheet arrangements as of further diversifying our business.February 2, 2019.

Critical Accounting Policies and Use of EstimatesCRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In preparing these financial statements, we have made our best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. Changes in the estimates and assumptions used by us could have a significant impact on our financial results, and actual results could differ from those estimates. Our senior management has discussed the development and selection of these critical accounting policies, as well as the significant accounting policies disclosed in Note 1, "Nature of Operations and Summary of Significant Accounting Policies," to our consolidated financial statements, with the Audit Committee of our Board of Directors. We believe the following accounting policies are the most critical to aid in fully understanding and evaluating our reporting of transactions and events, and the estimates these policies involve require our most difficult, subjective or complex judgments.
Valuation of Merchandise Inventories
Estimate DescriptionJudgment and/or UncertaintyPotential Impact if Results Differ
Valuation of Merchandise Inventories
Our merchandise inventories are carried at the lower of cost or market generally using the average cost method. Under the average cost method, as new product is received from vendors, its current cost is added to the existing cost of product on-hand and this amount is re-averaged over the cumulative units. Pre-owned 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, we are required to make assumptions regarding the necessity of reserves required to value potentially obsolete or over-valued items at the lower of cost or market. We consider quantities on hand, recent sales, potential price protections and returns to vendors, among other factors, when making these assumptions.
Our ability to gauge these factors is dependent upon our ability to forecast customer demand and to provide a well-balanced merchandise assortment. Any inability to forecast customer demand properly could lead to increased costs associated with write-downs of inventory to reflect volumes or pricing of inventory which we believe represents the net realizable value.

A 10% change in our obsolescence reserve percentage at January 30, 2016 would have affected net earnings by approximately $2.8 million in fiscal 2015.
Cash Consideration Received from Vendors
We participate in cooperative advertising programs and other vendor marketing programs in which our vendors provide us with cash consideration in exchange for marketing and advertising the vendors’ products.

The cooperative advertising programs and other vendor marketing programs generally cover a period from a few weeks up to a month and include items such as product in-store display promotions and placement, internet advertising, co-op print advertising and other programs. The allowance for each event is negotiated with the vendor and requires specific performance by us to be earned.
Estimate Description. Our merchandise inventories are carried at the lower of cost or market generally using the average cost method. Under the average cost method, as new product is received from vendors, its current cost is added to the existing cost of product on-hand and this amount is re-averaged over the cumulative units. Pre-owned video game products traded in by customers are recorded as inventory at the amount of the store credit given to the customer.
Judgment and/or Uncertainty. In valuing inventory, we are required to make assumptions regarding the necessity of reserves required to value potentially obsolete or over-valued items at the lower of cost or market. We consider quantities on hand, recent sales, potential price protections and returns to vendors, among other factors, when making these assumptions.
Potential Impact if Results Differ. Our ability to gauge these factors is dependent upon our ability to forecast customer demand and to provide a well-balanced merchandise assortment. Any inability to forecast customer demand properly could lead to increased costs associated with write-downs of inventory to reflect volumes or pricing of inventory which we believe represents the net realizable value. A 10% change in our obsolescence reserve percentage at February 2, 2019 would have affected net earnings by approximately $2.6 million in fiscal 2018.
Cash Consideration Received from Vendors
Estimate Description. We participate in cooperative advertising programs and other vendor marketing programs in which our vendors provide us with cash consideration in exchange for marketing and advertising the vendors’ products. The cooperative advertising programs and other vendor marketing programs generally cover a period from a few weeks up to a month and include items such as product in-store display promotions and placement, internet advertising, co-op print advertising and other programs. The allowance for each event is negotiated with the vendor and requires specific performance by us to be earned.
Judgment and/or Uncertainty. Our accounting for cooperative advertising arrangements and other vendor marketing programs results in a significant portion of the consideration received from our vendors reducing the product costs in inventory rather than as an offset to our marketing and advertising costs. The consideration serving as a reduction in inventory is recognized in cost of sales as inventory is sold.

We estimate the amount of vendor allowances to be deferred as a reduction of inventory based on the nature of the consideration received and the merchandise inventory to which the consideration relates. We apply a sell-through rate to determine the timing in which the consideration should be recognized in cost of sales. Consideration received that relates to video game products that have not yet been released to the public is deferred.
Although we consider our advertising and marketing programs to be effective, we do not believe that we would be able to incur the same level of advertising expenditures if the vendors decreased or discontinued their allowances. Additionally, if actual results are not consistent with our estimated deferrals and sell-through rates, we may be exposed to additional adjustments that could materially impact our gross profit rates and inventory balances.

A 10% difference in our vendor allowances deferral at January 30, 2016 would have affected net earnings by approximately $1.3 million in fiscal 2015.



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Estimate DescriptionJudgment and/or UncertaintyPotential Impact if Results Differ
Customer Liabilities
Our PowerUp Rewards loyalty program allows enrolled members to earn points on purchases in our stores and on some of our websites that can be redeemed for rewards that include discounts or merchandise. We estimate the net cost of the rewards that will be issued and redeemed and record this cost and the associated liability as points are earned by our loyalty program members.

Additionally, we sell gift cards to our customers in our retail stores, through our website and through selected third parties. At the point of sale, a liability is established for the value of the gift card. We recognize revenue from gift cards when the card is redeemed by the customer or the likelihood of the gift card being redeemed by the customer is remote, which is a concept known in the retail industry as breakage. We determine our gift card breakage rate based on historical redemption patterns.
The two primary estimates utilized to record the balance sheet liability for loyalty points earned by members are the estimated redemption rate and the estimated weighted-average cost per point redeemed. We use historical redemption rates experienced under our loyalty program as a basis for estimating the ultimate redemption rate of points earned. A weighted-average cost per point redeemed is used to estimate future redemption costs. The weighted-average cost per point redeemed is based on our most recent actual costs incurred to fulfill points that have been redeemed by our loyalty program members and is adjusted as appropriate for recent changes in redemption costs, including the mix of rewards redeemed.

Our estimate of the amount and timing of gift card redemptions is based primarily on historical transaction experience.
We continually evaluate our methodology and assumptions based on developments in redemption patterns, cost per point redeemed and other factors. Changes in the ultimate redemption rate and weighted-average cost per point redeemed have the effect of either increasing or decreasing the liability through the current period expense by an amount estimated to cover the cost of all points previously earned but not yet redeemed by loyalty program members as of the end of the reporting period.

A 10% change in our customer loyalty program redemption rate or weighted-average cost per point redeemed at January 30, 2016 would have affected net earnings by approximately $4.0 million and $4.0 million, respectively, in fiscal 2015.

A 10% change in our gift card breakage rate at January 30, 2016 would have affected net earnings by approximately $5.5 million in fiscal 2015.
Goodwill
Our goodwill results from our acquisitions and represents the excess purchase price over the net identifiable assets acquired. We are required to evaluate our goodwill and other indefinite-lived intangible assets for impairment at least annually or whenever indicators of impairment are present. Our annual test is completed as of the beginning of the fourth fiscal quarter, and interim tests are conducted when circumstances indicate the carrying value of the goodwill or other intangible assets may not be recoverable.

As of January 30, 2016, our goodwill totaled $1,476.7 million. Refer to Note 9, "Goodwill and Intangible Assets," to the consolidated financial statements included in this Form 10-K for a full description of our goodwill.
Considerable management judgment is necessary to initially value intangible assets upon acquisition and to evaluate those assets and goodwill for impairment going forward. We determine fair value using widely acceptable valuation techniques including discounted cash flows and market multiples analyses.

Assumptions used in our valuations, such as forecasted growth rates and our cost of capital, are consistent with our internal projections and operating plans.
Variations in any of the assumptions used in valuing our intangible assets and in our impairment analysis may result in different calculations of fair values that could result in a material impairment charge.

Based on the results of our annual impairment test in fiscal 2015, the fair values of our reporting units exceeded their respective carrying values by more than 50%. A reduction in the terminal growth rate assumption of 0.5% or an increase in the discount rate assumption of 1.0% utilized in the test for each respective reporting unit would not have resulted in an impairment.

We can provide no assurance that we will not have impairment charges in future periods as a result of changes in our operating results or our assumptions.


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Estimate DescriptionJudgment and/or UncertaintyPotential Impact if Results Differ
Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets were recorded as a result of acquisitions and consist of our dealer agreement assets and our Micromania trade name. As these intangible assets are expected to contribute to cash flows indefinitely, they are not subject to amortization.

We assess our indefinite-lived intangible assets for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Our test is completed as of the beginning of the fourth quarter each fiscal year.

We value our dealer agreements using a discounted cash flow analysis known as the Greenfield Method, which assumes that a business, at its inception, owns only dealer agreements and must make capital expenditure, working capital and other investments to ramp up its operations to a level that is comparable to its current operations.

We value our Micromania trade name using a relief-from-royalty approach, which assumes the value of the trade name is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the trade name and instead licensed the trade name from another company. 

As of January 30, 2016, our indefinite-lived intangible assets totaled $262.3 million. Refer to Note 9, "Goodwill and Intangible Assets," to the consolidated financial statements included in this Form 10-K for a full description of our indefinite-lived intangible assets.

In valuing our dealer agreement assets, considerable management judgment is necessary to estimate the cash flows required to build a comparable operation and the available future cash flows from these operations. Specifically, we are required to make certain assumptions about the cost of investment to build a comparable operation, projected net sales, cost of sales, operating expenses and income taxes, as well as the discount rate that is applied to the expected future cash flows to arrive at an estimated fair value.

In valuing our Micromania trade name, we are required to make certain assumptions regarding future cash flow projections to ensure that such projections represent reasonable market participant assumptions, to which the royalty rate is applied. Additionally, management judgment is necessary in selecting an appropriate discount rate which is reflective of the inherent risk of holding a standalone intangible asset.
Changes in the assumptions utilized in estimating the present value of the cash flows attributable to trade names and dealer agreements could materially impact the fair value estimates.

A reduction in the terminal growth rate assumption of 0.25% or an increase in the discount rate assumption of 0.25% utilized in the test would not have resulted in a material impairment of the dealer agreement assets.

A reduction in the terminal growth rate assumption of 0.25% or an increase in the discount rate assumption of 0.25% utilized in the test would not have resulted in a material impairment of the Micromania trade name.

We can provide no assurance that we will not have impairment charges in future periods as a result of changes in our operating results or our assumptions.

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Estimate DescriptionJudgment and/or UncertaintyPotential Impact if Results Differ
Income Taxes
We account for income taxes utilizing an asset and liability approach, and deferred taxes are determined based on the estimated future tax effect of differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates. As a result of our operations in many foreign countries, our global tax rate is derived from a combination of applicable tax rates in the various jurisdictions in which we operate.

We maintain accruals for uncertain tax positions until examination of the tax year is completed by the taxing authority, available review periods expire or additional facts and circumstances cause us to change our assessment of the appropriate accrual amount. Our liability for uncertain tax positions was $30.0 million as of January 30, 2016.

Additionally, a valuation allowance is recorded against a deferred tax asset if it is not more likely than not that the asset will be realized. Several factors are considered in evaluating the realizability of our deferred tax assets, including the remaining years available for carry forward, the tax laws for the applicable jurisdictions, the future profitability of the specific business units, and tax planning strategies. Our valuation allowance was $18.8 million as of January 30, 2016. See Note 13 to our consolidated financial statements for further information regarding income taxes.
Considerable management judgment is necessary to assess the inherent uncertainties related to the interpretations of complex tax laws, regulations and taxing authority rulings, as well as to the expiration of statutes of limitations in the jurisdictions in which we operate.

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 operations 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 tax rules and regulations. However, complexities in the tax rules and our operations, as well as positions taken publicly by the taxing authorities, may lead us to conclude that accruals for uncertain tax positions are required.

Additionally, several factors are considered in evaluating the realizability of our deferred tax assets, including the remaining years available for carry forward, the tax laws for the applicable jurisdictions, the future profitability of the specific business units, and tax planning strategies.
Our judgments and estimates concerning uncertain tax positions may change as a result of evaluation of new information, such as the outcome of tax audits or changes to or further interpretations of tax laws and regulations. Our judgments and estimates concerning realizability of deferred tax assets could change if any of the evaluation factors change.
If such changes take place, there is a risk that our effective tax rate could increase or decrease in any period, impacting our net earnings.



Seasonality
Our business, like that of many retailers, is seasonal, with the major portion of sales and operating profit realized during the fourth quarter which includes the holiday selling season. Results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year. Quarterly results may fluctuate materially depending upon, among other factors, the timing of new product introductions and new store openings, sales contributed by new stores, increases or decreases in comparable store sales, the nature and timing of acquisitions, adverse weather conditions, shifts in the timing of certain holidays or promotions and changes in our merchandise mix.


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Consolidated Results of Operations
The following table sets forth certain statement of operations items (in millions) and as a percentage of net sales, for the periods indicated:
  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014
  Dollars Percent Dollars Percent Dollars Percent
Statement of Operations Data:            
Net sales $9,363.8
 100.0% $9,296.0
 100.0% $9,039.5
 100.0%
Cost of sales 6,445.5
 68.8
 6,520.1
 70.1
 6,378.4
 70.6
Gross profit 2,918.3
 31.2
 2,775.9
 29.9
 2,661.1
 29.4
Selling, general and administrative expenses 2,108.9
 22.6
 2,001.0
 21.6
 1,892.4
 21.0
Depreciation and amortization 156.6
 1.7
 154.4
 1.7
 166.5
 1.8
Goodwill impairments —
 —
 —
 —
 10.2
 0.1
Asset impairments 4.6
 —
 2.2
 —
 18.5
 0.2
Operating earnings 648.2
 6.9
 618.3
 6.6
 573.5
 6.3
Interest expense, net 23.0
 0.2
 10.0
 0.1
 4.7
 —
Earnings before income tax expense 625.2
 6.7
 608.3
 6.5
 568.8
 6.3
Income tax expense 222.4
 2.4
 215.2
 2.3
 214.6
 2.4
Net income $402.8
 4.3% $393.1
 4.2% $354.2
 3.9%
We include purchasing, receiving and distribution costs in selling, general and administrative expenses in the statement of operations. We include processing fees associated with purchases made by check and credit cards in cost of sales as inventory is sold. We estimate the amount of vendor allowances to be deferred as a reduction of inventory based on the nature of the consideration received and the merchandise inventory to which the consideration relates.
We apply a sell-through rate to determine the timing in which the statement of operations. As a result of these classifications, our gross margins are not comparable to those retailers that include purchasing, receiving and distribution costsconsideration should be recognized in cost of salessales. Consideration received that relates to video game products that have not yet been released to the public is deferred.
Potential Impact if Results Differ. Although we consider our advertising and include processing feesmarketing programs to be effective, we do not believe that we would be able to incur the same level of advertising expenditures if the vendors decreased or discontinued their allowances. Additionally, if actual results are not consistent with our estimated deferrals and sell-through rates, we may be exposed to additional adjustments that could materially impact our gross profit rates and inventory balances. A 10% difference in our vendor allowances deferral at February 2, 2019 would have affected net earnings by approximately $1.8 million in fiscal 2018.


Customer Liabilities
Estimate Description. Our PowerUp Rewards loyalty program allows enrolled members to earn points on purchases in our stores and on some of our websites that can be redeemed for rewards and discounts. We allocate the transaction price between the product and loyalty points earned based on the relative stand-alone selling prices and expected point redemption. The portion allocated to the loyalty points is initially recorded as deferred revenue and subsequently recognized as revenue upon redemption or expiration. The two primary estimates utilized to record the deferred revenue for loyalty points earned by members are the estimated retail price per point and estimated amount of points that will never be redeemed, which is a concept known in the retail industry as "breakage."
Additionally, we sell gift cards to our customers in our retail stores, through our website and through selected third parties. At the point of sale, a liability is established for the value of the gift card. We recognize revenue from gift cards when the card is redeemed by the customer and recognize estimated breakage on gift cards in proportion to historical redemption patterns, regardless of the age of the unredeemed gift cards.
Judgment and/or Uncertainty. The two primary estimates utilized to record the balance sheet liability for loyalty points earned by members are the estimated redemption rate and the estimated weighted-average retail price per point redeemed. We use historical redemption rates experienced under our loyalty program as a basis for estimating the ultimate redemption rate of points earned. The estimated retail price per point is based on the actual historical retail prices of product purchased through the redemption of loyalty points. We estimate breakage of loyalty points and unredeemed gift cards based on historical redemption rates. A weighted-average retail price per point redeemed is used to estimate the value of our deferred revenue associated with purchases made by checkloyalty points. The weighted-average retail price per point redeemed is based on our most recent actual loyalty point redemptions and credit cardsis adjusted as appropriate for recent changes in selling, generalredemption values, including the mix of rewards redeemed. Our estimate of the amount and administrative expenses. The net effecttiming of these classifications as a percentage of sales has not historically been material.
The following table sets forth net sales (in millions) and percentages of total net sales by significant product category for the periods indicated:
  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014
  
Net
Sales
 
Percent
of Total
 
Net
Sales
 
Percent
of Total
 
Net
Sales
 
Percent
of Total
Net Sales:            
New video game hardware(1)
 $1,944.7
 20.8% $2,028.7
 21.8% $1,730.0
 19.1%
New video game software 2,905.1
 31.0
 3,089.0
 33.2
 3,480.9
 38.5
Pre-owned and value video game products 2,374.7
 25.4
 2,389.3
 25.7
 2,329.8
 25.8
Video game accessories 703.0
 7.5
 653.6
 7.1
 560.6
 6.2
Digital 188.3
 2.0
 216.3
 2.3
 217.7
 2.4
Mobile and consumer electronics 652.8
 7.0
 518.8
 5.6
 303.7
 3.4
Other(2)
 595.2
 6.3
 400.3
 4.3
 416.8
 4.6
Total $9,363.8
 100.0% $9,296.0
 100.0% $9,039.5
 100.0%
___________________gift card redemptions is based primarily on historical transaction experience.
(1)
Includes sales of hardware bundles, in which physical hardware and digital or physical software are sold together as a single SKU.
(2)
Other products include revenues from collectibles (including sales from our newly acquired ThinkGeek operation, beginning in July 2015), the sales of PC entertainment software, interactive toys, strategy guides and revenues from PowerUp Pro loyalty members receiving Game Informer magazine in physical form.


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The following table sets forth gross profit (in millions) and gross profit percentages by significant product category for the periods indicated:
  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014
  
Gross
Profit
 
Gross
Profit
Percent
 
Gross
Profit
 
Gross
Profit
Percent
 
Gross
Profit
 
Gross
Profit
Percent
Gross Profit:            
New video game hardware(1)
 $175.5
 9.0% $196.6
 9.7% $176.5
 10.2%
New video game software 689.3
 23.7
 716.9
 23.2
 805.3
 23.1
Pre-owned and value video game products 1,114.5
 46.9
 1,146.3
 48.0
 1,093.9
 47.0
Video game accessories 255.5
 36.3
 246.1
 37.7
 220.5
 39.3
Digital 149.6
 79.4
 152.0
 70.3
 149.2
 68.5
Mobile and consumer electronics 328.6
 50.3
 186.7
 36.0
 65.1
 21.4
Other(2)
 205.3
 34.5
 131.3
 32.8
 150.6
 36.1
Total $2,918.3
 31.2% $2,775.9
 29.9% $2,661.1
 29.4%
___________________
(1)
Includes sales of hardware bundles, in which physical hardware and digital or physical software are sold together as a single SKU.
(2)
Other products include revenues from collectibles (including sales from our newly acquired ThinkGeek operation, beginning in July 2015), the sales of PC entertainment software, interactive toys, strategy guides and revenues from PowerUp Pro loyalty members receiving Game Informer magazine in physical form.

Fiscal 2015 Compared to Fiscal 2014Potential Impact if Results Differ
  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 Change
  Dollars in millions Dollars in millions $ %
Statement of Operations Data:        
Net sales $9,363.8
 $9,296.0
 $67.8
 0.7 %
Cost of sales 6,445.5
 6,520.1
 (74.6) (1.1)
Gross profit 2,918.3
 2,775.9
 142.4
 5.1
Selling, general and administrative expenses 2,108.9
 2,001.0
 107.9
 5.4
Depreciation and amortization 156.6
 154.4
 2.2
 1.4
Asset impairments 4.6
 2.2
 2.4
 109.1
Operating earnings 648.2
 618.3
 29.9
 4.8
Interest expense, net 23.0
 10.0
 13.0
 130.0
Earnings before income tax expense 625.2
 608.3
 16.9
 2.8
Income tax expense 222.4
 215.2
 7.2
 3.3
Net income $402.8
 $393.1
 $9.7
 2.5 %

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  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 Change
  Dollars in millions Dollars in millions $ %
Net Sales:        
New video game hardware(1)
 $1,944.7
 $2,028.7
 $(84.0) (4.1)%
New video game software 2,905.1
 3,089.0
 (183.9) (6.0)
Pre-owned and value video game products 2,374.7
 2,389.3
 (14.6) (0.6)
Video game accessories 703.0
 653.6
 49.4
 7.6
Digital 188.3
 216.3
 (28.0) (12.9)
Mobile and consumer electronics 652.8
 518.8
 134.0
 25.8
Other(2)
 595.2
 400.3
 194.9
 48.7
Total $9,363.8
 $9,296.0
 $67.8
 0.7 %
  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 Change
  Dollars in millions Dollars in millions $ %
Gross Profit:        
New video game hardware(1)
 $175.5
 $196.6
 $(21.1) (10.7)%
New video game software 689.3
 716.9
 (27.6) (3.8)%
Pre-owned and value video game products 1,114.5
 1,146.3
 (31.8) (2.8)
Video game accessories 255.5
 246.1
 9.4
 3.8
Digital 149.6
 152.0
 (2.4) (1.6)
Mobile and consumer electronics 328.6
 186.7
 141.9
 76.0
Other(2)
 205.3
 131.3
 74.0
 56.4
Total $2,918.3
 $2,775.9
 $142.4
 5.1 %
___________________
(1)
Includes sales of hardware bundles, in which physical hardware and digital or physical software are sold together as a single SKU.
(2)
Other products include revenues from collectibles (including sales from our newly acquired ThinkGeek operation, beginning in July 2015), the sales of PC entertainment software, interactive toys, strategy guides and revenues from PowerUp Pro loyalty members receiving Game Informer magazine in physical form.
Net Sales
Net sales increased $67.8 million, or 0.7%,. We continually evaluate our methodology and assumptions based on developments in fiscal 2015 compared to fiscal 2014. The increase in net sales during fiscal 2015 was primarily attributable to an increase in comparable store sales of 4.3% compared to fiscal 2014, due to strong sales performanceredemption patterns, retail price per point redeemed and other factors. Changes in the current year period associated with video game accessories, interactive toysultimate redemption rate and collectibles. Overall sales growth also benefited from the continued growth of our Technology Brands stores and our newly acquired ThinkGeek business. These increases were partially offset by the impact of foreign exchange rate fluctuations, which hadweighted-average retail price per point redeemed have the effect of either increasing or decreasing net salesthe deferred revenue balance through current period revenue by $430.2 million foran amount estimated to cover the 52 weeksretail value of fiscal 2015 compared to the prior year period. Refer to the note to the Selected Financial Data table in "Item 6 — Selected Financial Data" for a discussionall points previously earned but not yet redeemed by loyalty program members as of the calculation of comparable store sales.
The increase in net sales was due to the following:
Sales of other product categories increased $194.9 million, or 48.7%, for fiscal 2015 as compared to fiscal 2014, primarily due to the addition of our ThinkGeek business and growth in sales of interactive toys and collectibles that we continue to expand globally.
Mobile and consumer electronics sales increased $134.0 million, or 25.8%, for fiscal 2015 as compared to fiscal 2014, due to the acquisition and opening of stores within the Technology Brands segment. Sales related to the Technology Brands segment increased $205.4 million for fiscal 2015 compared to the prior year period.
Video game accessories sales increased $49.4 million, or 7.6%, for fiscal 2015 as compared to fiscal 2014, due to sales of accessories for use with the next generation consoles.

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The increases described above were partially offset by the following:
New video game software sales decreased $183.9 million, or 6.0%, for fiscal 2015 as compared to fiscal 2014, primarily due to unfavorable foreign exchange rate fluctuations, which had the effect of decreasing net sales by $157.7 million for the current year period as compared to the prior year. Excluding the effects of currency, new video game software sales decreased $26.2 million due to fewer new titles that were released in fiscal 2015 as compared to fiscal 2014 and the decline in prior generation software sales. We expect the decline in prior generation software sales to continue.
New video game hardware sales decreased $84.0 million, or 4.1%, for fiscal 2015 as compared to fiscal 2014, primarily due to the reduction in price on both the PS4 and Xbox One as well as unfavorable foreign exchange rate fluctuations, which had the effect of decreasing net sales by $99.2 million for the current year as compared to the prior year.
Digital sales decreased $28.0 million, or 12.9%, for fiscal 2015 as compared to fiscal 2014, primarily due to unfavorable foreign exchange rate fluctuations, which had the effect of decreasing net sales by $11.4 million for the current year period as compared to the prior year and a larger portion of sales recognized on a net basis compared to the prior year period.
Pre-owned and value video game product sales decreased $14.6 million, or 0.6%, for fiscal 2015 as compared to fiscal 2014, primarily due to unfavorable foreign exchange rate fluctuations, which had the effect of decreasing net sales by $94.6 million for the current year as compared to the prior year. Excluding the effects of currency, sales increased $80.0 million due to stronger sell-throughend of the next generation video game products related to the new console cycle.
Cost of Sales
Cost of sales decreased $74.6 million, or 1.1%, in fiscal 2015 compared to fiscal 2014, primarily as a result of the changes in gross profit discussed below.
Gross Profit
Gross profit increased $142.4 million, or 5.1%, in fiscal 2015 compared to fiscal 2014, and gross profit as a percentage of net sales was 31.2% in fiscal 2015 compared to 29.9% in fiscal 2014. The gross profit increase was primarily driven by the growth in the mobile and consumer electronics category related to our Technology Brands segment, which carries a higher margin percentage than our other segments, and increased gross profit by $137.5 million year-over-year.
The net increase in gross profit as a percentage of net sales was due to the following:
Gross profit as a percentage of sales on mobile and consumer electronics sales increased to 50.3% in fiscal 2015 from 36.0% in fiscal 2014 due to an increase in the mix of Technology Brand segment sales related to the acquisition and opening of new stores during the year. Sales in the Technology Brands segment have higher margin than other mobile and consumer electronic sales in the category.
Gross profit as a percentage of sales on other product categories increased to 34.5% in fiscal 2015 from 32.8% in fiscal 2014, due to an increase in collectibles sales including our recently acquired ThinkGeek business. Collectibles sales carry a higher gross margin percentage than the other items in this category.
Gross profit as a percentage of sales on digital sales increased to 79.4% in fiscal 2015 from 70.3% in fiscal 2014 primarily due to a larger portion of sales recognized on a net basis in fiscal 2015 compared to the prior year.
The increases described above were partially offset by the following:
Gross profit as a percentage of sales on pre-owned and value video game products decreased to 46.9% in fiscal 2015 from 48.0% in fiscal 2014. The gross profit percentage decrease was driven by a greater mix of sales of next generation video game products, which carry lower margins early in the console cycle compared to the prior generation products. As the console cycle matures, we generally expect gross margin on the sales of pre-owned next generation video game products to increase.
Gross profit as a percentage of sales on video game accessories decreased to 36.3% in fiscal 2015 from 37.7% in fiscal 2014, due to the increased mix of controllers sales, which carry lower gross margins relative to the total video game accessories category.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $107.9 million, or 5.4%, in fiscal 2015 compared to fiscal 2014. The increase was primarily due to the growth of the Technology Brands segment, which carries higher selling, general and administrative expenses as a percentage of sales than the other segments. Technology Brands contributed $129.0 million to the increase for fiscal 2015 compared to fiscal 2014. Additionally, United States Video Game Brands selling, general and administrative expenses increased $76.9 million in the current year compared to the prior year, driven mainly by costs related to the acquisition of ThinkGeek.

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This increase was offset in part by the impact of foreign exchange rate fluctuations, which had the effect of decreasing selling, general and administrative expenses by $96.4 million for the 52 weeks of fiscal 2015 compared to the prior yearreporting period. Included in selling, general and administrative expenses are $29.9 million and $21.5 million in stock-based compensation expense for fiscal 2015 and fiscal 2014, respectively.
Depreciation and Amortization
Depreciation and amortization expense increased $2.2 million, or 1.4%, in fiscal 2015 compared to fiscal 2014. This increase was primarily due to the acquisition and opening of storesA 10% change in our Technology Brands segment.
Interest Income and Expense
Interest expense of $23.4 million for fiscal 2015 increased $12.7 million from $10.7customer loyalty program redemption rate or a 10% change in our weighted-average retail value per point redeemed at February 2, 2019, in each case, would have affected net earnings by approximately $3.4 million in fiscal 2014 primarily due to the $350.0 million issuance of2018. A 10% change in our gift card breakage rate at February 2, 2019 Senior Notes in September 2014, which is discussed more fully in Note 10, "Debt," to our consolidated financial statements. Interest income of $0.4 million for fiscal 2015, resulting from the investment of excess cash balances, decreased $0.3 million from $0.7would have affected net earnings by approximately $13.9 million in fiscal 2014.2018.
Income TaxGoodwill
Income tax expense was $222.4 million, representing an effective tax rateEstimate Description. Goodwill results from acquisitions and represents the excess purchase price over the net identifiable assets acquired. We are required to evaluate our goodwill for impairment at least annually or whenever indicators of 35.6% inimpairment are present. Our annual test is completed as of the beginning of the fourth fiscal 2015, compared to $215.2 million, representing an effective tax ratequarter, and interim tests are conducted when circumstances indicate the carrying value of 35.4% in fiscal 2014. Refer tothe goodwill may not be recoverable. As of February 2, 2019, our goodwill totaled $363.9 million. See Note 13, "Income Taxes,7, "Goodwill and Intangible Assets," to our consolidated financial statements for the allocation of our goodwill balance by reporting unit. In order to test goodwill for impairment, we compare a reporting unit's carrying amount to its estimated fair value. If the reporting unit’s carrying value exceeds its estimated fair value, then an impairment charge is recorded in the amount of the excess.
Based on the results of our impairment tests performed in fiscal 2018, we recognized goodwill impairment charges totaling $795.6 million, $28.8 million, $66.4 million and $79.9 million for the United States, Canada, Australia and Europe segments, respectively. As of February 2, 2019, the United States is the only remaining segment with goodwill. The impairment charges were primarily the result of a sustained decline in our market capitalization and lower forecasted cash flows. See Note 7, "Goodwill and Intangible Assets" to our consolidated financial statements for additional information.
Judgment and/or Uncertainty. Considerable management judgment is necessary to estimate the fair value of our reporting units. The discounted cash flows analyses utilize a five- to seven-year cash flow projection with a terminal value, which are discounted using a risk-adjusted weighted-average cost of capital. The projected cash flows include numerous assumptions such as, among others, future sales trends, operating margins, store count and capital expenditures, all of which are derived from our long-term financial forecasts. The projected sales trends include estimates related to the growth rate of the digital distribution of new video game software. In addition, we corroborate the aggregate fair value of our reporting units with our market capitalization, which may impact certain assumptions in our discounted cash flows analyses.

Potential Impact if Results Differ. Variations in any of the assumptions used in the discounted cash flow analyses may arrive at different estimated fair values that could result in a material impairment charge. Assuming all other factors unchanged, a 10% decrease in the projected net cash flows in our United States segment would result in additional impairment charges of approximately $50 million. Alternatively, assuming all other factors unchanged, an increase of 250 basis points to the discount rates utilized in the test of our United States segment would result in an additional impairment charge of approximately $10 million. Sustained declines in our stock price and related market capitalization could impact key assumptions and the estimated fair values of our reporting units that could result in material goodwill impairment charges. We can provide no assurance that we will not have impairment charges in future periods as a result of changes in our operating results, our assumptions or in our stock price.
Indefinite-lived Intangible Assets
Estimate Description. Indefinite-lived intangible assets were recorded as a result of acquisitions and primarily consist of the Micromania trade name. As this intangible asset is expected to contribute to cash flows indefinitely, it is not subject to amortization. We assess our indefinite-lived intangible assets for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Our test is completed as of the beginning of the fourth quarter each fiscal year or whenever there are indicators that the indefinite-lived intangible assets may be impaired.
We value our trade names using a relief-from-royalty approach, which assumes the value of the trade name is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the trade name and instead licensed the trade name from another company. As of February 2, 2019, our indefinite-lived intangible assets totaled $8.8 million.
As a result of our fiscal 2018 impairment tests, we recognized an impairment charge of $31.9 million associated with our Micromania trade name. The impairment charge was primarily the result of increases in discount rate assumptions, consistent with those utilized in the valuation of our segments for goodwill impairment testing. See Note 7, "Goodwill and Intangible Assets" to our consolidated financial statements for additional information.
Judgment and/or Uncertainty. In valuing our trade names, we are required to make certain assumptions regarding future cash flow projections to ensure that such projections represent reasonable market participant assumptions, to which an assumed marked-based royalty rate is applied. Additionally, management judgment is necessary in selecting an appropriate discount rate which is reflective of the inherent risk of holding a standalone intangible asset.
Potential Impact if Results Differ. Regarding our Micromania trade name, assuming all other factors unchanged, a 10% decline in sales in each forecast period, including the terminal period, would not result in an additional impairment charge. Alternatively, assuming all other factors unchanged, an increase of 250 basis points to the discount rate utilized in the test of Micromania trade name would not result in an additional impairment charge either. We can provide no assurance that we will not have impairment charges in future periods as a result of changes in our operating results or our assumptions.
Income Taxes
Estimate Description. We account for income taxes utilizing an asset and liability approach, and deferred taxes are determined based on the estimated future tax effect of differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates. As a result of our operations in many foreign countries, our global tax rate is derived from a combination of applicable tax rates in the various jurisdictions in which we operate. We maintain accruals for uncertain tax positions until examination of the tax year is completed by the taxing authority, available review periods expire or additional facts and circumstances cause us to change our assessment of the appropriate accrual amount. Our liability for uncertain tax positions was $17.7 million as of February 2, 2019.
Additionally, a valuation allowance is recorded against a deferred tax asset if it is not more likely than not that the asset will be realized. Several factors are considered in evaluating the realizability of our deferred tax assets, including the remaining years available for carry forward, the tax laws for the applicable jurisdictions, the future profitability of the specific business units, and tax planning strategies. Our valuation allowance was $32.9 million as of February 2, 2019. See Note 8, "Income Taxes" to our consolidated financial statements for further information regarding income taxes.
Operating Earnings and Net Income
The factors described above ledJudgment and/or Uncertainty. Considerable management judgment is necessary to operating earnings of $648.2 million for fiscal 2015, or a 4.8% increase from operating earnings of $618.3 million for fiscal 2014. Additionally, net income was $402.8 million for fiscal 2015, which represented a 2.5% increase from net income of $393.1 million for fiscal 2014. The increase in operating earnings is primarily attributableassess the inherent uncertainties related to the growth in gross margin in our Video Game Brands segments.
Fiscal 2014 Compared to Fiscal 2013
  52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014		 Change
  Dollars in millions Dollars in millions $ %
Statement of Operations Data:        
Net sales $9,296.0
 $9,039.5
 $256.5
 2.8 %
Cost of sales 6,520.1
 6,378.4
 141.7
 2.2
Gross profit 2,775.9
 2,661.1
 114.8
 4.3
Selling, general and administrative expenses 2,001.0
 1,892.4
 108.6
 5.7
Depreciation and amortization 154.4
 166.5
 (12.1) (7.3)
Goodwill impairments —
 10.2
 (10.2) (100.0)
Asset impairments 2.2
 18.5
 (16.3) (88.1)
Operating earnings 618.3
 573.5
 44.8
 7.8
Interest expense, net 10.0
 4.7
 5.3
 112.8
Earnings before income tax expense 608.3
 568.8
 39.5
 6.9
Income tax expense 215.2
 214.6
 0.6
 0.3
Net income $393.1
 $354.2
 $38.9
 11.0 %


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  52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014		 Change
  Dollars in millions Dollars in millions $ %
Net Sales:        
New video game hardware(1)
 $2,028.7
 $1,730.0
 $298.7
 17.3 %
New video game software 3,089.0
 3,480.9
 (391.9) (11.3)
Pre-owned and value video game products 2,389.3
 2,329.8
 59.5
 2.6
Video game accessories 653.6
 560.6
 93.0
 16.6
Digital 216.3
 217.7
 (1.4) (0.6)
Mobile and consumer electronics 518.8
 303.7
 215.1
 70.8
Other(2)
 400.3
 416.8
 (16.5) (4.0)
Total $9,296.0
 $9,039.5
 $256.5
 2.8 %

  52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014		 Change
  Dollars in millions Dollars in millions $ %
Gross Profit:        
New video game hardware(1)
 $196.6
 $176.5
 $20.1
 11.4 %
New video game software 716.9
 805.3
 (88.4) (11.0)
Pre-owned and value video game products 1,146.3
 1,093.9
 52.4
 4.8
Video game accessories 246.1
 220.5
 25.6
 11.6
Digital 152.0
 149.2
 2.8
 1.9
Mobile and consumer electronics 186.7
 65.1
 121.6
 186.8
Other(2)
 131.3
 150.6
 (19.3) (12.8)
Total $2,775.9
 $2,661.1
 $114.8
 4.3 %

(1)
Includes sales of hardware bundles, in which hardware and digital games are generally sold together as a single SKU.
(2)
Other products include revenues from the sales of PC entertainment software, interactive toys and licensed merchandise, strategy guides and revenues from PowerUp Pro loyalty members receiving Game Informer magazine in physical form.
Net Sales
Net sales increased $256.5 million, or 2.8%, in fiscal 2014 compared to fiscal 2013. The increase in net sales during fiscal 2014 was primarily attributable to an increase in comparable store sales of 3.4% compared to fiscal 2013, due to strong sales performance in the current year period associated with the new video game console launchescomplex tax laws, regulations and related video game accessories,taxing authority rulings, as well as to the continued growthexpiration of statutes of limitations in the jurisdictions in which we operate. We base our estimate of an annual effective tax rate at any given point in time on a calculated mix of the Technology Brands segment. These increases were partially offsettax rates applicable to our operations 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 tax rules and regulations. However, complexities in the tax rules and our operations, as well as positions taken publicly by the impacttaxing authorities, may lead us to conclude that accruals for uncertain tax positions are required. Additionally, several factors are considered in evaluating the realizability of foreign exchange rate fluctuations, which hadour deferred tax assets, including the effect of decreasing net sales by $133.9 millionremaining years available for carry forward, the tax laws for the 52 weeks of fiscal 2014 compared toapplicable jurisdictions, the prior year period. Refer to the note to the Selected Financial Data table in "Item 6 - Selected Financial Data" for a discussionfuture profitability of the calculation of comparable store sales.specific business units, and tax planning strategies.
The increase in net sales was due to the following:
New video game hardware sales increased $298.7 million, or 17.3%, for fiscal 2014 compared to fiscal 2013, primarily attributable to an increase in hardware unit sell-through due to the launches of the Microsoft Xbox OnePotential Impact if Results Differ. Our judgments and the Sony PlayStation 4 in November 2013. These increases were partially offset by declines in sales of previous generation hardware.
Pre-owned and value video game product sales increased $59.5 million, or 2.6%, for fiscal 2014 as compared to fiscal 2013, primarily due to trade growth and an increase in pre-owned hardware sales resulting from the release of Microsoft Xbox One and the Sony PlayStation 4 in November 2013.
Video game accessories sales increased $93.0 million, or 16.6%, for fiscal 2014 as compared to fiscal 2013, due to sales of accessories for use with the recently launched consoles.
Mobile and consumer electronics sales increased $215.1 million, or 70.8%, for fiscal 2014 as compared to fiscal 2013, due to the acquisitions of stores within the Technology Brands segment. Sales related to the Technology Brands segment increased $265.8 million for fiscal 2014 compared to the prior year period.

