UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 Form 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2020
NOVEMBER 2, 2019

OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-32637
GameStop Corp.
(Exact name of registrant as specified in its charter)
 
Delaware20-2733559
(State or other jurisdiction of

incorporation or organization)
gme-20201031_g1.jpg
(I.R.S. Employer

Identification No.)
625 Westport Parkway76051
Grapevine,Texas
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:
(817)424-2000

Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common StockGMENYSE

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.    Yes ☒ No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒  No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer☒☐Accelerated filer☐☒Non-accelerated filer☐Smaller reporting company☐Emerging growth 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 ☒
Number of shares of $.001 par value Class A Common Stock outstanding as of December 4, 2019: 65,922,2831, 2020: 69,746,960



TABLE OF CONTENTS 
 
Part I — FINANCIAL INFORMATION
Page No.
Item 1.
1
Page No.
PART I — FINANCIAL INFORMATION
Item 1.
1
Unaudited Condensed Consolidated Balance Sheets — As of October31, 2020, November2, 2019 November 3, 2018 and February 2, 20191, 2020
1
2
3
4
5
6
Item 2.
1820
Item 3.
2830
Item 4.
2830
PART II — OTHER INFORMATION
Item 1.
2830
Item 1A.
30
Item 2.
2930
Item 6.3.
2930
Item 4.
30
Item 5.
30
Item 6.
31
3032



Table of Contents
PART I — FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
ITEM 1.    FINANCIAL STATEMENTS
GAMESTOP CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except par value per share)
 November 2,
2019		 November 3,
2018		 February 2,
2019		October 31,
2020		November 2,
2019		February 1,
2020
ASSETSASSETSASSETS
Current assets:      Current assets:
Cash and cash equivalents $290.3
 $448.6
 $1,624.4
Cash and cash equivalents$445.9 $290.3 $499.4 
Restricted cashRestricted cash140.7 0.3 0.3 
Receivables, net 145.7
 152.3
 134.2
Receivables, net77.6 145.7 141.9 
Merchandise inventories, net 1,286.7
 1,881.5
 1,250.5
Merchandise inventories, net861.0 1,286.7 859.7 
Prepaid expenses and other current assets 127.6
 149.0
 118.6
Prepaid expenses and other current assets126.7 127.3 120.6 
Assets held for sale 12.8

631.6
 —
Assets held-for-saleAssets held-for-sale0 12.8 11.8 
Total current assets 1,863.1
 3,263.0
 3,127.7
Total current assets1,651.9 1,863.1 1,633.7 
Property and equipment, net 287.1
 323.9
 321.3
Property and equipment, net193.0 287.1 275.9 
Operating lease right-of-use assets 758.1
 —
 —
Operating lease right-of-use assets666.7 758.1 767.0 
Deferred income taxes 157.8
 189.0
 147.3
Deferred income taxes29.2 157.8 83.0 
Goodwill —
 777.0
 363.9
Long-term restricted cashLong-term restricted cash16.0 13.8 13.8 
Other noncurrent assets 79.5
 103.8
 84.1
Other noncurrent assets44.6 65.7 46.3 
Total assets $3,145.6
 $4,656.7
 $4,044.3
Total assets$2,601.4 $3,145.6 $2,819.7 
      
LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:      Current liabilities:
Accounts payable $709.9
 $1,452.8
 $1,051.9
Accounts payable$440.2 $709.9 $380.8 
Accrued and other current liabilities 625.1
 700.8
 780.0
Accrued liabilities and other current liabilitiesAccrued liabilities and other current liabilities654.1 625.1 617.5 
Current portion of operating lease liabilities 238.5
 —
 —
Current portion of operating lease liabilities212.9 238.5 239.4 
Current portion of debt, net —
 348.8
 349.2
Liabilities held for sale —
 54.3
 —
Short-term debt, including current portion of long-term debt, netShort-term debt, including current portion of long-term debt, net244.5 0 0 
Borrowings under revolving line of creditBorrowings under revolving line of credit25.0 0 0 
Total current liabilities 1,573.5
 2,556.7
 2,181.1
Total current liabilities1,576.7 1,573.5 1,237.7 
Long-term debt, net 419.4
 471.2
 471.6
Long-term debt, net216.0 419.4 419.8 
Operating lease liabilities 516.5
 —
 —
Operating lease liabilities456.7 516.5 529.3 
Other long-term liabilities 19.1
 63.7
 55.4
Other long-term liabilities19.8 19.1 21.4 
Total liabilities 2,528.5
 3,091.6
 2,708.1
Total liabilities2,269.2 2,528.5 2,208.2 
Commitments and contingencies (Note 8) 

 

 

Commitments and contingencies (Note 7)Commitments and contingencies (Note 7)
Stockholders’ equity:      Stockholders’ equity:
Class A common stock — $.001 par value; 300 shares authorized; 67.9, 102.0 and 102.0 shares issued and outstanding 0.1
 0.1
 0.1
Class A common stock — $.001 par value; 300 shares authorized; 65.2, 67.9 and 64.3 shares issued and outstandingClass A common stock — $.001 par value; 300 shares authorized; 65.2, 67.9 and 64.3 shares issued and outstanding0.1 0.1 0.1 
Additional paid-in capital —
 29.8
 27.7
Additional paid-in capital5.1 0 0 
Accumulated other comprehensive loss (71.5) (54.0) (54.3)Accumulated other comprehensive loss(67.4)(71.5)(78.8)
Retained earnings 688.5
 1,589.2
 1,362.7
Retained earnings394.4 688.5 690.2 
Total stockholders’ equity 617.1
 1,565.1
 1,336.2
Total stockholders’ equity332.2 617.1 611.5 
Total liabilities and stockholders’ equity $3,145.6
 $4,656.7
 $4,044.3
Total liabilities and stockholders’ equity$2,601.4 $3,145.6 $2,819.7 










See accompanying condensed notes to unaudited condensed consolidated financial statements.

1
Table of Contents
GAMESTOP CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
 13 Weeks Ended39 Weeks Ended
 October 31,
2020		November 2,
2019		October 31,
2020		November 2,
2019
Net sales$1,004.7 $1,438.5 $2,967.7 $4,271.9 
Cost of sales728.4 997.4 2,156.8 2,960.5 
Gross profit276.3 441.1 810.9 1,311.4 
Selling, general and administrative expenses360.4 475.4 1,095.1 1,411.0 
Goodwill and asset impairments0 11.3 4.8 375.2 
Gain on sale of assets(21.1)0 (32.4)0 
Operating loss(63.0)(45.6)(256.6)(474.8)
Interest income(0.3)(2.0)(1.6)(9.9)
Interest expense10.0 8.0 25.5 30.6 
Loss from continuing operations before income taxes(72.7)(51.6)(280.5)(495.5)
Income tax (benefit) expense(53.9)31.6 14.4 (6.2)
Net loss from continuing operations(18.8)(83.2)(294.9)(489.3)
Loss from discontinued operations, net of tax0 (0.2)(0.9)(2.6)
Net loss$(18.8)$(83.4)$(295.8)$(491.9)
Basic loss per share:
Continuing operations$(0.29)$(1.01)$(4.54)$(5.16)
Discontinued operations0 0 (0.01)(0.03)
Basic loss per share$(0.29)$(1.02)$(4.56)$(5.19)
Diluted loss per share:
Continuing operations$(0.29)$(1.01)$(4.54)$(5.16)
Discontinued operations0 0 (0.01)(0.03)
Diluted loss per share$(0.29)$(1.02)$(4.56)$(5.19)
Weighted-average shares outstanding:
Basic65.2 82.1 64.9 94.8 
Diluted65.2 82.1 64.9 94.8 
  13 Weeks Ended 39 Weeks Ended
  November 2,
2019		 November 3,
2018		 November 2,
2019		 November 3,
2018
Net sales $1,438.5
 $1,935.4
 $4,271.9
 $5,222.3
Cost of sales 997.4
 1,377.2
 2,960.5
 3,663.0
Gross profit 441.1
 558.2
 1,311.4
 1,559.3
Selling, general and administrative expenses 451.8
 463.6
 1,341.7
 1,361.2
Depreciation and amortization 23.6
 25.0
 69.3
 80.5
Goodwill impairments —
 557.3
 363.9
 557.3
Asset impairments 11.3
 30.2
 11.3
 30.2
Operating loss (45.6) (517.9) (474.8) (469.9)
Interest income (2.0) (1.1) (9.9) (2.1)
Interest expense 8.0
 14.1
 30.6
 42.7
Loss from continuing operations before income taxes (51.6) (530.9) (495.5) (510.5)
Income tax expense (benefit) 31.6
 (24.0) (6.2) 15.8
Net loss from continuing operations (83.2) (506.9) (489.3) (526.3)
(Loss) income from discontinued operations, net of tax (0.2) 18.3
 (2.6) 41.0
Net loss $(83.4) $(488.6) $(491.9) $(485.3)
         
Basic (loss) earnings per share:        
Continuing operations $(1.01) $(4.96) $(5.16) $(5.16)
Discontinued operations —
 0.18
 (0.03) 0.40
Basic loss per share $(1.02) $(4.78) $(5.19) $(4.76)
         
Diluted (loss) earnings per share:        
Continuing operations $(1.01) $(4.96) $(5.16) $(5.16)
Discontinued operations —
 0.18
 (0.03) 0.40
Diluted loss per share $(1.02) $(4.78) $(5.19) $(4.76)
         
Weighted-average shares outstanding:        
Basic 82.1
 102.2
 94.8
 102.0
Diluted 82.1
 102.2
 94.8
 102.0


















See accompanying condensed notes to unaudited condensed consolidated financial statements.

2
Table of Contents
GAMESTOP CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)LOSS
(in millions)
 13 Weeks Ended39 Weeks Ended
 October 31,
2020		November 2,
2019		October 31,
2020		November 2,
2019
Net loss$(18.8)$(83.4)$(295.8)$(491.9)
Other comprehensive (loss) income:
Foreign currency translation adjustment(3.5)3.6 11.4 (17.2)
Total comprehensive loss$(22.3)$(79.8)$(284.4)$(509.1)
  13 Weeks Ended 39 Weeks Ended
  November 2,
2019		 November 3,
2018		 November 2,
2019		 November 3,
2018
Net loss $(83.4) $(488.6) $(491.9) $(485.3)
Other comprehensive loss: 
 
 
 
Foreign currency translation adjustment 3.6
 (13.6) (17.2) (66.2)
Total comprehensive loss $(79.8) $(502.2) $(509.1) $(551.5)


















































See accompanying condensed notes to unaudited condensed consolidated financial statements.

3
Table of Contents
GAMESTOP CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions, except for per share data)
 
Class A
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Stockholders'
Equity
 Shares Amount    
Balance at February 2, 2019102.0
 $0.1
 $27.7
 $(54.3) $1,362.7
 $1,336.2
Net income—
 —
 —
 —
 6.8
 6.8
Foreign currency translation—
 —
 —
 (13.9) —
 (13.9)
Dividends declared, $0.38 per common share—
 —
 —
 —
 (38.7) (38.7)
Stock-based compensation expense—
 —
 1.9
 —
 —
 1.9
Settlement of stock-based awards0.3
 —
 (0.6) —
 —
 (0.6)
Balance at May 4, 2019102.3
 0.1
 29.0
 (68.2) 1,330.8
 1,291.7
Net loss—
 —
 —
 —
 (415.3) (415.3)
Foreign currency translation—
 —
 —
 (6.9) —
 (6.9)
Stock-based compensation expense—
 —
 3.3
 —
 —
 3.3
Repurchase of common shares(12.0) —
 (32.1) —
 (30.8) (62.9)
Settlement of stock-based awards0.2
 —
 (0.2) —
 —
 (0.2)
Balance at August 3, 201990.5
 0.1
 —
 (75.1) 884.7
 809.7
Net loss—
 —
 —
 —
 (83.4) (83.4)
Foreign currency translation—
 —
 —
 3.6
 —
 3.6
Stock-based compensation expense—
 —
 2.9
 —
 —
 2.9
Repurchase of common shares(22.6) —
 (2.9) —
 (112.8) (115.7)
Balance at November 2, 201967.9
 $0.1
 $—
 $(71.5) $688.5
 $617.1


 Class A
Common Stock		Additional
Paid-in
Capital		Accumulated
Other
Comprehensive
(Loss) Income		Retained
Earnings		Total
Stockholders'
Equity
 SharesAmount
Balance at February 1, 202064.3 $0.1 $0 $(78.8)$690.2 $611.5 
Net loss— — — — (165.7)(165.7)
Foreign currency translation— — — (12.1)— (12.1)
Stock-based compensation expense— — 1.8 — — 1.8 
Settlement of stock-based awards0.3 — (0.5)— — (0.5)
Balance at May 2, 202064.6 $0.1 $1.3 $(90.9)$524.5 $435.0 
Net loss— — — — (111.3)(111.3)
Foreign currency translation— — — 27.0 — 27.0 
Stock-based compensation expense— — 2.1 — — 2.1 
Settlement of stock-based awards0.6 — (0.5)— — (0.5)
Balance at August 1, 202065.2 $0.1 $2.9 $(63.9)$413.2 $352.3 
Net loss— — — — (18.8)(18.8)
Foreign currency translation— — — (3.5)— (3.5)
Stock-based compensation expense— — 2.2 — — 2.2 
Balance at October 31, 202065.2 $0.1 $5.1 $(67.4)$394.4 $332.2 
 
Class A
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained
Earnings
 Total
Stockholders'
Equity
 Shares Amount    
Balance at February 3, 2018101.3
 $0.1
 $22.1
 $12.2
 $2,180.1
 $2,214.5
Adoption of ASU 2014-09—
 —
 —
 —
 11.5
 11.5
Net income—
 —
 —
 —
 28.2
 28.2
Foreign currency translation—
 —
 —
 (35.2) —
 (35.2)
Dividends declared, $0.38 per common share—
 —
 —
 —
 (38.9) (38.9)
Stock-based compensation expense—
 —
 7.6
 —
 —
 7.6
Settlement of stock-based awards0.6
 —
 (4.2) —
 —
 (4.2)
Balance at May 5, 2018101.9
 0.1
 25.5
 (23.0) 2,180.9
 2,183.5
Net loss—
 —
 —
 —
 (24.9) (24.9)
Foreign currency translation—
 —
 —
 (17.4) —
 (17.4)
Dividends declared, $0.38 per common share—
 —
 —
 —
 (39.0) (39.0)
Stock-based compensation expense—
 —
 2.0
 —
 —
 2.0
Balance at August 4, 2018101.9
 0.1
 27.5
 (40.4) 2,117.0
 2,104.2
Net loss—
 —
 —
 —
 (488.6) (488.6)
Foreign currency translation—
 —
 —
 (13.6) —
 (13.6)
Dividends declared, $0.38 per common share—
 —
 —
 —
 (39.2) (39.2)
Stock-based compensation expense—
 —
 3.2
 —
 —
 3.2
Settlement of stock-based awards0.1
 —
 (0.9) —
 —
 (0.9)
Balance at November 3, 2018102.0
 $0.1
 $29.8
 $(54.0) $1,589.2
 $1,565.1


 Class A
Common Stock		Additional
Paid-in
Capital		Accumulated
Other
Comprehensive
(Loss) Income		Retained
Earnings		Total
Stockholders'
Equity
 SharesAmount
Balance at February 2, 2019102.0 $0.1 $27.7 $(54.3)$1,362.7 $1,336.2 
Net income— — — — 6.8 6.8 
Foreign currency translation— — — (13.9)— (13.9)
Dividends declared, $0.38 per common share— — — — (38.7)(38.7)
Stock-based compensation expense— — 1.9 — — 1.9 
Settlement of stock-based awards0.3 — (0.6)— — (0.6)
Balance at May 4, 2019102.3 $0.1 $29.0 $(68.2)$1,330.8 $1,291.7 
Net loss— — — — (415.3)(415.3)
Foreign currency translation— — — (6.9)— (6.9)
Stock-based compensation expense— — 3.3 — — 3.3 
Repurchase of common shares(12.0)— (32.1)— (30.8)(62.9)
Settlement of stock-based awards0.2 — (0.2)— — (0.2)
Balance at August 3, 201990.5 $0.1 $0 $(75.1)$884.7 $809.7 
Net loss— — — — (83.4)(83.4)
Foreign currency translation— — — 3.6 — 3.6 
Stock-based compensation expense— — 2.9 — — 2.9 
Repurchase of common shares(22.6)— (2.9)— (112.8)(115.7)
Balance at November 2, 201967.9 $0.1 $0 $(71.5)$688.5 $617.1 






See accompanying condensed notes to unaudited condensed consolidated financial statements.

4
Table of Contents
GAMESTOP CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
 39 Weeks Ended
 October 31,
2020		November 2,
2019
Cash flows from operating activities:
Net loss$(295.8)$(491.9)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization (including amounts in cost of sales)61.1 70.1 
Goodwill and asset impairments4.8 375.2 
Stock-based compensation expense6.1 8.1 
Deferred income taxes45.4 (11.8)
(Gain) loss on disposal of property and equipment, net(30.6)1.9 
Loss on divestitures0 1.3 
Other2.6 3.1 
Changes in operating assets and liabilities:
Receivables, net65.8 (6.7)
Merchandise inventories11.6 (61.6)
Prepaid expenses and other current assets(2.9)(10.7)
Prepaid income taxes and income taxes payable11.7 (44.2)
Accounts payable and accrued liabilities78.9 (488.4)
Operating lease right-of-use assets and lease liabilities1.1 0.7 
Changes in other long-term liabilities(0.9)0.1 
Net cash flows used in operating activities(41.1)(654.8)
Cash flows from investing activities:
Purchase of property and equipment(32.6)(61.4)
Proceeds from sale of property and equipment95.5 0 
Proceeds from divestitures0 5.2 
Other0.4 (0.7)
Net cash flows provided by (used in) investing activities63.3 (56.9)
Cash flows from financing activities:
Repurchase of common shares0 (176.9)
Proceeds from French term loans47.1 0 
Dividends paid(0.3)(40.5)
Borrowings from the revolver150.0 0 
Repayments of revolver borrowings(125.0)0 
Repayments of senior notes(5.3)(404.5)
Settlement of stock-based awards(1.0)(0.8)
Net cash flows provided by (used in) financing activities65.5 (622.7)
Exchange rate effect on cash, cash equivalents and restricted cash1.4 (1.7)
Increase (decrease) in cash, cash equivalents and restricted cash89.1 (1,336.1)
Cash, cash equivalents and restricted cash at beginning of period513.5 1,640.5 
Cash, cash equivalents and restricted cash at end of period$602.6 $304.4 
  39 Weeks Ended
  November 2,
2019		 November 3,
2018
Cash flows from operating activities:    
Net loss $(491.9) $(485.3)
Adjustments to reconcile net loss to net cash flows from operating activities: 
 
Depreciation and amortization (including amounts in cost of sales) 70.1
 97.4
Goodwill and asset impairments 375.2
 587.5
Stock-based compensation expense 8.1
 12.8
Deferred income taxes (11.8) (46.5)
Loss on disposal of property and equipment 1.9
 1.4
Loss on divestitures 1.3
 —
Other (13.1) (4.8)
Changes in operating assets and liabilities:    
Receivables, net (6.7) 20.5
Merchandise inventories (61.6) (705.3)
Prepaid expenses and other current assets (10.7) (20.1)
Prepaid income taxes and income taxes payable (44.2) (1.4)
Accounts payable and accrued liabilities (472.2) 365.2
Operating lease right-of-use assets and lease liabilities 0.7
 —
Changes in other long-term liabilities 0.1
 (0.6)
Net cash flows used in operating activities (654.8) (179.2)
Cash flows from investing activities:    
Purchase of property and equipment (61.4) (65.9)
Proceeds from divestitures 5.2
 —
Other (0.7) (0.3)
Net cash flows used in investing activities (56.9) (66.2)
Cash flows from financing activities:    
Repayment of acquisition-related debt —
 (12.2)
Repurchase of common shares (176.9) —
Dividends paid (40.5) (118.7)
Borrowings from the revolver —
 154.0
Repayments of revolver borrowings —
 (154.0)
Repayments of senior notes (404.5) —
Settlement of stock-based awards (0.8) (5.1)
Net cash flows used in financing activities (622.7) (136.0)
Exchange rate effect on cash and cash equivalents and restricted cash (1.7) (28.4)
Decrease in cash held for sale —
 4.3
Decrease in cash and cash equivalents and restricted cash (1,336.1) (405.5)
Cash and cash equivalents and restricted cash at beginning of period 1,640.5
 869.1
Cash and cash equivalents and restricted cash at end of period $304.4
 $463.6








See accompanying condensed notes to unaudited condensed consolidated financial statements.

