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Delaware | 5734 | 20-2733559 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Minnesota | 5734 | 41-1609563 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Proposed Maximum | Proposed Maximum | |||||||||||
Title of Each Class of | Amount | Offering Price | Aggregate | Amount of | ||||||||
Securities to be Registered | to be Registered | per Unit(1) | Offering Price(1) | Registration Fee | ||||||||
Senior Floating Rate Notes due 2011 | $300,000,000 | 100.000% | $300,000,000 | $32,100.00 | ||||||||
Guarantees of the Senior Floating Rate Notes due 2011 | (2) | (2) | (2) | (2) | ||||||||
8% Senior Notes due 2012 | $650,000,000 | 98.688% | $641,472,000 | $68,637.51 | ||||||||
Guarantees of the 8% Senior Notes due 2012 | (2) | (2) | (2) | (2) | ||||||||
(1) | Estimated solely for purposes of calculation of the registration fee pursuant to Rule 457(f) under the Securities Act of 1933, as amended. |
(2) | Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no separate registration fee is payable. |
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Jurisdiction of | I.R.S. Employer | |||||||
Incorporation/ | Identification | |||||||
Exact Name of Additional Registrants* | Organization | Number | ||||||
Electronics Boutique Holdings Corp. | Delaware | 51-0379406 | ||||||
GameStop Holdings Corp. | Delaware | 75-2951347 | ||||||
Marketing Control Services, Inc. | Virginia | 47-0927512 | ||||||
Sunrise Publications, Inc. | Minnesota | 41-1792301 | ||||||
GameStop Brands, Inc. | Delaware | 20-1243398 | ||||||
GameStop of Texas (GP), LLC | Delaware | 20-1201873 | ||||||
GameStop (LP), LLC | Delaware | 20-1243349 | ||||||
GameStop Texas LP | Texas | 20-1202148 | ||||||
EB Catalog Company, Inc. | Nevada | 88-0416406 | ||||||
ELBO Inc. | Delaware | 51-0381472 | ||||||
EB International Holdings, Inc. | Delaware | 51-0408682 | ||||||
EB Sadsbury Second, LLC | Delaware | 20-0597991 | ||||||
EB Sadsbury General Partner, LP | Delaware | none | ||||||
EB Sadsbury Property Holding, LP | Delaware | 45-0529392 |
* | The address and telephone number for each of the additional registrants is 625 Westport Parkway, Grapevine, Texas 76051, (817) 424-2000. The primary standard industrial classification code number for each of the additional registrants is 5734. |
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities Exchange Commission is effective. This prospectus is not an offer to sell securities and is not soliciting an offer to buy securities in any state where the offer of sale is not permitted. |
• | We will exchange all old notes that are validly tendered and not withdrawn prior to the expiration of the exchange offer. | |
• | You may withdraw tenders of old notes at any time prior to the expiration of the exchange offer. | |
• | We believe that the exchange of old notes for exchange notes will not be a taxable transaction for United States federal income tax purposes. | |
• | We will not receive any proceeds from the exchange offer. |
• | The form and terms of the exchange notes will be identical in all material respects to the form and terms of the old notes, except that the exchange notes will be registered under the Securities Act, the transfer restrictions and registration rights applicable to the old notes will not apply to the exchange notes, and the exchange notes will not contain any provisions relating to liquidated damages in connection with the old notes under circumstances related to the timing of the exchange offer. | |
• | We are offering the exchange notes in order to satisfy certain of our obligations under the registration rights agreement entered into in connection with the placement of the old notes. |
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• | Registration Statement on Form S-4, filed by GameStop with the SEC on May 23, 2005; | |
• | Amendment No. 1 to the Registration Statement on Form S-4, filed by GameStop with the SEC on July 8, 2005; | |
• | Amendment No. 2 to the Registration Statement on Form S-4, filed by GameStop with the SEC on September 2, 2005; | |
• | GameStop’s Annual Report on Form 10-K for the fiscal year ended January 28, 2006, filed with the SEC on April 3, 2006; | |
• | GameStop’s Current Report on Form 8-K, filed with the SEC on April 13, 2006; | |
• | EB’s Annual Report on Form 10-K for the fiscal year ended January 29, 2005, filed with the SEC on April 7, 2005; | |
• | EB’s Annual Report on Form 10-K/ A for the fiscal year ended January 29, 2005, filed with the SEC on May 20, 2005; | |
• | EB’s Annual Report on Form 10-K/ A for the fiscal year ended January 29, 2005, filed with the SEC on September 2, 2005; | |
• | EB’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2005, filed with the SEC on June 9, 2005; | |
• | EB’s Quarterly Report on Form 10-Q/ A for the quarter ended April 30, 2005, filed with the SEC on September 2, 2005; | |
• | EB’s Quarterly Report on Form 10-Q for the quarter ended July 30, 2005, filed with the SEC on September 8, 2005; | |
• | EB’s Current Report on Form 8-K, filed with the SEC on March 15, 2005; | |
• | EB’s Current Report on Form 8-K, filed with the SEC on March 22, 2005; | |
• | EB’s Current Report on Form 8-K, filed with the SEC on April 18, 2005; | |
• | EB’s Current Report on Form 8-K, filed with the SEC on May 27, 2005; | |
• | EB’s Current Report on Form 8-K, filed with the SEC on June 9, 2005; | |
• | EB’s Current Report on Form 8-K, filed with the SEC on June 15, 2005; | |
• | EB’s Current Report on Form 8-K, filed with the SEC on August 30, 2005; | |
• | EB’s Current Report on Form 8-K, filed with the SEC on September 6, 2005; | |
• | EB’s Current Report on Form 8-K, filed with the SEC on October 7, 2005; and | |
• | EB’s Current Report on Form 8-K, filed with the SEC on October 11, 2005. |
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• | our reliance on suppliers and vendors for sufficient quantities of their products and for new product releases; | |
• | economic conditions affecting the electronic game industry; | |
• | the competitive environment in the electronic game industry; | |
• | our ability to open and operate new stores; | |
• | our ability to attract and retain qualified personnel; | |
• | the impact and costs of litigation and regulatory compliance; | |
• | the risks involved in our international operations; | |
• | our ability to successfully integrate the operations of Historical GameStop and EB and manage the combined operations of the Company; | |
• | the cost savings and other synergies from the mergers may not be fully realized or may take longer to realize than expected; and | |
• | other factors described in our Annual Report on Form 10-K, filed with the SEC on April 3, 2006, including those set forth under the caption “Item 1A. Risk Factors.” |
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This summary highlights selected information in this prospectus and may not contain all of the information that is important to you. To better understand this offering, you should carefully read this entire prospectus, including the “Risk Factors” section beginning on page 10 and the financial statements and the notes to those statements, which are included elsewhere in this prospectus. |
• | Hardware Platform Technology Evolution. Video game hardware has evolved significantly from the early products launched in the 1980s. Technological developments in both chip processing speed and data storage have provided significant improvements in advanced graphics and audio quality, which allow software developers to create more advanced games, encourage existing players to upgrade their hardware platforms and attract new video game players to purchase an initial system. As general computer technology advances, we expect video game technology to make similar advances. |
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• | Next-Generation Systems Provide Multiple Capabilities Beyond Gaming. Many next-generation hardware platforms, including Sony PlayStation 2 and Microsoft Xbox and Xbox 360, utilize a DVD software format and have the potential to serve as multi-purpose entertainment centers by doubling as a player for DVD movies and compact discs. In addition, Sony PlayStation 2, Nintendo DS and Microsoft Xbox and Xbox 360 manufacture accessories which provide internet connectivity. | |
• | Backward Compatibility. Sony PlayStation 2, Nintendo DS and, to some extent, Microsoft Xbox 360 are backward compatible, meaning that titles produced for the earlier version of the hardware platform may be used on the new hardware platform. | |
• | Introduction of Next-Generation Hardware Platforms Drives Software Demand. Sales of video game software generally increase as next-generation platforms mature and gain wider acceptance. | |
• | Broadening Demographic Appeal. While the typical electronic game enthusiast is male between the ages of 14 and 35, the electronic game industry is broadening its appeal. |
Continue to Execute Our Proven Growth Strategies. We intend to continue to execute our proven growth strategies, including: |
• | Continuing the practices of Historical GameStop and EB of opening new strip center stores in our target markets and new mall stores in selected mall locations. | |
• | Increasing our comparable store sales and operating earnings by capitalizing on industry growth, increasing sales of used video game products and ourGame Informermagazine and increasing awareness of the GameStop brand. |
Targeting a Broad Audience of Game Players. We have created a store environment targeting a broad audience including the electronic game enthusiast, the casual gamer and the seasonal gift giver. | |
Enhancing our Image as a Destination Location. Our stores serve as destination locations for game players due to our broad selection of products, knowledgeable sales associates, game-oriented environment and unique pricing proposition. | |
Offering the Largest Selection of Used Video Game Products. We are the largest retailer of used video games in the world and carry the broadest selection of used video game products for both current and previous generation platforms. | |
Building the GameStop Brand. We currently operate most of Historical GameStop’s stores under the GameStop name. Within the next 12 to 24 months, we intend to rebrand all of the EB stores to the GameStop brand. Building the GameStop brand has enabled us to leverage brand awareness and to capture advertising and marketing efficiencies. | |
Providing aFirst-to-Market Distribution Network. We employ a variety of rapid-response distribution methods in our efforts to be thefirst-to-market for new video game products and PC entertainment software. We strive to deliver popular new releases to selected stores within hours of release and to all of our stores by the next morning. This highly efficient distribution network is essential, as a significant portion of a new title’s sales will be generated in the first few days and weeks following its release. |
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Investing in our Information Systems and Distribution Capabilities. We employ sophisticated and fully-integrated inventory management, store-level point of sale and financial systems andstate-of-the-art distribution facilities. |
• | Capitalize on Growth in Demand. Our sales of new video game software and used video game products grew by approximately 20% and 27%, respectively, in fiscal 2004 and, due primarily to the mergers, by an additional 60% and 58%, respectively, in fiscal 2005. | |
• | Increase Sales of Used Video Game Products. We will continue to expand the selection and availability of used video game products in our U.S. and international stores. Our strategy consists of increasing consumer awareness of the benefits of trading in and buying used video game products at our stores through increased marketing activities. | |
• | Increase GameStop Brand Awareness. We intend to increase customer awareness of how the adoption of the best practices of Historical GameStop and EB will benefit our customers. In connection with our brand-building efforts, in each of the last three fiscal years, we increased the amount of media advertising in targeted markets. In fiscal 2006, we plan to continue to increase media advertising, to expand our GameStop loyalty card program, to aggressively promote trade-ins of used video game products in our stores and to leverage our web sites atwww.gamestop.com andwww.ebgames.com. |
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The Exchange Offer | We are offering to exchange (1) up to $300.0 million aggregate principal amount of our new floating rate notes, which have been registered under the Securities Act, for a like amount of our old floating rate notes, and (2) up to $650.0 million aggregate principal amount of our new 8% notes, which have been registered under the Securities Act, for a like amount of our old 8% notes. The old floating rate notes and old 8% notes were issued on September 28, 2005 in a private offering. To exchange your old notes, you must properly tender them by following the procedures under “The Exchange Offer” and we must accept them. | |
Expiration Date | The exchange offer expires at 5:00 p.m., New York City time, on , 2006, unless we extend it. In that case, the term “expiration date” will mean the latest date and time to which the exchange offer is extended. We will issue exchange notes upon the expiration date or promptly thereafter. | |
Withdrawal Rights | You may withdraw the tender of your old notes at any time before 5:00 p.m., New York City time, on the expiration date. If we decide for any reason not to accept any old notes for exchange, we will return your old notes without expense to you promptly after the expiration or termination of the exchange offer. In the case of old notes tendered by book entry transfer into the exchange agent’s account at The Depository Trust Company, or DTC, any withdrawn or unaccepted old notes will be credited to the tendering holder’s account at DTC. See “The Exchange Offer — Withdrawal of Tender” for further information. | |
Conditions to the Exchange Offer | The exchange offer is subject to customary conditions, some of which we may waive in our sole discretion. The exchange offer is not conditioned upon any minimum principal amount of old notes being tendered for exchange. See “The Exchange Offer — Conditions” for further information. | |
Procedures for Tendering Old Notes | If you are a holder of old notes who wishes to accept the exchange offer for exchange notes: | |
• you must complete, sign and date the letter of transmittal accompanying this prospectus and mail, fax or otherwise deliver it, together with your old notes, to the exchange agent on or before the expiration date at the address set forth under “The Exchange Offer — Exchange Agent;” or | ||
• arrange for DTC to transmit certain required information to the exchange agent in connection with a book-entry transfer. | ||
Do not send letters of transmittal and certificates representing old notes to us. |
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By tendering your old notes in this manner, you will be representing to us, among other things, that: | ||
• the exchange notes you acquire pursuant to the exchange offer are being acquired in the ordinary course of your business; | ||
• you are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate, in the distribution of the exchange notes issued to you in the exchange offer; and | ||
• you are not an “affiliate” of either Issuer. | ||
Any broker-dealer that acquires exchange notes for its own account in exchange for old notes must represent to us that the old notes to be exchanged for the exchange notes were acquired by it as a result of market-making or other trading activities and acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of exchange notes received by it pursuant to the exchange offer. See “— Resales” below for further information. | ||
Special Procedures for Beneficial Owners | If you are a beneficial owner whose old notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and wish to tender your old notes in the exchange offer, please contact the registered owner as soon as possible and instruct it to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your old notes, either arrange to have your old notes registered in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. | |
Guaranteed Delivery Procedures | If you wish to tender your old notes and the old notes are not immediately available, time will not permit your required documents to reach the exchange agent by the expiration date, or the procedure for book-entry transfer cannot be completed by the expiration date, you may tender your old notes according to the guaranteed delivery procedures set forth in “The Exchange Offer — Guaranteed Delivery Procedures.” | |
Consequences of Not Exchanging Old Notes | If you do not tender your old notes or we reject your tender, your old notes will continue to be subject to the restrictions on transfer set forth in the legend on the certificate for your old notes. In addition, you will not be entitled to any further registration rights or exchange rights, except under limited circumstances where we may be required to file and cause to become effective a shelf registration statement which could cover your resales of your old notes. However, your old notes will remain outstanding and entitled to the benefits of the indenture governing the notes. See “The Exchange Offer — Consequences of Failure to Exchange” for further information. | |
Resales | We believe that you can offer for resale, resell or otherwise transfer the exchange notes without complying with further registration and |
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prospectus delivery requirements of the Securities Act if you make the representations described above under “— Procedures for Tendering Old Notes.” | ||
We base our belief on interpretations by the SEC staff in no action letters issued to other issuers in exchange offers like the one contemplated by this prospectus. We cannot guarantee that the SEC would make a similar decision about this exchange offer. | ||
If our belief is wrong, or if you cannot truthfully make the representations described above under “— Procedures for Tendering Old Notes,” and you transfer any exchange notes issued to you in the exchange offer without meeting the registration and prospectus delivery requirements of the Securities Act, or without an exemption from such requirements, you could incur liabilities under the Securities Act. We are not indemnifying you from any such liability and will not protect you against any loss incurred as a result of any such liability under the Securities Act. | ||
This prospectus, as it may be amended or supplemented from time to time, may be used by broker-dealers in connection with resales of exchange notes that they received in exchange for old notes that they acquired for their own account as a result of market-making activities or other trading activities. We have agreed that, for a period of 90 days after the consummation of the exchange offer, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. | ||
Federal Tax Consequences | Your exchange of old notes for exchange notes pursuant to the exchange offer should not result in any gain or loss to you for United States federal income tax purposes. For more information, see “Certain United States Federal Income Tax Consequences.” | |
Use of Proceeds | We will receive no proceeds from the exchange offer. We will pay all of our expenses related to the exchange offer. | |
Exchange Agent | Citibank, N.A. | |
Shelf Registration Statement | In certain limited circumstances, we will be required to file under the Securities Act, and cause to become effective, a shelf registration statement to cover resales of the old notes or the exchange notes, as the case may be, by the holders thereof. See “The Exchange Offer — Registration Rights; Liquidated Damages.” |
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Issuers | GameStop Corp. and GameStop, Inc. GameStop, Inc., a Minnesota corporation, is an indirect wholly-owned subsidiary of GameStop Corp. and is a co-obligor of the notes. | |
Notes Offered | $300,000,000 aggregate principal amount of Senior Floating Rate Notes due 2011. $650,000,000 aggregate principal amount of 8% Senior Notes due 2012. | |
Maturity Date | Senior Floating Rate Notes: October 1, 2011. Senior Notes: October 1, 2012. | |
Guarantees | Each of GameStop’s direct and indirect domestic wholly-owned subsidiaries (other than GameStop, Inc.) will guarantee the exchange notes on a senior unsecured basis with unconditional guarantees on the issue date of the exchange notes. From and after the issue date of the exchange notes, each domestic wholly-owned subsidiary acquired or formed by GameStop will be required to guarantee the notes on the same basis. | |
Interest Payment Dates | Interest on the new floating rate notes will be payable in cash on January 1, April 1, July 1 and October 1 of each year. Interest on the new 8% notes will be payable in cash on April 1 and October 1 of each year. The exchange notes will bear interest from the most recent date of payment of interest on the old notes surrendered and accepted for exchange or, if no interest has been paid on the old notes, from the date the old notes surrendered and accepted for exchange were issued. Accordingly, the most recent payment of interest on the old floating rate notes was made on the first business day following April 1, 2006 and the next payment of interest on the old floating rate notes, or if the exchange offer is earlier consummated, the new floating rate notes, will be due on the first business day following July 1, 2006. The most recent payment of interest on the old 8% notes was made on the first business day following April 1, 2006 and the next payment of interest on the old 8% notes, or if the exchange offer is earlier consummated, the new 8% notes, will be due on the first business day following October 1, 2006. | |
Ranking | The exchange notes will be the Issuers’ senior unsecured obligations and will: | |
• rank equally in right of payment to all of the Issuers’ existing and future unsecured senior indebtedness; |
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• rank senior in right of payment to all of the Issuers’ existing and future senior subordinated indebtedness and subordinated indebtedness; and | ||
• be effectively subordinated in right of payment to the Issuers’ secured indebtedness (including the Senior Credit Facility) to the extent of the value of the assets securing such indebtedness, and all obligations of each of GameStop’s existing and future subsidiaries. | ||
Similarly, the guarantees of the exchange notes will be senior unsecured obligations of the guarantors and will: | ||
• rank equally in right of payment to all of the applicable guarantor’s existing and future senior indebtedness; | ||
• rank senior in right of payment to all of the applicable guarantor’s existing and future senior subordinated indebtedness and subordinated indebtedness; and | ||
• be effectively subordinated in right of payment to all of the applicable guarantor’s existing and future secured debt (including the applicable guarantor’s guarantee under the Senior Credit Facility), to the extent of the value of the assets securing such debt, and to all liabilities and preferred stock of any subsidiary of a guarantor if that subsidiary is not a guarantor. | ||
As of January 28, 2006, we had approximately $984.2 million of indebtedness, gross of the original issue discount on the old 8% notes of $8.2 million, of which approximately $9.5 million was secured, approximately $0.6 million was indebtedness of non-guarantor subsidiaries and structurally senior to the exchange notes and approximately $24.3 million was subordinated to the exchange notes and the guarantees of the exchange notes. | ||
The exchange notes will also be structurally subordinated to all indebtedness and other obligations, including trade payables, of GameStop’s non-guarantor subsidiaries. See “Capitalization” for further information. | ||
Optional Redemption | We may redeem the new floating rate notes, in whole or in part, at any time on or after October 1, 2007 and we may redeem the new 8% notes, in whole or in part, at any time on or after October 1, 2009 at the redemption prices set forth under “Description of the Exchange Notes — Optional Redemption.” | |
We may redeem up to 100% of the aggregate principal amount of the new floating rate notes at any time on or prior to October 1, 2007 and up to 35% of the aggregate principal amount of the new 8% notes at any time on or prior to October 1, 2008, in each case with the proceeds of certain equity offerings plus accrued and unpaid interest, if any, to the date of redemption. See “Description of the Exchange Notes — Optional Redemption” for further information. | ||
Change of Control Offer | Upon the occurrence of a change of control, you will have the right, as holders of the exchange notes, to require us to repurchase some or all of your exchange notes at 101% of their principal amount, |
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plus accrued and unpaid interest, if any, to the repurchase date. See “Description of the Exchange Notes — Repurchase at the Option of Holders Upon a Change of Control” for further information. | ||
Certain Covenants | The indenture governing the notes contains covenants limiting, among other things, the Issuers’ ability and the ability of GameStop’s restricted subsidiaries to: | |
• incur additional debt; | ||
• pay dividends on or repurchase capital stock; | ||
• make certain investments; | ||
• enter into certain types of transactions with affiliates; | ||
• limit dividends or other payments by restricted subsidiaries; | ||
• engage in sale and leaseback transactions; | ||
• use assets as security in other transactions; and | ||
• sell certain assets or merge with or into other companies. | ||
These covenants are subject to important exceptions and qualifications, as described under the heading “Description of the Exchange Notes.” | ||
If at any time the notes receive an Investment Grade Rating (as defined under “Description of the Exchange Notes — Certain Definitions”), then for so long as such rating is maintained and no default or event of default shall have occurred and be continuing, certain of the covenants will cease to apply as described under “Description of the Exchange Notes — Certain Covenants — Suspension of Applicability of Certain Covenants in Certain Circumstances.” | ||
Use of Proceeds | We will not receive any cash proceeds from the exchange offer. The proceeds from the sale of the old notes were used to fund a portion of the cash consideration payable in the mergers to purchase shares of EB common stock and to pay certain fees and related expenses. See “Use of Proceeds” for further information. |
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There are significant consequences if you fail to exchange your old notes. |
You cannot be sure that an active trading market for the exchange notes will develop. |
You must follow the appropriate procedures to tender your old notes or they will not be exchanged. |
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The failure to successfully integrate Historical GameStop’s and EB’s businesses and operations in the expected timeframe may adversely affect our future results. |
We may fail to realize the anticipated synergies, cost savings and other benefits expected from the mergers. |
We depend upon our key personnel and they would be difficult to replace. |
We depend upon the timely delivery of products. |
We depend upon third parties to develop products and software. |
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Our ability to obtain favorable terms from our suppliers may impact our financial results. |
If our vendors fail to provide marketing and merchandising support at historical levels, our sales and earnings could be negatively impacted. |
The electronic game industry is cyclical, which could cause significant fluctuation in our earnings. |
Pressure from our competitors may force us to reduce our prices or increase spending, which could decrease our profitability. |
International events could delay or prevent the delivery of products to our suppliers. |
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Our international operations expose us to numerous risks. |
• | economic downturns; | |
• | currency exchange rate fluctuations; | |
• | international incidents; | |
• | government instability; and | |
• | an increasing number of competitors entering our current and potential markets. |
Possible changes in our global tax rate. |
If we are unable to renew or enter into new leases on favorable terms, our revenue growth may decline. |
The ability to download video games and play video games on the Internet could lower our sales. |
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If we fail to keep pace with changing industry technology, we will be at a competitive disadvantage. |
An adverse trend in sales during the holiday selling season could impact our financial results. |
Our results of operations may fluctuate from quarter to quarter, which could affect our business, financial condition and results of operations. |
• | the timing of new product releases; | |
• | the timing of new store openings; and | |
• | shifts in the timing of certain promotions. |
Our failure to effectively manage new store openings could lower our sales and profitability. |
• | the ability to identify new store locations, negotiate suitable leases and build out the stores in a timely and cost efficient manner; | |
• | the ability to hire and train skilled associates; | |
• | the ability to integrate new stores into our existing operations; and | |
• | the ability to increase sales at new store locations. |
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If our management information systems fail to perform or are inadequate, our ability to manage our business could be disrupted. |
We may engage in acquisitions which could negatively impact our business if we fail to successfully complete and integrate them. |
To service our indebtedness, we will require a significant amount of cash, the availability of which depends on many factors beyond our control. |
• | our reliance on suppliers and vendors for sufficient quantities of their products and new product releases and our ability to obtain favorable terms from these suppliers and vendors; | |
• | economic conditions affecting the electronic game industry as a whole; | |
• | the highly competitive environment in the electronic game industry and the resulting pressure from our competitors potentially forcing us to reduce our prices or increase spending; | |
• | our ability to open and operate new stores; | |
• | our ability to attract and retain qualified personnel; and | |
• | our dependence upon software publishers to develop popular game and entertainment titles for video game systems and PCs. |
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As a result of the Transactions, we have substantial debt that could adversely impact cash availability for growth and operations and may increase our vulnerability to general adverse economic and industry conditions. |
• | our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired; | |
• | we must use a substantial portion of our cash flow from operations to make debt service payments on the notes and our Senior Credit Facility, which will reduce the funds available to us for other purposes such as potential acquisitions and capital expenditures; | |
• | we may have a higher level of indebtedness than some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in planning for, or responding to, changing conditions in our industry, including increased competition; and | |
• | we are more vulnerable to general economic downturns and adverse developments in our business. |
Because of our incurrence of floating rate debt resulting from financing arrangements entered into in connection with the mergers, we may be adversely affected by interest rate changes. |
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Your right to receive payments on the notes will be effectively junior to our secured indebtedness to the extent of the value of the assets securing such indebtedness. |
Claims of holders of the notes will be structurally junior to claims of creditors of all of our existing and future non-guarantor subsidiaries. |
Our operations are substantially restricted by the indenture governing the notes and the terms of our Senior Credit Facility. |
• | incur, assume or permit to exist additional indebtedness or guaranty obligations; | |
• | incur liens or agree to negative pledges in other agreements; | |
• | engage in sale and leaseback transactions; | |
• | make loans and investments; | |
• | declare dividends, make payments or redeem or repurchase capital stock; | |
• | engage in mergers, acquisitions and other business combinations; | |
• | prepay, redeem or purchase certain indebtedness, including the notes; | |
• | amend or otherwise alter the terms of our organizational documents and our indebtedness, including the notes; | |
• | sell assets; and | |
• | transact with affiliates. |
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Most of the covenants in the indenture will be suspended during any future period that we have an investment grade rating from both rating agencies, and during any such period you will not have the benefit of those covenants. |
Despite current anticipated indebtedness levels and restrictive covenants, we may incur additional indebtedness in the future. |
We may not be able to repurchase the notes upon a change of control. |
Federal and state fraudulent transfer laws permit a court to void or subordinate the notes and related guarantees, and if that occurs, you may not receive any payments on the notes. |
• | issued the notes or a guarantee with actual intent to hinder, delay or defraud present or future creditors; or |
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• | received less than reasonably equivalent value or fair consideration in return for issuing either the notes or a guarantee, and, one of the following is also true: |
• | either of the Issuers or any guarantor was insolvent, or rendered insolvent, by reason of the issuance of the notes and/or guarantees; | |
• | the issuance of the notes and/or the guarantees left either of the Issuers or any guarantor with an unreasonably small amount of capital to carry on the business; or | |
• | either of the Issuers or any guarantor intended to incur, or believed it would incur, debts that we or it would be unable to pay as they become due and matured. |
• | the sum of its debts was greater than the fair value of all its assets; | |
• | the present fair saleable value of its assets is less than the amount required to pay the probable liability on its existing debts and liabilities as they become due; or | |
• | it cannot pay its debts as they become due. |
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As of January 28, 2006 | ||||||
(In thousands) | ||||||
Cash and cash equivalents | $ | 401,593 | ||||
Short-term borrowings: | ||||||
Revolving loans(1) | — | |||||
Current installment on long-term debt | $ | 12,527 | ||||
Total short-term debt | 12,527 | |||||
Long-term borrowings: | ||||||
New credit facility | $ | — | ||||
Long-term debt | 21,675 | |||||
Notes offered hereby, at face | 950,000 | |||||
Total long-term debt | 971,675 | |||||
Total debt | 984,202 | |||||
Stockholders’ equity | 1,114,713 | |||||
Total capitalization | $ | 2,098,915 | ||||
(1) | Borrowings under the Senior Credit Facility are limited to the lesser of $400.0 million or the borrowing base. |
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GameStop | EB | ||||||||||||||||
January 28, | October 8, | Pro Forma | GameStop | ||||||||||||||
For the Fiscal Year Ended January 28, 2006 | 2006 | 2005(a) | Adjustments | Pro Forma | |||||||||||||
(In thousands, except per share data) | |||||||||||||||||
Sales | $ | 3,091,783 | $ | 1,302,107 | $ | — | $ | 4,393,890 | |||||||||
Cost of sales | 2,219,753 | 935,175 | — | 3,154,928 | |||||||||||||
Gross profit | 872,030 | 366,932 | — | 1,238,962 | |||||||||||||
Selling, general and administrative expenses | 599,343 | 331,424 | — | 930,767 | |||||||||||||
Depreciation and amortization | 66,355 | 30,573 | (2,640 | )(b) | 94,288 | ||||||||||||
Merger-related expenses | 13,600 | 2,900 | (16,500 | )(c) | — | ||||||||||||
Operating earnings | 192,732 | 2,035 | 19,140 | 213,907 | |||||||||||||
Interest expense (income), net | 25,292 | (1,927 | ) | 52,528 | (d) | 78,339 | |||||||||||
2,446 | (e) | ||||||||||||||||
Merger-related interest expense | 7,518 | — | (7,518 | )(c) | — | ||||||||||||
Earnings (loss) before income tax expense (benefit) | 159,922 | 3,962 | (28,316 | ) | 135,568 | ||||||||||||
Income tax expense (benefit) | 59,138 | 1,415 | (11,071 | )(f) | 49,482 | ||||||||||||
Net earnings (loss) | $ | 100,784 | $ | 2,547 | $ | (17,245 | ) | $ | 86,086 | ||||||||
Net earnings (loss) per Class A and Class B common share — basic | $ | 1.74 | (h) | $ | 0.10 | $ | (0.64 | ) | $ | 1.20 | (i) | ||||||
(25,065 | )(g) | ||||||||||||||||
Weighted average shares of common stock — basic | 57,920 | 25,065 | 14,005 | (g) | 71,925 | ||||||||||||
Net earnings (loss) per Class A and Class B common share — diluted | $ | 1.61 | (h) | $ | 0.10 | $ | (0.58 | ) | $ | 1.13 | (i) | ||||||
(25,396 | )(g) | ||||||||||||||||
Weighted average shares of common stock — diluted | 62,486 | 25,396 | 14,005 | (g) | 76,491 | ||||||||||||
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Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | ||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||
January 28, | January 29, | January 31, | February 1, | February 2, | ||||||||||||||||
2006(1) | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
In thousands, except per share data and statistical data | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Sales | $ | 3,091,783 | $ | 1,842,806 | $ | 1,578,838 | $ | 1,352,791 | $ | 1,121,138 | ||||||||||