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The increases described above were partially offset by the following:
New video game software sales decreased $391.9 million, or 11.3%, for fiscal 2014 compared to fiscal 2013, primarily due to a decline in prior generation software sales and a weaker lineup of new titles released during fiscal 2014 as compared to fiscal 2013.
Sales of other product categories decreased $16.5 million, or 4.0%, for fiscal 2014 as compared to fiscal 2013, primarily due to a decrease in Game Informer physical subscriptionsestimates concerning uncertain tax positions may change as a result of evaluation of new information, such as the shiftoutcome of tax audits or changes to digital subscriptions, whichor further interpretations of tax laws and regulations. Our judgments and estimates concerning realizability of deferred tax assets could change if any of the evaluation factors change. If such changes take place, there is a risk that our effective tax rate could increase or decrease in any period, impacting our net earnings.
On December 22, 2017, the U.S. government passed the Tax Cuts and Jobs Act, significantly changing income tax law that affects U.S corporations. Key changes included a corporate tax rate reduction from 35 percent to 21 percent effective January 1, 2018, expensing of certain qualified property, significant changes to the U.S international tax system such as a one-time transition tax on accumulated foreign earnings, and how foreign earnings are reflectedsubject to U.S. tax. We are required to recognize the effects of the tax law changes in the digital product category, lower salesperiod of strategy guides and fewer new titles of PC entertainment software released duringenactment, including the current year period. These decreases were partially offset by an increase in the sale of interactive toys during fiscal 2014 as compared to fiscal 2013.
As a percentage of net sales, there was a shift in sales mix from new video game software to new video game hardware during the majority of fiscal 2014 compared to fiscal 2013 due to the releasedetermination of the next-generation consoles in November 2013transition tax and the decline in software sales in fiscal 2014.
Costre-measurement of Sales
Cost of sales increased $141.7 million, or 2.2%, in fiscal 2014 compared to fiscal 2013, primarily as a result of the increase in net sales discussed above and the changes in gross profit discussed below.
Gross Profit
Gross profit increased $114.8 million, or 4.3%, in fiscal 2014 compared to fiscal 2013, and gross profit as a percentage of net sales was 29.9% for fiscal 2014 and 29.4% for fiscal 2013. The gross profit increase was primarily driven by the growth in the mobile and consumer electronics category related to our Technology Brands segment, which increased gross profit by $151.5 million year-over-year.
The net increase in gross profit as a percentage of net sales was due to the following:
Gross profit as a percentage of sales on pre-owned and value video game products increased to 48.0% in fiscal 2014 from 47.0% in fiscal 2013 due to higher promotional activity in the prior year,deferred taxes as well as to re-assess the increase in gross profit percentage that occurs as prior generation video game platforms mature.
Gross profit as a percentagerealizability of sales on digital sales increased to 70.3% in fiscal 2014 from 68.5% in fiscal 2013 dueour deferred tax assets. Subsequent to the growthenactment of Kongregate, our platform for webthe Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and mobile gaming, as well as the conversion of certain digital revenue streams from a full retail price revenue arrangementJobs Act ("SAB 118"), which allows companies to commission revenue, which has the effect of decreasing sales with no impact on gross profit.
Gross profit as a percentage of sales on mobile and consumer electronics revenues increased to 36.0% in fiscal 2014 from 21.4% in fiscal 2013 duerecord provisional amounts related to the acquisition and opening of new stores within the Technology Brands segment.
The increases described above were partially offset by the following:
Gross profit as a percentage of sales on new video game hardware decreased to 9.7% in fiscal 2014 from 10.2% in fiscal 2013. The gross profit percentage decrease was driven by the mix of next generation console sales, which carry lower margins compared to the prior generation.
Gross profit as a percentage of sales on video game accessories decreased to 37.7% in fiscal 2014 from 39.3% in fiscal 2013, due to the mix of next generation accessories sales, which carry lower gross margins relative to the total video game accessories category.
Gross profit as a percentage of sales on other product categories decreased to 32.8% in fiscal 2014 from 36.1% in fiscal 2013, due to a decrease in Game Informer physical subscriptions as a resulteffects of the shiftTax Act during a measurement period not to digital subscriptions, which are reflected in the digital product category.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $108.6 million, or 5.7%, in fiscal 2014 compared to fiscal 2013. The increase was primarily due to the growthextend beyond one year of the Technology Brands segment, which carries higher selling, general and administrative expenses as a percentageenactment date. We have since completed our analysis of sales than the other segments. Technology Brands contributed $111.5income tax effects of the Tax Act. Our provisional estimates were reduced by $22.7 million toduring the increase for fiscal 2014 compared to fiscal 2013. This increase was offset in part by the impact of foreign exchange rate fluctuations, which had the effect of decreasing selling, general and administrative expenses by $24.3 million for the 52 weeks of fiscal 2014 compared to the prior year period. Included in selling, general and administrative expenses are $21.5 million and $19.4 million in stock-based compensation expense for fiscal 2014 and fiscal 2013, respectively.

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Depreciation and Amortization
Depreciation and amortization expense decreased $12.1 million, or 7.3%, in fiscal 2014 compared to fiscal 2013. This decrease was primarily due to a decrease in capital initiatives associated withmeasurement period defined under SAB 118, based upon our Video Game Brands segments.
Asset Impairments
During fiscal 2014, we recorded a $2.2 million impairment, comprised of $1.9 million of property and equipment impairments and $0.3 million of intangible asset impairments. During fiscal 2013, we recorded a $28.7 million impairment, comprised of a $10.2 million goodwill impairment, a $7.4 million impairment of technology assets, an impairment of $2.1 million of intangible assets as a resultanalysis of our decision to abandon Spawn Labsdata and an impairment of $9.0 million of propertytax positions along with the new guidance from regulators and equipment. Refer to Note 2, "Asset Impairments," and Note 9, "Goodwill and Intangible Assets," to the consolidated financial statements in this Form 10-K for further information associated with these impairments.
Interest Income and Expense
Interest income of $0.7 million for fiscal 2014, resulting from the investment of excess cash balances, decreased $0.2 million from $0.9 million in fiscal 2013. Interest expense of $10.7 million for fiscal 2014 increased $5.1 million from $5.6 million in fiscal 2013 primarily due to higher borrowings, including the $350.0 million issuanceinterpretations of the 2019 Senior Notes in September 2014, which is discussed more fully inlaw.
RECENT ACCOUNTING STANDARDS AND PRONOUNCEMENTS
See Note 10, "Debt," to our consolidated financial statements.
Income Tax
Income tax expense was $215.2 million, representing an effective tax rate1, "Nature of 35.4% in fiscal 2014, compared to $214.6 million, representing an effective tax rateOperations and Summary of 37.7% in fiscal 2013. The difference in the effective income tax rate between fiscal 2014 and fiscal 2013 was primarily due to the recognition of tax benefits related to losses in subsidiary investments in fiscal 2014 for which no benefit had previously been recorded. These benefits were partially offset by the recording of valuation allowances against (1) certain deferred tax assets in the European segment and (2) credits in the United States segment. Without the effect of the tax loss benefits and the recording of the valuation allowance, the effective income tax rate in fiscal 2014 would have been 36.7%. Refer to Note 13, "Income Taxes,Significant Accounting Policies," to our consolidated financial statements for additional information regarding income taxes.recent accounting standards and pronouncements.
Operating Earnings and Net Income
The factors described above led to operating earnings of $618.3 million for fiscal 2014, or a 7.8% increase from operating earnings of $573.5 million for fiscal 2013. Additionally, net income was $393.1 million for fiscal 2014, which represented an 11.0% increase from net income of $354.2 million for fiscal 2013. The increase in operating earnings is primarily attributable to the growth of our Technology Brands segment, which contributed operating earnings growth of $33.1 million in fiscal 2014 compared to fiscal 2013. Operating earnings in the Video Game Brands segments increased due to the launch of the new consoles, which has driven year-over-year growth in our new video game hardware and video game accessories, as well as continued growth in our pre-owned and value category.

Segment Performance
We operate our business in the following operating segments, which are also our reportable segments: Video Game Brands, which consists of four segments in the United States, Canada, Australia and Europe, and Technology Brands. We identified these segments based on a combination of geographic areas, the methods with which we analyze performance, the way in which our sales and profits are derived and how we divide management responsibility. Our sales and profits are driven through our physical stores which are highly integrated with our e-commerce, digital and mobile businesses. Due to this integration, our physical stores are the basis for our segment reporting. Each of the Video Game Brands segments consists primarily of retail operations, with all stores engaged in the sale of new and pre-owned video game systems, software and accessories (which we refer to as video game products), new and pre-owned mobile devices and related accessories. These products are substantially the same regardless of geographic location, with the primary differences in merchandise carried being the timing of the release of new products or technologies in the various segments.
With our presence in international markets, we have operations in several foreign currencies, including the Euro, Australian dollar, New Zealand dollar, Canadian dollar, British pound, Swiss franc, Danish kroner, Swedish krona, and the Norwegian kroner.

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Operating earnings (loss) by operating segment, defined as income from operations before intercompany royalty fees, net interest expense and income taxes, and net sales by reportable unit in U.S. dollars were as follows (in millions):
As of and for the Fiscal Year Ended January 30, 2016 
United
States
 Canada Australia Europe Technology Brands Consolidated
Net sales $6,435.1
 $446.6
 $591.4
 $1,356.7
 $534.0
 $9,363.8
Segment operating earnings $504.3
 $29.4
 $38.7
 $48.8
 $27.0
 $648.2
Segment Operating data:            
Store count 4,013
 325
 444
 1,299
 1,036
 7,117
Comparable store sales(1)
 4.8% 9.8% 7.5% (0.8)% n/a
 4.3%
As of and for the Fiscal Year Ended January 31, 2015 
United
States
 Canada Australia Europe Technology Brands Consolidated
Net sales $6,193.5
 $476.4
 $644.7
 $1,652.8
 $328.6
 $9,296.0
Segment operating earnings $483.2
 $28.3
 $38.0
 $35.9
 $32.9
 $618.3
Segment Operating data:            
Store count 4,138
 331
 421
 1,316
 484
 6,690
Comparable store sales(1)
 2.5% 9.3% 10.6% 2.3% n/a
 3.4%
As of and for the Fiscal Year Ended February 1, 2014 
United
States
 Canada Australia Europe Technology Brands Consolidated
Net sales $6,160.4
 $468.8
 $613.7
 $1,733.8
 $62.8
 $9,039.5
Segment operating earnings (loss) $465.3
 $26.6
 $37.5
 $44.3
 $(0.2) $573.5
Segment Operating data:            
Store count 4,249
 335
 418
 1,455
 218
 6,675
Comparable store sales(1)
 3.0% 5.7% 12.6% 3.2% n/a
 3.8%
___________________
(1)
Our Technology Brands stores are excluded from the calculation of comparable store sales. Refer to the note to the Selected Financial Data table in "Item 6 — Selected Financial Data" for a discussion of the calculation of comparable store sales.
Fiscal 2015 Compared to Fiscal 2014
Video Game Brands
United States
Segment results for Video Game Brands in the United States include retail GameStop operations in 50 states, the District of Columbia, Puerto Rico and Guam, the electronic commerce websites www.gamestop.com and www.thinkgeek.com, Game Informer magazine and Kongregate, our leading platform for web and mobile gaming. Net sales for fiscal 2015 increased $241.6 million, or 3.9%, compared to fiscal 2014, primarily due to the increase in comparable store sales of 4.8%. This increase in comparable store sales was driven by the increase in sales of collectibles, video game accessories, pre-owned and value video game products and next generation hardware sales in the current year period as compared to the prior year. Operating earnings for fiscal 2015 increased $21.1 million, or 4.4%, compared to fiscal 2014, driven primarily by the current year increase in net sales, increased margins from our collectibles business and our ability to effectively leverage the increase in net sales relative to the selling, general and administrative expenses.
Canada
Segment results for Canada include retail operations in Canada and an e-commerce site. Net sales in the Canadian segment for fiscal 2015 decreased $29.8 million, or 6.3%, compared to fiscal 2014, primarily due to the impact of foreign exchange rate fluctuations, which had the effect of decreasing net sales by $74.6 million in fiscal 2015 compared to the prior year period. Comparable store sales for fiscal 2015 increased 9.8%, driven by strong sales of next generation hardware and software as well as collectibles. Operating earnings for fiscal 2015 increased $1.1 million, or 3.9%, compared to fiscal 2014, due to the increase in comparable store sales, partially offset by the impact of foreign exchange rate fluctuations which had the effect of decreasing operating earnings by $5.3 million.

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Australia
Segment results for Australia include retail operations and e-commerce sites in Australia and New Zealand. Net sales in the Australian segment for fiscal 2015 decreased $53.3 million, or 8.3%, compared to fiscal 2014, primarily due to the impact of foreign exchange rate fluctuations, which had the effect of decreasing net sales by $117.3 million for fiscal 2015 compared to the prior year period. Comparable store sales for fiscal 2015 increased 7.5%, driven by strong sales of next generation hardware, pre-owned products, video game accessories and collectibles. Operating earnings for fiscal 2015 increased $0.7 million compared to fiscal 2014. Excluding the impact of foreign exchange rate fluctuations, operating earnings increased $7.3 million primarily due to the comparable store sales increase.
Europe
Segment results for Europe include retail operations in 10 European countries and e-commerce operations in five countries. Net sales in the European segment for fiscal 2015 decreased $296.1 million, or 17.9%, compared to fiscal 2014, primarily due to the impact of foreign exchange rate fluctuations, which had the effect of decreasing net sales by $238.3 million for fiscal 2015 compared to the prior year period, and a decrease in comparable store sales of 0.8%. Additionally, the exit of our Spain operations contributed to a $34.8 million decrease in net sales year-over-year. Operating earnings for fiscal 2015 increased $12.9 million, or 35.9%, compared to fiscal 2014, driven primarily by the pre-tax loss of $14.8 million in fiscal 2014 related to the exit of our Spain operations. Foreign exchange rate fluctuations also had the effect of decreasing operating earnings by $3.9 million in the current year period.
Technology Brands
Results for the Technology Brands segment include our Spring Mobile managed AT&T and Cricket branded stores and our Simply Mac business. Net sales for fiscal 2015 increased $205.4 million, or 62.5%, compared to fiscal 2014 primarily due to our continued acquisition activity and growth in our Technology Brands store count. Operating earnings for the 52 weeks ended January 30, 2016 decreased $5.9 million, or 17.9%, compared to the prior year period, primarily due to store openings and conversions taking longer than anticipated to open as well as our expansion and related investments in selling, general and administrative expenses to prepare for the growth of additional stores.
Fiscal 2014 Compared to Fiscal 2013
Video Game Brands
United States
Segment results for Video Game Brands in the United States include retail GameStop operations in 50 states, the District of Columbia, Puerto Rico and Guam, the electronic commerce website www.gamestop.com, Game Informer magazine and Kongregate, our leading platform for web and mobile gaming. Net sales for fiscal 2014 increased $33.1 million, or 0.5%, compared to fiscal 2013, primarily due to the increase in comparable store sales of 2.5%. This increase in comparable store sales was driven by the launch of the new consoles in November 2013. Operating earnings for fiscal 2014 increased $17.9 million, or 3.8%, compared to fiscal 2013, driven primarily by the current year increase in net sales and our ability to effectively leverage the increase in net sales relative to the selling, general and administrative expenses.
Canada
Segment results for Canada include retail operations in Canada and an e-commerce site. Net sales in the Canadian segment for fiscal 2014 increased $7.6 million, or 1.6%, compared to fiscal 2013, primarily due to the increase in comparable store sales of 9.3%. This increase in comparable store sales was driven by the launch of the new consoles in November 2013, as well as an increase in pre-owned sales. The increase in net sales was offset in part by the impact of foreign exchange rate fluctuations, which had the effect of decreasing net sales by $35.7 million in fiscal 2014 compared to the prior year period. Operating earnings for fiscal 2014 increased $1.7 million, or 6.4%, compared to fiscal 2013, driven primarily by the current year increase in net sales.
Australia
Segment results for Australia include retail operations and e-commerce sites in Australia and New Zealand. Net sales in the Australian segment for fiscal 2014 increased $31.0 million, or 5.1%, compared to fiscal 2013, primarily due to the increase in comparable store sales of 10.6%. This increase in comparable store sales was driven by the launch of the new consoles in November 2013, as well as an increase in pre-owned sales. The increase in net sales was offset in part by the impact of foreign exchange rate fluctuations, which had the effect of decreasing net sales by $39.3 million for the 52 weeks of fiscal 2014 compared to the prior year period. Operating earnings for fiscal 2014 were relatively flat compared to fiscal 2013, despite the impact of foreign exchange

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rate fluctuations, which had the effect of decreasing operating earnings by $2.6 million in the current year period.
Europe
Segment results for Europe include retail operations in 10 European countries and e-commerce operations in five countries. Net sales in the European segment for fiscal 2014 decreased $81.0 million, or 4.7%, compared to fiscal 2013, primarily due to the impact of foreign exchange rate fluctuations, which had the effect of decreasing net sales by $58.9 million for the 52 weeks of fiscal 2014 compared to the prior year period. Additionally, the exit of our Spain operations contributed to a $40.1 million decrease in net sales year-over-year. These decreases were offset in part by an increase in comparable store sales of 2.3%. Operating earnings for fiscal 2014 decreased $8.4 million, or 19.0%, compared to fiscal 2013, driven primarily by the pre-tax loss of $14.8 million in fiscal 2014 related to the exit of our Spain operations, as well as the impact of foreign exchange rate fluctuations, which had the effect of decreasing operating earnings by $5.2 million in the current year period.
Technology Brands
Segment results for the Technology Brands segment include our Spring Mobile managed AT&T and Cricket Wireless branded stores and our Simply Mac business. For fiscal 2014, Technology Brands net sales were $328.6 million, with operating earnings of $32.9 million. For fiscal 2013, Technology Brands net sales were $62.8 million, with an operating loss of $0.2 million. The increase in net sales and operating earnings from fiscal 2013 to fiscal 2014 was attributable to our continued investment and growth in our Technology Brands businesses.

Liquidity and Capital Resources
Overview
Based on our current operating plans, we believe that available cash balances, cash generated from our operating activities, funds available under our $400.0 million asset-based revolving credit facility (the “Revolver”) and the proceeds from our recently issued 2021 Senior Notes together will provide sufficient liquidity to fund our operations, store openings and remodeling activities and corporate capital allocation programs, including acquisitions, share repurchases and the payment of dividends declared by the Board of Directors, for at least the next 12 months.
As of January 30, 2016, $291.9 million of our total cash on hand of $450.4 million was attributable to our foreign operations. Although we may, from time to time, evaluate strategies and alternatives with respect to the cash attributable to our foreign operations, we currently anticipate that this cash will remain in those foreign jurisdictions and it therefore may not be available for immediate use; however, we believe that our existing sources of liquidity, as described more fully above, will enable us to meet our cash requirements in the next twelve months.
As of January 30, 2016, we had total cash on hand of $450.4 million and an additional $391.6 million of available borrowing capacity under the Revolver. As we continue to pursue acquisitions, divestitures and other strategic transactions to expand and grow our business, while also enhancing shareholder value through share repurchases and dividend payments, we regularly monitor capital market conditions and may raise additional funds through borrowings or public or private sales of debt or equity securities. The amount, nature and timing of any borrowings or sales of debt or equity securities will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed by our current credit arrangements; and overall market conditions.
In March 2016, we issued $475.0 million aggregate principal amount of the 2021 Senior Notes, our unsecured 6.75% senior notes due March 15, 2021. The 2021 Senior Notes bear interest at the rate of 6.75% per annum with interest payable semi-annually in arrears on March 15 and September 15 of each year beginning on September 15, 2016. The 2021 Senior Notes were sold in a private placement and will not be registered under the U.S. Securities Act of 1933. The net proceeds from the offering will be used for general corporate purposes, which will likely include acquisitions and, potentially, dividends and stock buybacks.
Cash Flows
During fiscal 2015, cash provided by operations was $656.8 million, compared to cash provided by operations of $480.5 million in fiscal 2014. The increase in cash provided by operations of $176.3 million from fiscal 2014 to fiscal 2015 was primarily due to an increase in cash provided by working capital of $167.7 million, due primarily to the timing of payments for income taxes as well as accounts payable and accrued liabilities when compared to fiscal 2014.
During fiscal 2014, cash provided by operations was $480.5 million, compared to cash provided by operations of $762.7 million in fiscal 2013. The decrease in cash provided by operations of $282.2 million from fiscal 2013 to fiscal 2014 was primarily due to a decrease in cash provided by working capital of $278.3 million, due primarily to the change in the timing of payments for accounts payable and accrued liabilities as well as income taxes in fiscal 2014.

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Cash used in investing activities was $444.6 million in fiscal 2015, $235.9 million in fiscal 2014 and $207.5 million in fiscal 2013. During fiscal 2015, we used $173.2 million for capital expenditures primarily to support the growth of our Technology Brands businesses, to invest in information systems and digital initiatives, and to open 54 Video Game Brands stores and 31 collectibles stores in the U.S. and internationally. Additionally, we used $267.5 million of cash for acquisitions within the U.S. Video Game Brands and Technology Brands segments. During fiscal 2014, we used $159.6 million for capital expenditures primarily to support the growth of our Technology Brands businesses, to invest in information systems and digital initiatives, and to open 49 Video Game Brands stores in the U.S. and internationally. Additionally, we used $89.7 million of cash for acquisitions of stores within the Technology Brands segment. During fiscal 2013, we used $125.6 million for capital expenditures primarily to open 109 Video Game Brands stores in the U.S. and internationally and to invest in information systems and digital initiatives. During fiscal 2013, we also used $77.4 million of cash primarily for the acquisition of Spring Mobile and Simply Mac.
Cash used in financing activities was $346.2 million in fiscal 2015, $131.2 million in fiscal 2014 and $350.6 million in fiscal 2013. The cash flows used in financing activities in fiscal 2015 were primarily for the repurchase of $194.3 million of treasury shares and the payment of dividends on our Class A Common Stock of $154.1 million. The cash flows used in financing activities in fiscal 2014 were primarily for the repurchase of $331.1 million of treasury shares and the payment of dividends on our Class A Common Stock of $148.8 million, offset in part by the $350.0 million issuance of 2019 Senior Notes in September 2014. The cash flows used in financing activities in fiscal 2013 were primarily for the repurchase of $258.3 million of treasury shares and the payment of dividends on our Class A Common Stock of $130.9 million. The cash flows used in financing activities in fiscal 2015 were not impacted by cash provided by the issuance of shares associated with stock option exercises. In fiscal 2014 and fiscal 2013, the impact was $0.7 million and $58.0 million, respectively.
Sources of Liquidity
We utilize cash generated from operations and have funds available to us under our Revolver, as well as the proceeds from the September 24, 2014 issuance of our 2019 Senior Notes, to cover seasonal fluctuations in cash flows and to support our various growth initiatives. Our cash and cash equivalents are carried at cost and consist primarily of time deposits with commercial banks.
Issuance of 5.50% Senior Notes due 2019. On September 24, 2014, we issued $350.0 million aggregate principal amount of the 2019 Senior Notes, our unsecured 5.50% Senior Notes due October 1, 2019. The 2019 Senior Notes bear interest at the rate of 5.50% per annum with interest payable semi-annually in arrears on April 1 and October 1 of each year beginning on April 1, 2015. The 2019 Senior Notes were sold in a private placement and will not be registered under the U.S. Securities Act of 1933. The 2019 Senior Notes were offered in the U.S. to “qualified institutional buyers” pursuant to the exemption from registration under Rule 144A of the Securities Act and in exempted offshore transactions pursuant to Regulation S under the Securities Act.
The 2019 Senior Notes were issued pursuant to an indenture dated as of September 24, 2014, by and among the Company, certain subsidiary guarantors named therein and U.S. Bank National Association, as trustee and will mature on October 1, 2019. The net proceeds from the offering of $343.7 million were used to pay down the remaining outstanding balance of our revolving credit facility, which is described more fully below, and for general corporate purposes, such as acquisitions, dividends and stock buybacks. The outstanding balance of the 2019 Senior Notes at January 30, 2016 was $350.0 million.

The indenture governing the 2019 Senior Notes does not contain financial covenants but does contain covenants which place certain restrictions on us and our subsidiaries, including limitations on asset sales, additional liens, investments, stock repurchases, the incurrence of additional debt and the repurchase of debt that is junior to the 2019 Senior Notes. In addition, the indenture restricts payments of dividends to stockholders (other than dividends payable in shares of capital stock) if one of the following conditions exist: (i) an event of default has occurred, (ii) we could not incur additional debt under the general debt covenant of the indenture or (iii) the sum of the proposed dividend and all other dividends and other restricted payments made under the indenture from the date of the indenture exceeds the sum of 50% of consolidated net income plus 100% of net proceeds from capital stock sales and other amounts set forth in and determined as provided in the indenture. These restrictions are subject to exceptions and qualifications, including that we can pay up to $175 million in dividends to stockholders in each fiscal year and we can pay dividends and make other restricted payments in an unlimited amount if our leverage ratio on a pro forma basis after giving effect to the dividend payment and other restricted payments would be less than or equal to 1.0:1.0.
The indenture contains customary events of default, including payment defaults, breaches of covenants, failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If an event of default occurs and is continuing, the principal amount of the 2019 Senior Notes, plus accrued and unpaid interest, if any, may be declared immediately due and payable. These amounts automatically become due and payable if an event of default relating to certain events of bankruptcy, insolvency or reorganization occurs.
Revolving Credit Facility. On January 4, 2011, we entered into a $400 million credit agreement, which we amended and restated on March 25, 2014 and further amended on September 15, 2014 (the “Revolver”). The Revolver is a five-year, asset-based facility that is secured by substantially all of our assets and the assets of our domestic subsidiaries. Availability under the Revolver is subject to a monthly borrowing base calculation. The Revolver includes a $50 million letter of credit sublimit. Prior to the March 2014 amendment, the Revolver was scheduled to mature in January 2016. The amendments extended the maturity

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date to March 25, 2019; increased the expansion feature under the Revolver from $150 million to $200 million, subject to certain conditions; and revised certain other terms, including a reduction of the fee we are required to pay on the unused portion of the total commitment amount. We believe the extension of the maturity date of the Revolver to March 2019 helps to limit our exposure to potential tightening or other adverse changes in the credit markets. The September 15, 2014 amendment amended certain covenants to permit the issuance of the 2019 Senior Notes.
Borrowing availability under the Revolver is limited to a borrowing base which allows us to borrow up to 90% of the appraisal value of the inventory, in each case plus 90% of eligible credit card receivables, net of certain reserves. The borrowing base provides for borrowing up to 92.5% of the appraisal value during the fiscal months of August through October. Letters of credit reduce the amount available to borrow under the Revolver by an amount equal to the face value of the letters of credit. Our ability to pay cash dividends, redeem options and repurchase shares is generally permitted, except under certain circumstances, including if either 1) excess availability under the Revolver is less than 30%, or is projected to be within 12 months after such payment or 2) excess availability under the Revolver is less than 15%, or is projected to be within 12 months after such payment, and the fixed charge coverage ratio, as calculated on a pro-forma basis for the prior 12 months is 1.1:1.0 or less. In the event that excess availability under the Revolver is at any time less than the greater of (1) $30 million or (2) 10% of the lesser of the total commitment or the borrowing base, we will be subject to a fixed charge coverage ratio covenant of 1.0:1.0.
The Revolver places certain restrictions on us and our subsidiaries, including limitations on asset sales, additional liens, investments, loans, guarantees, acquisitions and the incurrence of additional indebtedness. Absent consent from our lenders, we may not incur more than $1 billion of senior secured debt and $750 million of additional unsecured indebtedness to be limited to $250 million in general unsecured obligations and $500 million in unsecured obligations to finance acquisitions valued at $500 million or more.
The per annum interest rate under the Revolver is variable and is calculated by applying a margin (1) for prime rate loans of 0.25% to 0.75% above the highest of (a) the prime rate of the administrative agent, (b) the federal funds effective rate plus 0.50% or (c) 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 1.25% to 1.75% above the LIBO rate. The applicable margin is determined quarterly as a function of our average daily excess availability under the facility. In addition, we are required to pay a commitment fee of 0.25% for any unused portion of the total commitment under the Revolver. As of January 30, 2016, the applicable margin was 0.25% for prime rate loans and 1.25% for LIBO rate loans.
The Revolver provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, failure to comply with covenants, any material representation or warranty made by us or the borrowers proving to be false in any material respect, certain bankruptcy, insolvency or receivership events affecting us or our subsidiaries, defaults relating to certain other indebtedness, imposition of certain judgments and mergers or the liquidation of the Company or certain of its subsidiaries. During fiscal 2015, we cumulatively borrowed and subsequently repaid $463.0 million under the Revolver. Our maximum borrowings outstanding during fiscal 2015 were $123.0 million. During fiscal 2014 and fiscal 2013, we borrowed and repaid $626 million and $130 million, respectively, under the Revolver. Average borrowings under the Revolver for fiscal 2015 were $23.3 million. Our average interest rate on those outstanding borrowings for fiscal 2015 was 3.5%. As of January 30, 2016, total availability under the Revolver was $391.6 million, with no outstanding borrowings and outstanding standby letters of credit of $8.4 million. We are currently in compliance with the requirements of the Revolver.
Luxembourg Line of Credit. In September 2007, our Luxembourg subsidiary entered into a discretionary $20 million Uncommitted Line of Credit (the “Line of Credit”) with Bank of America. There is no term associated with the Line of Credit and Bank of America may withdraw the facility at any time without notice. The Line of Credit is available to our foreign subsidiaries for use primarily as a bank overdraft facility for short-term liquidity needs and for the issuance of bank guarantees and letters of credit to support operations. As of January 30, 2016, there were no cash overdrafts outstanding under the Line of Credit and bank guarantees outstanding totaled $1.9 million.
Issuance of 6.75% Senior Notes due 2021. In March 2016, we issued $475.0 million aggregate principal amount of the 2021 Senior Notes, our unsecured 6.75% senior notes due March 15, 2021. The 2021 Senior Notes bear interest at the rate of 6.75% per annum with interest payable semi-annually in arrears on March 15 and September 15 of each year beginning on September 15, 2016. The 2021 Senior Notes were sold in a private placement and will not be registered under the U.S. Securities Act of 1933. The net proceeds from the offering will be used for general corporate purposes, which will likely include acquisitions, and, potentially, dividends and stock buybacks.
The 2021 Senior Notes have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements of the Securities Act or the securities laws of any other jurisdiction. Accordingly, the 2021 Senior Notes are expected to be eligible for resale in the United States only to qualified institutional buyers and outside the United States to non-U.S. persons in compliance with Regulation S.