5
Table of Contents
GAMESTOP CORP.
CONDENSED NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.    General Information
The Company
GameStop Corp. (“GameStop,” “we,” “us,” “our,” or the “Company”) is a global, multichannel video game, consumer electronics and collectibles retailer. GameStop operates over 5,6005,000 stores across 1410 countries. OurGameStop's consumer product network also includes www.gamestop.com and Game Informer®Informer® magazine, the world's leading print and digital video game publication.
We operate ourGameStop operates its business in 4 geographic segments: United States, Canada, Australia and Europe. Our former Technology Brands segment primarily consisted of Spring Mobile and Simply Mac. We sold Spring Mobile in January 2019. In September 2019, we closed on the sale of Simply Mac. See Note 2, "Discontinued Operations and Dispositions," for further information.
Simply Mac is included in the United States segment in these consolidated financial statements and accompanying condensed notes. The historical results of Spring Mobile are reported as discontinued operations in our consolidated statements of operations for all periods presented. The assets and liabilities held for sale as of November 3, 2018, relate to Spring Mobile. 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 unaudited condensed notes to our consolidated financial statements refers to continuing operations unless otherwise noted.
Basis of Presentation and Consolidation
The unaudited condensed consolidated financial statements include ourthe Company's accounts and the accounts of ourits wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting only of normal, recurring adjustments) which are, in ourthe Company's opinion, necessary for a fair presentation of the information as of and for the periods presented. These unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all disclosures required under GAAP for complete consolidated financial statements.
These unaudited condensed consolidated financial statements should be read in conjunction with ourthe Company's annual report on Form 10-K for the 52 weeks ended February 2, 2019,1, 2020, as filed with the Securities and Exchange Commission ("SEC") on April 2, 2019,March 27, 2020, (the “2018“2019 Annual Report on Form 10-K”). The preparation of financial statements in conformity with GAAP requires usthe Company 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 havethe Company has made ourits best estimates and judgments of certain amounts included in the financial statements, and changes in the estimates and assumptions used by usthe Company could have a significant impact on ourits financial results. Actual results could differ from those estimates. Due to the seasonal nature of ourthe Company's business, the results of operations for the 39 weeks ended November 2, 2019October 31, 2020 are not indicative of the results to be expected for the 52 weeks ending February 1, 2020January 30, 2021 ("fiscal 2019"2020").
Reclassifications
In our unauditedThe Company has made certain classifications in its consolidated statements of cash flows wein order to conform to the current year presentation. Certain changes in customer liabilities, primarily associated with loyalty point redemptions and gift card breakage, of $16.2 million for the 39 weeks ended November 2, 2019 has been reclassified the prior period provision for inventory reserves of $42.4 million from other operating activities to changes in merchandise inventories in orderaccounts payable and accrued liabilities.
In the Company's consolidated statements of operations, depreciation and amortization of $23.6 million and $69.3 million for the 13 and 39 weeks ended November 2, 2019, respectively, have been reclassified to selling, general and administrative expenses to conform to the current year presentation. Additionally, asset impairments of $11.3 million for the 13 and 39 weeks ended November 2, 2019 and goodwill impairments of $363.9 million for the 39 weeks ended November 2, 2019 have been reclassified to goodwill and asset impairments to conform to the current year presentation.
In the Company's consolidated balance sheets, restricted cash of $0.3 million and $0.3 million as of November 2, 2019 and February 1, 2020, respectively, have been reclassified from prepaid expenses and other current assets to restricted cash to conform to the current year presentation. Additionally, restricted cash of $13.8 million and $13.8 million as of November 2, 2019 and February 1, 2020, respectively, have been reclassified from other noncurrent assets to long-term restricted cash to conform to the current year presentation.
Significant Accounting Policies
Except for the accounting policy for leases, which is discussed below within "—Adoption of New Accounting Pronouncements" and within Note 6, "Leases," thereThere have been no material changes to ourthe Company's significant accounting policies included in Note 1, "Nature of Operations and Summary of Significant Accounting Policies," within our 2018its 2019 Annual Report on Form 10-K.
Unvested Restricted Stock and Shares Issued and Outstanding
In June 2019, the Company adopted the GameStop Corp. 2019 Incentive Plan (the "2019 Plan"), which provides for the grant of equity awards to officers, employees, consultants, advisors and directors of the Company. The 2019 Plan provides for the grant of restricted stock awards, including both time-based and performance-based awards, among other equity awards. Time-based
6
Table of Contents
GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
restricted stock awards generally vest in equal annual installments over a three-year period on the anniversary of the date of issuance, subject to continued service to the Company. Performance-based restricted stock awards generally vest as a lump sum on the third anniversary of the date of issuance and are subject to the achievement of certain performance measures.
Shares of restricted stock granted by the Company are considered to be legally issued and outstanding as of the date of grant, notwithstanding that the shares remain subject to risk of forfeiture if the vesting conditions for such shares are not met, and are included in the number of shares of Class A common stock outstanding disclosed on the cover page of this quarterly report on Form 10-Q as of December 1, 2020. In accordance with accounting guidance followed by the Company, the financial statement presentation excludes unvested shares of restricted Class A common stock, as restricted shares are treated as issued and outstanding for financial statement presentation purposes only after such shares have vested and, therefore, have ceased to be subject to a risk of forfeiture. As of October 31, 2020, November 2, 2019 and February 1, 2020 there were 4.6 million, 3.4 million and 3.4 million, respectively, of unvested shares of restricted stock. Accordingly, as of October 31, 2020, November 2, 2019 and February 1, 2020 there were 69.8 million, 71.3 million and 67.7 million, respectively, of shares of Class A common stock, including unvested restricted shares, legally issued and outstanding.
Restricted Cash
Restricted cash of $156.7 million, $14.1 million $15.0 million and $16.1$14.1 million as of October 31, 2020, November 2, 2019 November 3, 2018 and February 2, 2019,1, 2020, respectively, consists primarily of bank deposits serving as collateral for bank guarantees issued on behalf of our foreign subsidiariesthat collateralize the Company's obligations to vendors and is included in other noncurrent assets in our unaudited condensed consolidated balance sheets.

6
Table of Contents
GAMESTOP CORP.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

landlords.
The following table provides a reconciliation of cash, and cash equivalents and restricted cash 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):
October 31,
2020		November 2,
2019		February 1,
2020
Cash and cash equivalents$445.9 $290.3 $499.4 
Restricted cash140.7 0.3 0.3 
Long-term restricted cash16.0 13.8 13.8 
Total cash, cash equivalents and restricted cash in the statements of cash flows$602.6 $304.4 $513.5 
  November 2,
2019		 November 3,
2018		 February 2,
2019
Cash and cash equivalents $290.3
 $448.6
 $1,624.4
Restricted cash (included in prepaid expenses and other current assets) 0.3
 2.7
 2.7
Restricted cash (included in other noncurrent assets) 13.8
 12.3
 13.4
Total cash and cash equivalents and restricted cash in the statements of cash flows $304.4
 $463.6
 $1,640.5
Assets Held-for-Sale
The Company's corporate aircraft was classified as assets held-for-sale as of November 2, 2019 and February 1, 2020, which had an estimated fair value, less costs to sell, of $12.8 million and $11.8 million, respectively. The Company recognized impairment charges of $3.2 million on the corporate aircraft during the 39 weeks ended October 31, 2020, which was partially attributable to recent economic impacts associated with the COVID-19 pandemic. On June 5, 2020, the Company sold its corporate aircraft with net cash proceeds from the sale totaling $8.6 million, net of costs to sell. NaN gain or loss on the sale of the aircraft was recognized.
Property and Equipment, Net
Accumulated depreciation related to ourthe Company's property and equipment totaled $1,175.3 million, $1,230.4 million $1,237.9 million and $1,235.8$1,190.1 million as of October 31, 2020, November 2, 2019 November 3, 2018 and February 2, 2019,1, 2020, respectively.
WeThe Company periodically review ourreviews its property and equipment when events or changes in circumstances indicate that its carrying amounts may not be recoverable or its depreciation or amortization periods should be accelerated. We assessThe Company assesses recoverability based on several factors, including ourits intention with respect to ourits stores and those stores’ projected undiscounted cash flows. An impairment loss is recognized for the amount by which the carrying amount of the assets exceeds its fair value, determined based on an estimate of discounted future cash flows. WeImpairment losses were recorded impairmenttotaling $1.0 million during the 39 weeks ended October 31, 2020. Impairment losses were recorded totaling $3.6 million during the third quarter of fiscal13 and 39 weeks ended November 2, 2019.
Share Repurchases
On June 11, 2019, we commenced a modified Dutch auction tender offer for up to 12.0 million shares of our Class A common stock with a price range between $5.20 and $6.00 per share. The tender offer expired on July 10, 2019. Through the tender offer, we accepted for payment 12.0 million shares at a purchase price of $5.20 per share for a total of $62.9 million, including fees and commissions. The shares purchased through the tender offer were immediately retired. The excess purchase price over par value was recorded as a reduction to additional paid-in capital and retained earnings in our unaudited consolidated balance sheet.
In addition to the equity tender offer describe above, duringDuring the third quarter of fiscal 2019, we executed a series of open market repurchases for an aggregate of 22.6 million shares of our Class A common stock totaling $115.7 million, including fees and commissions. Included in these amounts are repurchases of 0.3 million shares for $1.7 million that were initiated prior to November 2, 2019, but not settled until the fourth quarter of fiscal 2019. As of November 2, 2019, we have $121.4 million remaining under our share repurchase program.
Income Tax Expense (Benefit)
We have historically calculated the provision or benefit for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate ("AETR") for the full fiscal year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. For the 13 weeks ended November 2, 2019, we determined we could no longer reliably estimate income taxes utilizing an AETR. The AETR estimate is highly sensitive to estimates of ordinary income (loss) and permanent differences such that minor fluctuations in these estimates could result in significant fluctuations of the Company’s AETR. Accordingly, we used our actual year-to-date effective tax rate to calculate income taxes for the 13 and 39 weeks ended November 2, 2019.

We recognized income tax expense of $31.6 million, representing an effective tax rate of (61.2)%, for the 13 weeks ended November 2, 2019, and an income tax benefit of $6.2 million, representing an effective tax rate of 1.3%, for the 39 weeks ended November 2, 2019. The difference between our effective tax rates and the U.S. Federal statutory tax rate of 21% primarily relate to discrete items recognized in the 13 and 39 weeks ended November 2, 2019, and the relative mix of earnings across the jurisdictions within which we operate, including increases in valuation allowances and losses not benefited in certain foreign jurisdictions during the 13 and 39 weeks ended November 2, 2019.
Adoption of New Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standard Update ("ASU") 2016-02, Leases, which requires a lessee to recognize a liability related to lease payments and a corresponding right-of-use asset representing a right to use the underlying asset for the lease term. 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.

7
Table of Contents
GAMESTOP CORP.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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) 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. In March 2019, the FASB issued ASU 2019-01, Leases which clarifies the disclosure requirements for interim periods.
We adopted the new lease standard, Accounting Standards Codification Topic 842, Leases ("ASC 842"), effective February 3, 2019, using the modified-retrospective transition approach as outlined in ASU 2018-11, with no restatement of comparative periods. As permitted by the standard, we elected certain practical expedients, including the "package of practical expedients," under which we did not reassess our prior conclusions regarding lease identification, lease classification, or capitalization of initial lease direct costs for existing or expired contracts. For our real estate leases, we elected the practical expedient to not separate lease and non-lease components. For our non-real estate leases, we elected to separate lease and non-lease components. We did not elect to exclude short-term leases from our right-of-use asset and liability balances, nor did we elect the hindsight practical expedient.
Under the modified-retrospective transition approach, we have recorded adjustments to our fiscal 2019 opening balance sheet (as of February 3, 2019) to recognize an initial operating lease right-of-use asset and corresponding initial lease liability of approximately $850 million. See Note 6, "Leases" for further details.
2.    Discontinued Operations and Dispositions
Discontinued Operations
On January 16,September 25, 2019, we completed the sale of all of the equity interest in our former 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 ($65.4 million, net of tax) during the fourth quarter of fiscal 2018. Except for customary post-closing adjustments and transition services, we have no contingencies or continuing involvement with Spring Mobile subsequent to the completion of the sale.
The historical results of Spring Mobile are reported as discontinued operations in our consolidated statements of operations for all periods presented. The results of our discontinued operations for the 13 and 39 weeks ended November 2, 2019 and November 3, 2018 are as follows (in millions):
 13 Weeks Ended 39 Weeks Ended
 November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
Net sales$—
 $149.0
 $—
 $442.8
Cost of sales—
 16.4
 —
 57.9
Gross profit—
 132.6
 —
 384.9
Selling, general and administrative expenses0.2
 103.0
 3.2
 313.8
Depreciation and amortization—
 5.2
 —
 16.0
(Loss) income from discontinued operations before income taxes(0.2) 24.4
 (3.2) 55.1
Income tax (benefit) expense—
 6.1
 (0.6) 14.1
Net (loss) income from discontinued operations$(0.2) $18.3
 $(2.6) $41.0

There were no significant operating noncash items for our discontinued operations for the 39 weeks ended November 2, 2019. The following table presents capital expenditures, depreciation and amortization and other significant operating noncash items of our discontinued operations for the 39 weeks ended November 3, 2018 (in millions):
   
  November 3, 2018
Capital expenditures $6.1
Depreciation and amortization 16.0
Provision for inventory reserves 9.5


8
Table of Contents
GAMESTOP CORP.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Disposition of Simply Mac
On May 9, 2019, we entered into a definitive agreement to sellsold our Simply Mac business to Cool Holdings, Inc., which closed on September 25, 2019, for total consideration of $12.9 million. The consideration received ismillion subject to customary post-closing adjustments andadjustments. The consideration consisted of $5.2 million in cash and a note receivable of $7.7 million,
7
Table of Contents
GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
which was amended during the first quarter of fiscal 2020 to revise the amount to $1.3 million. We recognized a loss on sale of $1.3 million, net of tax, during the third quarter of fiscal 2019.
Assets and Liabilities Held for Sale
As2019 of November 2, 2019, we classified our corporate aircraft, with an estimated fair value, less costs to sell,$1.3 million, net of $12.8 million as assets held for sale. The assets and liabilities classified as held for sale as of November 3, 2018 relate to our former Spring Mobile business, which we sold intax. Subsequently, during the fourth quarter of fiscal 2018.2019, we fully reserved the $7.7 million note receivable due to the buyer's failure to make scheduled payments. We recognized a total loss on sale of $9.1 million, net of tax, during fiscal 2019.
During the fourth quarter of fiscal 2018, the Company sold its Spring Mobile business. The major classeshistoric results of Spring Mobile are presented as discontinued operations, which primarily consist of residual wind-down costs for all periods presented. The net loss from discontinued operations for the 13 weeks ended October 31, 2020 and November 2, 2019 consisted of $0.0 million and $0.2 million in selling, general and administrative expenses, respectively. The net loss from discontinued operations for the 39 weeks ended October 31, 2020 and November 2, 2019 consisted of $1.2 million and $3.2 million in selling, general and administrative expenses, respectively and $0.3 million and $0.6 million in income tax benefit, respectively.
Adoption of New Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which was further updated and clarified by the FASB through the issuance of additional related ASUs. This ASU requires financial assets measured at amortized cost to be presented at the net amount to be collected with the recognition of an allowance for credit losses expected to be incurred over an asset's lifetime based on relevant information about past events, current conditions and liabilities heldreasonable and supportable forecasts. ASU 2016-13 is effective for salefiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted this new standard, effective February 2, 2020, using the modified-retrospective approach. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard is intended to simplify the accounting and disclosure requirements for income taxes by eliminating various exceptions in accounting for income taxes as well as clarifying and amending existing guidance to improve consistency in application of ASC 740. The provisions of ASU 2019-12 are effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact that ASU 2019-12 will have on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides practical expedients for contract modifications with the transition from reference rates, such as LIBOR, that are expected to be discontinued. This guidance is applicable for the Company's revolving line of credit, which uses LIBOR as a reference rate. The provisions of ASU 2020-04 are effective as of March 12, 2020 and may be adopted prospectively through December 31, 2022. The Company is currently evaluating the impact that ASU 2020-04 will have on its consolidated financial statements.
2.    COVID-19 Impacts
The near-term macroeconomic conditions continue to be adversely impacted by the emergence of a novel coronavirus, identified as COVID-19, which was declared a global pandemic by the World Health Organization in March 2020. In efforts to mitigate the continued spread of the virus, numerous governments in geographies where the Company operates have imposed quarantines, stay-at-home orders, travel restrictions and other similar measures in attempts to limit physical human interaction, referred to as social distancing. To comply with these measures, the Company temporarily closed or limited store operations across all of its operating regions at various times throughout fiscal 2020 to date.
During the first half of 2020, the Company temporarily closed stores at various times across Europe, Canada and New Zealand. In the United States, all storefronts were temporarily closed to customers, however, the Company continued to process orders by offering curbside pick-up, ship from store and e-commerce delivery options in many of its stores. These temporary store closures began in late March 2020 and by the end of fiscal June 2020, 98% of the Company's stores globally were open to the public following the implementation of the highest level of health and safety protocols recommended by the federal and local health and governmental authorities. GameStop's store locations in Australia remained opened to the public during the first half of fiscal 2020 and were not negatively impacted during this period by the COVID-19 restrictions as the Company's other segments and New Zealand. During the third quarter of fiscal 2020, the substantial majority of the Company's stores were open, with approximately 15% of the Company's stores in Australia temporarily closed for approximately four weeks due to an outbreak of COVID-19.
Additionally, starting in late October 2020, as COVID-19 cases began to escalate in regions around the world, all of the Company's stores in France and Ireland were temporarily closed as required by federal governmental authorities, while certain of our stores in Canada, Australia and Austria closed temporarily starting in early to mid-November. Although certain stores remain closed, some of the Company's stores in France, Ireland, Canada and Australia are offering curbside pick-up. The Company remains vigilant in its compliance with COVID-19 regulations across its operating regions, and as such has reverted a minor number of store operations in the United States in early November 3, 2018 are as follows (in millions):to curbside pick-up only.
  November 3, 2018
Assets:  
Cash and cash equivalents $5.9
Receivables, net 5.2
Merchandise inventories, net 145.9
Prepaid expenses and other current assets 8.7
Property and equipment, net 69.6
Goodwill 316.9
Other intangible assets, net 77.0
Other assets 2.4
Total assets held for sale $631.6
   