Cost of sales | 2,219,753 | 1,333,506 | 1,145,893 | 1,012,145 | 855,386 | |||||||||||||||
Gross profit | 872,030 | 509,300 | 432,945 | 340,646 | 265,752 | |||||||||||||||
Selling, general and administrative expenses(2) | 599,343 | 373,364 | 299,193 | 230,461 | 200,698 | |||||||||||||||
Depreciation and amortization(2) | 66,355 | 36,789 | 29,368 | 23,114 | 19,842 | |||||||||||||||
Amortization of goodwill | — | — | — | — | 11,125 | |||||||||||||||
Merger-related expenses | 13,600 | — | — | — | — | |||||||||||||||
Operating earnings | 192,732 | 99,147 | 104,384 | 87,071 | 34,087 | |||||||||||||||
Interest expense (income), net | 25,292 | 236 | (804 | ) | (630 | ) | 19,452 | |||||||||||||
Merger-related interest expense | 7,518 | — | — | — | — | |||||||||||||||
Earnings before income taxes | 159,922 | 98,911 | 105,188 | 87,701 | 14,635 | |||||||||||||||
Income tax expense | 59,138 | 37,985 | 41,721 | 35,297 | 7,675 | |||||||||||||||
Net earnings | $ | 100,784 | $ | 60,926 | $ | 63,467 | $ | 52,404 | $ | 6,960 | ||||||||||
Net earnings per Class A and Class B common share — basic | $ | 1.74 | $ | 1.11 | $ | 1.13 | $ | 0.93 | $ | 0.19 | ||||||||||
Weighted average shares outstanding — basic | 57,920 | 54,662 | 56,330 | 56,289 | 36,009 | |||||||||||||||
Net earnings per Class A and Class B common share — diluted | $ | 1.61 | $ | 1.05 | $ | 1.06 | $ | 0.87 | $ | 0.18 | ||||||||||
Weighted average shares outstanding — diluted | 62,486 | 57,796 | 59,764 | 60,419 | 39,397 | |||||||||||||||
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Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | ||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||
January 28, | January 29, | January 31, | February 1, | February 2, | ||||||||||||||||
2006(1) | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
In thousands, except per share data and statistical data | ||||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||
Net earnings excluding the after-tax effect of goodwill amortization(3) | $ | 100,784 | $ | 60,926 | $ | 63,467 | $ | 52,404 | $ | 15,373 | ||||||||||
Net earnings per share excluding the after-tax effect of goodwill amortization — diluted(3) | $ | 1.61 | $ | 1.05 | $ | 1.06 | $ | 0.87 | $ | 0.39 | ||||||||||
Store Operating Data: | ||||||||||||||||||||
Stores open at the end of period | 4,490 | 1,826 | 1,514 | 1,231 | 1,038 | |||||||||||||||
Comparable store sales increase (decrease)(4) | (1.4 | )% | 1.7 | % | 0.8 | % | 11.4 | % | 32.0 | % | ||||||||||
Inventory turnover | 5.0 | 5.4 | 4.9 | 4.9 | 5.2 | |||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Working capital | $ | 233,591 | $ | 111,093 | $ | 188,378 | $ | 174,482 | $ | 31,107 | ||||||||||
Total assets(2) | 3,015,119 | 915,983 | 902,189 | 806,237 | 608,674 | |||||||||||||||
Total debt | 975,990 | 36,520 | — | — | 399,623 | |||||||||||||||
Total liabilities(2) | 1,900,406 | 372,972 | 308,156 | 257,562 | 612,659 | |||||||||||||||
Stockholders’ equity (deficit) | 1,114,713 | 543,011 | 594,033 | 548,675 | (3,985 | ) |
(1) | Includes the results of operations of EB from October 9, 2005, the day after completion of the mergers, through January 28, 2006. The addition of EB’s results affects the comparability of amounts from fiscal periods before fiscal 2005. |
(2) | In 2004, we revised our method of accounting for rent expense to conform to GAAP, as clarified by the Chief Accountant of the SEC in a February 2005 letter to the American Institute of Certified Public Accountants. A non-cash, after-tax adjustment of $3,312 was made in the fourth quarter of fiscal 2004 to correct the method of accounting for rent expense (and related deferred rent liability) to include the impact of escalating rents for periods in which we are reasonably assured of exercising lease options and to include any “rent holiday” period (a period during which the Company is not obligated to pay rent) the lease allows while the store is being constructed. We also corrected our calculation of depreciation expense for leasehold improvements for those leases which do not include an option period. The impact of these corrections on periods prior to fiscal 2004 was not material and the adjustment does not affect historical or future cash flows or the timing of payments under related leases. See Note 1 of “Notes to Consolidated Financial Statements” of the Company for additional information concerning lease accounting. |
(3) | Net earnings excluding the after-tax effect of goodwill amortization is presented here to provide additional information about our operations. These items should be considered in addition to, but not as a substitute for or superior to, operating earnings, net earnings, cash flow and other measures of financial performance prepared in accordance with GAAP. |
(4) | Stores are included in our comparable store sales base beginning in the 13th month of operation. |
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Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | ||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||
January 28, | January 29, | January 31, | February 1, | February 2, | ||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Earnings: | ||||||||||||||||||||
Earnings before income taxes | $ | 159,922 | $ | 98,911 | $ | 105,188 | $ | 87,701 | $ | 14,635 | ||||||||||
Fixed charges | 65,864 | 23,565 | 16,932 | 14,616 | 31,335 | |||||||||||||||
Adjusted earnings | $ | 225,786 | $ | 122,476 | $ | 122,120 | $ | 102,317 | $ | 45,970 | ||||||||||
Ratio of earnings to fixed charges | 3.4 | 5.2 | 7.2 | 7.0 | 1.5 | |||||||||||||||
Fixed charges: | ||||||||||||||||||||
Interest expense | $ | 30,111 | $ | 2,155 | $ | 663 | $ | 1,368 | $ | 19,575 | ||||||||||
Amortization of issue discount | 316 | — | — | — | — | |||||||||||||||
Interest portion of net rental expense(1) | 35,437 | 21,410 | 16,269 | 13,248 | 11,760 | |||||||||||||||
Total fixed charges | $ | 65,864 | $ | 23,565 | $ | 16,932 | $ | 14,616 | $ | 31,335 | ||||||||||
(1) | The interest portion of net rental expense is estimated to be equal to 28% of the minimum rental expense for the period. |
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Fiscal Year | Fiscal Year | Fiscal Year | ||||||||||
Ended | Ended | Ended | ||||||||||
January 28, | January 29, | January 31, | ||||||||||
2006 | 2005 | 2004 | ||||||||||
Statement of Operations Data: | ||||||||||||
Sales | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Cost of sales | 71.8 | 72.4 | 72.6 | |||||||||
Gross profit | 28.2 | 27.6 | 27.4 | |||||||||
Selling, general and administrative expenses | 19.4 | 20.2 | 19.0 | |||||||||
Depreciation and amortization | 2.2 | 2.0 | 1.8 | |||||||||
Merger-related expenses | 0.4 | — | — | |||||||||
Operating earnings | 6.2 | 5.4 | 6.6 | |||||||||
Interest expense (income), net | 0.8 | 0.0 | 0.0 | |||||||||
Merger-related interest expense | 0.2 | — | — | |||||||||
Earnings before income taxes | 5.2 | 5.4 | 6.6 | |||||||||
Income tax expense | 1.9 | 2.1 | 2.6 | |||||||||
Net earnings | 3.3 | % | 3.3 | % | 4.0 | % | ||||||
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Fiscal Year Ended | Fiscal Year Ended | Fiscal Year Ended | |||||||||||||||||||||||
January 28, 2006 | January 29, 2005 | January 31, 2004 | |||||||||||||||||||||||
Percent | Percent | Percent | |||||||||||||||||||||||
Sales | of Total | Sales | of Total | Sales | of Total | ||||||||||||||||||||
Sales: | |||||||||||||||||||||||||
New video game hardware | $ | 503.2 | 16.3 | % | $ | 209.2 | 11.4 | % | $ | 198.1 | 12.6 | % | |||||||||||||
New video game software | 1,244.9 | 40.3 | % | 776.7 | 42.1 | % | 647.9 | 41.0 | % | ||||||||||||||||
Used video game products | 808.0 | 26.1 | % | 511.8 | 27.8 | % | 403.3 | 25.5 | % | ||||||||||||||||
Other | 535.7 | 17.3 | % | 345.1 | 18.7 | % | 329.5 | 20.9 | % | ||||||||||||||||
Total | $ | 3,091.8 | 100.0 | % | $ | 1,842.8 | 100.0 | % | $ | 1,578.8 | 100.0 | % | |||||||||||||
Fiscal Year Ended | Fiscal Year Ended | Fiscal Year Ended | |||||||||||||||||||||||
January 28, 2006 | January 29, 2005 | January 31, 2004 | |||||||||||||||||||||||
Gross | Gross | Gross | |||||||||||||||||||||||
Gross | Profit | Gross | Profit | Gross | Profit | ||||||||||||||||||||
Profit | Percent | Profit | Percent | Profit | Percent | ||||||||||||||||||||
Gross Profit: | |||||||||||||||||||||||||
New video game hardware | $ | 30.9 | 6.1% | $ | 8.5 | 4.1% | $ | 10.6 | 5.3% | ||||||||||||||||
New video game software | 266.5 | 21.4% | 151.9 | 19.6% | 128.6 | 19.9% | |||||||||||||||||||
Used video game products | 383.0 | 47.4% | 231.6 | 45.3% | 179.3 | 44.5% | |||||||||||||||||||
Other | 191.6 | 35.8% | 117.3 | 34.0% | 114.4 | 34.7% | |||||||||||||||||||
Total | $ | 872.0 | 28.2% | $ | 509.3 | 27.6% | $ | 432.9 | 27.4% | ||||||||||||||||
Fiscal Year Ended | Fiscal Year Ended | Fiscal Year Ended | ||||||||||
January 28, 2006 | January 29, 2005 | January 31, 2004 | ||||||||||
United States | $ | 2,709.8 | $ | 1,818.2 | $ | 1,564.0 | ||||||
Canada | 111.4 | — | — | |||||||||
Australia | 94.4 | — | — | |||||||||
Europe | 176.2 | 24.6 | 14.8 | |||||||||
Total | $ | 3,091.8 | $ | 1,842.8 | $ | 1,578.8 | ||||||
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Fiscal Year Ended | Fiscal Year Ended | Fiscal Year Ended | ||||||||||
January 28, 2006 | January 29, 2005 | January 31, 2004 | ||||||||||
United States | $ | 173.7 | $ | 102.1 | $ | 104.8 | ||||||
Canada | 7.9 | — | — | |||||||||
Australia | 11.0 | — | — | |||||||||
Europe | 0.1 | (3.0 | ) | (0.4 | ) | |||||||
Total | $ | 192.7 | $ | 99.1 | $ | 104.4 | ||||||
January 28, 2006 | January 29, 2005 | |||||||
United States | $ | 2,347.1 | $ | 897.1 | ||||
Canada | 210.4 | — | ||||||
Australia | 214.7 | — | ||||||
Europe | 242.9 | 18.9 | ||||||
Total | $ | 3,015.1 | $ | 916.0 | ||||
Fiscal 2005 Compared to Fiscal 2004 |
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Fiscal 2004 Compared to Fiscal 2003 |
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Payments Due by Period | ||||||||||||||||||||
Less Than | More Than | |||||||||||||||||||
Contractual Obligations | Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | |||||||||||||||
In millions | ||||||||||||||||||||
Long-Term Debt(1) | $ | 1,479.4 | $ | 91.4 | $ | 168.8 | $ | 156.3 | $ | 1,062.9 | ||||||||||
Operating Leases | $ | 1,017.4 | $ | 197.1 | $ | 339.3 | $ | 206.5 | $ | 274.5 | ||||||||||
Purchase Obligations(2) | $ | 420.9 | $ | 420.9 | $ | — | $ | — | $ | — | ||||||||||
Involuntary Employment Termination Costs(3) | $ | 10.2 | $ | 10.2 | $ | — | $ | — | $ | — | ||||||||||
Total | $ | 2,927.9 | $ | 719.6 | $ | 508.1 | $ | 362.8 | $ | 1,337.4 | ||||||||||
(1) | The long-term debt consists of $650.0 million (principal value), which bears interest at 8.0%, $300.0 million of floating rate notes which currently bear interest at 8.865%, $24.3 million which bears interest at 5.5% and $9.3 million which bears interest at 5.4%. Amounts include contractual interest payments (using the interest rate as of January 28, 2006 for the floating rate notes). |
(2) | Purchase obligations represent outstanding purchase orders for merchandise from vendors. These purchase orders are generally cancelable until shipment of the products. |
(3) | Involuntary employment termination costs include known amounts committed to approximately 680 employees, primarily in general and administrative functions in EB’s Pennsylvania corporate office and distribution center and Nevada call center, which are expected to be closed in the first half of fiscal 2006. Termination of these employees began in October 2005 and is expected to be completed by July 2006. |
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• | Hardware Platform Technology Evolution. Video game hardware has evolved significantly from the early products launched in the 1980s. The processing speed of video game hardware has increased from 8-bit speeds in the 1980s to 128-bit speeds in next-generation systems such as Sony PlayStation 2, launched in 2000, and Nintendo GameCube and Microsoft Xbox, which both launched in November 2001. In addition, portable handheld video game devices have evolved from the 8-bit Nintendo Game Boy to the 128-bit Nintendo DS, which was introduced in November 2004, and the Sony PSP, which was introduced in March 2005. Microsoft released the Xbox 360 in November 2005 and Sony and Nintendo are each expected to release their respective new consoles in late 2006. Technological developments in both chip processing speed and data storage have provided significant improvements in advanced graphics and audio quality, which allow software developers to create more advanced games, encourage existing players to upgrade their hardware platforms and attract new video game players to purchase an initial system. As general computer technology advances, we expect video game technology to make similar advances. | |
• | Next-Generation Systems Provide Multiple Capabilities Beyond Gaming. Many next-generation hardware platforms, including Sony PlayStation 2 and Microsoft Xbox and Xbox 360, utilize a DVD software format and have the potential to serve as multi-purpose entertainment centers by doubling as a player for DVD movies and compact discs. In addition, Sony PlayStation 2, Nintendo DS and Microsoft Xbox and Xbox 360 manufacture accessories which provide internet connectivity. | |
• | Backward Compatibility. Sony PlayStation 2, Nintendo DS and, to some extent, Microsoft Xbox 360 are backward compatible, meaning that titles produced for the earlier version of the hardware platform may be used on the new hardware platform. We believe that backward compatibility may result in more stable industry growth because the decrease in consumer demand for products associated with existing hardware platforms that typically precedes the release of next-generation hardware platforms may be diminished. | |
• | Introduction of Next-Generation Hardware Platforms Drives Software Demand. Sales of video game software generally increase as next-generation platforms mature and gain wider acceptance. Historically, when a new platform is released, a limited number of compatible game titles are immediately available, but the selection grows rapidly as manufacturers and third-party publishers develop and release game titles for that new platform. For example, when the Sony PSP was released in March 2005, approximately 20 game titles were available for sale. Currently, there are over 200 titles for the Sony PSP platform available for sale. | |
• | Broadening Demographic Appeal. While the typical electronic game enthusiast is male between the ages of 14 and 35, the electronic game industry is broadening its appeal. More females are playing electronic video games, in part due to the development of video game products that appeal to them. According to ESA, approximately 43% of all electronic game players are female. More adults are also playing video games as a portion of the population that played video games in their childhood continues to play and advance to the next-generation video game products. In addition, the availability of used video game products for sale has enabled a lower-economic demographic, that may not have been able |
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to afford the considerably more expensive new video game products, to participate in the video game industry. |
• | Continuing the practices of Historical GameStop and EB of opening new strip center stores in our target markets and new mall stores in selected mall locations. | |
• | Increasing our comparable store sales and operating earnings by capitalizing on industry growth, increasing sales of used video game products and ourGame Informermagazine and increasing awareness of the GameStop brand. |
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• | Capitalize on Growth in Demand. Our sales of new video game software and used video game products grew by approximately 20% and 27%, respectively, in fiscal 2004 and, due primarily to the mergers, by an additional 60% and 58%, respectively, in fiscal 2005. In fiscal 2004, our comparable store sales increased 1.7%, driven in large measure by the success of Sony PlayStation 2, Microsoft Xbox, Nintendo GameCube and Nintendo DS, which was launched in November 2004. During fiscal 2004, we capitalized on the growth in demand for video game software and accessories that followed the increases in the installed hardware base of these four video game platforms. Comparable store sales on a pro forma basis for Historical GameStop and EB decreased 1.4% in fiscal 2005, due to soft demand leading up to the launch of the Microsoft Xbox 360 in November 2005. Despite limited supplies of the Microsoft Xbox 360, we capitalized on the demand for video game software and accessories that followed that launch and the launch in March 2005 of the Sony PSP. Over the next few years, we expect to continue to capitalize on the increasing installed base for these platforms and the expected release in late 2006 of the Sony PlayStation 3 and the Nintendo Revolution and the related growth in video game software and accessories sales. | |
• | Increase Sales of Used Video Game Products. We will continue to expand the selection and availability of used video game products in our U.S. and international stores. Our strategy consists of increasing consumer awareness of the benefits of trading in and buying used video game products at our stores through increased marketing activities. We expect the continued growth of new platform technology to drive trade-ins of previous generation products, as well as next generation platforms, thereby expanding the supply of used video game products. | |
• | Increase GameStop Brand Awareness. We intend to increase customer awareness of how the adoption of the best practices of Historical GameStop and EB will benefit our customers. In connection with our brand-building efforts, in each of the last three fiscal years, we increased the amount of media advertising in targeted markets. In fiscal 2006, we plan to continue to increase media advertising, to expand our GameStop loyalty card program, to aggressively promote trade-ins of used video game products in our stores and to leverage our web sites atwww.gamestop.com andwww.ebgames.com. |
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Site Selection and Locations |
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United States | Number of Stores | |||
Alabama | 58 | |||
Alaska | 3 | |||
Arizona | 71 | |||
Arkansas | 27 | |||
California | 388 | |||
Colorado | 52 | |||
Connecticut | 45 | |||
Delaware | 16 | |||
District of Columbia | 2 | |||
Florida | 230 | |||
Georgia | 104 | |||
Guam | 2 | |||
Hawaii | 15 | |||
Idaho | 8 | |||
Illinois | 163 | |||
Indiana | 69 | |||
Iowa | 29 | |||
Kansas | 31 | |||
Kentucky | 47 | |||
Louisiana | 56 | |||
Maine | 9 | |||
Maryland | 93 | |||
Massachusetts | 69 | |||
Michigan | 110 | |||
Minnesota | 49 | |||
Mississippi | 30 | |||
Missouri | 67 | |||
Montana | 7 | |||
Nebraska | 17 | |||
Nevada | 28 | |||
New Hampshire | 20 | |||
New Jersey | 142 | |||
New Mexico | 26 | |||
New York | 196 | |||
North Carolina | 105 | |||
North Dakota | 7 | |||
Ohio | 161 | |||
Oklahoma | 42 | |||
Oregon | 29 | |||
Pennsylvania | 191 | |||
Puerto Rico | 43 |
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United States (Cont’d) | Number of Stores | |||
Rhode Island | 12 | |||
South Carolina | 54 | |||
South Dakota | 3 | |||
Tennessee | 60 | |||
Texas | 337 | |||
Utah | 29 | |||
Vermont | 7 | |||
Virginia | 118 | |||
Washington | 72 | |||
West Virginia | 22 | |||
Wisconsin | 49 | |||
Wyoming | 4 | |||
Sub-total for United States | 3,624 |
International | Number of Stores | |||
Australia | 152 | |||
Austria | 2 | |||
Canada | 261 | |||
Denmark | 23 | |||
Finland | 1 | |||
Germany | 77 | |||
Ireland | 28 | |||
Italy | 102 | |||
New Zealand | 25 | |||
Norway | 10 | |||
Spain | 123 | |||
Sweden | 47 | |||
Switzerland | 9 | |||
United Kingdom | 6 | |||
Sub-total for International | 866 | |||
Total stores | 4,490 | |||
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Name | Age | Position with GameStop | Year Term Expires | |||||||
R. Richard Fontaine | 64 | Chairman of the Board, Chief Executive Officer and | 2007 | |||||||
Director | ||||||||||
Daniel A. DeMatteo | 58 | Vice Chairman, Chief Operating Officer and Director | 2006 | |||||||
Jerome L. Davis | 50 | Director | 2007 | |||||||
James J. Kim | 70 | Director | 2007 | |||||||
Leonard Riggio | 65 | Director | 2008 | |||||||
Michael N. Rosen | 65 | Secretary and Director | 2006 | |||||||
Stephanie M. Shern | 58 | Director | 2007 | |||||||
Stanley (Mickey) Steinberg | 73 | Director | 2008 | |||||||
Gerald R. Szczepanski | 57 | Director | 2008 | |||||||
Edward A. Volkwein | 64 | Director | 2006 | |||||||
Lawrence S. Zilavy | 55 | Director | 2008 |
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Nominating | ||||||||||||||||
and | ||||||||||||||||
Corporate | ||||||||||||||||
Name | Audit | Compensation | Governance | Executive | ||||||||||||
R. Richard Fontaine | X | |||||||||||||||
Jerome L. Davis | X | |||||||||||||||
Leonard Riggio | X | |||||||||||||||
Michael N. Rosen | X | |||||||||||||||
Stephanie Shern | X | |||||||||||||||
Gerald R. Szczepanski | X | X | X | |||||||||||||
Edward A. Volkwein | X | X | X |
Name | Age | Title | ||||
R. Richard Fontaine | 64 | Chairman of the Board and Chief Executive Officer | ||||
Daniel A. DeMatteo | 58 | Vice Chairman and Chief Operating Officer | ||||
Steven R. Morgan | 54 | President | ||||
David W. Carlson | 43 | Executive Vice President and Chief Financial Officer | ||||
Ronald Freeman | 58 | Executive Vice President of Distribution | ||||
Robert A. Lloyd | 44 | Senior Vice President and Chief Accounting Officer |
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• | until two years after the spin-off, entering into or permitting any transaction or series of transactions which would result in a person or persons acquiring or having the right to acquire shares of Historical GameStop’s capital stock that would comprise 50% or more of either the value of all outstanding shares of the capital stock or the total combined voting power of the outstanding voting stock; and | |
• | until two years after the spin-off, liquidating, disposing of, or otherwise discontinuing the conduct of any portion of Historical GameStop’s active trade or business. |
• | by mutual agreement of us and Barnes & Noble; | |
• | automatically, in the event that we no longer operate any department within Barnes & Noble’s stores; | |
• | by us or Barnes & Noble, with respect to any department, upon not less than 30 days prior notice; | |
• | by Barnes & Noble because of an uncured default by us; | |
• | automatically, with respect to any department, if the applicable store lease in which we operate that department expires or is terminated prior to its expiration date; or |
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• | automatically, in the event of the bankruptcy or a change in control of either us or Barnes & Noble. |
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General |
Interest Rate and Fees |
Prepayments |
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Collateral and Guarantees |
Restrictive Covenants and Other Matters |
• | incur, assume or permit to exist additional indebtedness or guaranty obligations; | |
• | incur liens or agree to negative pledges in other agreements; | |
• | make loans and investments; | |
• | declare dividends, make payments or redeem or repurchase capital stock; | |
• | engage in mergers, acquisitions and other business combinations; | |
• | prepay, redeem or purchase certain indebtedness; | |
• | amend or otherwise alter the terms of our organizational documents or other specified agreements to the extent any such amendment or alteration is adverse to the lenders under the Senior Credit Facility; | |
• | sell assets; | |
• | transact with affiliates; and | |
• | alter the business we conduct. |
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• | due to any change in law or applicable interpretation thereof by the SEC’s staff, we determine upon advice of outside counsel that we are not permitted to effect the exchange offer contemplated by this prospectus; | |
• | for any other reason the exchange offer is not consummated within 270 days of the date the old notes were issued; | |
• | any initial purchaser of the old notes so requests with respect to old notes that are not eligible to be exchanged for exchange notes in the exchange offer and that are held by such initial purchaser following consummation of the exchange offer; | |
• | any holder of old notes (other than an initial purchaser) is not eligible to participate in the exchange offer; or | |
• | any initial purchaser does not receive freely tradable exchange notes in exchange for old notes constituting any portion of an unsold allotment. |
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• | neither the exchange offer is completed within 270 days of the date the old notes were issued nor, if required, the shelf registration statement is declared effective within 120 days after the obligation arises to file such shelf registration statement; or | |
• | notwithstanding that we have consummated or will consummate the exchange offer, if we are required to file a shelf registration statement and such shelf registration statement is not declared effective on or prior to the 120th day following the date the obligation arises to file such shelf registration statement. |
• | the exchange notes you acquire pursuant to the exchange offer are being acquired in the ordinary course of your business; | |
• | you are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate, in the distribution of the exchange notes issued to you in the exchange offer; and | |
• | you are not an “affiliate” of either Issuer. |
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• | to delay accepting any old notes, to extend the exchange offer or to terminate the exchange offer and not permit acceptance of old notes not previously accepted, if any of the conditions set forth below |
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under “— Conditions” have not been satisfied, by giving oral or written notice of the delay, extension or termination to the exchange agent; or | ||
• | to amend the terms of the exchange offer in any manner which, in our good faith judgment, is advantageous to the holders of the old notes, whether before or after any tender of the exchange notes. |
• | any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer which, in our sole judgment, might materially impair our ability to proceed with the exchange offer; | |
• | any law, statute, rule or regulation is proposed, adopted or enacted, or any existing law, statute, rule or regulation is interpreted by the staff of the SEC, which, in our sole judgment, might materially impair our ability to proceed with the exchange offer; or | |
• | any governmental approval has not been obtained, which approval we shall, in our sole discretion, deem necessary for the consummation of the exchange offer as contemplated hereby. |
• | refuse to accept any old notes and return all tendered old notes to the tendering holders; | |
• | extend the exchange offer and retain all old notes tendered prior to the expiration of the exchange offer, subject, however, to the rights of holders who tendered such old notes to withdraw their tendered old notes; or | |
• | waive such unsatisfied conditions with respect to the exchange offer and accept all properly tendered old notes which have not been withdrawn. |
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• | old notes must be received by the exchange agent along with the letter of transmittal; | |
• | a timely confirmation of book-entry transfer of such old notes, if such procedure is available, into the exchange agent’s account at DTC pursuant to the procedure for book-entry transfer described below must be received by the exchange agent prior to the expiration date; or | |
• | you must comply with the guaranteed delivery procedures described below. |
• | by a holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal; or | |
• | for the account of an eligible institution. |
• | a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc.; | |
• | a commercial bank or trust company having an office or correspondent in the United States; or |
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• | an “eligible guarantor institution” within the meaning of Rule 17Ad-15 under the Exchange Act which is a member of one of the recognized signature guarantee programs identified in the letter of transmittal. |
• | purchase or make offers for any old notes that remain outstanding subsequent to the expiration date; | |
• | as set forth above under “— Conditions,” to terminate the exchange offer; | |
• | redeem the old notes as a whole or in part at any time and from time to time, as set forth under “Description of the Exchange Notes — Optional Redemption;” or | |
• | to the extent permitted by applicable law, purchase old notes in the open market, in privately negotiated transactions or otherwise. |
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• | the tender is made through an eligible institution; | |
• | prior to the expiration date, the exchange agent receives from an eligible institution a properly completed and duly signed letter of transmittal and notice of guaranteed delivery, substantially in the form provided by us (by facsimile transmission, mail or hand delivery) setting forth your name and address, the registered number(s) of the old notes and the principal amount of old notes tendered, stating that the tender is being made by guaranteed delivery and guaranteeing that, within three New York Stock Exchange trading days after the expiration date, the letter of transmittal together with the old notes or a book-entry confirmation, as the case may be, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and | |
• | a properly completed and signed letter of transmittal, as well as all tendered old notes in proper form for transfer or a book-entry confirmation, and all other documents required by the letter of transmittal, are received by the exchange agent within five New York Stock Exchange trading days after the expiration date. Upon request of the exchange agent, a notice of guaranteed delivery will be sent to holders who wish to tender their old notes according to the guaranteed delivery procedures set forth above. |
• | specify the name of the person having deposited the old notes to be withdrawn, which we refer to herein as the “depositor;” | |
• | identify the old notes to be withdrawn (including the principal amount of the old notes and, in the case certificates representing the old notes have been tendered, registered number or numbers and or, in the case of old notes transferred by book-entry transfer, the name and number of the account at DTC to be credited); |
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• | be signed by the holder in the same manner as the original signature on the letter of transmittal by which the old notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have Citibank, N.A., the trustee with respect to the old notes, register the transfer of such old notes into the name of the person withdrawing the tender; and | |
• | specify the name in which any such old notes are to be registered, if different from that of the depositor. |
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• | to us (upon redemption thereof or otherwise), | |
• | pursuant to an effective registration statement under the Securities Act, | |
• | so long as the old notes are eligible for resale pursuant to Rule 144A, to a qualified institutional buyer within the meaning of Rule 144A under the Securities Act in a transaction meeting the requirements of Rule 144A, or | |
• | pursuant to another available exemption from the registration requirements of the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. |
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• | upon the sale or other disposition of all the assets or Capital Stock of the Subsidiary Guarantor, in each case in a transaction in compliance with the covenant described under “— Certain Covenants — Limitation on Asset Sales”; | |
• | upon the sale or other disposition (including by way or consolidation or merger) of the Subsidiary Guarantor in compliance with the covenant described under “— Merger, Consolidation and Sale of Property”; and | |
• | upon the designation of the Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the covenant described under “— Certain Covenants — Designation of Restricted and Unrestricted Subsidiaries.” |
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Year | Percentage | |||
2007 | 102.000 | % | ||
2008 | 101.000 | % | ||
2009 and thereafter | 100.000 | % |
(1) at least 65% of the aggregate principal amount of Senior Notes originally issued under the Indenture (excluding Senior Notes held by the Issuers and their Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and | |
(2) the redemption occurs within 120 days of the date of the closing of such Equity Offering. |
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Year | Percentage | |||
2009 | 104.000 | % | ||
2010 | 102.000 | % | ||
2011 and thereafter | 100.000 | % |
(1) 1.00% of the principal amount of such Senior Floating Rate Notes; and | |
(2) the excess of |
(A) the present value at such time of (i) the redemption price of such Senior Floating Rate Notes at October 1, 2007 set forth above plus (ii) all accrued and unpaid interest required to be paid on such Senior Floating Rate Notes from the date of redemption through October 1, 2007, assuming that LIBOR (as determined in accordance with the definition of Applicable Rate) in effect on the date of the redemption notice would be LIBOR in effect through October 1, 2007 computed using a discount rate equal to LIBOR as of such redemption date plus 0.75% per annum, over | |
(B) the principal amount of such Senior Floating Rate Notes. |
(1) 1.00% of the principal amount of such Senior Notes; and | |
(2) the excess of |
(A) the present value at such time of (i) the redemption price of such Senior Notes at October 1, 2009 set forth above plus (ii) all accrued and unpaid interest required to be paid on such Senior Notes from the date of redemption through October 1, 2009 computed using a discount rate equal to the Treasury Rate plus 0.75% per annum, over | |
(B) the principal amount of such Senior Notes. |
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• | accept for payment all Notes or portions thereof validly tendered and not withdrawn pursuant to the Change of Control Offer, | |
• | deposit with the applicable paying agent (or, if an Issuer or any of the Restricted Subsidiaries is acting as the paying agent, segregate and hold in trust) an amount equal to the aggregate Change of Control Payments in respect of all Notes or portions thereof so tendered, and | |
• | deliver or cause to be delivered to the Trustee the Notes so accepted with an Officer’s Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Issuers. |
Suspension of Applicability of Certain Covenants in Certain Circumstances |
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(1) “Limitation on Debt;” | |
(2) “Limitation on Restricted Payments;” | |
(3) “Limitation on Asset Sales;” | |
(4) “Limitation on Payment Restrictions Affecting Restricted Subsidiaries;” | |
(5) “Limitation on Transactions with Affiliates;” | |
(6) “Designation of Restricted and Unrestricted Subsidiaries;” | |
(7) clause (d) of the first paragraph of “Merger, Consolidation and Sale of Property;” and | |
(8) clauses (1) and (4) of “Limitation on Sale and Leaseback Transactions” |
(a) (i) Debt of the Company or the Co-Issuer evidenced by the Notes and (ii) Debt of the Subsidiary Guarantors evidenced by the Subsidiary Guarantees relating to the Notes; | |
(b) Debt of the Company, the Co-Issuer or a Subsidiary Guarantor under Credit Facilities (including the Senior Credit Facility), provided that, after giving effect to any such Incurrence, the aggregate principal amount of all Debt Incurred pursuant to this clause (b) and then outstanding shall not exceed the greater of (i) $400 million, which amount shall be permanently reduced by the amount of Net Available Cash used to Repay Debt under any such Credit Facilities, pursuant to the covenant described under “— Limitation on Asset Sales,” and (ii) the Borrowing Base; | |
(c) Debt of the Company or a Restricted Subsidiary in respect of Capital Lease Obligations and Purchase Money Debt, provided that: |
(i) the aggregate principal amount of such Debt does not exceed the Fair Market Value (on the date of the Incurrence thereof) of the Property acquired, constructed or leased, and |
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(ii) the aggregate principal amount of all Debt Incurred and then outstanding pursuant to this clause (c) (together with all Permitted Refinancing Debt Incurred and then outstanding in respect of Debt previously Incurred pursuant to this clause (c)) does not exceed $50 million; |
(d) Debt of the Company owing to and held by any Wholly Owned Restricted Subsidiary and Debt of a Restricted Subsidiary owing to and held by the Company or any Wholly Owned Restricted Subsidiary; provided, however, that any subsequent issue or transfer of Capital Stock or other event that results in any such Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted Subsidiary or any subsequent transfer of any such Debt (except to the Company or a Wholly Owned Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Debt by the issuer thereof; provided, further, however, that if the Company, the Co-Issuer or any Subsidiary Guarantor is the obligor on such Debt and the payee is not the Company, the Co-Issuer or a Subsidiary Guarantor, such Debt must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company or the Co-Issuer, or the Subsidiary Guarantee, in the case of a Subsidiary Guarantor; | |
(e) Debt under Interest Rate Agreements entered into by the Company or a Restricted Subsidiary for the purpose of limiting interest rate risk in the ordinary course of the financial management of the Company or such Restricted Subsidiary and not for speculative purposes; provided that the obligations under such agreements are directly related to payment obligations on Debt otherwise permitted by the terms of this covenant; | |