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The indenture governing the 2021 Senior Notes does not contain financial covenants but does contain covenants which place certain restrictions on us and our subsidiaries, including limitations on asset sales, additional liens, investments, stock repurchases, the incurrence of additional debt and the repurchase of debt that is junior to the 2021 Senior Notes. In addition, the indenture restricts payments of dividends to stockholders (other than dividends payable in shares of capital stock) if one of the following conditions exist: (i) an event of default has occurred, (ii) we could not incur additional debt under the general debt covenant of the indenture or (iii) the sum of the proposed dividend and all other dividends and other restricted payments made under the indenture from the date of the indenture governing the 2021 Senior Notes exceeds the sum of 50% of consolidated net income plus 100% of net proceeds from capital stock sales and other amounts set forth in and determined as provided in the indenture. These restrictions are subject to exceptions and qualifications, including that we can pay up to $175 million in dividends to stockholders in each fiscal year and we can pay dividends and make other restricted payments in an unlimited amount if our leverage ratio on a pro forma basis after giving effect to the dividend payment and other restricted payments would be less than or equal to 1.0:1.0.
The indenture contains customary events of default, including payment defaults, breaches of covenants, failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If an event of default occurs and is continuing, the principal amount of the 2021 Senior Notes, plus accrued and unpaid interest, if any, may be declared immediately due and payable. These amounts automatically become due and payable if an event of default relating to certain events of bankruptcy, insolvency or reorganization occurs.
Uses of Capital
Our future capital requirements will depend upon the timing and extent of our ongoing investments in our Technology Brands businesses, our other strategic initiatives, and the number of new stores we open and the timing of those openings within a given fiscal year. We opened 85 Video Game Brands stores and opened or acquired 568 Technology Brands stores in fiscal 2015, and we expect to open 140 stores in fiscal 2016, as well as make significant investments in our Technology Brands businesses through acquisitions. Capital expenditures for fiscal 2016 are projected to be approximately $160-170 million, to be used primarily to fund continued growth of our Technology Brands businesses, distribution and information systems and other digital initiatives in support of our operations and new store openings and store remodels.
We used cash to expand our operations through acquisitions. During fiscal 2015, fiscal 2014 and fiscal 2013, we used $267.5 million, $89.7 million and $77.4 million, respectively, for acquisitions, primarily related to the growth of our Technology Brands business and ThinkGeek.
Since January 2010, our Board of Directors has authorized several share repurchase programs authorizing our management to repurchase our Class A Common Stock. Since the beginning of fiscal 2011, each individual authorization has been for $500 million. Our general practice is to seek Board of Directors’ approval for a new authorization before the existing one is fully used to ensure that we are always able to repurchase shares. For fiscal 2013, we repurchased 6.3 million shares for an average price per share of $41.12 and a total of $258.3 million. For fiscal 2014, we repurchased 8.4 million shares for an average price per share of $39.50 and a total of $333.4 million. For fiscal 2015, we repurchased 5.2 million shares for an average price per share of $38.68 and a total of $202.0 million. We have $245.3 million remaining under our latest authorization from November 2014.
We paid a total of $1.10 per share in cash dividends in fiscal 2013 and a total of $1.32 per share in fiscal 2014. In fiscal 2015, we paid dividends of $1.44 per share of Class A Common Stock, totaling $154.1 million for the year. On February 23, 2016, our Board of Directors authorized an increase in our annual cash dividend from $1.44 to $1.48 per share of Class A Common Stock. Future dividends will be subject to approval by our Board of Directors. Our payment of dividends is and will continue to be restricted by or subject to, among other limitations, applicable provisions of federal and state laws, our earnings and various business considerations, including our financial condition, results of operations, cash flow, the level of our capital expenditures, our future business prospects, our status as a holding company and such other matters that our Board of Directors deems relevant. In addition, the terms of the senior credit facility and of the indentures governing our Senior Notes restrict our ability to pay dividends under certain circumstances as stated above.


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Contractual Obligations
The following table sets forth our contractual obligations as of January 30, 2016:
  Payments Due by Period
Contractual Obligations Total 
Less Than
1 Year
 1-3 Years 3-5 Years 
More Than
5 Years
  (In millions)
Operating Leases $1,067.8
 $336.1
 $429.1
 $187.9
 $114.7
Purchase Obligations(1)
 630.9
 630.1
 0.8
 —
 —
2019 Senior Notes 350.0
 —
 —
 350.0
 —
Interest payments on 2019 Senior Notes 77.1
 19.3
 38.5
 19.3
 —
Total(2)
 $2,125.8
 $985.5
 $468.4
 $557.2
 $114.7
___________________
(1)
Purchase obligations represent outstanding purchase orders for merchandise from vendors. These purchase orders are generally cancelable until shipment of the products.
(2)
As of January 30, 2016, we had $30.0 million of income tax liability related to unrecognized tax benefits in other long-term liabilities in our consolidated balance sheet. At the time of this filing, the settlement period for the noncurrent portion of our income tax liability (and the timing of any related payments) cannot be reasonably determined and therefore these liabilities are excluded from the table above. In addition, certain payments related to unrecognized tax benefits would be partially offset by reductions in payments in other jurisdictions. See Note 13, "Income Taxes," to our consolidated financial statements for further information regarding our uncertain tax positions.
We lease retail stores, warehouse facilities, office space and equipment. These are generally leased under noncancelable agreements that expire at various dates through 2034 with various renewal options for additional periods. The agreements, which have been classified as operating leases, generally provide for minimum and, in some cases, percentage rentals and require us to pay all insurance, taxes and other maintenance costs. Percentage rentals are based on sales performance in excess of specified minimums at various stores.
As of January 30, 2016, we had standby letters of credit outstanding in the amount of $8.4 million and had bank guarantees outstanding in the amount of $15.7 million, $12.6 million of which are cash collateralized.

Recent Accounting Standards and Pronouncements
In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-08, Revenue from Contracts with Customers. The standard addresses the implementation guidance on principal versus agent considerations in the new revenue recognition standard. The ASU clarifies how an entity should identify the unit of accounting (i.e. the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The ASU is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2017, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. The standard specifies how prepaid stored-value product liabilities should be derecognized, thereby eliminating the current and potential future diversity in practice. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases. The standard requires a lessee to recognize a liability to make lease payments and a right-of-use asset representing a right to use the underlying asset for the lease term on the balance sheet. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. The standard amends the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will now be required to classify all deferred tax assets and liabilities as noncurrent. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption permitted. The Company early adopted this standard during the fourth quarter of fiscal 2015, utilizing prospective application as permitted. As such, certain prior period amounts have not been retrospectively adjusted to conform to the current presentation.

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In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. Under this standard, an acquirer in a business combination must recognize measurement-period adjustments during the period in which the acquirer determines the amounts, including the effect on earnings of any amounts the acquirer would have recorded in previous periods if the accounting had been completed at the acquisition date, as opposed to retrospectively. This guidance is effective for fiscal years beginning after December 15, 2015, with early adoption permitted. We do not anticipate that adoption of this standard will have a material impact to our consolidated financial statements.
In August 2015, the FASB issued ASU 2015-15, Interest - Imputation of Interest. The ASU is effective immediately and clarifies that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We do not anticipate that adoption of this standard will have a material impact to our consolidated financial statements.
In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. This standard changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This standard is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. We are currently evaluating the impact that adoption of this standard will have on our consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. This standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for interim and annual reporting periods beginning after December 15, 2015, with early application permitted. This standard will be applied retrospectively, and we do not expect the adoption of this standard to materially impact our consolidated financial statements.
In February 2015 the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which is effective for annual reporting periods beginning on or after December 15, 2015, with early adoption permitted. The standard amends both the variable interest entity and voting interest entity consolidation models and requires companies to reassess whether certain entities should be consolidated. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In May 2014, as part of its ongoing efforts to assist in the convergence of U.S. GAAP and International Financial Reporting Standards (“IFRS”), the FASB issued ASU 2014-09 related to revenue recognition. The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The ASU provides alternative methods of initial adoption and is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. In August 2015, the FASB issued ASU 2015-14 which defers the effective date of ASU 2014-09 one year making it effective for annual reporting periods beginning on or after December 15, 2017 while also providing for early adoption as of the original effective date. We anticipate that the standard will affect the way that we recognize gift card breakage and liabilities for our customer incentives. We are currently continuing to evaluate the impact that this standard will have on our consolidated financial statements as well as the appropriate method of adoption.
In April 2014, the FASB issued ASU 2014-08 related to reporting discontinued operations and disclosures of disposals of components of an entity. Specifically, the ASU amends the definition of a discontinued operation, expands disclosure requirements for transactions that meet the definition of a discontinued operation and requires entities to disclose additional information about individually significant components that are disposed of or held for sale and do not qualify as discontinued operations. Additionally, entities will be required to reclassify assets and liabilities of a discontinued operation for all comparative periods presented in the statement of financial position and to separately present certain information related to the operating and investing cash flows of the discontinued operation, for all comparative periods, in the statement of cash flows. The ASU became effective for us beginning in the first quarter of our fiscal year ending January 30, 2016 and will be adopted on a prospective basis for all disposals (except disposals classified as held for sale prior to the adoption date) or components initially classified as held for sale in periods beginning on or after the adoption date, with early adoption permitted. The implementation of this standard will not have a material impact on our consolidated financial statements.

ItemITEM 7A.Quantitative and Qualitative Disclosures About Market RiskQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk due to foreign currency and interest rate fluctuations, each as described more fully below.
Foreign Currency Risk
We use forward exchange contracts, foreign currency options and cross-currency swaps (together, the “foreign currency contracts”) to manage currency risk primarily related to intercompany loans denominated in non-functional currencies and certain foreign currency assets and liabilities. The foreign currency contracts are not designated as hedges and, therefore, changes in the fair values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the re-measurement of related intercompany loans and foreign currency assets and liabilities. For the fiscal year ended January 30, 2016,February 2, 2019, we recognized a $5.2$9.6 million lossgain in selling, general and administrative expenses related to derivative instruments. The aggregate fair value of the foreign currency contracts as of January 30, 2016February 2, 2019 was a net assetliability of $7.9$0.2 million as measured by observable inputs obtained from market news reporting services, such as Bloomberg and The Wall Street Journal, and industry-standard models that consider various assumptions, including quoted forward prices, time value, volatility factors, and contractual prices for the underlying instruments, as well as other relevant economic measures. A hypothetical strengthening or weakening of 10% in the foreign exchange rates underlying the foreign currency contracts from the market rate as of January 30, 2016February 2, 2019 would result in a gain of $5.9 million or a loss of $4.8 million in value of the forwards, options and swaps of $12.0 million.swaps.
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. We manage 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.
Interest Rate Risk
Our Revolver’s per annum interest rate is variable and is based on one of (i) the U.S. prime rate, (ii) the LIBO rate or (iii) the U.S. federal funds rate. Our Senior Notes' per annum interest rate is fixed. We do not use derivative financial instruments to hedge interest rate exposure. We limit our interest rate risks by investing our excess cash balances in short-term, highly-liquid instruments with a maturity of one year or less. We do not expect any material losses from our invested cash balances. Additionally, a hypothetical 10% adverse movement in interest rates would not have a material impact on our financial condition, results of operations or cash flows and we therefore believe that we do not have significant interest rate exposure.


ItemITEM 8.Financial Statements and Supplementary DataFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Item 15(a)(1) and (2) of this Form 10-K.

ItemITEM 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureCHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ItemITEM 9A.Controls and ProceduresCONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, our management conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) at the. Disclosure controls and procedures are designed to provide reasonable assurance level.that the information required to be disclosed in the reports that we file or submit under the Exchange Act has been appropriately recorded, processed, summarized and reported on a timely basis and are effective in ensuring that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are designed to provide reasonable assurancewere not effective because of achieving their objectives and that our disclosure controls and procedures are effective at the reasonable assurance level. material weaknesses described below.
Notwithstanding the foregoing, a control system, no matter how well designedmaterial weaknesses described below in Management’s Annual Report on Internal Control Over Financial Reporting, management, including the principal executive officer and operated, can provide only reasonable, not absolute, assuranceprincipal financial officer, believes that it will detect or uncover failures to disclosethe consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material information otherwise required to be set forthrespects our financial condition, results of operations and cash flows as of and for the periods presented in our periodic reports.accordance with GAAP.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with GAAP.
A company’s internal control over financial reporting includes policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Due to inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting, as of February 2, 2019, based on the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, known as (COSO). Based on such evaluation, the company’s management concluded that as of February 2, 2019, the Company’s internal control over financial reporting was not effective due to the material weaknesses described below.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.
We have identified design and operating effectiveness deficiencies that constitute a material weakness in the principles associated with the control activities component of the COSO framework. These control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to: (i) selecting and developing control activities that contribute to the mitigation of risks to the achievement of objectives to acceptable levels, (ii) selecting and developing control activities over information technology that contribute to the mitigation of risks and support achievement of objectives and (iii) deploying information technology control activities through policies that establish what is expected and procedures that put policies into action. Specifically, these control deficiencies primarily relate to end-user and privileged access to certain information technology systems that support our financial

reporting process. As a result of these deficiencies, the related process-level manual and automated application controls that rely on information generated from the affected information technology systems were also deemed ineffective. These material weaknesses did not result in any identified misstatements to the financial statements, and there were no changes to previously released financial results.
Deloitte & Touche LLP, our independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of February 2, 2019. Deloitte & Touche LLP’s opinion, as stated in their report which appears on page F-2 of this Annual Report on Form 10-K, is consistent with management’s report on internal control over financial reporting as set forth above.
Remediation
Our management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated, including establishing and improving policies, procedures and control activities primarily associated with end-user and privileged access to certain information technology systems that support our financial reporting process.
We believe that these actions will remediate the material weaknesses. The material weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of these material weaknesses will be completed by the end of fiscal 2019.
As we implement these remediation efforts, we may determine that additional steps may be necessary to remediate the material weaknesses. We cannot provide assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. We will continue to assess the effectiveness of our remediation efforts in connection with our evaluations of internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
Except for identification of the material weaknesses described above, there were no changes during the quarter ended February 2, 2019, in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of GameStop Corp.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of GameStop Corp. and subsidiaries (the “Company”) as of February 2, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission known as (COSO 2013)(COSO). BasedIn our opinion, because of the effect of the material weaknesses identified below on our evaluation under COSO 2013, our management concluded that our internalthe achievement of the objectives of the control over financial reporting wascriteria, the Company has not maintained effective at the reasonable assurance level as of January 30, 2016.

47
Table of Contents

The effectiveness of our internal control over financial reporting as of January 30, 2016 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included in this Form 10-K on page 49.
There was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



48
Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
GameStop Corp.
Grapevine, Texas

We have audited the internal control over financial reporting of GameStop Corp. and subsidiaries (the "Company") as of January 30, 2016,February 2, 2019, based on criteria established in Internal Control -— Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the Committee of Sponsoring Organizationsstandards of the Treadway Commission. Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the 52 week period ended February 2, 2019, of the Company and our report dated April 2, 2019, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company'sCompany’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company'sCompany’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. 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 audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting
A company'scompany’s internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company'scompany’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company'scompany’s assets that could have a material effect on the financial statements.

Because of theits inherent limitations, of internal control over financial reporting including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be preventedprevent or detected on a timely basis.detect misstatements. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Material Weaknesses
In our opinion, the Company maintained,A material weakness is a deficiency, or a combination of deficiencies, in all material respects, effective internal control over financial reporting, as of January 30, 2016, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizationssuch that there is a reasonable possibility that a material misstatement of the Treadway Commission.company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management's assessment:

We have also audited,Design and operating effectiveness deficiencies that constitute a material weakness in accordancethe principles associated with the standardscontrol activities component of the Public Company Accounting Oversight Board (United States),COSO framework. These control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to: (i) selecting and developing control activities that contribute to the mitigation of risks to the achievement of objectives to acceptable levels, (ii) selecting and developing control activities over information technology that contribute to the mitigation of risks and support achievement of objectives and (iii) deploying information technology control activities through policies that establish what is expected and procedures that put policies into action. Specifically, these control deficiencies primarily relate to end-user and privileged access to certain information technology systems that support the financial reporting process. As a result of these deficiencies, the related process-level manual and automated application controls that rely on information generated from the affected information technology systems were also deemed ineffective.


These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements and financial statement schedule as of and for the 52 week period ended January 30, 2016February 2, 2019, of the Company, and this report does not affect our report dated March 28, 2016 expressed an unqualified opinion on those consolidatedsuch financial statements and financial statement schedule and includes an explanatory paragraph relating to a change in the method of accounting for the classification of deferred tax assets and liabilities as of January 30, 2016 due to the adoption of Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes.

statements.


/s/  DELOITTE & TOUCHE LLP
Dallas, Texas
March 28, 2016April 2, 2019

49
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ItemITEM 9B.Other InformationOTHER INFORMATION
None.
PART III
ItemITEM 10.Directors, Executive Officers and Corporate Governance*DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE*
Code of Ethics
We have adopted a Code of Ethics for Senior Financial and Executive Officers that is applicable to our Executive Chairman, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Accounting Officer, any Executive Vice President and any Vice President employed in a finance or accounting role. We have also adopted a Code of Standards, Ethics and Conduct applicable to all of our management-level employees. Each of the Code of Ethics and Code of Standards, Ethics and Conduct are available on our website at www.gamestop.com.www.gamestop.com.
In accordance with SEC rules, we intend to disclose any amendment (other than any technical, administrative, or other non-substantive amendment) to either of the above Codes, or any waiver of any provision thereof with respect to any of the executive officers listed in the paragraph above, on our website (www.gamestop.com)(www.gamestop.com) within four business days following such amendment or waiver.
ItemITEM 11.Executive Compensation*EXECUTIVE COMPENSATION*
ItemITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters*SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS*
ItemITEM 13.Certain Relationships and Related Transactions, and Director Independence*CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE*
ItemITEM 14.Principal Accountant Fees and Services*PRINCIPAL ACCOUNTANT FEES AND SERVICES*
* The 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 our 20162019 Annual Meeting of Stockholders to be held on or around June 21, 2016,25, 2019 which is to be filed with the SEC pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. This definitive proxy statement relates to a meeting of stockholders involving the election of directors and the portions therefrom required to be set forth in this Form 10-K by Items 10, 11, 12, 13 and 14 are incorporated herein by reference pursuant to General Instruction G(3) to Form 10-K.

50
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PART IV
ItemITEM 15.Exhibits and Financial Statement ScheduleEXHIBITS AND FINANCIAL STATEMENT SCHEDULE
(a)The following documents are filed as a part of this Form 10-K:
(1)Index and Consolidated Financial Statements
The list of consolidated financial statements set forth in the accompanying Index to Consolidated Financial Statements at page F-1 herein is incorporated herein by reference. Such consolidated financial statements are filed as part of this Form 10-K.
(2)Financial Statement Schedules required to be filed by Item 8 of this Form 10-K:
The following financial statement schedule for the 52 weeks ended January 30, 2016, 52February 2, 2019, 53 weeks ended January 31, 2015February 3, 2018 and the 52 weeks ended February 1, 2014January 28, 2017 is filed as part of this Form 10-K and should be read in conjunction with our Consolidated Financial Statements appearing elsewhere in this Form 10-K. All other schedules are omitted because they are not applicable.
(b)Exhibits
The information required by this Section (b) of Item 15 is set forth on the Exhibit Index that follows the Consolidated Financial Statements and Notes to Consolidated Financial Statements appearing elsewhere in this Form 10-K.
Schedule II — Valuation and Qualifying Accounts
For the 52 weeks ended January 30, 2016, 52February 2, 2019, 53 weeks ended January 31, 2015February 3, 2018 and the 52 weeks ended February 1, 2014:January 28, 2017: 
           
  
 
Balance at
Beginning
of Period
 
Charged to
Costs and
Expenses
 
Charged
to Other
Accounts-
Accounts
Payable (1)
 
Deductions-
Write-Offs
Net of
Recoveries
 
Balance at
End of
Period
  (In millions)
Inventory Reserve, deducted from asset accounts          
52 Weeks Ended January 30, 2016 $69.3
 $36.9
 $58.2
 $102.9
 $61.5
52 Weeks Ended January 31, 2015 76.5
 40.9
 55.8
 103.9
 69.3
52 Weeks Ended February 1, 2014 83.8
 40.6
 32.0
 79.9
 76.5
   
Balance at
Beginning
of Period
 
Charged to
Costs and
Expenses
 
Charged
to Other
Accounts-
Accounts
Payable (1)
 
Deductions-
Write-Offs
Net of
Recoveries (2)
 
Balance at
End of
Period
  (In millions)
Inventory Reserve(3)
          
52 Weeks Ended February 2, 2019 $59.2
 $50.1
 $46.7
 $(86.6) $69.4
53 Weeks Ended February 3, 2018 $59.0
 $57.3
 $50.7
 $(107.8) $59.2
52 Weeks Ended January 28, 2017 $61.5
 $47.5
 $49.6
 $(99.6) $59.0
Valuation Allowance for Deferred Tax Assets          
52 Weeks Ended February 2, 2019 $36.9
 $—
 $—
 $(4.0) $32.9
53 Weeks Ended February 3, 2018 $39.4
 $3.6
 $—
 $(6.1) $36.9
52 Weeks Ended January 28, 2017 $18.8
 $20.9
 $—
 $(0.3) $39.4
___________________
(1)Consists primarily of amounts received from vendors for defective allowances.
(2)The 52 weeks ended February 2, 2019 includes the disposition of $3.6 million of Spring Mobile inventory reserves as of the date of the sale.
(3)Includes inventory reserve activity related to Spring Mobile. Spring Mobile was sold in January 2019.
(1) Consists primarily of amounts received from vendors for defective allowances.
ITEM 16.FORM 10-K SUMMARY
None.




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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant 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
SHANE S. KIM
  J. Paul RainesShane S. Kim
  Interim Chief Executive Officer and Director
Date: March 28, 2016April 2, 2019
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 the registrant and in the capacities and on the dates indicated.

Name  Capacity Date
   
/s/    J. PAUL RAINES
SHANE S. KIM		  Interim Chief Executive Officer and Director March 28, 2016April 2, 2019
J. Paul RainesShane S. Kim (Principal Executive Officer)  
   
/s/    DANIELDANIEL A. DEMATTEO
DEMATTEO		  Executive Chairman and Director March 28, 2016April 2, 2019
Daniel A. DeMatteo    
   
/s/    ROBERTROBERT A. LLOYD
LLOYD		  Executive Vice PresidentChief Operating Officer and Chief Financial Officer March 28, 2016April 2, 2019
Robert A. Lloyd (Principal Financial Officer)  
   
/s/    TROYTROY W. CRAWFORD
CRAWFORD		  Senior Vice President, Chief Accounting Officer March 28, 2016April 2, 2019
Troy W. Crawford (Principal Accounting Officer)  
   
/s/    JEROMEJEROME L. DAVIS
DAVIS		  Director March 28, 2016April 2, 2019
Jerome L. Davis    
   
/s/    R. RICHARD FONTAINE
THOMAS N. KELLY JR.        		 Director March 28, 2016
R. Richard Fontaine
/s/    THOMAS N. KELLY JR.        
DirectorMarch 28, 2016April 2, 2019
Thomas N. Kelly Jr.    
     
/s/    SHANE S. KIM
STEVEN R. KOONIN		  Director March 28, 2016
Shane S. Kim
/s/    STEVEN R. KOONIN
DirectorMarch 28, 2016April 2, 2019
Steven R. Koonin    
   
/s/    STEPHANIE M. SHERN
CARRIE W. TEFFNER		  Director March 28, 2016April 2, 2019
Stephanie M. ShernCarrie W. Teffner    
   
/s/    GERALDGERALD R. SZCZEPANSKI 
SZCZEPANSKI 		  Director March 28, 2016April 2, 2019
Gerald R. Szczepanski    
   
/s/    KATHYKATHY P. VRABECK        
VRABECK        		  Director March 28, 2016April 2, 2019
Kathy P. Vrabeck    
    
/s/    LAWRENCELAWRENCE S. ZILAVY        
ZILAVY        		  Director March 28, 2016April 2, 2019
Lawrence S. Zilavy    

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 
 Page
GameStop Corp. Consolidated Financial Statements: 
ReportsReport of Independent Registered Public Accounting FirmsFirm
F-2
Consolidated Financial Statements: 
Consolidated Balance Sheets
F-3
Consolidated Statements of Operations
F-4
Consolidated Statements of Comprehensive Income (Loss)
F-5
Consolidated Statements of Stockholders' Equity
F-6
Consolidated Statements of Cash Flows
F-7
Notes to Consolidated Financial Statements
Statements:
F-8
1. Nature of Operations and Summary of Significant Accounting Policies
F-8
Asset Impairments2. Discontinued Operations and Dispositions
F-13F-15
Acquisitions and Divestitures
F-14
Vendor Arrangements3. Revenue
F-16
Computation of Net Income per Common Share4. Asset Impairments
F-16F-18
5. Fair Value Measurements and Financial Instruments
F-17F-18
6. Receivables, Net
F-19F-20
Accrued Liabilities
F-19
7. Goodwill and Intangible Assets
F-19F-20
Debt8. Income Taxes
F-22
Leases
F-24
Commitments and Contingencies
F-25
Income Taxes9. Accrued Liabilities
F-26
10. Debt
F-26
11. Leases
F-28
12. Commitments and Contingencies
F-29
13. Common Stock and Share-Based Compensation
F-28F-29
Employees’ Defined Contribution Plan
F-31
Significant Products14. Earnings Per Share
F-32
Segment Information15. Employees’ Defined Contribution Plan
F-32
16. Segment Information
F-33
17. Unaudited Quarterly Financial Information
F-34


F-1
Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Stockholders and the Board of Directors and Stockholders of
GameStop Corp.
Grapevine, TexasOpinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of GameStop Corp. and subsidiaries (the "Company") as of January 30, 2016February 2, 2019 and January 31, 2015, andFebruary 3, 2018, the related consolidated statements ofoperations, comprehensive income (loss), stockholders’stockholders' equity, and cash flows, for the 52 week period ended February 2, 2019, 53 week period ended February 3, 2018 and 52 week period ended January 28, 2017, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 2, 2019 and February 3, 2018, and the results of its operations and its cash flows for each of the 52 week periodsperiod ended February 2, 2019, 53 week period ended February 3, 2018 and 52 week period ended January 30, 2016, January 31, 2015 and February 1, 2014. Our audits also included the financial statement schedule listed28, 2017, in conformity with accounting principles generally accepted in the Index at Item 15. United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 2, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 2, 2019, expressed an adverse opinion on the Company’s internal control over financial reporting because of material weaknesses.
Basis for Opinion
These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidatedCompany's financial statements and financial statement schedule based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesmisstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. An auditOur audits also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of GameStop Corp. and subsidiaries as of January 30, 2016 and January 31, 2015, and the results of their operations and their cash flows for each of the 52 week periods ended January 30, 2016, January 31, 2015 and February 1, 2014, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 13 to the consolidated financial statements, the Company has changed its method of accounting for the classification of deferred tax assets and liabilities as of January 30, 2016 due to the adoption of Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of January 30, 2016, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 28, 2016 expressed an unqualified opinion on the Company's internal control over financial reporting.




/s/  DELOITTE & TOUCHE LLP
Dallas, Texas
March 28, 2016April 2, 2019

We have served as the Company's auditor since 2013.







F-2
Table of Contents

GAMESTOP CORP.
CONSOLIDATED BALANCE SHEETS
(in millions, except par value per share)
 January 30,
2016		 January 31,
2015
 (In millions, except par value per share) February 2,
2019		 February 3,
2018
ASSETSASSETS    
Current assets:        
Cash and cash equivalents $450.4
 $610.1
 $1,624.4
 $854.2
Receivables, net 176.5
 113.5
 134.2
 138.6
Merchandise inventories, net 1,163.0
 1,144.8
 1,250.5
 1,250.3
Deferred income taxes - current —
 65.6
Prepaid expenses and other current assets 148.9
 128.5
 118.6
 115.2
Assets held for sale —
 660.1
Total current assets 1,938.8
 2,062.5
 3,127.7
 3,018.4
Property and equipment:        
Land 17.3
 18.3
 18.7
 19.9
Buildings and leasehold improvements 668.2
 609.2
 638.2
 651.8
Fixtures and equipment 874.6
 888.2
 900.2
 914.6
Total property and equipment 1,560.1
 1,515.7
 1,557.1
 1,586.3
Less accumulated depreciation 1,075.6
 1,061.5
 1,235.8
 1,235.3
Net property and equipment 484.5
 454.2
Deferred income taxes - noncurrent 39.0
 24.3
Property and equipment, net 321.3
 351.0
Deferred income taxes 147.3
 158.2
Goodwill 1,476.7
 1,390.4
 363.9
 1,350.5
Other intangible assets, net 330.4
 237.8
 33.5
 92.5
Other noncurrent assets 65.5
 77.1
 50.6
 71.0
Total noncurrent assets 2,396.1
 2,183.8
 916.6
 2,023.2
Total assets $4,334.9
 $4,246.3
 $4,044.3
 $5,041.6
        
LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities:        
Accounts payable $631.9
 $815.6
 $1,051.9
 $892.3
Accrued liabilities 1,041.0
 803.6
 752.8
 950.1
Income taxes payable 121.1
 15.4
 27.2
 37.5
Notes payable 0.4
 5.1
Current portion of debt, net 349.2
 —
Liabilities held for sale —
 50.9
Total current liabilities 1,794.4
 1,639.7
 2,181.1
 1,930.8
Deferred income taxes 29.6
 95.9
 0.1
 5.0
Long-term debt 350.0
 350.6
Long-term debt, net 471.6
 817.9
Other long-term liabilities 79.9
 92.4
 55.3
 73.4
Total long-term liabilities 459.5
 538.9
 527.0
 896.3
Total liabilities 2,253.9
 2,178.6
 2,708.1
 2,827.1
Commitments and contingencies (Notes 11, 12 and 13) 
 
Commitments and contingencies (Notes 8, 11 and 12)    
Stockholders’ equity:        
Preferred stock — authorized 5.0 shares; no shares issued or outstanding —
 —
Class A common stock — $.001 par value; authorized 300.0 shares; 103.3 and 107.7 shares issued, 103.3 and 107.7 shares outstanding, respectively 0.1
 0.1
Additional paid-in-capital —
 —
Accumulated other comprehensive loss (88.8) (25.4)
Class A common stock — $.001 par value; authorized 300.0 shares; 102.0 and 101.3 shares issued, 102.0 and 101.3 shares outstanding, respectively 0.1
 0.1
Additional paid-in capital 27.7
 22.1
Accumulated other comprehensive (loss) income (54.3) 12.2
Retained earnings 2,169.7
 2,093.0
 1,362.7
 2,180.1
Total stockholders' equity 2,081.0
 2,067.7
 1,336.2
 2,214.5
Total liabilities and stockholders’ equity $4,334.9
 $4,246.3
 $4,044.3
 $5,041.6
See accompanying notes to consolidated financial statements.

F-3
Table of Contents

GAMESTOP CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
 52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014		 Fiscal Year
 (In millions, except per share data) 2018 2017 2016
Net sales $9,363.8
 $9,296.0
 $9,039.5
 $8,285.3
 $8,547.1
 $7,965.0
Cost of sales 6,445.5
 6,520.1
 6,378.4
 5,977.2
 6,062.2
 5,465.1
Gross profit 2,918.3
 2,775.9
 2,661.1
 2,308.1
 2,484.9
 2,499.9
Selling, general and administrative expenses 2,108.9
 2,001.0
 1,892.4
 1,888.6
 1,909.6
 1,861.9
Depreciation and amortization 156.6
 154.4
 166.5
 105.6
 122.3
 136.7
Goodwill impairments —
 —
 10.2
 970.7
 —
 —
Asset impairments 4.6
 2.2
 18.5
 45.2
 13.8
 19.6
Operating earnings 648.2
 618.3
 573.5
Operating (loss) earnings (702.0) 439.2
 481.7
Interest income (0.4) (0.7) (0.9) (5.7) (1.5) (0.8)
Interest expense 23.4
 10.7
 5.6
 56.8
 56.8
 53.8
Earnings before income tax expense 625.2
 608.3
 568.8
(Loss) earnings from continuing operations before income taxes (753.1) 383.9
 428.7
Income tax expense 222.4
 215.2
 214.6
 41.7
 153.5
 124.2
Net income $402.8
 $393.1
 $354.2
Basic net income per common share attributable to GameStop Corp. $3.80
 $3.50
 $3.02
Diluted net income per common share attributable to GameStop Corp. $3.78
 $3.47
 $2.99
Weighted average shares of common stock outstanding — basic 106.0
 112.2
 117.2
Weighted average shares of common stock outstanding — diluted 106.7
 113.2
 118.4
Net (loss) income from continuing operations (794.8) 230.4
 304.5
Income (loss) from discontinued operations, net of tax 121.8
 (195.7) 48.7
Net (loss) income $(673.0) $34.7
 $353.2
      
Basic (loss) earnings per share:      
Continuing operations $(7.79) $2.27
 $2.94
Discontinued operations 1.19
 (1.93) 0.47
Basic (loss) earnings per share $(6.59) $0.34
 $3.42
      
Diluted (loss) earnings per share:      
Continuing operations $(7.79) $2.27
 $2.93
Discontinued operations 1.19
 (1.93) 0.47
Diluted (loss) earnings per share $(6.59) $0.34
 $3.40
      
Weighted-average shares outstanding:      
Basic 102.1
 101.4
 103.4
Diluted 102.1
 101.5
 103.8
  























See accompanying notes to consolidated financial statements.

F-4
Table of Contents

GAMESTOP CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014
  (In millions)
Net income $402.8
 $393.1
 $354.2
Other comprehensive loss:      
Foreign currency translation adjustments (63.4) (107.9) (81.9)
Comprehensive income attributable to GameStop Corp. $339.4
 $285.2
 $272.3
  Fiscal Year
  2018 2017 2016
Net (loss) income $(673.0) $34.7
 $353.2
Other comprehensive income (loss):      
Foreign currency translation adjustments (63.4) 59.5
 41.5
Reclassification of realized gain on foreign currency translation adjustments, net of tax of $0 (3.1) —
 —
Total comprehensive (loss) income $(739.5) $94.2
 $394.7















































See accompanying notes to consolidated financial statements.

F-5
Table of Contents

GAMESTOP CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in millions, except for per share data)
  GameStop Corp. Stockholders Total
  
Class A
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained
Earnings
 
  Shares 
Common
Stock
 
  (In millions)
Balance at February 2, 2013 118.2
 $0.1
 $348.3
 $164.4
 $1,773.5
 $2,286.3
Net income for the 52 weeks ended February 1, 2014 —
 —
 —
 —
 354.2
 354.2
Foreign currency translation —
 —
 —
 (81.9) —
 (81.9)
Dividends(1)
 —
 —
 —
 —
 (131.8) (131.8)
Stock-based compensation —
 —
 19.4
 —
 —
 19.4
Repurchases of common stock (6.3) —
 (258.3) —
 —
 (258.3)
Issuance of common stock, net of tax impact of share-based compensation of $11.1 3.4
 —
 63.5
 —
 —
 63.5
Balance at February 1, 2014 115.3
 0.1
 172.9
 82.5
 1,995.9
 2,251.4
Net income for the 52 weeks ended January 31, 2015 —
 —
 —
 —
 393.1
 393.1
Foreign currency translation —
 —
 —
 (107.9) —
 (107.9)
Dividends(1)
 —
 —
 —
 —
 (151.6) (151.6)
Stock-based compensation —
 —
 21.5
 —
 —
 21.5
Repurchases of common stock (8.4) —
 (189.0) —
 (144.4) (333.4)
Issuance of common stock, net of tax impact of share-based compensation of $5.3 0.8
 —
 (5.4) —
 —
 (5.4)
Balance at January 31, 2015 107.7
 0.1
 —
 (25.4) 2,093.0
 2,067.7
Net income for the 52 weeks ended January 30, 2016 —
 —
 —
 —
 402.8
 402.8
Foreign currency translation —
 —
 —
 (63.4) —
 (63.4)
Dividends(1)
 —
 —
 —
 —
 (153.5) (153.5)
Stock-based compensation —
 —
 29.9
 —
 —
 29.9
Repurchases of common stock (5.2) —
 (29.4) —
 (172.6) (202.0)
Issuance of common stock, net of tax impact of share-based compensation of $4.4 0.8
 —
 (0.5) —
 —
 (0.5)
Balance at January 30, 2016 103.3
 $0.1
 $—
 $(88.8) $2,169.7
 $2,081.0
  
Class A
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained
Earnings
 
Total
Stockholders' Equity
  Shares Amount 
Balance at January 31, 2016 103.3
 $0.1
 $—
 $(88.8) $2,169.7
 $2,081.0
Net income —
 —
 —
 —
 353.2
 353.2
Foreign currency translation —
 —
 —
 41.5
 —
 41.5
Dividends declared, $1.48 per common share —
 —
 —
 —
 (155.1) (155.1)
Stock-based compensation —
 —
 17.8
 —
 —
 17.8
Repurchases of common stock (3.0) —
 (8.6) —
 (66.5) (75.1)
Settlement of stock-based awards (including tax deficiency of $0.8) 0.7
 —
 (9.2) —
 —
 (9.2)
Balance at January 28, 2017 101.0
 0.1
 —
 (47.3) 2,301.3
 2,254.1
Net income —
 —
 —
 —
 34.7
 34.7
Foreign currency translation —
 —
 —
 59.5
 —
 59.5
Dividends declared, $1.52 per common share —
 —
 —
 —
 (155.9) (155.9)
Stock-based compensation —
 —
 25.6
 —
 —
 25.6
Settlement of stock-based awards 0.3
 —
 (3.5) —
 —
 (3.5)
Balance at February 3, 2018 101.3
 0.1
 22.1
 12.2
 2,180.1
 2,214.5
Adoption of ASU 2014-09 (Note 1) —
 —
 —
 —
 11.5
 11.5
Net loss —
 —
 —
 —
 (673.0) (673.0)
Foreign currency translation —
 —
 —
 (66.5) —
 (66.5)
Dividends declared, $1.52 per common share —
 —
 —
 —
 (155.9) (155.9)
Stock-based compensation —
 —
 10.7
 —
 —
 10.7
Settlement of stock-based awards 0.7
 —
 (5.1) —
 —
 (5.1)
Balance at February 2, 2019 102.0
 $0.1
 $27.7
 $(54.3) $1,362.7
 $1,336.2
(1)
Dividends declared per common share were $1.10 in the 52 weeks ended February 1, 2014, $1.32 in the 52 weeks ended January 31, 2015 and $1.44 in the 52 weeks ended January 30, 2016.