Liabilities:  
Accounts payable $16.1
Accrued liabilities 23.3
Other liabilities 14.9
Total liabilities held for sale $54.3
8

Table of Contents
GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Impact on Operating Results and Asset Recoverability
While the gaming industry has not been as severely impacted as certain other consumer businesses, store closures during the stay-at-home orders have adversely impacted the Company's results of operations during the 13 and 39 weeks ended October 31, 2020. In response, the Company has taken proactive measures to align inventory purchases with demand, reduce discretionary spending and earlier in fiscal 2020 instituted temporary pay reductions to partially offset the impact of store closures.
During the 39 weeks ended October 31, 2020, the Company incurred $23.3 million to mitigate the impact of the COVID-19 pandemic including incremental wage payments to hourly associates to help offset lost wages due to store closures, enhanced cleaning measures and expanded use of personal protective equipment at its stores, shared service centers and distribution centers across all geographies where the Company operates.
The aggregation of these events caused the Company to reassess potential impairments of long-lived assets, primarily consisting of store-level property and equipment and right-of-use assets under existing operating leases. As a result of this asset impairment analysis, during the 39 weeks ended October 31, 2020 the Company recognized impairment charges of $1.6 million. In addition, during the 39 weeks ended October 31, 2020, the Company recognized impairment charges of $3.2 million for its corporate aircraft, which was partially attributable to the economic impacts associated with the COVID-19 pandemic. The corporate aircraft was sold during the second quarter of fiscal 2020 for $8.6 million, net of costs to sell. See Note 1, "General Information" for further details.
During the 39 weeks ended October 31, 2020 the Company continued to assess the likelihood of realizing the benefits of its deferred tax assets. The Company assesses the realizability of its deferred tax assets using several factors, including the weight of all available evidence, which takes into consideration cumulative book losses recognized, projections of future taxable income in certain jurisdictions and other factors. While the Company's view of the longer-term operating outlook has not been significantly impacted by COVID-19, its ability to recover these deferred tax assets depends on several factors, including the Company's short and long-term results of operations. As a result of this analysis, the Company maintains valuation allowances of approximately $187.9 million on the majority of its U.S. and foreign net deferred tax assets as of October 31, 2020. See Note 10, “Income Taxes" for further information.
The Company evaluated its accounts receivable, which are mainly comprised of bankcard receivables and vendor allowances. Given the nature of these receivables and the credit worthiness of the applicable payees, the COVID-19 pandemic did not significantly impact the estimates of allowances for doubtful accounts.
The Company also evaluated its merchandise inventories, which are carried at the lower of cost or market generally using the average cost method. The Company is required to record valuation adjustments to inventory to reflect potential obsolescence or over-valuation as a result of cost exceeding market. In valuing inventory, the Company considers quantities on hand, recent sales, potential price protections, returns to vendors and other factors. Given the nature of the Company's products and the temporary store closures between March and June 2020, the COVID-19 pandemic did not significantly impact its estimates of inventory valuation.
Liquidity and Other Impacts
As of October 31, 2020, the Company had total unrestricted cash on hand of $445.9 million and an additional $175.4 million of available borrowing capacity under its revolving credit facilities. See Note 6, "Debt," for further information. As mentioned above, the Company has taken actions to align expenses and inventory levels given the impacts of the current operating environment and has projected it will have adequate liquidity for the next 12 months and the foreseeable future to maintain normal operations. Additionally, during the second quarter of fiscal 2020, the Company completed an exchange offer for a portion of its unsecured senior notes due in March 2021 resulting in the replacement of 52% of such notes (based on aggregate principal amount) for newly issued secured senior notes due in March 2023. See Note 6, "Debt," for further details on the exchange offer and related impacts to scheduled debt maturities. See Note 11, "Subsequent Events," for information regarding the Company's notice of redemption to redeem $125.0 million of its outstanding 2021 Senior Notes.
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which among other things, provides employer payroll tax credits for wages paid to employees who are unable to work during the COVID-19 pandemic and options to defer the Company's share of Social Security payroll taxes. The Company qualified for the deferral of payroll and other tax payments and, as a result, it has deferred, and continues to defer payroll taxes and other tax payments through the end of the calendar year 2020. The payment of these deferred amounts are required to be made in 2021 and 2022 calendar years. These deferrals are included in accrued liabilities and other current liabilities within the Company's unaudited condensed consolidated balance sheets. In addition, the Company's French subsidiary obtained €20.0 million of unsecured term loans in the second quarter of fiscal 2020 and another €20.0 million of unsecured term loans in the third quarter of fiscal 2020, 90% of which are guaranteed by the French government pursuant to a state guaranteed loan program instituted in connection with the COVID-19 pandemic. See Note 6, "Debt" for further information.
9
Table of Contents
GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
During the 13 and 39 weeks ended October 31, 2020, the Company received $9.7 million and $18.8 million, respectively, of COVID-19-related rent concessions comprised of rent abatements and rent deferrals. The Company applied lease modification guidance to any concession arrangement that extended the term of the lease and substantially altered future cash flows. The Company elected, as permitted by the guidance issued by the FASB during the COVID-19 pandemic, to not use lease modification accounting for all rent concessions including any rent abatements related to leases not subject to an extension of the original terms. For these leases, which represented most of the leases subject to COVID-19-related rent concessions, the Company reduced rent expense in the later of the month in which the landlord issued the rent concession or the month for which the rent concession related. For rent concessions in the form of lease payment deferrals, the liability for these rent amounts will remain on the balance sheet until paid.
The COVID-19 pandemic remains an evolving situation and its impact on the Company's business, operating results, cash flows and financial conditions will depend on the geographies impacted by the virus, the ongoing economic effect of the pandemic, the additional economic stimulus programs introduced by governments, and the timing of the post-pandemic economic recovery. Even as the Company continues to comply with all governmental health and safety requirements for its associates and customers while resuming and maintaining substantially full operations, the persistence and potential resurgence of the COVID-19 pandemic may require the Company to temporarily close stores again in future periods or introduce modified operating schedules and may impact customer behaviors, including a potential reduction in consumer discretionary spending. These developments could increase asset recovery and valuation risks. Further, the uncertainties in the global economy could impact the financial viability of the Company's suppliers, which may interrupt the Company's supply chain and require other changes to operations. In light of the foregoing, the extent and duration of the COVID-19 pandemic, and responses of governments, customers, suppliers and other third parties, may materially adversely impact the Company's business, financial condition, results of operations and cash flows.
3.    Revenue
At the end of fiscal 2019, the Company revised the categories of its similar products, as presented below, to better align with management's view of the business. Prior periods have been reclassified to conform to the current period presentation. Net sales by significant product category for the periods indicated is as follows (in millions):
  13 Weeks Ended 39 Weeks Ended
  November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
New video game hardware (1)
 $189.0
 $349.0
 $598.1
 $1,006.5
New video game software 485.9
 720.7
 1,217.3
 1,488.3
Pre-owned and value video game products 344.2
 396.9
 1,112.6
 1,344.7
Video game accessories 156.5
 180.8
 526.3
 567.2
Digital 37.0
 45.4
 111.4
 128.6
Collectibles 161.2
 154.6
 490.3
 438.7
Other (2)
 64.7
 88.0
 215.9
 248.3
Total $1,438.5
 $1,935.4
 $4,271.9
 $5,222.3

13 Weeks Ended39 Weeks Ended
 October 31, 2020November 2, 2019October 31, 2020November 2, 2019
Hardware and accessories (1)
$413.4 $546.0 $1,368.1 $1,757.4 
Software (2)
444.4 730.6 1,247.9 2,022.0 
Collectibles146.9 161.9 351.7 492.5 
Total$1,004.7 $1,438.5 $2,967.7 $4,271.9 

(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 branded stores, which were sold in September 2019. Also includes sales of PC entertainment software, interactive game figures, strategy guides, mobile and consumer electronics, and revenues from PowerUp Pro loyalty members receiving Game Informer magazine in print form.
(1)    Includes sales of new and pre-owned hardware, accessories, hardware bundles in which hardware and digital or physical software are sold together in a single SKU, interactive game figures, strategy guides, mobile and consumer electronics, and the operations of Simply Mac stores, which were sold in September 2019.
(2)    Includes sales of new and pre-owned video game software, digital software and PC entertainment software.
See Note 10,9, "Segment Information," for net sales by geographic location.


9
Table of Contents
GAMESTOP CORP.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Performance Obligations
We expectThe Company has arrangements with customers where its performance obligations are satisfied over time, which primarily relate to extended warranties and its Game Informer® magazine. Revenues do not include sales tax or other taxes collected from customers. The Company expects to recognize revenue in future periods for remaining performance obligations related toit has associated with unredeemed gift cards, trade-in credits, reservation deposits and ourits PowerUp Rewards loyalty program (collectively, “unredeemed"unredeemed customer liabilities”liabilities"), extended warranties and subscriptions to ourits Game Informer® magazine.
Performance obligations associated with unredeemed customer liabilities are primarily satisfied at the time our customers redeem gift cards, trade-in credits, reservationcustomer deposits or loyalty program points for products that we offer.offered by the Company. Unredeemed customer liabilities are generally redeemed within one year of issuance. As of October 31, 2020 and November 2, 2019, ourthe Company's unredeemed customer liabilities totaled $326.2 million and $250.5 million.million, respectively.
We offerThe Company offers 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 October 31, 2020 and November 2, 2019, ourthe Company's deferred revenue liability related to extended warranties totaled $47.7 million and $58.9 million.million, respectively.
10
Table of Contents
GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Performance obligations associated with subscriptions to our Game Informer® magazine are satisfied when monthly magazines are delivered in print form or made available in digital format. The significant majority of our customers’customer subscriptions isare for 12 monthly issues. As of October 31, 2020 and November 2, 2019, wethe Company had deferred revenue of $30.7 million and $39.2 million, respectively, associated with our Game Informer® magazine.
Significant Judgments and Estimates
The Company accrues PowerUp Rewards loyalty points at the estimated retail price per point, net of estimated breakage, which can be redeemed by loyalty program members for products offered by the Company. The estimated retail price per point is based on the actual historical retail prices of product(s) purchased through the redemption of loyalty points. The Company estimates breakage of loyalty points and unredeemed gift cards based on historical redemption rates.
Contract Balances
OurThe Company's 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 ourthe Company's contract liabilities are as follows (in millions):
 Contract LiabilitiesOctober 31, 2020November 2, 2019
Balance at February 2, 2019 $376.9
Contract liability beginning balanceContract liability beginning balance$339.2 $376.9 
Increase to contract liabilities (1)
 677.1
Increase to contract liabilities (1)
562.2 677.1 
Decrease to contract liabilities (2)
 (705.0)
Decrease to contract liabilities (2)
(496.5)(705.0)
Other adjustments (3)
 (0.4)
Other adjustments (3)
(0.3)(0.4)
Balance at November 2, 2019 $348.6
Contract liability ending balanceContract liability ending balance$404.6 $348.6 

(1)
(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 customer deposits as well as revenues recognized for Game Informer® and extended warranties. During the 39 weeks ended October 31, 2020, there were $36.6 million of gift cards redeemed that were outstanding as of February 1, 2020. During the 39 weeks ended November 2, 2019, there were $47.3 million of gift cards redeemed that were outstanding as of February 2, 2019.
(3)    Primarily includes foreign currency translation adjustments.
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 39 weeks ended November 2, 2019, there were $47.3 million of gift cards redeemed that were outstanding as of February 2, 2019.
(3)Primarily includes foreign currency translation adjustments.
4.    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 ourthe Company's 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 ourthe Company's foreign currency contracts, Company-owned life insurance policies we own that havewith a cash surrender value, and certain nonqualified deferred compensation liabilities.
We value ourThe Company values its 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.

1011
Table of Contents
GAMESTOP CORP.
CONDENSED NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OurThe Company's assets and liabilities measured at fair value on a recurring basis as of October 31, 2020, November 2, 2019 November 3, 2018 and February 2, 2019,1, 2020, utilize Level 2 inputs and include the following (in millions):
  November 2, 2019 November 3, 2018 February 2, 2019
Assets      
Foreign currency contracts(1)
 $1.2
 $4.6
 $1.0
Company-owned life insurance(2)
 16.2
 14.4
 14.6
Total assets $17.4
 $19.0
 $15.6
Liabilities      
Foreign currency contracts(3)
 $0.5
 $0.5
 $1.2
Nonqualified deferred compensation(3)
 0.8
 1.1
 1.1
Total liabilities $1.3
 $1.6
 $2.3

October 31, 2020November 2, 2019February 1, 2020
Assets
Foreign currency contracts(1)
$1.3 $1.2 $1.4 
Company-owned life insurance(2)
3.2 16.2 4.1 
Total assets$4.5 $17.4 $5.5 
Liabilities
Foreign currency contracts(3)
$3.2 $0.5 $0.3 
Nonqualified deferred compensation(3)
1.0 0.8 1.0 
Total liabilities$4.2 $1.3 $1.3 

(1)Recognized in prepaid expenses and other current assets in our unaudited condensed consolidated balance sheets.
(2)Recognized in other non-current assets in our unaudited condensed consolidated balance sheets.
(3)Recognized in accrued liabilities in our unaudited condensed consolidated balance sheets.
We use(1)     Recognized in prepaid expenses and other current assets in the Company's unaudited condensed consolidated balance sheets.
(2)    Recognized in other non-current assets in the Company's unaudited condensed consolidated balance sheets.
(3)    Recognized in accrued liabilities and other current liabilities in the Company's unaudited condensed consolidated balance sheets.
The Company uses forward exchange contracts to manage currency risk primarily related to intercompany loans and third party accounts payable denominated in foreignnon-functional currencies. TheThese 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 loansbalances denominated in foreign currencies. The total gross notional value of derivatives related to ourthe Company's foreign currency contracts was $262.3 million, $147.1 million $319.5 million and $240.0$144.6 million as of October 31, 2020, November 2, 2019 November 3, 2018 and February 2, 2019,1, 2020, respectively.
Activity related to the trading of derivative instruments and the offsetting impact of intercompany loansrelated balances denominated in foreign currencies recognized in selling, general and administrative expense is as follows (in millions):
  13 Weeks Ended 39 Weeks Ended
  November 2,
2019		 November 3,
2018		 November 2,
2019		 November 3,
2018
Gains on the change in fair value of derivative instruments $0.4
 $0.6
 $3.2
 $10.0
Gains (losses) on the re-measurement of related intercompany loans denominated in foreign currencies 0.1
 (0.2) (2.7) (7.7)
Net gains $0.5
 $0.4
 $0.5
 $2.3

 13 Weeks Ended39 Weeks Ended
 October 31,
2020		November 2,
2019		October 31,
2020		November 2,
2019
Gains (losses) on the changes in fair value of derivative instruments$0.6 $0.4 $(4.6)$3.2 
(Losses) gains on the re-measurement of related intercompany loans and third-party accounts payable denominated in foreign currencies(0.5)0.1 4.7 (2.7)
Net gains$0.1 $0.5 $0.1 $0.5 
We doThe Company does not use derivative financial instruments for trading or speculative purposes. We areThe Company is exposed to counterparty credit risk on all of ourits derivative financial instruments and cash equivalent investments. We manageThe Company manages counterparty risk according to the guidelines and controls established under our comprehensive risk management and investment policies. WeThe Company continuously monitor ourmonitors its counterparty credit risk and utilizeutilizes a number of different counterparties to minimize ourits exposure to potential defaults. We doThe Company does not require collateral under derivative or investment agreements.
Assets that are Measured at Fair Value on a NonrecurringNon-recurring Basis
Assets that are measured at fair value on a nonrecurringnon-recurring basis relate primarily to property and equipment right-of-use assets and other intangible assets, which are remeasured when the estimated fair value is below its carrying value. For these assets, we dothe Company does not periodically adjust carrying value to fair value; rather, when we determineit determines that impairment has occurred, the carrying value of the asset is reduced to its fair value.
During the 39 weeks ended October 31, 2020 and November 2, 2019, wethe Company recognized impairment charges totaling $1.6 million and $3.6 million, related to store-level property and equipment, to reflect their estimated fair value of 0. We also recognized an impairment charge of $7.7 million related to our corporate aircraft, to reflect the fair value of $12.8 million. The corporate aircraft is classified as assets held-for-sale in our consolidated balance sheet as of November 2, 2019.
During the 39 weeks ended November 3, 2018, we recognized impairment charges totaling $30.2 million related to intangible assets. We recognized impairment charges of $19.0 million and $5.3 millionrespectively, associated with our Micromania and ThinkGeek trade names, respectively, to reflect their fair values of $19.0 million and $2.8 million, respectively. We also recognized an impairment charge of $5.9 million associated with other ThinkGeek intangiblestore-level assets, to reflect their fair values of 0.

11
Table During the 39 weeks ended October 31, 2020 and November 2, 2019, the Company also recognized impairment charges of Contents
GAMESTOP CORP.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The fair value estimates of the store-level property$3.2 million and equipment, trade names and other intangible assets are based on significant unobservable inputs (Level 3) developed from 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. The$7.7 million, respectively, related to its corporate aircraft to reflect its fair value of the$8.6 million and $12.8 million as of October 31, 2020 and November 2, 2019, respectively. The corporate aircraft was estimated by evaluating significant unobservable inputs (Level 3), including recent salesclassified as assets held-for-sale in our unaudited condensed consolidated balance sheets as of similar assets, market statisticsNovember 2, 2019 and fleet information.February 1, 2020. The company sold its corporate aircraft on June 5, 2020.
Other Fair Value Disclosures
The carrying values of ourthe Company's cash equivalents, receivables, net, accounts payable and notes payableshort-term borrowings approximate thetheir fair valuevalues due to their short-term maturities.
12
Table of Contents
GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of November 2, 2019 ourOctober 31, 2020 the Company's unsecured 6.75% senior notes due in 2021 had a net carrying value of $419.4$197.9 million and a fair value of $422.9$197.9 million, and its secured 10.00% senior notes due in 2023 had a net carrying value of $216.0 million and a fair value of $216.4 million. The fair valuevalues of our 6.75%the Company's senior notes were determined based on observable inputs (Level 2), including quoted market prices obtained through an external pricing source which derives its price valuations from daily marketplace transactions, with adjustmentsadjusted 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.
5.    Goodwill
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 4 operating segments, including the 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 and the 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.Leases
The changes in the carrying amounts of goodwill, by reportable segment, for fiscal 2019 were as follows (in millions):
  United States Canada Australia Europe Total
Balance at February 2, 2019 $363.9
 $—
 $—
 $—
 $363.9
Impairment charge (363.9) —
 —
 —
 (363.9)
Balance at November 2, 2019 $—
 $—
 $—
 $—
 $—
           
Cumulative goodwill impairment charges $1,173.0
 $129.1
 $173.5
 $499.5
 $1,975.1

During the second quarter of fiscal 2019, we determined that a triggering event occurred as a result of a decline in our market capitalization; therefore, we performed an interim impairment test for our goodwill and indefinite-lived intangible assets. As a result of the interim impairment test, we recognized a goodwill impairment charge totaling $363.9 million related to our United States segment. We have 0 remaining goodwill as a result of the impairment charge. We estimated the fair value of our United States segment by using a combination of the income approach and market approach. The income approach is based on the present value of future cash flows, which are derived from our long-term financial forecasts, and requires significant assumptions including, among others, a discount rate and a terminal value. The market approach is based on the observed ratios of enterprise value to earnings of the Company and other comparable, publicly-traded companies.
During the third quarter of fiscal 2018, we determined that a triggering event occurred as a result of a decline in our market capitalization; therefore, we performed an interim impairment test for our goodwill and indefinite-lived intangible assets. As a result of the interim impairment testing, we recognized goodwill impairment charges totaling $557.3 million and intangible asset impairment charges totaling $30.2 million.