(f) Debt under Currency Exchange Protection Agreements entered into by the Company or a Restricted Subsidiary for the purpose of limiting currency exchange rate risks directly related to transactions entered into by the Company or such Restricted Subsidiary in the ordinary course of business and not for speculative purposes; | |
(g) Debt of a Restricted Subsidiary outstanding on the date on which such Restricted Subsidiary was acquired by the Company or otherwise became a Restricted Subsidiary (other than Debt Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Subsidiary of the Company or was otherwise acquired by the Company); provided that at the time such Restricted Subsidiary was acquired by the Company or otherwise became a Restricted Subsidiary and after giving effect to the Incurrence of such Debt, the Company would have been able to Incur $1.00 of additional Debt pursuant to the first paragraph of this covenant; | |
(h) Debt of the Company or a Restricted Subsidiary outstanding on the Issue Date; | |
(i) Debt arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the disposition of any business, assets or Capital Stock of the Company or any Restricted Subsidiary; provided, that (A) the maximum aggregate liability in respect of all such Debt shall at no time exceed the gross proceeds including non-cash proceeds (the Fair Market Value of such non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and its Subsidiaries in connection with such disposition and (B) such Debt is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (i)); | |
(j) the Incurrence by the Company or any of its Restricted Subsidiaries of Debt in respect of workers’ compensation claims, payment obligations in connection with health or other types of social security benefits, unemployment or other insurance or self-insurance obligations, reclamation, statutory obligations, bankers’ acceptances, performance, surety or similar bonds and letters of credit or completion or performance guarantees, or other similar obligations in the ordinary course of business or consistent with past practice; |
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(k) the Incurrence by the Company or any of its Restricted Subsidiaries of Debt arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds; | |
(l) Debt of the Company or any Subsidiary Guarantor (not including Debt under clause (h) above) in an aggregate principal amount outstanding at any one time not to exceed $100 million; | |
(m) the Guarantee by the Company, the Co-Issuer or any Subsidiary Guarantor of Debt of the Company or any Restricted Subsidiary, so long as in each case such Debt was Incurred pursuant to another provision of this covenant and is otherwise permitted under the Indenture; | |
(n) the Incurrence of Debt by Foreign Restricted Subsidiaries in an aggregate principal amount outstanding at any one time not to exceed $50.0 million; | |
(o) the Guarantee by any Restricted Subsidiary that is not the Co-Issuer or a Subsidiary Guarantor of Debt of the Company or any Restricted Subsidiary, so long as in each case such Debt was Incurred pursuant to another provision of this covenant and the requirements of the covenant described under “— Guarantees by Restricted Subsidiaries” are met; and | |
(p) Permitted Refinancing Debt Incurred in respect of Debt Incurred pursuant to the first paragraph of this covenant and clauses (a), (g) and (h) above. | |
Notwithstanding anything to the contrary contained in this covenant, | |
(a) the Company shall not, and shall not permit any Restricted Subsidiary to, Incur any Debt that is subordinated by its terms to any other Debt of the Company or any Restricted Subsidiary unless such Debt is subordinated by its terms to the Notes to at least the same extent and for so long as it is subordinated to such other Debt; | |
(b) the Company or the Co-Issuer shall not, and shall not permit any Subsidiary Guarantor of the Notes to, Incur any Debt pursuant to this covenant if the proceeds thereof are used, directly or indirectly, to Refinance any Subordinated Obligations unless such Debt shall be subordinated to the Notes or any Subsidiary Guarantee of the Notes by such Subsidiary Guarantor to at least the same extent as such Subordinated Obligations; | |
(c) the Company shall not permit any Restricted Subsidiary that is not the Co-Issuer or a Subsidiary Guarantor to Incur any Debt pursuant to this covenant if the proceeds thereof are used, directly or indirectly, to Refinance any Debt of the Company, the Co-Issuer or any Subsidiary Guarantor; and | |
(d) accrual of interest, fees, expenses, charges, premiums and additional or contingent interest on Permitted Debt, accretion or amortization of original issue discount and the payment of interest or dividends in the form of additional Debt will not be deemed to be an Incurrence of Debt for purposes of this covenant. |
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(a) a Default or Event of Default shall have occurred and be continuing, | |
(b) the Company could not Incur at least $1.00 of additional Debt pursuant to the first paragraph of the covenant described under “— Limitation on Debt,” or | |
(c) the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made since the Issue Date (the amount of any Restricted Payment, if made other than in cash, to be based upon Fair Market Value at the time of such Restricted Payment) would exceed an amount equal to the sum (without duplication) of: |
(i) 50% of the aggregate amount of Consolidated Net Income accrued during the period (treated as one accounting period) from the Issue Date to the end of the most recent fiscal quarter for which financial statements are available (or if the aggregate amount of Consolidated Net Income for such period shall be a deficit, minus 100% of such deficit), plus | |
(ii) 100% of Capital Stock Sale Proceeds, plus | |
(iii) the sum of: |
(A) the aggregate net cash proceeds received by the Company or any Restricted Subsidiary from the issuance or sale after the Issue Date of convertible or exchangeable Debt or Disqualified Stock that has been converted into or exchanged for Capital Stock (other than Disqualified Stock) of the Company, and | |
(B) the aggregate amount by which Debt (other than Subordinated Obligations) of the Company or any Restricted Subsidiary is reduced on the Company’s consolidated balance sheet on or after the Issue Date upon the conversion or exchange of any Debt issued or sold on or prior to the Issue Date that is convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company, |
excluding, in the case of clause (A) or (B): |
plus |
(iv) an amount equal to the sum of: |
(A) the net reduction in Investments in any Person other than the Company or a Restricted Subsidiary resulting from dividends, repayments of loans or advances or other |
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transfers of Property, in each case to the Company or any Restricted Subsidiary from such Person, and | |
(B) the portion (proportionate to the Company’s equity interest in such Unrestricted Subsidiary) of the Fair Market Value of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; |
(a) so long as no Default or Event of Default shall have occurred and be continuing (or result therefrom), pay dividends or distributions on its Capital Stock within 60 days of the declaration thereof if, on the declaration date, such dividends or distributions could have been paid in compliance with the Indenture; provided, however, that such dividends or distributions shall be included in the calculation of the amount of Restricted Payments made by the Company or any Restricted Subsidiary; | |
(b) purchase, repurchase, redeem, legally defease, acquire or retire for value any (i) Capital Stock of the Company, any Restricted Subsidiary or any joint venture, or (ii) Subordinated Obligations, in exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such Subsidiary for the benefit of their employees); provided, however, that |
(1) such purchase, repurchase, redemption, legal defeasance, acquisition or retirement shall be excluded from the calculation of the amount of Restricted Payments made by the Company or any Restricted Subsidiary, and | |
(2) the Capital Stock Sale Proceeds from such exchange or sale shall be excluded from (and shall not have been included in) the calculation of the amount of Capital Stock Sale Proceeds for the purposes of clause (c)(ii) of the first paragraph of this covenant; |
(c) purchase, repurchase, redeem, legally defease, acquire or retire for value any Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Permitted Refinancing Debt; provided, however, that such purchase, repurchase, redemption, legal defeasance, acquisition or retirement shall be excluded from the calculation of the amount of Restricted Payments made by the Company or any Restricted Subsidiary; | |
(d) purchase, repurchase, redeem, legally defease, acquire or retire for value any Subordinated Obligations from Net Available Cash to the extent permitted by the covenant described under “— Limitation on Asset Sales”; provided, however, that such purchase, repurchase, redemption, legal defeasance, acquisition or retirement for value shall be excluded from the calculation of the amount of Restricted Payments made by the Company or any Restricted Subsidiary; | |
(e) purchase or redeem any Subordinated Obligations or Disqualified Stock, to the extent required by the terms of such Debt or such Disqualified Stock, as applicable, following a Change of Control; provided, however, that the Company has made a Change of Control Offer and has purchased all Notes tendered in connection with that Change of Control Offer; provided further, however, that such purchase or redemption shall be included in the calculation of the amount of Restricted Payments made by the Company or any Restricted Subsidiary; | |
(f) make Restricted Payments in an amount not to exceed $50 million in the aggregate; provided, however, that such Restricted Payments shall be excluded from the calculation of the amount of Restricted Payments pursuant to clause (c) of the first paragraph of this covenant; | |
(g) repurchase, redeem, acquire or retire for value any Disqualified Stock of the Company or any Restricted Subsidiary made by exchange for, or out of the proceeds of the substantially concurrent sale of, |
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Disqualified Stock of the Company or any Restricted Subsidiary that is permitted to be Incurred pursuant to the covenant described under “— Limitation on Debt”; provided, however, that such repurchase, redemption or other acquisition or retirement for value will be excluded from the calculation of the amount of Restricted Payments made by the Company or any Restricted Subsidiary; | |
(h) purchase, repurchase, redeem, acquire or retire for value any Capital Stock of the Company upon the exercise of warrants, options or similar rights if such Capital Stock constitutes all or a portion of the exercise price or are surrendered in connection with satisfying any federal or state income tax obligation, including, without limitation, upon a cashless exercise of such warrants, options or other rights; provided, however, that such purchase, repurchase, redemption, acquisition or retirement shall be included in the calculation of the amount of Restricted Payments made by the Company or any Restricted Subsidiary; and | |
(i) make cash payments in lieu of the issuance of fractional shares in connection with stock splits, reverse-stock splits or the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of the Company; provided, however, that such payments shall be included in the calculation of the amount of Restricted Payments made by the Company or any Restricted Subsidiary. |
(a) Liens in respect of Debt existing at the Issue Date (other than Liens securing the Senior Credit Facility); | |
(b) Liens on Property existing at the time of acquisition thereof; | |
(c) Liens to secure Debt permitted to be Incurred under clause (c) of the second paragraph of the covenant described under “— Certain Covenants — Limitation on Debt”; provided that any such Lien may not extend to any Property of the Company or any Restricted Subsidiary, other than the Property acquired, constructed or leased with the proceeds of such Debt and any improvements or accessions to such Property; | |
(d) Liens on Property of a Person existing at the time (i) such Person is merged into or consolidated with the Company or any Restricted Subsidiary or (ii) such Person becomes a Restricted Subsidiary; | |
(e) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of setoff or similar rights; | |
(f) Liens for taxes or assessments or other governmental charges or levies (including, without limitation, Liens in favor of customs and revenue authorities to secure payment of customs duties in connection with the importation of goods in the ordinary course of business), Liens imposed by law, such as mechanics’ and material men’s Liens, for sums not due or sums being contested in good faith and with respect to which adequate reserves are being maintained, to the extent required by GAAP, and Liens securing reimbursement obligations with respect to trade letters of credit, bankers’ acceptances and sight drafts Incurred in the ordinary course of business which encumber documents and other Property relating to such trade letters of credit, bankers’ acceptances and sight drafts; | |
(g) Liens to secure obligations under workers’ compensation laws or similar legislation, including Liens with respect to judgments which are not currently dischargeable; | |
(h) Liens created by or resulting from any litigation or other proceeding being contested by the Company or a Restricted Subsidiary, including Liens arising out of judgment or awards against the |
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Company or any Restricted Subsidiary with respect to which the Company or such Restricted Subsidiary is prosecuting an appeal or proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment Liens which are satisfied within 15 days of the date of judgment; or Liens Incurred by the Company or any Restricted Subsidiary for the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which the Company or such Restricted Subsidiary is a party; | |
(i) Liens to secure obligations under the Senior Credit Facility in an amount not to exceed the amount of obligations permitted to be Incurred pursuant to clause (b) of the second paragraph of “— Limitation on Debt” and for purposes of this clause (i) deeming all of the Debt at any time outstanding under the Senior Credit Facility or any other Credit Facility to have been Incurred under such clause (b); | |
(j) Liens or deposits to secure the performance of statutory or regulatory obligations, or surety, appeal, indemnity or performance bonds, warranty and contractual requirements or other obligations of a like nature incurred in the ordinary course of business; | |
(k) easements, rights of way, zoning and similar restrictions, reservations, restrictions or encumbrances in respect of real property (or leases or subleases of real property) or title defects that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties (as such properties are used by the Company or its Subsidiaries) or materially impair their use in the operation of the business of the Company and its Subsidiaries; | |
(l) licenses of patents, trademarks and other intellectual property rights granted in the ordinary course of business; | |
(m) Liens arising out of conditional sale, retention, consignment or similar arrangements, Incurred in the ordinary course of business, for the sale of goods; | |
(n) Liens on Property of any Foreign Restricted Subsidiary; | |
(o) Liens existing on the Issue Date not otherwise described in clauses (a) through (n) above; | |
(p) Liens not otherwise described in clauses (a) through (o) above on the Property of any Restricted Subsidiary that is not the Co-Issuer or a Subsidiary Guarantor to secure any Debt permitted to be Incurred by such Restricted Subsidiary pursuant to the covenant described under “— Limitation on Debt;” | |
(q) so long as the Company is subject to all of the Specified Covenants, Liens not otherwise permitted by clauses (a) through (p) securing Debt or other obligations permitted under the Indenture at any time outstanding not to exceed 5% of the Consolidated Net Tangible Assets of the Company, determined based on the consolidated balance sheet of the Company as of the end of the most recent fiscal quarter for which financial statements have been filed or furnished; and | |
(r) Liens to secure any extension, renewal or refinancing (or successive extensions, renewals or refinancings), in whole or in part, of any Debt secured by Liens referred to in the foregoing clauses (a) to (k) so long as such Liens do not extend to any other Property and the Debt so secured is not increased. |
(1) the Company or such Restricted Subsidiary would be entitled to Incur Debt in an amount equal to the Attributable Value relating to such Sale and Leaseback Transaction in accordance with the “— Limitation on Debt” covenant above; | |
(2) the Company or such Restricted Subsidiary would be entitled to Incur a Lien to secure Debt in an amount equal to the Attributable Value of the Sale and Leaseback Transaction in accordance with the |
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“— Limitation on Liens” covenant above, without equally and ratably securing the Notes or the applicable Subsidiary Guarantee; and | |
(3) the transfer of assets in such Sale and Leaseback Transaction is permitted by, and the Company applies the proceeds of such transaction in accordance with, the “— Limitation on Assets Sales” covenant below. |
(a) the Company or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the Property subject to such Asset Sale; | |
(b) at least 75% of the consideration paid to the Company or such Restricted Subsidiary in connection with such Asset Sale is in the form of (i) cash or cash equivalents, (ii) notes or obligations that are converted into cash (to the extent of the cash received) or equity securities listed on a national securities exchange (as such term is defined in the Exchange Act) or quoted on the Nasdaq National Market and converted into cash (to the extent of cash received), in each case within 90 days of such Asset Sale, (iii) the assumption by the purchaser of liabilities of the Company or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes or the applicable Subsidiary Guarantee) as a result of which the Company and the Restricted Subsidiaries are no longer obligated with respect to such liabilities or (iv) Additional Assets; and | |
(c) the Company delivers an Officer’s Certificate to the Trustee certifying that such Asset Sale complies with the foregoing clauses (a) and (b). |
(a) to permanently Repay (and to correspondingly reduce commitments with respect thereto in the case of revolving borrowings) (i) Bank Obligations, or (ii) Debt of any Restricted Subsidiary that is not the Co-Issuer or a Subsidiary Guarantor; | |
(b) to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary); | |
(c) to the extent the Net Available Cash is from Asset Sales of Property of a Foreign Restricted Subsidiary, to Repay Debt of any Foreign Restricted Subsidiary; or | |
(d) a combination of the repayments and reinvestments permitted by the foregoing clauses (a), (b) and (c). |
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(a) the Excess Proceeds and | |
(b) a fraction, |
(1) the numerator of which is the aggregate principal amount of the Notes outstanding on the date of the Asset Sale Offer, and | |
(2) the denominator of which is the sum of the aggregate principal amount of the Notes outstanding on the date of the Asset Sale Offer and the aggregate principal amount of other Debt of the Company outstanding on the date of the Asset Sale Offer that ispari passu in right of payment with the Notes and subject to terms and conditions in respect of Asset Sales similar in all material respects to this covenant and requiring the Company to make an offer to purchase such Debt at substantially the same time as the Asset Sale Offer. |
(a) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock, or pay any Debt or other obligation owed, to the Company or any other Restricted Subsidiary; | |
(b) make any loans or advances to the Company or any other Restricted Subsidiary; or | |
(c) transfer any of its Property to the Company or any other Restricted Subsidiary. |
(1) with respect to clauses (a), (b) and (c), to: |
(A) restrictions in effect on the Issue Date, including, without limitation, restrictions pursuant to the old notes and the Indenture (including any exchange notes and Subsidiary Guarantees of the Notes) and restrictions pursuant to Credit Facilities (including, for such purposes, restrictions in effect under the Senior Credit Facility); | |
(B) restrictions relating to Debt or Capital Stock of a Restricted Subsidiary and existing at the time it became a Restricted Subsidiary if such restriction was not created in connection with or in anticipation of the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company, and any amendments, restatements, renewals or other modifications of these instruments, provided that the encumbrances or restrictions contained in any such amendments, restatements, renewals or other modifications, taken |
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as a whole, are not materially more restrictive than the encumbrances or restrictions contained in documents in effect on the date of acquisition; | |
(C) restrictions existing under or by reason of applicable law, rule, regulation or order; | |
(D) restrictions that result from the Refinancing of Debt Incurred pursuant to clause (A) or (B) above;providedsuch restrictions are no less favorable to the holders of the Notes than those under the agreement evidencing the Debt so Refinanced; | |
(E) any other agreement governing Debt entered into after the Issue Date that contains encumbrances and restrictions that are not materially more restrictive with respect to any Restricted Subsidiary than those in effect on the Issue Date with respect to that Restricted Subsidiary pursuant to agreements in effect on the Issue Date; | |
(F) any restrictions applicable only to Foreign Restricted Subsidiaries; or | |
(G) Liens securing obligations otherwise permitted to be Incurred under the provisions of the covenants described under “— Limitation on Liens” or “— Limitation on Sale and Leaseback Transactions” that limit the right of the debtor to dispose of the assets subject to such Liens; and |
(2) with respect to clause (c) only, to restrictions: |
(A) relating to Debt that is permitted to be Incurred and secured without also securing the Notes or any Subsidiary Guarantee pursuant to the covenants described under “— Limitation on Debt” and “— Limitation on Liens” only to the extent that such restrictions limit the right of the debtor to dispose of the Property securing such Debt; | |
(B) encumbering Property at the time such Property was acquired by the Company or any Restricted Subsidiary, so long as such restriction relates solely to the Property so acquired and was not created in connection with or in anticipation of such acquisition; | |
(C) resulting from customary restrictions contained in asset sale, stock purchase, merger or other similar agreements limiting the transfer of such Property pending the closing of such sale; | |
(D) resulting from restrictions relating to the common stock of Unrestricted Subsidiaries; | |
(E) resulting from encumbrances or restrictions existing under or by reason of provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business; | |
(F) resulting from encumbrances or restrictions existing under or by reason of restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; | |
(G) resulting from restrictions on cash, Temporary Cash Investments or other deposits or net worth imposed by customers or lessors under contracts or leases entered into in the ordinary course of business; | |
(H) resulting from customary provisions restricting subletting or assignment of leases or customary provisions in other agreements that restrict assignment of such agreements or rights thereunder; or | |
(I) imposed under any Purchase Money Debt or Capital Lease Obligation in the ordinary course of business with respect only to the Property the subject thereof. |
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(a) the terms of such Affiliate Transaction are not less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of the Company; | |
(b) if such Affiliate Transaction involves aggregate payments or value in excess of $10 million, the Board of Directors (including at least a majority of the disinterested members of the Board of Directors) approves such Affiliate Transaction and, in its good faith judgment, believes that such Affiliate Transaction complies with clause (a) of this paragraph as evidenced by a Board Resolution promptly delivered to the Trustee; and | |
(c) if such Affiliate Transaction involves aggregate payments or value in excess of $25 million, the Company obtains a written opinion from an Independent Financial Advisor to the effect that the consideration to be paid or received in connection with such Affiliate Transaction is fair, from a financial point of view, to the Company and its Restricted Subsidiaries, taken as a whole. |
(a) any transaction or series of transactions between the Company and one or more Restricted Subsidiaries or between two or more Restricted Subsidiaries in the ordinary course of business; | |
(b) any Restricted Payment permitted to be made pursuant to the covenant described under “— Limitation on Restricted Payments” or any Permitted Investment; | |
(c) the payment of compensation (including awards or grants in cash, securities or other payments) for the personal services of officers and directors of the Company or any of the Restricted Subsidiaries entered into by the Company or any Restricted Subsidiary in the ordinary course of business or, if not entered into in the ordinary course of business, that the Board of Directors in good faith shall have approved the terms thereof and deemed the services theretofore or thereafter to be performed for such compensation to be fair consideration therefor; | |
(d) payments made by the Company or any Restricted Subsidiary in the ordinary course of business pursuant to employment agreements, collective bargaining agreements, employee benefit plans, officer or director indemnification agreements or arrangements for employees, officers or directors, including health and life insurance plans, deferred compensation plans, directors’ and officers’ indemnification agreements and retirement or savings plans, stock option, stock ownership and similar plans and the entering into of such agreements and plans by the Company or any Restricted Subsidiary in the ordinary course of business; | |
(e) transactions with a Person (other than an Unrestricted Subsidiary of the Company) that is an Affiliate of the Company solely because the Company owns, directly or through a Restricted Subsidiary, Capital Stock of, or controls, such Person; | |
(f) loans or advances to employees or consultants in the ordinary course of business or consistent with past practice not to exceed $5 million in the aggregate at any one time outstanding; | |
(g) transactions with Unrestricted Subsidiaries, customers, clients, suppliers, joint venture partners or purchasers or sellers of goods or services, or lessors or lessees of property, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture which are, in the aggregate (taking into account all the costs and benefits associated with such transactions), materially no less favorable to the Company or its Restricted Subsidiaries than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person, in the reasonable determination of the Board of Directors of the Company or senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; |
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(h) the issuance or sale of any Capital Stock (other than Disqualified Capital Stock) of the Company; | |
(i) any agreement or arrangement as in effect on the Issue Date or any amendment to any such agreement or arrangement (so long as such amendment is not disadvantageous to the holders of the Notes in any material respect) or any transaction contemplated thereby; | |
(j) the granting and performance of registration rights for shares of Capital Stock of the Company if approved by the Board of Directors; and | |
(k) any action required to be taken in connection with the mergers described elsewhere in this prospectus. |
(1) no Default or Event of Default shall have occurred and be continuing at the time of or after giving effect to such Designation; | |
(2) the Company would be permitted under the Indenture to make an Investment at the time of Designation (assuming the effectiveness of such Designation) in an amount (the“Designation Amount”) equal to the sum of (A) the Fair Market Value of the Capital Stock of such Subsidiary owned by the Company and/or any of the Restricted Subsidiaries on such date and (B) the aggregate amount of Indebtedness of such Subsidiary owed to the Company and the Restricted Subsidiaries on such date; and | |
(3) the Company would be permitted to incur $1.00 of additional Debt under the first paragraph of the covenant described under “— Limitation on Debt” at the time of Designation (assuming the effectiveness of such Designation). |
(x) provide direct or indirect credit support for or a guarantee of any Debt of any Unrestricted Subsidiary (including any undertaking agreement or instrument evidencing such Debt); | |
(y) be directly or indirectly liable for any Debt of any Unrestricted Subsidiary; or | |
(z) be directly or indirectly liable for any Debt which provides that the holder thereof may (upon notice, lapse of time or both) declare a default thereon or cause the payment thereof to be accelerated or payable prior to its final scheduled maturity upon the occurrence of a default with respect to any Indebtedness of any Unrestricted Subsidiary (including any right to take enforcement action against such Unrestricted Subsidiary), except, in the case of clause (x) or (y), to the extent permitted under the covenant described under “— Limitation on Restricted Payments.” |
(1) no Default or Event of Default shall have occurred and be continuing at the time and after giving effect to such Revocation; and | |
(2) all Liens and Indebtedness of such Unrestricted Subsidiaries outstanding immediately following such Revocation would, if incurred at such time, have been permitted to be incurred for all purposes of the Indenture. |
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(i) any Subsidiary Guarantee of any Domestic Restricted Subsidiary that existed at the time such Person became a Domestic Restricted Subsidiary and was not Incurred in connection with, or in contemplation of, such Person becoming a Domestic Restricted Subsidiary; | |
(ii) any Guarantee arising under or in connection with performance bonds, indemnity bonds, surety bonds and letters of credit or bankers’ acceptances; or | |
(iii) Permitted Liens. |
(a) the sale of the Capital Stock of the applicable Subsidiary Guarantor in accordance with the terms of the Indenture such that it is no longer a Subsidiary of the Company, | |
(b) the sale of all or substantially all of the assets of such Subsidiary Guarantor in accordance with the terms of the Indenture, | |
(c) the release of the Subsidiary Guarantor of liability on the Subsidiary Guarantee, the issuance of which caused such Restricted Subsidiary to be required to become a Subsidiary Guarantor, or | |
(d) the applicable Subsidiary Guarantor’s becoming an Unrestricted Subsidiary in accordance with the terms of the Indenture, |
(a) the Company shall be the Surviving Person in such merger or consolidation, or the Surviving Person (if other than the Company) formed by such merger or consolidation or to which such sale, transfer, assignment, lease, conveyance or other disposition is made shall be an entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; | |
(b) the Surviving Person (if other than the Company) expressly assumes, by supplemental indenture in form satisfactory to the Trustee, executed and delivered to the Trustee by such Surviving Person, the due and punctual payment of the principal of, and premium, if any, and interest on, all the Notes, and the due and punctual performance and observance of all the covenants and conditions of the Indenture to be performed by the Company; |
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(c) immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of this clause (c) and clauses (d) and (e) below, any Debt that becomes an obligation of the Surviving Person or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; | |
(d) immediately after giving effect to such transaction or series of transactions on a pro forma basis, the Company or the Surviving Person, as the case may be, would be able to Incur at least $1.00 of additional Debt under the first paragraph of the covenant described under “— Certain Covenants — Limitation on Debt;” and | |
(e) the Company shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officer’s Certificate and an Opinion of Counsel, each stating that such transaction and the supplemental indenture, if any, with respect thereto comply with this covenant and that all conditions precedent herein provided for relating to such transaction have been satisfied. |
(a) the Co-Issuer or such Subsidiary Guarantor will be the Surviving Person or the Surviving Person (if not the Co-Issuer or such Subsidiary Guarantor) formed by such merger or consolidation or to which such sale, transfer, assignment, lease, conveyance or other disposition is made shall be an entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; | |
(b) the Surviving Person (if other than the Co-Issuer or such Subsidiary Guarantor) becomes a Subsidiary Guarantor of Notes by executing a supplemental indenture to the Indenture providing a Subsidiary Guarantee; | |
(c) immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of this clause (c) and clause (d) below, any Debt that becomes an obligation of the Surviving Person, the Company or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person, the Company or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; and | |
(d) the Company shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officer’s Certificate and an Opinion of Counsel, each stating that such transaction and such Subsidiary Guarantee, if any, with respect thereto comply with this covenant and that all conditions precedent herein provided for relating to such transaction have been satisfied. |
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(a) a sale, transfer, assignment, conveyance or other disposition (unless such sale, transfer, assignment, conveyance or other disposition is of all the assets of the Company as an entirety or virtually as an entirety); or | |
(b) a lease; |
(1) failure to make the payment of any interest or Additional Interest, if any, on the Notes of such series when the same becomes due and payable, and such failure continues for a period of 30 days; | |
(2) failure to make the payment of any principal of, or premium, if any, on, any of the Notes of such series when the same becomes due and payable at its Stated Maturity, upon acceleration, redemption, optional redemption, required repurchase or otherwise (including a Special Mandatory Redemption); | |
(3) failure to comply with the covenant described under “— Merger, Consolidation and Sale of Property;” | |
(4) failure to make a Change of Control Offer pursuant to the covenant described under “— Repurchase at the Option of the Holders Upon a Change of Control;” | |
(5) failure to make an Asset Sale Offer pursuant to the covenant described under “— Limitation on Asset Sales;” |
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(6) failure to comply with any other covenant or agreement in the Notes of such series or in the Indenture (other than a failure that is the subject of the foregoing clauses (1), (2), (3), (4) or (5)) and such failure continues for 60 days after written notice is given to the Company as provided below; | |
(7) the occurrence of a default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Debt by the Company or any of its Restricted Subsidiaries (or any Debt Guaranteed by the Company or any of its Restricted Subsidiaries if the Company or a Restricted Subsidiary does not perform its payment obligations under such Guarantee within any grace period provided for in the documentation governing such Guarantee), whether such Debt or Guarantee existed on the Issue Date or was or is thereafter created, which default (a) constitutes a Payment Default or (b) results in the acceleration of such Debt prior to its Stated Maturity, and in each case, the principal amount of any such Debt, together with the principal amount of any other such Debt under which there has been a Payment Default or that has been so accelerated, aggregates $50 million or more; | |
(8) one or more judgments or orders that exceed $50 million in the aggregate (net of amounts covered by insurance or bonded) for the payment of money have been entered by a court or courts of competent jurisdiction against the Issuers or any Restricted Subsidiary and such judgment or judgments have not been satisfied, stayed, annulled or rescinded within 30 days of being entered; | |
(9) the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law: |
(A) commences a voluntary insolvency proceeding; | |
(B) consents to the entry of an order for relief against it in an involuntary insolvency proceeding; | |
(C) consents to the appointment of a Custodian of it or for any substantial part of its Property; or | |
(D) makes a general assignment for the benefit of its creditors; |