See accompanying notes to consolidated financial statements.

F-6
Table of Contents

GAMESTOP CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS

  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014
  (In millions)
Cash flows from operating activities:      
Net income $402.8
 $393.1
 $354.2
Adjustments to reconcile net income to net cash flows provided by operating activities:      
Depreciation and amortization (including amounts in cost of sales) 158.2
 156.5
 169.2
Impairments of goodwill and other long-lived assets 4.6
 2.2
 28.7
Stock-based compensation expense 29.9
 21.5
 19.4
Deferred income taxes (1.5) 9.2
 (2.7)
Excess tax benefits related to stock-based awards (4.4) (5.7) (12.4)
Loss on disposal of property and equipment 3.6
 4.7
 7.1
Other (4.6) (16.1) 40.0
Changes in operating assets and liabilities:      
Receivables, net (58.1) (44.3) (1.4)
Merchandise inventories (49.2) (24.8) (86.9)
Prepaid expenses and other current assets (6.0) (1.7) (9.7)
Prepaid income taxes and income taxes payable 95.9
 (82.3) (19.8)
Accounts payable and accrued liabilities 91.4
 59.4
 302.4
     Changes in other long-term liabilities (5.8) 8.8
 (25.4)
Net cash flows provided by operating activities 656.8
 480.5
 762.7
Cash flows from investing activities:      
Purchase of property and equipment (173.2) (159.6) (125.6)
Acquisitions, net of cash acquired of $13.9, $3.6 and $1.8, respectively (267.5) (89.7) (77.4)
Proceeds from divestiture —
 12.4
 —
Other (3.9) 1.0
 (4.5)
Net cash flows used in investing activities (444.6) (235.9) (207.5)
Cash flows from financing activities:      
Repayment of acquisition-related debt (2.2) —
 (31.8)
Repurchase of common shares (194.3) (331.1) (258.3)
Dividends paid (154.1) (148.8) (130.9)
Proceeds from senior notes —
 350.0
 —
Borrowings from the revolver 463.0
 626.0
 130.0
Repayments of revolver borrowings (463.0) (626.0) (130.0)
Payments of financing costs —
 (7.7) —
Issuance of common stock, net of share repurchases for withholding taxes —
 0.7
 58.0
Excess tax benefits related to stock-based awards 4.4
 5.7
 12.4
Net cash flows used in financing activities (346.2) (131.2) (350.6)
Exchange rate effect on cash and cash equivalents (25.7) (39.5) (42.8)
Increase (decrease) in cash and cash equivalents (159.7) 73.9
 161.8
Cash and cash equivalents at beginning of period 610.1
 536.2
 374.4
Cash and cash equivalents at end of period $450.4
 $610.1
 $536.2
       
SUPPLEMENTAL CASH FLOW INFORMATION:      
Interest paid $21.8
 $2.7
 $2.7
Income taxes paid $122.2
 $265.9
 $238.0













See accompanying notes to consolidated financial statements.

F-7

Table of ContentsGAMESTOP CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
  Fiscal Year
  2018 2017 2016
Cash flows from operating activities:      
Net (loss) income $(673.0) $34.7
 $353.2
Adjustments to reconcile net (loss) income to net cash flows provided by operating activities:      
Depreciation and amortization (including amounts in cost of sales) 126.9
 151.9
 166.7
Provision for inventory reserves 57.3
 59.1
 48.6
Goodwill and asset impairments 1,015.9
 395.1
 33.8
Stock-based compensation expense 10.7
 25.6
 17.8
Deferred income taxes (4.1) (107.9) (37.2)
Excess tax benefits related to stock-based awards —
 —
 0.8
Loss on disposal of property and equipment 2.0
 8.5
 10.4
Gain on divestiture (100.8) (6.4) —
Other (36.2) (34.2) (33.1)
Changes in operating assets and liabilities:      
Receivables, net (34.4) 35.7
 (43.9)
Merchandise inventories (44.7) (256.3) 14.7
Prepaid expenses and other current assets 2.2
 (1.2) (11.4)
Prepaid income taxes and income taxes payable (18.7) (24.7) (49.1)
Accounts payable and accrued liabilities 17.1
 169.8
 64.1
Changes in other long-term liabilities 4.9
 (14.8) 1.7
Net cash flows provided by operating activities 325.1
 434.9
 537.1
Cash flows from investing activities:      
Purchase of property and equipment (93.7) (113.4) (142.7)
Acquisitions, net of cash acquired —
 (8.5) (441.2)
Proceeds from divestiture, net of cash sold 727.9
 58.5
 —
Other 1.3
 2.8
 6.5
Net cash flows provided by (used in) investing activities 635.5
 (60.6) (577.4)
Cash flows from financing activities:      
Repayment of acquisition-related debt (12.2) (21.8) (0.4)
Repurchase of common shares —
 (22.0) (63.1)
Dividends paid (157.4) (155.2) (155.5)
Proceeds from senior notes —
 —
 475.0
Borrowings from the revolver 154.0
 373.0
 545.0
Repayments of revolver borrowings (154.0) (373.0) (545.0)
Payments of financing costs —
 —
 (8.1)
Issuance of common stock, net of share repurchases for withholding taxes (5.1) (3.5) (8.4)
Excess tax benefits related to stock-based awards —
 —
 (0.8)
Net cash flows (used in) provided by financing activities (174.7) (202.5) 238.7
Exchange rate effect on cash and cash equivalents and restricted cash (24.7) 28.0
 21.1
Decrease (increase) in cash held for sale 10.2
 (5.4) (2.2)
Increase in cash and cash equivalents 771.4
 194.4
 217.3
Cash and cash equivalents and restricted cash at beginning of period 869.1
 674.7
 457.4
Cash and cash equivalents and restricted cash at end of period $1,640.5
 $869.1
 $674.7
SUPPLEMENTAL CASH FLOW INFORMATION:      
Interest paid $53.5
 $53.4
 $38.0
Income taxes paid $122.9
 $168.3
 $230.1
See accompanying notes to consolidated financial statements.

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.1.    Nature of Operations and Summary of Significant Accounting Policies
BackgroundThe Company
GameStop Corp. (“GameStop,” “we,” “us,” “our,” or the “Company”) is a global, family of specialty retail brands that makes the most popular technologies affordable and simple. As the world's largest omnichannelmultichannel video game retailer, we sell new and pre-owned video game hardware, physical and digital video game software, video game accessories, as well as new and pre-owned mobile and consumer electronics products and other merchandise primarily through our GameStop, EB Games and Micromania stores. Additionally, we recently acquired Geeknet, Inc. ("Geeknet"), an online and wholesale retailer that sells collectibles, apparel, gadgets, electronics, toys and other retail products for technology enthusiasts and general consumers under the name ThinkGeek through the www.thinkgeek.com website. ThinkGeek also sells certain exclusive products to wholesale channel customers. As of January 30, 2016, we operated 7,117retailer. We operate over 5,800 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 websites www.gamestop.com, www.ebgames.com.au, www.ebgames.co.nz, www.gamestop.ca, www.gamestop.it, www.gamestop.ie, www.gamestop.de, www.gamestop.co.uk and www.micromania.fr. Theacross 14 countries. Our consumer product network also includes: www.kongregate.com, a leading browser-based game site; includes www.gamestop.com; Game InformerInformer® magazine, the world's leading print and digital video game publication; and iOSThinkGeek, www.thinkgeek.com, the premier retailer for the global geek community featuring exclusive and Android mobile applications.unique video game and pop culture products, and Simply Mac, which sells the full line of Apple products, including laptops, tablets, and smartphones and offers Apple certified warranty and repair services.
Our Technology Brands segment owns and operates Spring Mobile, an authorized AT&T reseller operating AT&T branded wireless retail stores and pre-paid wireless stores under the name Cricket (an AT&T brand) in the United States, as well as a certified Apple reseller selling Apple consumer electronic products in the United States under the name Simply Mac. We operate our business in four Video Game Brandsgeographic segments: United States, Canada, Australia and Europe; and aEurope. Our former Technology Brands segment which includes the operationshad been comprised of our Spring Mobile, managed AT&TSimply Mac and Cricket Wireless branded stores ("Cricket Wireless"). Cricket Wireless was sold in January 2018, and ourSpring Mobile was sold in January 2019. Simply Mac business.and the historical results of Cricket Wireless are reported in the United States segment in these consolidated financial statements and accompanying notes. The historical results of Spring Mobile, including the gain on sale, are reported as discontinued operations in our consolidated statements of operations for all periods presented. See Note 2, "Discontinued Operations and Dispositions," for further information. The consolidated statement of cash flows is presented on a combined basis for all periods presented and, therefore, does not segregate cash flows from continuing and discontinued operations. The information contained in these notes to our consolidated financial statements refers to continuing operations unless otherwise noted.
Our largest vendors worldwidein our video game brands business are Nintendo, Sony, Microsoft, Nintendo, Electronic ArtsTake-Two Interactive and Activision Blizzard, which accounted for 27%23%, 19%, 11%22%, 10%, 6% and 9%4%, respectively, of our new product purchases in fiscal 2015, 24%year 2018; 22%, 17%20%, 11%10%, 8%4% and 10%6%, respectively, in fiscal 2014year 2017; and 20%10%, 15%24%, 12%14%, 10%5% and 10%6%, respectively, in fiscal 2013.year 2016.
Basis of Presentation and Consolidation
Our consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. All dollar and share amounts (other than dollar amounts per share) in the consolidated financial statements are stated in millions unless otherwise indicated.
Our fiscal year is composed of the 52 or 53 weeks ending on the Saturday closest to the last day of January. Fiscal 2015year 2018 consisted of the 52 weeks ended on February 2, 2019 ("fiscal 2018"). Fiscal year 2017 consisted of the 53 weeks ended on February 3, 2018 ("fiscal 2017"). Fiscal year 2016 consisted of the 52 weeks ended on January 30,28, 2017 ("fiscal 2016").

Subsequent to the issuance of our consolidated financial statements included in our fiscal 2017 Annual Report on Form 10-K, we determined that certain previously disclosed amounts associated with supplemental cash flow information and segment information were incorrect. As a result, the interest paid amounts for fiscal 2017 and 2016, ("disclosed in the supplemental cash flow information section of our consolidated statements of cash flows, have been increased by $39.4 million and $14.7 million, respectively, to their correct amounts of $53.4 million and $38.0 million, respectively. The misstatements did not affect the previously reported cash flows from operating, investing or financing activities for fiscal 2015"). Fiscal 2014 consisted2017 and 2016, or the beginning or ending cash and cash equivalents balances previously reported for fiscal 2017 and 2016. Within Note 16, "Segment Information," total assets of the 52 weeks ended on January 31, 2015 ("United States segment for fiscal 2014"). Fiscal 2013 consisted2017 have been increased by $1,925.8 million with a corresponding decrease to the total assets of the 52 weeks endedEurope segment to correct an error related to the consideration of intercompany balances in the computation of total assets by segment. The corrected total assets amount, as of February 3, 2018, for the United States of $2,919.0 million includes retrospective adjustments for deferred tax assets formerly associated with Spring Mobile and the total assets of Simply Mac. The corrected total assets amount, as of February 3, 2018, for Europe is $817.7 million. The misstatement did not affect the other reportable segments and did not affect any consolidated amounts. We evaluated the materiality of these misstatements from quantitative and qualitative perspectives and concluded that they were not material to the previously issued consolidated financial statements included in our fiscal 2017 Annual Report on February 1, 2014 ("fiscal 2013").Form 10-K.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In preparing these financial statements, we have made our best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. Changes in the estimates and assumptions used by us could have a significant impact on our financial results. Actual results could differ from those estimates.


F-8

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Cash and Cash Equivalents
We consider all short-term, highly-liquid instruments purchased with an originala remaining maturity of three months or less to be cash equivalents. Our cash and cash equivalents are carried at cost, which approximates market value, and consist primarily of time deposits with highly rated commercial banks. From time to time depending upon interest rates, credit worthiness and other factors, we invest in money market investment funds holding direct U.S. Treasury obligations.
Restricted Cash
We consider bank deposits serving as collateral for bank guarantees issued on behalf of our foreign subsidiaries as restricted cash, which is included in prepaid expenses and other current assets and other noncurrent assets in our consolidated balance sheets. Our restricted cash was $9.7$16.1 million and $12.7$14.9 million as of January 30, 2016February 2, 2019 and January 31, 2015,February 3, 2018, respectively.

F-8
Table of Contents
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Merchandise Inventories
Our merchandise inventories are carried at the lower of cost or market generally using the average cost method. Under the average cost method, as new product is received from vendors, its current cost is added to the existing cost of product on-hand and this amount is re-averaged over the cumulative units. Pre-owned video game products traded in by customers are recorded as inventory at the amount of the store credit given to the customer. We are required to make adjustments to inventory to reflect potential obsolescence or over-valuation as a result of cost exceeding market. In valuing inventory, we consider quantities on hand, recent sales, potential price protections, returns to vendors and other factors.
Our ability to assess these factors is dependent upon our ability to forecast customer demand and to provide a well-balanced merchandise assortment. Inventory is adjusted based on anticipated physical inventory losses or shrinkage and actual losses resulting from periodic physical inventory counts. Inventory reserves as of January 30, 2016February 2, 2019 and January 31, 2015February 3, 2018 were $61.5$69.4 million and $69.3$56.1 million, respectively.
Property and Equipment
Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation on furniture, fixtures and equipment is computed using the straight-line method over their estimated useful lives ranging from two to ten years. Maintenance and repairs are expensed as incurred, while betterments and major remodeling costs are capitalized. Leasehold improvements are capitalized and amortized over the shorter of their estimated useful lives or the terms of the respective leases (generally ranging from one to ten years), including option periods in which the exercise of the option is reasonably assured (generally ranging from three to ten years).assured. Costs incurred in purchasing management information systems are capitalized and included in property and equipment. These costs are amortized over their estimated useful lives from the date the systems becometechnology becomes operational. Our total depreciation expense was $144.9$96.7 million, $144.5$110.1 million and $152.9$123.3 million duringfor fiscal 2015, fiscal 20142018, 2017 and fiscal 2013,2016, respectively.
We periodically review our property and equipment when events or changes in circumstances indicate that theirits carrying amounts may not be recoverable or theirits depreciation or amortization periods should be accelerated. We assess recoverability based on several factors, including our intention with respect to our stores and those stores’ projected undiscounted cash flows. An impairment loss would beis recognized for the amount by which the carrying amount of the assets exceeds theirits fair value, as approximated by the present valuedetermined based on an estimate of their projected discounted future cash flows. We recorded impairment losses of $4.6$2.1 million, $2.2$2.8 million and $18.5$5.2 million in fiscal 2015, fiscal 20142018, 2017 and fiscal 2013,2016, respectively. See Note 2,4, "Asset Impairments," for further information regarding our asset impairment charges.
Goodwill &and Intangible Assets
Goodwill represents the excess purchase price over tangible net assets and identifiable intangible assets acquired. Intangible assets are recorded apart from goodwill if they arise from a contractual right and are capable of being separated from the entity and sold, transferred, licensed, rented or exchanged individually. We are required to evaluate goodwill and other intangible assets not subject to amortization for impairment at least annually. This annual test is completed at the beginning of the fourth quarter of each fiscal year or when circumstances indicate the carrying value of the goodwill or other intangible assets might be impaired. Goodwill has been assigned to reporting units for the purpose of impairment testing. We have four operating segments—United States, Canada, Australia and Europe, which also define our reporting units based upon the similar economic characteristics of operations within each segment, including the nature of products, product distribution, type of customer and separate management within these businesses.
In order to test goodwill for impairment, we compare a reporting unit's carrying amount to its estimated fair value. If the reporting unit’s carrying value exceeds its estimated fair value, then an impairment charge is recorded in the amount of the excess. The estimated fair value of a reporting unit is determined based on its discounted cash flows, which are derived from our long-term financial forecasts. The discounted cash flows analysis requires significant assumptions including, among others, a discount rate and a terminal value. Goodwill impairment charges totaling $970.7 million were recognized in fiscal 2018. See Note 9,7, "Goodwill and Intangible Assets,"Assets" for additional information regardinginformation. No goodwill impairment charges related to our accounting policiescontinuing operations were recognized in fiscal 2017 and 2016.

F-9

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Our indefinite-lived intangible assets consist of trade names and dealer agreements. Intangible assets that are determined to have an indefinite life are not amortized, but are required to be evaluated at least annually for goodwillimpairment. If the carrying value of an individual indefinite-lived intangible asset exceeds its fair value, such individual indefinite-lived intangible asset is impaired by the amount of the excess. The fair value of our dealer agreements are estimated using a discounted cash flow analysis known as the Greenfield Method, which assumes that a business, at its inception, owns only dealer agreements and must make capital expenditure, working capital and other investments to ramp up its operations to a level that is comparable to its current operations. The fair value of our trade names are estimated by using a relief-from-royalty approach, which assumes the value of the trade name is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the trade name and instead licensed the trade name from another company. As a result of our fiscal 2018, 2017 and 2016 annual impairment testing, we recognized impairment charges totaling $43.1 million, $11.0 million and $14.4 million, respectively, primarily associated with our dealer agreements and trade names. See Note 7, "Goodwill and Intangible Assets" for additional information.
Our definite-lived intangible assets.assets consist primarily of customer relationships, leasehold rights, advertising relationships and amounts attributed to favorable leasehold interests recorded as a result of business acquisitions. The estimated useful life and amortization methodology of intangible assets are determined based on the period in which they are expected to contribute directly to cash flows. Intangible assets that are determined to have a definite life are amortized over the life of the asset.
Revenue Recognition
We adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (ASC Topic 606), effective February 4, 2018 (the first day of fiscal 2018) utilizing the modified retrospective transition approach. Our revenue recognition policy discussed below is subsequent to the adoption of ASU 2014-09. See “—Recently Adopted Accounting Pronouncements” for information regarding our revenue recognition policy prior to the adoption of ASU 2014-09.
We recognize revenue when the sales price is fixedperformance obligations are satisfied by transferring goods or determinable, collection is reasonably assured andservices to the customer in an amount that we expect to collect in exchange for those goods or services. The satisfaction of a performance obligation with a single customer may occur at a point in time or may occur over time. The significant majority of our revenue is recognized at a point in time, generally when a customer purchases and takes possession of merchandise through our stores or when merchandise purchased through our e-commerce websites is delivered to a customer. We have arrangements with customers where our performance obligations are satisfied over time, which primarily relate to extended warranties and our Game Informer magazine. In arrangements where we have multiple performance obligations, the merchandise, or in the case of commissions, when the commission-generating activity has been performed.transaction price is allocated to each performance obligation based on their relative stand-alone selling price (see "—Loyalty Program").
Revenue from the sales of our products is recognized at the time of sale, net of sales discounts and net of an estimated sales return reserve, based on historical return rates, with a corresponding reduction in cost of sales.reserve. Our sales return policy is generally limited to 30 days or less and as such our sales returns are, and historically have been, immaterial. Revenues do not include sales taxes or other taxes collected from customers.
The sales of pre-owned video game products are recorded at the retail price charged to the customer. Advertising revenues for Game Informer are recorded upon release of magazines for sale to consumers. Subscription revenues for our PowerUp Rewards loyalty program and magazines are recognized on a straight-line basis over the subscription period. Revenue from the sales of product replacement plans is recognized on a straight-line basis over the coverage period. Customer liabilities and other deferred revenues for our PowerUp Rewards loyalty program, gift cards, customer credits, magazines and product replacement plans are included in accrued liabilities (see Note 8, "Accrued Liabilities").liabilities.
We also sell 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 us to purchase inventory or take physical possession of, or take title to, inventory. When purchasing these products from us, consumers pay a retail price and we earn a commission based on a percentage of the retail sale as negotiated with the product publisher. We recognize these commissions as revenue at the time of sale of these digital products.
Loyalty Program
Our Spring Mobile business earns commission revenue as an AT&T authorized dealer relatedloyalty program accounting policy discussed below is subsequent to the activationadoption of new wireless customers,ASU 2014-09. See “—Recently Adopted Accounting Pronouncements” for information regarding our loyalty program accounting policy prior to the activationadoption of enhancedASU 2014-09.
Our PowerUp Rewards loyalty program allows members to earn points on purchases that can be redeemed for rewards that include discounts or upgraded features on existing wireless customer plansmerchandise. When loyalty program members purchase our product, we allocate the transaction price between the product and certain other commission incentive opportunities that may be offered to us by AT&T. We have determined that we are not deemed the obligorloyalty points earned based on the underlyingrelative stand-alone selling prices and expected point redemption. The portion allocated to the loyalty points is initially recorded as deferred revenue and subsequently recognized as revenue upon redemption or expiration.

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


wireless services contracts that give riseThe two primary estimates utilized to this commission revenue; therefore, commissionrecord the deferred revenue for loyalty points earned by members are the estimated retail price per point and estimated breakage. The estimated retail price per point is recognized atbased on the actual historical retail prices of product purchased through the redemption of loyalty points. We estimate breakage of loyalty points based on historical redemption rates. We continually evaluate our methodology and assumptions based on developments in retail price per point at whichredeemed, redemption patterns and other factors. Changes in the commission-generating activity has been performed, which is generally drivenretail price per point and redemption rates have the effect of either increasing or decreasing the deferred revenue liability through current period revenue by customer activation. Commissions are recognized netan amount estimated to represent the retail value of an allowance for chargebacks from AT&T for estimated customer cancellations, which is periodically assessed and adjusted to reflect historical cancellation experience.
Revenues doall points previously earned but not include sales taxes or other taxes collected from customers.
Costyet redeemed by loyalty program members as of Sales and Selling, General and Administrative Expenses Classification
the end of the reporting period. The classification of cost of salesadministering the loyalty program, including program administration fees, program communications and selling, general and administrative expenses varies across the retail industry. We include purchasing, receiving and distribution costscost of loyalty cards, is recognized in selling, general and administrative expenses in the consolidated statements of operations. For the 52 weeks ended January 30, 2016, the 52 weeks ended January 31, 2015 and the 52 weeks ended February 1, 2014, these purchasing, receiving and distribution costs amounted to $62.9 million, $50.3 million and $56.4 million, respectively.
We include processing fees associated with purchases made by check and credit cards in cost of sales in the consolidated statements of operations. For the 52 weeks ended January 30, 2016, the 52 weeks ended January 31, 2015 and the 52 weeks ended February 1, 2014, these processing fees amounted to $80.3 million, $66.4 million and $61.5 million, respectively.expenses.
Customer Liabilities
Our customer liabilities accounting policy discussed below is subsequent to the adoption of ASU 2014-09. See “—Recently Adopted Accounting Pronouncements” for information regarding our customer liabilities accounting policy prior to the adoption of ASU 2014-09.
We establish a liability upon the issuance of merchandise credits and the sale of gift cards. Revenue is subsequently recognized when the credits and gift cards are redeemed. In addition, we recognize breakage is recognized quarterly on unused customer liabilities older than two yearsin revenue upon redemption and in proportion to the extent that our management believes the likelihood of redemption by the customer is remote, based on historical redemption patterns.patterns, regardless of the age of the unused gift cards and merchandise credit liabilities. To the extent that future redemption patterns differ from those historically experienced, there will be variations in the recorded breakage. Breakage
Vendor Arrangements
We and most of our largest vendors participate in cooperative advertising programs and other vendor marketing programs in which the vendors provide us with cash consideration in exchange for marketing and advertising the vendors’ products. Our accounting for cooperative advertising arrangements and other vendor marketing programs results in a significant portion of the consideration received from our vendors reducing the product costs in inventory rather than as an offset to our marketing and advertising costs. The consideration serving as a reduction in inventory is recognized in cost of sales as inventory is sold. The amount of vendor allowances to be recorded as a reduction of inventory is determined based on the nature of the consideration received and the merchandise inventory to which the consideration relates. We apply a sell-through rate to determine the timing in which the consideration should be recognized in cost of sales. Consideration received that relates to video game products that have not yet been released to the public is deferred as a reduction of inventory.
The cooperative advertising programs and other vendor marketing programs generally cover a period from a few days up to a few weeks and include items such as product catalog advertising, in-store display promotions, internet advertising, co-op print advertising and other programs. The allowance for each event is negotiated with the vendor and requires specific performance by us to be earned. Vendor allowances of $143.4 million, $162.5 million and $184.3 million were recorded as a reduction of cost of sales for fiscal 2018, 2017 and 2016, respectively.
Cost of Sales and Selling, General and Administrative Expenses Classification
The classification of cost of sales and selling, general and administrative expenses ("SG&A") varies across the retail industry. We include certain purchasing, receiving and distribution costs in SG&A in the consolidated statements of operations. We include processing fees associated with purchases made by check and credit cards in cost of sales in ourthe consolidated statements of operations.
Advertising Expenses
We expense advertising costs for television, newspapers and other media when the advertising takes place. Advertising expenses for the 52 weeks ended January 30,fiscal 2018, 2017 and 2016 the 52 weeks ended January 31, 2015 and the 52 weeks ended February 1, 2014 were $66.6totaled $72.9 million, $64.1$82.8 million and $57.8$76.3 million, respectively.
Loyalty Expenses
Our PowerUp Rewards loyalty program allows enrolled members to earn points on purchases that can be redeemed for rewards that include discounts or merchandise. We estimate the net cost of the rewards that will be issued and redeemed and record this cost and the associated balance sheet liability as points are accumulated by loyalty program members. The two primary estimates utilized to record the balance sheet liability for loyalty points earned by members are the estimated redemption rate and the estimated weighted-average cost per point redeemed. Our management uses historical redemption rates experienced under the loyalty program as a basis to estimate the ultimate redemption rate of points earned. A weighted-average cost per point redeemed is used to estimate future redemption costs. The weighted-average cost per point redeemed is based on our most recent actual costs incurred to fulfill points that have been redeemed by our loyalty program members and is adjusted as appropriate for recent changes in redemption costs, including the mix of rewards redeemed. We continually evaluate our methodology and assumptions based on developments in redemption patterns, cost per point redeemed and other factors. Changes in the ultimate redemption rate and weighted-average cost per point redeemed have the effect of either increasing or decreasing the liability through the current period provision by an amount estimated to cover the cost of all points previously earned but not yet redeemed by loyalty program members as of the end of the reporting period.
The cost of free or discounted product is recognized in cost of sales and the associated liability is included in accrued liabilities. The reserve is released when loyalty program members redeem their respective points and the corresponding rewards are recorded to cost of goods sold in the period of redemption. The cost of administering the loyalty program, including program administration fees, program communications and cost of loyalty cards, is recognized in selling, general and administrative expenses.
Income Taxes
Income tax expense includes federal, state, local and international income taxes. Income taxes are accounted for utilizing an asset and liability approach and deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the financial reporting basis and the tax basis of existing assets and liabilities using enacted tax rates. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Valuation allowances are recorded to reduce deferred tax assets to the

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


amount that will more likely than not be realized. In accordance with GAAP, we maintain liabilities for uncertain tax positions until examination of the tax year is completed by the applicable taxing authority, available review periods expire or additional facts and circumstances cause us to change our assessment of the appropriate accrual amount. See Note 13,8, "Income Taxes," for additional information.

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


We plan on permanentlyindefinitely reinvesting our undistributedunremitted foreign earnings outside the United States. Where foreign earnings are permanentlyindefinitely reinvested, no provision for federal income or foreign withholding taxes is made. Should we have undistributedunremitted foreign earnings that are not permanentlyindefinitely reinvested, United States income tax expense and foreign withholding taxes will be provided for at the time the earnings are generated.
Lease AccountingLeases
We lease retail stores, warehouse facilities, office space and equipment. These assets and properties are generally leased under noncancelable agreements that expire at various dates with various renewal options for additional periods. The agreements, which are classified as operating leases, generally provide for minimum and, in some cases, percentage rentals and require us to pay all insurance, taxes and other maintenance costs. Leases with step rent provisions, escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term, which includes renewal option periods when we are reasonably assured of exercising the renewal options and includes “rent holidays” (periods in which we are not obligated to pay rent). Cash or lease incentives received upon entering into certain store leases (“tenant improvement allowances”) are recognized on a straight-line basis as a reduction to rent expense over the lease term, which includes renewal option periods when we are reasonably assured of exercising the renewal options. We record the unamortized portion of tenant improvement allowances as a part of deferred rent. We do not have leases with capital improvement funding. Percentage rentals are based on sales performance in excess of specified minimums at various stores and are accounted for in the period in which the amount of percentage rentals can be accurately estimated.
In February 2016, the FASB issued an update to current lease accounting standards; see "—Recent Accounting Pronouncements" for additional information.
Foreign Currency
Generally, we have determined that the functional currencies of our foreign subsidiaries are the subsidiaries’ local currencies. The assets and liabilities of the subsidiaries are translated at the applicable exchange rate as of the end of the balance sheet date and revenue and expenses are translated at an average rate over the period. Currency translation adjustments are recorded as a component of other comprehensive income. Currency translation adjustments related to divested foreign businesses are reclassified into earnings as a component of SG&A in our consolidated statements of operations once the liquidation of the respective foreign businesses is substantially complete.
Net gains from foreign currency transactions and derivatives are included in selling, general and administrative expenses and were $3.0 million, $2.4 million and $4.5 million in fiscal 2018, 2017 and 2016, respectively. The foreign currency transaction gains and losses are primarily due to the decrease or increase in the value of the U.S. dollar compared to the functional currencies of the countries in which we operate internationally.
We use forward exchange contracts, foreign currency options and cross-currency swaps (together, the “foreign currency contracts��) to manage currency risk primarily related to foreign-currency denominated intercompany assets and liabilities and certain other foreign currency assets and liabilities. These foreign currency contracts are not designated as hedges and, therefore, changes in the fair values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the re-measurement of related intercompany loans and foreign currency assets and liabilities. See Note 5, "Fair Value Measurements and Financial Instruments," for additional information regarding our foreign currency contracts.
Recently Adopted Accounting Pronouncements
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments, which provides guidance on eight specific cash flow issues in regard to how cash receipts and cash payments are presented and classified in the statement of cash flows. The FASB also issued ASU 2016-18, Restricted Cash, in November 2016 that requires entities to include restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented in the statement of cash flows. These updated standards are effective for fiscal years beginning after December 15, 2017, including interim periods within those years, with early adoption permitted. We adopted these new standards on a retrospective basis, which did not result in a material impact to our consolidated financial statements.

F-12

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


As required by ASU 2016-18, we include restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented on our condensed consolidated statement of cash flows. The following table provides a reconciliation of cash and cash equivalents in the condensed consolidated balance sheets to total cash and cash equivalents and restricted cash in the condensed consolidated statements of cash flows (in millions):
  February 2,
2019		 February 3,
2018		 January 28,
2017
Cash and cash equivalents $1,624.4
 $854.2
 $664.5
Restricted cash (included in prepaid expenses and other current assets) 2.7
 —
 —
Restricted cash (included in other noncurrent assets) 13.4
 14.9
 10.2
Total cash and cash equivalents and restricted cash in the statements of cash flows $1,640.5
 $869.1
 $674.7
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which sets forth a new five-step revenue recognition model that replaces the prior revenue recognition guidance in its entirety. The underlying principle of the new standard is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The updated standard also requires additional disclosures on the nature, timing, and uncertainty of revenue and related cash flows. In 2016, the FASB issued several ASUs that further amended the new revenue standard in the areas of principal versus agent evaluation, licenses of intellectual property, identifying performance obligations, and other clarifications and technical corrections. We adopted the new revenue standard, effective February 4, 2018, by utilizing the modified retrospective transition approach.

The new revenue standard primarily impacted the accounting of our PowerUp Rewards loyalty program and the recognition of breakage associated with our gift cards liability. For our loyalty program, we previously estimated the net cost of the rewards that were issued and recorded this cost (presented as cost of sales) and the associated balance sheet liability as points were accumulated by our loyalty program members. Under the new standard, the transaction price is allocated between the product(s) and loyalty points earned based on the relative stand-alone selling prices and expected point redemption. The portion allocated to the loyalty points is initially recorded as deferred revenue and subsequently recognized as revenue upon redemption or expiration. For our gift cards liability, estimated breakage on unused gift cards and merchandise credit liabilities was previously recognized on a quarterly basis (recorded to cost of sales) to the extent that we believed the likelihood of redemption was remote, generally for balances older than two years. Under the new standard, we recognize breakage in revenue upon redemption and in proportion to historical redemption patterns, regardless of the age of the unused gift cards and merchandise credit liabilities. In addition, the new revenue standard requires presentation of our sales return reserve to be on a gross basis, consisting of a separate right of return asset and liability.

Consistent with the modified retrospective transition approach, we have applied the new revenue standard on a prospective basis, effective February 4, 2018, and recorded adjustments to our current period opening balance sheet (as of February 4, 2018) to reflect the cumulative effect of the new revenue standard. The cumulative-effect adjustment included a reduction of our gift card and customer deposit liabilities of $44.3 million, an increase to our loyalty program liabilities of $28.2 million and an increase to our retained earnings of $16.1 million ($11.5 million, net of tax). The cumulative-effect adjustment also included a $4.4 million increase to merchandise inventories, net and accrued liabilities to present our sales return reserve on a gross basis. The adoption of the new standard resulted in expanded revenue recognition disclosures which are included below in Note 3, “Revenue.”