12
Table of Contents
GAMESTOP CORP.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6.    Leases
We conductconducts the substantial majority of ourits business with leased real estate properties, including retail stores, warehouse facilities and office space. WeThe Company also leaseleases certain equipment and vehicles. These are generally leased under noncancelable agreements and include various renewal options for additional periods. These agreements generally provide for minimum, and in some cases, percentage rentals, and require usthe Company to pay insurance, taxes and other maintenance costs. 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. All of ourthe Company's lease agreements are classified as operating leases.
Effective February 3, 2019, wethe Company adopted ASC 842, Leases (see Note 1, "General Information").Leases. Under ASC 842, fixed payments associated with ourits operating leases are included in operating lease right-of-use ("ROU") assets and both current and noncurrent operating lease liabilities on the balance sheet. We determineThe Company determines if an arrangement is considered a lease at inception. We recognize ROU assets are recognized on the commencement date based on the present value of future minimum lease payments over the lease term, including reasonably certain renewal options. As the rate implicit in the lease is not readily determinable for most leases, we utilize ourthe Company utilizes its incremental borrowing rate ("IBR") to determine the present value of future payments. The incremental borrowing rate represents a significant judgment that is based on an analysis of ourthe Company's credit rating, country risk, corporate bond yields, the effect of collateralization, as well as comparison to ourits borrowing rates. For our real estate leases, we dothe Company does not separate the components of a contract, thus ourits future payments include minimum rent payments and fixed executory costs. For our non-real estate leases, future payments include only fixed minimum rent payments. We recordThe Company records the amortization of our ROU assets and the accretion of our lease liabilities as a single lease cost on a straight-line basis over the lease term, which includes option terms we arethe Company is reasonably certain to exercise. We recognize ourThe Company recognizes cash or lease incentives as a reduction to the ROU asset. We assess ROU assets are assessed for impairment in accordance with ourthe Company's long-lived asset impairment policy, which is performed periodically or when events or changes in circumstances indicate that the carrying amount may not be recoverable.
Prior
In July of 2020, the Company sold, in separate unrelated transactions, to our adoptionunaffiliated third parties: i) its corporate headquarters and ancillary office space in Grapevine, Texas for $28.5 million, net of ASC 842, liabilitiescosts to sell and ii) a nearby refurbishment center for future rental payments$15.2 million, net of costs to sell. The net proceeds from the sale of these assets will be used for general corporate purposes. As a result of these transactions, a gain on sale of assets of $11.3 million was recognized, which is included in the Company's unaudited condensed consolidated statement of operations in gain on sale of assets for the 39 weeks ended October 31, 2020.
In connection with each of the sales, the Company leased-back from the applicable purchasers its corporate headquarters for an initial term of ten years, and the ancillary office space and refurbishment center for two years. The leaseback agreement for the corporate headquarters contains 3 renewal periods of five years each; the Company recognized only the initial term of the lease as part of its right-of-use asset and lease liability for the corporate headquarters. The other facilities do not contain a renewal option. The annual rent for the corporate headquarters will start at $1.7 million, plus taxes, utilities, management fees and other operating leases were notand maintenance expenses and will increase by 2.25% per year. The annual rent for the other facilities will be $1.3 million with no rent escalation, plus taxes, utilities, management fees and other operating and maintenance expenses. These leaseback agreements are accounted for as operating leases.
With respect to the leaseback of the corporate headquarters, the Company agreed to provide a letter of credit to the buyer-lessor within 18 months from the closing date to secure the Company's lease obligation. Given that the purchase price of the corporate headquarters was reduced by $2.8 million to account for the deferred issuance of this letter of credit, as of October 31, 2020 the Company recognized a contract asset for the same amount within “prepaid expenses and other current assets” representing the variable consideration on the balance sheet. Leases with steppurchase price. Upon delivering the letter of credit, the Company will be entitled to a rent provisions, escalation clauses orcredit of an equivalent amount. This variable consideration is included in the total gain on sale of assets recognized during the second quarter of 2020.
In August 2020, the Company sold its Australian headquarters in Eagle Farm, Queensland to an unrelated party for approximately $27.0 million, net of costs to sell, and immediately leased back the facility for a term of ten years on market rate terms at an average annual base rent of $1.7 million, plus taxes, utilities, management fees and other lease concessions were accountedoperating and maintenance expenses. Additionally, in September 2020, the Company sold its Canadian headquarters in Brampton, Ontario for approximately $16.7 million, net of costs to sell, and leased back the facility for a term of five years on a straight-line basis overmarket rate terms at an average annual base rent of $0.9 million, plus taxes, utilities, management fees and other operating and maintenance expenses. The Company recognized only the initial term of the lease term, which included renewal option periods when we were reasonably assured of exercising the renewal options and included “rent holidays” (periods in which we were not obligated to pay rent). Cash or lease incentives received upon entering into certain store leases (“tenant improvement allowances”) were also recognized on a straight-line basis as a reduction to rent expense over the lease term. We recorded the unamortized portion of tenant improvement allowances as a part of deferred rent.its right-of-use asset and lease liability for both the Australian and Canadian headquarters. The net proceeds from the sale of these assets will be used for general corporate
13
Table of Contents
GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
purposes. As a result of these transactions, a gain on sale of assets of $21.1 million was recognized, which is included in the Company's unaudited condensed consolidated statement of operations in gain on sale of assets for the 13 and 39 weeks ended October 31, 2020.
Rent expense under operating leases was as follows (in millions):
 13 Weeks Ended 39 weeks ended13 Weeks Ended39 Weeks Ended
 November 2, 2019 November 2, 2019October 31,
2020		November 2,
2019		October 31,
2020		November 2,
2019
Operating lease cost $86.6
 $257.8
Operating lease cost$73.4 $86.6 $233.7 $257.8 
Variable lease cost (1)
 23.1
 72.2
Variable lease cost (1)
20.2 23.1 60.3 72.2 
Total rent expense $109.7
 $330.0
Total rent expense$93.6 $109.7 $294.0 $330.0 

(1)Variable lease cost includes percentage rentals and variable executory costs.
(1)    Variable lease cost primarily includes percentage rentals and variable executory costs.
During the 39 weeks ended October 31, 2020 and November 2, 2019, wethe Company had cash outflows of $193.7 million and $223.0 million, respectively, associated with operating leases included inleases. Refer to Note 2, "COVID-19 Impacts" as it pertains to impacts of rent obligations due to COVID-19. The Company recognized $82.2 million and $147.3 million during the measurement of our lease liabilities39 weeks ended October 31, 2020 and we recognized $147.3 millionNovember 2, 2019, respectively, of ROU assets that were obtained in exchange for operating lease obligations. During the 39 weeks ended October 31, 2020, $0.6 million of store-level ROU asset impairment charges were recognized. The Company did not record any impairment charges related to ROU assets during the 13 weeks ended October 31, 2020 or the 13 and 39 weeks ended November 2, 2019.
The weighted-average remaining lease term, which includes reasonably certain renewal options, and the weighted-average discount rate for operating leases included in the measurement of ourthe Company's lease liabilities, as of October 31, 2020, November 2, 2019, and February 1, 2020, were as follows:
November 2, 2019
Weighted-average remaining lease term (years)4.5
(1)
Weighted-average discount rate4.4%
October 31, 2020November 2, 2019February 1, 2020
Weighted-average remaining lease term (years)(1)
4.54.54.7
Weighted-average discount rate5.1 %4.4 %4.1 %

(1)The weighted-average remaining lease term is weighted based on the lease liability balance for each lease as of November 2, 2019. This weighted average calculation differs from our
(1)    The weighted-average remaining lease term is weighted based on the lease liability balance for each lease as of October 31, 2020, November 2, 2019 and February 1, 2020. This weighted average calculation differs from the Company's simple average remaining lease term due to the inclusion of reasonably certain renewal options and the effect of the lease liability value of longer term leases.

13
Table of Contents
GAMESTOP CORP.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Expected lease payments associated with ourthe Company's operating lease liabilities, excluding percentage rentals, as of November 2, 2019,October 31, 2020, are as follows (in millions):
Period  
Operating Leases (1)
Remainder of Fiscal Year 2019, as of November 2, 2019 $76.7
Fiscal Year 2020 247.5
Fiscal Year 2021 172.1
Fiscal Year 2022 124.6
Fiscal Year 2023 78.0
Thereafter 137.5
Total remaining lease payments 836.4
Less: Interest (81.4)
Present value of lease liabilities (2)
 $755.0

(1)Period
Operating lease payments exclude legally binding lease payments for leases signed but not yet commenced.Leases (1)
Remainder of Fiscal Year 2020, as of October 31, 2020$71.8 
(2)Fiscal Year 2021The present217.2 
Fiscal Year 2022150.4 
Fiscal Year 2023103.3 
Fiscal Year 202473.2 
Thereafter126.6 
Total remaining lease payments742.5 
Less: Interest(72.9)
Present value of lease liabilities consist of $238.5 million classified as current portion of operating lease liabilities and $516.5 million classified as long-term operating lease liabilities. (2)
$669.6 

As previously disclosed in our 2018 Annual Report on Form 10-K(1)    Operating lease payments exclude legally binding lease payments for leases signed but not yet commenced.
(2)    The present value of lease liabilities consist of $212.9 million classified as current portion of operating lease liabilities and under$456.7 million classified as long-term operating lease liabilities.

14
Table of Contents
GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6.    Debt
The carrying value of the previous lease accounting standard, ASC 840, future minimum annual rentals, including reasonably assured options, as of February 2, 2019, wereCompany's debt is comprised as follows (in millions):
October 31, 2020November 2, 2019February 1, 2020
Revolving credit facility expiring November 2022$25.0 $0 $0 
French term loans due June 2021(1)
23.3 0 0 
French term loans due October 2021(1)
23.3 0 0 
2021 Senior Notes principal amount198.2 421.4 421.4 
2023 Senior Notes principal amount216.4 0 0 
Less: Senior Notes unamortized debt financing costs(0.7)(2.0)(1.6)
Total debt, net(2)
$485.5 $419.4 $419.8 
Less: short-term debt and current portion of long-term debt(3)
(269.5)0 0 
Long-term debt, net$216.0 $419.4 $419.8 

Period  
Fiscal Year 2019$296.2
Fiscal Year 2020208.7
Fiscal Year 2021149.1
Fiscal Year 2022105.4
Fiscal Year 202371.4
Thereafter116.2
  $947.0

(1)    These term loans may be extended, subject to specified conditions, for up to five additional years at Micromania SAS's request.
(2)    During the second quarter of fiscal 2020, the Company's wholly-owned subsidiary, Micromania SAS, obtained an unsecured credit facility. NaN amounts have been drawn under this facility through October 31, 2020, and this facility expires in January 2021.
7.    Debt(3)    Includes advances under the revolving credit facility expiring November 2022, the French term loans due June 2021 and October 2021, and the 2021 Senior Notes, net of the associated unamortized debt financing costs. See Note 11, "Subsequent Events" for details regarding the scheduled redemption of a portion of our 2021 Senior Notes.
Senior Notes
The carrying values of our long-term debt, net consist of2023 Senior Notes. In July 2020, the following (in millions):
 November 2, 2019 November 3, 2018 February 2, 2019
2019 Senior Notes principal amount$—
 $350.0
 $350.0
2021 Senior Notes principal amount421.4
 475.0
 475.0
Less: Unamortized debt financing costs(2.0) (5.0) (4.2)
 $419.4
 $820.0
 $820.8
Less: Current portion—
 (348.8) (349.2)
Long-term debt, net$419.4
 $471.2
 $471.6

2019 Senior Notes. In September 2014, weCompany issued $350.0approximately $216.4 million aggregate principal amount of unsecured 5.50%10.00% senior notes due October 1, 2019March 15, 2023 (the "2019"2023 Senior Notes"). On April 4, 2019, we used cash on hand to redeem all of our $350.0 million unsecured senior notes due October 2019, plus accrued but unpaid interest, at the redemption price in exchange for an equal to 100% of par value.

14
Table of Contents
GAMESTOP CORP.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2021 Senior Notes. In March 2016, we issued $475.0 million aggregate principal amount of unsecuredits 6.75% senior notes due March 15, 2021 (the "2021 Senior Notes"). The 2021Interest is payable on the 2023 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. year.
The net proceeds from the offering were used for general corporate purposes, including acquisitions and dividends. WeCompany incurred approximately $7.4 million in fees and expenses in connection with the exchange, consisting primarily of bank and legal fees, which are included in selling, general and administrative expenses in the Company's condensed consolidated statements of operations for the 39 weeks ended October 31, 2020.
The Company's obligations under the 2023 Senior Notes are fully and unconditionally guaranteed on a senior secured basis by most of its domestic subsidiaries. The 2023 Senior Notes and the related guarantees are secured by first-priority liens on most of the Company's and the guarantors’ assets, other than Excluded Property and ABL Priority Collateral (each as defined in the indenture governing the 2023 Senior Notes), and by second-priority liens on the ABL Priority Collateral (which generally includes most of the Company's and the guarantors’ credit card receivables, accounts receivable, payment intangibles, inventory, pledged deposit accounts and related assets), in each case, subject to certain exceptions and permitted liens.
The indenture governing the 2023 Senior Notes contains restrictions on the ability of the Company and its restricted subsidiaries to incur, assume or permit to exist additional indebtedness or guaranty obligations; declare or pay dividends or redeem or repurchase capital stock; prepay, redeem or purchase certain subordinated indebtedness; issue certain preferred stock or similar equity securities; make loans and certain investments; sell assets; incur liens; engage in transactions with affiliates; enter into agreements restricting the ability of subsidiaries to pay dividends; and engage in mergers, acquisitions and other business combinations. The 2023 Senior Notes indenture also contains certain affirmative covenants and events of default.
The 2023 Senior Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act") or the securities laws of any state and may not be offered or sold in the United States absent registration or an exemption from the registration requirements of the Securities Act and applicable state securities laws.
2021 Senior Notes. In March 2016, the Company issued $475.0 million of 2021 Senior Notes. Interest is payable on the 2021 Senior Notes offeringsemi-annually in arrears on March 15 and September 15 of each year. The Company incurred approximately $8.1 million in fees and expenses in connection with the issuance of the 2021 Senior Notes, which were capitalized during the first quarter of fiscal 2016 and are being amortized as interest expense over the term of the notes.2021 Senior Notes. In connection with the exchange transaction discussed above, approximately $0.5 million of these fees and expenses are now being amortized as interest expense over the term of the 2023 Notes. The 2021 Senior Notes were sold in a private placement and arehave not been registered under the Securities Act or the securities laws of 1933 (the "Securities Act").any state. 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.
15
Table of Contents
GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
During the 39 weeks ended November 2, 2019, wethe Company repurchased $53.6 million of ourits 2021 Senior Notes in open market transactions at prices ranging from 99.6% to 101.5% of parface value.
The indentureDuring the 39 weeks ended October 31, 2020, the Company repurchased $6.8 million of 2021 Senior Notes in open market transactions at prices ranging from 71.5% to 79.1% of face value, of which $0.5 million were extinguished as of May 2, 2020, with the remaining $6.3 million extinguished as of May 21, 2020. In connection with the exchange transaction described above, $216.4 million aggregate principal amount of the 2021 Senior Notes were exchanged for an equal aggregate principal amount of 2023 Senior Notes, and all interest that had accrued on the 2021 Senior Notes that were exchanged was paid through July 6, 2020. Upon consummation of the exchange transaction and as of October 31, 2020, $198.2 million aggregate principal amount of 2021 Senior Notes remained outstanding.
In connection with the exchange transaction, the Company entered into the Fifth Supplemental Indenture governing the 2021 Senior Notes does not contain financial covenants but does contain covenantsNotes. The Fifth Supplemental Indenture, which placebecame effective on July 6, 2020, deleted certain restrictions on us and our subsidiaries, including limitations onin the original indenture relating to asset sales, additional liens, investments, stock repurchases, debt incurrence, debt repurchases and dividends.
Furthermore, the incurrenceFifth Supplemental Indenture eliminated certain events of additional debt and the repurchasedefault related to failures to pay, or acceleration of, debt that is junior to(other than the 2021 Senior Notes. In addition, the indenture restricts paymentsNotes), breaches 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 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 ofcertain covenants, failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If an event of default occurs and is continuing,
On November 10, 2020, the Company issued a notice to redeem, on December 11, 2020, $125.0 million in aggregate 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.Notes. See Note 11, "Subsequent Events," for further details.
Revolving Credit Facility
We maintainThe Company maintains 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 also includes a $200 million expansion feature and $50$100 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 the assets of GameStop Corp.the Company and the assets of its domestic subsidiaries.subsidiaries, such lien being junior to the lien in certain of such assets that secure the 2023 Senior Notes.
Borrowing availability under the Revolver is limited to a borrowing base which allows usthe Company to borrow up to 90% of the appraisalappraised value of its inventory (or 92.5% during the inventory,period of July 15 and October 15 of each year), 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. OurThe Company's 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$12.5 million or (2) 10% of the lesser of the total commitment or the borrowing base, wethe Company will be subject to a fixed charge coverage ratio covenant of 1.0:1.0.1.0 (the "Availability Reduction").
The Revolver places certain restrictions on usthe Company and ourits 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.