or takes any comparable action under any foreign laws relating to insolvency; provided, however, that the liquidation of any Significant Subsidiary into another Restricted Subsidiary or the Company other than as part of a credit reorganization, shall not constitute an Event of Default under this clause (9); |
(10) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: |
(A) is for relief against the Company or any Significant Subsidiary or for any substantial part of its Property; | |
(B) appoints a Custodian of the Company or any Significant Subsidiary or for any substantial part of its Property; | |
(C) orders the winding up or liquidation of the Company or any Significant Subsidiary; or | |
(D) grants any similar relief under any foreign laws; |
and in each such case the order or decree remains unstayed and in effect for 90 days; and |
(11) (a) any Subsidiary Guarantee of the Notes by a Significant Subsidiary ceases to be in full force and effect (other than in accordance with the terms of such Guarantee) or (b) any such Significant Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guarantee. |
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(a) such holder has previously given to the Trustee written notice of a continuing Event of Default; | |
(b) the registered holders of at least 25% in aggregate principal amount of the Notes of such series then outstanding have made a written request and offered reasonable indemnity to the Trustee to institute such proceeding as trustee; and | |
(c) the Trustee shall not have received from the registered holders of a majority in aggregate principal amount of the Notes of such series then outstanding a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days. |
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(1) reduce the amount of Notes of such series whose holders must consent to an amendment or waiver; | |
(2) reduce the rate of or extend the time for payment of interest and Additional Interest, if any, on any Note of such series; | |
(3) reduce the principal of or extend the Stated Maturity of any Note of such series; | |
(4) make any Note of such series payable in money other than that stated in the Note; | |
(5) impair the right of any holder of the Notes of such series to receive payment of principal of, premium, if any, and interest and Additional Interest, if any, on such holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s Notes; | |
(6) subordinate the Notes of such series to any other obligation of the Company, the Co-Issuer or the applicable Subsidiary Guarantor; | |
(7) reduce the premium payable upon the redemption of any Note of such series nor change the time at which any Note of such series may be redeemed, as described under “— Optional Redemption” above; | |
(8) reduce the premium payable upon a Change of Control or, at any time after a Change of Control has occurred, change the time at which the Change of Control Offer relating thereto must be made or at which the Notes of such series must be repurchased pursuant to such Change of Control Offer; | |
(9) at any time after the Company is obligated to make an Asset Sale Offer with the Excess Proceeds from Asset Sales, change the time at which such Asset Sale Offer must be made or at which the Notes of such series must be repurchased pursuant thereto; | |
(10) make any change in the amendment provisions which require the consent of each holder or in the waiver provisions; or | |
(11) release any Subsidiary from its obligations under its Subsidiary Guarantee of the Notes of such series or the Indenture other than pursuant to terms of the Indenture relating to the release of Subsidiary Guarantors of the Notes of such series. |
(1) cure any ambiguity, omission, defect or inconsistency; | |
(2) provide for the assumption by a Surviving Person of the obligations of the Company under the Indenture; | |
(3) evidence the assumption by a Surviving Person of the obligations of the Company to the holders of the Notes and covenants for the protection of the holders of the Notes; |
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(4) provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code); | |
(5) provide for any Guarantee with respect to the Notes or to release any Subsidiary Guarantee of the Notes as provided or permitted by the terms of the Indenture; | |
(6) make any change that does not adversely affect the rights of any holder of the Notes; | |
(7) provide for the issuance of Additional Notes in accordance with the Indenture; | |
(8) comply with any requirement of the Commission in connection with the qualification of the Indenture under the TIA or other applicable trust indenture legislation; | |
(9) add to the covenants of the Company for the benefit of the holders of the Notes or to surrender any right or power conferred in the Indenture upon the Company; and | |
(10) modify or amend the Indenture to permit the qualification of indenture supplements thereto. |
(1) their and the Subsidiary Guarantors’ obligations under the covenants described under “— Repurchase at the Option of Holders Upon a Change of Control” and “ — Certain Covenants”; | |
(2) the operation of clause (7) or (8), clause (9) or (10) solely with respect to Significant Subsidiaries and clause (11) described under “— Events of Default” above; and | |
(3) the limitations contained in the second paragraph of, and in clauses (c) and (d) in the first paragraph of, “— Merger, Consolidation and Sale of Property” above (collectively,“covenant defeasance”). |
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(a) the Issuers deposit, or causes to be deposited, irrevocably in trust with the Trustee money or U.S. Government Obligations, or any combination thereof, for the payment of principal, premium, if any, and interest and Additional Interest, if any, on the Notes of such series to maturity or redemption, as the case may be; | |
(b) the Issuers deliver to the Trustee a certificate from a nationally recognized firm of independent certified public accountants expressing their opinion that the payments of principal, premium, if any, and interest and Additional Interest, if any, when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Notes of such series to maturity or redemption, as the case may be; | |
(c) 91 days pass after the deposit is made and during the91-day period no Default described in clause (9) or (10) under “— Events of Default” occurs and is continuing at the end of the period with respect to the Issuers or any other Person making such deposit; | |
(d) no Default or Event of Default has occurred and is continuing on the date of such deposit and after giving effect thereto; | |
(e) such deposit does not constitute a default under any other agreement or instrument binding on the Issuers; | |
(f) in the case of the legal defeasance option, the Issuers deliver to the Trustee an Opinion of Counsel stating that: |
(1) the Issuers have received from the Internal Revenue Service a private letter ruling, or | |
(2) since the date of the Indenture there has been a change in any applicable U.S. federal income tax law, |
to the effect, in either case, that, and based thereon, such Opinion of Counsel shall confirm that, holders of the Notes will not recognize income, gain or loss for U.S. federal income tax as a result of such legal defeasance and will be subject to U.S. federal income tax (including withholding tax) on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; |
(g) in the case of the covenant defeasance option, the Issuers deliver to the Trustee an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for U.S. federal income tax as a result of such covenant defeasance and will be subject to U.S. federal income tax (including withholding tax) on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and | |
(h) the Issuers deliver to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes of such series have been complied with as required by the Indenture. |
(a) either: |
(i) all Notes of such series that have been previously authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has previously been deposited in trust or segregated and held in trust by the Issuers and is thereafter repaid to the Issuers or discharged from the trust) have been delivered to the Trustee for cancellation; or |
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(ii) all Notes of such series that have not been previously delivered to the Trustee for cancellation (A) have become due and payable or (B) will become due and payable at their maturity within one year or (C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of a notice of redemption by the Trustee, and, in the case of (A), (B) or (C), the Issuers have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of holders of the Notes of such series, cash in U.S. dollars, non-callable U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire Debt on the Notes of such series not previously delivered to the Trustee for cancellation for principal, premium, if any, and interest and Additional Interest, if any, on the Notes of such series to the date of deposit, in the case of Notes of such series that have become due and payable, or to the Stated Maturity or redemption date, as the case may be; |
(b) the Issuers have paid or caused to be paid all other sums payable by them under the Indenture; and | |
(c) if required by the Trustee, the Issuers deliver to the Trustee an Officer’s Certificate and Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been satisfied. |
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(a) any Property (other than cash, securities and Capital Stock) to be owned by the Company or any Restricted Subsidiary and used or useful in a Permitted Business; | |
(b) Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary from any Person other than the Company or an Affiliate of the Company; or | |
(c) Capital Stock of a Person that at such time is a Restricted Subsidiary; |
(a) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, or | |
(b) any other Person who is a director or officer of: |
(1) such specified Person, | |
(2) any Subsidiary of such specified Person, or | |
(3) any Person described in clause (a) above. |
(a) any shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares), or |
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(b) any other Property of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary, |
(1) any disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly Owned Restricted Subsidiary; | |
(2) any disposition that constitutes a Permitted Investment or Restricted Payment permitted by the covenant described under “— Certain Covenants — Limitation on Restricted Payments;” | |
(3) any disposition effected in compliance with the first paragraph of the covenant described under “— Merger, Consolidation and Sale of Property;” | |
(4) any sale or other disposition of damaged, worn-out, obsolete or no longer useful assets or properties in the ordinary course of business; | |
(5) any sale of assets received by the Company or any of its Restricted Subsidiaries upon the foreclosure on a Lien; | |
(6) any disposition or series of related dispositions of Property with an aggregate Fair Market Value and for net proceeds of less than $10 million; and | |
(7) the creation of any Permitted Lien. |
(a) the sum of the product of (i) the number of years (rounded to the nearest one-twelfth of one year) from the date of determination to the dates of each successive scheduled principal payment of such Debt or redemption or similar payment with respect to such Preferred Stock multiplied by (ii) the amount of such payment by | |
(b) the sum of all such payments. |
(a) 80% of the aggregate book value of all accounts receivable owned by the Company and its Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date that were not more that 90 days past due; plus |
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(b) 69% of the aggregate book value of all inventory owned by the Company and its Restricted Subsidiaries as of the end of the most recent fiscal quarter preceding such date. |
(1) any “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and13d-5 under the Exchange Act, except that a Person shall be deemed to have “beneficial ownership” of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 50% or more of the total voting power of all Voting Stock of the Company; | |
(2) Continuing Directors shall cease to constitute at least a majority of the directors constituting the Board of Directors; | |
(3) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act); | |
(4) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding Capital Stock of the Company is converted into or exchanged for cash, securities or other Property, other than any such transaction where the Capital Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged from Capital Stock (other than Disqualified Stock) of the surviving or transferee Person representing at least a majority of the voting power of all Capital Stock of such surviving or transferee Person immediately after giving effect to such issuance; or | |
(5) the adoption by the stockholders of the Company of a plan or proposal for the liquidation or dissolution of the Company. |
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(a) the aggregate amount of EBITDA for the most recent four consecutive fiscal quarters ending prior to such determination date to | |
(b) Consolidated Interest Expense for such four fiscal quarters; |
(1) if |
(A) since the beginning of such period the Company or any Restricted Subsidiary has Incurred any Debt that remains outstanding or Repaid any Debt; or | |
(B) the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Incurrence or Repayment of Debt; |
Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Incurrence or Repayment as if such Debt was Incurred or Repaid on the first day of such period, provided that, in the event of any such Repayment of Debt, EBITDA for such period shall be calculated on a pro forma basis as if the Company or such Restricted Subsidiary had not earned any interest income actually earned during such period in respect of the funds used to Repay such Debt, and |
(2) if |
(A) since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Sale or an Investment (by merger or otherwise) in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of Property which constitutes all or substantially all of an operating unit of a business; | |
(B) the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is such an Asset Sale, Investment or acquisition which constitutes all or substantially all of an operating unit of a business; or | |
(C) since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made such an Asset Sale, Investment or acquisition which constitutes all or substantially all of an operating unit of a business; |
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(a) interest expense attributable to leases constituting part of a Sale and Leaseback Transaction and to Capital Lease Obligations; | |
(b) amortization of debt discount and debt issuance cost, including commitment fees; | |
(c) capitalized interest; | |
(d) non-cash interest expense; | |
(e) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing; | |
(f) net costs associated with Hedging Obligations (including amortization of fees); | |
(g) Disqualified Stock Dividends; | |
(h) Preferred Stock Dividends; and | |
(i) interest accruing on any Debt of any other Person to the extent such Debt is Guaranteed by the Company or any Restricted Subsidiary. |
(a) any net income (loss) of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that: |
(1) subject to the exclusion contained in clause (d) below, the equity of the Company and its consolidated Restricted Subsidiaries in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (c) below), and | |
(2) the equity of the Company and its consolidated Restricted Subsidiaries in a net loss of any such Person other than an Unrestricted Subsidiary for such period shall be included in determining such Consolidated Net Income, |
(b) any net income (loss) of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions, directly or indirectly, to the Company, except that: |
(1) subject to the exclusion contained in clause (d) below, the equity of the Company and its consolidated Restricted Subsidiaries in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to another Restricted Subsidiary, to the limitation contained in this clause), and | |
(2) the equity of the Company and its consolidated Restricted Subsidiaries in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income; |
provided, that for the purpose of calculating Consolidated Net Income as a component of EBITDA, the exclusion from Consolidated Net Income set forth in this clause (b) with respect to a Foreign Restricted Subsidiary shall be disregarded, |
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(c) any gain (but not loss) realized upon the sale or other disposition of any Property of the Company or any of its consolidated Subsidiaries (including pursuant to any Sale and Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business, | |
(d) any extraordinary gain or loss, | |
(e) the cumulative effect of a change in accounting principles and | |
(f) any non-cash compensation expense realized for grants of performance shares, stock options or other rights to officers, directors and employees of the Company or any Restricted Subsidiary;providedthat such shares, options or other rights can be redeemed at the option of the holder only for Capital Stock of the Company (other than Disqualified Stock). |
(i) at the beginning of any two-year period was a member of the Board of Directors on the Issue Date; or | |
(ii) was nominated for election or elected to the Board of Directors with the affirmative vote of at least a majority of the directors then still in office who were either members of the Board of Directors at the beginning of such period or whose nomination for election was previously so approved, including new members of the Board of Directors designated in or provided for in an agreement approved by at least a majority of such members. |
(a) the principal of and premium (if any) in respect of: |
(1) debt of such Person for money borrowed, and | |
(2) debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; |
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(b) all Capital Lease Obligations of such Person and the Attributable Value relating to the Sale and Leaseback Transactions entered into by such Person; | |
(c) all obligations of such Person representing the deferred purchase price of Property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); | |
(d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in (a) through (c) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit); | |
(e) the amount of all obligations of such Person with respect to the Repayment of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Stock (measured, in each case, at the greater of its voluntary or involuntary maximum fixed repurchase price or liquidation value but excluding, in each case, any accrued dividends); | |
(f) all obligations of the type referred to in clauses (a) through (e) above of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee; | |
(g) all obligations of the type referred to in clauses (a) through (f) above of other Persons secured by any Lien on any Property of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the Fair Market Value of such Property and the amount of the obligation so secured; and | |
(h) to the extent not otherwise included in this definition, Hedging Obligations of such Person. |
(1) zero if such Hedging Obligation has been Incurred pursuant to clause (e) or (f) of the second paragraph of “— Certain Covenants — Limitation on Debt,” or | |
(2) the amount of such Hedging Obligation as determined in accordance with GAAP if not Incurred pursuant to such clauses. |
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(a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise; | |
(b) is or may become redeemable or repurchasable at the option of the holder thereof, in whole or in part; or | |
(c) is convertible or exchangeable at the option of the holder thereof for Debt or Disqualified Stock; |
(a) the sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period: |
(1) the provision for taxes based on income or profits or utilized in computing net loss; | |
(2) Consolidated Interest Expense; | |
(3) depreciation; | |
(4) amortization of intangibles; and | |
(5) any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period); minus |
(b) all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period). |
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(a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt of such other Person, or | |
(b) entered into for the primary purpose of assuring in any other manner the obligee against loss in respect thereof (in whole or in part); |
(1) endorsements for collection or deposit in the ordinary course of business, or | |
(2) a contractual commitment by one Person to invest in another Person for so long as such Investment is reasonably expected to constitute a Permitted Investment under clause (a) or (b) of the definition of“Permitted Investment.” |
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(a) the Company’s “Investment” in such Subsidiary at the time of such redesignation; less | |
(b) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation. |
(a) all legal, title, accounting and recording tax expenses, transfer taxes, commissions and other fees and expenses Incurred (including, without limitation, brokerage commissions and accounting, legal and investment banking expenses, fees and sales commissions), and all U.S. federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Sale; | |
(b) all payments made on or in respect of any Debt that is secured by any Property subject to such Asset Sale, in accordance with the terms of any Lien upon such Property, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale; | |
(c) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale; | |
(d) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the Property disposed of in such Asset Sale and retained by the Company or any Restricted Subsidiary after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale; and |
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(e) payments of unassumed liabilities (not constituting Debt) relating to the Property sold at the time of, or within 30 days after, the date of such sale. |
(a) the Company or any Restricted Subsidiary (including any non-wholly owned Restricted Subsidiary) or any Person that will, upon the making of such Investment, become a Restricted Subsidiary; provided that the primary business of such Restricted Subsidiary is a Permitted Business; | |
(b) any Person if as a result of such Investment such Person is merged or consolidated with or into, or transfers or conveys all or substantially all its Property to, the Company or a Restricted Subsidiary; provided that the primary business of such Restricted Subsidiary is a Permitted Business; | |
(c) cash and Temporary Cash Investments; | |
(d) receivables owing to the Company or a Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; | |
(e) payroll, travel, commission and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; | |
(f) stock, obligations or other securities received in settlement or good faith compromises of debts created in the ordinary course of business and owing to the Company or a Restricted Subsidiary or in satisfaction of judgments; | |
(g) any Person to the extent such Investment represents the non-cash portion of the consideration received in connection with an Asset Sale consummated in compliance with the covenant described under “— Certain Covenants — Limitation on Asset Sales”; | |
(h) prepaid expenses, negotiable instruments held for collection, lease, utility, workers’ compensation, performance and other similar deposits provided to third parties in the ordinary course of business; |
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(i) any assets or Capital Stock of any Person made out of the net cash proceeds of the substantially concurrent sale of Capital Stock of the Company (other than Disqualified Stock); | |
(j) Interest Rate Agreements and Currency Exchange Protection Agreements, in each case to the extent such obligations Incurred thereunder may be Incurred pursuant to the second paragraph of “— Certain Covenants — Limitation on Debt”; | |
(k) in securities of any trade creditor or customer received in settlement of obligations or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditor or customer; | |
(l) acquired as a result of a foreclosure by the Company or such Restricted Subsidiary with respect to any secured Investment or other transfer of title with respect to any secured Investment in default; | |
(m) consisting of purchases and acquisitions of inventory, supplies, materials and equipment in the ordinary course of business and otherwise in accordance with the Indenture; | |
(n) existence on the Issue Date; and | |
(o) other Investments made for Fair Market Value that do not exceed $25 million in the aggregate outstanding at any one time. |
(a) such Debt is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of: |
(1) the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding of the Debt being Refinanced; and | |
(2) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such Refinancing; |
(b) the Average Life of such Debt is equal to or greater than the Average Life of the Debt being Refinanced; | |
(c) the Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being Refinanced; and | |
(d) the new Debt shall not be senior in right of payment to the Debt that is being Refinanced; |
(1) Debt of a Subsidiary that is not the Co-Issuer or a Subsidiary Guarantor that Refinances Debt of the Company, the Co-Issuer or a Subsidiary Guarantor; or | |
(2) Debt of the Company or a Restricted Subsidiary that Refinances Debt of an Unrestricted Subsidiary. |
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(a) consisting of the deferred purchase price of Property, conditional sale obligations, obligations under any title retention agreement, other purchase money obligations and obligations in respect of industrial revenue bonds, in each case where the maturity of such Debt does not exceed the anticipated useful life of the Property being financed, and | |
(b) Incurred to finance the acquisition, construction or lease by the Company or a Restricted Subsidiary of such Property, including additions and improvements thereto; |
(a) any dividend or distribution (whether made in cash, securities or other Property) declared or paid on or with respect to any shares of Capital Stock of the Company or any Restricted Subsidiary (including any payment in connection with any merger or consolidation with or into the Company or any Restricted Subsidiary), except for any dividend or distribution that is made solely to the Company or a Restricted Subsidiary (and, if such Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, to the other shareholders of such Restricted Subsidiary on a pro rata basis or on a basis that results in the receipt by the Company or a Restricted Subsidiary of dividends or distributions of greater value than it would receive on a pro rata basis) or any dividend or distribution payable solely in shares of Capital Stock (other than Disqualified Stock) of the Company, and except for pro rata dividends or other distributions made by a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders; | |
(b) the purchase, repurchase, redemption, acquisition or retirement for value of any Capital Stock of the Company or any Restricted Subsidiary (other than from the Company or a Restricted Subsidiary) or any securities exchangeable for or convertible into any such Capital Stock, including the exercise of any option to exchange any Capital Stock (other than for or into Capital Stock of the Company that is not Disqualified Stock); | |
(c) the purchase, repurchase, redemption, acquisition or retirement for value, prior to the date for any scheduled maturity, sinking fund or amortization or other installment payment, of any Subordinated Obligation (other than the purchase, repurchase or other acquisition of any Subordinated Obligation purchased in anticipation of satisfying a scheduled maturity, sinking fund or amortization or other installment obligation, in each case due within one year of the date of acquisition); or | |
(d) any Investment (other than Permitted Investments) in any Person. |
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(a) such Person; | |
(b) such Person and one or more Subsidiaries of such Person; or | |
(c) one or more Subsidiaries of such Person. |
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(a) Investments in U.S. Government Obligations, in each case maturing within 365 days of the date of acquisition thereof; | |
(b) Investments in time deposit accounts, certificates of deposit and money market deposits maturing within 90 days of the date of acquisition thereof issued or guaranteed by a bank or trust company organized under the laws of the United States of America or any state or the District of Columbia or any U.S. branch of a foreign bank having, at the date of acquisition thereof, combined capital, surplus and undivided profits aggregating in excess of $250.0 million and whose long-term debt is rated “A-3” or “A-” or higher according to Moody’s or S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act)); | |
(c) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) entered into with: |
(1) a bank meeting the qualifications described in clause (b) above, or | |
(2) any primary government securities dealer reporting to the Market Reports Division of the Federal Reserve Bank of New York; |
(d) Investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of any state or jurisdiction of the United States of America with a rating at the time as of which any Investment therein is made of “P-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act)); | |
(e) direct obligations (or certificates representing an ownership interest in such obligations) of any state of the United States of America or any foreign country recognized by the United States or any political subdivision of any such state, province or foreign country, as the case may be (including any agency or instrumentality thereof), for the payment of which the full faith and credit of such state is pledged and which are not callable or redeemable at the issuer’s option, provided that: |
(1) the long-term debt of such state, province or country is rated “A-3” or “A-” or higher according to Moody’s or S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act)), and | |
(2) such obligations mature within 180 days of the date of acquisition thereof; and |
(f) Investments in money market funds which invest substantially all of their assets in securities of the types described in clauses (a) through (e) above. |
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(a) any Subsidiary of the Company that is designated after the Issue Date as an Unrestricted Subsidiary as permitted or required pursuant to the covenant described under “— Certain Covenants — Designation of Restricted and Unrestricted Subsidiaries” and is not thereafter redesignated as a Restricted Subsidiary as permitted pursuant thereto; | |
(b) any Subsidiary of an Unrestricted Subsidiary. |
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• | an individual who is a citizen or resident of the United States; | |
• | a domestic corporation; | |
• | an estate whose income is subject to United States federal income tax regardless of its source; or | |
• | a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust or if the trust was in existence on August 20, 1996 and has elected to continue to be treated as a United States person. |
Interest |
Sale, Exchange or Retirement of Notes |
Backup Withholding |
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• | an individual who is not a citizen or resident of the United States; | |
• | a corporation (or other entity treated as a corporation) that is not organized or created under United States law; | |
• | an estate that is not taxable in the United States on its worldwide income; or | |
• | a trust unless (a) a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States persons have the authority to control all substantial decisions of the trust or (b) such trust has in effect a valid election to be treated as a domestic trust for United States federal income tax purposes. |
Withholding Taxes |
• | such holder (1) does not own, actually or constructively, 10% or more of the total combined voting power of the outstanding stock of either Issuer, (2) is not a bank that received notes on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business, and (3) is not a controlled foreign corporation related, directly or indirectly, to either Issuer through stock ownership; and | |
• | the certification requirement, as described below, has been fulfilled with respect to the beneficial owner. |
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Sale, Exchange or Retirement of Notes |
• | the gain is effectively connected with a trade or business that you conduct in the United States; | |
• | you are an individual who is present in the United States for at least 183 days during the year in which you dispose of the exchange note and certain other conditions are satisfied; or | |
• | such gain represents accrued but unpaid interest not previously included in income, in which case the rules for interest would apply. |
United States Trade or Business |
• | any interest on the exchange note, and any gain from disposing of the exchange note, generally will be subject to United States federal income tax on a net income basis in the same manner as if you were a United States person (and the 30% U.S. federal withholding tax will not apply provided that certain certification requirements are satisfied); and | |
• | if you are a corporation, you may be subject to the “branch profits tax” on your earnings that are effectively connected with your United States trade or business, including earnings from the exchange note. This tax is 30%, but may be reduced or eliminated by an applicable income tax treaty. |
Information Reporting and Backup Withholding |
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Page | |||
Number | |||
CONSOLIDATED FINANCIAL STATEMENTS OF GAMESTOP | |||
F-2 | |||
Audited Financial Statements | |||
F-3 | |||
F-4 | |||
F-5 | |||
F-6 | |||
F-7 | |||
CONSOLIDATED FINANCIAL STATEMENTS OF EB | |||
F-43 | |||
Audited Financial Statements | |||
F-44 | |||
F-45 | |||
F-46 | |||
F-47 | |||
F-48 | |||
Unaudited Financial Statements | |||
F-71 | |||
F-72 | |||
F-73 | |||
F-74 | |||
F-75 |
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/s/ BDO SEIDMAN, LLP | |
BDO Seidman, LLP |
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January 28, | January 29, | |||||||||
2006 | 2005 | |||||||||
(In thousands) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 401,593 | $ | 170,992 | ||||||
Receivables, net | 38,738 | 9,812 | ||||||||
Merchandise inventories, net | 603,178 | 216,296 | ||||||||
Prepaid expenses and other current assets | 16,339 | 18,400 | ||||||||
Prepaid taxes | 19,135 | 3,703 | ||||||||
Deferred taxes | 42,282 | 5,785 | ||||||||
Total current assets | 1,121,265 | 424,988 | ||||||||
Property and equipment: | ||||||||||
Land | 10,257 | 2,000 | ||||||||
Buildings and leasehold improvements | 262,908 | 106,428 | ||||||||
Fixtures and equipment | 343,897 | 184,536 | ||||||||
617,062 | 292,964 | |||||||||
Less accumulated depreciation and amortization | 184,937 | 124,565 | ||||||||
Net property and equipment | 432,125 | 168,399 | ||||||||
Goodwill, net | 1,392,352 | 320,888 | ||||||||
Assets held for sale | 19,297 | — | ||||||||
Deferred financing fees | 18,561 | 566 | ||||||||
Other noncurrent assets | 31,519 | 1,142 | ||||||||
Total other assets | 1,461,729 | 322,596 | ||||||||
Total assets | $ | 3,015,119 | $ | 915,983 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 543,288 | $ | 206,739 | ||||||
Accrued liabilities | 331,859 | 94,983 | ||||||||
Notes payable, current portion | 12,527 | 12,173 | ||||||||
Total current liabilities | 887,674 | 313,895 | ||||||||
Deferred taxes | 12,938 | 21,257 | ||||||||
Senior notes payable, long-term portion, net | 641,788 | — | ||||||||
Senior floating rate notes payable, long-term portion | 300,000 | — | ||||||||
Note payable, long-term portion | 21,675 | 24,347 | ||||||||
Deferred rent and other long-term liabilities | 36,331 | 13,473 | ||||||||
Total long-term liabilities | 1,012,732 | 59,077 | ||||||||
Total liabilities | 1,900,406 | 372,972 | ||||||||
Commitments and contingencies (Note 11) | ||||||||||
Stockholders’ equity: | ||||||||||
Preferred stock — authorized 5,000 shares; no shares issued or outstanding | — | — | ||||||||
Class A common stock — $.001 par value; authorized 300,000 shares; 42,895 and 24,189 shares issued, respectively | 43 | 24 | ||||||||
Class B common stock — $.001 par value; authorized 100,000 shares; 29,902 shares issued and outstanding | 30 | 30 | ||||||||
Additional paid-in-capital | 921,349 | 500,769 | ||||||||
Accumulated other comprehensive income | 886 | 567 | ||||||||
Retained earnings | 192,405 | 91,621 | ||||||||
Treasury stock, at cost, 0 and 3,263 shares, respectively | — | (50,000 | ) | |||||||
Total stockholders’ equity | 1,114,713 | 543,011 | ||||||||
Total liabilities and stockholders’ equity | $ | 3,015,119 | $ | 915,983 | ||||||
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52 Weeks | 52 Weeks | 52 Weeks | |||||||||||
Ended | Ended | Ended | |||||||||||
January 28, | January 29, | January 31, | |||||||||||
2006 | 2005 | 2004 | |||||||||||
(In thousands, except per share data) | |||||||||||||
Sales | $ | 3,091,783 | $ | 1,842,806 | $ | 1,578,838 | |||||||
Cost of sales | 2,219,753 | 1,333,506 | 1,145,893 | ||||||||||
Gross profit | 872,030 | 509,300 | 432,945 | ||||||||||
Selling, general and administrative expenses | 599,343 | 373,364 | 299,193 | ||||||||||
Depreciation and amortization | 66,355 | 36,789 | 29,368 | ||||||||||
Merger-related expenses | 13,600 | — | — | ||||||||||