The impact of the new revenue standard to our statements of operations for fiscal 2018 is as follows (in millions):
  Fiscal Year 2018
  Under Prior Standard Impact of New Standard As Reported
Net sales $8,240.7
 $44.6
 $8,285.3
Cost of sales 5,937.1
 40.1
 5,977.2
Gross profit 2,303.6
 4.5
 2,308.1
Operating (loss) earnings from continuing operations (706.5) 4.5
 (702.0)
(Loss) earnings from continuing operations before income taxes (757.6) 4.5
 (753.1)
Income tax expense 40.5
 1.2
 41.7
Net (loss) income from continuing operations (798.1) 3.3
 (794.8)


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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The impact of the new revenue standard to our balance sheet as of February 2, 2019 is as follows (in millions):
  February 2, 2019
  Under Prior Standard Impact of New Standard As Reported
Merchandise inventories, net $1,246.1
 $4.4
 $1,250.5
Total current assets 3,123.3
 4.4
 3,127.7
Deferred income taxes 151.9
 (4.6) 147.3
Total noncurrent assets 921.2
 (4.6) 916.6
Total assets 4,044.5
 (0.2) 4,044.3
       
Accrued liabilities 769.0
 (16.2) 752.8
Income taxes payable 26.0
 1.2
 27.2
Total current liabilities 2,196.1
 (15.0) 2,181.1
Total liabilities 2,723.1
 (15.0) 2,708.1
Retained earnings 1,347.9
 14.8
 1,362.7
Total stockholders' equity 1,321.4
 14.8
 1,336.2
Total liabilities and stockholders' equity 4,044.5
 (0.2) 4,044.3
Recent Accounting Pronouncements
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The new guidance is intended to more closely align hedge accounting with entities’ hedging strategies, simplify the application of hedge accounting and increase the transparency of hedging programs. In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. This ASU expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting. The provisions of ASU 2017-12 and ASU 2018-16 are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We do not anticipate that adoption of these standards will have a material impact to our consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases. This standard requires a lessee to recognize a liability related to lease payments and an offsetting right-of-use asset representing a right to use the underlying asset for the lease term on the balance sheet. Entities are required to use a modified retrospective transition approach for leases that exist or are entered into after the beginning of the earliest comparative period presented in the financial statements, with certain reliefs available. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides clarifications and improvements to ASU 2016-02 including allowing entities to elect an additional transition method with which to adopt ASU 2016-02. The approved transition method enables entities to apply the transition requirements in this ASU at the effective date of ASU 2016-02 (rather than at the beginning of the earliest comparative period presented as currently required) with the effect of initially applying ASU 2016-02 recognized as a cumulative-effect adjustment to retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the year of adoption would continue to be in accordance with ASC 840, Leases (Topic 840) (“ASC 840”), including the disclosure requirements of ASC 840. These ASUs are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted.
We will adopt the new standard in the first quarter of fiscal 2019, using the modified-retrospective transition approach as outlined in ASU 2018-11, including certain practical expedients, with no restatement of comparative periods and a cumulative effect adjustment recognized on the date of adoption. Under this transition approach, we will apply the new lease standard, effective February 3, 2019, and record adjustments to our fiscal 2019 opening balance sheet (as of February 3, 2019) to reflect the cumulative effect of the new lease standard. We will also provide quantitative and qualitative disclosures of the new standard's impact to each of our financial statement line items during fiscal 2019. We continue to finalize our implementation efforts and currently estimate that the adoption of ASC 842 will result in recognition of an initial right-of-use asset and corresponding initial lease liability of approximately $850 million. We do not expect the adoption of the new lease standard to have a material impact to our consolidated statements of operations or statements of cash flows.

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2.    Discontinued Operations and Dispositions
Discontinued Operations
On January 16, 2019, we completed the sale of all of the equity interest in our wholly-owned subsidiary Spring Communications Holding, Inc. ("Spring Mobile") to Prime Acquisition Company, LLC, a wholly-owned subsidiary of Prime Communications, L.P., pursuant to an Equity Purchase Agreement dated as of November 21, 2018. The net cash proceeds received from the sale totaled $727.9 million, which is subject to customary post-closing adjustments. The net proceeds received consisted of the purchase price of $700.0 million less $10.5 million of transaction costs, plus preliminary adjustments totaling $38.4 million for working capital and indebtedness. We recognized a gain on sale of $100.8 million ($65.4 million, net of tax) during fiscal 2018. Except for customary post-closing adjustments and transition services, we have no contingencies or continuing involvement with Spring Mobile subsequent to the completion of the sale.
The historical results of Spring Mobile, including the gain on sale, are reported as discontinued operations in our consolidated statements of operations for all periods presented. The consolidated statement of cash flows is presented on a combined basis for all periods presented, therefore, does not segregate cash flows from continuing and discontinued operations. The results of our discontinued operations for fiscal 2018, 2017 and 2016 are as follows (in millions):
 Fiscal Year
 2018 2017 2016
Net sales$565.4
 $677.5
 $642.9
Cost of sales73.1
 122.3
 133.5
Gross profit492.3
 555.2
 509.4
Selling, general and administrative expenses395.9
 453.4
 390.7
Depreciation and amortization20.1
 28.4
 28.5
Goodwill impairments—
 32.8
 —
Asset impairments—
 344.2
 14.2
Operating earnings (loss)76.3
 (303.6) 76.0
Gain on sale of discontinued operations100.8
 —
 —
Earnings (loss) from discontinued operations before income taxes177.1
 (303.6) 76.0
Income tax expense (benefit)55.3
 (107.9) 27.3
Net income (loss) from discontinued operations$121.8
 $(195.7) $48.7
The major classes of assets and liabilities held for sale associated with Spring Mobile are as follows (in millions):
 February 3, 2018
Assets: 
Cash and cash equivalents$10.2
Receivables, net44.1
Merchandise inventories, net116.4
Prepaid expenses and other current assets9.7
Property and equipment, net82.2
Goodwill316.8
Other intangible assets, net77.0
Other assets3.7
Total assets held for sale$660.1
  
Liabilities: 
Accounts payable$9.7
Accrued liabilities26.0
Other liabilities15.2
Total liabilities held for sale$50.9

F-15

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The following table presents capital expenditures, depreciation and amortization and other significant operating noncash items of our discontinued operations for fiscal 2018, 2017 and 2016 (in millions):
 Fiscal Year
 2018 2017 2016
Capital expenditures$7.5
 $22.2
 $36.9
Depreciation and amortization20.1
 28.4
 28.5
Goodwill and asset impairments—
 377.0
 14.2
Provision for inventory reserves12.7
 12.9
 17.6
Disposition of Kongregate
On July 21, 2017, we sold our ownership interest in Kongregate, a web and mobile gaming platform and publisher of mobile games, for proceeds of $54.7 million, net of transaction costs, of which $3.5 million was restricted cash held in escrow primarily for indemnification purposes. We recognized a gain on the sale of $6.4 million, net of tax, which is classified in selling, general and administrative expenses in our consolidated statements of operations for fiscal 2017. The disposed net assets of Kongregate primarily consisted of goodwill.
Disposition of Cricket Wireless
On January 24, 2018, we sold 63 Cricket Wireless branded stores for proceeds of $3.8 million. The gain on the sale was not material to our results of operations for fiscal 2017. We had no remaining Cricket Wireless stores as of February 3, 2018.
3.    Revenue
Net sales by significant product category for the periods indicated is as follows (in millions):
  Fiscal Year
  2018 2017 2016
New video game hardware (1)
 $1,767.8
 $1,791.8
 $1,396.7
New video game software 2,449.7
 2,582.0
 2,493.4
Pre-owned and value video game products 1,866.3
 2,149.6
 2,254.1
Video game accessories 956.5
 784.3
 676.7
Digital 194.0
 189.2
 181.0
Collectibles 707.5
 636.2
 494.1
Other (2)
 343.5
 414.0
 469.0
Total $8,285.3
 $8,547.1
 $7,965.0

(1)Includes sales of hardware bundles, in which physical hardware and digital or physical software are sold together as a single SKU.
(2)
Includes mobile and consumer electronics sold through our Simply Mac and Cricket Wireless branded stores. We sold our Cricket Wireless branded stores in January 2018. Also includes sales of PC entertainment software, interactive game figures, strategy guides, mobile and consumer electronics sold through our Video Game Brands segments, and revenues from PowerUp Pro loyalty members receiving Game Informer magazine in print form.
See Note 16, "Segment Information," for net sales by geographic location.

Performance Obligations
Effective February 4, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers, which set forth a new revenue recognition model that replaced the prior revenue recognition guidance in its entirety (see Note 1 above). The core principle of the new standard is that revenue is recognized when performance obligations are satisfied by transferring goods or services to the customer in an amount that the entity expects to collect in exchange for those goods or services. The satisfaction of a performance obligation with a single customer may occur at a point in time or may occur over time. The significant majority of our revenue is recognized at a point in time, generally when a customer purchases and takes possession of merchandise through 2034our stores or when merchandise purchased through our e-commerce websites is delivered to a customer. We have arrangements with customers where our performance obligations are satisfied over time, which primarily relate to extended warranties and our Game Informer magazine. Revenues do not include sales taxes or other taxes collected from customers.

F-16

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


We expect to recognize revenue in future periods for remaining performance obligations we have associated with unredeemed gift cards, trade-in credits, reservation deposits and our PowerUp Rewards loyalty program (collectively, “unredeemed customer liabilities”), extended warranties and subscriptions to our Game Informer magazine.
Performance obligations associated with unredeemed customer liabilities are primarily satisfied at the time our customers redeem their gift cards, trade-in credits, reservation deposits or loyalty program points for products that we offer. Unredeemed customer liabilities are generally redeemed within one year of issuance. As of February 2, 2019, our unredeemed customer liabilities totaled $262.0 million.
We offer extended warranties on certain new and pre-owned video game products with terms generally ranging from 12 to 24 months, depending on the product. Revenues for extended warranties sold are recognized on a straight-line basis over the life of the contract. As of February 2, 2019, our deferred revenue liability related to extended warranties totaled $70.4 million.
Performance obligations associated with subscriptions to our Game Informer magazine are satisfied when monthly magazines are delivered in print form or when made available in digital format. The significant majority of our customers’ subscriptions is for 12 monthly issues. As of February 2, 2019, we had deferred revenue of $44.5 million associated with our Game Informer magazine.
Significant Judgments and Estimates
We accrue PowerUp Rewards loyalty points at the estimated retail price per point, net of estimated breakage, which can be redeemed by our loyalty program members for products that we offer. The estimated retail price per point is based on the actual historical retail prices of product(s) purchased through the redemption of loyalty points. We estimate breakage of loyalty points and unredeemed gift cards based on historical redemption rates.
Contract Balances
Our contract liabilities primarily consist of unredeemed customer liabilities and deferred revenues associated with extended warranties and subscriptions to our Game Informer magazine. The opening balance, current period changes and ending balance of our contract liabilities are as follows (in millions):
  Contract Liabilities
Balance at February 3, 2018 $426.0
Adoption of ASU 2014-09 (16.8)
Increase to contract liabilities (1)
 1,238.1
Decrease to contract liabilities (2)
 (1,262.9)
Other adjustments (3)
 (7.5)
Balance at February 2, 2019 $376.9

(1)
Includes issuances of gift cards, trade-in credits and loyalty points, new reservation deposits, new subscriptions to Game Informer and extended warranties sold.
(2)
Includes redemptions of gift cards, trade-in credits, loyalty points and reservation deposits as well as revenues recognized for Game Informer and extended warranties. During the 52 weeks ended February 2, 2019, there were $65.8 million of gift cards redeemed that were outstanding as of February 3, 2018.
(3)Primarily includes foreign currency translation adjustments.

F-17

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4.    Asset Impairments
A summary of our asset impairment charges, by reportable segment, for fiscal 2018, 2017 and 2016 is as follows (in millions):
  
United 
States
 Canada Australia Europe Total
Fiscal 2018          
Intangible asset impairment charges $11.2
 $—
 $—
 $31.9
 $43.1
Store and other asset impairment charges 1.3
 —
 0.2
 0.6
 2.1
Total $12.5
 $—
 $0.2
 $32.5
 $45.2
Fiscal 2017          
Intangible asset impairment charges $11.0
 $—
 $—
 $—
 $11.0
Store and other asset impairment charges 1.3
 —
 0.3
 1.2
 2.8
Total $12.3
 $—
 $0.3
 $1.2
 $13.8
Fiscal 2016          
Intangible asset impairment charges $7.0
 $—
 $—
 $7.4
 $14.4
Store and other asset impairment charges 2.7
 0.2
 —
 2.3
 5.2
Total $9.7
 $0.2
 $—
 $9.7
 $19.6

See Note 7, "Goodwill and Intangible Assets," for information regarding our intangible asset impairment charges.
Store and other asset impairment charges relate to our evaluation of store property, equipment and other assets in situations where an asset’s carrying value was not expected to be recovered by its future cash flows over its remaining useful life.
5.    Fair Value Measurements and Financial Instruments
Fair value is defined 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. Applicable accounting standards require disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly through market-corroborated inputs. Level 3 inputs are unobservable inputs for the asset or liability reflecting our assumptions about pricing by market participants.
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis
Assets and liabilities that are measured at fair value on a recurring basis include our foreign currency contracts, life insurance policies we own that have a cash surrender value, certain nonqualified deferred compensation liabilities and contingent consideration payable associated with acquisitions.
We value our foreign currency contracts, our 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 as Bloomberg, and industry-standard models that consider various assumptions, including quoted forward prices, time value, volatility factors, and contractual prices for the underlying instruments, as well as other relevant economic measures, all of which are observable in active markets. When appropriate, valuations are adjusted to reflect credit considerations, generally based on available market evidence.

Our contingent consideration payable related to an acquisition completed by Spring Mobile during fiscal 2016. The contingent consideration was paid in two installments, with one payment occurring in each of the fiscal years 2017 and 2018. The fair value was estimated based on Level 3 inputs which include future sales projections derived from our historical experience with comparable acquired stores and a discount rate commensurate with the risks and inherent uncertainty in the business.

F-18

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The following table provides the fair value of our assets and liabilities measured on a recurring basis and recorded on our consolidated balance sheets (in millions): 
  February 2, 2019 February 3, 2018
  Level 2 Level 3 Level 2 Level 3
Assets:        
Foreign currency contracts (1)
 $1.0
 $—
 $2.4
 $—
Company-owned life insurance(2)
 14.6
 —
 13.9
 —
Total assets $15.6
 $—
 $16.3
 $—
Liabilities:        
Foreign currency contracts (3)
 $1.2
 $—
 $9.9
 $—
Nonqualified deferred compensation(3)
 1.1
 —
 1.2
 —
Contingent consideration(3)
 —
 —
 —
 12.2
Total liabilities $2.3
 $—
 $11.1
 $12.2
___________________
(1)Recognized in prepaid expenses and other current assets in our consolidated balance sheets.
(2)Recognized in other non-current assets in our consolidated balance sheets.
(3)Recognized in accrued liabilities in our consolidated balance sheets.
We use forward exchange contracts, foreign currency options and cross-currency swaps (together, the “foreign currency contracts”) to manage currency risk primarily related to intercompany loans denominated in non-functional currencies and certain foreign currency assets and liabilities. These foreign currency contracts are not designated as hedges and, therefore, changes in the fair values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the re-measurement of related intercompany loans and foreign currency assets and liabilities. The total gross notional value of derivatives related to our foreign currency contracts was $240.0 million and $563.3 million as of February 2, 2019 and February 3, 2018, respectively.
Activity related to the trading of derivative instruments and the offsetting impact of related intercompany and foreign currency assets and liabilities recognized in selling, general and administrative expense is as follows (in millions): 
  Fiscal Year
  2018 2017 2016
Gains (losses) on the changes in fair value of derivative instruments $9.6
 $(24.6) $20.0
(Losses) gains on the re-measurement of related intercompany loans and foreign currency assets and liabilities (6.6) 27.0
 (15.5)
Net gains $3.0
 $2.4
 $4.5
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. We manage 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.
Assets that are Measured at Fair Value on a Nonrecurring Basis
Assets that are measured at fair value on a nonrecurring basis relate primarily to property and equipment and other intangible assets, which are remeasured when the estimated fair value is below its carrying value. For these assets, we do not periodically adjust carrying value to fair value; rather, when we determine that impairment has occurred, the carrying value of the asset is reduced to its fair value.
In fiscal 2018, we recognized impairment charges totaling $43.1 million related to intangible assets. We recognized impairment charges of $31.9 million and $5.3 million associated with our Micromania and ThinkGeek trade names, respectively, to reflect their fair values of $6.0 million and $2.8 million, respectively. We also recognized an impairment charge of $5.9 million associated with other ThinkGeek intangible assets, to reflect their fair values of zero.
In fiscal 2017 and 2016, we recognized impairment charges of $11.0 million and $7.0 million, respectively, associated with our Simply Mac Apple dealer agreement to reflect its fair value of zero and $11.0 million, respectively.

F-19

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


In fiscal 2016, we recognized impairment charges of $7.4 million, associated with our Micromania trade name, to reflect its fair value of $35.0 million.
In fiscal 2018, 2017 and 2016, we recognized impairment charges of $2.1 million, $2.8 million and $5.2 million, respectively, primarily associated store-level property and equipment, to reflect their fair values of zero.
The fair value estimates of the dealer agreements, trade names, customer relationship intangible assets and store-level property and equipment are based on significant unobservable inputs (Level 3) developed using company-specific information. These assets were valued using variations of the discounted cash flow method, which require assumptions associated with, among others, projected sales and cost estimates, capital expenditures, royalty rates, discount rates, terminal values and remaining useful lives. See Note 1, "Nature of Operations and Summary of Significant Accounting Policies," for further information related to our valuation methods.
Other Fair Value Disclosures
The carrying values of our cash equivalents, receivables, net, accounts payable and notes payable approximate the fair value due to their short-term maturities.
As of February 2, 2019, our unsecured 5.50% senior notes due in 2019 had a net carrying value of $349.2 million and a fair value of $350.8 million, and our unsecured 6.75% senior notes due in 2021 had a net carrying value of $471.6 million and a fair value of $478.1 million. The fair values of our senior notes were determined based on quoted market prices obtained through an external pricing source which derives its price valuations from daily marketplace transactions, with adjustments to reflect the spreads of benchmark bonds, credit risk and certain other variables. We have determined this to be a Level 2 measurement as all significant inputs into the quote provided by our pricing source are observable in active markets.
6.    Receivables, Net
Receivables consisted of the following (in millions):
  February 2, 2019 February 3, 2018
Bankcard receivables $44.6
 $49.2
Vendor and other receivables (1)
 93.6
 97.1
Allowance for doubtful accounts (4.0) (7.7)
Total receivables, net $134.2
 $138.6
___________________________
(1)Vendor receivables primarily relate to vendor allowances.
7.    Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill, by reportable segment, for fiscal 2017 and 2018 were as follows (in millions):
  United States Canada Australia Europe Technology Brands Total
Balance at January 28, 2017—as reported $1,199.7
 $28.6
 $70.1
 $74.8
 $352.0
 $1,725.2
Transfers (1)
 2.4
 —
 —
 —
 (352.0) (349.6)
Balance at January 28, 2017—after transfers 1,202.1
 28.6
 70.1
 74.8
 —
 1,375.6
Divestitures (Note 2) (42.6) —
 —
 —
 —
 (42.6)
Foreign currency translation adjustment —
 1.7
 3.5
 12.3
 —
 17.5
Balance at February 3, 2018 1,159.5
 30.3
 73.6
 87.1
 —
 1,350.5
Foreign currency translation adjustment —
 (1.5) (7.2) (7.2) —
 (15.9)
Impairment charge (795.6) (28.8) (66.4) (79.9) —
 (970.7)
Balance at February 2, 2019 $363.9
 $—
 $—
 $—
 $—
 $363.9

F-20

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


___________________
(1)As a result of the divestiture of Spring Mobile, which was completed in January 2019, we allocated the goodwill balance associated with our former Technology Brands segment for the earliest period presented to Spring Mobile, Simply Mac and Cricket Wireless based on their relative fair values. Simply Mac and the historical results of Cricket Wireless are included in the United States segment. We allocated $349.6 million of goodwill to Spring Mobile which was impaired by $32.8 million during fiscal 2017. As of February 3, 2018, goodwill of $316.8 million related to Spring Mobile is included in assets held for sale in our consolidated balance sheets.
We perform an impairment test of goodwill on an annual basis during the fourth quarter or when circumstances indicate that the carrying value of goodwill might be impaired (see Note 1, "Nature of Operations and Summary of Significant Accounting Policies"). During the third quarter of fiscal 2018, we determined that a triggering event occurred as a result of a sustained decline in our market capitalization; therefore, we performed an interim impairment test for all of our reporting units and indefinite-lived intangible assets. As a result of the interim impairment testing, we recognized goodwill impairment charges totaling $557.3 million. During our annual impairment test in the fourth quarter of fiscal 2018, we determined that an additional triggering event occurred upon the announcement that our Board of Directors terminated efforts to pursue a sale of the Company, which resulted in a further decline in our market capitalization, and downward revisions to our forecasted cash flows. As a result of our impairment testing in the fourth quarter of fiscal 2018, we recognized additional goodwill impairment charges of $413.4 million. Goodwill impairment charges in fiscal 2018 totaled $970.7 million.
No goodwill impairment charges related to continuing operations were recognized in fiscal 2017 and 2016. Cumulative goodwill impairment charges were $1,611.2 million as of February 2, 2019, of which $809.1 million, $129.1 million, $173.5 million, and $499.5 million were attributable to our United States, Canada, Australia, and Europe segments, respectively.
Intangible Assets
The gross carrying amount and accumulated amortization of our intangible assets other than goodwill as of February 2, 2019 and February 3, 2018 were as follows (in millions):
  February 2, 2019 February 3, 2018
  Gross Carrying Amount(1) Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Intangible assets with indefinite lives:            
Trade names $8.8
 $—
 $8.8
 $49.3
 $—
 $49.3
Intangible assets with finite lives:            
Leasehold rights 91.8
 (67.3) 24.5
 100.4
 (67.0) 33.4
Customer relationships —
 —
 —
 14.5
 (6.8) 7.7
Other 32.5
 (32.3) 0.2
 33.5
 (31.4) 2.1
Total $133.1
 $(99.6) $33.5
 $197.7
 $(105.2) $92.5
___________________
(1)The change in the gross carrying amount of intangible assets from February 3, 2018 to February 2, 2019 is due to impairments (see Note 4, "Asset Impairments") and the impact of exchange rate fluctuations.
Indefinite-lived Intangible Assets
Indefinite-lived intangible assets are expected to contribute to cash flows indefinitely and, therefore, are not subject to amortization but are subject to annual impairment testing. We test our indefinite-lived intangible assets on an annual basis during the fourth quarter or when circumstances indicate the carrying value might be impaired. We generally perform impairment testing on our indefinite-lived intangible assets in conjunction with the impairment testing on our carrying value of goodwill.
Our trade names consist of Micromania, our video game business in France, which we acquired in 2008; and ThinkGeek, our online and wholesale collectibles retailer, which we acquired in 2015. As a result of impairment tests performed during fiscal 2018, we recognized impairment charges of $31.9 million and $5.3 million related to our Micromania trade name and ThinkGeek trade name, respectively. The impairment charges were primarily the result of increases in discount rate assumptions and downward revisions to our forecasted cash flows, consistent with those utilized in the valuation of our Video Game Brands segments for goodwill impairment testing.
Simply Mac maintains exclusive agreements with Apple to sell their products in Simply Mac branded stores. We previously maintained a dealer agreement intangible asset balance associated with our Simply Mac business, which was fully impaired by $11.0 million during fiscal 2017 to reflect its fair value of zero. The impairment of Simply Mac’s Apple dealer agreements was the result of projected financial performance no longer supporting its carrying value.

F-21

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Finite-lived Intangible Assets
Leasehold rights, the majority of which were recorded as a result of the purchase of SFMI Micromania SAS (“Micromania”) in 2008, represent the value of rights of tenancy under commercial property leases for properties located in France. Rights pertaining to individual leases can be sold by us to a new tenant or recovered by us from the landlord if the exercise of the automatic right of renewal is refused. Leasehold rights are amortized on a straight-line basis over the expected lease term, not to exceed 20 years, with no residual value.
Customer relationships, which were recorded as a result of the ThinkGeek acquisition, represent the value of the relationships related to both wholesale and website customers within the United States. ThinkGeek sells its products directly to large wholesale retailers and also sells its products directly to customers on its ThinkGeek website. Wholesale customer relationships are amortized on a straight-line basis over seven years, and website customer relationships are amortized on a straight-line basis over five years. As the result of lower-than-expected profitability of our ThinkGeek website and our recent decision to exit the ThinkGeek wholesale business, we fully impaired the remaining carrying value of $5.9 million associated with our customer relationships intangible assets during fiscal 2018.
Other intangible assets include design portfolio and favorable leasehold interests. The design portfolio reflects the collection of product designs and ideas that were created by Geeknet and recorded as a result of the Geeknet acquisition. These designs are amortized on a straight-line basis over three 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. Favorable leasehold interests are amortized on a straight-line basis over their remaining lease term with no expected residual value.
As of February 2, 2019, the total weighted-average amortization period for our finite-lived intangible assets was approximately 9.9 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized, with no expected residual value.
Intangible asset amortization expense during fiscal 2018, 2017 and 2016 was $10.1 million, $13.4 million and $15.0 million, respectively. The estimated aggregate intangible asset amortization expense for the next five fiscal years is as follows (in millions): 
Period Projected Amortization Expense
Fiscal 2019 $5.5
Fiscal 2020 4.5
Fiscal 2021 3.7
Fiscal 2022 3.2
Fiscal 2023 2.6
8.    Income Taxes
The provision for income taxes consisted of the following (in millions): 
  Fiscal Year
  2018 2017 2016
Current tax expense:      
Federal $45.0
 $104.7
 $122.2
State 12.8
 14.2
 9.6
Foreign 38.5
 28.5
 29.2
  96.3
 147.4
 161.0
Deferred tax (benefit) expense:      
Federal (36.0) 23.4
 (3.1)
State (4.0) (1.3) (0.1)
Foreign (14.6) (16.0) (33.6)
  (54.6) 6.1
 (36.8)
Total income tax expense $41.7
 $153.5
 $124.2

F-22

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The components of (loss) earnings before income tax expense consisted of the following (in millions):
  Fiscal Year
  2018 2017 2016
United States $(543.4) $310.7
 $370.8
International (209.7) 73.2
 57.9
Total $(753.1) $383.9
 $428.7
The following is a reconciliation of income tax expense (benefit) computed at the U.S. Federal statutory tax rate to income tax expense (benefit) reported in our consolidated statements of operations. Certain prior year rates have been reclassified to conform with current year presentation: 
  Fiscal Year
  2018 2017 2016
Federal statutory tax rate(1)
 21.0 % 33.7 % 35.0 %
State income taxes, net of federal effect (0.9) 3.0
 1.4
Foreign income tax rate differential 2.8
 (1.1) (1.1)
Change in valuation allowance —
 (1.1) 4.8
Change in unrecognized tax benefits 0.2
 (1.5) 2.7
Transition tax 3.0
 2.7
 —
Tax reform —
 8.3
 —
Realization of losses in foreign operations not previously benefited(2)
 —
 —
 (9.8)
Loss on investment in foreign subsidiary —
 —
 (3.8)
Intercompany sale of intangible assets —
 (3.4) —
Foreign tax credit 0.1
 (2.5) (0.1)
Withholding tax expense (0.3) 2.3
 0.2
Impairment of goodwill (25.6) 0.1
 —
Nondeductible interest (4.2) 0.5
 0.6
Other (including permanent differences)(3)
 (1.6) (1.0) (0.9)
  (5.5)% 40.0 % 29.0 %
___________________
(1)Per IRC Section 15, we have incorporated a statutory rate of 21.0% for our year end current provision ending February 2, 2019.
(2)In fiscal 2016, we adopted a plan of reorganization specific to certain foreign operations which resulted in our ability to recognize the benefit of foreign net operating loss carryforwards that were previously unrecognized in affected jurisdictions. As a result, we recognized a tax benefit of $42.1 million in the fourth quarter of fiscal 2016, which is subject to a partial valuation allowance of $14.8 million. The valuation allowance established for this tax benefit is reflected in the line item “Change in valuation allowance.”
(3)Other is comprised of numerous items, none of which is greater than 1.05% of loss before income taxes for fiscal 2018, 1.69% of earnings before income taxes for fiscal 2017, and 1.75% of earnings before income taxes for fiscal 2016.

On December 22, 2017, H.R. 1, formerly known as the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), was signed into law. The Tax Act makes broad and complex changes to the Internal Revenue Code, including, but not limited to: (i) reducing the future U.S. federal corporate tax rate from 35 percent to 21 percent; (ii) requiring companies to pay a one-time transition tax on certain unremitted earnings of foreign subsidiaries; and (iii) providing for bonus depreciation that will allow full expensing of certain qualified property.

The Tax Act also established new tax laws that came into effect beginning in 2018, including, but not limited to: (i) the reduction of the U.S. federal corporate tax rate discussed above; (ii) a general elimination of U.S. federal income taxes on dividends from certain foreign subsidiaries; (iii) a new provision designed to tax global intangible low-taxed income (“GILTI”); (iv) the repeal of the domestic production activity deductions; (v) limitations on the deductibility of certain executive compensation; (vi) limitations on the use of certain foreign tax credits to reduce the U.S. income tax liability; and (vii) a new provision that allows a domestic corporation an immediate deduction for a portion of its foreign derived intangible income (“FDII”).



F-23

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Further, the Securities and Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on accounting for the immediate tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the related accounting under ASC 740, Accounting for Income Taxes. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for a certain income tax effect of the Tax Act is incomplete, but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

As of February 2, 2019 we have completed our accounting for the impacts of the Tax Act and as a result there was a net decrease of $22.7 million to the 2017 provisional amounts recorded for the one-time transition tax. Furthermore, changes in net expense related to revaluation of deferred tax assets and liabilities resulting from the new lower corporate tax rate were immaterial.
Under U.S. GAAP we are allowed to make an accounting policy choice to either: (1) treat taxes due on future GILTI inclusions in U.S. taxable income as a current-period expense when incurred (the “period cost method”); or (2) factor in such amounts into our measurement of our deferred taxes (the “deferred method”). After further evaluation in the current year, we have elected to account for GILTI as a period cost in the year the tax is incurred. Accordingly, no GILTI-related deferred amounts were recorded.
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 the extent they are temporary, are recorded as deferred tax assets and liabilities which are presented in the table below (in millions).
  February 2, 2019 February 3, 2018
Deferred tax asset:    
Inventory $14.7
 $16.8
Deferred rents 3.9
 6.9
Stock-based compensation 1.8
 9.2
Net operating losses 78.5
 86.2
Customer liabilities 18.6
 16.6
Property and equipment 11.3
 13.6
Credits 18.2
 9.5
Accrued compensation 12.1
 12.9
Intangible assets 21.8
 63.2
Other 13.1
 12.9
Total deferred tax assets 194.0
 247.8
Valuation allowance (32.9) (36.9)
Total deferred tax assets, net 161.1
 210.9
Deferred tax liabilities:    
Goodwill (10.2) (49.9)
Prepaid expenses (3.6) (4.5)
Other (0.1) (3.3)
Total deferred tax liabilities (13.9) (57.7)
Net deferred tax assets $147.2
 $153.2
The above amounts are reflected in the consolidated financial statements as:    
Deferred income taxes - assets $147.3
 $158.2
Deferred income taxes - liabilities $(0.1) $(5.0)
With respect to state and local jurisdictions and countries outside of the United States, we and our subsidiaries are typically subject to examination for three to six years after the income tax returns have been filed. Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to state, local or foreign audits.



F-24

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Certain of our French subsidiaries had been under audit by the French Tax Administration (the "FTA") for fiscal years 2008 through 2015. We received tax reassessment notices pursuant to which the FTA asserted that the French subsidiaries were ineligible to claim certain tax deductions from November 4, 2008, through January 31, 2013, which has resulted in a tax collection notice received on January 16, 2018 in the amount of approximately €80.0 million. Based on the nature of the tax deductions being challenged, collection notices through fiscal year 2018 were anticipated. During fiscal 2018, we settled this matter with the FTA and as a result recognized charges totaling $30.3 million in income tax expense. The final settlement covers fiscal years 2008 through 2018.
As of February 2, 2019, we have approximately $25.2 million of net operating loss ("NOL") carryforwards in various foreign jurisdictions that expire in years 2019 through 2035 (primarily related to Puerto Rico), as well as $222.5 million of foreign NOL carryforwards that have no expiration date. In addition, we have approximately $19.8 million of foreign tax credit carryforwards that expire in years 2024 through 2027. We also have approximately $65.1 million of Federal NOL carryovers acquired through the ThinkGeek acquisition that will expire in years 2020 through 2035.
As of February 2, 2019, the gross amount of unrecognized tax benefits was approximately $22.5 million. If we were to prevail on all uncertain tax positions, the net effect would be a benefit to our effective tax rate of approximately $19.6 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):
  Fiscal Year
  2018 2017 2016
Beginning balance of unrecognized tax benefits $24.9
 $42.1
 $31.9
Increases related to current period tax positions 1.1
 1.0
 3.5
Increases related to prior period tax positions 35.5
 11.2
 7.9
Reductions as a result of a lapse of the applicable statute of limitations (0.6) (1.3) (0.2)
Reductions as a result of settlements with taxing authorities (38.4) (28.1) (1.0)
Ending balance of unrecognized tax benefits $22.5
 $24.9
 $42.1
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. As of February 2, 2019, February 3, 2018 and January 28, 2017, we had approximately $5.4 million, $6.9 million and $7.2 million, respectively, in interest and penalties related to unrecognized tax benefit accrued, of which approximately $1.5 million of benefit, $0.3 million of expense and $2.3 million of expense were recognized through income tax expense in fiscal 2018, 2017 and 2016. If we were to prevail on all uncertain tax positions, the reversal of these accruals related to interest would also be a benefit to our effective tax rate.
It is reasonably possible that the amount of the unrecognized benefit with respect to certain of our unrecognized tax positions could significantly increase or decrease within the next 12 months as a result of settling ongoing audits. However, as audit outcomes and the timing of audit resolutions are subject to significant uncertainty, and given the nature and complexity of the issues involved, we are unable to reasonably estimate the possible amount of change in the unrecognized tax benefits, if any, that may occur within the next 12 months as a result of ongoing examinations. Nevertheless, we believe we are adequately reserved for our uncertain tax positions as of February 2, 2019.
Prior to enactment of the Tax Act, the Company asserted that all unremitted earnings of its foreign subsidiaries were considered indefinitely reinvested. As a result of the Tax Act, the Company reported and paid U.S. tax on the majority of its previously unremitted foreign earnings. As of February 2, 2019, the Company continues to be indefinitely reinvested with respect to investments in its foreign subsidiaries. As of February 2, 2019, the Company has not recorded approximately $38.9 million of deferred tax liabilities associated with remaining unremitted earnings considered indefinitely reinvested, primarily associated with foreign withholding taxes that would be due upon remittance.

