GameStop 2003 Annual Report Download - page 52

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Table of Contents
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Net Earnings Per Common Share
Net earnings per common share is presented in accordance with Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (“SFAS 128”). Basic
earnings per common share is computed using the weighted average number of common shares outstanding during the period and excludes any dilutive effects of the
Company’s outstanding options.
Diluted earnings per common share is computed using the weighted average number of common and dilutive common shares outstanding during the period. Note 4
provides additional information regarding net earnings per common share.
Stock Options
Statement of Financial Accounting Standards No. 123, “Accounting for Stock Based Compensation,” (“SFAS 123”) encourages but does not require companies to
record compensation cost for stock based employee compensation plans at fair value. As permitted under Statement of Financial Accounting Standards No. 148,
“Accounting for Stock Based Compensation — Transition and Disclosure,” (“SFAS 148”) which amended SFAS 123, the Company has elected to continue to account
for stock based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to
Employees,” and related interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the
Company’s stock at the date of the grant over the amount an employee must pay to acquire the stock. Note 13 provides additional information regarding the Company’s
stock option plan.
The following table illustrates the effect on net earnings and net earnings per common share if the Company had applied the fair value recognition provisions of
SFAS 123 to stock based employee compensation for the options granted under its plans:
52 Weeks 52 Weeks 52 Weeks
Ended Ended Ended
January 31, February 1, February 2,
2004 2003 2002
(In thousands, except per share data)
Net earnings, as reported $63,467 $52,404 $6,960
Deduct: Total stock-based employee compensation expense determined under
fair value based method for all awards, net of related tax effects* 7,888 8,287 9,016
Pro forma net earnings (loss) $55,579 $44,117 $(2,056)
Net earnings per common share — basic, as reported $ 1.13 $ 0.93 $ 0.19
Net earnings (loss) per common share — basic, pro forma $0.99 $0.78 $(0.06)
Net earnings per common share — diluted, as reported $ 1.06 $ 0.87 $ 0.18
Net earnings (loss) per common share — diluted, pro forma $0.93 $0.73 $(0.06)
* Amounts include compensation expense associated with options to acquire approximately 350 shares of Barnes & Noble which were issued to GameStop employees
in January 2000 pursuant to the Barnes & Noble stock option plan.
F-10