15
Table of Contents
GAMESTOP CORP.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

incurrence.
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 ourthe Company's average daily excess availability under the facility. In addition, we arethe Company is required to pay a commitment fee of 0.25% for any unused portion of the total commitment under the Revolver. As of November 2, 2019,October 31, 2020, 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 for failure to pay any principal or interest when due, failure to comply with covenants, failure of any material representation or warranty made by us or the borrowers proving to be falsetrue and correct in anya material respect, certain bankruptcy, insolvency or receivership events affecting usthe Company or ourits 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 the 39 weeks ended November 2, 2019, we had 0 borrowings or repaymentsOctober 31, 2020, the Company borrowed $150.0 million and repaid $125.0 million under our revolving credit facility.the Revolver. As of November 2, 2019,October 31, 2020, total availability under the Revolver after giving effect to the Availability Reduction was $412.7$152.1 million, with 0 outstanding borrowings of $25.0 million and outstanding standby letters of credit of $7.3$59.8 million. We areThe Company is currently in compliance with all covenants in the financial requirementsRevolver.
16
Table of Contents
GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In August 2020, the Company entered into the fourth amendment (“Fourth Amendment”) to the credit agreement governing the Revolver (“Credit Agreement”). The foregoing discussion of the Revolver gives effect to the Fourth Amendment, and the amendments therein include, but are not limited to the following:
•a reduction in the amount of the excess availability threshold that determines whether the Company is subject to a fixed charge coverage ratio covenant of 1.0:1.0 from the greater of $30 million and 10% of the borrowing base to the greater of $12.5 million and 10% of the borrowing base;
•an increase in the sublimit for the issuances of letters of credit under the Credit Agreement from $50 million to $100 million; and
•an increase in the amount of letters of credit permitted to be issued separately from, and not pursuant to, the Credit Agreement from $25 million to (i) up to $150 million for letters of credit issued for the benefit of borrowers/guarantors under the Credit Agreement and (ii) up to $75 million for letters of credit issued for the benefit of foreign subsidiaries, subject to the understanding that the outstanding amount of letters of credit issued under the Credit Agreement, combined with the outstanding amount of letters of credit otherwise permitted by the Credit Agreement, may not exceed $275 million in the aggregate.
Letter of Credit Facilities
Separately from the Revolver, the Company maintains uncommitted letter of credit facilities with certain lenders that provide for the issuance of letters of credit and bank guarantees, at times supported by cash collateral. As of October 31, 2020, the Company had $90.2 million of outstanding letters of credit and bank guarantees under facilities outside of the Revolver.
Luxembourg LineFrench Term Loans and Credit Facility
During the second and third quarters of Creditfiscal 2020, the Company's French subsidiary, Micromania SAS, entered into 6 separate unsecured term loans for a total of €40.0 million ($46.6 million as of October 31, 2020). The term loans all bear interest at 0%. NaN of the term loans totaling €20.0 million mature in June 2021 and the other 3 term loans totaling €20.0 million mature in October 2021, and all of them may be extended, subject to specified conditions, for up to five additional years at Micromania SAS's request. In connection with any extension, the interest rate would increase to a rate to be determined at the time of the extension. The French government has guaranteed 90% of the term loans pursuant to a state guaranteed loan program instituted in connection with the COVID-19 pandemic.
In September 2007, our Luxembourg subsidiary entered intoaddition, Micromania SAS obtained a $20.0€20.0 million Uncommitted Line($23.3 million as of Credit (the “LineOctober 31, 2020) credit facility that provides for term loans of Credit”) with Bank of America. There is no term associated with the Line of Credit and Bank of America may withdraw the10 to 93 days in duration to support its working capital needs. This facility at any time without notice. The Line of Credit is availablewas scheduled to our foreign subsidiaries for use primarily as a bank overdraft facility for short-term liquidity needs andexpire in June 2021, but in consideration for the issuance of additional term loans to Micromania SAS in the third quarter of fiscal 2020, Micromania SAS agreed to accelerate the maturity of this facility to January 2021. Loans made under this facility accrue interest at a variable rate tied to the Euro Interbank Offered Rate plus an applicable margin of 1.5% and are secured by a pledge of the bank guaranteesaccount from which repayments of the loans would be made. NaN amounts have been drawn under this facility through October 31, 2020.
Each of Micromania SAS's term loans and lettersshort term credit facility, as described above, restrict the ability of creditMicromania SAS to support operations. Asmake distributions and loans to its affiliates, including to the Company, and include various events that would result in the automatic acceleration of November 2, 2019, there were 0 cash overdrafts outstanding under the Lineloans thereunder, including failure to pay any principal or interest when due, acceleration of Creditother indebtedness, a change of control and bank guarantees outstanding totaled $1.8 million.certain bankruptcy, insolvency or receivership events.
8.7.    Commitments and Contingencies
Commitments
During the 39 weeks ended November 2, 2019,October 31, 2020, there were no material changes to ourthe Company's commitments as disclosed in our 2018its 2019 Annual Report on Form 10-K.10-K except as discussed in Note 6, "Debt."
Contingencies
Legal Proceedings
In the ordinary course of business, we are,the Company is, from time to time, subject to various legal proceedings, including matters involving wage and hour employee class actions, stockholder actions and consumer class actions. WeThe Company may enter into discussions regarding settlement of these and other types of lawsuits, and may enter into settlement agreements, if we believeit believes settlement is in the best interest of ourits stockholders. We doThe Company does not believe that any such existing legal proceedings or settlements, individually or in the aggregate, will have a material effect on ourits financial condition, results of operations or liquidity.
17
9.
Table of Contents
GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8.    Earnings Per Share
Basic net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing the net income (loss) 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 net loss from continuing operations causes all potentially dilutive securities to be antidilutive. The Company has certain undistributed stock awards that participate in dividends on a nonforfeitable basis, however, their impact on earnings per share under the two-class method is negligible. See Note 1, "General Information," for information regarding our unvested restricted stock and shares issued and outstanding.
A reconciliation of shares used in calculating basic and diluted net income (loss)loss per common share is as follows (in millions):
 13 Weeks Ended39 Weeks Ended
 October 31,
2020		November 2,
2019		October 31,
2020		November 2,
2019
Weighted-average common shares outstanding65.2 82.1 64.9 94.8 
Dilutive effect of stock options and restricted stock awards0 0 0 0 
Weighted-average diluted common shares outstanding65.2 82.1 64.9 94.8 
Anti-dilutive stock options and restricted stock awards4.7 2.3 4.7 2.3 
 13 Weeks Ended 39 Weeks Ended
 November 2,
2019		 November 3,
2018		 November 2,
2019		 November 3,
2018
Weighted-average common shares outstanding82.1
 102.2
 94.8
 102.0
Dilutive effect of stock options and restricted stock awards—
 —
 —
 —
Weighted-average diluted common shares outstanding82.1
 102.2
 94.8
 102.0
        
Anti-dilutive stock options and restricted stock awards2.3
 1.7
 2.3
 1.7


16
Table of Contents
GAMESTOP CORP.
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

10.9.    Segment Information
We operate ourThe Company operates its business in 4 geographic segments: United States, Canada, Australia and Europe. Our former Technology Brands segment primarily consisted of Spring Mobile and Simply Mac. We sold Spring Mobile in January 2019. In September 2019, we closed on the sale of Simply Mac, which is reported in the United States segment in these consolidated financial statements and accompanying notes. The historical results of Spring Mobile are reported as discontinued operations and are excluded from our segment results for all periods presented.
We identifyThe Company identifies segments based on a combination of geographic areas and management responsibility. Segment results for the United States include retail operations in 50 states the District of Columbia and Guam; ourits e-commerce website www.gamestop.com;operations; Game Informer® magazine; and Simply Mac, which was sold in September 2019. The United States segment also includes general and administrative expenses related to ourthe Company's 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 six European countries for the 13 weeks ended October 31, 2020 and 10 European countries. We measurecountries for the 39 weeks ended October 31, 2020 as well as the 13 and 39 weeks ended November 2, 2019. The Company measures 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 0 material intersegment sales during the 13 and 39 weeks ended October 31, 2020 and November 2, 2019 and November 3, 2018.2019.
Segment information for the 13 and 39 weeks ended October 31, 2020 and November 2, 2019 and November 3, 2018 is as follows (in millions):
United
States		CanadaAustraliaEuropeConsolidated
13 weeks ended October 31, 2020
Net sales$664.5 $55.9 $111.2 $173.1 $1,004.7 
Operating (loss) earnings(66.8)7.1 10.1 (13.4)(63.0)
13 weeks ended November 2, 2019
Net sales$987.5 $79.8 $117.0 $254.2 $1,438.5 
Operating loss(24.2)(3.9)(0.2)(17.3)(45.6)
  
United
States
 Canada Australia Europe Consolidated
13 weeks ended November 2, 2019          
Net sales $987.5
 $79.8
 $117.0
 $254.2
 $1,438.5
Operating loss (24.2) (3.9) (0.2) (17.3) (45.6)
13 weeks ended November 3, 2018          
Net sales $1,326.4
 $107.0
 $147.4
 $354.6
 $1,935.4
Operating loss (427.2) (7.1) (30.4) (53.2) (517.9)
  
United
States
 Canada Australia Europe Consolidated
39 weeks ended November 2, 2019          
Net sales $3,010.7
 $215.4
 $339.8
 $706.0
 $4,271.9
Operating loss (386.1) (16.3) (10.6) (61.8) (474.8)
39 weeks ended November 3, 2018          
Net sales $3,661.1
 $263.4
 $405.9
 $891.9
 $5,222.3
Operating loss (336.4) (10.7) (37.5) (85.3) (469.9)


18
Table of Contents
GAMESTOP CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
United
States		CanadaAustraliaEuropeConsolidated
39 weeks ended October 31, 2020
Net sales$2,009.3 $137.5 $373.9 $447.0 $2,967.7 
Operating (loss) earnings(189.6)(3.0)21.2 (85.2)(256.6)
39 weeks ended November 2, 2019
Net sales$3,010.7 $215.4 $339.8 $706.0 $4,271.9 
Operating loss(386.1)(16.3)(10.6)(61.8)(474.8)

10.    Income Taxes
In response to the COVID-19 pandemic, many governments have enacted measures to provide aid and economic stimulus. These measures include deferring the due dates of tax payments and other changes to their income and non-income-based tax laws as well as providing direct government assistance through grants and forgivable loans. The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws. With respect to the CARES Act, the Company currently expects to benefit from the deferral of certain payroll taxes through the end of calendar year 2020, the carryback of a net operating loss for fiscal 2020, the modification of limitation on business interest and certain technical corrections with respect to qualified improvement property.
The Company recognized an income tax benefit of $53.9 million for the 13 weeks ended October 31, 2020 compared to an income tax expense of $31.6 million for the 13 weeks ended November 2, 2019. The Company's effective income tax rate increased to 74.1% for the 13 weeks ended October 31, 2020 compared to (61.2)% for the 13 weeks ended November 2, 2019. The increase in the effective income tax rate compared to the prior year quarter was primarily driven by a change in the tax status of certain foreign entities, sale and leaseback transactions, the impact of the CARES Act, including tax benefits associated with the availability of a five-year carryback period for certain current year tax losses, and the relative mix of earnings across the jurisdictions within which we operate.
The Company recognized income tax expense of $14.4 million for the 39 weeks ended October 31, 2020 compared to an income tax benefit of $6.2 million for the 39 weeks ended November 2, 2019. The Company's effective income tax rate decreased to (5.1)% for the 39 weeks ended October 31, 2020 compared to 1.3% for the 39 weeks ended November 2, 2019. The decrease in the effective income tax rate compared to the prior year quarter was primarily driven by the establishment of a full valuation allowance on U.S. deferred tax assets, a change in the tax status of certain foreign entities,sale and leaseback transactions, the impact of the CARES Act, including tax benefits associated with the availability of a five-year carryback period for certain current year tax losses, and the relative mix of earnings across the jurisdictions within which we operate.
The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. Where the Company has determined existing deferred tax assets are not more likely than not to be realized, it has established a valuation allowance against those net deferred tax assets, including in the U.S. and most foreign jurisdictions. The Company continues to evaluate the realizability of all deferred tax assets on a jurisdictional basis as it relates to expected future earnings. Should the Company fail to achieve its expected earnings in the coming periods, it may be necessary to establish a valuation allowance against some or all of its deferred tax assets in those jurisdictions not currently subject to a valuation allowance.
11.    Subsequent Events
On November 10, 2020 the Company issued a notice of redemption to redeem $125.0 million of its outstanding 2021 Senior Notes, representing 63.1% of the aggregate outstanding principal amount. The redemption date will be December 11, 2020 and the redemption price will be equal to $1,000 per $1,000 principal amount of the 2021 Senior Notes being redeemed and will include accrued but unpaid interest to, but not including, the redemption date. Upon the redemption by the Company of the 2021 Senior Notes being redeemed, $73.2 million of 2021 Senior Notes will remain outstanding. See Note 6, "Debt," for further details on the 2021 Senior Notes.
19
Table of Contents
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 2.    MANAGEMENT'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 unaudited condensed 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

The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). SuchIn 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. Forward-looking statements include our current assumptions, expectations or forecasts of future events.

These statements are only predictions based upon management’son current beliefs, views, estimatesexpectations and expectations. Theseassumptions 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. 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 based upon the current beliefs, views, estimates and expectationsreasonable, we cannot guarantee future results, levels of our management including as to the Company’s industry, business strategy, goals and expectations concerning its market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. Such statements include without limitation those about the Company’s expectations for fiscal 2019, future financial and operating results, projections, expectations and other statements that are not historical facts. All statements regarding targeted and expected benefits of our transformation, capital allocation, profit improvement and cost-savings initiatives, and expected fiscal 2019 results, are forward-looking statements and are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies, many of which are difficult to predict and beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the anticipated results discussed in these forward-looking statements.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. Such factorsFactors that might cause such differences include, without limitation, the uncertain impact, effects and results of pursuit of operating, strategic, financial and structural alternatives, including the Reboot strategic plan; volatilitybut are not limited to, those described in capital and credit markets, including changes that reduce availability, and increase costs, of capital and credit; our inability to obtain sufficient quantities of product to meet consumer demand; the timing of release and consumer demand for new and pre-owned products; our ability to continue to expand, and successfully open and operate new stores for our collectibles business; risks associated with achievement of anticipated financial and operating results from acquisitions; our ability to sustain and grow our console digital video game sales; the impact intangible asset impairments; cost reduction initiatives, including store closing costs; risks related to changes in, and our continued retention of, executives and other key personnel; changes in consumer preferences and economic conditions; increased operating costs, including wages; cyber security events and related costs; risks associated with international operations; and increased competition. Please referExhibit 99.4 to the "Disclosure Regarding Forward-looking Statements" and "Risk Factors" sections in our Annual Report on Form 10-K for the fiscal year ended February 2, 20198-K that we filed with the SEC on April 2, 2019 (the “2018 Annual ReportJune 5, 2020 and those described under the heading "Risk Factors" in our quarterly report on Form 10-K”).10-Q that we filed with the SEC on September 9, 2020, and include risks related to:
We caution you not•macroeconomic pressures, including the effects of COVID-19 on consumer spending;
•the impact of COVID-19, including government restrictions, on our business and financial results;
•the impact of COVID-19 on costs and availability of capital;
•the cyclicality of the video game industry;
•our dependence on the timely delivery of new and innovative products from our vendors;
•the impact of technological advances in the video game industry and related changes in consumer behavior on our sales;
•our ability to place unduekeep pace with changing industry technology and consumer preferences;
•the economic, social and political conditions in the U.S. and certain international markets;
•the impact of international crises and trade restrictions and tariffs on the delivery of our products;
•our ability to obtain favorable terms from our suppliers;
•the international nature of our business;
•our dependence on sales during the holiday selling season;
•fluctuations in our results of operations from quarter to quarter;
•our ability to de-densify our global store base;
•our ability to renew or enter into new leases on favorable terms;
•the competitive nature of our industry;
•our ability to attract and retain executive officers and key personnel;
•the adequacy of our management information systems;
•our reliance on thesecentralized facilities for refurbishment of our pre-owned products;
•our ability to react to trends in pop culture with regard to our sales of collectibles and our dependence on licensed products for a substantial portion of such sales;
•our ability to maintain security of our customer, employee or company information;
•potential harm to our reputation;
•our ability to maintain effective control over financial reporting;
•our vendors’ ability to provide marketing and merchandise support at historical levels;
•restrictions on our ability to purchase and sell pre-owned video games;
•potential decrease in popularity of certain types of video games;
•changes in our tariff, import/export regulations and global tax rate;
•potential future litigation and other legal proceedings;
•potential future actions by activist stockholders;
•changes in accounting rules and regulations; and
•our ability to comply with federal, state, local and international law.

All forward-looking statements which speak onlyincluded or incorporated by reference in this Report are based upon information available to us as of the date of this report. All subsequent writtenReport, and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section and in our 2018 Annual Report on Form 10-K and other filings with the SEC. Except to the extent required by applicable law or regulation, we undertake no obligation to update or revise any of these forward-looking statements to reflectfor any reason, whether as a result of new information, future events or circumstancesotherwise after the date of this filing or to reflect the occurrenceReport, except as required by law.

20
Table of unanticipated events.Contents
OVERVIEW
GameStop Corp. (“GameStop,” “we,” “us,” “our,” or the “Company”) is a global, multichannelthe world's largest video game retailer, which operates approximately 5,000 stores across ten countries, and offers the best selection of new and pre-owned video gaming consoles, accessories and video game titles, in both physical and digital formats. GameStop also offers fans a wide variety of POP! vinyl figures, collectibles, board games and more. Through GameStop's unique buy-sell-trade program, gamers can trade in video game consoles, games, and accessories, as well as consumer electronics and collectibles retailer. We operate over 5,600 stores across 14 countries.for cash or in-store credit. Our consumer product network also includes www.gamestop.com and Game Informer®Informer® magazine, the world's leading print and digital video game publication.
We operate our business in four geographic segments: United States, Canada, Australia and Europe. Our former Technology Brands segment had been primarily comprised of Spring Mobile and Simply Mac. Spring Mobile was sold in January 2019 and Simply Mac was sold in September 2019. In this Quarterly Report, for all periods presented, Simply Mac is reported in the United States segment, and the historical results of Spring Mobile are reported as discontinued operations. The discussion and analysis of our 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. The fiscal years ending January 30, 2021 ("fiscal 2020") and February 1, 2020 ("fiscal 2019") and February 2, 2019 ("fiscal 2018") each consist of 52 weeks. The discussion and analysis of our results of operations refers to continuing operations unless otherwise noted. Our business, like that of many retailers, is seasonal, with the major portion of the net sales realized during the fourth fiscal quarter, which includes the holiday selling season.