9.    Accrued Liabilities
Accrued liabilities consisted of the following (in millions):
  February 2, 2019 February 3, 2018
Customer-related liabilities $268.7
 $302.2
Deferred revenue 124.2
 132.4
Employee benefits, compensation and related taxes 140.7
 152.2
Checks and transfers yet to be presented for payment from zero balance cash accounts 82.7
 176.4
Other taxes 45.5
 63.4
Other accrued liabilities(1)
 91.0
 123.5
Total accrued liabilities $752.8
 $950.1
___________________
(1)Includes acquisition-related contingent consideration of $12.2 million as of February 3, 2018. See Note 5, "Fair Value Measurements and Financial Instruments" for additional information.
10.    Debt
Senior Notes
The carrying value of our long-term debt is comprised as follows (in millions):
 February 2, 2019 February 3, 2018
2019 Senior Notes principal amount$350.0
 $350.0
2021 Senior Notes principal amount475.0
 475.0
Less: Unamortized debt financing costs(4.2) (7.1)
 820.8
 817.9
Less: Current portion(349.2) —
Long-term debt, net$471.6
 $817.9
2019 Senior Notes. In September 2014, we issued $350.0 million aggregate principal amount of unsecured 5.50% senior notes due October 1, 2019 (the "2019 Senior Notes"). The 2019 Senior Notes bear interest at the rate of 5.50% per annum with interest payable semi-annually in arrears on April 1 and October 1 of each year beginning on April 1, 2015. We incurred fees and expenses related to the 2019 Senior Notes offering of $6.3 million, which were capitalized during the third quarter of fiscal 2014 and are being amortized as interest expense over the term of the notes. As of February 2, 2019, the 2019 Senior Notes, net of unamortized debt financing costs, are classified as current in our consolidated balance sheet. The 2019 Senior Notes were sold in a private placement and are not registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"). The 2019 Senior Notes were offered in the United States to “qualified institutional buyers” pursuant to the exemption from registration under Rule 144A of the Securities Act and in exempted offshore transactions pursuant to Regulation S under the Securities Act.
On March 4, 2019, we issued a notice of redemption to redeem all of our $350.0 million unsecured senior notes due October 2019. The redemption date will be April 4, 2019 and the redemption price will be equal to $1,000 per $1,000 principal amount of the 2019 Senior Notes, representing 100.0% of the aggregate principal amount being redeemed, plus accrued but unpaid interest. We expect to use cash on hand for the redemption of the 2019 Senior Notes.
2021 Senior Notes. In March 2016, we issued $475.0 million aggregate principal amount of unsecured 6.75% senior notes due March 15, 2021 (the "2021 Senior Notes"). The 2021 Senior Notes bear interest at the rate of 6.75% per annum with interest payable semi-annually in arrears on March 15 and September 15 of each year beginning on September 15, 2016. The net proceeds from the offering were used for general corporate purposes, including acquisitions and dividends. We incurred fees and expenses related to the 2021 Senior Notes offering of $8.1 million, which were capitalized during the first quarter of fiscal 2016 and are being amortized as interest expense over the term of the notes. The 2021 Senior Notes were sold in a private placement and are not registered under the Securities Act. The 2021 Senior Notes were offered in the United States to "qualified institutional buyers" pursuant to the exemption from registration under Rule 144A of the Securities Act and in exempted offshore transactions pursuant to Regulation S under the Securities Act.

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The indentures governing the 2019 Senior Notes and the 2021 Senior Notes (together, the "Senior Notes") do not contain financial covenants but do contain covenants which place certain restrictions on us and our subsidiaries, including limitations on asset sales, additional liens, investments, stock repurchases, the incurrence of additional debt and the repurchase of debt that is junior to the Senior Notes. In addition, the indentures restrict payments of dividends to stockholders (other than dividends payable in shares of capital stock) if one of the following conditions exist: (i) an event of default has occurred, (ii) we could not incur additional debt under the general debt covenant of the indentures or (iii) the sum of the proposed dividend and all other dividends and other restricted payments made under the indentures from the date of the indentures governing the Senior Notes exceeds the sum of 50% of consolidated net income plus 100% of net proceeds from capital stock sales and other amounts set forth in and determined as provided in the indentures. These restrictions are subject to exceptions and qualifications, including that we can pay up to $175 million in dividends to stockholders in each fiscal year and we can pay dividends and make other restricted payments in an unlimited amount if our leverage ratio on a pro forma basis after giving effect to the dividend payment and other restricted payments would be less than or equal to 1.0:1.0.
The indentures contain customary events of default, including payment defaults, breaches of covenants, failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If an event of default occurs and is continuing, the principal amount of the Senior Notes, plus accrued and unpaid interest, if any, may be declared immediately due and payable. These amounts automatically become due and payable if an event of default relating to certain events of bankruptcy, insolvency or reorganization occurs.
Revolving Credit Facility
We maintain an asset-based revolving credit facility (the “Revolver”) with a borrowing base capacity of $420 million and a maturity date of November 2022. The Revolver has a $200 million expansion feature and $50 million letter of credit sublimit, and allows for an incremental $50 million first-in, last-out facility. The applicable margins for prime rate loans range from 0.25% to 0.50% and, for the London Interbank Offered ("LIBO") rate loans, range from 1.25% to 1.50%. The Revolver is secured by substantially all of our assets and the assets of our domestic subsidiaries.
Borrowing availability under the Revolver is limited to a borrowing base which allows us to borrow up to 90% of the appraisal value of the inventory, plus 90% of eligible credit card receivables, net of certain reserves. The borrowing base provides for borrowing of up to 92.5% of the appraisal value during the period between July 15 and October 15 of each year. Letters of credit reduce the amount available to borrow under the Revolver by an amount equal to the face value of the letters of credit. Our ability to pay cash dividends, redeem options and repurchase shares is generally permitted, except under certain circumstances, including if either (1) excess availability under the Revolver is less than 20%, or is projected to be within six months after such payment or (2) excess availability under the Revolver is less than 15%, or is projected to be within six months after such payment, and the fixed charge coverage ratio, as calculated on a pro-forma basis for the prior 12 months, is 1.0:1.0 or less. In the event that excess availability under the Revolver is at any time less than the greater of (1) $30 million or (2) 10% of the lesser of the total commitment or the borrowing base, we will be subject to a fixed charge coverage ratio covenant of 1.0:1.0.
The Revolver places certain restrictions on us and our subsidiaries, including limitations on asset sales, additional liens, investments, loans, guarantees, acquisitions and the incurrence of additional indebtedness. Absent consent from our lenders, we may not incur more than $1 billion of senior secured debt and $750 million of additional unsecured indebtedness to be limited to $250 million in general unsecured obligations and $500 million in unsecured obligations to finance acquisitions valued at $500 million or more.
The per annum interest rate under the Revolver is variable and is calculated by applying a margin (1) for prime rate loans of 0.25% to 0.50% above the highest of (a) the prime rate of the administrative agent, (b) the federal funds effective rate plus 0.50% and (c) the LIBO rate for a one month interest period as determined on such day plus 1.00%, and (2) for LIBO rate loans of 1.25% to 1.50% above the LIBO rate. The applicable margin is determined quarterly as a function of our average daily excess availability under the facility. In addition, we are required to pay a commitment fee of 0.25% for any unused portion of the total commitment under the Revolver. As of February 2, 2019, the applicable margin was 0.25% for prime rate loans and 1.25% for LIBO rate loans.
The Revolver provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, failure to comply with covenants, any material representation or warranty made by us or the borrowers proving to be false in any material respect, certain bankruptcy, insolvency or receivership events affecting us or our subsidiaries, defaults relating to certain other indebtedness, imposition of certain judgments and mergers or the liquidation of the Company or certain of its subsidiaries. During fiscal 2018, we cumulatively borrowed $154.0 million and repaid $154.0 million under our revolving credit facility. Average daily borrowings under the facility for fiscal 2018 were $7.5 million and our average interest rate on those borrowings was 3.9%. As of February 2, 2019, total availability under the Revolver was $385.1 million, with no outstanding borrowings and outstanding standby letters of credit of $7.2 million. We are currently in compliance with the financial requirements of the Revolver.

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


On December 10, 2018, we entered into a third amendment to our Revolver in which the lenders consented to the sale of Spring Mobile, which closed in January 2019.
Luxembourg Line of Credit
In September 2007, our Luxembourg subsidiary entered into a discretionary $20.0 million Uncommitted Line of Credit (the “Line of Credit”) with Bank of America. There is no term associated with the Line of Credit and Bank of America may withdraw the facility at any time without notice. The Line of Credit is available to our foreign subsidiaries for use primarily as a bank overdraft facility for short-term liquidity needs and for the issuance of bank guarantees and letters of credit to support operations. As of February 2, 2019, there were no cash overdrafts outstanding under the Line of Credit and bank guarantees outstanding totaled $9.4 million.
11.    Leases
We lease retail stores, warehouse facilities, office space and equipment. These are generally leased under noncancelable agreements that expire at various dates with various renewal options for additional periods. The agreements, which have been classified as operating leases, generally provide for minimum and, in some cases, percentage rentals and require us to pay all insurance, taxes and other maintenance costs. Leases with step rent provisions, escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term, which includes renewal option periods when we are reasonably assured of exercising the renewal options and includes “rent holidays” (periods in which we are not obligated to pay rent). Cash or lease incentives received upon entering into certain store leases (“tenant improvement allowances”) are recognized on a straight-line basis as a reduction to rent expense over the lease term, which includes renewal option periods when we are reasonably assured of exercising the renewal options. We record the unamortized portion of tenant improvement allowances as a part of deferred rent. We do not have leases with capital improvement funding. Percentage rentals are based on sales performance in excess of specified minimums at various stores and are accounted for in the period in which the amount of percentage rentals can be accurately estimated.
Foreign Currency TranslationRent expense under operating leases was as follows (in millions): 
Generally, we have determined
  Fiscal Year


2018 2017 2016
Minimum
$350.5

$357.0

$355.9
Percentage rentals
7.1

8.3

6.5
Total rent expense
$357.6

$365.3

$362.4
Future minimum annual rentals, including reasonably assured options, required under leases that the functional currencies of our foreign subsidiaries are the subsidiaries’ local currencies. The assets and liabilities of the subsidiaries are translated at the applicable exchange ratehad initial, noncancelable lease terms greater than one year, as of the end of the balance sheet date and revenue and expensesFebruary 2, 2019, are translated at an average rate over the period. Currency translation adjustments are recorded as a component of other comprehensive income. Transaction and derivative net gains are included in selling, general and administrative expenses and were $1.6 million, $2.5 million and$3.3 million for the 52 weeks ended January 30, 2016, the 52 weeks ended January 31, 2015 and the 52 weeks ended February 1, 2014, respectively. The foreign currency transaction gains and losses are primarily due to the decrease or increase in the value of the U.S. dollar compared to the functional currencies of the countries in which we operate internationally.follows (in millions):
We use forward exchange contracts, foreign currency options and cross-currency swaps (together, the “foreign currency contracts”) to manage currency risk primarily related to foreign-currency denominated intercompany assets and liabilities and certain other foreign currency assets and liabilities. These foreign currency contracts are not designated as hedges and, therefore, changes in the fair values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the re-measurement of related intercompany loans and foreign currency assets and liabilities. See Note 6, "Fair Value Measurements and Financial Instruments," for additional information regarding our foreign currency contracts.
New Accounting Pronouncements
Period  
Fiscal 2019$296.2
Fiscal 2020208.7
Fiscal 2021149.1
Fiscal 2022105.4
Fiscal 202371.4
Thereafter116.2
  $947.0
In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-08, Revenue from Contracts with Customers. The standard addresses the implementation guidance on principal versus agent considerations in the new revenue recognition standard. The ASU clarifies how an entity should identify the unit of accounting (i.e. the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The ASU is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2017, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. The standard specifies how prepaid stored-value product liabilities should be derecognized, thereby eliminating the current and potential future diversity in practice. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.

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In12.     Commitments and Contingencies
Commitments
We had bank guarantees relating primarily to international store leases and other commercial commitments totaling $24.1 million and $25.5 million as of February 2016, the FASB issued ASU 2016-02, Leases. The standard requires a lessee to recognize a liability to make lease payments2, 2019 and a right-of-use asset representing a right to use the underlying assetFebruary 3, 2018, respectively.
See Note 11, "Leases," for the lease term on the balance sheet. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. The standard amends the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will now be required to classify all deferred tax assets and liabilities as noncurrent. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption permitted. The Company early adopted this standard during the fourth quarter of fiscal 2015, utilizing prospective application as permitted. As such, certain prior period amounts have not been retrospectively adjusted to conform to the current presentation.
In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. Under this standard, an acquirer in a business combination must recognize measurement-period adjustments during the period in which the acquirer determines the amounts, including the effect on earnings of any amounts the acquirer would have recorded in previous periods if the accounting had been completed at the acquisition date, as opposed to retrospectively. This guidance is effective for fiscal years beginning after December 15, 2015, with early adoption permitted. We do not anticipate that adoption of this standard will have a material impactinformation regarding commitments related to our consolidated financial statements.noncancelable operating leases.
Legal Proceedings
In August 2015, the FASB issued ASU 2015-15, Interest - Imputation of Interest. The ASU is effective immediately and clarifies that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We do not anticipate that adoption of this standard will have a material impact to our consolidated financial statements.
In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. This standard changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costswe are, from time to time, subject to various legal proceedings, including matters involving wage and hour employee class actions, stockholder actions and consumer class actions. We may enter into discussions regarding settlement of completion, disposalthese and transportation. This standardother types of lawsuits, and may enter into settlement agreements, if we believe settlement is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted.in the best interest of our stockholders. We are currently evaluatingdo not believe that any such existing legal proceedings or settlements, individually or in the impact that adoption of this standardaggregate, will have a material effect on our consolidated financial statements.condition, results of operations or liquidity.
In April 2015,Certain of our French subsidiaries had been under audit by the FASB issued ASU 2015-03, SimplifyingFrench Tax Administration (the "FTA") for fiscal years 2008 through 2015. We received tax reassessment notices pursuant to which the Presentation of Debt Issuance Costs. This standard requiresFTA asserted that debt issuance costs relatedthe French subsidiaries were ineligible to claim certain tax deductions from November 4, 2008, through January 31, 2013, which has resulted in a recognized debt liability be presentedtax collection notice received on January 16, 2018 in the balance sheetamount of approximately €80.0 million. Based on the nature of the tax deductions being challenged, collection notices through fiscal year 2018 were anticipated. During fiscal 2018, we settled this matter with the FTA and as a direct deduction fromresult recognized charges totaling $30.3 million in income tax expense. The final settlement covers fiscal years 2008 through 2018.
13.    Common Stock and Share-Based Compensation
Common Stock
The holders of Class A Common Stock are entitled to one vote per share on all matters to be voted on by stockholders. Holders of Class A Common Stock will share in any dividend declared by the carrying amountBoard of Directors. In the event of our liquidation, dissolution or winding up, all holders of common stock are entitled to share ratably in any assets available for distribution to holders of shares of common stock.
Share Repurchase Activity. Since January 2010, our Board of Directors has approved several share repurchase authorizations allowing our management to repurchase our Class A Common Stock. We generally seek Board of Directors’ approval for a new authorization before the existing program is fully utilized to ensure we maintain availability under a repurchase program. Repurchased shares are subsequently retired. Share repurchases are generally recorded as a reduction to additional paid-in capital; however, in the event that debt liability, consistent with debt discounts. ASU 2015-03share repurchases would cause additional paid-in capital to be reduced below zero, any excess is effective for interimrecorded as a reduction to retained earnings. On March 4, 2019, our Board of Directors approved a new $300.0 million share repurchase authorization to replace the previous share authorization, which had $170.2 million remaining.
We did not repurchase shares during fiscal 2018 or fiscal 2017. The following table summarizes our share repurchase activity during fiscal 2016 (in millions, except average price paid per share):
  Fiscal Year 2016
Total number of shares purchased 3.0
Average price per share $24.94
Aggregate value of shares purchased $75.1
Dividends. We paid $1.52, $1.52 and annual reporting periods beginning after December 15, 2015, with early application permitted. This standard$1.48 per share in dividends in fiscal 2018, 2017 and 2016, respectively. On March 4, 2019, our Board of Directors declared a quarterly cash dividend of $0.38 per share of Class A Common Stock which was paid on March 29, 2019. Future dividends will be applied retrospectively, and we do not expect the adoptionsubject to approval by our Board of this standard to materially impact our consolidated financial statements.Directors.
In February 2015 the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which is effective for annual reporting periods beginning on or after December 15, 2015, with early adoption permitted. The standard amends both the variable interest entity and voting interest entity consolidation models and requires companies to reassess whether certain entities should be consolidated. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In May 2014, as part of its ongoing efforts to assist in the convergence of U.S. GAAP and International Financial Reporting Standards (“IFRS”), the FASB issued ASU 2014-09 related to revenue recognition. The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The ASU provides alternative methods of initial adoption and is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. In August 2015, the FASB issued ASU 2015-14 which defers the effective date of ASU 2014-09 one year making it effective for annual reporting periods beginning on or after December 15, 2017 while also providing for early adoption as of the original effective date. We anticipate that the standard will affect the way that we recognize gift card breakage and liabilities for our customer incentives. We are currently continuing to evaluate the impact that this standard will have on our consolidated financial statements as well as the appropriate method of adoption.
In April 2014, the FASB issued ASU 2014-08 related to reporting discontinued operations and disclosures of disposals of components of an entity. Specifically, the ASU amends the definition of a discontinued operation, expands disclosure requirements for transactions that meet the definition of a discontinued operation and requires entities to disclose additional information about

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


individually significant components thatShare-Based Compensation
Effective June 2013, our stockholders voted to adopt the Amended and Restated 2011 Incentive Plan (the “Amended 2011 Incentive Plan”) to provide for issuance under the 2011 Incentive Plan of our Class A Common Stock. The Amended 2011 Incentive Plan provides a maximum aggregate amount of 9.25 million shares of Class A Common Stock with respect to which awards may be granted and provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, performance awards, restricted stock and other share-based awards. The options to purchase Class A common shares are disposed of or held for sale and do not qualify as discontinued operations. Additionally, entities will be required to reclassify assets and liabilities of a discontinued operation for all comparative periods presented in the statement of financial position and to separately present certain information related to the operating and investing cash flowsissued at fair market value of the discontinued operation,underlying shares on the date of grant. In general, the options vest and become exercisable in equal annual installments over a three-year period, and expire ten years from the grant date. Shares issued upon exercise of options and vesting of restricted stock awards are newly issued shares. Options and restricted shares granted after June 21, 2011 are issued under the 2011 Incentive Plan.
Effective June 2009, our stockholders voted to amend the Third Amended and Restated 2001 Incentive Plan (the “2001 Incentive Plan”) to provide for all comparative periods, inissuance under the statement of cash flows. The ASU became effective for us beginning in the first quarter2001 Incentive Plan of our fiscalClass A Common Stock. The 2001 Incentive Plan provided a maximum aggregate amount of 46.5 million shares of Class A Common Stock with respect to which options may have been granted and provided for the granting of incentive stock options, non-qualified stock options, and restricted stock. The options to purchase Class A common shares were issued at fair market value of the underlying shares on the date of grant. In general, the options vested and became exercisable in equal annual installments over a three-year period, commencing one year ending January 30, 2016after the grant date, and will be adopted on a prospective basis for all disposals (except disposals classified as held for sale prior toexpire ten years from the adoption date) or components initially classified as held for sale in periods beginninggrant date. Options and restricted shares granted on or afterbefore June 21, 2011 were issued under the adoption date, with early adoption permitted. The implementation of this standard will not have a material impact on our consolidated financial statements.2001 Incentive Plan.

2.Asset Impairments
Fiscal 2015Stock Options
We recognized impairment chargesrecord stock-based compensation expense in earnings based on the grant-date fair value of $4.6 million inoptions granted. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. This valuation model requires the use of subjective assumptions, including expected option life and expected volatility. We use historical data to estimate the option life and the employee forfeiture rate, and use historical volatility when estimating the stock price volatility. There were no options granted during fiscal 2015 related2018, 2017 and 2016. As of February 2, 2019, outstanding and exercisable options had a range of exercise prices from $20.32 to our evaluation$38.52, with a weighted-average remaining life of store property, equipment and other assets in situations where the asset’s carrying value was not expected to be recovered by its future cash flows over its remaining useful life.3.36 years.
A summary of our asset impairment charges, by reportable segment, for the 52 weeks ended January 30, 2016stock option activity during fiscal 2018 is as follows:presented below:
  United States Europe Technology Brands Total
  (In millions)
Impairments of intangible assets $—
 $0.2
 $—
 $0.2
Impairments of property, equipment and other assets - store impairments $2.8
 $0.6
 $1.0
 $4.4
Total $2.8
 $0.8
 $1.0
 $4.6
  Options 
Weighted-
Average
Exercise
Price
Balance, February 3, 2018 1,194,025
 $35.30
Expired (594,770) $41.84
Balance, February 2, 2019 599,255
 $28.81
There were no asset impairment chargesoptions exercised during fiscal 2018. The total intrinsic value of options exercised during fiscal 2017 and 2016 was $0.1 million and $0.1 million, respectively. There was no intrinsic value of both options exercisable and options outstanding, as of February 2, 2019.
The 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. There was no compensation expense during fiscal 2018 related to options. During fiscal 2017 and 2016, we included compensation expense relating to the grant of options in our Canada or Australia Video Game Brands segments during the 52 weeks ended January 30, 2016.
Fiscal 2014
We recognized impairment chargesamount of $2.2$0.1 million and $0.9 million, respectively, in fiscal 2014selling, general and administrative expenses. As of February 2, 2019, there was no unrecognized compensation expense related to our evaluationstock options.
Restricted Stock Awards
The fair value of intangible assetsrestricted stock awards is recognized as compensation expense on a straight-line basis between the grant date and store property, equipment and other assets in situations where the asset’s carrying value was not expecteddate the restricted stock awards become fully vested. We grant restricted stock awards to be recovered by its future cash flows over its remaining useful life.
A summarycertain of our asset impairment charges, by reportable segment, foremployees, officers and non-employee directors. We estimate the 52 weeks ended January 31, 2015 is as follows:fair value of restricted stock awards on the grant date based on the quoted market price of our common stock.
  United States Canada Europe Total
  (In millions)
Impairments of intangible assets $—
 $—
 $0.3
 $0.3
Impairments of property, equipment and other assets - store impairments 0.6
 0.4
 0.9
 1.9
Total $0.6
 $0.4
 $1.2
 $2.2
There were no asset impairment chargesTime-based restricted stock awards generally vest in our Australia Video Game Brands or Technology Brands segments duringequal annual installments over a three-year period on the 52 weeks ended January 31, 2015.
Fiscal 2013
We recognized impairment charges of $9.0 million in fiscal 2013 related to our evaluation of store property, equipment and other assets in situations where the asset's carrying value was not expected to be recovered by its future cash flows over its remaining useful life. Additionally, we made a decision during the fourth quarter of fiscal 2013 to abandon our Spawn Labs business and related technology assets. As a result of this decision, we recorded impairment charges of $2.1 million related to other intangible assets and $7.4 million related to certain technology assets in connection with the exitanniversary of the Spawn Labs business, which are reflecteddate of issuance, subject to continued service to the Company, and subject further to accelerated vesting in the asset impairments line item in our consolidated statementscase of operations. Because we never integrated Spawn Labs into our United States Video Game Brands reporting unit, our decision to exit this business triggered an interim impairmentretirement eligibility and certain termination events.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


test that resultedPerformance-based restricted stock awards generally vest as a lump sum on the third anniversary of the date of issuance. Restricted stock awards subject to performance measures may generally be earned in greater or lesser percentages if targets are exceeded or not achieved by specified amounts.
The following table presents a goodwill impairment chargesummary of $10.2 million, which is reflectedour restricted stock awards activity during fiscal 2018:
  Time-Based Restricted Stock Awards Performance-Based Restricted Stock Awards
  Shares Weighted-
Average
Grant Date
Fair Value		 Shares 
Weighted-
Average
Grant Date
Fair Value
Nonvested shares at February 3, 2018 912,360
 $27.96
 553,189
 $28.83
Granted 969,043
 $15.67
 257,667
 $15.80
Vested (791,891) $25.66
 (298,454) $30.49
Forfeited (282,484) $19.86
 (225,095) $22.56
Nonvested shares at February 2, 2019 807,028
 $18.30
 287,307
 $20.33
In fiscal 2017 and 2016, we granted 596,412 and 602,414 shares, respectively, of time-based restricted stock with weighted-average grant date fair values of $24.94 and $30.18, respectively. We also granted 287,670 and 206,580 shares, respectively, of performance-based restricted stock with weighted-average grant date fair values of $25.28 and $30.54, respectively.
During fiscal 2018, 2017 and 2016, we included compensation expense relating to the grants of restricted shares in the goodwill impairments line itemamounts of $10.7 million, $25.5 million and $16.9 million, respectively, in ourselling, general and administrative expenses in the accompanying consolidated statements of operations. See Note 9, "GoodwillThe fiscal 2018, 2017 and Intangible Assets," for further information2016 compensation expense associated with the goodwill impairment.
A summaryrestricted shares is net of our asset impairment charges, by reportable segment, for the 52 weeks endedadjustments totaling $5.1 million, $2.9 million and $5.9 million, respectively, relating to performance measures that were not fully met. As of February 1, 20142, 2019, there was $7.5 million of unrecognized compensation expense related to nonvested restricted shares that is as follows:
  United States Europe Total
   
Goodwill impairment $10.2
 $—
 $10.2
Impairment of intangible assets 2.1
 —
 2.1
Impairment of technology assets 7.4
 —
 7.4
Impairments of property, equipment and other assets - store impairments 4.3
 4.7
 9.0
Total $24.0
 $4.7
 $28.7
There were no asset impairment charges in our Canada or Australia Video Game Brands or Technology Brands segments during the 52 weeks ended February 1, 2014.expected to be recognized over a weighted-average period of 1.6 years.

The total income tax expense (benefit), inclusive of excess tax deficiencies, associated with stock-based compensation was $4.1 million, $4.2 million and $10.3 million for fiscal 2018, 2017 and 2016, respectively.
3.Acquisitions and Divestitures
Acquisitions
Fiscal 2015
United States Video Game Brands. On July 17, 2015, we purchased Geeknet, Inc. ("Geeknet") an online and wholesale retailer that sells collectibles, apparel, gadgets, electronics, toys and other retail products for technology enthusiasts and general consumers under the name ThinkGeek through the www.thinkgeek.com website and certain exclusive products to wholesale channel customers. The additiontotal fair value of Geeknet provides an expansion of our global omnichannel platform and enables us to broaden our product offering in the collectibles category and deepen relationships with our existing customer base.
Total consideration was $126.0 million, net of $13.9 million of cash acquired. The following table summarizes our allocation of the consideration and the respective fair values of the assets acquired and liabilities assumed in the Geeknet acquisitionrestricted stock awards vested, as of the purchase date:
Receivables, net $6.9
Merchandise inventories, net 25.6
Prepaid expenses and other current assets 12.5
Fixtures and equipment 0.9
Deferred income taxes 2.8
Other non-current assets 0.1
Goodwill 52.2
Other intangible assets, net 33.4
Total assets acquired 134.4
   
Accounts payable 3.6
Accrued liabilities 17.3
Deferred income taxes (12.6)
Other long-term liabilities 0.1
Total liabilities assumed 8.4
   
Net assets acquired $126.0
their respective vesting dates, was $16.2 million, $12.5 million, and $27.6 million during fiscal 2018, 2017 and 2016.


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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The goodwill of $52.2 million resulting from the acquisition is not deductible for tax purposes and represents the value we paid for the knowledge and expertise of, and established presence in, the collectibles market. The operating results of Geeknet have been included in our consolidated financial statements beginning on the closing date of July 17, 2015 and are reported in our United States Video Game Brands segment. The pro forma effect assuming this acquisition was made at the beginning of the earliest period presented herein is not material to our consolidated financial statements. As of January 30, 2016, we completed the final fair value assignments and analysis of certain matters primarily related to the valuation of deferred income taxes.
Technology Brands. During the 52 weeks ended January 30, 2016, in connection with the continued expansion of our Technology Brands segment, Spring Mobile completed acquisitions of certain AT&T resellers and Simply Mac completed an acquisition of an authorized Apple retailer for a total combined consideration of $141.5 million (net of cash acquired). We recorded $46.3 million of goodwill and $76.6 million of other intangible assets related to these acquisitions. The operating results of these acquisitions are included in our consolidated financial statements beginning on the respective closing dates of each acquisition and are reported in our Technology Brands segment. The pro forma effect assuming these acquisitions were made at the beginning of the earliest period presented herein is not material to our consolidated financial statements. As of January 30, 2016, we had not completed the final fair value assignments related to these acquisitions and continue to analyze certain matters related to the valuation of intangible assets and deferred income taxes.
We continue to believe that our Spring Mobile and Simply Mac businesses represent important strategic growth opportunities for us within the specialty retail marketplace and also provide avenues for diversification relative to our core operations in the video game retail marketplace.
Fiscal 2014
Technology Brands. During the 52 weeks ended January 31, 2015, in connection with the continued expansion of our Technology Brands business, Spring Mobile completed acquisitions of certain AT&T resellers and Simply Mac completed acquisitions of certain authorized Apple retailers for total consideration of $93.3 million ($89.7 million net of cash acquired). We recorded indefinite-lived intangible assets of $76.8 million and goodwill of $4.5 million related to these acquisitions. The operating results of these acquisitions are included in our consolidated financial statements beginning on the respective closing dates of each acquisition and are reported in our Technology Brands segment. The pro forma effect assuming these acquisitions were made at the beginning of each fiscal year presented herein is not material to our consolidated financial statements.
Fiscal 2013
Simply Mac. In October 2012, we acquired a minority equity ownership interest in Simply Mac, which operates Apple specialist retail stores in Utah and Wyoming. The original equity investment was structured with an option whereby we could acquire the remaining ownership interest in Simply Mac's equity for a pre-negotiated price at a future point in time. Pursuant to this arrangement, in November 2013, we acquired the remaining 50.1% interest in Simply Mac for a purchase price of $9.5 million.
Spring Mobile. In November 2013, we purchased Spring Communications, Inc. ("Spring Mobile," or "Spring"), a wireless retailer, for a purchase price of $62.6 million. The fair values of the assets acquired and liabilities assumed in connection with the Spring Mobile acquisition were determined based, in part, on a third-party valuation.
The operating results of Simply Mac and Spring Mobile have been included in our consolidated financial statements beginning on the respective closing dates of each acquisition and are reported in our Technology Brands segment. The pro forma effect assuming these acquisitions were made at the beginning of each fiscal year presented herein is not material to our consolidated financial statements.
Divestitures
Fiscal 2014
GameStop Iberia. In October 2014, we entered into a sale and purchase agreement to transfer certain retail locations and most of the inventory owned by our Spain subsidiary, GameStop Iberia, to a local video game specialty retailer. We made the decision to exit these operations, which were part of our Europe segment, due to continued operating losses and limited market share. These operations were considered immaterial for discontinued operations accounting treatment.
As a result of the divestiture, we recorded a pre-tax loss in continuing operations of $14.8 million during fiscal 2014, primarily related to inventory write-downs, involuntary termination benefits and lease obligations, of which $7.1 million was recorded in cost of sales and $7.7 million was recorded in selling, general and administrative expenses in our consolidated statements of operations. As of November 1, 2014, we had transferred or otherwise ceased daily operations in all of our stores in Spain.

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



14.    Earnings Per Share
4.Vendor Arrangements
We and most of our largest vendors participate in cooperative advertising programs and other vendor marketing programs in which the vendors provide us with cash consideration in exchange for marketing and advertising the vendors’ products. Our accounting for cooperative advertising arrangements and other vendor marketing programs results in a significant portion of the consideration received from our vendors reducing the product costs in inventory rather than as an offset to our marketing and advertising costs. The consideration serving as a reduction in inventory is recognized in cost of sales as inventory is sold. The amount of vendor allowances to be recorded as a reduction of inventory was determined based on the nature of the consideration received and the merchandise inventory to which the consideration relates. We apply a sell-through rate to determine the timing in which the consideration should be recognized in cost of sales. Consideration received that relates to video game products that have not yet been released to the public is deferred as a reduction of inventory.
The cooperative advertising programs and other vendor marketing programs generally cover a period from a few days up to a few weeks and include items such as product catalog advertising, in-store display promotions, internet advertising, co-op print advertising and other programs. The allowance for each event is negotiated with the vendor and requires specific performance by us to be earned. Vendor allowances of $208.2 million, $202.4 million and $221.0 million were recorded as a reduction of cost of sales for the 52 week period ended January 30, 2016, 52 week period ended January 31, 2015, and the 52 week period ended February 1, 2014, respectively.

5.Computation of Net Income per Common Share
Basic net income per common share is computed by dividing the net income available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing the net income available to common stockholders by the weighted-average number of common shares outstanding and potentially dilutive securities outstanding during the period. Potentially dilutive securities include stock options and unvested restricted stock outstanding during the period, using the treasury stock method. Potentially dilutive securities are excluded from the computations of diluted earnings per share if their effect would be antidilutive. A reconciliation of shares used in calculating basic and diluted net income per common share is as follows:follows (in millions, except per share data):
  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014
  (In millions, except per share data)
Net income attributable to common stockholders $402.8
 $393.1
 $354.2
Weighted-average common shares outstanding 106.0
 112.2
 117.2
Dilutive effect of options and restricted shares on common stock 0.7
 1.0
 1.2
Common shares and dilutive potential common shares 106.7
 113.2
 118.4
Net income per common share:      
Basic $3.80
 $3.50
 $3.02
Diluted $3.78
 $3.47
 $2.99
  Fiscal Year
  2018 2017 2016
Net (loss) income from continuing operations $(794.8) $230.4
 $304.5
Income (loss) from discontinued operations, net of tax 121.8
 (195.7) 48.7
Net (loss) income $(673.0) $34.7
 $353.2
       
Weighted-average common shares outstanding 102.1
 101.4
 103.4
Dilutive effect of stock options and restricted stock awards —
 0.1
 0.4
Weighted-average diluted common shares 102.1
 101.5
 103.8

      
Basic (loss) earnings per share: (1)
      
Continuing operations $(7.79) $2.27
 $2.94
Discontinued operations 1.19
 (1.93) 0.47
Basic (loss) earnings per share $(6.59) $0.34
 $3.42
       
Diluted (loss) earnings per share: (1)
      
Continuing operations $(7.79) $2.27
 $2.93
Discontinued operations 1.19
 (1.93) 0.47
Diluted (loss) earnings per share $(6.59) $0.34
 $3.40
       
Anti-dilutive stock options and restricted stock awards 1.7
 2.0
 1.4
The following table contains information on share-based awards of Class A Common Stock which were excluded from the computation of diluted earnings per share because their effects were antidilutive:
Anti-
Dilutive
Shares
(In millions)
52 Weeks Ended January 30, 20161.0
52 Weeks Ended January 31, 20151.6
52 Weeks Ended February 1, 20141.5

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



6.Fair Value Measurements and Financial Instruments
Recurring Fair Value Measurements and Derivative Instruments
Fair value is defined 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 currency contracts, life insurance policies we own that have a cash surrender value and certain nonqualified deferred compensation liabilities that are measured at fair value on a recurring basis in periods subsequent to initial recognition.
Fair value accounting guidance requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly through market-corroborated inputs. Level 3 inputs are unobservable inputs for the asset or liability reflecting our assumptions about pricing by market participants.
We value our foreign currency contracts, our 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 as Bloomberg and The Wall Street Journal, and industry-standard models that consider various assumptions, including quoted forward prices, time value, volatility factors, and contractual prices for the underlying instruments, as well as other relevant economic measures. When appropriate, valuations are adjusted to reflect credit considerations, generally based on available market evidence.
The following table provides the fair value of our assets and liabilities measured on a recurring basis and recorded on our consolidated balance sheets (in millions):
  January 30, 2016
Level 2		 January 31, 2015
Level 2
Assets    
Foreign currency contracts    
Other current assets $40.6
 $32.0
Other noncurrent assets 0.1
 22.7
Company-owned life insurance(1)
 10.1
 8.7
Total assets $50.8
 $63.4
Liabilities    
Foreign currency contracts    
Accrued liabilities $32.3
 $23.3
Other long-term liabilities 0.5
 13.0
Nonqualified deferred compensation(2)
 1.1
 1.2
Total liabilities $33.9
 $37.5
___________________
(1) Recognized in other non-current assets in our consolidated balance sheets.
(2) Recognized in accrued liabilities in our consolidated balance sheets.
We use forward exchange contracts, foreign currency options and cross-currency swaps (together, the “foreign currency contracts”) to manage currency risk primarily related to foreign-currency denominated intercompany assets and liabilities and certain other foreign currency assets and liabilities. These foreign currency contracts are not designated as hedges and, therefore, changes in the fair values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the re-measurement of related intercompany loans and foreign currency assets and liabilities. The total gross notional value of derivatives related to our foreign currency contracts was $925.3 million and $1,128.5 million as of January 30, 2016 and January 31, 2015, respectively.