Operating earnings | 192,732 | 99,147 | 104,384 | ||||||||||
Interest income | (5,135 | ) | (1,919 | ) | (1,467 | ) | |||||||
Interest expense | 30,427 | 2,155 | 663 | ||||||||||
Merger-related interest expense | 7,518 | — | — | ||||||||||
Earnings before income tax expense | 159,922 | 98,911 | 105,188 | ||||||||||
Income tax expense | 59,138 | 37,985 | 41,721 | ||||||||||
Net earnings | $ | 100,784 | $ | 60,926 | $ | 63,467 | |||||||
Net earnings per Class A and Class B common share — basic | $ | 1.74 | $ | 1.11 | $ | 1.13 | |||||||
Weighted average shares of common stock — basic | 57,920 | 54,662 | 56,330 | ||||||||||
Net earnings per Class A and Class B common share — diluted | $ | 1.61 | $ | 1.05 | $ | 1.06 | |||||||
Weighted average shares of common stock — diluted | 62,486 | 57,796 | 59,764 | ||||||||||
F-4
Table of Contents
Accumulated | ||||||||||||||||||||||||||||||||||||
Common Stock | Additional | Other | ||||||||||||||||||||||||||||||||||
Paid in | Comprehensive | Retained | Treasury | |||||||||||||||||||||||||||||||||
Shares | Class A | Shares | Class B | Capital | Income | Earnings | Stock | Total | ||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||
Balance at February 1, 2003 | 21,050 | $ | 21 | 36,009 | $ | 36 | $ | 493,998 | $ | — | $ | 54,620 | $ | — | $ | 548,675 | ||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||
Net earnings for the 52 weeks ended January 31, 2004 | — | — | — | — | — | — | 63,467 | — | ||||||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | 296 | — | — | ||||||||||||||||||||||||||||
Total comprehensive income | 63,763 | |||||||||||||||||||||||||||||||||||
Exercise of employee stock options (including tax benefit of $9,702) | 1,943 | 2 | — | — | 16,599 | — | — | — | 16,601 | |||||||||||||||||||||||||||
Treasury stock acquired, 2,304 shares | — | — | — | — | — | — | — | (35,006 | ) | (35,006 | ) | |||||||||||||||||||||||||
Balance at January 31, 2004 | 22,993 | 23 | 36,009 | 36 | 510,597 | 296 | 118,087 | (35,006 | ) | 594,033 | ||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||
Net earnings for the 52 weeks ended January 29, 2005 | — | — | — | — | — | — | 60,926 | — | ||||||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | 271 | — | — | ||||||||||||||||||||||||||||
Total comprehensive income | 61,197 | |||||||||||||||||||||||||||||||||||
Exercise of employee stock options (including tax benefit of $5,082) | 1,196 | 1 | — | — | 14,555 | — | — | — | 14,556 | |||||||||||||||||||||||||||
Repurchase and retirement of Class B common stock | — | — | (6,107 | ) | (6 | ) | (24,383 | ) | — | (87,392 | ) | — | (111,781 | ) | ||||||||||||||||||||||
Treasury stock acquired, 959 shares | — | — | — | — | — | — | — | (14,994 | ) | (14,994 | ) | |||||||||||||||||||||||||
Balance at January 29, 2005 | 24,189 | 24 | 29,902 | 30 | 500,769 | 567 | 91,621 | (50,000 | ) | 543,011 | ||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||
Net earnings for the 52 weeks ended January 28, 2006 | — | — | — | — | — | — | 100,784 | — | ||||||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | 319 | — | — | ||||||||||||||||||||||||||||
Total comprehensive income | 101,103 | |||||||||||||||||||||||||||||||||||
Elimination of treasury stock | (3,263 | ) | (3 | ) | — | — | (49,997 | ) | — | — | 50,000 | — | ||||||||||||||||||||||||
Issuance of stock to Electronics Boutique stockholders | 20,229 | 20 | — | — | 437,124 | — | — | — | 437,144 | |||||||||||||||||||||||||||
Restricted stock expense | — | — | — | — | 347 | — | — | — | 347 | |||||||||||||||||||||||||||
Exercise of employee stock options (including tax benefit of $12,308) | 1,740 | 2 | — | — | 33,106 | — | — | — | 33,108 | |||||||||||||||||||||||||||
Balance at January 28, 2006 | 42,895 | $ | 43 | 29,902 | $ | 30 | $ | 921,349 | $ | 886 | $ | 192,405 | $ | — | $ | 1,114,713 | ||||||||||||||||||||
F-5
Table of Contents
52 Weeks | 52 Weeks | 52 Weeks | |||||||||||||
Ended | Ended | Ended | |||||||||||||
January 28, | January 29, | January 31, | |||||||||||||
2006 | 2005 | 2004 | |||||||||||||
(In thousands) | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net earnings | $ | 100,784 | $ | 60,926 | $ | 63,467 | |||||||||
Adjustments to reconcile net earnings to net cash flows provided by operating activities: | |||||||||||||||
Depreciation and amortization (including amounts in cost of sales) | 66,659 | 37,019 | 29,487 | ||||||||||||
Provision for inventory reserves | 25,103 | 17,808 | 12,901 | ||||||||||||
Amortization of loan cost | 1,229 | 432 | 313 | ||||||||||||
Amortization of original issue discount on senior notes | 316 | — | — | ||||||||||||
Restricted stock expense | 347 | — | — | ||||||||||||
Deferred taxes | (8,216 | ) | 5,402 | 5,713 | |||||||||||
Tax benefit realized from exercise of stock options by employees | 12,308 | 5,082 | 9,702 | ||||||||||||
Loss on disposal and impairment of property and equipment | 11,648 | 382 | 213 | ||||||||||||
Increase in deferred rent and other long-term liabilities for scheduled rent increases in long-term leases | 3,669 | 5,349 | 338 | ||||||||||||
Increase in liability to landlords for tenant allowances, net | 202 | 1,644 | 937 | ||||||||||||
Minority interest | — | (96 | ) | (298 | ) | ||||||||||
Decrease in value of foreign exchange contracts | (2,421 | ) | — | — | |||||||||||
Changes in operating assets and liabilities, net of business acquired Receivables, net | (9,995 | ) | (267 | ) | (1,954 | ) | |||||||||
Merchandise inventories | (91,363 | ) | (10,578 | ) | (72,712 | ) | |||||||||
Prepaid expenses and other current assets | 19,484 | (4,060 | ) | (4,111 | ) | ||||||||||
Prepaid taxes | 13,610 | 9,072 | (12,775 | ) | |||||||||||
Accounts payable and accrued liabilities | 148,054 | 17,872 | 40,056 | ||||||||||||
Net cash flows provided by operating activities | 291,418 | 145,987 | 71,277 | ||||||||||||
Cash flows from investing activities: | |||||||||||||||
Purchase of property and equipment | (110,696 | ) | (98,305 | ) | (64,484 | ) | |||||||||
Merger with Electronics Boutique, net of cash acquired | (886,116 | ) | — | — | |||||||||||
Acquisition of controlling interest in Gamesworld Group Limited, net of cash received | — | (62 | ) | (3,027 | ) | ||||||||||
Net cash flows used in investing activities | (996,812 | ) | (98,367 | ) | (67,511 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||
Issuance of senior notes payable relating to Electronics Boutique merger, net of discount | 641,472 | — | — | ||||||||||||
Issuance of senior floating rate notes payable relating to Electronics Boutique merger | 300,000 | — | — | ||||||||||||
Issuance of shares relating to employee stock options | 20,800 | 9,474 | 6,899 | ||||||||||||
Net increase in other noncurrent assets and deferred financing fees | (13,466 | ) | (825 | ) | (522 | ) | |||||||||
Purchase of treasury shares through repurchase program | — | (14,994 | ) | (35,006 | ) | ||||||||||
Repurchase of Class B shares | — | (111,781 | ) | — | |||||||||||
Issuance of debt relating to the Class B share repurchase | — | 74,020 | — | ||||||||||||
Repayment of debt relating to the Class B shares | (12,173 | ) | (37,500 | ) | — | ||||||||||
Repayment of debt relating to pre-existing debt of Electronics Boutique | (956 | ) | — | — | |||||||||||
Repayment of debt of Gamesworld Group Limited | — | — | (2,296 | ) | |||||||||||
Net cash flows provided by (used in) financing activities | 935,677 | (81,606 | ) | (30,925 | ) | ||||||||||
Exchange rate effect on cash and cash equivalents | 318 | 73 | 34 | ||||||||||||
Net increase (decrease) in cash and cash equivalents | 230,601 | (33,913 | ) | (27,125 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 170,992 | 204,905 | 232,030 | ||||||||||||
Cash and cash equivalents at end of period | $ | 401,593 | $ | 170,992 | $ | 204,905 | |||||||||
F-6
Table of Contents
1. | Summary of Significant Accounting Policies |
Background and Basis of Presentation |
Consolidation |
F-7
Table of Contents
Year-End |
Cash and Cash Equivalents |
Merchandise Inventories |
Property and Equipment |
Goodwill |
F-8
Table of Contents
Revenue Recognition |
Customer Liabilities |
Pre-Opening Expenses |
Closed Store Expenses |
F-9
Table of Contents
Advertising Expenses |
Income Taxes |
Lease Accounting |
Foreign Currency Translation |
F-10
Table of Contents
Net Earnings Per Common Share |
Stock Options |
F-11
Table of Contents
52 Weeks | 52 Weeks | 52 Weeks | ||||||||||
Ended | Ended | Ended | ||||||||||
January 28, | January 29, | January 31, | ||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands, except per share data) | ||||||||||||
Net earnings, as reported | $ | 100,784 | $ | 60,926 | $ | 63,467 | ||||||
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects | 6,666 | 9,405 | 7,888 | |||||||||
Pro forma net earnings | $ | 94,118 | $ | 51,521 | $ | 55,579 | ||||||
Net earnings per Class A and Class B common share — basic, as reported | $ | 1.74 | $ | 1.11 | $ | 1.13 | ||||||
Net earnings per Class A and Class B common share — basic, pro forma | $ | 1.62 | $ | 0.94 | $ | 0.99 | ||||||
Net earnings per Class A and Class B common share — diluted, as reported | $ | 1.61 | $ | 1.05 | $ | 1.06 | ||||||
Net earnings per Class A and Class B common share — diluted, pro forma | $ | 1.51 | $ | 0.89 | $ | 0.93 | ||||||
52 Weeks | 52 Weeks | 52 Weeks | ||||||||||
Ended | Ended | Ended | ||||||||||
January 28, | January 29, | January 31, | ||||||||||
2006 | 2005 | 2004 | ||||||||||
Volatility | 57.3 | % | 60.1 | % | 61.6 | % | ||||||
Risk-free interest rate | 4.2 | % | 3.3 | % | 3.2 | % | ||||||
Expected life (years) | 6.0 | 6.0 | 6.0 | |||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % |
F-12
Table of Contents
Use of Estimates |
Fair Values of Financial Instruments |
Guarantees |
Vendor Concentration |
Classifications |
Reclassifications |
F-13
Table of Contents
New Accounting Pronouncements |
2. | Acquisitions |
F-14
Table of Contents
October 8, | ||||||
2005 | ||||||
Current assets | $ | 541,171 | ||||
Property, plant & equipment | 231,172 | |||||
Goodwill | 1,071,464 | |||||
Intangible assets: | ||||||
Point-of-sale software | 3,150 | |||||
Non-compete agreements | 282 | |||||
Leasehold interests | 17,299 | |||||
Total intangible assets | 20,731 | |||||
Other long-term assets | 38,068 | |||||
Current liabilities | (420,962 | ) | ||||
Long-term liabilities | (37,688 | ) | ||||
Total purchase price | $ | 1,443,956 | ||||
F-15
Table of Contents
52 Weeks | 52 Weeks | ||||||||
Ended | Ended | ||||||||
January 28, | January 29, | ||||||||
2006 | 2005 | ||||||||
(In thousands, except | |||||||||
per share data) | |||||||||
Sales | $ | 4,393,890 | $ | 3,827,685 | |||||
Cost of sales | 3,154,928 | 2,786,554 | |||||||
Gross profit | 1,238,962 | 1,041,131 | |||||||
Selling, general and administrative expenses | 930,767 | 788,413 | |||||||
Depreciation and amortization | 94,288 | 77,964 | |||||||
Operating earnings | 213,907 | 174,754 | |||||||
Interest income | (6,717 | ) | (1,998 | ) | |||||
Interest expense | 85,056 | 72,217 | |||||||
Earnings before income tax expense | 135,568 | 104,535 | |||||||
Income tax expense | 49,482 | 38,477 | |||||||
Net earnings | $ | 86,086 | $ | 66,058 | |||||
Net earnings per Class A and Class B common share — basic | $ | 1.20 | $ | 0.88 | |||||
Weighted average shares of common stock — basic | 71,925 | 74,891 | |||||||
Net earnings per Class A and Class B common share — diluted | $ | 1.13 | $ | 0.85 | |||||
Weighted average shares of common stock — diluted | 76,491 | 78,025 | |||||||
F-16
Table of Contents
Charged to | Balance at | |||||||||||||||||||
Charged to | Costs and | Write-Offs and | Cash | End of | ||||||||||||||||
Acquisition Costs | Expenses | Non-Cash Charges | Payments | Period | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Severance and employee related costs | $ | 17,889 | $ | — | $ | — | $ | 4,984 | $ | 12,905 | ||||||||||
Lease terminations | 10,641 | — | — | 584 | 10,057 | |||||||||||||||
Disposal of property and equipment | 2,494 | 10,649 | 10,649 | — | 2,494 | |||||||||||||||
Merger costs, bridge financing and other | 34,669 | 10,469 | 496 | 42,009 | 2,633 | |||||||||||||||
Total | $ | 65,693 | $ | 21,118 | $ | 11,145 | $ | 47,577 | $ | 28,089 | ||||||||||
3. | Vendor Arrangements |
F-17
Table of Contents
52 Weeks | |||||
Ended | |||||
January 31, | |||||
2004 | |||||
(In thousands, | |||||
except per | |||||
share data) | |||||
Sales | $ | 1,578,838 | |||
Cost of sales | 1,142,225 | ||||
Gross profit | 436,613 | ||||
Selling, general and administrative expenses | 299,193 | ||||
Depreciation and amortization | 29,368 | ||||
Operating earnings | 108,052 | ||||
Interest income | (1,467 | ) | |||
Interest expense | 663 | ||||
Earnings before income tax expense | 108,856 | ||||
Income tax expense | 43,108 | ||||
Net earnings | $ | 65,748 | |||
Net earnings per Class A and Class B common share — basic | $ | 1.17 | |||
Weighted average shares of common stock — basic | 56,330 | ||||
Net earnings per Class A and Class B common share — diluted | $ | 1.10 | |||
Weighted average shares of common stock — diluted | 59,764 | ||||
4. | Computation of Net Earnings per Common Share |
F-18
Table of Contents
52 Weeks | 52 Weeks | 52 Weeks | |||||||||||
Ended | Ended | Ended | |||||||||||
January 28, | January 29, | January 31, | |||||||||||
2006 | 2005 | 2004 | |||||||||||
(In thousands, except per share data) | |||||||||||||
Net earnings | $ | 100,784 | $ | 60,926 | $ | 63,467 | |||||||
Weighted average common shares outstanding | |||||||||||||
Class A | 28,018 | 20,683 | 20,321 | ||||||||||
Class B | 29,902 | 33,979 | 36,009 | ||||||||||
Weighted average common shares outstanding | 57,920 | 54,662 | 56,330 | ||||||||||
Dilutive effect of options and warrants on Class A common stock | 4,566 | 3,134 | 3,434 | ||||||||||
Common shares and dilutive potential common shares | 62,486 | 57,796 | 59,764 | ||||||||||
Net earnings per Class A and Class B common share: | |||||||||||||
Basic | $ | 1.74 | $ | 1.11 | $ | 1.13 | |||||||
Diluted | $ | 1.61 | $ | 1.05 | $ | 1.06 | |||||||
Anti-Dilutive | Range of | |||||||||||
Shares | Exercise Prices | Expiration Dates | ||||||||||
(In thousands, except per share data) | ||||||||||||
52 Weeks Ended January 28, 2006 | 120 | $ | 35.88 | 2015 | ||||||||
52 Weeks Ended January 29, 2005 | 30 | $ | 21.25 | 2012 | ||||||||
52 Weeks Ended January 31, 2004 | 3,831 | $ | 18.00-$21.25 | Through 2013 |
5. | Receivables, Net |
January 28, | January 29, | |||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Bankcard receivables | $ | 19,017 | $ | 5,946 | ||||
Other receivables | 21,210 | 4,259 | ||||||
Allowance for doubtful accounts | (1,489 | ) | (393 | ) | ||||
Total receivables, net | $ | 38,738 | $ | 9,812 | ||||
F-19
Table of Contents
6. | Accrued Liabilities |
January 28, | January 29, | |||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Customer liabilities | $ | 89,053 | $ | 35,213 | ||||
Deferred revenue | 40,808 | 10,497 | ||||||
Accrued rent | 13,501 | 6,090 | ||||||
Accrued interest | 19,943 | 22 | ||||||
Employee compensation and related taxes | 36,543 | 5,750 | ||||||
Accrued merger costs and expenses (Note 2) | 28,089 | — | ||||||
Other taxes | 20,917 | 5,129 | ||||||
Other accrued liabilities | 83,005 | 32,282 | ||||||
Total accrued liabilities | $ | 331,859 | $ | 94,983 | ||||
7. | Goodwill and Intangible Assets |
United States | Canada | Australia | Europe | Total | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Balance at January 31, 2004 | $ | 317,957 | $ | — | $ | — | $ | 2,869 | $ | 320,826 | ||||||||||
Addition for the acquisition of Gamesworld Group Limited | — | — | — | 62 | 62 | |||||||||||||||
Impairment for the 52 weeks ended January 29, 2005 | — | — | — | — | — | |||||||||||||||
Balance at January 29, 2005 | 317,957 | — | — | 2,931 | 320,888 | |||||||||||||||
Additional cost relating to the acquisition of Electronics Boutique | 773,100 | 116,818 | 146,419 | 35,127 | 1,071,464 | |||||||||||||||
Impairment for the 52 weeks ended January 28, 2006 | — | — | — | — | — | |||||||||||||||
Balance at January 28, 2006 | $ | 1,091,057 | $ | 116,818 | $ | 146,419 | $ | 38,058 | $ | 1,392,352 | ||||||||||
F-20
Table of Contents
Deferred | Intangible | |||||||
Financing Fees | Assets | |||||||
(In thousands) | ||||||||
Balance at January 31, 2004 | $ | 328 | $ | — | ||||
Addition for revolving credit facility entered into in June 2004 | 670 | — | ||||||
Amortization for the 52 weeks ended January 29, 2005 | (432 | ) | — | |||||
Balance at January 29, 2005 | 566 | — | ||||||
Addition for the acquisition of Electronics Boutique, including senior notes payable and senior floating rate notes payable issued and revolving credit facility entered into in October 2005 | 19,617 | 20,731 | ||||||
Write-off of deferred financing fees remaining on June 2004 revolving credit facility | (393 | ) | — | |||||
Amortization for the 52 weeks ended January 28, 2006 | (1,229 | ) | (251 | ) | ||||
Balance at January 28, 2006 | $ | 18,561 | $ | 20,480 | ||||
Amortization | Amortization of | |||||||
of Deferred | Intangible | |||||||
Year Ended | Financing Fees | Assets | ||||||
(In thousands) | ||||||||
January 2006 | $ | 3,216 | $ | 5,150 | ||||
January 2007 | 3,216 | 4,444 | ||||||
January 2008 | 3,216 | 3,582 | ||||||
January 2009 | 3,216 | 2,689 | ||||||
January 2010 | 2,986 | 1,796 | ||||||
$ | 15,850 | $ | 17,661 | |||||
8. | Debt |
F-21
Table of Contents
F-22
Table of Contents
F-23
Table of Contents
Year Ended | Amount | |||
(In thousands) | ||||
January 2007 | $ | 12,527 | ||
January 2008 | 12,549 | |||
January 2009 | 390 | |||
January 2010 | 627 | |||
January 2011 | 338 | |||
Thereafter | 957,771 | |||
$ | 984,202 | |||
9. | Comprehensive Income |
52 Weeks | 52 Weeks | 52 Weeks | |||||||||||
Ended | Ended | Ended | |||||||||||
January 28, | January 29, | January 31, | |||||||||||
2006 | 2005 | 2004 | |||||||||||
(In thousands) | |||||||||||||
Net earnings | $ | 100,784 | $ | 60,926 | $ | 63,467 | |||||||
Other comprehensive income: | |||||||||||||
Foreign currency translation adjustments | 319 | 271 | 296 | ||||||||||
Total comprehensive income | $ | 101,103 | $ | 61,197 | $ | 63,763 | |||||||
10. | Leases |
F-24
Table of Contents
52 Weeks | 52 Weeks | 52 Weeks | ||||||||||
Ended | Ended | Ended | ||||||||||
January 28, | January 29, | January 31, | ||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Minimum | $ | 126,562 | $ | 76,466 | $ | 58,105 | ||||||
Percentage rentals | 8,620 | 4,471 | 7,418 | |||||||||
$ | 135,182 | $ | 80,937 | $ | 65,523 | |||||||
Year Ended | Amount | |||
(In thousands) | ||||
January 2007 | $ | 197,128 | ||
January 2008 | 183,076 | |||
January 2009 | 156,223 | |||
January 2010 | 120,540 | |||
January 2011 | 86,014 | |||
Thereafter | 274,463 | |||
$ | 1,017,444 | |||
11. | Litigation |
F-25
Table of Contents
12. | Income Taxes |
52 Weeks | 52 Weeks | 52 Weeks | |||||||||||
Ended | Ended | Ended | |||||||||||
January 28, | January 29, | January 31, | |||||||||||
2006 | 2005 | 2004 | |||||||||||
(In thousands) | |||||||||||||
Current tax expense (benefit): | |||||||||||||
Federal | $ | 43,142 | $ | 23,780 | $ | 21,671 | |||||||
State | 3,950 | 4,355 | 4,733 | ||||||||||
Foreign | 7,954 | (634 | ) | (98 | ) | ||||||||
55,046 | 27,501 | 26,306 | |||||||||||
Deferred tax expense (benefit): | |||||||||||||
Federal | (7,016 | ) | 5,228 | 4,690 | |||||||||
State | (1,512 | ) | 6 | 1,023 | |||||||||
Foreign | 312 | 168 | — | ||||||||||
(8,216 | ) | 5,402 | 5,713 | ||||||||||
Charge in lieu of income taxes, relating to the tax effect of stock option tax deduction | 12,308 | 5,082 | 9,702 | ||||||||||
Total income tax expense | $ | 59,138 | $ | 37,985 | $ | 41,721 | |||||||
F-26
Table of Contents
52 Weeks | 52 Weeks | 52 Weeks | ||||||||||
Ended | Ended | Ended | ||||||||||
January 28, | January 29, | January 31, | ||||||||||
2006 | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
United States | $ | 142,362 | $ | 101,961 | $ | 105,606 | ||||||
International | 17,560 | (3,050 | ) | (418 | ) | |||||||
Total | $ | 159,922 | $ | 98,911 | $ | 105,188 | ||||||
52 Weeks | 52 Weeks | 52 Weeks | ||||||||||
Ended | Ended | Ended | ||||||||||
January 28, | January 29, | January 31, | ||||||||||
2006 | 2005 | 2004 | ||||||||||
Federal statutory tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
State income taxes, net of federal effect | 1.6 | 3.3 | 4.6 | |||||||||
Foreign income taxes | 1.4 | 0.6 | (0.1 | ) | ||||||||
Other (including permanent differences) | (1.0 | ) | (0.5 | ) | 0.2 | |||||||
37.0 | % | 38.4 | % | 39.7 | % | |||||||
January 28, | January 29, | |||||||||
2006 | 2005 | |||||||||
(In thousands) | ||||||||||
Deferred tax asset: | ||||||||||
Allowance for doubtful accounts | $ | 841 | $ | 59 | ||||||
Inventory capitalization costs | 4,663 | 1,157 | ||||||||
Inventory obsolescence reserve | 17,078 | 3,640 | ||||||||
Organization costs | 165 | 134 | ||||||||
Accrued liabilities | 7,740 | 1,650 | ||||||||
Gift certificate liability | 5,351 | 1,984 | ||||||||
Deferred rents | 9,806 | 3,438 | ||||||||
Deferred compensation | 139 | — | ||||||||
Merger-related liabilities | 11,403 | — | ||||||||
Foreign net operating losses | 3,360 | — | ||||||||
Translation adjustment | 931 | — | ||||||||
Accrued state taxes | (2,422 | ) | (213 | ) | ||||||
Total deferred tax benefits | 59,055 | 11,849 | ||||||||
F-27
Table of Contents
January 28, | January 29, | ||||||||
2006 | 2005 | ||||||||
(In thousands) | |||||||||
Deferred tax liabilities: | |||||||||
Goodwill | (25,202 | ) | (20,131 | ) | |||||
Prepaid expenses | (3,154 | ) | (2,626 | ) | |||||
Translation adjustment | — | (368 | ) | ||||||
Fixed assets | (2,680 | ) | (5,119 | ) | |||||
Foreign dividend | (295 | ) | — | ||||||
Accrued state taxes | 1,620 | 923 | |||||||
Total deferred tax liabilities | (29,711 | ) | (27,321 | ) | |||||
Net | $ | 29,344 | $ | (15,472 | ) | ||||
Financial statements: | |||||||||
Current deferred tax assets | $ | 42,282 | $ | 5,785 | |||||
Non-current deferred tax liabilities | $ | (12,938 | ) | $ | (21,257 | ) | |||
13. | Stock Option Plan |
F-28
Table of Contents
Weighted-Average | ||||||||
Shares | Exercise Price | |||||||
(Thousands of shares) | ||||||||
Balance, February 1, 2003 | 12,760 | $ | 8.83 | |||||
Granted | 1,119 | $ | 12.19 | |||||
Exercised | (1,943 | ) | $ | 3.55 | ||||
Forfeited | (629 | ) | $ | 16.55 | ||||
Balance, January 31, 2004 | 11,307 | $ | 9.63 | |||||
Granted | 1,676 | $ | 18.40 | |||||
Exercised | (1,196 | ) | $ | 7.93 | ||||
Forfeited | (381 | ) | $ | 16.81 | ||||
Balance, January 29, 2005 | 11,406 | $ | 10.86 | |||||
Granted | 2,222 | $ | 20.63 | |||||
Exercised | (1,740 | ) | $ | 11.95 | ||||
Forfeited | (432 | ) | $ | 19.45 | ||||
Balance, January 28, 2006 | 11,456 | $ | 12.31 | |||||
Options Outstanding | Options Exercisable | |||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||
Number | Average | Average | Number | Average | ||||||||||||||||
Outstanding | Remaining | Contractual | Exercisable | Exercise | ||||||||||||||||
Range of Exercise Prices | (000s) | Life | Price | (000s) | Price | |||||||||||||||
$ 3.53 - $ 4.51 | 4,987 | 5.32 | $ | 4.41 | 4,987 | $ | 4.41 | |||||||||||||
$11.80 - $12.71 | 542 | 7.18 | $ | 11.88 | 284 | $ | 11.85 | |||||||||||||
$15.10 - $16.48 | 166 | 8.01 | $ | 15.62 | 77 | $ | 15.79 | |||||||||||||
$18.00 - $21.25 | 5,641 | 7.45 | $ | 18.85 | 2,961 | $ | 18.09 | |||||||||||||
$35.88 | 120 | 9.62 | $ | 35.88 | — | $ | — | |||||||||||||
$ 3.53 - $35.88 | 11,456 | 6.55 | $ | 12.31 | 8,309 | $ | 9.64 | |||||||||||||
14. | Employees’ Defined Contribution Plan |
F-29
Table of Contents
15. | Certain Relationships and Related Transactions |
F-30
Table of Contents
16. | Significant Products |
52 Weeks Ended | 52 Weeks Ended | 52 Weeks Ended | |||||||||||||||||||||||
January 28, 2006 | January 29, 2005 | January 31, 2004 | |||||||||||||||||||||||
Percent | Percent | Percent | |||||||||||||||||||||||
Sales | of Total | Sales | of Total | Sales | of Total | ||||||||||||||||||||
Sales: | |||||||||||||||||||||||||
New video game hardware | $ | 503.2 | 16.3 | % | $ | 209.2 | 11.4 | % | $ | 198.1 | 12.6 | % | |||||||||||||
New video game software | 1,244.9 | 40.3 | % | 776.7 | 42.1 | % | 647.9 | 41.0 | % | ||||||||||||||||
Used video game products | 808.0 | 26.1 | % | 511.8 | 27.8 | % | 403.3 | 25.5 | % | ||||||||||||||||
Other | 535.7 | 17.3 | % | 345.1 | 18.7 | % | 329.5 | 20.9 | % | ||||||||||||||||
Total | $ | 3,091.8 | 100.0 | % | $ | 1,842.8 | 100.0 | % | $ | 1,578.8 | 100.0 | % | |||||||||||||
52 Weeks Ended | 52 Weeks Ended | 52 Weeks Ended | |||||||||||||||||||||||
January 28, 2006 | January 29, 2005 | January 31, 2004 | |||||||||||||||||||||||
Gross | Gross | Gross | |||||||||||||||||||||||
Gross | Profit | Gross | Profit | Gross | Profit | ||||||||||||||||||||
Profit | Percent | Profit | Percent | Profit | Percent | ||||||||||||||||||||
Gross Profit: | |||||||||||||||||||||||||
New video game hardware | $ | 30.9 | 6.1 | % | $ | 8.5 | 4.1 | % | $ | 10.6 | 5.3 | % | |||||||||||||
New video game software | 266.5 | 21.4 | % | 151.9 | 19.6 | % | 128.6 | 19.9 | % | ||||||||||||||||
Used video game products | 383.0 | 47.4 | % | 231.6 | 45.3 | % | 179.3 | 44.5 | % | ||||||||||||||||
Other | 191.6 | 35.8 | % | 117.3 | 34.0 | % | 114.4 | 34.7 | % | ||||||||||||||||
Total | $ | 872.0 | 28.2 | % | $ | 509.3 | 27.6 | % | $ | 432.9 | 27.4 | % | |||||||||||||
17. | Segment Information |
F-31
Table of Contents
United | ||||||||||||||||||||||||
Fiscal Year Ended January 28, 2006 | States | Canada | Australia | Europe | Other | Consolidated | ||||||||||||||||||
Sales | $ | 2,709.8 | $ | 111.4 | $ | 94.4 | $ | 176.2 | $ | — | $ | 3,091.8 | ||||||||||||
Depreciation and amortization | 58.6 | 2.6 | 1.9 | 3.3 | — | 66.4 | ||||||||||||||||||
Operating earnings | 173.7 | 7.9 | 11.0 | 0.1 | — | 192.7 | ||||||||||||||||||
Interest income | (4.6 | ) | (0.2 | ) | (0.3 | ) | (1.3 | ) | 1.3 | (5.1 | ) | |||||||||||||
Interest expense | 28.4 | 0.2 | — | 3.1 | (1.3 | ) | 30.4 | |||||||||||||||||
Earnings (loss) before income tax expense (benefit) | 142.4 | 7.9 | 11.2 | (1.6 | ) | — | 159.9 | |||||||||||||||||
Goodwill | 1,091.1 | 116.8 | 146.4 | 38.1 | — | 1,392.4 | ||||||||||||||||||
Other long-lived assets | 359.1 | 37.6 | 21.0 | 83.8 | — | 501.5 | ||||||||||||||||||
Total assets | 2,347.1 | 210.4 | 214.7 | 242.9 | — | 3,015.1 |
United | ||||||||||||||||||||||||
Fiscal Year Ended January 29, 2005 | States | Canada | Australia | Europe | Other | Consolidated | ||||||||||||||||||
Sales | $ | 1,818.2 | $ | — | $ | — | $ | 24.6 | $ | — | $ | 1,842.8 | ||||||||||||
Depreciation and amortization | 36.2 | — | — | 0.6 | — | 36.8 | ||||||||||||||||||
Operating earnings (loss) | 102.1 | — | — | (3.0 | ) | — | 99.1 | |||||||||||||||||
Interest income | (1.8 | ) | — | — | (0.1 | ) | — | (1.9 | ) | |||||||||||||||
Interest expense | 2.0 | — | — | 0.1 | — | 2.1 | ||||||||||||||||||
Earnings (loss) before income tax expense (benefit) | 101.9 | — | — | (3.0 | ) | — | 98.9 | |||||||||||||||||
Goodwill | 318.0 | — | — | 2.9 | — | 320.9 | ||||||||||||||||||
Other long-lived assets | 164.9 | — | — | 5.6 | (0.4 | ) | 170.1 | |||||||||||||||||
Total assets | 897.5 | — | — | 18.9 | (0.4 | ) | 916.0 |
United | ||||||||||||||||||||||||
Fiscal Year Ended January 31, 2004 | States | Canada | Australia | Europe | Other | Consolidated | ||||||||||||||||||
Sales | $ | 1,564.0 | $ | — | $ | — | $ | 14.8 | $ | — | $ | 1,578.8 | ||||||||||||
Depreciation and amortization | 29.1 | — | — | 0.2 | — | 29.3 | ||||||||||||||||||
Operating earnings (loss) | 104.8 | — | — | (0.4 | ) | — | 104.4 | |||||||||||||||||
Interest income | (1.5 | ) | — | — | — | — | (1.5 | ) | ||||||||||||||||
Interest expense | 0.7 | — | — | — | — | 0.7 | ||||||||||||||||||
Earnings (loss) before income tax expense (benefit) | 105.6 | — | — | (0.4 | ) | — | 105.2 | |||||||||||||||||
Goodwill | 318.0 | — | — | 2.8 | — | 320.8 | ||||||||||||||||||
Other long-lived assets | 192.8 | — | — | 3.0 | — | 195.8 | ||||||||||||||||||
Total assets | 893.6 | — | — | 12.4 | (3.8 | ) | 902.2 |
F-32
Table of Contents
18. | Supplemental Cash Flow Information |
52 Weeks | 52 Weeks | 52 Weeks | |||||||||||
Ended | Ended | Ended | |||||||||||
January 28, | January 29, | January 31, | |||||||||||
2006 | 2005 | 2004 | |||||||||||
(In thousands) | |||||||||||||
Cash paid during the period for: | |||||||||||||
Interest | $ | 9,258 | $ | 1,447 | $ | 308 | |||||||
Income taxes | 40,434 | 19,903 | 56,555 | ||||||||||
Subsidiaries acquired: | |||||||||||||
Goodwill | 1,071,464 | 62 | 2,869 | ||||||||||
Cash received in acquisition | 120,696 | — | 252 | ||||||||||
Net assets acquired (or liabilities assumed) | 251,796 | — | 158 | ||||||||||
Issuance of common shares to EB stockholders | (437,144 | ) | — | — | |||||||||
Cash paid | $ | 1,006,812 | $ | 62 | $ | 3,279 | |||||||
19. | Repurchase of Equity Securities |
20. | Shareholders’ Equity |
F-33
Table of Contents
21. | Consolidating Financial Statements |
F-34
Table of Contents
Issuers and | ||||||||||||||||||
Guarantor | Non-Guarantor | |||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | ||||||||||||||||
January 28, | January 28, | January 28, | ||||||||||||||||
2006 | 2006 | Eliminations | 2006 | |||||||||||||||
(Amounts in thousands, except per share amounts) | ||||||||||||||||||
ASSETS: | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 328,923 | $ | 72,670 | $ | — | $ | 401,593 | ||||||||||
Receivables, net | 87,039 | 12,228 | (60,529 | ) | 38,738 | |||||||||||||
Merchandise inventories, net | 470,013 | 133,165 | — | 603,178 | ||||||||||||||
Prepaid expenses and other current assets | 11,016 | 5,323 | — | 16,339 | ||||||||||||||
Prepaid taxes | 19,601 | (466 | ) | — | 19,135 | |||||||||||||
Deferred taxes | 40,890 | 1,392 | — | 42,282 | ||||||||||||||
Total current assets | 957,482 | 224,312 | (60,529 | ) | 1,121,265 | |||||||||||||
Property and equipment: | ||||||||||||||||||
Land | 2,000 | 8,257 | — | 10,257 | ||||||||||||||
Buildings and leasehold improvements | 194,069 | 68,839 | — | 262,908 | ||||||||||||||
Fixtures and equipment | 288,060 | 55,837 | — | 343,897 | ||||||||||||||
484,129 | 132,933 | — | 617,062 | |||||||||||||||
Less accumulated depreciation and amortization | 177,241 | 7,696 | — | 184,937 | ||||||||||||||
Net property and equipment | 306,888 | 125,237 | — | 432,125 | ||||||||||||||
Investment | 463,619 | — | (463,619 | ) | — | |||||||||||||
Goodwill, net | 1,091,057 | 301,295 | — | 1,392,352 | ||||||||||||||
Assets held for sale | 19,297 | — | — | 19,297 | ||||||||||||||
Deferred financing fees | 18,536 | 25 | — | 18,561 | ||||||||||||||
Other noncurrent assets | 14,341 | 17,178 | — | 31,519 | ||||||||||||||
Total other assets | 1,606,850 | 318,498 | (463,619 | ) | 1,461,729 | |||||||||||||
Total assets | $ | 2,871,220 | $ | 668,047 | $ | (524,148 | ) | $ | 3,015,119 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT): | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 435,128 | $ | 108,160 | $ | — | $ | 543,288 | ||||||||||
Accrued liabilities | 286,505 | 105,883 | (60,529 | ) | 331,859 | |||||||||||||
Note payable, current portion | 12,452 | 75 | — | 12,527 | ||||||||||||||
Total current liabilities | 734,085 | 214,118 | (60,529 | ) | 887,674 | |||||||||||||
Deferred taxes | 23,923 | (10,985 | ) | — | 12,938 | |||||||||||||
Senior notes payable, long-term portion, net | 641,788 | — | — | 641,788 | ||||||||||||||
Senior floating rate notes payable, long-term portion | 300,000 | — | — | 300,000 | ||||||||||||||
Notes payable, long-term portion | 21,189 | 486 | — | 21,675 | ||||||||||||||
Other long-term liabilities | 35,522 | 809 | — | 36,331 | ||||||||||||||
Total long-term liabilities | 1,022,422 | (9,690 | ) | — | 1,012,732 | |||||||||||||
Total liabilities | 1,756,507 | 204,428 | (60,529 | ) | 1,900,406 | |||||||||||||
Stockholders’ equity (deficit): | ||||||||||||||||||
Preferred stock — authorized 5,000 shares; no shares issued or outstanding | — | 47,313 | (47,313 | ) | — | |||||||||||||
Class A common stock — $.001 par value; authorized 300,000 shares; 42,895 shares issued and outstanding | 43 | 6,938 | (6,938 | ) | 43 | |||||||||||||
Class B common stock — $.001 par value; authorized 100,000 shares; 29,902 shares issued and outstanding | 30 | 8,197 | (8,197 | ) | 30 | |||||||||||||
Additional paid-in-capital | 921,349 | 333,163 | (333,163 | ) | 921,349 | |||||||||||||
Accumulated other comprehensive income (loss) | 886 | 50 | (50 | ) | 886 | |||||||||||||
Retained earnings | 192,405 | 67,958 | (67,958 | ) | 192,405 | |||||||||||||
Total stockholders’ equity (deficit) | 1,114,713 | 463,619 | (463,619 | ) | 1,114,713 | |||||||||||||
Total liabilities and stockholders’ equity (deficit) | $ | 2,871,220 | $ | 668,047 | $ | (524,148 | ) | $ | 3,015,119 | |||||||||
F-35
Table of Contents
Issuers and | ||||||||||||||||||
Guarantor | Non-Guarantor | |||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | ||||||||||||||||
January 29, | January 29, | January 29, | ||||||||||||||||
2005 | 2005 | Eliminations | 2005 | |||||||||||||||
(Amounts in thousands, except per share amounts) | ||||||||||||||||||
ASSETS: | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 167,788 | $ | 3,204 | $ | — | $ | 170,992 | ||||||||||
Receivables, net | 9,516 | 296 | — | 9,812 | ||||||||||||||
Merchandise inventories, net | 210,634 | 5,662 | — | 216,296 | ||||||||||||||
Prepaid expenses and other current assets | 17,997 | 403 | — | 18,400 | ||||||||||||||
Prepaid taxes | 2,921 | 782 | — | 3,703 | ||||||||||||||
Deferred taxes | 5,785 | — | — | 5,785 | ||||||||||||||
Total current assets | 414,641 | 10,347 | — | 424,988 | ||||||||||||||
Property and equipment: | ||||||||||||||||||
Land | 2,000 | — | — | 2,000 | ||||||||||||||
Leasehold improvements | 104,418 | 2,010 | — | 106,428 | ||||||||||||||
Fixtures and equipment | 180,119 | 4,417 | — | 184,536 | ||||||||||||||
286,537 | 6,427 | — | 292,964 | |||||||||||||||
Less accumulated depreciation and amortization | 123,791 | 774 | — | 124,565 | ||||||||||||||
Net property and equipment | 162,746 | 5,653 | — | 168,399 | ||||||||||||||
Goodwill, net | 317,957 | 2,931 | — | 320,888 | ||||||||||||||
Deferred financing fees | 566 | — | — | 566 | ||||||||||||||
Other noncurrent assets | 1,629 | — | (487 | ) | 1,142 | |||||||||||||
Total other assets | 320,152 | 2,931 | (487 | ) | 322,596 | |||||||||||||
Total assets | $ | 897,539 | $ | 18,931 | $ | (487 | ) | $ | 915,983 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT): | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 205,014 | $ | 1,725 | $ | — | $ | 206,739 | ||||||||||
Accrued liabilities | 78,264 | 16,719 | — | 94,983 | ||||||||||||||
Note payable, current portion | 12,173 | — | — | 12,173 | ||||||||||||||
Total current liabilities | 295,451 | 18,444 | — | 313,895 | ||||||||||||||
Deferred taxes | 21,257 | — | — | 21,257 | ||||||||||||||
Notes payable, long-term portion | 24,347 | — | — | 24,347 | ||||||||||||||
Deferred rent and other long-term liabilities | 13,473 | — | — | 13,473 | ||||||||||||||
Total long-term liabilities | 59,077 | — | — | 59,077 | ||||||||||||||
Total liabilities | 354,528 | 18,444 | — | 372,972 | ||||||||||||||
Stockholders’ equity (deficit): | ||||||||||||||||||
Preferred stock — authorized 5,000 shares; no shares issued or outstanding | — | — | — | — | ||||||||||||||
Class A common stock — $.001 par value; authorized 300,000 shares; 24,189 shares issued | 24 | — | — | 24 | ||||||||||||||
Class B common stock — $.001 par value; authorized 100,000 shares; 29,902 shares issued and outstanding | 30 | — | — | 30 | ||||||||||||||
Additional paid-in-capital | 500,769 | 3,340 | (3,340 | ) | 500,769 | |||||||||||||
Accumulated other comprehensive income | 567 | (118 | ) | 118 | 567 | |||||||||||||
Retained earnings | 91,621 | (2,735 | ) | 2,735 | 91,621 | |||||||||||||
Treasury stock, at cost, 3,263 shares | (50,000 | ) | — | — | (50,000 | ) | ||||||||||||
Total stockholders’ equity (deficit) | 543,011 | 487 | (487 | ) | 543,011 | |||||||||||||
Total liabilities and stockholders’ equity (deficit) | $ | 897,539 | $ | 18,931 | $ | (487 | ) | $ | 915,983 | |||||||||
F-36
Table of Contents
Issuers and | |||||||||||||||||
Guarantor | Non-Guarantor | ||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | |||||||||||||||
January 28, | January 28, | January 28, | |||||||||||||||
For the Fiscal Year Ended January 28, 2006 | 2006 | 2006 | Eliminations | 2006 | |||||||||||||
(Amounts in thousands) | |||||||||||||||||
Sales | $ | 2,709,786 | $ | 381,997 | $ | — | $ | 3,091,783 | |||||||||
Cost of sales | 1,927,765 | 291,988 | — | 2,219,753 | |||||||||||||
Gross profit | 782,021 | 90,009 | — | 872,030 | |||||||||||||
Selling, general and administrative expenses | 536,130 | 63,213 | — | 599,343 | |||||||||||||
Depreciation and amortization | 58,628 | 7,727 | — | 66,355 | |||||||||||||
Merger-related expenses | 13,600 | — | — | 13,600 | |||||||||||||
Operating earnings | 173,663 | 19,069 | — | 192,732 | |||||||||||||
Interest income | (9,123 | ) | (1,791 | ) | 5,779 | (5,135 | ) | ||||||||||
Interest expense | 32,906 | 3,300 | (5,779 | ) | 30,427 | ||||||||||||
Merger-related interest expense | 7,518 | 7,518 | |||||||||||||||
Earnings (loss) before income tax expense (benefit) | 142,362 | 17,560 | — | 159,922 | |||||||||||||
Income tax expense (benefit) | 50,872 | 8,266 | — | 59,138 | |||||||||||||
Net earnings (loss) | $ | 91,490 | $ | 9,294 | $ | — | $ | 100,784 | |||||||||
Issuers and | |||||||||||||||||
Guarantor | Non-Guarantor | ||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | |||||||||||||||
January 29, | January 29, | January 29, | |||||||||||||||
For the Fiscal Year Ended January 29, 2005 | 2005 | 2005 | Eliminations | 2005 | |||||||||||||
(Amounts in thousands) | |||||||||||||||||
Sales | $ | 1,818,158 | $ | 24,648 | $ | — | $ | 1,842,806 | |||||||||
Cost of sales | 1,314,937 | 18,569 | — | 1,333,506 | |||||||||||||
Gross profit | 503,221 | 6,079 | — | 509,300 | |||||||||||||
Selling, general and administrative expenses | 364,903 | 8,461 | — | 373,364 | |||||||||||||
Depreciation and amortization | 36,187 | 602 | — | 36,789 | |||||||||||||
Operating earnings (loss) | 102,131 | (2,984 | ) | — | 99,147 | ||||||||||||
Interest income | (1,854 | ) | (65 | ) | — | (1,919 | ) | ||||||||||
Interest expense | 2,024 | 131 | — | 2,155 | |||||||||||||