Impact from COVID-19
During the first half of fiscal 2020, due to the COVID-19 pandemic, we temporarily closed our U.S. store locations to customer access, as well as closed store locations in Canada, Europe and New Zealand. These temporary store closures began in late March 2020 and by the end of fiscal June 2020, 98% of our stores globally were open to the public following the implementation of the highest level of health and safety protocols recommended by the federal and local health and governmental authorities. During the third quarter of fiscal 2020, the substantial majority of our stores were open, with approximately 15% of our stores in Australia temporarily closed for approximately four weeks due to an outbreak of COVID-19. Additionally, starting in late October 2020, as COVID-19 cases began to escalate in regions around the world, all of our stores in France and Ireland were temporarily closed as required by federal governmental authorities, while certain of our stores in Canada, Australia and Austria closed temporarily starting in early to mid-November. Although certain stores remain closed, some of our stores in France, Ireland, Canada and Australia are offering curbside pick-up. We remain vigilant in our compliance with COVID-19 regulations across our operating regions, and as such have reverted a minor number of store operations in the United States in early November to curbside pick-up only.
During the period of temporary closures, we took several steps to continue to serve our customers via our omni-channel platform by enhancing our online capabilities and curbside pick-up options while also lowering our purchase and expense levels to correspond with the lower demand.
We continue to prioritize the health and safety of our customers and team members. As a result, during the 39 weeks ended October 31, 2020, we incurred $23.3 million to mitigate the impact of the COVID-19 pandemic including incremental wage payments to hourly associates to help offset lost wages due to store closures, enhanced cleaning measures and expanded use of personal protective equipment at our stores, shared service centers and distribution centers across all geographies where we operate.
The COVID-19 pandemic remains a rapidly evolving situation and the impact on our business, operating results, cash flows and financial conditions will also depend on many factors that are not within our control, including the following:
•the geographies impacted by the virus;
•changes in consumer confidence and consumer spending habits, including spending for the merchandise that we sell;
•negative trends in consumer purchasing patterns due to changes in consumers' disposable income, credit availability and debt levels;
•the availability of additional economic stimulus programs introduced by the various governments where we operate;
•disruption to our supply chain including the manufacturing, supply, distribution, transportation and delivery of our products;
•delays in the release of key video game titles; and
•a slowdown in the U.S. and global economies, and the timing of the post-pandemic economic recovery.
We continue to take steps to improve cash flows and liquidity, which we believe will enhance our resiliency as we emerge from the COVID-19 pandemic, including:
•reducing inventory receipts to match demand, focusing our purchasing efforts on key hardware, software and accessories products;
•concentrating capital spending on required maintenance or near-term high value strategic projects; and
•divesting non-strategic assets to free up cash for deployment to certain strategic investments and initiatives

In addition, during the first quarter of fiscal 2020 and the beginning of the second quarter of fiscal 2020, we took the following steps to preserve liquidity while most of our stores were temporarily closed:
•reduced the base salary for our executive leadership team by graduated amounts ranging from 30%-50% for 9 weeks;
•lowered the cash compensation for the members of the Board of Directors by 50% for 9 weeks;
21
Table of Contents
•reduced pay for certain other employees by graduated amounts across most of the worldwide permanent workforce between 10% and 30% for 9 weeks; and
•forewent merit pay increases for the majority of our associates for fiscal 2020.
See Note 2, "COVID-19 Impacts" for further details.
Industry Overview
Growth in the video game industry is generally driven by the introduction of new technology. Gaming consoles have historically launched in five to seven-year cycles as technological developments provide significant improvements in the gaming experience and add other entertainment capabilities. Consumer demand for gaming consoles are typically the highest in the early years of the cycle and the weakest in the latter years. The current generation of consoles include the Sony PlayStation 4 (launched in 2013), Microsoft Xbox One (launched in 2013) and the Nintendo Switch (launched in 2017). We believe the current generation consoles fromThe Sony PlayStation 4 and Microsoft XBox One are nearing the end of their cycle as Sony and we anticipate that theMicrosoft have successfully launched their next generation consoles, from these manufacturers will launchthe Sony PlayStation 5 and the Microsoft Xbox Series X, in the second half ofNovember 2020.
The sale of video games delivered through digital channels and other forms of 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 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 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.
In our discussion 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 or decline in sales for certain stores for a particular period over the corresponding period in the prior year. year's comparable period.
Our comparable store sales are comprised of sales from our video 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
Historically, stores with an active lease designation were included in our comparable stores sales even if there were temporary closures because such temporary closures were primarily due to remodeling and relocations and were typically resolved within fewer than 14 days. Beginning in the first quarter of our fiscal year 2020, we refined the definition of comparable store sales to exclude stores that were closed for 14 consecutive days or more and where curbside delivery was not available to customers. Therefore, comparable sales results for the 13 and 39 weeks ended November 2, 2019October 31, 2020 exclude stores that were closed for 14 consecutive days or more primarily due to the COVID-19 pandemic where curbside delivery was not available to customers. These criteria are consistent with the metric used by management for internal reporting and analysis to measure performance of our stores. Comparable store sales reported in prior periods are not affected by this revision.
The calculation of comparable store sales compares those periodsthe 13 and 39 weeks ended October 31, 2020 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. We believe our calculation of comparable store sales best represents our strategy as an omnichannelomni-channel retailer that provides its consumers several ways to access its products.
BUSINESS STRATEGY
In May of 2019, we announced our multi-year transformation initiative, which we refer to as GameStop Reboot to position GameStop on the correct strategic path and fully leverage our unique position and brand in the video game industry. Our strategic plan is anchored on the following four tenets.
Optimize the core.core business. Improve the efficiency and effectiveness of operations across the organization, including cost restructuring, inventory management optimization, adding and growing high margin product categories, and rationalizing the global store base. Prioritizing efforts to optimize the store base and improve the fundamental operations of the business yielded the net closure of 321 stores in fiscal 2019, 461 stores year-to-date in fiscal 2020, and included both the divestiture of the Simply Mac business and wind down of underperforming operations in Denmark, Finland, Norway and Sweden. Improved inventory management drove a significant increase in inventory turns and as a result, in working capital, while an intense focus on organization structure and expense reductions yielded a $315.9 reduction in reported Selling, General and Administrative costs year-to-date in fiscal 2020.
Build a frictionless digital ecosystem. Develop and deploy a frictionless consumer facing digital first omni-channel environment, including the recent relaunch and customer experience enhancements within GameStop.com, the launch of a
22
Table of Contents
completely new GameStop App, as well as the optimization of our retail store footprint to maximize our customer reach more broadly across all channels and provide them the full spectrum of content and access to products they desire, however, wherever and whenever they want to shop. Enhancements to the user shopping experience and improved omni-channel capabilities, including expanded delivery and payment options, yielded an increase in e-commerce sales of over 430% through the third fiscal quarter of 2020.
Become the social / cultural hub for gaming. Create the social and cultural hub of gamingfor games and entertainment and expand GameStop’s addressable market through category and product expansion to offer the most comprehensive product offering across the GameStop omni-channel platform.
Build digital platform. Develop a Frictionless Digital Ecosystem. Develop and deploy a frictionless consumer facing digital environment, including the recent relaunch of GameStop.com, to reach Our customers more broadlyare increasing their engagement across the omni-channel platform and give them the full spectrum of contentgames, entertainment and accesstechnology and our focus remains to products they desire. meet those expanding needs.
Transform vendor partnerships. Transform our vendor and partner relationships to unlock additional high-margin revenue streams through an expanded suite of product and service offerings to optimize the lifetime value of every customer.
Connected to our transformation efforts, we have incurred and expectcontinue to incur future costs including, but not limited to, consulting fees, severance, and store closure costs.costs and expenses for consultants and advisors. See "Consolidated Results from Operations—Selling, General and Administrative Expenses" for further information.
We remaincontinually review and prioritize our capital needs and are committed to making investments in our infrastructure to drive our business plans and realize on our transformation initiatives. Key areas of investment include improving the presentation and content as well as the functionality, general search and navigation across our customer facing digital channels; improving customer data integration and customer relations management capabilities; continuing to enhance service offerings to our customers; continuing to strengthen and deepen our information technology, analytics, marketing and e-commerce groups; and creating more flexible fulfillment options designed to improve our delivery capabilities and reduce our shipping costs. These and other investments are expected to, among other things, provide a balancedseamless and disciplined capital allocation approach, which will return capital to shareholders when the time is right and balancing that opportunity against the need to maintain a strong balance sheet and to invest in responsible growth that will drive innovation for the business. Ascompelling customer experience across our omni-channel retail platform.

23
Table of November 2, 2019, we have repurchased $178.6 million, or 34.6 million shares, under our authorized repurchase program. See Note 1, "General Information," for further information.Contents


CONSOLIDATED RESULTS OF OPERATIONS
13 weeks ended November 2, 2019 compared with the 13 weeks ended November 3, 2018
  13 Weeks Ended Change
  November 2, 2019 November 3, 2018 $ %
  ($ in millions)    
Net sales $1,438.5
 $1,935.4
 $(496.9) (25.7)%
Cost of sales 997.4
 1,377.2
 (379.8) (27.6)
Gross profit 441.1
 558.2
 (117.1) (21.0)
Selling, general and administrative expenses 451.8
 463.6
 (11.8) (2.5)
Depreciation and amortization 23.6
 25.0
 (1.4) (5.6)
Goodwill impairments —
 557.3
 (557.3) NM
Asset impairments 11.3
 30.2
 (18.9) (62.6)
Operating loss (45.6) (517.9) 472.3
 (91.2)
Interest expense, net 6.0
 13.0
 (7.0) (53.8)
Loss from continuing operations before income taxes (51.6) (530.9) 479.3
 (90.3)
Income tax expense (benefit) 31.6
 (24.0) 55.6
 NM
Net loss from continuing operations (83.2) (506.9) 423.7
 (83.6)
(Loss) income from discontinued operations, net of tax (0.2) 18.3
 (18.5) NM
Net loss $(83.4) $(488.6) $405.2
 (82.9)%

NM - Not meaningful.
  13 Weeks Ended    
  November 2, 2019 November 3, 2018 Change
Net sales by significant product category: 
Net
Sales
 
Percent
of Total
 
Net
Sales
 
Percent
of Total
 $ %
New video game hardware(1)
 $189.0
 13.1% $349.0
 18.0% $(160.0) (45.8)%
New video game software 485.9
 33.8
 720.7
 37.2
 (234.8) (32.6)
Pre-owned and value video game products 344.2
 23.9
 396.9
 20.5
 (52.7) (13.3)
Video game accessories 156.5
 10.9
 180.8
 9.3
 (24.3) (13.4)
Digital 37.0
 2.6
 45.4
 2.3
 (8.4) (18.5)
Collectibles 161.2
 11.2
 154.6
 8.0
 6.6
 4.3
Other(2)
 64.7
 4.5
 88.0
 4.7
 (23.3) (26.5)
Total $1,438.5
 100.0% $1,935.4
 100.0% $(496.9) (25.7)%

(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 branded stores, which were sold in September 2019. 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.
We includeThe following table sets forth 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 checkoperations items (in millions) 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 net sales, has not historically been material.for the periods indicated:

13 Weeks Ended39 Weeks Ended
October 31, 2020November 2, 2019October 31, 2020November 2, 2019
AmountPercent of Net SalesAmountPercent of Net SalesAmountPercent of Net SalesAmountPercent of Net Sales
Net sales$1,004.7 100.0 %$1,438.5 100.0 %$2,967.7 100.0 %$4,271.9 100.0 %
Cost of sales728.4 72.5 997.4 69.3 2,156.8 72.7 2,960.5 69.3 
Gross profit276.3 27.5 441.1 30.7 810.9 27.3 1,311.4 30.7 
Selling, general and administrative expenses360.4 35.9 475.4 33.0 1,095.1 36.9 1,411.0 33.0 
Goodwill and asset impairments— — 11.3 0.8 4.8 0.2 375.2 8.8 
Gain on disposal of assets(21.1)(2.1)— — (32.4)(1.1)— — 
Operating loss(63.0)(6.3)(45.6)(3.1)(256.6)(8.7)(474.8)(11.1)
Interest expense, net9.7 0.9 6.0 0.5 23.9 0.8 20.7 0.5 
Loss from continuing operations before income taxes(72.7)(7.2)(51.6)(3.6)(280.5)(9.5)(495.5)(11.6)
Income tax (benefit) expense(53.9)(5.4)31.6 2.2 14.4 0.5 (6.2)(0.2)
Net loss from continuing operations(18.8)(1.8)(83.2)(5.8)(294.9)(10.0)(489.3)(11.4)
Loss from discontinued operations, net of tax— — (0.2)— (0.9)— (2.6)(0.1)
Net loss$(18.8)(1.8)%$(83.4)(5.8)%$(295.8)(10.0)%$(491.9)(11.5)%
We revised the categories of our similar products at the end of fiscal 2019. See Note 3, "Revenue," for further details. The following table sets forth net sales by significant product category for the period indicated (dollars in millions):
 13 Weeks Ended39 Weeks Ended
 October 31, 2020November 2, 2019October 31, 2020November 2, 2019
Net
Sales		Percent of Net SalesNet
Sales		Percent of Net SalesNet
Sales		Percent of Net SalesNet
Sales		Percent of Net Sales
Hardware and accessories$413.4 41.2 %$546.0 37.9 %$1,368.1 46.1 %$1,757.4 41.1 %
Software444.4 44.2 730.6 50.8 1,247.9 42.0 2,022.0 47.4 
Collectibles146.9 14.6 161.9 11.3 351.7 11.9 492.5 11.5 
Total$1,004.7 100.0 %$1,438.5 100.0 %$2,967.7 100.0 %$4,271.9 100.0 %
Net sales by reportable segment in U.S. dollars were as follows (in millions):
13 Weeks Ended
October 31, 2020November 2, 2019
Net
Sales		Percent of Net SalesComparable Store SalesNet
Sales		Percent of Net SalesComparable Store Sales
United States$664.5 66.1 %(27.1)%$987.5 68.6 %(24.0)%
Canada55.95.6 (25.7)79.8 5.5 (23.7)
Australia111.211.1 0.6 117.0 8.2 (14.7)
Europe173.117.2 (27.1)254.2 17.7 (23.7)
Total$1,004.7 100.0 %(24.6)%$1,438.5 100.0 %(23.2)%

24
Table of Contents
39 Weeks Ended
October 31, 2020November 2, 2019
Net
Sales		Percent of Net SalesComparable Store SalesNet
Sales		Percent of Net SalesComparable Store Sales
United States$2,009.3 67.7 %(23.7)%$3,010.7 70.5 %(16.3)%
Canada137.54.6 (18.9)215.4 5.0 (15.5)
Australia373.912.6 20.8 339.8 8.0 (9.1)
Europe447.015.1 (18.5)706.0 16.5 (15.1)
Total$2,967.7 100.0 %(18.7)%$4,271.9 100.0 %(15.5)%
Net Sales
Net sales decreased $496.9$433.8 million or 25.7%(30.2%) and $1,304.2 million (30.5%), during the 13 and 39 weeks ended October 31, 2020, respectively, compared to their prior year periods. Comparable store sales decreased 24.6% and 18.7% during the current quarter and year-to-date periods, respectively. The decrease in net sales for the quarter and year-to-date periods was primarily attributable to the combined impacts of temporary store closures to customer traffic due to the COVID-19 pandemic and the cyclicality of new hardware consoles as our third fiscal quarter was the final period prior to the launch of new generation of video game consoles from Microsoft and Sony. Although the substantial majority of our stores were open during the third quarter of fiscal 2020, the negative impact related to the ongoing COVID-19 pandemic continued to affect our store operations in all of our operating segments. This includes our Australia stores which were not affected by temporary closures during the first half of fiscal 2020, but during the third fiscal quarter approximately 15% of Australian stores temporarily closed for approximately four weeks. For the 39 weeks ended October 31, 2020 we experienced declines in the United States, Canada, Europe and New Zealand, which were partially offset by the performance in our Australia segment which increased in sales by 10.0% as stores in Australia remained open during for the substantial majority of the year-to-date period. These declines were partially offset by the increase in our e-commerce sales, which increased 257.4% and 432.9% in the current quarter and year-to-date periods, respectively, compared to the prior year periods. Although our sales have decreased compared to the prior year periods as described above, we believe the COVID-19 pandemic has increased demand for at home entertainment and connectivity products as consumers are spending more time in their homes and seek in-home entertainment options.
Net sales during the 13 weeks ended November 2, 2019October 31, 2020 in our United States, Canada, Australia and Europe segments declined by 32.7%, 29.9%, 5.0% and 31.9%, respectively, when compared to the 13 weeks ended November 3, 2018. The decrease2, 2019. Comparable store sales in net sales was primarily attributable to a decline inthe United States, Canada and Europe decreased by 27.1%, 25.7% and 27.1%, respectively, while comparable store sales of 23.2%.
The decreaseincreased in net sales wasthe Australia segment by 0.6% primarily due to the following:same factors described above.
New video game softwareNet sales decreased $234.8 million, or 32.6%during the 39 weeks ended October 31, 2020 in our United States, Canada and Europe segments declined by 33.3%, for36.2% and 36.7%, respectively, while net sales in our Australia segment increased 10.0%, when compared to the 1339 weeks ended November 2, 2019 compared to the 13 weeks ended November 3, 2018, primarily due to a reduction2019. Comparable store sales in the numberUnited States, Canada and success of title releases versusEurope decreased by 23.7%, 18.9% and 18.5%, respectively, while comparable store sales increased in the prior year period.
New video game hardware sales decreased $160.0 million, or 45.8%, for the 13 weeks ended November 2, 2019 compared to the 13 weeks ended November 3, 2018, primarily drivenAustralia segment by lower demand for the current generation consoles from Sony and Microsoft as they near the end of their console cycle.
Pre-owned and value video game product sales decreased $52.7 million, or 13.3%20.8%, for the 13 weeks ended November 2, 2019 compared to the 13 weeks ended November 3, 2018. The decrease was primarily driven by weakening demand as a result of digital adoption, including digital access to older titles, and the maturation of the current generation of consoles from Sony and Microsoft as they near the end of their cycle.
Video game accessories decreased $24.3 million, or 13.4%, for the 13 weeks ended November 2, 2019 compared to the 13 weeks ended November 3, 2018, primarily due to the strength in sales in the prior year period of audio-related and other accessories associated with the growth in the battle royale gaming genre.same factors described above.
Gross Profit
Gross profit decreased $117.1 million, or 21.0%,37.4% and 38.2% for the 13 and 39 weeks ended November 2, 2019October 31, 2020, respectively, compared to the 13 weeks ended November 3, 2018,prior year periods, primarily due to the decrease in sales. Gross profit as a percentage of net sales increaseddecreased to 30.7%27.5% and 27.3% in the current year quarter and year-to-date periods compared to 28.8%30.7% and 30.7% in the prior year quarter and year-to-date periods, respectively, primarily due primarily as a result ofto a shift in product mix between categories, specificallyto lower margin products including the declineshift to new hardware and accessories within our hardware and accessories product category as well as an increase in new video game hardware.industry-wide freight costs and credit card processing fees as a result of higher penetration of e-commerce sales. Additionally, the quarter-to-date period was partially offset by a shift in product mix to collectibles.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A&A") decreased by $11.8$115.0 million or 2.5%, to $451.8(24.2%) and $315.9 million (22.4%) for the 13 and 39 weeks ended November 2, 2019,October 31, 2020, respectively compared to the 13 weeks ended November 3, 2018.prior year periods. The decrease in SG&A was primarily due to cost reduction effortsprior year quarter and a lower store count as we rationalize our global store base, partially offset byyear-to-date periods included $14.4 million and $47.5 million, respectively, of costs associated with our transformation initiatives and severance totaling $14.4 million.severance. Excluding these charges, the decrease in SG&A for both the quarter and year-to-date periods was primarily due to the impact of the extensive cost reduction initiatives we have undertaken, and to a lesser extent, lower variable expenses as a result of lower sales volume. See Note 2, "COVID-19 Impacts" for further details.
25
Table of Contents
Goodwill and Asset Impairments
During the 39 weeks ended October 31, 2020, we recognized asset impairment charges totaling $4.8 million. No asset impairment charges were recognized during the 13 weeks ended October 31, 2020. The charges consist of $3.2 million in impairment charges related to our formerly-owned corporate aircraft, which we sold in the second fiscal quarter of 2020 and $1.6 million in impairment charges associated with store-level assets.
During the 13 and 39 weeks ended November 2, 2019 we recognized asset impairment charges totaling $11.3 million, consisting of a $7.7 million impairment of our corporate aircraft, which was classified as held for sale during the period,as of November 2, 2019, and $3.6 million in impairment charges related to store-level property and equipment. During the same period in the prior year,39 weeks ended November 2, 2019, we performed an interimrecognized a goodwill impairment test for allcharge totaling $363.9 million, primarily as a result of our reporting units and indefinite-lived intangible assets, which was triggered by a decline in our market capitalization. As a result of the goodwill impairment charge, we recognized impairment chargeshave no remaining goodwill.
Gain on Sale of $557.3 million and $30.2 million associated with our goodwill and intangible assets, respectively, duringAssets
During the 13 weeks ended November 3, 2018.October 31, 2020, we sold our Australian headquarters in Eagle Farm, Queensland to an unrelated party for approximately $27.0 million, net of costs to sell, and immediately leased back the facility for a term of ten years on market rate terms at an average annual base rent of $1.7 million, plus taxes, utilities, management fees and other operating and maintenance expenses. Additionally, in September 2020, we sold our Canadian headquarters in Brampton, Ontario for approximately $16.7 million, net of costs to sell, and leased back the facility for a term of five years on market rate terms at an average annual base rent of $0.9 million plus taxes, utilities, management fees and other operating and maintenance expenses. The net proceeds from the sale of these assets will be used for general corporate purposes. As a result of these transactions, a gain on sale of assets of $21.1 million was recognized and is included in our unaudited condensed consolidated statement of operations for the 13 weeks ended October 31, 2020.
During the second fiscal quarter of 2020, we sold, in separate unrelated transactions, to unaffiliated third parties i) our corporate headquarters and ancillary office space in Grapevine, Texas for $28.5 million, net of costs to sell and ii) a nearby refurbishment center for $15.2 million, net of costs to sell. With respect to the leaseback of the corporate headquarters, we agreed to provide a letter of credit to the buyer-lessor within 18 months from the closing date to secure our lease obligation. Upon delivering such letter of credit, we will be entitled to a rent credit of $2.8 million. This variable consideration is included in the total gain on sale of assets recognized during the 39 weeks ended October 31, 2020.
The net proceeds from the sale of these assets will be used for general corporate purposes. As a result of the transactions that occurred during the second and third fiscal quarters of 2020, a gain on sale of assets of $32.4 million was recognized and is included in our unaudited condensed consolidated statement of operations for the 39 weeks ended October 31, 2020.
See Note 5, "Leases," for further information regarding the sale and leaseback of these facilities.
Interest Expense, Net
Interest expense, net decreasedincreased by $7.0$3.7 million or 53.8%(61.7%) during the 13 weeks ended October 31, 2020 compared to the 13 weeks ended November 2, 2019, primarily due to an increase in interest expense as a result of the increase in the interest rate associated with the exchange of $216.4 million aggregate principal amount of our 6.75% senior notes due in 2021 for our 10.0% senior notes due in 2023 as well as a decrease in interest income primarily as a result of a reduction in interest rates.
Interest expense, net increased by $3.2 million (15.5%), during the 39 weeks ended October 31, 2020 compared to the 39 weeks ended November 2, 2019, primarily due to a decrease in interest income primarily as a result of a reduction in interest rates. The decrease in interest income was offset by a decrease in interest expense as a result of the early redemption of our $350.0 million 2019 Senior Notes on April 4, 2019, the repurchase of $53.6 million and $6.8 million aggregate principal amount of our 2021 Senior Notes during fiscal 2019 and fiscal 2020, respectively, offset by an increase in interest expense associated with the exchange of $216.4 million aggregate principal amount of our 6.75% senior notes due in 2021 for our 10.0% senior notes due in 2023.
Income Tax (Benefit) Expense
We recognized income tax benefit of $53.9 million for the 13 weeks ended October 31, 2020 compared to an income tax expense of $31.6 million for the 13 weeks ended November 2, 2019 compared2019. Our effective income tax rate increased to 74.1% for the 13 weeks ended November 3, 2018, primarily dueOctober 31, 2020 compared to the redemption of our $350.0 million unsecured senior notes during the first quarter of fiscal 2019.
Income Tax Expense (Benefit)
We have historically calculated the provision or benefit for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate ("AETR") for the full fiscal year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. For the 13 weeks ended November 2, 2019, we determined we could no longer reliably estimate income taxes utilizing an AETR. The AETR estimate is highly sensitive to estimates of ordinary income (loss) and permanent differences such that minor fluctuations in these estimates could result in significant fluctuations of the Company’s AETR. Accordingly, we used our actual year-to-date effective tax rate to calculate income taxes(61.2)% for the 13 weeks ended November 2, 2019.
Income tax expense was $31.6 million, representing an effective tax rate of (61.2)%, for the 13 weeks ended November 2, 2019 compared to income tax benefit of $24.0 million, representing an effective tax rate of 4.5%, for the 13 weeks ended November 3, 2018. The changeincrease in the effective income tax rate compared to the same period in the prior year quarter was primarily driven by discrete items recordeda change in the respective periodstax status of certain foreign entities, sale and leaseback transactions, the impact of the CARES Act, including tax benefits associated with the availability of a five-year carryback period for certain current year tax losses, and the relative mix of earnings across the jurisdictions within which we operate, including increases in valuation allowances and losses not benefited in certain foreign jurisdictions during the 13 weeks ended November 2, 2019.

