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Mail Stop 3561
August 9, 2005
Mr. R. Richard Fontaine
c/o GameStop Corporation
625 Westport Parkway
Grapevine, Texas 76051
Re: GSC Holdings Corporation
Amendment No. 1 to Registration Statement on Form S-4
Filed July 8, 2005
File No. 333-125161
Electronics Boutique Holdings Corporation
Form 10-K/A for Fiscal Year Ended January 29, 2005
Filed May 20, 2005
Form 10-Q for Fiscal Quarter Ended April 30, 2005
Filed June 9, 2005
File No. 0-24603
Dear Mr. Fontaine:
We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may or may not raise additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form S-4
General
1. Where applicable, please revise your presentation of financial
information and related disclosures included herein for GameStop
Corporation and Electronics Boutique Holdings Corporation to
address
comments issued on each entity.
Selected Historical and Pro Forma Financial Data
Selected Historical Financial Data of GameStop, page 10
2. We note that you have two classes of common stock, Class A and
Class B. Please amend your consolidated financial statements and
disclosures throughout the filing to present basic and diluted
Earnings Per Share separately for both classes of your common
stock
for each period presented, or explain why you do not believe it is
appropriate to do so. See paragraphs 60 and 61 of SFAS 128.
Please
also ensure that the additional disclosures required by paragraph
40
of this SFAS are provided as well.
Selected Unaudited Pro Forma Condensed Consolidated Financial Data
of
Holdco, page 15
3. Please revise to present pro forma Earnings Per Share of both
classes of common stock. Refer to paragraphs 60 and 61 of SFAS
128.
Comparative Per Share Data (Unaudited), page 16
4. Please revise to present Earnings Per Share data for both
classes
of common stock for GameStop and Holdco. Refer to paragraphs 60
and
61 of SFAS 128.
GSC Holdings Corporation
Unaudited Pro Forma Condensed Consolidated Financial Data
Unaudited Pro Forma Condensed Consolidated Balance Sheet, page 135
5. We note your response to comment 2 in our letter dated June 22,
2005. Please explain in more detail how your response complies
with
the requirements of SFAS 141 paragraph 37(c)(1). Acquired
inventory
should be valued at the estimated cost to sell less cost of
disposal
and reasonable profit allowance.
6. We note your response to comment 3 in our letter dated June 22,
2005 regarding your allocation of excess purchase cost to
intangible
assets. Please explain the basis for your allocation of $995.4
million was allocated to goodwill. Please explain and disclose
the
amount of cost allocated to intangible assets such as trademarks
and
trade names such as EB Games being acquired in the merger. In
addition, according to the disclosures in Item 1 of Form 10-K
regarding the operations of EB, included among the assets being
acquired are approximately 2,000 leased store locations that have
potentially favorable contractual lease terms. Please explain and
disclose the amount allocated to other intangible assets relating
to
the value of these contractual lease agreements. If you do not
anticipate allocating any of the excess cost to these contractual
lease agreements, please explain in detail your reasons for these
conclusions. Refer to paragraphs 39 and A14 of SFAS 141.
7. We note your response to comment 7 in our letter dated June 22,
2005 regarding the assumption used in calculating interest expense
on
the new long-term debt. The footnote references that you use on
page
138 do not correspond to the appropriate note on page 139. Please
revise accordingly.
Unaudited Pro Forma Condensed Consolidated Statement of
Operations,
page 137
8. We note from the disclosures on page 139 that in connection
with
the merger transactions you will have two classes of common stock,
Class A and Class B. Please amend your pro forma condensed
consolidated financial statements and disclosures throughout the
filing to present basic and diluted Earnings Per Share separately
for
both classes of your common stock for all periods presented, or
explain to us why you do not believe it is appropriate to do so.
See
paragraphs 60 and 61 of SFAS 128.
GameStop Corporation - Form 10-K for the year ended January 29,
2005
Electronics Boutique Holdings Corporation - Form 10-K for the year
ended January 29, 2005
Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations
Results of Operations, page 24
9. We note your response to comment 13 in our letter dated June
22,
2005 relating to the net sales and gross margins of the new and
pre-
played video game products and the contribution of each component
to
your overall results of operation. We believe an understanding of
the significance of the contribution to your results that is made
by
the pre-played video game products is important to understanding
your
business. In this regard, please revise your disclosures to
discuss
the changes in your results of operations between periods in your
management`s discussion and analysis due to the changes within the
sales and gross profits of new and pre-played video game products.
Refer to Item 303(a)(3) of Regulation S-K.
Liquidity and Capital Resources
General
10. We note your response to comment 15 in our letter dated June
22,
2005 regarding disclosure in the table of your purchase
obligations
in future periods. Please explain and revise your disclosures to
include in the table for the applicable periods the amount of
advance
future commitments for the purchase of new video game hardware and
software to be released in the future. If you do not have any of
these type of commitments for future releases, please explain the
type of agreements and their terms, including how far in advance
of
actual receipt, you have with manufacturers such as Sony and
others
relating to your commitment to order certain quantities of
products
that are planned to be released in the future. Refer to Item
303(a)(5)(ii)(D) of Regulation S-K.