Earnings (loss) before income tax expense (benefit) | 101,961 | (3,050 | ) | — | 98,911 | ||||||||||||
Income tax expense (benefit) | 38,619 | (634 | ) | — | 37,985 | ||||||||||||
Net earnings (loss) | $ | 63,342 | $ | (2,416 | ) | $ | — | $ | 60,926 | ||||||||
F-37
Table of Contents
Issuers and | |||||||||||||||||
Guarantor | Non-Guarantor | ||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | |||||||||||||||
January 31, | January 31, | January 31, | |||||||||||||||
For the Fiscal Year Ended January 31, 2004 | 2004 | 2004 | Eliminations | 2004 | |||||||||||||
(Amounts in thousands) | |||||||||||||||||
Sales | $ | 1,564,037 | $ | 14,801 | $ | — | $ | 1,578,838 | |||||||||
Cost of sales | 1,133,996 | 11,897 | — | 1,145,893 | |||||||||||||
Gross profit | 430,041 | 2,904 | — | 432,945 | |||||||||||||
Selling, general and administrative expenses | 296,146 | 3,047 | — | 299,193 | |||||||||||||
Depreciation and amortization | 29,122 | 246 | — | 29,368 | |||||||||||||
Operating earnings (loss) | 104,773 | (389 | ) | — | 104,384 | ||||||||||||
Interest income | (1,467 | ) | — | — | (1,467 | ) | |||||||||||
Interest expense | 634 | 29 | — | 663 | |||||||||||||
Earnings (loss) before income tax expense (benefit) | 105,606 | (418 | ) | — | 105,188 | ||||||||||||
Income tax expense (benefit) | 41,820 | (99 | ) | — | 41,721 | ||||||||||||
Net earnings (loss) | $ | 63,786 | $ | (319 | ) | $ | — | $ | 63,467 | ||||||||
F-38
Table of Contents
Issuers and | |||||||||||||||||||
Guarantor | Non-Guarantor | ||||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | |||||||||||||||||
January 28, | January 28, | January 28, | |||||||||||||||||
For the Fiscal Year Ended January 28, 2006 | 2006 | 2006 | Eliminations | 2006 | |||||||||||||||
(Amounts in thousands) | |||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net earnings | 91,490 | $ | 9,294 | $ | — | $ | 100,784 | ||||||||||||
Adjustments to reconcile net earnings to net cash flows provided by operating activities: | |||||||||||||||||||
Depreciation and amortization (including amounts in cost of sales) | 58,932 | 7,727 | — | 66,659 | |||||||||||||||
Provision for inventory reserves | 24,726 | 377 | — | 25,103 | |||||||||||||||
Amortization of loan cost | 1,229 | — | — | 1,229 | |||||||||||||||
Amortization of original issue discount on senior notes | 316 | — | — | 316 | |||||||||||||||
Restricted stock expense | 347 | — | — | 347 | |||||||||||||||
Deferred taxes | (8,528 | ) | 312 | — | (8,216 | ) | |||||||||||||
Tax benefit realized from exercise of stock options by employees | 12,308 | — | — | 12,308 | |||||||||||||||
Loss on disposal and impairment of property and equipment | 11,648 | — | — | 11,648 | |||||||||||||||
Increase in deferred rent and other long-term liabilities for scheduled rent increases in long-term leases | 3,216 | 453 | — | 3,669 | |||||||||||||||
Increase in liability to landlords for tenant allowances, net | 936 | (734 | ) | — | 202 | ||||||||||||||
Decrease in value of foreign exchange contracts | (2,421 | ) | — | — | (2,421 | ) | |||||||||||||
Changes in operating assets and liabilities, net of business acquired | |||||||||||||||||||
Receivables, net | (6,728 | ) | (3,267 | ) | — | (9,995 | ) | ||||||||||||
Merchandise inventories | (75,311 | ) | (16,052 | ) | — | (91,363 | ) | ||||||||||||
Prepaid expenses and other current assets | 19,402 | 82 | — | 19,484 | |||||||||||||||
Prepaid taxes | 18,172 | (4,562 | ) | — | 13,610 | ||||||||||||||
Accounts payable and accrued liabilities | 89,675 | 58,379 | — | 148,054 | |||||||||||||||
Net cash flows provided by operating activities | 239,409 | 52,009 | — | 291,418 | |||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Purchase of property and equipment | (93,419 | ) | (17,277 | ) | — | (110,696 | ) | ||||||||||||
Merger with Electronics Boutique, net of cash acquired | (920,504 | ) | 34,388 | — | (886,116 | ) | |||||||||||||
Net cash flows used in investing activities | (1,013,923 | ) | 17,111 | — | (996,812 | ) | |||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Issuance of senior notes payable relating to Electronics Boutique merger, net of discount | 641,472 | — | — | 641,472 | |||||||||||||||
Issuance of senior floating rate notes payable relating to Electronics Boutique merger | 300,000 | — | — | 300,000 | |||||||||||||||
Issuance of shares relating to employee stock options | 20,800 | — | — | 20,800 | |||||||||||||||
Net increase in other noncurrent assets and deferred financing fees | (14,450 | ) | 984 | — | (13,466 | ) | |||||||||||||
Payment of debt relating to repurchase of Class B shares | (12,173 | ) | — | — | (12,173 | ) | |||||||||||||
Payment of debt relating to pre-existing Electronics Boutique debt | — | (956 | ) | — | (956 | ) | |||||||||||||
Net cash flows provided by (used in) financing activities | 935,649 | 28 | — | 935,677 | |||||||||||||||
Exchange rate effect on cash and cash equivalents | — | 318 | — | 318 | |||||||||||||||
Net decrease in cash and cash equivalents | 161,135 | 69,466 | — | 230,601 | |||||||||||||||
Cash and cash equivalents at beginning of period | 167,788 | 3,204 | — | 170,992 | |||||||||||||||
Cash and cash equivalents at end of period | 328,923 | 72,670 | — | 401,593 | |||||||||||||||
F-39
Table of Contents
Issuers and | |||||||||||||||||||
Guarantor | Non-Guarantor | ||||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | |||||||||||||||||
January 29, | January 29, | January 29, | |||||||||||||||||
For the Fiscal Year Ended January 29, 2005 | 2005 | 2005 | Eliminations | 2005 | |||||||||||||||
(Amounts in thousands) | |||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net earnings (loss) | $ | 63,342 | $ | (2,416 | ) | $ | — | $ | 60,926 | ||||||||||
Adjustments to reconcile net earnings to net cash flows provided by operating activities: | |||||||||||||||||||
Depreciation and amortization (including amounts in cost of sales) | 36,418 | 601 | — | 37,019 | |||||||||||||||
Provision for inventory reserves | 17,808 | — | — | 17,808 | |||||||||||||||
Amortization of loan cost | 432 | — | — | 432 | |||||||||||||||
Deferred taxes | 5,402 | — | — | 5,402 | |||||||||||||||
Tax benefit realized from exercise of stock options by employees | 5,082 | — | — | 5,082 | |||||||||||||||
Loss on disposal of property and equipment | 382 | — | — | 382 | |||||||||||||||
Increase in deferred rent and other long-term liabilities for scheduled rent increases in long-term leases | 5,350 | (1 | ) | — | 5,349 | ||||||||||||||
Increase in liability to landlords for tenant allowances, net | 1,644 | — | 1,644 | ||||||||||||||||
Minority interest | — | (96 | ) | — | (96 | ) | |||||||||||||
Changes in operating assets and liabilities, net Receivables, net | (1,122 | ) | 855 | — | (267 | ) | |||||||||||||
Merchandise inventories | (7,964 | ) | (2,614 | ) | — | (10,578 | ) | ||||||||||||
Prepaid expenses and other current assets | (3,874 | ) | (186 | ) | — | (4,060 | ) | ||||||||||||
Prepaid taxes | 9,734 | (662 | ) | — | 9,072 | ||||||||||||||
Accounts payable and accrued liabilities | 8,618 | 9,254 | — | 17,872 | |||||||||||||||
Net cash flows provided by operating activities | 141,252 | 4,735 | — | 145,987 | |||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Purchase of property and equipment | (95,149 | ) | (3,156 | ) | — | (98,305 | ) | ||||||||||||
Acquisition of controlling interest in Gamesworld Group Limited, net of cash received | (62 | ) | — | (62 | ) | ||||||||||||||
Net cash flows used in investing activities | (95,149 | ) | (3,218 | ) | — | (98,367 | ) | ||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Issuance of shares relating to employee stock options | 9,474 | — | — | 9,474 | |||||||||||||||
Net increase in other noncurrent assets | (825 | ) | — | — | (825 | ) | |||||||||||||
Purchase of treasury shares through repurchase program | (14,994 | ) | — | — | (14,994 | ) | |||||||||||||
Repurchase of Class B shares | (111,781 | ) | — | — | (111,781 | ) | |||||||||||||
Issuance of debt relating to the Class B share repurchase | 74,020 | — | — | 74,020 | |||||||||||||||
Repayment of debt relating to the Class B shares | (37,500 | ) | — | — | (37,500 | ) | |||||||||||||
Net cash flows provided by (used in) financing activities | (81,606 | ) | — | — | (81,606 | ) | |||||||||||||
Exchange rate effect on cash and cash equivalents | — | 73 | — | 73 | |||||||||||||||
Net decrease in cash and cash equivalents | (35,503 | ) | 1,590 | — | (33,913 | ) | |||||||||||||
Cash and cash equivalents at beginning of period | 203,291 | 1,614 | — | 204,905 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 167,788 | $ | 3,204 | $ | — | $ | 170,992 | |||||||||||
F-40
Table of Contents
Issuers and | |||||||||||||||||||
Guarantor | Non-Guarantor | ||||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | |||||||||||||||||
January 31, | January 31, | January 31, | |||||||||||||||||
For the Fiscal Year Ended January 31, 2004 | 2004 | 2004 | Eliminations | 2004 | |||||||||||||||
(Amounts in thousands) | |||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net earnings (loss) | $ | 63,786 | $ | (319 | ) | $ | — | $ | 63,467 | ||||||||||
Adjustments to reconcile net earnings to net cash flows provided by (used in) operating activities: | |||||||||||||||||||
Depreciation and amortization (including amounts in cost of sales) | 29,241 | 246 | — | 29,487 | |||||||||||||||
Provision for inventory reserves | 12,901 | — | — | 12,901 | |||||||||||||||
Amortization of loan cost | 313 | — | — | 313 | |||||||||||||||
Deferred taxes | 5,713 | — | — | 5,713 | |||||||||||||||
Tax benefit realized from exercise of stock options by employees | 9,702 | — | — | 9,702 | |||||||||||||||
Loss on disposal of property and equipment | 213 | — | — | 213 | |||||||||||||||
Increase in deferred rent and other long-term liabilities for scheduled rent increases in long-term leases | 342 | (4 | ) | — | 338 | ||||||||||||||
Increase in liability to landlords for tenant allowances, net | 937 | — | — | 937 | |||||||||||||||
Minority interest | — | (298 | ) | — | (298 | ) | |||||||||||||
Changes in operating assets and liabilities, net Receivables, net | (1,502 | ) | (452 | ) | — | (1,954 | ) | ||||||||||||
Merchandise inventories | (72,010 | ) | (702 | ) | — | (72,712 | ) | ||||||||||||
Prepaid expenses and other current assets | (3,996 | ) | (115 | ) | — | (4,111 | ) | ||||||||||||
Prepaid taxes | (12,656 | ) | (119 | ) | — | (12,775 | ) | ||||||||||||
Accounts payable and accrued liabilities | 33,340 | 6,716 | — | 40,056 | |||||||||||||||
Net cash flows provided by (used in) operating activities | 66,324 | 4,953 | — | 71,277 | |||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Purchase of property and equipment | (63,155 | ) | (1,329 | ) | — | (64,484 | ) | ||||||||||||
Acquisition of controlling interest in Gamesworld Group Limited, net of cash received | — | (3,027 | ) | — | (3,027 | ) | |||||||||||||
Net cash flows used in investing activities | (63,155 | ) | (4,356 | ) | — | (67,511 | ) | ||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Issuance of shares relating to employee stock options | 6,899 | — | — | 6,899 | |||||||||||||||
Net increase in other noncurrent assets | (3,801 | ) | 3,279 | — | (522 | ) | |||||||||||||
Purchase of treasury shares through repurchase program | (35,006 | ) | — | — | (35,006 | ) | |||||||||||||
Repayment of debt of Gamesworld Group Limited | — | (2,296 | ) | — | (2,296 | ) | |||||||||||||
Net cash flows provided by (used in) financing activities | (31,908 | ) | 983 | — | (30,925 | ) | |||||||||||||
Exchange rate effect on cash and cash equivalents | — | 34 | — | 34 | |||||||||||||||
Net decrease in cash and cash equivalents | (28,739 | ) | 1,614 | — | (27,125 | ) | |||||||||||||
Cash and cash equivalents at beginning of period | 232,030 | — | — | 232,030 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 203,291 | $ | 1,614 | $ | — | $ | 204,905 | |||||||||||
F-41
Table of Contents
22. | Unaudited Quarterly Financial Information |
Fiscal Year Ended January 28, 2006 | Fiscal Year Ended January 29, 2005 | |||||||||||||||||||||||||||||||
1st | 2nd | 3rd | 4th | 1st | 2nd | 3rd | 4th | |||||||||||||||||||||||||
Quarter | Quarter | Quarter(4) | Quarter(4) | Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||||||||
(Amounts in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
Sales | $ | 474,727 | $ | 415,930 | $ | 534,212 | $ | 1,666,914 | $ | 371,736 | $ | 345,593 | $ | 416,737 | $ | 708,740 | ||||||||||||||||
Gross profit | 126,037 | 128,155 | 176,720 | 441,118 | 104,642 | 106,286 | 118,959 | 179,413 | ||||||||||||||||||||||||
Operating earnings(1) | 16,857 | 13,190 | 10,095 | 152,590 | 10,770 | 12,545 | 19,852 | 55,980 | ||||||||||||||||||||||||
Net earnings (loss)(2) | 10,326 | 7,903 | (2,460 | ) | 85,015 | 6,678 | 7,672 | 12,059 | 34,517 | |||||||||||||||||||||||
Net earnings (loss) per Class A and Class B common share — basic(3) | 0.20 | 0.15 | (0.04 | ) | 1.17 | 0.12 | 0.14 | 0.22 | 0.68 | |||||||||||||||||||||||
Net earnings (loss) per Class A and Class B common share — diluted(3) | 0.19 | 0.14 | (0.04 | ) | 1.10 | 0.11 | 0.13 | 0.21 | 0.64 |
(1) | Includes the following pre-tax charges: |
• | $2,750 in the first quarter of the fiscal year ended January 29, 2005 attributable to the California labor litigation settlement, | |
• | $2,800 in the third quarter of the fiscal year ended January 29, 2005 attributable to the professional fees related to the spin-off by Barnes & Noble of Historical GameStop’s Class B common shares, and | |
• | $5,373 in the fourth quarter of the fiscal year ended January 29, 2005 attributable to correcting the Company’s method of accounting for rent expense and depreciation expense on leasehold improvements for those leases that do not contain a renewal option. |
(2) | Includes the following after-tax charges: |
• | $1,708 in the first quarter of the fiscal year ended January 29, 2005 attributable to the California labor litigation settlement, | |
• | $1,739 in the third quarter of the fiscal year ended January 29, 2005 attributable to the professional fees related to the spin-off by Barnes & Noble of Historical GameStop’s Class B common shares, and | |
• | $3,312 in the fourth quarter of the fiscal year ended January 29, 2005 attributable to correcting the Company’s method of accounting for rent expense and depreciation expense on leasehold improvements for those leases that do not contain a renewal option. |
(3) | Includes the following charges per basic and diluted share: |
• | $0.03 per basic and diluted share in the first quarter of the fiscal year ended January 29, 2005 attributable to the California labor litigation settlement, | |
• | $0.03 per basic and diluted share in the third quarter of the fiscal year ended January 29, 2005 attributable to the professional fees related to the spin-off by Barnes & Noble of Historical GameStop’s Class B common shares, and | |
• | $0.07 and $0.06 per basic and diluted share, respectively, in the fourth quarter of the fiscal year ended January 29, 2005 attributable to correcting the Company’s method of accounting for rent expense and depreciation expense on leasehold improvements for those leases that do not contain a renewal option. |
(4) | The results for the third quarter of the fiscal year ended January 28, 2006 include the results of EB from October 9, 2005, the merger date, through October 29, 2005 and include merger-related expenses of $11,329 and merger-related interest expense of $7,518. The results for the fourth quarter of the fiscal year ended January 28, 2006 include the results of EB and merger-related expenses of $2,271. |
F-42
Table of Contents
(signed) KPMG |
F-43
Table of Contents
January 29, | January 31, | |||||||||
2005 | 2004 | |||||||||
(Amounts in thousands, | ||||||||||
except per share amounts) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 94,345 | $ | 97,793 | ||||||
Marketable securities | 80,950 | 60,175 | ||||||||
Accounts receivable: | ||||||||||
Trade and vendors | 17,685 | 22,407 | ||||||||
Other | 3,585 | 17,405 | ||||||||
Merchandise inventories | 291,678 | 253,577 | ||||||||
Deferred tax asset | 9,438 | 9,895 | ||||||||
Prepaid expenses and other current assets | 17,955 | 16,435 | ||||||||
Total current assets | 515,636 | 477,687 | ||||||||
Property and equipment: | ||||||||||
Building and leasehold improvements | 153,883 | 122,852 | ||||||||
Furniture, fixtures and equipment | 154,896 | 123,265 | ||||||||
Land | 8,120 | 5,827 | ||||||||
Construction in progress | 2,473 | 2,826 | ||||||||
319,372 | 254,770 | |||||||||
Less accumulated depreciation and amortization | 145,951 | 116,766 | ||||||||
Net property and equipment | 173,421 | 138,004 | ||||||||
Goodwill and other intangible assets, net of accumulated amortization of $1,155 and $666 | 16,308 | 13,662 | ||||||||
Deferred tax asset | 12,433 | 10,476 | ||||||||
Other non-current assets | 6,402 | 4,103 | ||||||||
Total assets | $ | 724,200 | $ | 643,932 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 228,825 | $ | 220,481 | ||||||
Accrued expenses | 99,939 | 75,922 | ||||||||
Income taxes payable | 11,450 | 17,862 | ||||||||
Total current liabilities | 340,214 | 314,265 | ||||||||
Deferred rent and other long-term liabilities | 32,518 | 25,687 | ||||||||
Total liabilities | 372,732 | 339,952 | ||||||||
Stockholders’ equity: | ||||||||||
Preferred stock — authorized 25,000 shares; $.01 par value; no shares issued and outstanding at January 29, 2005 and January 31, 2004 | — | — | ||||||||
Common stock — authorized 100,000 shares; $.01 par value; 27,433 shares issued and 24,648 shares outstanding at January 29, 2005; 26,449 shares issued and 24,834 shares outstanding at January 31, 2004 | 274 | 264 | ||||||||
Treasury stock — 2,785 and 1,615 shares at January 29, 2005 and January 31, 2004, respectively, at cost | (66,132 | ) | (34,455 | ) | ||||||
Additional paid-in capital | 206,503 | 181,204 | ||||||||
Accumulated other comprehensive income | 6,980 | 5,411 | ||||||||
Retained earnings | 203,843 | 151,556 | ||||||||
Total stockholders’ equity | 351,468 | 303,980 | ||||||||
Total liabilities and stockholders’ equity | $ | 724,200 | $ | 643,932 | ||||||
F-44
Table of Contents
Years Ended | |||||||||||||
January 29, | January 31, | February 1, | |||||||||||
2005 | 2004 | 2003 | |||||||||||
(Amounts in thousands, except per | |||||||||||||
share amounts) | |||||||||||||
Net sales | $ | 1,983,537 | $ | 1,588,406 | $ | 1,309,226 | |||||||
Management fees | 5,845 | 13,375 | 7,553 | ||||||||||
Total revenues | 1,989,382 | 1,601,781 | 1,316,779 | ||||||||||
Cost of goods sold | 1,450,205 | 1,174,429 | 971,204 | ||||||||||
Gross profit | 539,177 | 427,352 | 345,575 | ||||||||||
Costs and expenses: | |||||||||||||
Selling, general and administrative expense | 422,374 | 327,260 | 266,729 | ||||||||||
Restructuring and asset impairment reversal | — | — | (2,611 | ) | |||||||||
Depreciation and amortization | 37,473 | 29,211 | 23,361 | ||||||||||
Operating income | 79,330 | 70,881 | 58,096 | ||||||||||
Interest income, net | 2,350 | 1,751 | 1,677 | ||||||||||
Income before income tax expense and cumulative effect of change in accounting principle | 81,680 | 72,632 | 59,773 | ||||||||||
Income tax expense | 29,393 | 26,903 | 22,373 | ||||||||||
Income before cumulative effect of change in accounting principle | 52,287 | 45,729 | 37,400 | ||||||||||
Cumulative effect of change in accounting principle, net of income tax expense | — | — | (4,773 | ) | |||||||||
Net income | $ | 52,287 | $ | 45,729 | $ | 32,627 | |||||||
Income per share before cumulative effect of change in accounting principle: | |||||||||||||
Basic | $ | 2.16 | $ | 1.82 | $ | 1.44 | |||||||
Diluted | $ | 2.13 | $ | 1.80 | $ | 1.42 | |||||||
Per share cumulative effect of change in accounting principle: | |||||||||||||
Basic | $ | (0.18 | ) | ||||||||||
Diluted | $ | (0.18 | ) | ||||||||||
Net income per share: | |||||||||||||
Basic | $ | 2.16 | $ | 1.82 | $ | 1.26 | |||||||
Diluted | $ | 2.13 | $ | 1.80 | $ | 1.24 | |||||||
Weighted average shares outstanding: | |||||||||||||
Basic | 24,159 | 25,114 | 25,833 | ||||||||||
Diluted | 24,547 | 25,415 | 26,247 | ||||||||||
F-45
Table of Contents
Accumulated | |||||||||||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||||||||||
Preferred stock | Common stock | Treasury stock | Additional | Comprehensive | Total | ||||||||||||||||||||||||||||||||||||
Paid-In | (Loss) | Retained | Stockholders’ | ||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income | Earnings | Equity | ||||||||||||||||||||||||||||||||
(Amounts in thousands) | |||||||||||||||||||||||||||||||||||||||||
Balance Feb. 2, 2002 | — | $ | — | 25,783 | $ | 258 | — | $ | — | $ | 166,312 | $ | (2,610 | ) | $ | 73,200 | $ | 237,160 | |||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | 32,627 | 32,627 | |||||||||||||||||||||||||||||||
Foreign currency translations | — | — | — | — | — | — | — | 6,574 | — | 6,574 | |||||||||||||||||||||||||||||||
Hedging activities | — | — | — | — | — | — | — | (5,077 | ) | — | (5,077 | ) | |||||||||||||||||||||||||||||
Total comprehensive income | 34,124 | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | 23 | — | — | — | 467 | — | — | 467 | |||||||||||||||||||||||||||||||
Exercise of stock options | — | — | 76 | 1 | — | — | 1,190 | — | — | 1,191 | |||||||||||||||||||||||||||||||
Tax benefit from stock options exercised | — | — | — | — | — | — | 1,558 | — | — | 1,558 | |||||||||||||||||||||||||||||||
Balance Feb. 1, 2003 | — | — | 25,882 | 259 | — | — | 169,527 | (1,113 | ) | 105,827 | 274,500 | ||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | 45,729 | 45,729 | |||||||||||||||||||||||||||||||
Foreign currency translations | — | — | — | — | — | — | — | 12,981 | — | 12,981 | |||||||||||||||||||||||||||||||
Hedging activities | — | — | — | — | — | — | — | (6,457 | ) | — | (6,457 | ) | |||||||||||||||||||||||||||||
Total comprehensive income | 52,253 | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | 32 | — | — | — | 531 | — | — | 531 | |||||||||||||||||||||||||||||||
Exercise of stock options | — | — | 535 | 5 | — | — | 8,590 | — | — | 8,595 | |||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | (1,615 | ) | (34,455 | ) | — | — | — | (34,455 | ) | ||||||||||||||||||||||||||||
Tax benefit from stock options exercised | — | — | — | — | — | — | 2,556 | — | — | 2,556 | |||||||||||||||||||||||||||||||
Balance Jan. 31, 2004 | — | — | 26,449 | 264 | (1,615 | ) | (34,455 | ) | 181,204 | 5,411 | 151,556 | 303,980 | |||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | 52,287 | 52,287 | |||||||||||||||||||||||||||||||
Foreign currency translations | — | — | — | — | — | — | — | 4,849 | — | 4,849 | |||||||||||||||||||||||||||||||
Hedging activities | — | — | — | — | — | — | — | (3,280 | ) | — | (3,280 | ) | |||||||||||||||||||||||||||||
Total comprehensive income | 53,856 | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | 31 | — | — | — | 710 | — | — | 710 | |||||||||||||||||||||||||||||||
Exercise of stock options | — | — | 953 | 10 | — | — | 18,281 | — | — | 18,291 | |||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | (1,170 | ) | (31,677 | ) | — | — | — | (31,677 | ) | ||||||||||||||||||||||||||||
Other financing activities | — | — | — | — | — | — | 164 | — | — | 164 | |||||||||||||||||||||||||||||||
Tax benefit from stock options exercised | — | — | — | — | — | — | 6,144 | — | — | 6,144 | |||||||||||||||||||||||||||||||
Balance Jan. 29, 2005 | — | $ | — | 27,433 | $ | 274 | (2,785 | ) | $ | (66,132 | ) | $ | 206,503 | $ | 6,980 | $ | 203,843 | $ | 351,468 | ||||||||||||||||||||||
F-46
Table of Contents
Years Ended | ||||||||||||||
January 29, | January 31, | February 1, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||||
(Amounts in thousands) | ||||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income | $ | 52,287 | $ | 45,729 | $ | 32,627 | ||||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||||
Depreciation of property and equipment | 36,871 | 28,769 | 23,046 | |||||||||||
Amortization of other assets | 602 | 442 | 315 | |||||||||||
Loss on disposal of property and equipment | 234 | 313 | 649 | |||||||||||
Deferred taxes | (1,134 | ) | 1,705 | 1,284 | ||||||||||
Foreign currency transaction loss (gain) | 509 | 597 | (537 | ) | ||||||||||
Management fee amortization from termination agreement | (5,845 | ) | (4,660 | ) | — | |||||||||
Changes in assets and liabilities: | ||||||||||||||
Accounts receivable | 18,858 | (12,070 | ) | (2,133 | ) | |||||||||
Merchandise inventories | (33,482 | ) | (17,537 | ) | (74,831 | ) | ||||||||
Prepaid expenses | (1,247 | ) | (6,635 | ) | (1,567 | ) | ||||||||
Other non-current assets | (4,682 | ) | 1,188 | (1,594 | ) | |||||||||
Accounts payable | 4,944 | 39,266 | 36,335 | |||||||||||
Accrued expenses | 24,497 | 25,087 | 8,298 | |||||||||||
Income taxes payable | (1,191 | ) | 1,451 | 6,087 | ||||||||||
Deferred rent and other long-term liabilities | 11,174 | (40 | ) | 1,859 | ||||||||||
Net cash provided by operating activities | 102,395 | 103,605 | 29,838 | |||||||||||
Cash flows from investing activities: | ||||||||||||||
Purchases of property and equipment | (75,119 | ) | (45,905 | ) | (38,502 | ) | ||||||||
Proceeds from disposition of assets | 5,539 | 135 | 2,544 | |||||||||||
Proceeds from sales of marketable securities | 152,750 | 322,820 | 197,300 | |||||||||||
Purchases of marketable securities | (173,525 | ) | (334,070 | ) | (150,350 | ) | ||||||||
Businesses acquired, net of cash | — | (111 | ) | (1,552 | ) | |||||||||
Net cash (used in) provided by investing activities | (90,355 | ) | (57,131 | ) | 9,440 | |||||||||
Cash flows from financing activities: | ||||||||||||||
Proceeds from exercise of stock options | 18,291 | 8,595 | 1,191 | |||||||||||
Repurchase of common stock | (31,677 | ) | (34,455 | ) | — | |||||||||
Repayments of long-term debt | — | — | (506 | ) | ||||||||||
Proceeds from issuance of common stock | 710 | 531 | 467 | |||||||||||
Other financing activities | 164 | — | — | |||||||||||
Net cash (used in) provided by financing activities | (12,512 | ) | (25,329 | ) | 1,152 | |||||||||
Effects of exchange rates on cash | (2,976 | ) | 3,700 | 1,870 | ||||||||||
Net increase (decrease) in cash and cash equivalents | (3,448 | ) | 24,845 | 42,300 | ||||||||||
Cash and cash equivalents, beginning of year | 97,793 | 72,948 | 30,648 | |||||||||||
Cash and cash equivalents, end of year | $ | 94,345 | $ | 97,793 | $ | 72,948 | ||||||||
Supplemental disclosures of cash flow information: | ||||||||||||||
Cash paid during the year for: | ||||||||||||||
Interest | $ | 52 | $ | 16 | $ | 31 | ||||||||
Income taxes | 30,515 | 23,301 | 13,469 |
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Table of Contents
(1) | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Description of Business |
Fiscal Year-End |
Principles of Consolidation |
Revenue Recognition |
Cost of Goods Sold |
F-48
Table of Contents
Selling, General and Administrative Expense |
Vendor Programs |
Cash and Cash Equivalents |
Marketable Securities |
F-49
Table of Contents
Merchandise Inventories |
Property and Equipment |
Leasehold improvements | Lesser of 10 years or the lease term | |||
Furniture and fixtures | 5 years | |||
Computer equipment | 3 years | |||
Buildings | 30 years |
Deferred Revenue |
Gift Certificates |
Goodwill and Other Intangible Assets |
F-50
Table of Contents
Other Assets |
Guarantees |
Leasing Expense |
F-51
Table of Contents
Pre-opening Costs and Advertising Expense |
Foreign Currency |
Income Taxes |
F-52
Table of Contents
Net Income Per Share |
Fiscal 2005 | Fiscal 2004 | Fiscal 2003 | ||||||||||
Weighted average shares outstanding — basic | 24,159 | 25,114 | 25,833 | |||||||||
Dilutive effect of stock options | 388 | 301 | 414 | |||||||||
Weighted average shares outstanding — diluted | 24,547 | 25,415 | 26,247 | |||||||||
Use of Estimates |
Fair Value of Financial Instruments |
Stock-Based Employee Compensation |
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Fiscal 2005 | Fiscal 2004 | Fiscal 2003 | |||||||||||
(Amounts in thousands, except per | |||||||||||||
share amounts) | |||||||||||||
Net income, as reported | $ | 52,287 | $ | 45,729 | $ | 32,627 | |||||||
Less: total stock based employee compensation | 3,294 | 4,350 | 4,796 | ||||||||||
Pro forma net income | $ | 48,993 | $ | 41,379 | $ | 27,831 | |||||||
Net income per share: | |||||||||||||
Basic — as reported | $ | 2.16 | $ | 1.82 | $ | 1.26 | |||||||
Diluted — as reported | $ | 2.13 | $ | 1.80 | $ | 1.24 | |||||||
Basic — pro forma | $ | 2.03 | $ | 1.65 | $ | 1.08 | |||||||
Diluted — pro forma | $ | 2.00 | $ | 1.63 | $ | 1.06 | |||||||
New Accounting Pronouncements Adopted |
(2) | CHANGE IN ACCOUNTING PRINCIPLE |
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Table of Contents
(3) | COMMITMENTS |
Lease Commitments |
Retail | Distribution | |||||||||||
Store | Facilities and | Total Lease | ||||||||||
Locations | Other | Commitments | ||||||||||
Fiscal 2006 | $ | 101,880 | $ | 1,833 | $ | 103,713 | ||||||
Fiscal 2007 | 99,395 | 1,403 | 100,798 | |||||||||
Fiscal 2008 | 93,451 | 1,204 | 94,655 | |||||||||
Fiscal 2009 | 77,009 | 1,142 | 78,151 | |||||||||
Fiscal 2010 | 55,001 | 1,023 | 56,024 | |||||||||
Thereafter | 89,450 | 533 | 89,983 | |||||||||
$ | 516,186 | $ | 7,138 | $ | 523,324 | |||||||
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(4) | ACCRUED EXPENSES |
January 29, | January 31, | |||||||
2005 | 2004 | |||||||
Employee compensation and related taxes | $ | 23,504 | $ | 18,779 | ||||
Gift certificates and customer deposits | 25,953 | 16,424 | ||||||
Deferred revenue | 21,527 | 17,205 | ||||||
Accrued rent | 6,207 | 6,458 | ||||||
Other taxes | 6,505 | 5,342 | ||||||
Other accrued liabilities | 16,243 | 11,714 | ||||||
Total | $ | 99,939 | $ | 75,922 | ||||
(5) | DEBT |
(6) | GAME GROUP SERVICES AGREEMENT |
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(7) | RELATED PARTY TRANSACTIONS |
(8) | EMPLOYEES’ RETIREMENT PLAN |
(9) | EQUITY PLANS |
Equity Participation Plans |
Employee Stock Purchase Plan |
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Fiscal 2005 | Fiscal 2004 | Fiscal 2003 | ||||||||||
Expected volatility | 57.66 | % | 60.89 | % | 62.38 | % | ||||||
Risk-free interest rate | 3.68 | % | 3.15 | % | 2.98 | % | ||||||
Expected life of options in years | 4.91 | 4.92 | 4.76 | |||||||||
Expected life of purchase rights in months | 3.0 | 3.0 | 3.0 | |||||||||
Dividend yield | — | % | — | % | — | % |
Fiscal 2005 | Fiscal 2004 | Fiscal 2003 | |||||||||||
Outstanding at beginning of year | 2,126 | 2,388 | 2,093 | ||||||||||
Granted | 272 | 431 | 433 | ||||||||||
Exercised | (952 | ) | (535 | ) | (76 | ) | |||||||
Forfeited | (45 | ) | (158 | ) | (62 | ) | |||||||
Outstanding at end of year | 1,401 | 2,126 | 2,388 | ||||||||||
Exercisable at end of year | 744 | 1,200 | 1,215 | ||||||||||
Weighted average price per share: | |||||||||||||
Granted | $ | 28.60 | $ | 16.95 | $ | 31.74 | |||||||
Exercised | 19.20 | 16.04 | 16.72 | ||||||||||
Forfeited | 24.65 | 28.32 | 22.59 |
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Options Outstanding | ||||||||||||||||||||
Options Exercisable | ||||||||||||||||||||
Number | Weighted | |||||||||||||||||||
Outstanding as | Average | Number | Weighted | |||||||||||||||||
of January 29, | Remaining | Weighted Average | Exercisable as of | Average | ||||||||||||||||
Range of Exercise Prices | 2005 | Contractual Life | Exercise Price | January 29, 2005 | Exercise Price | |||||||||||||||
$ 9.50 - $17.37 | 421 | 7.22 | $ | 15.77 | 177 | $ | 14.94 | |||||||||||||
$17.38 - $28.42 | 462 | 6.73 | $ | 20.03 | 352 | $ | 18.21 | |||||||||||||
$28.43 - $41.65 | 518 | 7.85 | $ | 31.29 | 215 | $ | 32.44 | |||||||||||||
1,401 | 744 | |||||||||||||||||||
(10) | INCOME TAXES |
Fiscal 2005 | Fiscal 2004 | Fiscal 2003 | ||||||||||
Domestic | $ | 43,415 | $ | 44,344 | $ | 52,989 | ||||||
Foreign | 38,265 | 28,288 | 6,784 | |||||||||
Total | $ | 81,680 | $ | 72,632 | $ | 59,773 | ||||||
Fiscal 2005 | Fiscal 2004 | Fiscal 2003 | |||||||||||
Federal statutory tax rate | 35.00 | % | 35.00 | % | 35.00 | % | |||||||
State income taxes, net of federal benefit | 1.06 | 2.88 | 3.17 | ||||||||||
Permanent differences- domestic and foreign | 0.41 | (0.26 | ) | (0.30 | ) | ||||||||
Difference in foreign tax rates | (0.93 | ) | (0.25 | ) | (0.33 | ) | |||||||
Other | (0.07 | ) | 0.17 | (0.14 | ) | ||||||||
Change in valuation allowance | 0.52 | (0.50 | ) | 0.03 | |||||||||
Income tax expense | 35.99 | % | 37.04 | % | 37.43 | % | |||||||
Current: | |||||||||||||
Domestic — Federal | $ | 14,484 | $ | 12,577 | $ | 11,191 | |||||||
Domestic — State | 1,382 | 2,371 | 2,091 | ||||||||||
Foreign | 13,652 | 10,600 | 5,092 | ||||||||||
Deferred: | |||||||||||||
Domestic — Federal | 544 | 2,059 | 5,932 | ||||||||||
Domestic — State | (45 | ) | 873 | 994 | |||||||||
Foreign | (624 | ) | (1,577 | ) | (2,927 | ) | |||||||
Income tax expense | $ | 29,393 | $ | 26,903 | $ | 22,373 | |||||||
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January 29, | January 31, | ||||||||
2005 | 2004 | ||||||||
Deferred tax assets: | |||||||||
Inventory | $ | 1,283 | $ | 6,327 | |||||
Accrued expenses | 8,148 | 3,010 | |||||||
State net operating loss | 716 | 558 | |||||||
Fixed assets | 672 | 4,592 | |||||||
Deferred rent | 7,177 | 2,128 | |||||||
Amortization of goodwill | 67 | 96 | |||||||
Foreign net operating loss | 4,563 | 4,012 | |||||||
Total gross deferred tax asset | 22,626 | 20,723 | |||||||
Valuation allowance | (755 | ) | (352 | ) | |||||
Net deferred tax asset | $ | 21,871 | $ | 20,371 | |||||
(11) | RESTRUCTURING CHARGE |
Beginning | Cash | Ending | ||||||||||||||||||||||
Balance | Payments | Charges | Reversals | Other | Balance | |||||||||||||||||||
Year ended January 31, 2004 | $ | 240 | $ | (36 | ) | — | — | — | $ | 204 | ||||||||||||||
Year ended January 29, 2005 | $ | 204 | — | — | — | $ | (204 | ) | — |
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(12) | LEGAL CONTINGENCIES |
(13) | COMPREHENSIVE INCOME |
Fiscal 2005 | Fiscal 2004 | Fiscal 2003 | ||||||||||
Net income | $ | 52,287 | $ | 45,729 | $ | 32,627 | ||||||
Foreign currency translations | 4,849 | 12,981 | 6,574 | |||||||||
Hedging activities | (3,280 | ) | (6,457 | ) | (5,077 | ) | ||||||
Comprehensive income | $ | 53,856 | $ | 52,253 | $ | 34,124 | ||||||
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(14) | GOODWILL AND OTHER INTANGIBLE ASSETS |
January 29, 2005 | January 31, 2004 | |||||||||||||||
Gross | Gross | |||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | |||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||
Key Money(1) | $ | 3,761 | $ | 1,145 | $ | 1,791 | $ | 581 | ||||||||
Other | 10 | 10 | 85 | 85 | ||||||||||||
Total Intangible Assets | $ | 3,771 | $ | 1,155 | $ | 1,876 | $ | 666 | ||||||||
(1) | Key Money represents payments made to landlords, outgoing tenants or other third parties to enter into certain store leases. |
Goodwill |
Balance as of February 1, 2003 | $ | 10,938 | ||
Buyout of German partner(1) | 111 | |||
Foreign exchange fluctuations and other | 1,403 | |||
Balance as of January 31, 2004 | $ | 12,452 | ||
Foreign exchange fluctuations and other | 1,240 | |||
Balance as of January 29, 2005 | $ | 13,692 | ||
(1) | In June 2003, the Company bought out the last of its partners in the German subsidiary. This resulted in an increase in ownership of .3125%. The Company now owns 100% of its German subsidiary. |
(15) | STOCK BUY-BACK PROGRAM |
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F-63
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Guarantor | Non-Guarantor | |||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | ||||||||||||||||
January 29, | January 29, | January 29, | ||||||||||||||||
2005 | 2005 | Eliminations | 2005 | |||||||||||||||
ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 30,470 | $ | 63,875 | $ | — | $ | 94,345 | ||||||||||
Marketable securities | 80,950 | — | — | 80,950 | ||||||||||||||
Accounts receivable | 59,682 | 9,291 | (47,703 | ) | 21,270 | |||||||||||||
Merchandise inventories | 211,314 | 80,364 | — | 291,678 | ||||||||||||||
Deferred tax asset | 8,148 | 1,290 | — | 9,438 | ||||||||||||||
Prepaid expenses and other current assets | 13,701 | 4,254 | — | 17,955 | ||||||||||||||
Total current assets | 404,265 | 159,074 | (47,703 | ) | 515,636 | |||||||||||||
Property and equipment: | ||||||||||||||||||
Building and leasehold improvements | 116,626 | 37,257 | — | 153,883 | ||||||||||||||
Furniture, fixtures and equipment | 107,095 | 47,801 | — | 154,896 | ||||||||||||||
Land | 4,450 | 3,670 | — | 8,120 | ||||||||||||||
Construction in progress | 1,660 | 813 | — | 2,473 | ||||||||||||||
229,831 | 89,541 | — | 319,372 | |||||||||||||||
Less accumulated depreciation and amortization | 113,663 | 32,288 | — | 145,951 | ||||||||||||||
Net property and equipment | 116,168 | 57,253 | — | 173,421 | ||||||||||||||
Investment | 103,071 | — | (103,071 | ) | — | |||||||||||||
Goodwill and other intangible assets, net | 1,625 | 14,683 | — | 16,308 | ||||||||||||||
Deferred tax asset | 5,045 | 7,388 | — | 12,433 | ||||||||||||||
Other non-current assets | 3,470 | 2,932 | — | 6,402 | ||||||||||||||
Total assets | $ | 633,644 | $ | 241,330 | $ | (150,774 | ) | $ | 724,200 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 169,463 | $ | 59,362 | $ | — | $ | 228,825 | ||||||||||
Accrued expenses | 78,067 | 69,575 | (47,703 | ) | 99,939 | |||||||||||||
Income taxes payable | 6,091 | 5,359 | — | 11,450 | ||||||||||||||
Total current liabilities | 253,621 | 134,296 | (47,703 | ) | 340,214 | |||||||||||||
Deferred rent and other long-term liabilities | 28,555 | 3,963 | — | 32,518 | ||||||||||||||
Total liabilities | 282,176 | 138,259 | (47,703 | ) | 372,732 | |||||||||||||
Stockholders’ equity: | ||||||||||||||||||
Preferred stock — authorized 25,000 shares; $.01 par value; no shares issued and outstanding | — | — | — | — | ||||||||||||||
Common stock — authorized 100,000 shares; $.01 par value; 27,433 shares issued and 24,648 shares outstanding | 274 | 7,658 | (7,658 | ) | 274 | |||||||||||||
Treasury stock, at cost | (66,132 | ) | — | — | (66,132 | ) | ||||||||||||
Additional paid-in-capital | 206,503 | 38,830 | (38,830 | ) | 206,503 | |||||||||||||
Accumulated other comprehensive income | 6,980 | 9,217 | (9,217 | ) | 6,980 | |||||||||||||
Retained earnings | 203,843 | 47,366 | (47,366 | ) | 203,843 | |||||||||||||