operate.
We assess the available positive and negative evidence to estimate whether sufficient future taxablerecognized income will be generated to permit usetax expense of the existing deferred tax assets. We have established valuation allowances in certain foreign jurisdictions where the Company has determined existing deferred tax assets are not more likely than not to be realized. We continue to evaluate the realizability of all deferred tax assets on a jurisdictional basis as it relates to expected future earnings. Should the Company fail to achieve its expected earnings in the coming periods, it may be necessary to establish a valuation allowance against some or all of its deferred tax assets in those jurisdictions not currently subject to a valuation allowance.
39 weeks ended November 2, 2019 compared with the 39 weeks ended November 3, 2018
  39 Weeks Ended Change
  November 2, 2019 November 3, 2018 $ %
  ($ in millions)    
Net sales $4,271.9
 $5,222.3
 $(950.4) (18.2)%
Cost of sales 2,960.5
 3,663.0
 (702.5) (19.2)
Gross profit 1,311.4
 1,559.3
 (247.9) (15.9)
Selling, general and administrative expenses 1,341.7
 1,361.2
 (19.5) (1.4)
Depreciation and amortization 69.3
 80.5
 (11.2) (13.9)
Goodwill impairments 363.9
 557.3
 (193.4) (34.7)
Asset impairments 11.3
 30.2
 (18.9) (62.6)
Operating loss (474.8) (469.9) (4.9) 1.0
Interest expense, net 20.7
 40.6
 (19.9) (49.0)
Loss from continuing operations before income taxes (495.5) (510.5) 15.0
 (2.9)
Income tax (benefit) expense (6.2) 15.8
 (22.0) NM
Net loss from continuing operations (489.3) (526.3) 37.0
 (7.0)
(Loss) income from discontinued operations, net of tax (2.6) 41.0
 (43.6) NM
Net loss $(491.9) $(485.3) $(6.6) 1.4 %

NM - Not meaningful.
  39 Weeks Ended    
  November 2, 2019 November 3, 2018 Change
Net sales by significant product category: 
Net
Sales
 
Percent
of Total
 
Net
Sales
 
Percent
of Total
 $ %
New video game hardware(1)
 $598.1
 14.0% $1,006.5
 19.3% $(408.4) (40.6)%
New video game software 1,217.3
 28.5
 1,488.3
 28.5
 (271.0) (18.2)
Pre-owned and value video game products 1,112.6
 26.0
 1,344.7
 25.7
 (232.1) (17.3)
Video game accessories 526.3
 12.3
 567.2
 10.9
 (40.9) (7.2)
Digital 111.4
 2.6
 128.6
 2.5
 (17.2) (13.4)
Collectibles 490.3
 11.5
 438.7
 8.4
 51.6
 11.8
Other(2)
 215.9
 5.1
 248.3
 4.7
 (32.4) (13.0)
Total $4,271.9
 100.0% $5,222.3
 100.0% $(950.4) (18.2)%

(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 branded stores, which were sold in September 2019. 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 $950.4$14.4 million or 18.2% for the 39 weeks ended November 2, 2019October 31, 2020 compared to the 39 weeks ended November 3, 2018. The decrease in net sales was primarily attributable to a decline in comparable store sales of 15.5%, which was driven by a decrease in sales of video game products, partially offset by an increase in sales of collectibles.
The decrease in net sales was due to the following:
New video game hardware sales decreased $408.4 million, or 40.6%, for the 39 weeks ended November 2, 2019 compared to the 39 weeks ended November 3, 2018, primarily driven by lower demand for the current generation consoles from Sony and Microsoft as they near the end of their console cycle.

New video game software sales decreased $271.0 million or 18.2%, for the 39 weeks ended November 2, 2019 compared to the 39 weeks ended November 3, 2018, primarily due to a reduction in the number and success of title releases versus the prior year period.
Pre-owned and value video game product sales decreased $232.1 million or 17.3% for the 39 weeks ended November 2, 2019 compared to the 39 weeks ended November 3, 2018. The decrease was primarily driven by weakening demand as a result of digital adoption, including digital access to older titles, and the maturation of the current generation of consoles from Sony and Microsoft as they near the end of their cycle.
Video game accessories sales decreased $40.9 million, or 7.2%, for the 39 weeks ended November 2, 2019 compared to the 39 weeks ended November 3, 2018, primarily due to the strength in sales in the prior year period of audio-related and other accessories associated with growth in the battle royale gaming genre.
The decreases described above were partially offset by an increase in sales of collectibles of $51.6 million, or 11.8%, for the 39 weeks ended November 2, 2019 compared to the 39 weeks ended November 3, 2018, primarily driven by our focus on the category and higher customer demand.
Gross Profit
Gross profit decreased $247.9 million, or 15.9%, for the 39 weeks ended November 2, 2019 compared to the 39 weeks ended November 3, 2018, primarily due to the decline in sales. Gross profit as a percentage of net sales increased to 30.7% in the current year period compared to 29.9% in the same period in the prior year, primarily due to a shift in mix between product categories, driven by the decline in new video game hardware.
Selling, General and Administrative Expenses
SG&A decreased $19.5 million, or 1.4% in the 39 weeks ended November 2, 2019 compared to the 39 weeks ended November 3, 2018, primarily due to the positive impact of foreign exchange rate fluctuations of $26.3 million, cost reduction efforts and a lower store count as we rationalize our global store base. These decreases were partially offset by an increase in costs primarily associated with our transformation initiatives and severance of $36.3 million.
Depreciation and Amortization
Depreciation and amortization expense decreased $11.2 million, or 13.9%, in the 39 weeks ended November 2, 2019 compared to the 39 weeks ended November 3, 2018, primarily due to declining capital expenditures over the past several years.
Goodwill and Asset Impairments
During the 39 weeks ended November 2, 2019 and November 3, 2018, we performed interim impairment tests for all of our reporting units and indefinite-lived intangible assets, which were triggered by declines in our market capitalization. As a result of these interim tests, we recognized goodwill and intangible asset impairment charges of $363.9 million and $587.5 million during the 39 weeks ended November 2, 2019 and November 3, 2018, respectively. We have no remaining goodwill balances as of November 2, 2019. In addition, we recognized asset impairment charges totaling $11.3 million during the current year period, which consisted of a $7.7 million impairment of our corporate aircraft that was classified as held for sale during the period and $3.6 million in impairment charges related to store-level property and equipment.
Interest Expense, Net
Interest expense, net decreased by $19.9 million, or 49.0%, for the 39 weeks ended November 2, 2019 compared to the 39 weeks ended November 2, 2019, primarily due to the redemption of our $350.0 million unsecured senior notes during the first quarter of fiscal 2019.
Income Tax (Benefit) Expense
We have historically calculated the provision or benefit for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate ("AETR") for the full fiscal year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. For the 39 weeks ended November 2, 2019, we determined we could no longer reliably estimate income taxes utilizing an AETR. The AETR estimate is highly sensitive to estimates of ordinary income (loss) and permanent differences such that minor fluctuations in these estimates could result in significant fluctuations of the Company’s AETR. Accordingly, we used our actual year-to-date effective tax rate to calculate income taxes for the 39 weeks ended November 2, 2019.
Income tax benefit wasof $6.2 million for the 39 weeks ended November 2, 2019,2019. Our effective income tax rate decreased to (5.1)% for the 39 weeks ended October 31, 2020 compared to income tax expense of $15.8 million1.3% for the 39 weeks ended November 3, 2018. Income tax expense for the prior year period included a $29.6 million charge associated with a tax dispute in France. Excluding this charge, our adjusted effective income tax rate was 2.7% for the prior year period, which decreased to 1.3%2, 2019. The decrease in the current year period. The change in the effective
26
Table of Contents
income tax rate compared to the same period in the prior year quarter was primarily driven by discrete items recordedthe establishment of a full valuation allowance on U.S. deferred tax assets, a change in the respective periodstax status of certain foreign entities, sale and leaseback transactions, the impact of the CARES Act, including tax benefits associated with the availability of a five-year carryback period for certain current year tax losses, and the relative mix of earnings across the jurisdictions within which we operate, including increases in valuation allowances and losses not benefited in certain foreign jurisdictions during the 39 weeks ended November 2, 2019.operate.

See Note 10, "Income Taxes," for further information.
We assess the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. We have established valuation allowances in certain foreign jurisdictions where the Company has determined existing deferred tax assets are not more likely than not to be realized. We continue to evaluate the realizability of all deferred tax assets on a jurisdictional basis as it relates to expected future earnings. Should the Company fail to achieve its expected earnings in the coming periods, it may be necessary to establish a valuation allowance against some or all of its deferred tax assets in those jurisdictions not currently subject to a valuation allowance.
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 our segments consists primarily of retail operations, with all stores engaged in the sale of new and pre-owned video game hardware, software and accessories (which we refer to as video game products), new and pre-owned mobile devices, related accessories and collectibles. 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.
13 weeks ended November 2, 2019 compared with the 13 weeks ended November 3, 2018
As of and for the 13 Weeks Ended November 2, 2019 
United
States
 Canada Australia Europe Consolidated
Net sales $987.5
 $79.8
 $117.0
 $254.2
 $1,438.5
Operating loss $(24.2) $(3.9) $(0.2) $(17.3) $(45.6)
Segment operating data:          
Store count 3,732
 305
 446
 1,172
 5,655
Comparable store sales (24.0)% (23.7)% (14.7)% (23.7)% (23.2)%
As of and for the 13 Weeks Ended November 3, 2018 
United
States
 Canada Australia Europe Consolidated
Net sales $1,326.4
 $107.0
 $147.4
 $354.6
 $1,935.4
Operating loss $(427.2) $(7.1) $(30.4) $(53.2) $(517.9)
Segment operating data:          
Store count 3,884
 313
 468
 1,224
 5,889
Comparable store sales 3.4% 7.7% (0.8)% (2.7)% 2.1%
United States
Segment results in the United States include retail GameStop operations in 50 states, the District of Columbia and Guam; our e-commerce website www.gamestop.com; Game Informer magazine; and Simply Mac, which was sold in September 2019. Net sales for the 13 weeks ended November 2, 2019 decreased $338.9 million, or 25.6%, compared to the 13 weeks ended November 3, 2018, primarily due to a 24.0% decrease in comparable store sales driven by declines across all of our video game product categories, partially offset by an increase in sales of collectibles. Operating loss for the 13 weeks ended November 2, 2019 was $24.2 million compared to $427.2 million for the same period in the prior year. The current year quarter included a $7.7 million impairment charge related to our corporate aircraft and the prior year quarter included $488.7 million of impairment charges, primarily related to goodwill. Excluding these impairment charges, our operating loss would have been $16.5 million in the current year quarter compared to operating earnings of $61.5 million in the prior year quarter. The decline in operating earnings was primarily driven by the decrease in net sales and an increase in expenses associated with our transformation initiatives and severance totaling $13.9 million, which were partially offset by overhead cost reductions and lower store expenses due to a lower store count.
Canada
Segment results for Canada include retail and e-commerce operations in Canada. Net sales for the 13 weeks ended November 2, 2019 decreased $27.2 million, or 25.4%, compared to the 13 weeks ended November 3, 2018, primarily due to a 23.7% decrease in comparable store sales. The decrease in comparable stores sales was primarily the result of a decrease in sales of video game products. Operating loss for the 13 weeks ended November 2, 2019 decreased to $3.9 million compared to $7.1 million for the same period in the prior year. Operating loss for the 13 weeks ended November 3, 2018 included a goodwill impairment charge of $9.7 million.

Australia
Segment results for Australia include retail and e-commerce operations in Australia and New Zealand. Net sales for the 13 weeks ended November 2, 2019 decreased $30.4 million, or 20.6%, compared to the 13 weeks ended November 3, 2018 primarily due to a 14.7% decrease in comparable store sales. The decrease in comparable store sales was primarily the result of a decrease in sales of video game products, partially offset by an increase in sales of collectibles. Operating loss for the 13 weeks ended November 2, 2019 decreased to $0.2 million compared to $30.4 million during the same period in the prior year. The 13 weeks ended November 3, 2018 included a goodwill impairment charge of $31.5 million.
Europe
Segment results for Europe include retail and e-commerce operations in 10 European countries. Net sales for the 13 weeks ended November 2, 2019 decreased $100.4 million, or 28.3%, compared to the 13 weeks ended November 3, 2018 primarily due to a 23.7% decrease in comparable store sales. The decrease in comparable store sales was primarily the result of a decrease in sales of video game products, partially offset by an increase in sales of collectibles. Operating loss for the 13 weeks ended November 2, 2019 was $17.3 million compared to $53.2 million during the prior year quarter, which included goodwill and asset impairment charges totaling $57.6 million. Excluding the impairment charge in the prior year quarter, operating earnings in the current year quarter would have decreased by $21.7 million, primarily due to the decrease in sales.
39 weeks ended November 2, 2019 compared with the 39 weeks ended November 3, 2018
As of and for the 39 Weeks Ended November 2, 2019 
United
States
 Canada Australia Europe Consolidated
Net sales $3,010.7
 $215.4
 $339.8
 $706.0
 $4,271.9
Operating loss $(386.1) $(16.3) $(10.6) $(61.8) $(474.8)
Segment operating data:          
Store count 3,732
 305
 446
 1,172
 5,655
Comparable store sales (16.3)% (15.5)% (9.1)% (15.1)% (15.5)%
As of and for the 39 Weeks Ended November 3, 2018 
United
States
 Canada Australia Europe Consolidated
Net sales $3,661.1
 $263.4
 $405.9
 $891.9
 $5,222.3
Operating earnings (loss) $(336.4) $(10.7) $(37.5) $(85.3) $(469.9)
Segment operating data:          
Store count 3,884
 313
 468
 1,224
 5,889
Comparable store sales 0.9% (0.4)% (7.0)% (7.1)% (1.3)%
United States
Net sales for the 39 weeks ended November 2, 2019 decreased $650.4 million, or 17.8%, compared to the 39 weeks ended November 3, 2018, primarily due to a 16.3% decrease in comparable store sales. The decrease in comparable store sales was primarily the result of decreases in sales of video game products, partially offset by an increase in sales of collectibles. Operating loss for the 39 weeks ended November 2, 2019 was $386.1 million compared to $336.4 million during the same period in the prior year, which included impairment charges, primarily related to goodwill, of $371.6 million and $488.7 million, respectively. Excluding these impairment charges, operating loss for the 39 weeks ended November 2, 2019 would have been $14.5 million compared to operating earnings of $152.3 million for the same period in the prior year. The decrease in operating earnings is primarily due to the decline in sales and an increase in costs associated with our transformation initiatives and severance totaling $36.3 million, which were partially offset by overhead cost reductions and lower store expenses due to a reduced store count.
Canada
Net sales for the 39 weeks ended November 2, 2019 decreased $48.0 million, or 18.2%, compared to the 39 weeks ended November 3, 2018, primarily due to a 15.5% decrease in comparable store sales. The decrease in comparable store sales was primarily the result of a decrease in sales of video game products, partially offset by an increase in sales of collectibles. Operating loss for the 39 weeks ended November 2, 2019 increased to $16.3 million compared to $10.7 million during the same period in the prior year. Excluding a goodwill impairment charge of $9.7 million in the prior year period, operating loss for the 39 weeks ended November 2, 2019 would have increased by $15.3 million, primarily due to the decline in sales.