11. We note your response to comment 15 in our letter dated June
22,
2005 relating to future purchase obligations. The type of
purchase
orders discussed in your response, although not long-term in
nature,
appear to meet the requirements for disclosures in your table of
contractual obligations. Please revise your tabular disclosures
to
include all purchase obligations for products held for resale. In
this regard, amounts that are estimated should be explained in a
footnote providing the basis for the amounts presented in each
period. If you do not believe the purchase orders you discuss in
your response are enforceable and legally binding purchase
obligations, please explain why. Refer to Item 303(a(5)(ii)(D)
of
Regulation S-K.
Consolidated Financial Statements
Consolidated Balance Sheet, page 32
12. We note that you reclassified in your most recently filed Form
10-Q from cash and cash equivalents certain amounts for auction
rate
certificates. According to your disclosures as of April 30, 2005,
cash and cash equivalents as of January 29, 2005 also included $81
million of auction rate securities. Please amend Form 10-K for
the
year ended January 29, 2005 and Form 10-Q for the quarter ended
April
30, 2005 to restated cash and cash equivalents and to exclude
these
securities and separately report them as marketable securities for
all periods presented. This change represents a correction of an
error and should be reported in accordance with paragraphs 36 and
37
of APBO 20. Accordingly, please coordinate with your independent
registered public accounting firm to revise their audit report
dated
April 7, 2005.
Notes to Consolidated Financial Statements
Note 1. Organization and Summary of Significant Accounting
Policies
Description of Business, page 38
13. We note your response to comment 20 in our letter dated June
22,
2005 relating to your conclusion that you have only one reportable
segment. Please explain to us in more detail how you determined
that
Canada and the United States comprised one operating segment.
Based
upon the information that you provided to us, it appears that you
have discrete financial results for both your Canadian operations
as
well as your U.S. operations.
14. We note your response to comment 20 in our letter dated June
22,
2005. You state that you have three operating segments that you
aggregate into one reportable segment. You support your assertion
that each segment has similar economic characteristics based
solely
upon similarity in average gross margin for the past three years.
Please provide us with a more detailed explanation of the
similarity
of the economic characteristics of your three operating segments.
We
would expect your explanation to show us sales and a measure of
profit for each operating segment for the past 3 years.
Generally,
we would expect to see similarities in both sales as well as the
measure of profit or loss. The similarities would include
variances
between periods that move in the same direction and proportion.
15. We note your response to comment 20 in our letter dated June
22,
2005 regarding your conclusion that you have only one business
segment. Your response states that you have provided us
"representative samples of the financial information reviewed by
your
Chief Executive Officer (CODM)." Please confirm to us if the
information you provided us represents all of the information
reviewed by your CODM. Tell us if your CODM reviews any daily,
weekly or monthly information on the performance of your pre-
played
video game hardware and software products. If so, please also
provide us with a sample copy of each type of this information
received either in paper form or reviewed with your CODM on a
regular
basis either in your monthly management presentations or a
separate
meeting with management. Your response states that your CODM also
has "on-line access to daily sales and gross margin for each
country
at store level." Please tell us if this on-line access also
allows
the CODM to view, evaluate and understand the contribution of the
pre-played video game products. If you do not discuss at any time
the net sales and gross margin results of your pre-played video
game
products, please explain why you do not consider this information
to
be important to understanding the performance of your business.
Vendor Programs, page 39
16. We note your response to comment 22 in our letter dated June
22,
2005 regarding the timing of your recognition of the allowances
received from various vendor programs. Please expand your note
disclosures to include your accounting treatment as discussed in
your
response for each type of allowance received.
17. We note your response to comment 23 in our letter dated June
22,
2005 regarding the importance of the vendor participation in your
cooperative advertising programs. Please include in your revised
disclosures in management`s discussion and analysis how your
revenues
might be adversely affected if vendor participation either
decreased
or ceased completely from current levels.
Form 10-Q, for the period ended April 30, 2005
General
18. Where applicable, please address the issues noted in the above
comments in your interim financial statements.
* * * * *
As appropriate, please amend your filings in response to
these
comments. You may wish to provide us with marked copies of the
amendments to expedite our review. Please furnish a cover letter
with your amendments that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
You may contact Milwood Hobbs, Staff Accountant, at (202)
551-
3241, or Michael Moran, Accounting Branch Chief, at (202) 551-3841
if
you have questions regarding comments on the financial statements
and
related matters. Please contact Matthew Benson, Attorney-Advisor,
at
(202) 551-3335 or me at (202) 551-3720 with any other questions.
Sincerely,
H. Christopher Owings
Assistant Director
cc: Jay M. Dorman, Esq.
Bryan Cave LLP
Fax: (212) 541-1418
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R. Richard Fontaine
GSC Holdings Corp.
August 9, 2005
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