GameStop 2003 Annual Report Download - page 11

Table of Contents
PART I
Item 1. Business
General
GameStop Corp. (“GameStop” or the “Company”) is the largest video game and PC entertainment software specialty retailer in the United States, based on the
number of U.S. stores we operate and our total U.S. revenues. We carry one of the largest assortments of new and used video game hardware, video game software and
accessories, PC entertainment software, and related products, including action figures, trading cards and strategy guides. As of January 31, 2004, we operated 1,514
stores in the United States, Puerto Rico, Ireland and Guam. We currently operate most of our stores under the GameStop name and are completing the rebranding of our
remaining stores to the GameStop brand. We carry a constantly changing selection of more than 5,000 stock keeping units (“SKUs”) of electronic game merchandise in
most stores. In addition, we operate a web site at www.gamestop.com and publish Game Informer, the industry’s largest circulation multi-platform video game
magazine, with over 1,500,000 subscribers.
Of our 1,514 stores, 982 stores are located in strip centers and 532 stores are located in shopping malls and other locations. Our strip center stores, which average
approximately 1,500 square feet, carry a balanced mix of new and used video game hardware, video game software and accessories, which we refer to as video game
products, and PC entertainment software. Our mall stores, which average approximately 1,200 square feet, carry primarily new video game products and PC
entertainment software, as well as used video game products. Our used video game products provide a unique value proposition to our customers, and our purchasing of
used video game products provides our customers with an opportunity to trade in their used video game products for store credits and apply those credits towards other
merchandise, which, in turn, increases sales.
Our corporate office and distribution facilities are housed in a 250,000 square foot headquarters and distribution center in Grapevine, Texas. In March 2004, we
purchased a new 420,000 square foot facility in Grapevine, Texas. We intend to relocate some of our distribution operations to this facility in fiscal 2004 (the 52 weeks
ending January 29, 2005), and intend to relocate our headquarters and remaining distribution center operations to this facility in early 2005.
Prior to February 12, 2002, we were a wholly-owned subsidiary of Barnes & Noble, Inc. (“Barnes & Noble”). On February 12, 2002, we completed an initial
public offering of shares of our Class A common stock raising net proceeds of approximately $347.3 million. A portion of those proceeds was used to repay
$250.0 million of our $400 million indebtedness to Barnes & Noble, with Barnes & Noble contributing the remaining $150.0 million of indebtedness to us as additional
paid-in-capital. Of the balance of the proceeds (approximately $97.3 million), approximately $33.8 million was used for capital expenditures and the remainder was
used for working capital and general corporate purposes. Currently, Barnes & Noble owns approximately 63.1% of the outstanding shares of our capital stock through
its ownership of 100% of our Class B common stock, which represents 94.5% of the combined voting power of all classes of our voting stock.
Disclosure Regarding Forward-looking Statements
This report on Form 10-K and other oral and written statements made by the Company to the public contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934. The forward-looking statements
involve a number of risks and uncertainties. A number of factors could cause our actual results, performance, achievements or industry results to be materially different
from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, but are not limited to:
• our reliance on suppliers and vendors for new product releases;
• economic conditions affecting the electronic game industry;
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