Total stockholders’ equity | 351,468 | 103,071 | (103,071 | ) | 351,468 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 633,644 | $ | 241,330 | $ | (150,774 | ) | $ | 724,200 | |||||||||
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Guarantor | Non-Guarantor | |||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | ||||||||||||||||
January 31, | January 31, | January 31, | ||||||||||||||||
2004 | 2004 | Eliminations | 2004 | |||||||||||||||
ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 47,538 | $ | 50,255 | $ | — | $ | 97,793 | ||||||||||
Marketable securities | 60,175 | — | — | 60,175 | ||||||||||||||
Accounts receivable | 59,941 | 13,685 | (33,814 | ) | 39,812 | |||||||||||||
Merchandise inventories | 196,871 | 56,706 | — | 253,577 | ||||||||||||||
Deferred tax asset | 9,265 | 630 | — | 9,895 | ||||||||||||||
Prepaid expenses and other current assets | 13,476 | 2,959 | — | 16,435 | ||||||||||||||
Total current assets | 387,266 | 124,235 | (33,814 | ) | 477,687 | |||||||||||||
Property and equipment: | ||||||||||||||||||
Building and leasehold improvements | 98,265 | 24,587 | — | 122,852 | ||||||||||||||
Furniture, fixtures and equipment | 88,738 | 34,527 | — | 123,265 | ||||||||||||||
Land | 3,282 | 2,545 | — | 5,827 | ||||||||||||||
Construction in progress | 2,412 | 414 | — | 2,826 | ||||||||||||||
192,697 | 62,073 | — | 254,770 | |||||||||||||||
Less accumulated depreciation and amortization | 94,344 | 22,422 | — | 116,766 | ||||||||||||||
Net property and equipment | 98,353 | 39,651 | — | 138,004 | ||||||||||||||
Investment | 72,879 | — | (72,879 | ) | — | |||||||||||||
Goodwill and other intangible assets, net | 1,045 | 12,617 | — | 13,662 | ||||||||||||||
Deferred tax asset | 3,830 | 6,646 | — | 10,476 | ||||||||||||||
Other non-current assets | 2,253 | 1,850 | — | 4,103 | ||||||||||||||
Total assets | $ | 565,626 | $ | 184,999 | $ | (106,693 | ) | $ | 643,932 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 161,355 | $ | 59,126 | $ | — | $ | 220,481 | ||||||||||
Accrued expenses | 66,384 | 43,352 | (33,814 | ) | 75,922 | |||||||||||||
Income taxes payable | 10,404 | 7,458 | — | 17,862 | ||||||||||||||
Total current liabilities | 238,143 | 109,936 | (33,814 | ) | 314,265 | |||||||||||||
Deferred rent and other long-term liabilities | 23,503 | 2,184 | — | 25,687 | ||||||||||||||
Total liabilities | 261,646 | 112,120 | (33,814 | ) | 339,952 | |||||||||||||
Stockholders’ equity: | ||||||||||||||||||
Preferred stock — authorized 25,000 shares; $.01 par value; no shares issued and outstanding | — | — | — | — | ||||||||||||||
Common stock — authorized 100,000 shares; $.01 par value; 26,449 shares issued and 24,834 shares outstanding | 264 | 9,707 | (9,707 | ) | 264 | |||||||||||||
Treasury stock, at cost | (34,455 | ) | — | — | (34,455 | ) | ||||||||||||
Additional paid-in-capital | 181,204 | 30,237 | (30,237 | ) | 181,204 | |||||||||||||
Accumulated other comprehensive income | 5,411 | 6,268 | (6,268 | ) | 5,411 | |||||||||||||
Retained earnings | 151,556 | 26,667 | (26,667 | ) | 151,556 | |||||||||||||
Total stockholders’ equity | 303,980 | 72,879 | (72,879 | ) | 303,980 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 565,626 | $ | 184,999 | $ | (106,693 | ) | $ | 643,932 | |||||||||
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Guarantor | Non-Guarantor | ||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | |||||||||||||||
January 29, | January 29, | January 29, | |||||||||||||||
For the Fiscal Year Ended January 29, 2005 | 2005 | 2005 | Eliminations | 2005 | |||||||||||||
Net sales | $ | 1,411,971 | $ | 571,566 | $ | — | $ | 1,983,537 | |||||||||
Management fees | 9,237 | — | (3,392 | ) | 5,845 | ||||||||||||
Total revenues | 1,421,208 | 571,566 | (3,392 | ) | 1,989,382 | ||||||||||||
Cost of goods sold | 1,022,172 | 428,033 | — | 1,450,205 | |||||||||||||
Gross profit | 399,036 | 143,533 | (3,392 | ) | 539,177 | ||||||||||||
Selling, general and administrative expense | 332,403 | 93,363 | (3,392 | ) | 422,374 | ||||||||||||
Depreciation and amortization | 26,856 | 10,617 | — | 37,473 | |||||||||||||
Operating income | 39,777 | 39,553 | — | 79,330 | |||||||||||||
Interest (income)/expense, net | (3,639 | ) | 1,289 | — | (2,350 | ) | |||||||||||
Subsidiary income | (25,237 | ) | — | 25,237 | — | ||||||||||||
Income before income tax expense | 68,653 | 38,264 | (25,237 | ) | 81,680 | ||||||||||||
Income tax expense | 16,366 | 13,027 | — | 29,393 | |||||||||||||
Net income | $ | 52,287 | $ | 25,237 | $ | (25,237 | ) | $ | 52,287 | ||||||||
Guarantor | Non-Guarantor | ||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | |||||||||||||||
January 31, | January 31, | January 31, | |||||||||||||||
For the Fiscal Year Ended January 31, 2004 | 2004 | 2004 | Eliminations | 2004 | |||||||||||||
Net sales | $ | 1,187,481 | $ | 400,925 | $ | — | $ | 1,588,406 | |||||||||
Management fees | 16,455 | — | (3,080 | ) | 13,375 | ||||||||||||
Total revenues | 1,203,936 | 400,925 | (3,080 | ) | 1,601,781 | ||||||||||||
Cost of goods sold | 869,796 | 304,633 | — | 1,174,429 | |||||||||||||
Gross profit | 334,140 | 96,292 | (3,080 | ) | 427,352 | ||||||||||||
Selling, general and administrative expense | 271,330 | 59,010 | (3,080 | ) | 327,260 | ||||||||||||
Depreciation and amortization | 21,828 | 7,383 | — | 29,211 | |||||||||||||
Operating income | 40,982 | 29,899 | — | 70,881 | |||||||||||||
Interest (income)/expense, net | (3,362 | ) | 1,611 | — | (1,751 | ) | |||||||||||
Subsidiary income | (19,265 | ) | — | 19,265 | — | ||||||||||||
Income before income tax expense | 63,609 | 28,288 | (19,265 | ) | 72,632 | ||||||||||||
Income tax expense | 17,880 | 9,023 | — | 26,903 | |||||||||||||
Net income | $ | 45,729 | $ | 19,265 | $ | (19,265 | ) | $ | 45,729 | ||||||||
F-66
Table of Contents
Guarantor | Non-Guarantor | ||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | |||||||||||||||
February 1, | February 1, | February 1, | |||||||||||||||
For the Fiscal Year Ended February 1, 2003 | 2003 | 2003 | Eliminations | 2003 | |||||||||||||
Net sales | $ | 1,057,006 | $ | 252,220 | $ | — | $ | 1,309,226 | |||||||||
Management fees | 11,311 | — | (3,758 | ) | 7,553 | ||||||||||||
Total revenues | 1,068,317 | 252,220 | (3,758 | ) | 1,316,779 | ||||||||||||
Cost of goods sold | 774,991 | 196,213 | — | 971,204 | |||||||||||||
Gross profit | 293,326 | 56,007 | (3,758 | ) | 345,575 | ||||||||||||
Selling, general and administrative expense | 227,855 | 42,632 | (3,758 | ) | 266,729 | ||||||||||||
Restructuring and asset impairment reversal | (2,611 | ) | — | — | (2,611 | ) | |||||||||||
Depreciation and amortization | 18,499 | 4,862 | — | 23,361 | |||||||||||||
Operating income | 49,583 | 8,513 | — | 58,096 | |||||||||||||
Interest (income)/expense, net | (3,406 | ) | 1,729 | — | (1,677 | ) | |||||||||||
Subsidiary income | (3,749 | ) | — | 3,749 | — | ||||||||||||
Income before income tax expense and cumulative effect of change in accounting principle | 56,738 | 6,784 | (3,749 | ) | 59,773 | ||||||||||||
Income tax expense | 20,208 | 2,165 | — | 22,373 | |||||||||||||
Income before cumulative effect of change in accounting principle | 36,530 | 4,619 | (3,749 | ) | 37,400 | ||||||||||||
Cumulative effect of change in accounting principle, net of income tax expense | (3,903 | ) | (870 | ) | — | (4,773 | ) | ||||||||||
Net income | $ | 32,627 | $ | 3,749 | $ | (3,749 | ) | $ | 32,627 | ||||||||
F-67
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | ||||||||||||||||
January 29, | January 29, | January 29, | ||||||||||||||||
For the Fiscal Year Ended January 29, 2005 | 2005 | 2005 | Eliminations | 2005 | ||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||
Net income | $ | 52,287 | $ | 25,237 | $ | (25,237 | ) | $ | 52,287 | |||||||||
Subsidiary income | (25,237 | ) | — | 25,237 | — | |||||||||||||
Depreciation of property and equipment | 26,856 | 10,015 | — | 36,871 | ||||||||||||||
Amortization of other assets | — | 602 | — | 602 | ||||||||||||||
Loss on disposal of property and equipment | 24 | 210 | — | 234 | ||||||||||||||
Deferred taxes | (486 | ) | (648 | ) | — | (1,134 | ) | |||||||||||
Foreign currency transaction loss | — | 509 | — | 509 | ||||||||||||||
Management fee amortization from termination agreement | (5,845 | ) | — | — | (5,845 | ) | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||
Accounts receivable | 17,617 | 1,241 | — | 18,858 | ||||||||||||||
Due to/from affiliates | (22,187 | ) | 22,187 | — | — | |||||||||||||
Merchandise inventories | (14,443 | ) | (19,039 | ) | — | (33,482 | ) | |||||||||||
Prepaid expenses | (225 | ) | (1,022 | ) | — | (1,247 | ) | |||||||||||
Other non-current assets | (1,798 | ) | (2,884 | ) | — | (4,682 | ) | |||||||||||
Accounts payable | 8,109 | (3,165 | ) | — | 4,944 | |||||||||||||
Accrued expenses | 17,277 | 7,220 | — | 24,497 | ||||||||||||||
Income taxes payable | 723 | (1,914 | ) | — | (1,191 | ) | ||||||||||||
Deferred rent and other long-term liabilities | 9,547 | 1,627 | — | 11,174 | ||||||||||||||
Net cash provided by operating activities | 62,219 | 40,176 | — | 102,395 | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||
Purchases of property and equipment | (50,045 | ) | (25,074 | ) | — | (75,119 | ) | |||||||||||
Proceeds from disposition of assets | 5,350 | 189 | — | 5,539 | ||||||||||||||
Proceeds from sales of marketable securities | 152,750 | — | — | 152,750 | ||||||||||||||
Purchases of marketable securities | (173,525 | ) | — | — | (173,525 | ) | ||||||||||||
Net cash used in investing activities | (65,470 | ) | (24,885 | ) | — | (90,355 | ) | |||||||||||
Cash flows from financing activities: | ||||||||||||||||||
Proceeds from exercise of stock options | 18,291 | — | — | 18,291 | ||||||||||||||
Repurchase of common stock | (31,677 | ) | — | — | (31,677 | ) | ||||||||||||
Proceeds from issuance of common stock | 710 | — | — | 710 | ||||||||||||||
Other financing activities | 164 | — | — | 164 | ||||||||||||||
Intercompany capital contributions and dividends | (1,305 | ) | 1,305 | — | — | |||||||||||||
Net cash provided by (used in) financing activities | (13,817 | ) | 1,305 | — | (12,512 | ) | ||||||||||||
Effects of exchange rates on cash | — | (2,976 | ) | — | (2,976 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (17,068 | ) | 13,620 | — | (3,448 | ) | ||||||||||||
Cash and cash equivalents, beginning of year | 47,538 | 50,255 | — | 97,793 | ||||||||||||||
Cash and cash equivalents, end of year | $ | 30,470 | $ | 63,875 | $ | — | $ | 94,345 | ||||||||||
F-68
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | ||||||||||||||||
January 31, | January 31, | January 31, | ||||||||||||||||
For the Fiscal Year Ended January 31, 2004 | 2004 | 2004 | Eliminations | 2004 | ||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||
Net income | $ | 45,729 | $ | 19,265 | $ | (19,265 | ) | $ | 45,729 | |||||||||
Subsidiary income | (19,265 | ) | — | 19,265 | — | |||||||||||||
Depreciation of property and equipment | 21,809 | 6,960 | — | 28,769 | ||||||||||||||
Amortization of other assets | 19 | 423 | — | 442 | ||||||||||||||
Loss on disposal of property and equipment | 280 | 33 | — | 313 | ||||||||||||||
Deferred taxes | 3,572 | (1,867 | ) | — | 1,705 | |||||||||||||
Foreign currency transaction loss | — | 597 | — | 597 | ||||||||||||||
Management fee amortization from termination agreement | (4,660 | ) | — | — | (4,660 | ) | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||
Accounts receivable | (7,922 | ) | (4,148 | ) | — | (12,070 | ) | |||||||||||
Due to/from affiliates | 6,606 | (6,606 | ) | — | — | |||||||||||||
Merchandise inventories | (9,166 | ) | (8,371 | ) | — | (17,537 | ) | |||||||||||
Prepaid expenses | (6,092 | ) | (543 | ) | — | (6,635 | ) | |||||||||||
Other non-current assets | 606 | 582 | — | 1,188 | ||||||||||||||
Accounts payable | 23,099 | 16,167 | — | 39,266 | ||||||||||||||
Accrued expenses | 20,395 | 4,692 | — | 25,087 | ||||||||||||||
Income taxes payable | 4,366 | (2,915 | ) | — | 1,451 | |||||||||||||
Deferred rent and other long-term liabilities | (649 | ) | 609 | — | (40 | ) | ||||||||||||
Net cash provided by operating activities | 78,727 | 24,878 | — | 103,605 | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||
Purchases of property and equipment | (34,151 | ) | (11,754 | ) | — | (45,905 | ) | |||||||||||
Proceeds from disposition of assets | 68 | 67 | — | 135 | ||||||||||||||
Proceeds from sales of marketable securities | 322,820 | — | — | 322,820 | ||||||||||||||
Purchases of marketable securities | (334,070 | ) | — | — | (334,070 | ) | ||||||||||||
Businesses acquired, net of cash | — | (111 | ) | — | (111 | ) | ||||||||||||
Net cash used in investing activities | (45,333 | ) | (11,798 | ) | — | (57,131 | ) | |||||||||||
Cash flows from financing activities: | ||||||||||||||||||
Proceeds from exercise of stock options | 8,595 | — | — | 8,595 | ||||||||||||||
Repurchase of common stock | (34,455 | ) | — | — | (34,455 | ) | ||||||||||||
Proceeds from issuance of common stock | 531 | — | — | 531 | ||||||||||||||
Intercompany capital contributions and dividends | (9,108 | ) | 9,108 | — | — | |||||||||||||
Net cash provided by (used in) financing activities | (34,437 | ) | 9,108 | — | (25,329 | ) | ||||||||||||
Effects of exchange rates on cash | — | 3,700 | — | 3,700 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | (1,043 | ) | 25,888 | — | 24,845 | |||||||||||||
Cash and cash equivalents, beginning of year | 48,581 | 24,367 | — | 72,948 | ||||||||||||||
Cash and cash equivalents, end of year | $ | 47,538 | $ | 50,255 | $ | — | $ | 97,793 | ||||||||||
F-69
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | ||||||||||||||||
February 1, | February 1, | February 1, | ||||||||||||||||
For the Fiscal Year Ended February 1, 2003 | 2003 | 2003 | Eliminations | 2003 | ||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||
Net income | $ | 32,627 | $ | 3,749 | $ | (3,749 | ) | $ | 32,627 | |||||||||
Subsidiary income | (3,749 | ) | — | 3,749 | — | |||||||||||||
Depreciation of property and equipment | 18,451 | 4,595 | — | 23,046 | ||||||||||||||
Amortization of other assets | 48 | 267 | — | 315 | ||||||||||||||
Loss on disposal of property and equipment | 608 | 41 | — | 649 | ||||||||||||||
Deferred taxes | 3,754 | (2,470 | ) | — | 1,284 | |||||||||||||
Foreign currency transaction gain | — | (537 | ) | — | (537 | ) | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||
Accounts receivable | (455 | ) | (1,678 | ) | — | (2,133 | ) | |||||||||||
Due to/from affiliates | (12,578 | ) | 12,578 | — | — | |||||||||||||
Merchandise inventories | (68,690 | ) | (6,141 | ) | — | (74,831 | ) | |||||||||||
Prepaid expenses | (1,404 | ) | (163 | ) | — | (1,567 | ) | |||||||||||
Other non-current assets | 439 | (2,033 | ) | — | (1,594 | ) | ||||||||||||
Accounts payable | 25,548 | 10,787 | — | 36,335 | ||||||||||||||
Accrued expenses | 6,902 | 1,396 | — | 8,298 | ||||||||||||||
Income taxes payable | 2,573 | 3,514 | — | 6,087 | ||||||||||||||
Deferred rent and other long-term liabilities | 1,367 | 492 | — | 1,859 | ||||||||||||||
Net cash provided by operating activities | 5,441 | 24,397 | — | 29,838 | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||
Purchases of property and equipment | (27,314 | ) | (11,188 | ) | — | (38,502 | ) | |||||||||||
Proceeds from disposition of assets | 2,433 | 111 | — | 2,544 | ||||||||||||||
Proceeds from sales of marketable securities | 197,300 | — | — | 197,300 | ||||||||||||||
Purchases of marketable securities | (150,350 | ) | — | — | (150,350 | ) | ||||||||||||
Businesses acquired, net of cash | (546 | ) | (1,006 | ) | — | (1,552 | ) | |||||||||||
Net cash provided by (used in) investing activities | 21,523 | (12,083 | ) | — | 9,440 | |||||||||||||
Cash flows from financing activities: | ||||||||||||||||||
Proceeds from exercise of stock options | 1,191 | — | — | 1,191 | ||||||||||||||
Proceeds from issuance of common stock | 467 | — | — | 467 | ||||||||||||||
Repayments of long-term debt | — | (506 | ) | — | (506 | ) | ||||||||||||
Intercompany capital contributions and dividends | (4,305 | ) | 4,305 | — | — | |||||||||||||
Net cash provided by (used in) financing activities | (2,647 | ) | 3,799 | — | 1,152 | |||||||||||||
Effects of exchange rates on cash | — | 1,870 | — | 1,870 | ||||||||||||||
Net increase in cash and cash equivalents | 24,317 | 17,983 | — | 42,300 | ||||||||||||||
Cash and cash equivalents, beginning of year | 24,264 | 6,384 | — | 30,648 | ||||||||||||||
Cash and cash equivalents, end of year | $ | 48,581 | $ | 24,367 | $ | — | $ | 72,948 | ||||||||||
F-70
Table of Contents
July 30, | January 29, | |||||||||
2005 | 2005 | |||||||||
(Unaudited) | ||||||||||
(Amounts in thousands, | ||||||||||
except per share amounts) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 71,169 | $ | 94,345 | ||||||
Marketable securities | 35,700 | 80,950 | ||||||||
Accounts receivable: | ||||||||||
Trade and vendors | 16,449 | 17,685 | ||||||||
Other | 3,364 | 3,585 | ||||||||
Merchandise inventories | 273,945 | 291,678 | ||||||||
Deferred tax asset | 13,940 | 9,438 | ||||||||
Prepaid expenses and other current assets | 33,792 | 17,955 | ||||||||
Total current assets | 448,359 | 515,636 | ||||||||
Property and equipment: | ||||||||||
Building and leasehold improvements | 173,055 | 153,883 | ||||||||
Furniture, fixtures and equipment | 172,339 | 154,896 | ||||||||
Land | 10,497 | 8,120 | ||||||||
Construction in progress | 3,867 | 2,473 | ||||||||
359,758 | 319,372 | |||||||||
Less accumulated depreciation and amortization | 166,113 | 145,951 | ||||||||
Net property and equipment | 193,645 | 173,421 | ||||||||
Goodwill and other intangible assets, net of accumulated amortization of $1,489 and $1,155 | 18,418 | 16,308 | ||||||||
Deferred tax asset | 15,770 | 12,433 | ||||||||
Other non-current assets | 7,757 | 6,402 | ||||||||
Total assets | $ | 683,949 | $ | 724,200 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Current portion of long-term debt | $ | 813 | $ | — | ||||||
Accounts payable | 166,644 | 228,825 | ||||||||
Accrued expenses | 96,167 | 99,939 | ||||||||
Income taxes payable | — | 11,450 | ||||||||
Total current liabilities | 263,624 | 340,214 | ||||||||
Long-term debt, less current portion | 10,210 | — | ||||||||
Deferred rent and other long-term liabilities | 30,591 | 32,518 | ||||||||
Total liabilities | 304,425 | 372,732 | ||||||||
Stockholders’ equity: | ||||||||||
Preferred stock — authorized 25,000 shares; $.01 par value; no shares issued and outstanding at July 30, 2005 and January 29, 2005 | — | — | ||||||||
Common stock — authorized 100,000 shares; $.01 par value; 28,168 shares issued and 25,383 shares outstanding at July 30, 2005; 27,433 shares issued and 24,648 shares outstanding at January 29, 2005 | 282 | 274 | ||||||||
Treasury stock — 2,785 shares at July 30, 2005 and January 29, 2005, at cost | (66,132 | ) | (66,132 | ) | ||||||
Additional paid-in capital | 233,411 | 206,503 | ||||||||
Accumulated other comprehensive income | 3,723 | 6,980 | ||||||||
Retained earnings | 208,240 | 203,843 | ||||||||
Total stockholders’ equity | 379,524 | 351,468 | ||||||||
Total liabilities and stockholders’ equity | $ | 683,949 | $ | 724,200 | ||||||
F-71
Table of Contents
13 Weeks Ended | 26 Weeks Ended | ||||||||||||||||
July 30, | July 31, | July 30, | July 31, | ||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
(Unaudited) | |||||||||||||||||
(Amounts in thousands, except per share amounts) | |||||||||||||||||
Net sales | $ | 447,219 | $ | 360,487 | $ | 953,180 | $ | 731,451 | |||||||||
Management fees | 1,124 | 1,461 | 2,248 | 2,922 | |||||||||||||
Total revenues | 448,343 | 361,948 | 955,428 | 734,373 | |||||||||||||
Cost of goods sold | 311,628 | 254,302 | 685,988 | 525,456 | |||||||||||||
Gross profit | 136,715 | 107,646 | 269,440 | 208,917 | |||||||||||||
Costs and expenses: | |||||||||||||||||
Selling, general and administrative expense | 123,281 | 92,964 | 241,783 | 181,489 | |||||||||||||
Depreciation and amortization | 11,578 | 8,897 | 22,380 | 17,258 | |||||||||||||
Operating income | 1,856 | 5,785 | 5,277 | 10,170 | |||||||||||||
Interest income, net | 675 | 384 | 1,592 | 836 | |||||||||||||
Income before income tax expense | 2,531 | 6,169 | 6,869 | 11,006 | |||||||||||||
Income tax expense | 911 | 2,285 | 2,472 | 4,076 | |||||||||||||
Net income | $ | 1,620 | $ | 3,884 | $ | 4,397 | $ | 6,930 | |||||||||
Net income per share: | |||||||||||||||||
Basic | $ | 0.06 | $ | 0.16 | $ | 0.18 | $ | 0.29 | |||||||||
Diluted | $ | 0.06 | $ | 0.16 | $ | 0.17 | $ | 0.28 | |||||||||
Weighted average shares outstanding: | |||||||||||||||||
Basic | 25,096 | 23,840 | 24,896 | 24,183 | |||||||||||||
Diluted | 25,467 | 24,176 | 25,273 | 24,545 | |||||||||||||
F-72
Table of Contents
Accumulated | |||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Treasury Stock | Additional | Other | Total | ||||||||||||||||||||||||||||||||||||
Paid-In | Comprehensive | Retained | Stockholders’ | ||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Capital | (Loss) Income | Earnings | Equity | ||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||||||
(Amounts in thousands) | |||||||||||||||||||||||||||||||||||||||||
Balance Jan. 29, 2005 | — | $ | — | 27,433 | $ | 274 | (2,785 | ) | $ | (66,132 | ) | $ | 206,503 | $ | 6,980 | $ | 203,843 | $ | 351,468 | ||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | 4,397 | 4,397 | |||||||||||||||||||||||||||||||
Foreign currency translations | — | — | — | — | — | — | — | (6,444 | ) | — | (6,444 | ) | |||||||||||||||||||||||||||||
Hedging activities | — | — | — | — | — | — | — | 3,187 | — | 3,187 | |||||||||||||||||||||||||||||||
Total comprehensive income | — | — | — | — | — | — | — | — | — | 1,140 | |||||||||||||||||||||||||||||||
Issuance of common stock | — | — | 8 | — | — | — | 339 | — | — | 339 | |||||||||||||||||||||||||||||||
Exercise of stock options | — | — | 727 | 8 | — | — | 16,571 | — | — | 16,579 | |||||||||||||||||||||||||||||||
Tax benefit from stock options exercised | — | — | — | — | — | — | 9,998 | — | — | 9,998 | |||||||||||||||||||||||||||||||
Balance July 30, 2005 | — | $ | — | 28,168 | $ | 282 | (2,785 | ) | $ | (66,132 | ) | $ | 233,411 | $ | 3,723 | $ | 208,240 | $ | 379,524 | ||||||||||||||||||||||
F-73
Table of Contents
26 Weeks Ended | |||||||||||
July 30, | July 31, | ||||||||||
2005 | 2004 | ||||||||||
(Unaudited) | |||||||||||
(Amounts in thousands) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 4,397 | $ | 6,930 | |||||||
Adjustments to reconcile net income to cash used in operating activities: | |||||||||||
Depreciation of property and equipment | 21,943 | 17,021 | |||||||||
Amortization of other assets | 437 | 237 | |||||||||
Loss on disposal of property and equipment | 671 | 931 | |||||||||
Deferred taxes | (5,226 | ) | (552 | ) | |||||||
Foreign currency transaction gain | (255 | ) | (361 | ) | |||||||
Management fee amortization from termination agreement | (2,248 | ) | (2,922 | ) | |||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | 1,528 | 24,870 | |||||||||
Merchandise inventories | 20,734 | 31,023 | |||||||||
Prepaid expenses | (15,961 | ) | (308 | ) | |||||||
Other non-current assets | (4,610 | ) | (2,201 | ) | |||||||
Accounts payable | (69,677 | ) | (84,143 | ) | |||||||
Accrued expenses | (6,109 | ) | (3,927 | ) | |||||||
Income taxes payable | (1,657 | ) | (14,459 | ) | |||||||
Deferred rent and other long-term liabilities | (1,889 | ) | (1,650 | ) | |||||||
Net cash used in operating activities | (57,922 | ) | (29,511 | ) | |||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (39,214 | ) | (26,933 | ) | |||||||
Proceeds from disposition of assets | 60 | 78 | |||||||||
Proceeds from sales of marketable securities | 150,425 | 74,350 | |||||||||
Purchases of marketable securities | (105,175 | ) | (28,175 | ) | |||||||
Businesses acquired, net of cash | (1,026 | ) | — | ||||||||
Net cash provided by investing activities | 5,070 | 19,320 | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from bank debt | 9,450 | — | |||||||||
Repayment of bank debt | (942 | ) | — | ||||||||
Proceeds from exercise of stock options | 16,579 | 2,091 | |||||||||
Repurchase of common stock | — | (31,677 | ) | ||||||||
Proceeds from issuance of common stock | 339 | 321 | |||||||||
Other financing activities | — | 164 | |||||||||
Net cash provided by (used in) financing activities | 25,426 | (29,101 | ) | ||||||||
Effects of exchange rates on cash | 4,250 | (1,371 | ) | ||||||||
Net decrease in cash and cash equivalents | (23,176 | ) | (40,663 | ) | |||||||
Cash and cash equivalents, beginning of period | 94,345 | 97,793 | |||||||||
Cash and cash equivalents, end of period | $ | 71,169 | $ | 57,130 | |||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | 28 | $ | 11 | |||||||
Income taxes | 23,120 | 18,722 |
F-74
Table of Contents
(1) | Basis of Presentation |
(2) | Net Income Per Share |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
July 30, | July 31, | July 30, | July 31, | |||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Weighted average shares outstanding — basic | 25,096 | 23,840 | 24,896 | 24,183 | ||||||||||||
Dilutive effect of stock options | 371 | 336 | 377 | 362 | ||||||||||||
Weighted average shares outstanding — diluted | 25,467 | 24,176 | 25,273 | 24,545 | ||||||||||||
(3) | Income Taxes |
F-75
Table of Contents
(4) | Marketable Securities |
(5) | Debt |
F-76
Table of Contents
(6) | Comprehensive (Loss) Income |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
July 30, | July 31, | July 30, | July 31, | |||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Net income | $ | 1,620 | $ | 3,884 | $ | 4,397 | $ | 6,930 | ||||||||
Foreign currency translations | (5,258 | ) | (207 | ) | (6,444 | ) | (4,306 | ) | ||||||||
Hedging activities | 2,950 | (254 | ) | 3,187 | 903 | |||||||||||
Comprehensive (loss) income | $ | (688 | ) | $ | 3,423 | $ | 1,140 | $ | 3,527 | |||||||
(7) | Goodwill and Other Intangible Assets |
Amortizable Intangible Assets |
July 30, 2005 | January 29, 2005 | |||||||||||||||
Gross | Gross | |||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | |||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||
Key money | $ | 4,290 | $ | 1,479 | $ | 3,761 | $ | 1,145 | ||||||||
Other | 45 | 10 | 10 | 10 | ||||||||||||
Total intangible assets | $ | 4,335 | $ | 1,489 | $ | 3,771 | $ | 1,155 | ||||||||
July 30, | July 31, | |||||||
2005 | 2004 | |||||||
13 weeks ended | $ | 227 | $ | 145 | ||||
26 weeks ended | $ | 437 | $ | 237 |
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Balance as of January 29, 2005 | $ | 13,692 | ||
Foreign exchange fluctuations | (169 | ) | ||
Balance as of April 30, 2005 | 13,523 | |||
Jump acquisition(1) | 2,754 | |||
Foreign exchange fluctuations | (705 | ) | ||
Balance as of July 30, 2005 | $ | 15,572 | ||
(1) | In May 2005, the Company acquired all the outstanding shares of Jump, a Spanish company consisting of 138 retail stores and a distribution facility. |
(8) | Game Group Services Agreement |
(9) | Related Party Transactions |
F-78
Table of Contents
(10) | Stock-Based Employee Compensation |
13 Weeks Ended | 26 Weeks Ended | ||||||||||||||||
July 30, | July 31, | July 30, | July 31, | ||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
(Amounts in thousands, except | |||||||||||||||||
per share amounts) | |||||||||||||||||
Net income, as reported | $ | 1,620 | $ | 3,884 | $ | 4,397 | $ | 6,930 | |||||||||
Less: stock-based employee compensation, net of income tax | 433 | 739 | 1,052 | 1,702 | |||||||||||||
Pro forma net income | $ | 1,187 | $ | 3,145 | $ | 3,334 | $ | 5,228 | |||||||||
Net income per share: | |||||||||||||||||
Basic — as reported | $ | 0.06 | $ | 0.16 | $ | 0.18 | $ | 0.29 | |||||||||
Diluted — as reported | $ | 0.06 | $ | 0.16 | $ | 0.17 | $ | 0.28 | |||||||||
Basic — pro forma | $ | 0.05 | $ | 0.13 | $ | 0.13 | $ | 0.22 | |||||||||
Diluted — pro forma | $ | 0.05 | $ | 0.13 | $ | 0.13 | $ | 0.21 | |||||||||
(11) | Stock Buy-Back Program |
(12) | Acquisition |
(13) | Subsequent Event |
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Table of Contents
(14) | Consolidating Financial Statements |
F-80
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | ||||||||||||||||
July 30, | July 30, | July 30, | ||||||||||||||||
2005 | 2005 | Eliminations | 2005 | |||||||||||||||
ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 34,173 | $ | 36,996 | $ | — | $ | 71,169 | ||||||||||
Marketable securities | 35,700 | — | — | 35,700 | ||||||||||||||
Accounts receivable | 75,173 | 10,056 | (65,416 | ) | 19,813 | |||||||||||||
Merchandise inventories | 189,056 | 84,889 | — | 273,945 | ||||||||||||||
Deferred tax asset | 12,633 | 1,307 | — | 13,940 | ||||||||||||||
Prepaid expenses and other current assets | 27,115 | 6,677 | — | 33,792 | ||||||||||||||
Total current assets | 373,850 | 139,925 | (65,416 | ) | 448,359 | |||||||||||||
Property and equipment: | ||||||||||||||||||
Building and leasehold improvements | 118,914 | 54,141 | — | 173,055 | ||||||||||||||
Furniture, fixtures and equipment | 114,353 | 57,986 | — | 172,339 | ||||||||||||||
Land | 4,450 | 6,047 | — | 10,497 | ||||||||||||||
Construction in progress | 769 | 3,098 | — | 3,867 | ||||||||||||||
238,486 | 121,272 | — | 359,758 | |||||||||||||||
Less accumulated depreciation and amortization | 124,911 | 41,202 | — | 166,113 | ||||||||||||||
Net property and equipment | 113,575 | 80,070 | — | 193,645 | ||||||||||||||
Investment | 86,713 | — | (86,713 | ) | — | |||||||||||||
Goodwill and other intangible assets, net | 4,380 | 14,038 | — | 18,418 | ||||||||||||||
Deferred tax asset | 4,053 | 11,717 | — | 15,770 | ||||||||||||||
Other non-current assets | 4,412 | 3,345 | — | 7,757 | ||||||||||||||
Total assets | $ | 586,983 | $ | 249,095 | $ | (152,129 | ) | $ | 683,949 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 101,912 | $ | 64,732 | $ | — | $ | 166,644 | ||||||||||
Accrued expenses | 69,637 | 91,946 | (65,416 | ) | 96,167 | |||||||||||||
Note payable, current portion | 271 | 542 | — | 813 | ||||||||||||||
Total current liabilities | 171,820 | 157,220 | (65,416 | ) | 263,624 | |||||||||||||
Notes payable, long-term portion | 9,157 | 1,053 | — | 10,210 | ||||||||||||||
Deferred rent and other long-term liabilities | 26,482 | 4,109 | — | 30,591 | ||||||||||||||
Total liabilities | 207,459 | 162,382 | (65,416 | ) | 304,425 | |||||||||||||
Stockholders’ equity: | ||||||||||||||||||
Preferred stock — authorized 25,000 shares; $.01 par value; no shares issued and outstanding | — | — | — | — | ||||||||||||||
Common stock — authorized 100,000 shares; $.01 par value; 28,168 shares issued and 25,383 shares outstanding | 282 | 8,383 | (8,383 | ) | 282 | |||||||||||||
Treasury stock, at cost | (66,132 | ) | — | — | (66,132 | ) | ||||||||||||
Additional paid-in-capital | 233,411 | 40,641 | (40,641 | ) | 233,411 | |||||||||||||
Accumulated other comprehensive income | 3,723 | 9,476 | (9,476 | ) | 3,723 | |||||||||||||
Retained earnings | 208,240 | 28,213 | (28,213 | ) | 208,240 | |||||||||||||
Total stockholders’ equity | 379,524 | 86,713 | (86,713 | ) | 379,524 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 586,983 | $ | 249,095 | $ | (152,129 | ) | $ | 683,949 | |||||||||
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Guarantor | Non-Guarantor | ||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | |||||||||||||||
July 30, | July 30, | July 30, | |||||||||||||||
For the 26 Weeks Ended July 30, 2005 | 2005 | 2005 | Eliminations | 2005 | |||||||||||||
Net sales | $ | 660,166 | $ | 293,014 | $ | — | $ | 953,180 | |||||||||
Management fees | 3,859 | — | (1,611 | ) | 2,248 | ||||||||||||
Total revenues | 664,025 | 293,014 | (1,611 | ) | 955,428 | ||||||||||||
Cost of goods sold | 469,373 | 216,615 | — | 685,988 | |||||||||||||
Gross profit | 194,652 | 76,399 | (1,611 | ) | 269,440 | ||||||||||||
Selling, general and administrative expense | 179,866 | 63,528 | (1,611 | ) | 241,783 | ||||||||||||
Depreciation and amortization | 14,958 | 7,422 | — | 22,380 | |||||||||||||
Operating income | (172 | ) | 5,449 | — | 5,277 | ||||||||||||
Interest (income)/expense, net | (2,301 | ) | 709 | — | (1,592 | ) | |||||||||||
Subsidiary income | (3,128 | ) | — | 3,128 | — | ||||||||||||
Income before income tax expense | 5,257 | 4,740 | (3,128 | ) | 6,869 | ||||||||||||
Income tax expense | 860 | 1,612 | — | 2,472 | |||||||||||||
Net income | $ | 4,397 | $ | 3,128 | $ | (3,128 | ) | $ | 4,397 | ||||||||
F-82
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Guarantor | |||||||||||||||||
Subsidiaries | Non-Guarantor | Consolidated | |||||||||||||||
July 31, | Subsidiaries | July 31, | |||||||||||||||
For the 26 Weeks Ended July 31, 2004 | 2004 | July 31, 2004 | Eliminations | 2004 | |||||||||||||
Net sales | $ | 529,159 | $ | 202,292 | $ | — | $ | 731,451 | |||||||||
Management fees | 4,217 | — | (1,295 | ) | 2,922 | ||||||||||||
Total revenues | 533,376 | 202,292 | (1,295 | ) | 734,373 | ||||||||||||
Cost of goods sold | 375,780 | 149,676 | — | 525,456 | |||||||||||||
Gross profit | 157,596 | 52,616 | (1,295 | ) | 208,917 | ||||||||||||
Selling, general and administrative expense | 142,680 | 40,104 | (1,295 | ) | 181,489 | ||||||||||||
Depreciation and amortization | 12,659 | 4,599 | — | 17,258 | |||||||||||||
Operating income | 2,257 | 7,913 | — | 10,170 | |||||||||||||
Interest (income)/expense, net | (1,375 | ) | 539 | — | (836 | ) | |||||||||||
Subsidiary income | (4,863 | ) | — | 4,863 | — | ||||||||||||
Income before income tax expense | 8,495 | 7,374 | (4,863 | ) | 11,006 | ||||||||||||
Income tax expense | 1,565 | 2,511 | — | 4,076 | |||||||||||||
Net income | $ | 6,930 | $ | 4,863 | $ | (4,863 | ) | $ | 6,930 | ||||||||
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Guarantor | Non-Guarantor | |||||||||||||||||
Subsidiaries | Subsidiaries | Consolidated | ||||||||||||||||
July 30, | July 30, | July 30, | ||||||||||||||||
For the 26 Weeks Ended July 30, 2005 | 2005 | 2005 | Eliminations | 2005 | ||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||
Net income | $ | 4,397 | $ | 3,128 | $ | (3,128 | ) | $ | 4,397 | |||||||||
Subsidiary income | (3,128 | ) | — | 3,128 | — | |||||||||||||
Depreciation of property and equipment | 14,958 | 6,985 | — | �� | 21,943 | |||||||||||||
Amortization of other assets | — | 437 | — | 437 | ||||||||||||||
Loss on disposal of property and equipment | 551 | 120 | — | 671 | ||||||||||||||
Deferred taxes | (3,492 | ) | (1,734 | ) | — | (5,226 | ) | |||||||||||
Foreign currency transaction gain | — | (255 | ) | — | (255 | ) | ||||||||||||
Management fee amortization from termination agreement | (2,248 | ) | — | — | (2,248 | ) | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||
Accounts receivable | 2,379 | (851 | ) | — | 1,528 | |||||||||||||
Due to/from affiliates | (17,505 | ) | 17,505 | — | — | |||||||||||||
Merchandise inventories | 22,258 | (1,524 | ) | — | 20,734 | |||||||||||||
Prepaid expenses | (13,414 | ) | (2,547 | ) | — | (15,961 | ) | |||||||||||
Other non-current assets | (3,696 | ) | (914 | ) | — | (4,610 | ) | |||||||||||
Accounts payable | (67,551 | ) | (2,126 | ) | — | (69,677 | ) | |||||||||||
Accrued expenses | (6,054 | ) | (55 | ) | — | (6,109 | ) | |||||||||||
Income taxes payable | 3,907 | (5,564 | ) | — | (1,657 | ) | ||||||||||||
Deferred rent and other long-term liabilities | (2,073 | ) | 184 | — | (1,889 | ) | ||||||||||||
Net cash provided by (used in) operating activities | (70,711 | ) | 12,789 | — | (57,922 | ) | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||||
Purchases of property and equipment | (12,972 | ) | (26,242 | ) | — | (39,214 | ) | |||||||||||
Proceeds from disposition of assets | 55 | 5 | — | 60 | ||||||||||||||
Proceeds from sales of marketable securities | 150,425 | — | — | 150,425 | ||||||||||||||
Purchases of marketable securities | (105,175 | ) | — | — | (105,175 | ) | ||||||||||||
Businesses acquired, net of cash | (1,128 | ) | 102 | — | (1,026 | ) | ||||||||||||
Net cash provided by (used in) investing activities | 31,205 | (26,135 | ) | — | 5,070 | |||||||||||||
Cash flows from financing activities: | ||||||||||||||||||
Proceeds from exercise of stock options | 16,579 | — | — | 16,579 | ||||||||||||||
Proceeds from issuance of common stock | 339 | — | — | 339 | ||||||||||||||
Proceeds from bank debt | 9,450 | — | — | 9,450 | ||||||||||||||
Other financing activities | (22 | ) | (920 | ) | — | (942 | ) | |||||||||||
Intercompany capital contributions and dividends | 16,863 | (16,863 | ) | — | — | |||||||||||||
Net cash provided by (used in) financing activities | 43,209 | (17,783 | ) | — | 25,426 | |||||||||||||
Effects of exchange rates on cash | — | 4,250 | — | 4,250 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | 3,703 | (26,879 | ) | — | (23,176 | ) | ||||||||||||
Cash and cash equivalents, beginning of period | 30,470 | 63,875 | — | 94,345 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 34,173 | $ | 36,996 | $ | — | $ | 71,169 | ||||||||||
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Guarantor | ||||||||||||||||||
Subsidiaries | Non-Guarantor | Consolidated | ||||||||||||||||
July 31, | Subsidiaries | July 31, | ||||||||||||||||
For the Weeks Ended July 31, 2004 | 2004 | July 31, 2004 | Eliminations | 2004 | ||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||
Net income | $ | 6,930 | $ | 4,863 | $ | (4,863 | ) | $ | 6,930 | |||||||||
Subsidiary income | (4,863 | ) | — | 4,863 | — | |||||||||||||
Depreciation of property and equipment | 12,659 | 4,362 | — | 17,021 | ||||||||||||||
Amortization of other assets | — | 237 | — | 237 | ||||||||||||||
Loss on disposal of property and equipment | 794 | 137 | — | 931 | ||||||||||||||
Deferred taxes | (552 | ) | — | — | (552 | ) | ||||||||||||
Foreign currency transaction gain | — | (361 | ) | — | (361 | ) | ||||||||||||
Management fee amortization from termination agreement | (2,922 | ) | — | — | (2,922 | ) | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||
Accounts receivable | 19,412 | 5,458 | — | 24,870 | ||||||||||||||
Due to/ from affiliates | (7,289 | ) | 7,289 | — | — | |||||||||||||
Merchandise inventories | 30,124 | 899 | — | 31,023 | ||||||||||||||
Prepaid expenses | 231 | (539 | ) | — | (308 | ) | ||||||||||||
Other non-current assets | (397 | ) | (1,804 | ) | — | (2,201 | ) | |||||||||||