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Activity related to the trading of derivative instruments and the offsetting impact of related intercompany and foreign currency assets and liabilities recognized in selling, general and administrative expense is as follows (in millions):
  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014
Gains (losses) on the changes in fair value of derivative instruments $(5.2) $28.9
 $(20.3)
Gains (losses) on the re-measurement of related intercompany loans and foreign currency assets and liabilities 6.8
 (26.4) 23.6
Total $1.6
 $2.5
 $3.3
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. We manage 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.
Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a recurring basis, we recorded 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 related primarily to write-downs associated with property and equipment, goodwill and other intangible assets.
During fiscal 2015, we recorded a $4.6 million impairment charge, compromised of $4.4 million of property and equipment impairments and $0.2 million of other intangible asset impairments. During fiscal 2014, we recorded a $2.2 million impairment charge, comprised of $1.9 million of property and equipment impairments and $0.3 million of other intangible asset impairments. During fiscal 2013, we recorded a $28.7 million impairment charge related to assets measured at fair value on a nonrecurring basis, comprised of $16.4 million of property and equipment impairments, $10.2 million of goodwill impairments and $2.1 million of other intangible asset impairments. When recognizing an impairment charge, 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. The fair value measurements 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. These assets were valued using the discounted cash flow method, the relief-from-royalty method and the undiscounted cash flow method. Under these approaches, management made assumptions about key variables including the following unobservable inputs: revenue and cost estimates, discount rates, terminal values, royalty rates, and remaining useful lives. See Note 9, "Goodwill and Intangible Assets," for further information associated with the goodwill and trade name impairments and Note 2, "Asset Impairments," for further information associated with the property and equipment impairments.
Additionally, we recorded the fair value of net assets acquired and liabilities assumed in connection with our ThinkGeek acquisition in fiscal 2015 and Technology Brands acquisitions in fiscal 2015 and fiscal 2014. The fair value measurements were primarily based on significant unobservable inputs (Level 3) developed using company-specific information. Certain assets were valued using the income approach, which required discounting projected future cash flows. Under this approach, management made assumptions about key variables including the following unobservable inputs: customer growth rate, attrition rate, revenue and margin estimates, remaining useful lives and royalty rates. In order to calculate the present value of those future cash flows, we discounted cash flow estimates at a rate commensurate with the risk that selected market participants would assign to the cash flows. See Note 3, "Acquisitions and Divestitures," for further information associated with the values recorded in the acquisitions.
Other Fair Value Disclosures
The carrying values of our cash equivalents, receivables, net, accounts payable and notes payable approximate the fair value due to their short-term maturities.
As of January 30, 2016, our unsecured 5.50% senior notes due October 1, 2019 (the "2019 Senior Notes") had a carrying value of $350.0 million and a fair value of $343.9 million. The fair value of the 2019 Senior Notes was determined based on quoted market prices obtained through an external pricing source which derives its price valuations from daily marketplace transactions, with adjustments to reflect the spreads of benchmark bonds, credit risk and certain other variables. We have determined this to be a Level 2 measurement as all significant inputs into the quote provided by our pricing source are observable in active markets.


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7.Receivables, Net
Receivables consist primarily of bankcard receivables and other receivables. Other receivables include receivables from vendors, primarily related to commissions receivable associated with our Technology Brands businesses, 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 reduce receivables to an amount expected to be collectible. Receivables consisted of the following (in millions):
  January 30, 2016 January 31, 2015
Bankcard receivables $37.7
 $52.9
Vendor receivables 119.3
 50.2
Technology brands carrier receivables 24.1
 11.5
Other receivables 0.8
 2.6
Allowance for doubtful accounts (5.4) (3.7)
Total receivables, net $176.5
 $113.5
8.Accrued Liabilities
Accrued liabilities consisted of the following (in millions):
  January 30, 2016 January 31, 2015
Customer liabilities $341.6
 $364.3
Deferred revenue 112.8
 103.5
Employee benefits, compensation and related taxes 156.4
 137.5
Checks and transfers yet to be presented for payment from zero balance cash accounts 264.9
 57.7
Other taxes 52.9
 49.9
Other accrued liabilities 112.4
 90.7
Total accrued liabilities $1,041.0
 $803.6
9.Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill, by reportable segment, for the 52 weeks ended January 31, 2015 and the 52 weeks ended January 30, 2016 were as follows:
  United States Canada Australia Europe Technology Brands Total
  (In millions)
Balance at February 1, 2014 $1,143.3
 $33.8
 $81.3
 $94.2
 $62.1
 $1,414.7
Acquisitions (Note 3) —
 —
 —
 —
 4.5
 4.5
Foreign currency translation adjustment —
 (4.3) (9.2) (15.3) —
 (28.8)
Balance at January 31, 2015 1,143.3
 29.5
 72.1
 78.9
 66.6
 1,390.4
Acquisitions (Note 3) 52.2
 —
 —
 —
 46.3
 98.5
Foreign currency translation adjustment —
 (2.6) (6.4) (3.2) —
 (12.2)
Balance at January 30, 2016 $1,195.5
 $26.9
 $65.7
 $75.7
 $112.9
 $1,476.7
Goodwill represents the excess purchase price over tangible net assets and identifiable intangible assets acquired. Our management is required to evaluate goodwill and other intangible assets not subject to amortization for impairment at least annually. This annual test is completed at the beginning of the fourth quarter of each fiscal year or when circumstances indicate the carrying value of the goodwill or other intangible assets might be impaired. Goodwill has been assigned to reporting units for the purpose of impairment testing. We have five operating segments, including Video Game Brands in the United States, Australia, Canada and Europe, and Technology Brands in the United States, which also define our reporting units based upon the similar economic characteristics of operations within each segment, including the nature of products, product distribution and the type of customer and separate management within these businesses.

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


We estimate the fair value of each reporting unit based on the discounted cash flows of each reporting unit. We use a two-step process to measure goodwill impairment. If the fair value of the reporting unit is higher than its carrying value, then goodwill is not impaired. If the carrying value of the reporting unit is higher than the fair value, then the second step of the goodwill impairment test is needed. The second step compares the implied fair value of the reporting unit’s goodwill with its carrying amount. The implied fair value of goodwill is determined in step 2 of the goodwill impairment test by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation used in a business combination. Any residual fair value after this allocation represents the implied fair value of the reporting unit's goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value, then an impairment loss is recognized in the amount of the excess.
We completed the annual impairment test of goodwill for fiscal 2015 as of the first day of the fourth quarter and concluded that none of our goodwill was impaired. For all of our reporting units, the concluded fair value of each of these reporting units exceeded its carrying value by at least 50%.
We completed the annual impairment test of goodwill for fiscal 2014 as of the first day of the fourth quarter and concluded that none of our goodwill was impaired. For our United States, Canada, Europe and Technology Brands reporting units, the concluded fair value of each of these reporting units exceeded its carrying value by more than 30% and the concluded fair value of our Australia reporting unit exceeded its carrying value by 15%.
In fiscal 2013, we recorded a $10.2 million goodwill write-off in the United States Video Game Brands segment as a result of exiting an immaterial non-core business; however, there were no impairments of goodwill in fiscal 2013 as a result of completing our annual impairment test, which was conducted as of the first day of the fourth quarter. For the fiscal 2013 annual impairment test, Technology Brands was excluded since it commenced operations during the fourth quarter and therefore was not a reporting unit subject to assessment as of our annual testing date.
Cumulative goodwill impairment losses were $640.5 million as of January 30, 2016, of which $13.5 million, $100.3 million, $107.1 million and $419.6 million were attributable to our United States, Canada, Australia and Europe reporting units, respectively.
Intangible Assets
Other intangible assets consist primarily of dealer agreements, trade names, customer relationships, leasehold rights, advertising relationships and amounts attributed to favorable leasehold interests recorded as a result of business acquisitions. Intangible assets are recorded apart from goodwill if they arise from a contractual right and are capable of being separated from the entity and sold, transferred, licensed, rented or exchanged individually. The estimated useful life and amortization methodology of intangible assets are determined based on the period in which they are expected to contribute directly to cash flows. Intangible assets that are determined to have a definite life are amortized over that period.
Finite-lived Intangible Assets
Leasehold rights, which were recorded as a result of the purchase of SFMI Micromania SAS (“Micromania”) in 2008, represent the value of rights of tenancy under commercial property leases for properties located in France. Rights pertaining to individual leases can be sold by us to a new tenant or recovered by us from the landlord if the exercise of the automatic right of renewal is refused. Leasehold rights are amortized on a straight-line basis over the expected lease term, not to exceed 20 years, with no residual value.
Advertising relationships, which were recorded as a result of digital acquisitions, are relationships with existing advertisers who pay to place ads on our digital websites 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. Favorable leasehold interests are amortized on a straight-line basis over their remaining lease term with no expected residual value.
Customer relationships, which were recorded as a result of the ThinkGeek acquisition, represent the value of the relationships related to both wholesale and website customers within the United States. ThinkGeek sells its products directly to large wholesale retailers and also sells its products directly to customers on its ThinkGeek website. Wholesale customer relationships are amortized on a straight-line basis over seven years, and website customer relationships are amortized on a straight-line basis over five years.
As of January 30, 2016, the total weighted-average amortization period for the remaining intangible assets, excluding goodwill, was approximately 9.9 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized, with no expected residual value.

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Indefinite-lived Intangible Assets
Intangible assets that are determined to have an indefinite life are not amortized, but are required to be evaluated at least annually for impairment. If the carrying value of an individual indefinite-lived intangible asset exceeds its fair value as determined by its discounted cash flows, such individual indefinite-lived intangible asset is written down by the amount of the excess.
Dealer agreements were recorded as a result of our acquisitions of Spring and Simply Mac in the fourth quarter of fiscal 2013 as well as the subsequent acquisitions completed by Spring and Simply Mac in fiscal 2014. These dealer agreements represent Spring's exclusive agreements with AT&T to operate AT&T stores as an “AT&T Authorized Retailer” and sell AT&T wireless contracts in its stores and Simply Mac’s exclusive agreements with Apple to operate Apple stores under the name “Simply Mac” and sell Apple products in its stores. The dealer agreement value recorded on our consolidated balance sheets represents a value associated with the rights and privileges afforded to us under these agreements. Our dealer agreements are considered indefinite-lived intangible assets as they are expected to contribute to cash flows indefinitely and are not subject to amortization, but are subject to annual impairment testing.
We value our Spring and Simply Mac dealer agreements using a discounted cash flow analysis known as the Greenfield Method, which is a common valuation technique in valuing dealer agreement assets. The Greenfield Method assumes that a business, at its inception, owns only dealer agreements and makes capital expenditures, working capital and other investments required to ramp up its operations to a level that is comparable to its current operations. We estimate the cash flows required to build a comparable operation and the available future cash flows from these operations, which requires us to make certain assumptions about the cost of investment to build a comparable operation, projected net sales, cost of sales, operating expenses and income taxes. The cash flows are then discounted using an appropriate rate that is reflective of the inherent risks and uncertainties associated with the expected future cash flows of the business. The estimated fair values of the Spring and Simply Mac dealer agreement assets based upon the discounted cash flows is then compared to their respective carrying values.
Trade names which were recorded as a result of acquisitions, primarily Micromania, are considered indefinite-lived intangible assets as they are expected to contribute to cash flows indefinitely and are not subject to amortization, but are subject to annual impairment testing.The fair value of our Micromania trade name was calculated using a relief-from-royalty approach, which assumes the fair value of the trade name is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the trade name and instead licensed the trade name from another company. The basis for future cash flow projections is internal revenue forecasts, which we believe represent reasonable market participant assumptions, to which the selected royalty rate is applied. These future cash flows are discounted using the applicable discount rate, as well as any potential risk premium to reflect the inherent risk of holding a standalone intangible asset. The discount rate used in the analysis reflects a hypothetical market participant’s weighted-average cost of capital, current market rates and the risks associated with the projected cash flows.
We completed the annual impairment tests of indefinite-lived intangible assets as of the first day of the fourth quarter of fiscal 2015 and fiscal 2014 and concluded that none of our indefinite-lived intangible assets were impaired.

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The gross carrying amount and accumulated amortization of our intangible assets other than goodwill as of January 30, 2016 and January 31, 2015 were as follows (in millions):
  As of January 30, 2016 As of January 31, 2015
  Gross Carrying Amount (1) Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Intangible assets with indefinite lives:            
Trade names $51.7
 $—
 $51.7
 $45.4
 $—
 $45.4
Dealer agreements 210.6
 —
 210.6
 134.0
 —
 134.0
Intangible assets with finite lives:            
Key money 87.5
 (46.2) 41.3
 91.5
 (41.8) 49.7
Customer Relationships 14.5
 (1.5) 13.0
 —
 —
 —
Other 39.1
 (25.3) 13.8
 32.7
 (24.0) 8.7
Total $403.4
 $(73.0) $330.4
 $303.6
 $(65.8) $237.8
___________________
(1)
The change in the gross carrying amountsum of intangible assets from January 31, 2015(loss) earnings per share may not total to January 30, 2016 is primarily due to acquisitions (Note 3) and the impact of exchange rate fluctuations.consolidated (loss) earnings per common share as amounts are calculated based on whole numbers.
Intangible asset amortization expense for the fiscal years ended January 30, 2016, January 31, 2015 and February 1, 2014 was $13.4 million, $12.0 million and $14.0 million, respectively.
The estimated aggregate intangible asset amortization expense for the next five fiscal years is as follows (in millions):
Fiscal Year Ending on or around January 31, Projected Amortization Expense
2017 $14.1
2018 13.4
2019 11.2
2020 8.6
2021 6.2
  $53.5
10.Debt
Issuance of 5.50% Senior Notes due 2019
On September 24, 2014, we issued $350.0 million aggregate principal amount of unsecured 5.50% senior notes due October 1, 2019. The 2019 Senior Notes bear interest at the rate of 5.50% per annum with interest payable semi-annually in arrears on April 1 and October 1 of each year beginning on April 1, 2015. The 2019 Senior Notes were sold in a private placement and will not be registered under the U.S. Securities Act of 1933. The 2019 Senior Notes were offered in the U.S. to “qualified institutional buyers” pursuant to the exemption from registration under Rule 144A of the Securities Act and in exempted offshore transactions pursuant to Regulation S under the Securities Act.
The 2019 Senior Notes were issued pursuant to an indenture dated as of September 24, 2014, by and among the Company, certain subsidiary guarantors named therein and U.S. Bank National Association, as trustee and will mature on October 1, 2019. The net proceeds from the offering of $343.7 million were used to pay down the remaining outstanding balance of our revolving credit facility, which is described more fully below, and were used for general corporate purposes, such as acquisitions, dividends and stock buybacks. The outstanding balance of the 2019 Senior Notes at January 30, 2016 was $350.0 million. We incurred fees and expenses related to the 2019 Senior Notes offering of $6.3 million, which were capitalized during the third quarter of fiscal 2014 and will be amortized as interest expense over the term of the notes.
The indenture governing the 2019 Senior Notes does not contain financial covenants but does contain covenants which place certain restrictions on us and our subsidiaries, including limitations on asset sales, additional liens, investments, stock repurchases, dividends, distributions, the incurrence of additional debt and the repurchase debt that is junior to the 2019 Senior Notes. In addition, the indenture restricts payments of dividends to stockholders (other than dividends payable in shares of capital stock) if one of the

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following conditions exist: (i) an event of default has occurred, (ii) we could not incur additional debt under the general debt covenant of the indenture or (iii) the sum of the proposed dividend and all other dividends and other restricted payments made under the indenture from the date of the indenture governing the 2019 Senior Notes exceeds the sum of 50% of consolidated net income plus 100% of net proceeds from capital stock sales and other amounts set forth in and determined as provided in the indenture. These restrictions are subject to exceptions and qualifications, including that we can pay up to $175.0 million in dividends to stockholders in each fiscal year and we can pay dividends and make other restricted payments in an unlimited amount if our leverage ratio on a pro forma basis after giving effect to the dividend payment and other restricted payments would be less than or equal to 1.0:1.0.
The indenture contains customary events of default, including payment defaults, breaches of covenants, failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If an event of default occurs and is continuing, the principal amount of the 2019 Senior Notes, plus accrued and unpaid interest, if any, may be declared immediately due and payable. These amounts automatically become due and payable if an event of default relating to certain events of bankruptcy, insolvency or reorganization occurs.
Revolving Credit Facility
On January 4, 2011, we entered into a $400 million credit agreement, which we amended and restated on March 25, 2014 and further amended on September 15, 2014 (the “Revolver”). The Revolver is a five-year, asset-based facility that is secured by substantially all of our assets and the assets of our domestic subsidiaries. Availability under the Revolver is subject to a monthly borrowing base calculation. The Revolver includes a $50 million letter of credit sublimit. The amendments extended the maturity date to March 25, 2019; increased the expansion feature under the Revolver from $150 million to $200 million, subject to certain conditions; and revised certain other terms, including a reduction of the fee we are required to pay on the unused portion of the total commitment amount. We believe the extension of the maturity date of the Revolver to March 2019 helps to limit our exposure to potential tightening or other adverse changes in the credit markets. The September 15, 2014 amendment amended certain covenants to permit the issuance of the 2019 Senior Notes.
Borrowing availability under the Revolver is limited to a borrowing base which allows us to borrow up to 90% of the appraisal value of the inventory, in each case plus 90% of eligible credit card receivables, net of certain reserves. The borrowing base provides for borrowing up to 92.5% of the appraisal value during the fiscal months of August through October. Letters of credit reduce the amount available to borrow under the Revolver by an amount equal to the face value of the letters of credit. Our ability to pay cash dividends, redeem options and repurchase shares is generally permitted, except under certain circumstances, including if either 1) excess availability under the Revolver is less than 30%, or is projected to be within 12 months after such payment or 2) excess availability under the Revolver is less than 15%, or is projected to be within 12 months after such payment, and the fixed charge coverage ratio, as calculated on a pro-forma basis for the prior 12 months is 1.1:1.0 or less. In the event that excess availability under the Revolver is at any time less than the greater of (1) $30 million or (2) 10% of the lesser of the total commitment or the borrowing base, we will be subject to a fixed charge coverage ratio covenant of 1.0:1.0.
The Revolver places certain restrictions on us and our subsidiaries, including limitations on asset sales, additional liens, investments, loans, guarantees, acquisitions and the incurrence of additional indebtedness. Absent consent from our lenders, we may not incur more than $1 billion of senior secured debt and $750 million of additional unsecured indebtedness to be limited to $250 million in general unsecured obligations and $500 million in unsecured obligations to finance acquisitions valued at $500 million or more.
The per annum interest rate under the Revolver is variable and is calculated by applying a margin (1) for prime rate loans of 0.25% to 0.75% above the highest of (a) the prime rate of the administrative agent, (b) the federal funds effective rate plus 0.50% or (c) 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 1.25% to 1.75% above the LIBO rate. The applicable margin is determined quarterly as a function of our average daily excess availability under the facility. In addition, we are required to pay a commitment fee of 0.25% for any unused portion of the total commitment under the Revolver. As of January 30, 2016, the applicable margin was 0.25% for prime rate loans and 1.25% for LIBO rate loans.
The Revolver provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, failure to comply with covenants, any material representation or warranty made by us or the borrowers proving to be false in any material respect, certain bankruptcy, insolvency or receivership events affecting us or our subsidiaries, defaults relating to certain other indebtedness, imposition of certain judgments and mergers or the liquidation of the Company or certain of its subsidiaries. During fiscal 2015, we cumulatively borrowed and subsequently repaid $463.0 million under the Revolver. Our maximum borrowings outstanding during fiscal 2015 were $123.0 million. Average borrowings under the Revolver for fiscal 2015 were $23.3 million. Our average interest rate on those outstanding borrowings for fiscal 2015 was 3.5%. As of January 30,

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2016, total availability under the Revolver was $391.6 million, with no outstanding borrowings and outstanding standby letters of credit of $8.4 million. We are currently in compliance with the financial requirements of the Revolver.
Luxembourg Line of Credit
In September 2007, our Luxembourg subsidiary entered into a discretionary $20.0 million Uncommitted Line of Credit (the “Line of Credit”) with Bank of America. There is no term associated with the Line of Credit and Bank of America may withdraw the facility at any time without notice. The Line of Credit is available to our foreign subsidiaries for use primarily as a bank overdraft facility for short-term liquidity needs and for the issuance of bank guarantees and letters of credit to support operations. As of January 30, 2016, there were no cash overdrafts outstanding under the Line of Credit and bank guarantees outstanding totaled $1.9 million.
Issuance of 6.75% Senior Notes due 2021
Issuance of 6.75% Senior Notes due 2021. In March 2016, we issued $475.0 million aggregate principal amount of unsecured 6.75% senior notes due March 15, 2021 (the "2021 Senior Notes"). The 2021 Senior Notes bear interest at the rate of 6.75% per annum with interest payable semi-annually in arrears on March 15 and September 15 of each year beginning on September 15, 2016. The 2021 Senior Notes were sold in a private placement and will not be registered under the U.S. Securities Act of 1933. The net proceeds from the offering will be used for general corporate purposes, which will likely include acquisitions, and, potentially, dividends and stock buybacks.
The 2021 Senior Notes have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements of the Securities Act or the securities laws of any other jurisdiction. Accordingly, the 2021 Senior Notes are expected to be eligible for resale in the United States only to qualified institutional buyers and outside the United States to non-U.S. persons in compliance with Regulation S.
The indenture governing the 2021 Senior Notes does not contain financial covenants but does contain covenants which place certain restrictions on us and our subsidiaries, including limitations on asset sales, additional liens, investments, stock repurchases, the incurrence of additional debt and the repurchase of debt that is junior to the 2021 Senior Notes. In addition, the indenture restricts payments of dividends to stockholders (other than dividends payable in shares of capital stock) if one of the following conditions exist: (i) an event of default has occurred, (ii) we could not incur additional debt under the general debt covenant of the indenture or (iii) the sum of the proposed dividend and all other dividends and other restricted payments made under the indenture from the date of the indenture governing the 2021 Senior Notes exceeds the sum of 50% of consolidated net income plus 100% of net proceeds from capital stock sales and other amounts set forth in and determined as provided in the indenture. These restrictions are subject to exceptions and qualifications, including that we can pay up to $175 million in dividends to stockholders in each fiscal year and we can pay dividends and make other restricted payments in an unlimited amount if our leverage ratio on a pro forma basis after giving effect to the dividend payment and other restricted payments would be less than or equal to 1.0:1.0.
The indenture contains customary events of default, including payment defaults, breaches of covenants, failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If an event of default occurs and is continuing, the principal amount of the 2021 Senior Notes, plus accrued and unpaid interest, if any, may be declared immediately due and payable. These amounts automatically become due and payable if an event of default relating to certain events of bankruptcy, insolvency or reorganization occurs.

11.Leases
We lease retail stores, warehouse facilities, office space and equipment. These are generally leased under noncancelable agreements that expire at various dates through 2034 with various renewal options for additional periods. The agreements, which have been classified as operating leases, generally provide for minimum and, in some cases, percentage rentals and require us to pay all insurance, taxes and other maintenance costs. Leases with step rent provisions, escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term, which includes renewal option periods when we are reasonably assured of exercising the renewal options and includes “rent holidays” (periods in which we are not obligated to pay rent). Cash or lease incentives received upon entering into certain store leases (“tenant improvement allowances”) are recognized on a straight-line basis as a reduction to rent expense over the lease term, which includes renewal option periods when we are reasonably assured of exercising the renewal options. We record the unamortized portion of tenant improvement allowances as a part of deferred rent. We do not have leases with capital improvement funding. Percentage rentals are based on sales performance in excess of specified

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minimums at various stores and are accounted for in the period in which the amount of percentage rentals can be accurately estimated.
Approximate rental expenses under operating leases were as follows: 


52 Weeks Ended  
 January 30, 2016
52 Weeks Ended  
 January 31, 2015
52 Weeks Ended  
 February 1, 2014
 
(In millions)
Minimum
$394.5

$391.4

$381.6
Percentage rentals
7.8

8.2

9.4


$402.3

$399.6

$391.0
Future minimum annual rentals, excluding percentage rentals, required under leases that had initial, noncancelable lease terms greater than one year, as of January 30, 2016, are approximately:
Fiscal Year Ending on or around January 31, Amount
  (In millions)
2017 $336.1
2018 250.2
2019 178.9
2020 119.3
2021 68.6
Thereafter 114.7
  $1,067.8
12.Commitments and Contingencies
Commitments
We had bank guarantees relating primarily to international store leases totaling $15.7 million as of January 30, 2016 and $16.6 million as of January 31, 2015.
See Note 11, "Leases," for information regarding commitments related to our noncancelable operating leases.
Contingencies
In the ordinary course of our business, we are, from time to time, subject to various legal proceedings, including matters involving wage and hour employee class actions and consumer class actions. We may enter into discussions regarding settlement of these and other types of lawsuits, and may enter into settlement agreements, if we believe settlement is in the best interest of our stockholders. We do not believe that any such existing legal proceedings or settlements, individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or liquidity.

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13.Income Taxes
The provision for income taxes consisted of the following:
  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014
  (In millions)
Current tax expense:      
Federal $178.7
 $158.4
 $158.2
State 16.3
 18.0
 24.5
Foreign 28.9
 29.6
 34.6
  223.9
 206.0
 217.3
Deferred tax expense (benefit):      
Federal 0.2
 29.3
 (1.9)
State 3.6
 (3.3) (0.1)
Foreign (5.3) (16.8) (0.7)
  (1.5) 9.2
 (2.7)
Total income tax expense $222.4
 $215.2
 $214.6

The components of earnings before income tax expense consisted of the following:
  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014
  (In millions)
United States $553.5
 $558.8
 $491.6
International 71.7
 49.5
 77.2
Total $625.2
 $608.3
 $568.8
The following is a reconciliation of income tax expense (benefit) computed at the U.S. Federal statutory tax rate to income tax expense (benefit) reported in our consolidated statements of operations:
  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014
Federal statutory tax rate 35.0 % 35.0 % 35.0 %
State income taxes, net of federal effect 2.1
 2.0
 1.9
Foreign income tax rate differential (1.0) (0.4) (0.5)
Nondeductible goodwill impairment —
 —
 0.6
Change in valuation allowance (0.9) 1.8
 —
Subpart F income 0.9
 2.7
 4.8
Interest income from hybrid securities (1.6) (5.2) (5.8)
Realization of losses in foreign operations not previously benefited —
 (2.2) —
Other (including permanent differences)(1)
 1.1
 1.7
 1.7
  35.6 % 35.4 % 37.7 %
___________________
(1) Other is comprised of numerous items, none of which is greater than 1.75% of earnings before income taxes.

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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 the extent they are temporary, are recorded as deferred tax assets and liabilities and consisted of the following components (in millions):
  January 30, 2016 January 31, 2015
Deferred tax asset:    
Inventory $26.5
 $27.4
Deferred rents 8.9
 11.1
Stock-based compensation 16.5
 16.0
Net operating losses 52.2
 30.8
Customer liabilities 26.1
 29.9
Fixed assets —
 —
Foreign tax credit carryover 3.9
 5.2
Other 32.1
 14.8
Total deferred tax assets 166.2
 135.2
Valuation allowance (18.8) (24.3)
Total deferred tax assets, net 147.4
 110.9
Deferred tax liabilities:    
Fixed assets (11.6) (4.3)
Goodwill (89.0) (88.8)
Prepaid expenses (6.6) (3.8)
Intangible assets (30.3) (17.3)
Other (0.5) (2.7)
Total deferred tax liabilities (138.0) (116.9)
Net $9.4
 $(6.0)
The above amounts are reflected in the consolidated financial statements as:    
Deferred income taxes - current $—
 $65.6
Deferred income taxes - noncurrent $39.0
 $24.3
Deferred income taxes $(29.6) $(95.9)
During November 2015, the FASB issued ASU 2015-17, which simplifies the presentation of deferred income taxes. ASU 2015-17 requires that deferred tax assets and liabilities be classified as long-term on the balance sheet. The Company elected to early adopt ASU 2015-17 effective January 30, 2016, on a prospective basis. As reflected in the table above, the adoption of ASU 2015-17 resulted in a reclassification of the Company’s net current deferred tax asset to the net long-term deferred tax asset on the Company’s consolidated balance sheet as of January 30, 2016. Balances as of January 31, 2015 have not been recast.
We file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Internal Revenue Service (“IRS”) is currently examining our U.S. income tax returns for the fiscal years 2010 through 2014. We do not anticipate any adjustments that would result in a material impact on our consolidated financial statements as a result of these audits. We are no longer subject to U.S. federal income tax examination for years before and including the fiscal year ended January 30, 2010.
With respect to state and local jurisdictions and countries outside of the United States, we and our subsidiaries are typically subject to examination for three to six years after the income tax returns have been filed. Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to state, local or foreign audits.
Certain of our French subsidiaries have been under audit by the French Tax Administration ("FTA") for fiscal years 2008 through 2012.  We received a tax reassessment notice on December 23, 2015, pursuant to which the FTA asserted that the French subsidiaries were ineligible to claim certain tax deductions from November 4, 2008, through January 31, 2010, resulting in a potential additional tax charge of approximately €23.0 million.  We may receive additional tax reassessments in material amounts for subsequent fiscal years, including those years currently under audit. We filed a response to the reassessment notice on February 19, 2016, and we intend to vigorously contest the reassessment through administrative procedures.  If we are unable to resolve this matter through administrative remedies at the FTA, we plan to pursue judicial remedies. We believe our tax positions will be sustained and have not taken a reserve for any potential adjustment based on the reassessment.  If we were not to prevail, then the adjustment to our income tax provision could be material.

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As of January 30, 2016, the Company has approximately $11.0 million of net operating loss ("NOL") carryforwards in various foreign jurisdictions that expire in years 2018 through 2035, as well as $86.4 million of foreign NOL carryforwards that have no expiration date. In addition, the Company has approximately $3.9 million of foreign tax credit carryforwards that expire in years 2022 through 2024. The Company also has approximately $88.0 million of Federal NOL carryovers acquired through the ThinkGeek acquisition that will expire in years 2018 through 2034.
As of January 30, 2016, the gross amount of unrecognized tax benefits was approximately $31.9 million. If we were to prevail on all uncertain tax positions, the net effect would be a benefit to our effective tax rate of approximately $27.7 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 30, 2016 January 31, 2015 February 1, 2014
Beginning balance of unrecognized tax benefits $21.4
 $20.6
 $28.7
Increases related to current period tax positions 4.0
 1.0
 0.5
Increases related to prior period tax positions 9.0
 6.1
 16.6
Reductions as a result of a lapse of the applicable statute of limitations (1.0) (0.5) (1.9)
Reductions as a result of settlements with taxing authorities (1.5) (5.8) (23.3)
Ending balance of unrecognized tax benefits $31.9
 $21.4
 $20.6
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. As of January 30, 2016, January 31, 2015 and February 1, 2014, we had approximately $4.9 million, $4.6 million and $6.1 million, respectively, in interest and penalties related to unrecognized tax benefits accrued, of which approximately $0.4 million of expense, $0.6 million of expense and $1.6 million of expense were recognized through income tax expense in the fiscal years ended January 30, 2016, January 31, 2015 and February 1, 2014, respectively. If we were to prevail on all uncertain tax positions, the reversal of these accruals related to interest would also be a benefit to our effective tax rate.
It is reasonably possible that the amount of the unrecognized benefit with respect to certain of our unrecognized tax positions could significantly increase or decrease within the next 12 months as a result of settling ongoing audits. However, as audit outcomes and the timing of audit resolutions are subject to significant uncertainty, and given the nature and complexity of the issues involved, we are unable to reasonably estimate the possible amount of change in the unrecognized tax benefits, if any, that may occur within the next 12 months as a result of ongoing examinations. Nevertheless, we believe we are adequately reserved for our uncertain tax positions as of January 30, 2016.
Deferred income taxes have not been provided for on the approximately $601.0 million of undistributed earnings generated by certain foreign subsidiaries as of January 30, 2016 because we intend to permanently reinvest such earnings outside the United States. We do not currently require, nor do we have plans for, the repatriation of retained earnings from these subsidiaries. However, in the future, if we determine it is necessary to repatriate these funds, or we sell or liquidate any of these subsidiaries, we may be required to provide for income taxes on the repatriation. We may also be required to withhold foreign taxes depending on the foreign jurisdiction from which the funds are repatriated. The effective rate of tax on such repatriations may materially differ from the federal statutory tax rate, thereby having a material impact on tax expense in the year of repatriation; however, we cannot reasonably estimate the amount of such a tax event.
14.Common Stock and Share-Based Compensation
Common Stock
The holders of Class A Common Stock are entitled to one vote per share on all matters to be voted on by stockholders. Holders of Class A Common Stock will share in any dividend declared by the Board of Directors, subject to any preferential rights of any outstanding preferred stock. In the event of our liquidation, dissolution or winding up, all holders of common stock are entitled to share ratably in any assets available for distribution to holders of shares of common stock after payment in full of any amounts required to be paid to holders of preferred stock.
In 2005, we adopted a rights agreement under which one right (a “Right”) was attached to each outstanding share of our common stock. Each Right entitles the holder to purchase from us one ten-thousandth of a share of a series of preferred stock, designated as Series A Junior Participating Preferred Stock (the “Series A Preferred Stock”), at a price of $100.00 per one one-

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thousandth of a share. The Rights expired on October 28, 2014, and accordingly, at January 30, 2016, there were no shares of Series A Preferred Stock issued or outstanding.
Share Repurchase Activity. Since January 2010, our Board of Directors has authorized several share repurchase programs authorizing our management to repurchase our Class A Common Stock. Since the beginning of fiscal 2011, each individual authorization has been $500 million. Our typical practice is to seek Board of Directors’ approval for a new authorization before the existing one is fully used to ensure we are always able to repurchase shares. Repurchased shares are subsequently retired. Share repurchases are generally recorded as a reduction to additional paid-in capital; however, in the event that share repurchases would cause additional-paid in capital to be reduced below zero, any excess is recorded as a reduction to retained earnings.
The following table summarizes our share repurchase activity during the 52 weeks ended January 30, 2016, the 52 weeks ended January 31, 2015 and the 52 weeks ended February 1, 2014:
Period Total
Number of
Shares
Purchased		 Average
Price Paid per
Share		 Aggregate Value of Shares Repurchased During the Period
  (in millions)   (in millions)
52 weeks ended January 30, 2016 5.2
 $38.68
 $202.0
52 weeks ended January 31, 2015 8.4
 $39.50
 $333.4
52 weeks ended February 1, 2014 6.3
 $41.12
 $258.3
As of January 30, 2016 we have $245.3 million remaining under our latest authorization from November 2014. Subsequent to January 30, 2016, we have not made any share repurchases.
Dividends. In February 2012, our Board of Directors approved the initiation of a quarterly cash dividend to our stockholders of Class A Common Stock. We paid a total of $1.10 per share in dividends in fiscal 2013 and a total of $1.32 per share fiscal 2014. In fiscal 2015, we paid dividends of $1.44 per share of Class A Common Stock, totaling approximately $154.1 million. On February 23, 2016, our Board of Directors authorized an increase in our annual cash dividend from $1.44 to $1.48 per share of Class A Common Stock. Future dividends will be subject to approval by our Board of Directors.
Share-Based Compensation
Effective June 2013, our stockholders voted to adopt the Amended and Restated 2011 Incentive Plan (the “Amended 2011 Incentive Plan”) to provide for issuance under the 2011 Incentive Plan of our Class A Common Stock. The Amended 2011 Incentive Plan provides a maximum aggregate amount of 9.25 million shares of Class A Common Stock with respect to which options may be granted and provides for a grant of cash, granting of incentive stock options, non-qualified stock options, stock appreciation rights, performance awards, restricted stock and other share-based awards, which may include, without limitation, restrictions on the right to vote such shares and restrictions on the right to receive dividends on such shares. The options to purchase Class A common shares are issued at fair market value of the underlying shares on the date of grant. In general, the options vest and become exercisable in equal annual installments over a three-year period, commencing one year after the grant date, and expire ten years from the grant date. Shares issued upon exercise of options are newly issued shares. Options and restricted shares granted after June 21, 2011 are issued under the 2011 Incentive Plan.
Effective June 2009, our stockholders voted to amend the Third Amended and Restated 2001 Incentive Plan (the “2001 Incentive Plan”) to provide for issuance under the 2001 Incentive Plan of our Class A Common Stock. The 2001 Incentive Plan provided a maximum aggregate amount of 46.5 million shares of Class A Common Stock with respect to which options may have been granted and provided for the granting of incentive stock options, non-qualified stock options, and restricted stock, which may have included, without limitation, restrictions on the right to vote such shares and restrictions on the right to receive dividends on such shares. The options to purchase Class A common shares were issued at fair market value of the underlying shares on the date of grant. In general, the options vested and became exercisable in equal annual installments over a three-year period, commencing one year after the grant date, and expired ten years from the grant date. Shares issued upon exercise of options are newly issued shares. Options and restricted shares granted on or before June 21, 2011 were issued under the 2001 Incentive Plan.
Stock Options
We record stock-based compensation expense in earnings based on the grant-date fair value of options granted. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. This valuation model requires the use of subjective assumptions, including expected option life and expected volatility. We use historical data to estimate the option life and the employee forfeiture rate, and use historical volatility when estimating the stock price volatility. We have not