Australia
Net sales for the 39 weeks ended November 2, 2019 decreased $66.1 million, or 16.3%, compared to the 39 weeks ended November 3, 2018 primarily due to a 9.1% decrease in comparable store sales. The decline in comparable store sales was primarily the result of a decrease in sales of video game products, partially offset by an increase in sales of collectibles. Operating loss for the 39 weeks ended November 2, 2019 decreased to $10.6 million compared to $37.5 million during the same period in the prior year. Excluding a goodwill impairment charge of $31.5 million in the prior year period, operating loss for the 39 weeks ended November 2, 2019 would have increased by $4.6 million, primarily due to the decrease in sales.
Europe
Net sales for the 39 weeks ended November 2, 2019 decreased $185.9 million, or 20.8%, compared to the 39 weeks ended November 3, 2018, primarily due to a decrease in comparable store sales of 15.1%. The decrease in comparable store sales was primarily as a result of a decrease in sales of video game products, partially offset by an increase in sales of collectibles. Operating loss for the 39 weeks ended November 2, 2019 decreased to $61.8 million compared to $85.3 million during the same period in the prior year. Excluding goodwill and intangible asset impairment charges of $57.6 million in the prior year period, operating loss for the 39 weeks ended November 2, 2019 would have increased by $34.1 million, primarily due to the decrease in sales.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our principal sources of liquidity are cash from operations, cash on hand and our revolving credit facilities. As of November 2, 2019,October 31, 2020, we had total cash and liquidity of $703.0 million, includingunrestricted cash on hand of $290.3$445.9 million and an additional $412.7$175.4 million of available borrowing capacity under our revolving credit facility.facilities.
Availability under our revolving credit facilities, which was increased during the 13 weeks ended October 31, 2020, as described in the Sources of Liquidity section below, provides us additional liquidity throughout the course of the year to fund our operations. Based on our current operating plans, we believe that available cash balances, cash generated from our operating activities and funds available under our asset-based revolving credit facilityfacilities together will provide sufficient liquidity to fund our operations and transformation initiatives and support corporate capital allocation programs including any share or debt repurchases that we may undertake, for at least the next 12 months.months and the foreseeable future. While factors related to COVID-19 have negatively impacted our results for the first quarter ended May 2, 2020, results for our second quarter ended August 1, 2020 and third quarter ended October 31, 2020, as compared to our first quarter of fiscal 2020, have improved as we continued to achieve the cash flow benefits from cost savings and expense reduction initiatives, as well as disciplined working capital management which supports an improved liquidity position.
On an ongoing basis, we evaluate and consider certain strategic operating alternatives, including divestitures, restructuring or dissolution of unprofitable business segments, repurchasing shares of our common stock or our outstanding debt obligations, as well as other transactionsequity and debt financing alternatives that we believe may enhance stockholder value. Specific to our 2021 Senior Notes, on July 6, 2020 we issued $216.4 million aggregate principal amount of 2023 Senior Notes in exchange for an equal aggregate principal amount of our 2021 Senior Notes. See Note 6, "Debt," for further details on this debt exchange. The nature, amount nature and timing of any strategic operational changes,change, or purchases of our debt or equity securitiesfinancing transactions that we might pursue will depend on a variety of factors, including, as of the applicable time, our available cash and liquidity and operating performance and other circumstances;performance; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed byunder our current credit arrangements; and overall market conditions. As part of our previously announced GameStop Reboot profit improvement initiative, we are evaluating future strategic and operating alternatives for certain of our unprofitable operating subsidiaries and business units that operate within our international segments. In total, we currently believe that any potential charges associated with the disposition or wind-down of certain operations under consideration, primarily relating to lease and severance obligations and accelerated depreciation and amortization, would not be material but may be incurred duringto our liquidity, results of operations or financial condition.
As a result of the balanceimpact of fiscal 2019COVID-19 around the world, many of our vendors have been impacted by the volatility in the supply chain financing market. As we seek to optimize our inventories, including for next generation video game consoles and a number of new software releases, and related payment terms, we have increased the amount of collateral we provide to select vendors for our inventory purchase obligations. Our continued provision of collateral, and the first halflevels of fiscal 2020, dependingsuch collateral, will depend on the outcomea variety of factors, including our evaluation.
Usesinventory purchase levels, available payment terms for inventories, availability of Capitalborrowing capacity under our credit facilities, favorable credit terms and costs of providing collateral. See Note 1, "General Information — Restricted Cash" for further details.
On April 4, 2019, we used cash on handNovember 10, 2020, the Company issued a notice to redeem, allon December 11, 2020, $125.0 million in aggregate principal amount of our $350.02021 Senior Notes. See Note 11, "Subsequent Events," for further details.
Cash Flows
During the 39 weeks ended October 31, 2020, cash used in operations was $41.1 million, unsecured senior notes due October 2019, plus accrued but unpaid interest, at the redemption price equalcompared to 100% of par value. In addition,$654.8 million during the 39 weeks ended November 2, 2019,2019. The decrease in cash used in operations of $613.7 million was primarily attributable to the optimization of inventory and accounts payable levels as we repurchased $53.6have focused our operational process to optimize the cash conversion cycle and carry more efficient levels of inventory.
Cash provided by investing activities increased to $63.3 million during the 39 weeks ended October 31, 2020 compared to cash used in investing of $56.9 million during the 39 weeks ended November 2, 2019. The $120.2 million increase in cash provided by investing activities is primarily attributable to the proceeds from the sale and leaseback of five properties including our headquarter facilities in the United States, Australia and Canada as well as a refurbishment center and ancillary office space in Grapevine, Texas, lower capital expenditures in the current year period and $8.6 million net proceeds from the sale of our 2021 Senior Notes in open market transactions at prices ranging from 99.6% to 101.5%corporate aircraft. See Note 1, "General Information," and Note 5, "Leases" for further information.
During the 39 weeks ended October 31, 2020, cash provided by financing activities was $65.5 million, consisting primarily of par value.
On June 11, 2019, we commenced a modified Dutch auction tender offer for up to 12.0 million shares of our Class A common stock with a price range between $5.20 and $6.00 per share. The tender offer expired on July 10, 2019. Through the tender offer, we accepted for payment 12.0 million shares at a purchase price of $5.20 per share for a total of $62.9 million, including fees and commissions. The shares purchased through the tender offer were immediately retired.
In addition to the equity tender offer describe above, during the third quarter of fiscal 2019, we executed a series of open market repurchases for an aggregate of 22.6 million shares of our Class A common stock totaling $115.7 million. Included in these amounts are repurchases of 0.3 million shares for $1.7 million that were initiated prior to November 2, 2019, but not settled until the fourth quarter of fiscal 2019. These share repurchases were immediately retired.
On June 3, 2019, our Board of Directors elected to eliminate the Company’s quarterly dividend, effective immediately, in an effort to strengthen the Company's balance sheet and provide increased financial flexibility and optionality. We paid an aggregate of approximately $157$47.1 million in cash dividends in fiscal 2018,proceeds from term loans entered into by our French subsidiary, Micromania SAS and we believe the decision to eliminate the dividend will enable us to further reduce debt and provide us flexibility as we seek to drive value creation for stockholders.

Cash Flows
a net $25.0 million draw down on our Revolver. During the 39 weeks ended November 2, 2019, cash used in operations was $654.8 million, compared to cash used in operations of $179.2 million during the 39 weeks ended November 3, 2018. The increase in cash used in operations of $475.6 million was primarily attributable to the timing of vendor payments and a decrease in earnings.
Cash used in investing activities decreased to $56.9 million during the 39 weeks ended November 2, 2019, from $66.2 million during the 39 weeks ended November 3, 2018. The decline is due to lower capital expenditures and $5.2 million in proceeds received from the sale of Simply Mac during the third quarter of fiscal 2019.
Cash used in financing activities was $622.7 million, during the 39 weeks ended November 2, 2019, compared to $136.0 million during the 39 weeks ended November 3, 2018. The increase in cash used is
27
Table of Contents
consisting primarily due toof the redemption of our $350.0$350 million 2019in aggregate principal of 5.5% unsecured senior notes, in April 2019, repurchases of our common stock totaling $176.9 million, and open market repurchases of $53.6 million of our 2021 senior notes totaling $53.6 million, partially offset by a decline inSenior Notes and dividends paid on our common stock of $78.2$40.5 million.
Sources of Liquidity
We utilize cash generated from operations and have funds available to us under our revolving credit facilityasset-based Revolver 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 anOur asset-based revolving credit facility (the "Revolver") withRevolver has a borrowing base capacity of $420 million and a maturity date of November 2022. TheOur Revolver has a $200 million expansion feature and $50$100 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 the assets of GameStop Corp.the Company and the assets of its domestic subsidiaries. We are required to pay a commitment fee of 0.25% for any unused portion of the total commitment under the Revolver. As of November 2, 2019,October 31, 2020, our applicable margins were 0.25% for prime rate loans and 1.25% for LIBO rate loans. AsAlso as of November 2, 2019,October 31, 2020, total availability under the Revolver after giving effect to the Availability Reduction was $412.7$152.1 million, with no outstanding borrowings of $25.0 million and outstanding standby letters of credit of $7.3$59.8 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.
The agreement governing our Revolver and the indentureindentures governing our 2021 Senior Notes and 2023 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 indenturesagreement governing our Revolver and the indentures governing our 2021 Senior Notes and 2023 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.thresholds (the "Availability Reduction"). We are currently in compliance with all covenants under ourthe indentures governing the 2021 Senior Notes and 2023 Senior Notes and the agreement governing our Revolver.
As of October 31, 2020, our 2021 Senior Notes and 2023 Senior Notes had an aggregate principal amount outstanding of $198.2 million and $216.4 million, respectively. Additionally, as of October 31, 2020, our term loans entered into by our French subsidiary, Micromania SAS, had an aggregate principal balance of €40.0 million ($46.6 million as of October 31, 2020).
See Note 7,6, “Debt,” to our unaudited consolidated financial statements for additional information relatedstatements.
Our French subsidiary, Micromania SAS, also maintains a credit facility of €20.0 million ($23.3 million as of October 31, 2020) that allows it to obtain short term loans of 10 to 93 days in duration to support its working capital needs. The commitments expire in January 2021. Loans made under the credit facility accrue interest at a variable rate tied to the Euro Interbank offered Rate plus an applicable margin of 1.5% and are secured by a pledge of the bank account from which repayments of the loans would be made. No amounts have been drawn under this facility through October 31, 2020.
In August 2020, we entered into the fourth amendment (“Fourth Amendment”) to the credit agreement governing our Revolver (“Credit Agreement”) giving effect to certain amendments, which are incorporated above and 2021 Senior Notes.include, but are not limited to the following:
Our Luxembourg subsidiary maintains•Reduced the amount of the excess availability trigger that determines whether the Company is subject to a $20.0fixed charge coverage ratio covenant of 1.0:1.0 from the greater of $30 million Uncommitted Lineand 10% of the borrowing base to the greater of $12.5 million and 10% of the borrowing base;
•Increased the sublimit for the issuances of letters of credit under the Credit (the “LineAgreement from $50 million to $100 million; and
•Increased the amount of Credit”) with Bankletters of America. There is no term associatedcredit debt permitted to be issued separately from, and not pursuant to, the Credit Agreement from $25 million to (i) up to $150 million for letters of credit issued by borrowers/guarantors under the Credit Agreement and (ii) up to $75 million for letters of credit issued for the benefit of foreign subsidiaries, subject to the understanding that the outstanding amount of letters of credit issued under the Credit Agreement, combined with the Lineoutstanding amount of letters of credit otherwise permitted by the Credit and BankAgreement cannot exceed $275 million in the aggregate.
Separately from the asset-based Revolver, we maintain uncommitted letter 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 andcredit facilities with certain lenders that provide for the issuance of bank guarantees and letters of credit to support operations. As of November 2, 2019, there were no cash overdrafts outstanding under the Line of Credit and bank guarantees, at times supported by cash collateral. We had $90.2 million of outstanding totaled $1.8 million.letters of credit and bank guarantees under facilities outside of the Revolver.
We may also fund our growth capital needs, as circumstances warrant, from sales of equity securities. The timing and amount of any equity sales would depend on, among other factors, our capital needs and alternative sources and costs of capital available to us, market perceptions about us, and the then current trading price of our common equity.
28
Table of Contents
CRITICAL ACCOUNTING POLICIES
Our unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and do not include all disclosures required under GAAP for complete financial statements. Preparation of these statements requires us to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these financial statements. For a summary of significant accounting policies and the means by which we develop estimates thereon, see “Part II—Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 20182019 Annual Report on Form 10-K. There have been no material changes to our critical accounting policies from those included in our 20182019 Annual Report on Form 10-K.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
See Note 1 to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements.

OFF-BALANCE SHEET ARRANGEMENTS
We had no material off-balance sheet arrangements as of October 31, 2020.
29
Table of Contents
ITEM 3.
ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our Revolver references LIBOR, which is expected to be discontinued after 2021. As our Revolver matures in November 2022, we anticipate that we will amend the Revolver prior to the LIBOR quotation termination date. There can be no assurances as to what alternative reference rates may be and whether such rates will be more or less favorable than LIBOR and any other unforeseen impacts of the potential discontinuation of LIBOR. We intend to monitor the developments with respect to the potential phasing out of LIBOR after 2021 and work with our lenders to ensure any transition away from LIBOR will have minimal impact on our financial condition, but can provide no assurances regarding the impact of the discontinuation of LIBOR.
Except for as described above, thereThere have been no material changes in ourthe Company's quantitative and qualitative disclosures about market risk as set forth in our 2018its 2019 Annual Report on Form 10-K.10-K, except as described below.
The impact of the COVID-19 pandemic both in the United States and globally continues to cause uncertainty and volatility in financial markets, including interest rates and foreign currency exchange rates. The outbreak is expected to have a continued adverse impact on market conditions for the foreseeable future and to trigger a period of global economic slowdown with no known duration. See further discussion in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
ITEM 4.CONTROLS AND PROCEDURES
ITEM 4.    CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
OurThe Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to provide reasonable assurance that the information required to be disclosed in the reports that we fileit files or submitsubmits 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 ourits principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. OurThe Company's principal executive officer and principal financial officer, with assistance from other members of management, have reviewed the effectiveness of ourthe Company's disclosure controls and procedures as of the end of the period covered by this report and, based on that evaluation, determined that ourits disclosure controls and procedures were not effective because of the material weaknesses in internal control over financial reporting that were disclosed in our 2018 Annual Report on Form 10-K for the fiscal year ended February 2, 2019. Specifically, the control deficiencies associated with the material weaknesses 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.
Notwithstanding the material weaknesses, management, including the principal executive officer and principal financial officer, believes that the consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects our financial condition, results of operations and cash flows as of and forOctober 31, 2020 at the periods presented in accordance with GAAP.
Remediation
As previously described in Part II, Item 9A of our 2018 Annual Report on Form 10-K, our management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the identified material weaknesses are remediated. We expect that the remediation of these material weaknesses will be completed by the end of fiscal 2019.reasonable assurance level.
Changes in Internal Control Over Financial Reporting
Upon adoptionIn response to the COVID-19 pandemic, the Company has required certain employees, some of ASU 2016-02, Leases, on February 3, 2019, we implemented changeswhom are involved in ourthe operation of the Company's internal controls over financial reporting, by implementing new accounting processes, systems and control procedures for lease accounting. Other than the changes related to our remediation efforts and ASU 2016-02,work from home. Despite this change, there werehave been no other changes in ourthe Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) underduring the Exchange Act) during our most recently completed fiscal quarter ended October 31, 2020 that hashave materially affected, or isare reasonably likely to materially affect, ourthe Company’s internal control over financial reporting. The Company is continually monitoring and assessing the impact of COVID-19 on its internal controls to minimize any impact it may have on their design and operating effectiveness.
PART II — OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
ITEM 1.    LEGAL PROCEEDINGS
In the ordinary course of ourits business, we are,the Company is, from time to time, subject to various legal proceedings, including matters involving wage and hour employee class actions and consumer class actions. WeThe Company may enter into discussions regarding settlement of these and other types of lawsuits, and may enter into settlement agreements, if we believeit believes settlement is in the best interest of ourits stockholders. We doThe Company does not believe that any such existing legal proceedings or settlements, individually or in the aggregate, will have a material effect on ourits financial condition, results of operations or liquidity.

ITEM 1A.    RISK FACTORS
In light of recent developments relating to the COVID-19 pandemic, the Company amended and restated all risk factors that were included in item "1A. Risk Factors" of its 2019 Annual Report on Form 10-K filed with the SEC on March 27, 2020. The amended and restated risk factors are included in Exhibit 99.4 to the Form 8-K the Company filed with the SEC on June 5, 2020 and these risk factors were further supplemented in Item 1A of the Company's Quarterly Report on Form 10-Q filed with the SEC on September 9, 2020.
ITEM 2.
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of our equity securities during the fiscal quarter ended November 2, 2019 were as follows:
ISSUER PURCHASES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.    MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.    OTHER INFORMATION
None.
30
Period 
Total
Number of
Shares
Purchased
 
Weighted-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)
August 4 through August 31, 2019(2)
 —
 $—
 —
 $237.1
September 1 through October 5, 2019(2)
 15,480,974
 $4.99
 15,480,974
 $237.1
October 6 through November 2, 2019(2)
 7,151,109
 $5.37
 7,151,109
 $159.8
Total 22,632,083
 $5.11
 22,632,083
 $121.4

(1)In March 2019, we publicly announced that our Board of Directors authorized a share repurchase program allowing our management to repurchase up to $300 million of our Class A Common Stock. As of November 2, 2019, we had $121.4 million remaining to repurchase shares under the authorized repurchase program which has no expiration date.
(2)During the the third quarter of fiscal 2019, we executed a series of open market repurchases for an aggregate of 22.6 million shares of our Class A common stock totaling $115.7 million. Included in these amounts are repurchases of 0.3 million shares for $1.7 million that were initiated prior to November 2, 2019, but not settled until the fourth quarter of fiscal 2019. As of November 2, 2019, we have $121.4 million remaining under our share repurchase program.
Table of Contents
ITEM 6.    EXHIBITS
ITEM 6.EXHIBITS
Exhibit

Number
DescriptionPreviously Filed as an Exhibit to and Incorporated by Reference FromDate Filed
10.1
LetterFourth Amendment to Second Amendment and Restated Credit Agreement, between Bernard R. Colpitts, Jr.dated as of August 28, 2020, by and among GameStop Corp. executed October 14, 2019, the other Borrowers party thereto, the Lenders party thereto and Bank of America, N.A.
Current Report on Form 8-KOctober 16, 2019September 2, 2020
10.2
Amendment to Employment AgreementUncommitted Letter of Credit Facility, dated September 20, 2019 with Daniel A. DeMatteoas of August 28, 2020, by and among GameStop Corp., the other borrowers party thereto and Bank of America, N.A.
Current Report on Form 8-KOctober 1, 2019September 2, 2020
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.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are imbedded within the inline XBRL document.Submitted electronically herewith.
101.SCHInline XBRL Taxonomy Extension SchemaSubmitted electronically herewith.
101.CALInline XBRL Taxonomy Extension Calculation LinkbaseSubmitted electronically herewith.
101.DEFInline XBRL Taxonomy Extension Definition LinkbaseSubmitted electronically herewith.
101.LABInline XBRL Taxonomy Extension Label LinkbaseSubmitted electronically herewith.
101.PRE104Inline XBRL Taxonomy Extension Presentation LinkbaseSubmitted electronically herewith.
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).Submitted electronically herewith.



31
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
GAMESTOP CORP.
By:/s/    JAMES A. BELL
James A. Bell
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: December 11, 20198, 2020
GAMESTOP CORP.
By:/s/    BERNARD R. COLPITTS JR.DIANA JAJEH
Bernard R. Colpitts Jr.Diana Jajeh
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Date: December 11, 20198, 2020


30
32