Accounts payable | (62,017 | ) | (22,126 | ) | — | (84,143 | ) | |||||||||||
Accrued expenses | (4,627 | ) | 700 | — | (3,927 | ) | ||||||||||||
Income taxes payable | (8,254 | ) | (6,205 | ) | — | (14,459 | ) | |||||||||||
Deferred rent and other long-term liabilities | (1,617 | ) | (33 | ) | — | (1,650 | ) | |||||||||||
Net cash used in operating activities | (22,388 | ) | (7,123 | ) | — | (29,511 | ) | |||||||||||
Cash flows from investing activities: | ||||||||||||||||||
Purchases of property and equipment | (16,820 | ) | (10,113 | ) | — | (26,933 | ) | |||||||||||
Proceeds from disposition of assets | 33 | 45 | — | 78 | ||||||||||||||
Proceeds from sales of marketable securities | 74,350 | — | — | 74,350 | ||||||||||||||
Purchases of marketable securities | (28,175 | ) | — | — | (28,175 | ) | ||||||||||||
Net cash provided by (used in) investing activities | 29,388 | (10,068 | ) | — | 19,320 | |||||||||||||
Cash flows from financing activities: | ||||||||||||||||||
Proceeds from exercise of stock options | 2,091 | — | — | 2,091 | ||||||||||||||
Repurchase of common stock | (31,677 | ) | — | — | (31,677 | ) | ||||||||||||
Proceeds from issuance of common stock | 321 | — | — | 321 | ||||||||||||||
Other financing activities | 164 | — | — | 164 | ||||||||||||||
Intercompany capital contributions and dividends | (664 | ) | 664 | — | — | |||||||||||||
Net cash provided by (used in) financing activities | (29,765 | ) | 664 | — | (29,101 | ) | ||||||||||||
Effects of exchange rates on cash | — | (1,371 | ) | — | (1,371 | ) | ||||||||||||
Net decrease in cash and cash equivalents | (22,765 | ) | (17,898 | ) | — | (40,663 | ) | |||||||||||
Cash and cash equivalents, beginning of period | 47,538 | 50,255 | — | 97,793 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 24,773 | $ | 32,357 | $ | — | $ | 57,130 | ||||||||||
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II-1
Table of Contents
• | such person has not been indemnified by another organization or employee benefit plan for the same judgments, penalties or fines; | |
• | such person has acted in good faith; | |
• | such person has received no improper personal benefit, and statutory procedure has been followed in the case of any conflict of interest by a director; | |
• | in the case of a criminal proceeding, such person had no reasonable cause to believe the conduct was unlawful; and | |
• | in the case of acts or omissions occurring in the person’s performance in the official capacity of director or, for a person not a director, in the official capacity of officer, board committee member or employee, such person reasonably believed that the conduct was in the best interests of the corporation, or, in the case of performance by a director, officer or employee of the corporation who was serving at the request of the corporation or whose duties involved service as a director, officer, partner, trustee, employee or agent of another organization or employee benefit plan, such person reasonably believed that the conduct was not opposed to the best interests of the corporation. |
II-2
Table of Contents
Item 21. | Exhibits and Financial Statement Schedules |
Exhibit | ||||
Number | Description | |||
2 | .1 | Agreement and Plan of Merger, dated as of April 17, 2005, among GameStop Corp. (f/k/a GSC Holdings Corp.), Electronics Boutique Holdings Corp., GameStop, Inc., GameStop Holdings Corp. (f/k/a GameStop Corp.), Cowboy Subsidiary LLC and Eagle Subsidiary LLC.(1) | ||
3 | .1 | Amended and Restated Certificate of Incorporation of GameStop Corp. (f/k/a GSC Holdings Corp.).(2) | ||
3 | .2 | Amended and Restated Bylaws of GameStop Corp. (f/k/a GSC Holdings Corp.).(2) | ||
3 | .3 | Amendment to the Amended and Restated Certificate of Incorporation of GameStop Corp. (f/k/a GSC Holdings Corp.).(3) | ||
3 | .4 | Amended and Restated Articles of Incorporation of GameStop, Inc. | ||
3 | .5 | Amended and Restated Bylaws of GameStop, Inc. | ||
3 | .6 | Certificate of Limited Partnership of GameStop Texas LP. | ||
3 | .7 | Limited Partnership Agreement of GameStop Texas LP, dated as of May 27, 2004. | ||
3 | .8 | Certificate of Incorporation of GameStop Brands, Inc. | ||
3 | .9 | Certificate of Amendment of Certificate of Incorporation of GameStop Brands, Inc. | ||
3 | .10 | Bylaws of GameStop Brands, Inc. | ||
3 | .11 | Amended and Restated Certificate of Incorporation of GameStop Holdings Corp. (f/k/a GameStop Corp.). | ||
3 | .12 | Bylaws of GameStop Holdings Corp. (f/k/a GameStop Corp.). | ||
3 | .13 | Articles of Incorporation of Sunrise Publications, Inc. | ||
3 | .14 | Bylaws of Sunrise Publications, Inc. | ||
3 | .15 | Articles of Incorporation of Marketing Control Services, Inc. | ||
3 | .16 | Bylaws of Marketing Control Services, Inc. | ||
3 | .17 | Certificate of Formation of GameStop of Texas (GP), LLC. | ||
3 | .18 | Certificate of Amendment of the Certificate of Formation of GameStop of Texas (GP), LLC. | ||
3 | .19 | Limited Liability Company Agreement of GameStop of Texas (GP), LLC, dated as of May 25, 2004. | ||
3 | .20 | Certificate of Formation of GameStop (LP), LLC. | ||
3 | .21 | Certificate of Amendment of the Certificate of Formation of GameStop (LP), LLC. | ||
3 | .22 | Limited Liability Company Agreement of GameStop (LP), LLC, dated as of May 26, 2004. | ||
3 | .23 | Certificate of Incorporation of Electronics Boutique Holdings Corp. | ||
3 | .24 | Certificate of Amendment of the Certificate of Incorporation of Electronics Boutique Holdings Corp. | ||
3 | .25 | Amended and Restated Bylaws of Electronics Boutique Holdings Corp. | ||
3 | .26 | Articles of Incorporation of EB Catalog Company, Inc. | ||
3 | .27 | Bylaws of EB Catalog Company, Inc. | ||
3 | .28 | Certificate of Incorporation of ELBO Inc. | ||
3 | .29 | Bylaws of ELBO Inc. | ||
3 | .30 | Certificate of Formation of FR Sadsbury Second, LLC. | ||
3 | .31 | Certificate of Amendment to the Certificate of Formation of FR Sadsbury Second, LLC (changing name to EB Sadsbury Second, LLC). | ||
3 | .32 | Limited Liability Company Agreement of FR Sadsbury Second, LLC, dated as of August 10, 2004, by its sole member, FR Sadsbury, LLC. |
II-3
Table of Contents
Exhibit | ||||
Number | Description | |||
3 | .33 | Certificate of Limited Partnership of FR Sadsbury General Partner, LP. Certificate of Amendment to the Certificate of Limited Partnership of FR Sadsbury General Partner, LP (changing name to EB Sadsbury General Partner, LP). | ||
3 | .34 | Limited Partnership Agreement of FR Sadsbury General Partner, LP, dated as of May 23, 2005, by and between EB Sadsbury Second, LLC and EB Sadsbury, LLC. | ||
3 | .35 | Certificate of Limited Partnership of FR Sadsbury Property Holding, LP. Certificate of Amendment to the Certificate of Limited Partnership of FR Sadsbury Property Holding, LP (changing name to EB Sadsbury Property Holding, LP). | ||
3 | .36 | Limited Partnership Agreement of FR Sadsbury Property Holding, LP, dated as of August 10, 2004, by and between FR Sadsbury General Partner, LP and FR Sadsbury, LLC. | ||
3 | .37 | Certificate of Incorporation of EB International Holdings, Inc. | ||
3 | .38 | Certificate of Merger of E.B. International, Inc. with and into EB International Holdings, Inc. | ||
3 | .39 | Bylaws of EB International Holdings, Inc. | ||
4 | .1 | Indenture, dated September 28, 2005, by and among GameStop Corp. (f/k/a GSC Holdings Corp.), GameStop, Inc., the Subsidiary Guarantors party thereto, and Citibank, N.A., as Trustee.(4) | ||
4 | .2 | Form of Senior Floating Rate Notes due 2011 (included in Exhibit 4.1 hereto). | ||
4 | .3 | Form of 8% Senior Notes due 2012 (included in Exhibit 4.1 hereto). | ||
4 | .4 | Form of Guarantees of Senior Floating Rate Notes due 2011 and 8% Senior Notes due 2012 (included in Exhibit 4.1 hereto). | ||
4 | .5 | First Supplemental Indenture, dated October 8, 2005, by and among GameStop Corp. (f/k/a GSC Holdings Corp.), GameStop, Inc., the Subsidiary Guarantors party thereto, and Citibank, N.A., as Trustee.(5) | ||
4 | .6 | Registration Rights Agreement, dated September 28, 2005, by and among GameStop Corp. (f/k/a GSC Holdings Corp.), GameStop, Inc., the Subsidiary Guarantors listed on Schedule I-A thereto, and Citigroup Global Markets Inc., for themselves and as representatives of the several Initial Purchasers listed on Schedule II thereto.(4) | ||
4 | .7 | Rights Agreement, dated as of June 27, 2005, between GameStop Corp. (f/k/a GSC Holdings Corp.) and The Bank of New York, as Rights Agent.(2) | ||
5 | .1 | Opinion of Bryan Cave LLP. | ||
5 | .2 | Opinion of Oppenheimer Wolff & Donnelly LLP. | ||
10 | .1 | Separation Agreement, dated as of January 1, 2002, between Barnes & Noble, Inc. and GameStop Holdings Corp.(f/k/a GameStop Corp.).(6) | ||
10 | .2 | Tax Disaffiliation Agreement, dated as of January 1, 2002, between Barnes & Noble, Inc. and GameStop Holdings Corp.(f/k/a GameStop Corp.).(7) | ||
10 | .3 | Insurance Agreement, dated as of January 1, 2002, between Barnes & Noble, Inc. and GameStop Holdings Corp. (f/k/a GameStop Corp.).(7) | ||
10 | .4 | Operating Agreement, dated as of January 1, 2002, between Barnes & Noble, Inc. and GameStop Holdings Corp. (f/k/a GameStop Corp.).(7) | ||
10 | .5 | Amended and Restated 2001 Incentive Plan.(8) | ||
10 | .6 | Amendment to Amended and Restated 2001 Incentive Plan.(5) | ||
10 | .7 | Supplemental Compensation Plan.(8) | ||
10 | .8 | Form of Option Agreement.(8) | ||
10 | .9 | Form of Restricted Share Agreement.(9) | ||
10 | .10 | Stock Purchase Agreement, dated as of October 1, 2004, by and among GameStop Holdings Corp. (f/k/a GameStop Corp.), B&N GameStop Holding Corp. and Barnes & Noble, Inc.(10) | ||
10 | .11 | Promissory Note, dated as of October 1, 2004, made by GameStop Holdings Corp. (f/k/a GameStop Corp.) in favor of B&N GameStop Holding Corp.(10) |
II-4
Table of Contents
Exhibit | ||||
Number | Description | |||
10 | .12 | Credit Agreement, dated October 11, 2005, by and among GameStop Corp. (f/k/a GSC Holdings Corp.), certain subsidiaries of GameStop Corp., Bank of America, N.A. and the other lending institutions listed in the Agreement, Bank of America, N.A. and Citicorp North America, Inc., as Issuing Banks, Bank of America, N.A., as Administrative Agent and Collateral Agent, Citicorp North America, Inc., as Syndication Agent, and Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc., as Documentation Agent.(3) | ||
10 | .13 | Guaranty, dated as of October 11, 2005, by GameStop Corp. (f/k/a GSC Holdings Corp.) and certain subsidiaries of GameStop Corp. in favor of the agents and lenders.(3) | ||
10 | .14 | Security Agreement, dated October 11, 2005.(3) | ||
10 | .15 | Patent and Trademark Security Agreement, dated as of October 11, 2005.(3) | ||
10 | .16 | Mortgage, Security Agreement, and Assignment and Deeds of Trust between GameStop Texas LP and Bank of America, N.A., as Collateral Agent.(3) | ||
10 | .17 | Mortgage, Security Agreement, and Assignment and Deeds of Trust between Electronics Boutique of America, Inc. and Bank of America, N.A., as Collateral Agent.(3) | ||
10 | .18 | Form of Securities Collateral Pledge Agreement.(3) | ||
10 | .19 | Registration Rights Agreement, dated October 8, 2005, among EB Nevada Inc., James J. Kim and GameStop Corp. (f/k/a GSC Holdings Corp.)(3) | ||
10 | .20 | Executive Employment Agreement, dated as of April 11, 2005, between GameStop Holdings Corp. (f/k/a GameStop Corp.) and R. Richard Fontaine.(11) | ||
10 | .21 | Executive Employment Agreement, dated as of April 11, 2005, between GameStop Holdings Corp. (f/k/a GameStop Corp.) and Daniel A. DeMatteo.(11) | ||
10 | .22 | Executive Employment Agreement, dated as of December 9, 2005, between GameStop Corp. and Steven R. Morgan.(12) | ||
10 | .23 | Executive Employment Agreement, dated as of April 3, 2006, between GameStop Corp. (f/k/a GSC Holdings Corp.) and David W. Carlson.(13) | ||
21 | .1 | List of Subsidiaries of GameStop Corp. (f/k/a GSC Holdings Corp.). | ||
23 | .1 | Consent of BDO Seidman, LLP. | ||
23 | .2 | Consent of KPMG LLP. | ||
23 | .3 | Consent of Bryan Cave LLP (included in Exhibit 5.1 hereto). | ||
23 | .4 | Consent of Oppenheimer Wolff & Donnelly LLP (included in Exhibit 5.2 hereto). | ||
24 | .1 | Power of Attorney (included on signature pages to this Registration Statement). | ||
25 | .1 | Statement of Eligibility and Qualification on Form T-1 of Citibank, N.A as Trustee under the Indenture. | ||
99 | .1 | Form of Letter of Transmittal. | ||
99 | .2 | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. | ||
99 | .3 | Form of Letter to Clients. | ||
99 | .4 | Form of Notice of Guaranteed Delivery. |
(1) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Form 8-K, filed with the Securities and Exchange Commission on April 18, 2005. | |
(2) | Incorporated by reference to Amendment No. 1 to Registration Statement on Form S-4 of GameStop Corp. (f/k/a GSC Holdings Corp.), filed with the Securities and Exchange Commission on July 8, 2005. | |
(3) | Incorporated by reference to GameStop Corp.’s (f/k/a GSC Holdings Corp.) Form 8-K, filed with the Securities and Exchange Commission on October 12, 2005. | |
(4) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Form 8-K, filed with the Securities and Exchange Commission on September 30, 2005. |
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(5) | Incorporated by reference to GameStop Corp.’s (f/k/a GSC Holdings Corp.) Quarterly Report on Form 10-Q for the quarter ended October 29, 2005, filed with the Securities and Exchange Commission on December 8, 2005. | |
(6) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Amendment No. 4 to Form S-1, filed with the Securities and Exchange Commission on February 5, 2002 (No. 333-68294). | |
(7) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Amendment No. 3 to Form S-1, filed with the Securities and Exchange Commission on January 24, 2002 (No. 333-68294). | |
(8) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Form 8-K, filed with the Securities and Exchange Commission on October 5, 2004. | |
(9) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Form 8-K, filed with the Securities and Exchange Commission on September 12, 2005. |
(10) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Annual Report on Form 10-K for the fiscal year ended January 29, 2005, filed with the Securities and Exchange Commission on April 11, 2005. |
(11) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Form 8-K filed with the Securities and Exchange Commission on April 15, 2005. |
(12) | Incorporated by reference to GameStop Corp.’s (f/k/a GSC Holdings Corp.) Form 8-K filed with the Securities and Exchange Commission on December 13, 2005. |
(13) | Incorporated by reference to the GameStop Corp.’s (f/k/a GSC Holdings Corp.) Form 10-K for the fiscal year ended January 28, 2006, filed with the Securities and Exchange Commission on April 3, 2006. |
Item 22. | Undertakings. |
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; | |
(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement (notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement); and | |
(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
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(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof. | |
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. | |
(4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of GameStop Corp.’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof. | |
(5) That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. | |
(6) That every prospectus (i) that is filed pursuant to paragraph (5) above, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment has become effective, and that for the purpose of determining liabilities under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof. | |
(7) Insofar as indemnification for liabilities under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of each registrant pursuant to the foregoing provisions, or otherwise, each registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable. In the event a claim of indemnification against such liabilities (other than the payment by a registrant of expenses incurred or paid by a director, officer or controlling person of such registrant in a successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, each registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. | |
(8) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. | |
(9) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in this registration statement when it became effective. |
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GameStop Corp. |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chairman and Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ R. Richard Fontaine R. Richard Fontaine | Chairman, Chief Executive Officer and Director (Principal Executive Officer) | April 26, 2006 | ||||
/s/ Daniel A. DeMatteo Daniel A. DeMatteo | Vice Chairman, Chief Operating Officer and Director | April 26, 2006 | ||||
/s/ David W. Carlson David W. Carlson | Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Financial Officer) | April 26, 2006 | ||||
/s/ Robert A. Lloyd Robert A. Lloyd | Senior Vice President, Chief Accounting Officer (Principal Accounting Officer) | April 26, 2006 | ||||
/s/ Leonard Riggio Leonard Riggio | Director | April 26, 2006 | ||||
/s/ Jerome L. Davis Jerome L. Davis | Director | April 26, 2006 |
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Signature | Capacity | Date | ||||
/s/ James J. Kim James J. Kim | Director | April 26, 2006 | ||||
/s/ Michael N. Rosen Michael N. Rosen | Director and Secretary | April 26, 2006 | ||||
/s/ Stephanie M. Shern Stephanie M. Shern | Director | April 26, 2006 | ||||
/s/ Stanley P. Steinberg Stanley P. Steinberg | Director | April 26, 2006 | ||||
/s/ Gerald R. Szczepanski Gerald R. Szczepanski | Director | April 26, 2006 | ||||
/s/ Edward A. Volkwein Edward A. Volkwein | Director | April 26, 2006 | ||||
/s/ Lawrence S. Zilavy Lawrence S. Zilavy | Director | April 26, 2006 |
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GameStop, Inc. |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chairman and Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ R. Richard Fontaine R. Richard Fontaine | Chairman, Chief Executive Officer and Director (Principal Executive Officer) | April 26, 2006 | ||||
/s/ Daniel A. DeMatteo Daniel A. DeMatteo | Vice Chairman, Chief Operating Officer and Director | April 26, 2006 | ||||
/s/ David W. Carlson David W. Carlson | Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Accounting and Financial Officer) | April 26, 2006 |
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Sunrise Publications, Inc. |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chairman and Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ R. Richard Fontaine R. Richard Fontaine | Chairman, Chief Executive Officer and Director (Principal Executive Officer) | April 26, 2006 | ||||
/s/ Daniel A. DeMatteo Daniel A. DeMatteo | Vice Chairman, Chief Operating Officer and Director | April 26, 2006 | ||||
/s/ David W. Carlson David W. Carlson | Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Accounting and Financial Officer) | April 26, 2006 |
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GameStop Holdings Corp. |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chairman and Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ R. Richard Fontaine R. Richard Fontaine | Chairman, Chief Executive Officer and Director (Principal Executive Officer) | April 26, 2006 | ||||
/s/ Daniel A. DeMatteo Daniel A. DeMatteo | Vice Chairman, Chief Operating Officer and Director | April 26, 2006 | ||||
/s/ David W. Carlson David W. Carlson | Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Accounting and Financial Officer) | April 26, 2006 | ||||
/s/ Jerome L. Davis Jerome L. Davis | Director | April 26, 2006 | ||||
/s/ Gerald R. Szczepanski �� Gerald R. Szczepanski | Director | April 26, 2006 | ||||
/s/ Edward A. Volkwein Edward A. Volkwein | Director | April 26, 2006 |
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Marketing Control Services, Inc. |
By: | /s/ Kevin Weimerskirch |
Kevin Weimerskirch | |
President and Secretary |
Signature | Capacity | Date | ||||
/s/ Kevin Weimerskirch Kevin Weimerskirch | President and Secretary (Principal Executive Officer) | April 26, 2006 | ||||
/s/ Shirley Granado Shirley Granado | Vice President, Finance (Principal Accounting and Financial Officer) | April 26, 2006 | ||||
/s/ Robert Lloyd Robert Lloyd | Director | April 26, 2006 |
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GameStop Brands, Inc. |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chairman and Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ R. Richard Fontaine R. Richard Fontaine | Chairman, Chief Executive Officer and Director (Principal Executive Officer) | April 26, 2006 | ||||
/s/ Daniel A. DeMatteo Daniel A. DeMatteo | President and Director | April 26, 2006 | ||||
/s/ David W. Carlson David W. Carlson | Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Accounting and Financial Officer) | April 26, 2006 |
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GameStop (LP), LLC | |
By: GameStop, Inc., its Sole Member |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chairman and Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ Cathy Preston Cathy Preston | President (Principal Executive Officer) | April 26, 2006 | ||||
/s/ Paul Anderson Paul Anderson | Treasurer and Secretary (Principal Accounting and Financial Officer) | April 26, 2006 | ||||
GameStop, Inc. | Sole Member | April 26, 2006 | ||||
/s/ R. Richard Fontaine R. Richard Fontaine |
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GameStop of Texas (GP), LLC | |
By: GameStop, Inc., its Sole Member |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chairman and Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ R. Richard Fontaine R. Richard Fontaine | Chief Executive Officer and Director (Principal Executive Officer) | April 26, 2006 | ||||
/s/ David W. Carlson David W. Carlson | Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Accounting and Financial Officer) | April 26, 2006 | ||||
GameStop, Inc. | Sole Member | April 26, 2006 | ||||
/s/ R. Richard Fontaine R. Richard Fontaine |
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GameStop Texas LP |
By: | GameStop of Texas (GP), LLC, its General Partner | |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ R. Richard Fontaine R. Richard Fontaine | Chief Executive Officer (Principal Executive Officer) | April 26, 2006 | ||||
/s/ David W. Carlson David W. Carlson | Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Accounting and Financial Officer) | April 26, 2006 | ||||
GameStop of Texas (GP), LLC | General Partner | April 26, 2006 | ||||
/s/ R. Richard Fontaine R. Richard Fontaine |
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Electronics Boutique Holdings Corp. |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chairman and Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ R. Richard Fontaine R. Richard Fontaine | Chairman, Chief Executive Officer and Director (Principal Executive Officer) | April 26, 2006 | ||||
/s/ Daniel A. DeMatteo Daniel A. DeMatteo | Vice Chairman, Chief Operating Officer and Director | April 26, 2006 | ||||
/s/ David W. Carlson David W. Carlson | Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Accounting and Financial Officer) | April 26, 2006 |
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ELBO Inc. |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chairman and Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ R. Richard Fontaine R. Richard Fontaine | Chairman, Chief Executive Officer and Director (Principal Executive Officer) | April 26, 2006 | ||||
/s/ Daniel A. DeMatteo Daniel A. DeMatteo | President and Director | April 26, 2006 | ||||
/s/ David W. Carlson David W. Carlson | Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Accounting and Financial Officer) | April 26, 2006 |
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EB International Holdings, Inc. |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chairman and Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ R. Richard Fontaine R. Richard Fontaine | Chairman, Chief Executive Officer and Director (Principal Executive Officer) | April 26, 2006 | ||||
/s/ Daniel A. DeMatteo Daniel A. DeMatteo | President and Director | April 26, 2006 | ||||
/s/ David W. Carlson David W. Carlson | Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Accounting and Financial Officer) | April 26, 2006 |
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EB Catalog Company, Inc. |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chairman and Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ R. Richard Fontaine R. Richard Fontaine | Chairman, Chief Executive Officer and Director (Principal Executive Officer) | April 26, 2006 | ||||
/s/ Daniel A. DeMatteo Daniel A. DeMatteo | President and Director | April 26, 2006 | ||||
/s/ David W. Carlson David W. Carlson | Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Accounting and Financial Officer) | April 26, 2006 |
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EB Sadsbury Second, LLC | |
By: GamsStop Inc., its Sole Member |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chairman and Chief Executive Officer |
Signature | Capacity | Date | ||||
/s/ R. Richard Fontaine R. Richard Fontaine | Chief Executive Officer (Principal Executive Officer) | April 26, 2006 | ||||
/s/ David W. Carlson David W. Carlson | Executive Vice President, Chief Financial Officer and Assistant Secretary (Principal Accounting and Financial Officer) | April 26, 2006 | ||||
GameStop, Inc. | Sole Member | April 26, 2006 | ||||
/s/ R. Richard Fontaine R. Richard Fontaine |
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EB Sadsbury General Partner, LP |
By: | EB Sadsbury Second, LLC, its General Partner | |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chief Executive Officer |
Signature | Capacity | Date | ||||
EB Sadsbury Second, LLC | General Partner | April 26, 2006 | ||||
/s/ R. Richard Fontaine R. Richard Fontaine |
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EB Sadsbury Property Holding, LP |
By: | EB Sadsbury General Partner, LP, its General Partner | |
By: | /s/ R. Richard Fontaine |
R. Richard Fontaine | |
Chief Executive Officer |
Signature | Capacity | Date | ||||||
EB Sadsbury General Partner, LP | General Partner | April 26, 2006 | ||||||
/s/ R. Richard Fontaine R. Richard Fontaine |
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Exhibit | ||||
Number | Description | |||
2 | .1 | Agreement and Plan of Merger, dated as of April 17, 2005, among GameStop Corp. (f/k/a GSC Holdings Corp.), Electronics Boutique Holdings Corp., GameStop, Inc., GameStop Holdings Corp. (f/k/a GameStop Corp.), Cowboy Subsidiary LLC and Eagle Subsidiary LLC.(1) | ||
3 | .1 | Amended and Restated Certificate of Incorporation of GameStop Corp. (f/k/a GSC Holdings Corp.).(2) | ||
3 | .2 | Amended and Restated Bylaws of GameStop Corp. (f/k/a GSC Holdings Corp.).(2) | ||
3 | .3 | Amendment to the Amended and Restated Certificate of Incorporation of GameStop Corp. (f/k/a GSC Holdings Corp.).(3) | ||
3 | .4 | Amended and Restated Articles of Incorporation of GameStop, Inc. | ||
3 | .5 | Amended and Restated Bylaws of GameStop, Inc. | ||
3 | .6 | Certificate of Limited Partnership of GameStop Texas LP. | ||
3 | .7 | Limited Partnership Agreement of GameStop Texas LP, dated as of May 27, 2004. | ||
3 | .8 | Certificate of Incorporation of GameStop Brands, Inc. | ||
3 | .9 | Certificate of Amendment of Certificate of Incorporation of GameStop Brands, Inc. | ||
3 | .10 | Bylaws of GameStop Brands, Inc. | ||
3 | .11 | Amended and Restated Certificate of Incorporation of GameStop Holdings Corp. (f/k/a GameStop Corp.). | ||
3 | .12 | Bylaws of GameStop Holdings Corp. (f/k/a GameStop Corp.). | ||
3 | .13 | Articles of Incorporation of Sunrise Publications, Inc. | ||
3 | .14 | Bylaws of Sunrise Publications, Inc. | ||
3 | .15 | Articles of Incorporation of Marketing Control Services, Inc. | ||
3 | .16 | Bylaws of Marketing Control Services, Inc. | ||
3 | .17 | Certificate of Formation of GameStop of Texas (GP), LLC. | ||
3 | .18 | Certificate of Amendment of the Certificate of Formation of GameStop of Texas (GP), LLC. | ||
3 | .19 | Limited Liability Company Agreement of GameStop of Texas (GP), LLC, dated as of May 25, 2004. | ||
3 | .20 | Certificate of Formation of GameStop (LP), LLC. | ||
3 | .21 | Certificate of Amendment of the Certificate of Formation of GameStop (LP), LLC. | ||
3 | .22 | Limited Liability Company Agreement of GameStop (LP), LLC, dated as of May 26, 2004. | ||
3 | .23 | Certificate of Incorporation of Electronics Boutique Holdings Corp. | ||
3 | .24 | Certificate of Amendment of the Certificate of Incorporation of Electronics Boutique Holdings Corp. | ||
3 | .25 | Amended and Restated Bylaws of Electronics Boutique Holdings Corp. | ||
3 | .26 | Articles of Incorporation of EB Catalog Company, Inc. | ||
3 | .27 | Bylaws of EB Catalog Company, Inc. | ||
3 | .28 | Certificate of Incorporation of ELBO Inc. | ||
3 | .29 | Bylaws of ELBO Inc. | ||
3 | .30 | Certificate of Formation of FR Sadsbury Second, LLC. | ||
3 | .31 | Certificate of Amendment to the Certificate of Formation of FR Sadsbury Second, LLC (changing name to EB Sadsbury Second, LLC). | ||
3 | .32 | Limited Liability Company Agreement of FR Sadsbury Second, LLC, dated as of August 10, 2004, by its sole member, FR Sadsbury, LLC. | ||
3 | .33 | Certificate of Limited Partnership of FR Sadsbury General Partner, LP. Certificate of Amendment to the Certificate of Limited Partnership of FR Sadsbury General Partner, LP (changing name to EB Sadsbury General Partner, LP). | ||
3 | .34 | Limited Partnership Agreement of FR Sadsbury General Partner, LP, dated as of May 23, 2005, by and between EB Sadsbury Second, LLC and EB Sadsbury, LLC. |
Table of Contents
Exhibit | ||||
Number | Description | |||
3 | .35 | Certificate of Limited Partnership of FR Sadsbury Property Holding, LP. Certificate of Amendment to the Certificate of Limited Partnership of FR Sadsbury Property Holding, LP (changing name to EB Sadsbury Property Holding, LP). | ||
3 | .36 | Limited Partnership Agreement of FR Sadsbury Property Holding, LP, dated as of August 10, 2004, by and between FR Sadsbury General Partner, LP and FR Sadsbury, LLC. | ||
3 | .37 | Certificate of Incorporation of EB International Holdings, Inc. | ||
3 | .38 | Certificate of Merger of E.B. International, Inc. with and into EB International Holdings, Inc. | ||
3 | .39 | Bylaws of EB International Holdings, Inc. | ||
4 | .1 | Indenture, dated September 28, 2005, by and among GameStop Corp. (f/k/a GSC Holdings Corp.), GameStop, Inc., the Subsidiary Guarantors party thereto, and Citibank, N.A., as Trustee.(4) | ||
4 | .2 | Form of Senior Floating Rate Notes due 2011 (included in Exhibit 4.1 hereto). | ||
4 | .3 | Form of 8% Senior Notes due 2012 (included in Exhibit 4.1 hereto). | ||
4 | .4 | Form of Guarantees of Senior Floating Rate Notes due 2011 and 8% Senior Notes due 2012 (included in Exhibit 4.1 hereto). | ||
4 | .5 | First Supplemental Indenture, dated October 8, 2005, by and among GameStop Corp. (f/k/a GSC Holdings Corp.), GameStop, Inc., the Subsidiary Guarantors party thereto, and Citibank, N.A., as Trustee.(5) | ||
4 | .6 | Registration Rights Agreement, dated September 28, 2005, by and among GameStop Corp. (f/k/a GSC Holdings Corp.), GameStop, Inc., the Subsidiary Guarantors listed on Schedule I-A thereto, and Citigroup Global Markets Inc., for themselves and as representatives of the several Initial Purchasers listed on Schedule II thereto.(4) | ||
4 | .7 | Rights Agreement, dated as of June 27, 2005, between GameStop Corp. (f/k/a GSC Holdings Corp.) and The Bank of New York, as Rights Agent.(2) | ||
5 | .1 | Opinion of Bryan Cave LLP. | ||
5 | .2 | Opinion of Oppenheimer Wolff & Donnelly LLP. | ||
10 | .1 | Separation Agreement, dated as of January 1, 2002, between Barnes & Noble, Inc. and GameStop Holdings Corp.(f/k/a GameStop Corp.).(6) | ||
10 | .2 | Tax Disaffiliation Agreement, dated as of January 1, 2002, between Barnes & Noble, Inc. and GameStop Holdings Corp.(f/k/a GameStop Corp.).(7) | ||
10 | .3 | Insurance Agreement, dated as of January 1, 2002, between Barnes & Noble, Inc. and GameStop Holdings Corp. (f/k/a GameStop Corp.).(7) | ||
10 | .4 | Operating Agreement, dated as of January 1, 2002, between Barnes & Noble, Inc. and GameStop Holdings Corp. (f/k/a GameStop Corp.).(7) | ||
10 | .5 | Amended and Restated 2001 Incentive Plan.(8) | ||
10 | .6 | Amendment to Amended and Restated 2001 Incentive Plan.(5) | ||
10 | .7 | Supplemental Compensation Plan.(8) | ||
10 | .8 | Form of Option Agreement.(8) | ||
10 | .9 | Form of Restricted Share Agreement.(9) | ||
10 | .10 | Stock Purchase Agreement, dated as of October 1, 2004, by and among GameStop Holdings Corp. (f/k/a GameStop Corp.), B&N GameStop Holding Corp. and Barnes & Noble, Inc.(10) | ||
10 | .11 | Promissory Note, dated as of October 1, 2004, made by GameStop Holdings Corp. (f/k/a GameStop Corp.) in favor of B&N GameStop Holding Corp.(10) | ||
10 | .12 | Credit Agreement, dated October 11, 2005, by and among GameStop Corp. (f/k/a GSC Holdings Corp.), certain subsidiaries of GameStop Corp., Bank of America, N.A. and the other lending institutions listed in the Agreement, Bank of America, N.A. and Citicorp North America, Inc., as Issuing Banks, Bank of America, N.A., as Administrative Agent and Collateral Agent, Citicorp North America, Inc., as Syndication Agent, and Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc., as Documentation Agent.(3) | ||
10 | .13 | Guaranty, dated as of October 11, 2005, by GameStop Corp. (f/k/a GSC Holdings Corp.) and certain subsidiaries of GameStop Corp. in favor of the agents and lenders.(3) |
Table of Contents
Exhibit | ||||
Number | Description | |||
10 | .14 | Security Agreement, dated October 11, 2005.(3) | ||
10 | .15 | Patent and Trademark Security Agreement, dated as of October 11, 2005.(3) | ||
10 | .16 | Mortgage, Security Agreement, and Assignment and Deeds of Trust between GameStop Texas LP and Bank of America, N.A., as Collateral Agent.(3) | ||
10 | .17 | Mortgage, Security Agreement, and Assignment and Deeds of Trust between Electronics Boutique of America, Inc. and Bank of America, N.A., as Collateral Agent.(3) | ||
10 | .18 | Form of Securities Collateral Pledge Agreement.(3) | ||
10 | .19 | Registration Rights Agreement, dated October 8, 2005, among EB Nevada Inc., James J. Kim and GameStop Corp. (f/k/a GSC Holdings Corp.)(3) | ||
10 | .20 | Executive Employment Agreement, dated as of April 11, 2005, between GameStop Holdings Corp. (f/k/a GameStop Corp.) and R. Richard Fontaine.(11) | ||
10 | .21 | Executive Employment Agreement, dated as of April 11, 2005, between GameStop Holdings Corp. (f/k/a GameStop Corp.) and Daniel A. DeMatteo.(11) | ||
10 | .22 | Executive Employment Agreement, dated as of December 9, 2005, between GameStop Corp. and Steven R. Morgan.(12) | ||
10 | .23 | Executive Employment Agreement, dated as of April 3, 2006, between GameStop Corp. (f/k/a GSC Holdings Corp.) and David W. Carlson.(13) | ||
21 | .1 | List of Subsidiaries of GameStop Corp. (f/k/a GSC Holdings Corp.). | ||
23 | .1 | Consent of BDO Seidman, LLP. | ||
23 | .2 | Consent of KPMG LLP. | ||
23 | .3 | Consent of Bryan Cave LLP (included in Exhibit 5.1 hereto). | ||
23 | .4 | Consent of Oppenheimer Wolff & Donnelly LLP (included in Exhibit 5.2 hereto). | ||
24 | .1 | Power of Attorney (included on signature pages to this Registration Statement). | ||
25 | .1 | Statement of Eligibility and Qualification on Form T-1 of Citibank, N.A as Trustee under the Indenture. | ||
99 | .1 | Form of Letter of Transmittal. | ||
99 | .2 | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. | ||
99 | .3 | Form of Letter to Clients. | ||
99 | .4 | Form of Notice of Guaranteed Delivery. |
(1) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Form 8-K, filed with the Securities and Exchange Commission on April 18, 2005. | |
(2) | Incorporated by reference to Amendment No. 1 to Registration Statement on Form S-4 of GameStop Corp. (f/k/a GSC Holdings Corp.), filed with the Securities and Exchange Commission on July 8, 2005. | |
(3) | Incorporated by reference to GameStop Corp.’s (f/k/a GSC Holdings Corp.) Form 8-K, filed with the Securities and Exchange Commission on October 12, 2005. | |
(4) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Form 8-K, filed with the Securities and Exchange Commission on September 30, 2005. | |
(5) | Incorporated by reference to GameStop Corp.’s (f/k/a GSC Holdings Corp.) Quarterly Report on Form 10-Q for the quarter ended October 29, 2005, filed with the Securities and Exchange Commission on December 8, 2005. | |
(6) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Amendment No. 4 to Form S-1, filed with the Securities and Exchange Commission on February 5, 2002 (No.333-68294). | |
(7) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Amendment No. 3 to Form S-1, filed with the Securities and Exchange Commission on January 24, 2002 (No. 333-68294). |
Table of Contents
(8) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Form 8-K, filed with the Securities and Exchange Commission on October 5, 2004. | |
(9) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Form 8-K, filed with the Securities and Exchange Commission on September 12, 2005. |
(10) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Annual Report on Form 10-K for the fiscal year ended January 29, 2005, filed with the Securities and Exchange Commission on April 11, 2005. |
(11) | Incorporated by reference to GameStop Holdings Corp.’s (f/k/a GameStop Corp.) Form 8-K filed with the Securities and Exchange Commission on April 15, 2005. |
(12) | Incorporated by reference to GameStop Corp.’s (f/k/a GSC Holdings Corp.) Form 8-K filed with the Securities and Exchange Commission on December 13, 2005. |
(13) | Incorporated by reference to the GameStop Corp.’s (f/k/a GSC Holdings Corp.) Form 10-K for the fiscal year ended January 28, 2006, filed with the Securities and Exchange Commission on April 3, 2006. |