GAMESTOP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Debt

Senior Notes

The carrying value of our long-term debt is comprised as follows (in millions):

	February 1, 2020				February 2, 2019
2019 Senior Notes principal amount	$				$	350.0
2021 Senior Notes principal amount	421.4				475.0
Less: Unamortized debt financing costs	(1.6		)		(4.2		)
	419.8				820.8
Less: Current portion					(349.2		)
Long-term debt, net	$	419.8			$	471.6

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

2021 Senior Notes. In March 2016, we issued $475.0 million aggregate principal amount of unsecured 6.75% senior notes due March 15, 2021 (the "2021 Senior Notes"). The 2021 Senior Notes bear interest at the rate of 6.75% per annum with interest payable semi-annually in arrears on March 15 and September 15 of each year beginning on September 15, 2016. The net proceeds from the offering were used for general corporate purposes, including acquisitions and dividends. We incurred fees and expenses related to the 2021 Senior Notes offering of $8.1 million, which were capitalized during the first quarter of fiscal 2016 and are being amortized as interest expense over the term of the notes. The 2021 Senior Notes were sold in a private placement and are not registered under the Securities Act of 1933 (the "Securities Act"). The 2021 Senior Notes were offered in the United States to "qualified institutional buyers" pursuant to the exemption from registration under Rule 144A of the Securities Act and in exempted offshore transactions pursuant to Regulation S under the Securities Act.

During fiscal 2019, we repurchased $53.6 million of our 2021 Senior Notes in open market transactions at prices ranging from 99.6% to 101.5% of par value.

The indenture governing the 2021 Senior Notes does not contain financial covenants but does contain covenants which place certain restrictions on us and our subsidiaries, including limitations on asset sales, additional liens, investments, stock repurchases, the incurrence of additional debt and the repurchase of debt that is junior to the 2021 Senior Notes. In addition, the indenture restricts payments of dividends to stockholders (other than dividends payable in shares of capital stock) if one of the following conditions exist: (i) an event of default has occurred, (ii) we could not incur additional debt under the general debt covenant of the indentures or (iii) the sum of the proposed dividend and all other dividends and other restricted payments made under the indenture from the date of the indenture governing the 2021 Senior Notes exceeds the sum of 50% of consolidated net income plus 100% of net proceeds from capital stock sales and other amounts set forth in and determined as provided in the indenture. These restrictions are subject to exceptions and qualifications, including that we can pay up to $175 million in dividends to stockholders in each fiscal year and we can pay dividends and make other restricted payments in an unlimited amount if our leverage ratio on a pro forma basis after giving effect to the dividend payment and other restricted payments would be less than or equal to 1.0:1.0.

The indenture contains customary events of default, including payment defaults, breaches of covenants, failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If an event of default occurs and is continuing, the principal amount of the 2021 Senior Notes, plus accrued and unpaid interest, if any, may be declared immediately due and payable. These amounts automatically become due and payable if an event of default relating to certain events of bankruptcy, insolvency or reorganization occurs.

18. Subsequent Events

The near-term global economic conditions have been adversely impacted by the emergence of a novel coronavirus in China, identified as COVID-19, which continues to spread throughout the United States and other parts of the world. In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic. In an effort to mitigate the continued spread of the virus, governments have imposed quarantines, travel restrictions and similar measures. We have temporarily closed stores on a country-wide basis in Europe, primarily in Italy and France, as well as in Canada, which became effective in various points in March 2020. In the United States, effective March 22, 2020, we have temporarily closed all storefronts to customers but continue to process orders on a digital only basis, offering curbside pick-up at stores and e-commerce delivery only. As a result of these actions and restrictions, we expect a significant reduction in customer traffic and demand. We cannot reasonably estimate the negative impact of COVID-19 to our results of operations, cash flows or our financial condition.

1. What is the maturity date of the unsecured 6.75% senior notes issued on March, 2016?

2. Is interest paid annually or semi-annually? What are the payment dates?

3. GameStop has repurchased $53.6 million of these notes. Did they purchase these notes at the call price? Explain.

4. There are some 6 plus restrictions on GameStop for this bond issue. Describe 3 (other than asset sales since we dont know which assets) in your own words.

A.

B.

C.

5. We talked about subsequent events in Chapter 13. I included this footnote because I thought you would find it interesting. From our text, what is a subsequent event? Why does COVID-19 qualify as a subsequent event?