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historically experienced material forfeitures with respect to the employees who currently receive stock option grants and thus we do not expect any forfeitures related to these awards. There were no options granted during the 52 weeks ended January 30, 2016.
Our Black-Scholes assumptions are presented below:
  52 Weeks Ended  
 January 31, 2015		 53 Weeks Ended  
 February 1, 2014
Volatility 46.5% 46.4%
Risk-free interest rate 1.7% 1.0%
Expected life (years) 5.5
 5.6
Expected dividend yield 3.4% 4.3%
In addition to recognizing the estimated fair value of stock-based compensation in earnings over the required service period, we are also required to present tax benefits received in excess of amounts determined based on the compensation expense recognized on the statements of cash flows. Such tax benefits are presented as a use of cash in the operating section and a source of cash in the financing section of the consolidated statements of cash flows.
A summary of our stock option activity during the 52 weeks ended January 30, 2016 is presented below:
  
Shares
(Millions)
 
Weighted-
Average
Exercise
Price
     
Balance, January 31, 2015 1.8
 $33.14
Exercised (0.3) 18.19
Forfeited (0.1) 45.90
Balance, January 30, 2016 1.4
 35.88
The following table summarizes information as of January 30, 2016 concerning outstanding and exercisable options:
  Options Outstanding Options Exercisable
Range of Exercise Prices 
Number
Outstanding
(Millions)
 
Weighted-
Average
Remaining
Life (Years)
 
Weighted-
Average
Contractual
Price
 
Number
Exercisable
(Millions)
 
Weighted-
Average
Exercise
Price
$20.32 - $20.69 0.1
 3.58 $20.36
 0.1
 $20.36
$24.82 - $26.68 0.6
 5.55 25.27
 0.4
 25.44
$38.52 - $49.95 0.7
 4.28 46.68
 0.6
 48.06
$20.32 - $49.95 1.4
 4.76 35.88
 1.1
 36.98
The total intrinsic value of options exercised during the fiscal years ended January 30, 2016, January 31, 2015 and February 1, 2014 was $6.7 million, $10.7 million, and $53.5 million, respectively. The intrinsic value of options exercisable and options outstanding was $0.8 million and $1.1 million, respectively, as of January 30, 2016.
The 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 30, 2016, the 52 weeks ended January 31, 2015 and the 52 weeks ended February 1, 2014, we included compensation expense relating to the grant of these options in the amount of $2.6 million, $2.1 million and $1.0 million, respectively, in selling, general and administrative expenses. As of January 30, 2016, there was $1.0 million of unrecognized compensation expense related to the unvested portion of our stock options that is expected to be recognized over a weighted-average period of 1.0 year.
Restricted Stock Awards
We grant restricted stock awards to certain of our employees, officers and non-employee directors. Restricted stock awards generally vest over a three-year period on the anniversary of the date of issuance, subject to continued service to the Company and, in some cases, subject to the attainment of certain performance measures.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The following table presents a summary of our restricted stock awards activity during the 52 weeks ended January 30, 2016:
  
Shares
(Millions)
 
Weighted-
Average
Grant Date
Fair Value
   
Nonvested shares at January 31, 2015 2.2
 $28.14
Granted 0.6
 40.34
Vested (0.9) 28.91
Forfeited (0.4) 25.16
Nonvested shares at January 30, 2016 1.5
 $33.77
Of the shares granted during fiscal 2015, 457 thousand shares of restricted stock were granted under the 2011 Incentive Plan, 429 thousand of which vest in equal annual installments over three years and 28 thousand vest in a single installment over one year. At the same time, an additional 189 thousand shares of restricted stock were granted under the 2011 Incentive Plan and are subject to performance targets which will be measured following the completion of fiscal 2016. These grants will vest one year after measurement to the extent earned. Shares subject to performance measures may generally be earned in greater or lesser percentages if targets are exceeded or not achieved by specified amounts.
During the 52 weeks ended January 31, 2015, we granted 0.6 million shares of restricted stock with a weighted-average grant date fair value of $38.61 per common share with fair value being determined by the quoted market price of our common stock on the date of grant. Of these shares, 434 thousand shares of restricted stock were granted under the 2011 Incentive Plan, which vest in equal annual installments over three years. At the same time, an additional 182 thousand shares of restricted stock were granted under the 2011 Incentive Plan, of which 91 thousand shares vest in equal annual installments over three years based on performance targets measured at the end of fiscal 2014. This award achieved 93% of the target amount, which resulted in the incremental forfeiture of 15.9 thousand shares that would have vested in equal annual installments over three years. The remaining 91 thousand shares of restricted stock granted are subject to performance targets which will be measured following the completion of fiscal 2016. These grants will vest immediately upon measurement to the extent earned. Shares subject to performance measures may generally be earned in greater or lesser percentages if targets are exceeded or not achieved by specified amounts.
During the 52 weeks ended January 30, 2016, the 52 weeks ended January 31, 2015 and the 52 weeks ended February 1, 2014, we included compensation expense relating to the grants of restricted shares in the amounts of $27.3 million, $19.4 million and $18.4 million, respectively, in selling, general and administrative expenses in the accompanying consolidated statements of operations. As of January 30, 2016, there was $21.7 million of unrecognized compensation expense related to nonvested restricted shares that is expected to be recognized over a weighted-average period of 1.7 years.
15.Employees’15.    Employees' Defined Contribution Plan
We sponsor a defined contribution plan (the “Savings Plan”) for the benefit of substantially all of our U.S. employees who meet certain eligibility requirements, primarily age and length of service. The Savings Plan allows employees to invest up to 60%, for a maximum of $18 thousand a year for 2015,subject to IRS limitations, of their eligible gross cash compensation invested on a pre-tax basis. Our optional contributions to the Savings Plan are generally in amounts based upon a certain percentage of the employees’ contributions. Our contributions to the Savings Plan during the 52 weeks ended January 30,fiscal 2018, 2017 and 2016, the 52 weeks ended January 31, 2015 and the 52 weeks ended February 1, 2014, were $6.3$6.1 million, $5.2$5.9 million and $4.8$5.9 million, respectively.

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



16.Significant Products
The following table sets forth net sales (in millions) and percentages of total net sales by significant product category for the periods indicated:
  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014
  Net Sales 
Percent
of Total
 Net Sales 
Percent
of Total
 Net Sales 
Percent
of Total
Net sales:            
New video game hardware(1)
 $1,944.7
 20.8% $2,028.7
 21.8% $1,730.0
 19.1%
New video game software 2,905.1
 31.0% 3,089.0
 33.2% 3,480.9
 38.5%
Pre-owned and value video game products 2,374.7
 25.4% 2,389.3
 25.7% 2,329.8
 25.8%
Video game accessories 703.0
 7.5% 653.6
 7.1% 560.6
 6.2%
Digital 188.3
 2.0% 216.3
 2.3% 217.7
 2.4%
Mobile and consumer electronics 652.8
 7.0% 518.8
 5.6% 303.7
 3.4%
Other(2)
 595.2
 6.3% 400.3
 4.3% 416.8
 4.6%
Total $9,363.8
 100.0% $9,296.0
 100.0% $9,039.5
 100.0%


  52 Weeks Ended  
 January 30, 2016		 52 Weeks Ended  
 January 31, 2015		 52 Weeks Ended  
 February 1, 2014
  
Gross
Profit
 
Gross
Profit
Percent
 
Gross
Profit
 
Gross
Profit
Percent
 
Gross
Profit
 
Gross
Profit
Percent
Gross Profit:            
New video game hardware(1)
 $175.5
 9.0% $196.6
 9.7% $176.5
 10.2%
New video game software 689.3
 23.7% 716.9
 23.2% 805.3
 23.1%
Pre-owned and value video game products 1,114.5
 46.9% 1,146.3
 48.0% 1,093.9
 47.0%
Video game accessories 255.5
 36.3% 246.1
 37.7% 220.5
 39.3%
Digital 149.6
 79.4% 152.0
 70.3% 149.2
 68.5%
Mobile and consumer electronics 328.6
 50.3% 186.7
 36.0% 65.1
 21.4%
Other(2)
 205.3
 34.5% 131.3
 32.8% 150.6
 36.1%
Total $2,918.3
 31.2% $2,775.9
 29.9% $2,661.1
 29.4%
___________________
(1)
Includes sales of hardware bundles, in which physical hardware and digital or physical software are sold together as a single SKU.
(2)
Other products include revenues from collectibles (including sales from our newly acquired ThinkGeek operation, beginning in July 2015), from the sales of PC entertainment software, interactive toys and licensed merchandise, strategy guides and revenues from PowerUp Pro loyalty members receiving Game Informer magazine in physical form.

16.    Segment Information
17.Segment Information
We operate our business in four Video Game Brandsgeographic segments: United States, Canada, Australia and Europe; and aEurope. Our former Technology Brands segment whichhad been comprised of Spring Mobile, Simply Mac and Cricket Wireless. Cricket Wireless was addedsold in January 2018 and Spring Mobile was sold in January 2019. Simply Mac and the historical results of Cricket Wireless is included in the fourth quarterUnited States segment for all periods presented. The historical results of fiscal 2013 and includes the operations of our Spring Mobile, Cricketincluding the gain on sale, is reported as discontinued operations and Simply Mac businesses. is excluded from our segment results for all periods presented.
We identify segments based on a combination of geographic areas and management responsibility. Each of the segments includes significant retail operations with all Video Game Brandsvideo game brands stores engaged in the sale of new and pre-owned video game systems andhardware, software, and related accessories and Technology Brand stores engaged in the sale of consumer electronics and wireless products and services.collectibles, Our segments also include stand-alone collectibles stores. Segment results for the United States include retail operations in 50 states the District of Columbia, Guam and Puerto Rico;Guam; our electronic commerce websitee-commerce websites www.gamestop.com and www.thinkgeek.com; www.gamestop.com;Game Informer magazine;

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


and Simply Mac; Kongregate, our leadinga web and mobile gaming platform.platform which we sold in July 2017; and Cricket Wireless, which we sold in January 2018. The United States segment also includes general and administrative expenses related to our corporate headquarters in Grapevine, Texas. 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 retail and e-commerce operations in 10 European countries and e-commerce operations in five countries. The Technology Brands segment includes retail operations in the United States. We measure segment profit using operating earnings, which is defined as income from continuing operations before intercompany royalty fees, net interest expense and income taxes. Transactions between reportable segments consist primarily of royalties, management fees, intersegment loans and related interest. There were no material intersegment sales during the 52 weeks ended January 30,fiscal 2018, 2017 and 2016.
Segment information for fiscal 2018, 2017 and 2016 the 52 weeks ended January 31, 2015 or the 52 weeks ended February 1, 2014.
Information on segments and the reconciliation of segment profit to earnings (loss) before income taxes areis as follows (in millions): 
As of and for the Fiscal Year Ended January 30, 2016 
United
States
 Canada Australia Europe Technology Brands Consolidated
Net sales $6,435.1
 $446.6
 $591.4
 $1,356.7
 $534.0
 $9,363.8
             
Segment operating earnings 504.3
 29.4
 38.7
 48.8
 27.0
 648.2
Interest income           0.4
Interest expense           (23.4)
Earnings before income taxes           $625.2
             
Other Information:            
Goodwill $1,195.5
 $26.9
 $65.7
 $75.7
 $112.9
 $1,476.7
Other long-lived assets 333.2
 17.6
 47.0
 200.3
 321.3
 919.4
Total assets 2,703.1
 259.2
 382.2
 401.7
 588.7
 4,334.9
Income tax expense 195.0
 6.1
 8.3
 4.1
 8.9
 222.4
Depreciation and amortization 98.8
 3.5
 8.8
 24.3
 21.2
 156.6
Capital expenditures $76.9
 $4.4
 $12.8
 $20.2
 $58.9
 $173.2
  
United
States
 Canada Australia Europe Total
As of and for the Fiscal Year Ended February 2, 2019          
Net sales $5,800.2
 $434.5
 $645.4
 $1,405.2
 $8,285.3
Operating loss (533.9) (19.3) (46.5) (102.3) (702.0)
Depreciation and amortization 67.1
 3.7
 9.8
 25.0
 105.6
Goodwill impairments 795.6
 28.8
 66.4
 79.9
 970.7
Asset impairments 12.5
 —
 0.2
 32.5
 45.2
Capital expenditures 51.5
 4.4
 10.5
 19.8
 86.2
Property and equipment, net 188.7
 17.1
 40.6
 74.9
 321.3
Total segment assets 2,889.5
 144.4
 301.2
 709.2
 4,044.3
           
As of and for the Fiscal Year Ended February 3, 2018          
Net sales $5,876.0
 $434.9
 $702.2
 $1,534.0
 $8,547.1
Operating earnings 332.8
 18.5
 34.9
 53.0
 439.2
Depreciation and amortization 81.6
 3.9
 10.4
 26.4
 122.3
Asset impairments 12.3
 —
 0.3
 1.2
 13.8
Capital expenditures 61.5
 4.3
 10.1
 15.3
 91.2
Property and equipment, net 207.6
 17.4
 44.2
 81.8
 351.0
Total segment assets (1)
 2,919.0
 187.3
 457.5
 817.7
 4,381.5
           
As of and for the Fiscal Year Ended January 28, 2017          
Net sales $5,660.0
 $382.0
 $609.5
 $1,313.5
 $7,965.0
Operating earnings 398.4
 22.4
 34.9
 26.0
 481.7
Depreciation and amortization 98.5
 3.8
 9.4
 25.0
 136.7
Asset impairments 9.7
 0.2
 —
 9.7
 19.6
Capital expenditures 63.6
 1.3
 15.1
 25.8
 105.8
Property and equipment, net 226.9
 16.1
 43.4
 76.9
 363.3
Total segment assets 2,628.7
 271.6
 434.6
 567.9
 3,902.8

As of and for the Fiscal Year Ended January 31, 2015 
United
States
 Canada Australia Europe Technology Brands Consolidated
Net sales $6,193.5
 $476.4
 $644.7
 $1,652.8
 $328.6
 $9,296.0
             
Segment operating earnings 483.2
 28.3
 38.0
 35.9
 32.9
 618.3
Interest income           0.7
Interest expense           (10.7)
Earning before income taxes           $608.3
             
Other Information:            
Goodwill $1,143.3
 $29.5
 $72.1
 $78.9
 $66.6
 $1,390.4
Other long-lived assets 328.6
 18.4
 46.4
 214.1
 185.9
 793.4
Total assets 2,740.3
 252.1
 382.5
 527.2
 344.2
 4,246.3
Income tax expense (benefit) 198.1
 4.2
 8.4
 (6.7) 11.2
 215.2
Depreciation and amortization 102.5
 3.8
 9.6
 30.8
 7.7
 154.4
Capital expenditures $92.3
 $5.1
 $11.2
 $19.9
 $31.1
 $159.6

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


As of and for the Fiscal Year Ended February 1, 2014 
United
States
 Canada Australia Europe Technology Brands Consolidated
Net sales $6,160.4
 $468.8
 $613.7
 $1,733.8
 $62.8
 $9,039.5
             
Segment operating earnings (loss) 465.3
 26.6
 37.5
 44.3
 (0.2) 573.5
Interest income           0.9
Interest expense           (5.6)
Loss before income taxes           $568.8
             
Other Information:            
Goodwill $1,143.3
 $33.8
 $81.3
 $94.2
 $62.1
 $1,414.7
Other long-lived assets 320.0
 20.8
 40.4
 269.3
 76.6
 727.1
Total assets 2,320.7
 228.7
 389.2
 972.2
 180.6
 4,091.4
Income tax expense 173.2
 11.6
 8.8
 21.0
 —
 214.6
Depreciation and amortization 115.4
 4.4
 10.5
 35.3
 0.9
 166.5
Capital expenditures $85.7
 $6.9
 $6.7
 $21.4
 $4.9
 $125.6
___________________

18.(1)Unaudited Quarterly Financial InformationThe total segment assets for the United States and Europe as of fiscal year ended February 3, 2018, have been revised to correct an error. See Note 1, "Nature of Operations and Summary of Significant Accounting Policies," for additional information.
A reconciliation of the total capital expenditures of our reportable segments to the total capital expenditures presented in our consolidated statement of cash flows is as follows (in millions):
  Fiscal Year
  2018 2017 2016
Total segment capital expenditures $86.2
 $91.2
 $105.8
Discontinued operations 7.5
 22.2
 36.9
Total capital expenditures $93.7
 $113.4
 $142.7
A reconciliation of the total assets of our reportable segments to the total assets presented in our consolidated balance sheets is as follows (in millions):
  
February 2,
2019
 
February 3,
2018
Total segment assets $4,044.3
 $4,381.5
Assets held for sale —
 660.1
Consolidated total assets $4,044.3
 $5,041.6
17.    Unaudited Quarterly Financial Information
The following table sets forth certain unaudited quarterly consolidated statement of operations information for the fiscal years ended January 30, 2016February 2, 2019 and January 31, 2015.February 3, 2018 (in millions, except per share amounts). The unaudited quarterly information includes all normal recurring adjustments that our management considers necessary for a fair presentation of the information shown. 
  Fiscal Year Ended January 30, 2016 Fiscal Year Ended January 31, 2015
  
1st
Quarter
 
2nd
Quarter
 
3rd
Quarter
 4th
Quarter (1)		 
1st
Quarter
 
2nd
Quarter
 
3rd
Quarter
 
4th
Quarter (1)
  (Amounts in millions, except per share amounts)
Net sales $2,060.6
 $1,761.9
 $2,016.3
 $3,525.0
 $1,996.3
 $1,731.4
 $2,092.2
 $3,476.1
Gross profit 639.0
 580.5
 655.6
 1,043.2
 626.4
 550.9
 622.2
 976.4
Operating earnings 123.9
 51.7
 90.7
 381.9
 105.9
 36.7
 89.8
 385.9
Net income 73.8
 25.3
 55.9
 247.8
 68.0
 24.6
 56.4
 244.1
Basic net income per common share(2)
 0.68
 0.24
 0.53
 2.38
 0.59
 0.22
 0.50
 2.25
Diluted net income per common share(2)
 0.68
 0.24
 0.53
 2.36
 0.59
 0.22
 0.50
 2.23
Dividend declared per common share 0.36
 0.36
 0.36
 0.36
 0.33
 0.33
 0.33
 0.33
  Fiscal Year 2018 Fiscal Year 2017
  
1st
Quarter
 
2nd
Quarter
 
3rd
Quarter(2)
 
4th
Quarter(2)
 
1st
Quarter
 
2nd
Quarter
 
3rd
Quarter
 
4th
Quarter(2)
Net sales(1)
 $1,785.8
 $1,501.1
 $1,935.4
 $3,063.0
 $1,874.0
 $1,529.5
 $1,827.6
 $3,316.0
Gross profit(1)
 531.1
 470.0
 558.2
 748.8
 567.2
 493.2
 559.8
 864.7
Operating earnings (loss)(1)
 46.5
 1.5
 (517.9) (232.1) 89.3
 26.9
 71.9
 251.1
Net income (loss) from continuing operations 20.4
 (39.8) (506.9) (268.5) 51.8
 12.0
 49.7
 116.9
Income (loss) from discontinued operations, net of tax 7.8
 14.9
 18.3
 80.8
 7.2
 10.2
 9.7
 (222.8)
Net (loss) income 28.2
 (24.9) (488.6) (187.7) 59.0
 22.2
 59.4
 (105.9)
Basic earnings (loss) per share:(3) (4)
                
Continuing operations $0.20
 $(0.39) $(4.96) $(2.63) $0.51
 $0.12
 $0.49
 $1.15
Discontinued operations 0.08
 0.15
 0.18
 0.79
 0.07
 0.10
 0.10
 (2.20)
Basic earnings (loss) per share $0.28
 $(0.24) $(4.78) $(1.84) $0.58
 $0.22
 $0.59
 $(1.04)
Diluted earnings (loss) per share:(3) (4)
                
Continuing operations $0.20
 $(0.39) $(4.96) $(2.63) $0.51
 $0.12
 $0.49
 $1.15
Discontinued operations 0.08
 0.15
 0.18
 0.79
 0.07
 0.10
 0.10
 (2.19)
Diluted earnings (loss) per share $0.28
 $(0.24) $(4.78) $(1.84) $0.58
 $0.22
 $0.59
 $(1.04)
Dividend declared per common share $0.38
 $0.38
 $0.38
 $0.38
 $0.38
 $0.38
 $0.38

$0.38
___________________
(1)Net sales, gross profit and operating earnings (loss) differ from the amounts previously reported in our Quarterly Reports on Form 10-Q as a result of our former Spring Mobile business being classified as discontinued operations for all periods presented. See Note 2, "Discontinued Operations and Dispositions," for additional information.
(2)The results of operations for the fourth quarter of fiscal 2018 include goodwill and asset impairment charges totaling $428.4 million on a pre-tax basis. The results of operations for the third quarter of fiscal 2018 include goodwill and asset impairment charges totaling $587.5 million on a pre-tax basis. The results of operations for the fourth quarter of fiscal 2017 include goodwill and asset impairment charges totaling $13.8 million on a pre-tax basis.
The following footnotes are discussed as pretax expenses.
(3)The sum of the quarters may not necessarily be equal to the full year (loss) earnings per common share amount.
(4)The sum of (loss) earnings per share may not total to consolidated (loss) earnings per common share as amounts are calculated based on whole numbers.

(1) The results of operations for the fourth quarter of the fiscal year ended January 30, 2016 include asset impairments of $4.6 million. The results of operations for the fourth quarter of the fiscal year ended January 31, 2015 include asset impairments of $2.2 million.
(2) The sum of the quarters may not necessarily be equal to the full year net income per common share amount.

F-34


EXHIBIT INDEX

Exhibit
Number
 Description 
Previously Filed as an Exhibit to and
Incorporated by Reference From
 Date Filed
      
2.1 
Equity Purchase Agreement, dated November 21, 2018, by and Plan of Merger, dated as of April 17, 2005, among Prime Communications, L.P., Prime Acquisition Company, Spring Communications Parent, Inc., Spring Communications Holding, Inc., and GameStop Corp. (f/k/a GSC Holdings Corp.), Electronics Boutique Holdings Corp., GameStop, Inc., GameStop Holdings Corp. (f/k/a GameStop Corp.), Cowboy Subsidiary LLC and Eagle Subsidiary LLC.
 Current Report on Form 8-K April 18, 2005
2.2Sale and Purchase Agreement, dated September 30, 2008, between EB International Holdings, Inc. and L Capital, LV Capital, Europ@Web and other Micromania shareholders.Current Report on Form 8-K
October 2, 2008

2.3Amendment, dated November 17, 2008, to Sale and Purchase Agreement for Micromania Acquisition listed as Exhibit 2.2 above.Current Report on Form 8-K
November 18, 2008

21, 2018
      
3.1 
Third Amended and Restated Certificate of Incorporation.
 Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 2013 
September 11, 2013

      
3.2 Third
Fifth Amended and Restated Bylaws.
 QuarterlyCurrent Report on Form 10-Q for the fiscal quarter ended August 3, 20138-K September 11, 2013
March 6, 2017
      
4.1 Form of Indenture.Registration Statement on Form S-3ASRApril 10, 2006
4.2
Indenture, dated as of September 24, 2014, by and among GameStop Corp. as Issuer, the Subsidiary Guarantors party thereto as Subsidiary Guarantors and U.S. Bank National Association as Trustee.
 Current Report on Form 8-K September 24, 2014
       
4.34.2 
Form of 5.5% Senior Notes due 2019.
 Current Report on Form 8-K September 24, 2014
      
4.44.3 
First Supplemental Indenture to the Indenture
dated as of September 24, 2014, dated as of March
7, 2016, by and among GameStop Corp., the
guarantors named therein and U.S. Bank NationalNational.
Current Report on Form 8-KMarch 9, 2016
4.4
Indenture, dated as of March 9 2016, by and among GameStop Corp. as Issuer, the Subsidiary Guarantors party thereto as Subsidiary.
 Current Report on Form 8-K March 9, 2016
      
4.5 
Indenture, dated as of March 9 2016, by and
among GameStop Corp. as Issuer, the Subsidiary
Guarantors party thereto as Subsidiary
Current Report on Form 8-KMarch 9, 2016
4.6
Form of 6.75% Senior Notes due 2021.

 Current Report on Form 8-K March 9, 2016
       
10.1* 
Fourth Amended and Restated 2001 Incentive Plan.
 Definitive Proxy Statement for 2009 Annual Meeting of Stockholders May 22, 2009
      
10.2* 
Amended and Restated 2011 Incentive Plan.
 Current Report on Form 8-K June 27, 2013
      
10.3* Second Amended and Restated Supplemental Compensation Plan.Definitive Proxy Statement for 2008 Annual Meeting of StockholdersMay 23, 2008
10.4*
Form of Option Agreement.
 Annual Report on Form 10-K for the fiscal year ended January 29, 2005 April 11, 2005
      
10.5*10.4* 
Form of Restricted ShareLong-Term Incentive Award Agreement.
 CurrentAnnual Report on Form 8-K10-K for the fiscal year ended February 3, 2018 March 9, 2015April 2, 2018
      


10.6*10.5* 
Executive Employment Agreement, dated as of May 10, 2013, between GameStop Corp. and Daniel A. DeMatteo.
Current Report on Form 8-KMay 13, 2013
10.6*
Amendment to Employment Agreement dated March 1, 2018 with Daniel A. DeMatteo.
Current Report on Form 8-KMarch 6, 2018
10.7*
Amendment to Employment Agreement dated May 31, 2018 with Daniel A. DeMatteo.
Current Report on Form 8-KJune 4, 2018
10.8*
Executive Employment Agreement, dated as of May 10, 2013, between GameStop Corp. and J. Paul Raines.
 Current Report on Form 8-K May 13, 2013
      
10.7*10.9* 
Executive Employment Agreement, dated as of May 10, 2013, between GameStop Corp. and J. Paul Raines.Robert A. Lloyd.
 Current Report on Form 8-K May 13, 2013
      
10.8*10.10* Executive
Amendment to Employment Agreement between GameStop Corp. and J. Paul Raines, as amended on November 13, 2013.dated March 1, 2018 with Robert A. Lloyd.
 Current Report on Form 8-K 
November 15, 2013

March 6, 2018
      
10.9*10.11* 
Amendment to Employment Agreement dated May 31, 2018 with Robert A. Lloyd.
Current Report on Form 8-KJune 4, 2018

Exhibit
Number
Description
Previously Filed as an Exhibit to and
Incorporated by Reference From
Date Filed
10.12*
Executive Employment Agreement, dated as of May 10, 2013, between GameStop Corp. and Tony D. Bartel.Michael K. Mauler.
 Current Report on Form 8-K May 13, 2013
      
10.10*10.13* 
Amendment to Employment Agreement dated March 1, 2018 with Michael K. Mauler.
Current Report on Form 8-KMarch 6, 2018
10.14*
Executive Employment Agreement, dated as of May 10, 2013, between GameStop Corp. and Robert A. Lloyd.Tony D. Bartel.
 Current Report on Form 8-K May 13, 2013
      
10.11*Executive Employment Agreement, dated as of May 10, 2013, between GameStop Corp. and Michael K. Mauler.Current Report on Form 8-KMay 13, 2013
 
10.12*10.15* 
Executive Employment Agreement, dated as of May 10, 2013, between GameStop Corp. and Michael P. Hogan.
 Annual Report on Form 10-K for the fiscal year ended February 1, 2014 April 2, 2014
10.13*Retirement Policy.Current Report on Form 8-K March 10, 2014
10.14Guaranty, dated as of October 11, 2005, by GameStop Corp. (f/k/a GSC Holdings Corp.) and certain subsidiaries of GameStop Corp. in favor of the agents and lenders.Current Report on Form 8-KOctober 12, 2005
10.15Mortgage, Security Agreement, and Assignment and Deeds of Trust, dated October 11, 2005, between GameStop of Texas, L.P. and Bank of America, N.A., as Collateral Agent.Current Report on Form 8-KOctober 12, 2005
      
10.16 Mortgage, Security Agreement, and Assignment and Deeds of Trust, dated October 11, 2005, between Electronics Boutique of America, Inc. and Bank of America, N.A., as Collateral Agent.Current Report on Form 8-KOctober 12, 2005
10.17
Second Amended and Restated Credit Agreement, dated as of March 25, 2014, by and among GameStop Corp., certain subsidiaries of GameStop Corp., Bank of America, N.A. and the other lending institutions listed therein, Bank of America, N.A., as Issuing Bank, Bank of America, N.A., as Agent, JPMorgan Chase Bank, N.A., as Syndication Agent and Wells Fargo Bank, National Association, U.S. Bank National Association, and Regions Bank as Co-Documentation Agents and Merrill Lynch, Pierce, Jenner & Smith Incorporated as sole lead arranger and bookrunner.bookrunner (the "Revolver").
 Current Report on Form 8-K  March 28, 2014
       
10.1810.17 Second Amended and Restated Security Agreement,
First Amendment to the Revolver, dated as of March 25, 2014.September 15, 2014, by and among GameStop Corp., the Borrowers party thereto, the Lenders party thereto and Bank of America, N.A.
 Current Report on Form 8-K September 16, 2014
10.18
 March 28, 2014Second Amendment to the Revolver, dated as of November 20, 2017, by and among GameStop Corp., the Borrowers, party thereto, the Lenders party thereto and Bank of America, N.A., (the “Amended Revolver”).

Current Report on Form 8-KNovember 21, 2017
       
10.19 
Third Amendment to Second Amended and Restated Credit Agreement.
Current Report on Form 8-KDecember 12, 2018
10.20
Third Amended and Restated Security Agreement, dated as of November 20, 2017.
Current Report on Form 8-K
 November 21, 2017

10.21
Second Amended and Restated Patent and Trademark Security Agreement, dated as of March 25, 2014.
 Current Report on Form 8-K  March 28, 2014
       
10.2010.22 
First Amendment to Second Amended and Restated Patent and Trademark Security Agreement, dated as of November 20, 2017.
Current Report on Form 8-KNovember 21, 2017
10.23
Second Amended and Restated Pledge Agreement, dated as of March 25, 2014.
 Current Report on Form 8-K  March 28, 2014
       
10.24*
Executive Employment Agreement, dated as of May 13, 2013, between GameStop Corp. and Troy W. Crawford.
Annual Report on Form 10-K for the fiscal year ended January 30, 2015March 28, 2016
10.25*
Amendment to Employment Agreement dated May 31, 2018 with Troy W. Crawford.
Current Report on Form 8-KJune 4, 2018
10.26*
Executive Employment Agreement, dated as of October 1, 2012, between GameStop Corp. and Daniel J. Kaufman, as amended through March 1, 2018.
Annual Report on Form 10-K for the fiscal year ended February 3, 2018April 2, 2018
10.27*
Amendment to Employment Agreement dated May 31, 2018 with Daniel J. Kaufman.
Current Report on Form 8-KJune 4, 2018
10.28*
Amended and Restated Retirement Policy.
Annual Report on Form 10-K for the fiscal year ended February 3, 2018April 2, 2018
10.29*
GameStop Corp. Executive Life Insurance Plan.
Annual Report on Form 10-K for the fiscal year ended February 3, 2018April 2, 2018
10.30*
Split Dollar Agreement, dated as of October 22, 2012, between GameStop Corp. and J. Paul Raines.
Annual Report on Form 10-K for the fiscal year ended February 3, 2018April 2, 2018


10.21
Exhibit
Number
 First AmendmentDescription
Previously Filed as an Exhibit to Second Amended and Restated Credit
Incorporated by Reference From
Date Filed
10.31*
Split Dollar Agreement, dated as of SeptemberOctober 15, 2014, by2012, between GameStop Corp. and among GameStop Corp., the Borrowers party thereto, the Lenders party thereto and Bank of America, N.A.Michael K. Mauler.
 CurrentAnnual Report on Form 8-K10-K for the fiscal year ended February 3, 2018 September 16, 2014April 2, 2018
       
10.22*10.32* Executive Employment
Split Dollar Agreement, dated as of May 10, 2013,October 15, 2012, between GameStop Corp. and Michael T. Buskey.Robert A. Lloyd.
 Filed herewith.Annual Report on Form 10-K for the fiscal year ended February 3, 2018 April 2, 2018
       
10.23*10.33* Executive Employment
Split Dollar Agreement, dated as of May 10, 2013,October 25, 2012, between GameStop Corp. and Troy W. Crawford.Daniel J. Kaufman.
 Filed herewith.Annual Report on Form 10-K for the fiscal year ended February 3, 2018April 2, 2018
  
10.34*
Letter Agreement with Shane S. Kim dated May 31, 2018.
Current Report on Form 8-KJune 4, 2018
10.35*
Retention Agreement with Robert A. Lloyd.
Current Report on Form 8-KJune 4, 2018
10.36*
Retention Agreement with Daniel J. Kaufman.
Current Report on Form 8-KJune 4, 2018
10.37*
Retention Agreement with Troy W. Crawford.
Current Report on Form 8-KJune 4, 2018
10.38*
Compensation Letter Agreement with Daniel A. DeMatteo dated December 18, 2017.
Current Report on Form 8-KDecember 21, 2017
       
21.1 
Subsidiaries.
 Filed herewith.  
       
23.1 
Consent of Deloitte & Touche LLP.
 Filed herewith.  
       
31.1 
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 Filed herewith.  
      
31.2 
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 Filed herewith.  
       
32.1 
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 Furnished herewith.  
      
32.2 
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 Furnished herewith.  
      
101.INS XBRL Instance Document. Submitted electronically herewith.  
      
101.SCH XBRL Taxonomy Extension Schema. Submitted electronically herewith.  
      
101.CAL XBRL Taxonomy Extension Calculation Linkbase. Submitted electronically herewith.  
      
101.DEF XBRL Taxonomy Extension Definition Linkbase. Submitted electronically herewith.  
      
101.LAB XBRL Taxonomy Extension Label Linkbase. Submitted electronically herewith.  
      
101.PRE XBRL Taxonomy Extension Presentation Linkbase. Submitted electronically herewith.  
      
* This exhibit is a management or compensatory contract.