GameStop 2003 Annual Report Download - page 53

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Table of Contents
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The weighted-average fair value of the options granted during the 52 weeks ended January 31, 2004, February 1, 2003 and February 2, 2002 were estimated at
$5.30, $8.08 and $2.75, respectively, using the Black-Scholes option pricing model with the following assumptions:
52 Weeks 52 Weeks 52 Weeks
Ended Ended Ended
January 31, February 1, February 2,
2004 2003 2002
Volatility 61.6% 61.9% 61.1%
Risk-free interest rate 3.19% 4.60% 4.97%
Expected life (years) 6.0 6.0 6.0
Expected dividend yield 0% 0% 0%
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. In preparing these financial statements, management has made its best estimates and judgments of certain amounts
included in the financial statements, giving due consideration to materiality. Changes in the estimates and assumptions used by management could have significant
impact on the Company’s financial results. Actual results could differ from those estimates.
Fair Values of Financial Instruments
The carrying values of cash and cash equivalents reported in the accompanying consolidated balance sheets approximate fair value due to the short-term maturities
of these assets.
Recently Issued Accounting Pronouncements
There were no recent accounting pronouncements that had an effect on the Company.
Reclassifications
Certain reclassifications have been made to conform the prior period data to the current year presentation.
2. Effect of Accounting Change (Unaudited)
In November 2002, the FASB Emerging Issues Task Force (“Task Force”) issued EITF Issue 02-16, “Accounting by a Customer (including a Reseller) for Cash
Consideration Received from a Vendor,” (“EITF 02-16”). EITF 02-16 addresses the following two issues: (i) the classification in a reseller’s financial statements of
cash consideration received from a vendor (“Issue 1”); and (ii) the timing of recognition by a reseller of a rebate or refund from a vendor that is contingent upon
achieving a specific cumulative level of purchases or remaining a customer for a specified time period (“Issue 2”). Issue 1 stipulates that cash consideration received
from a vendor is presumed to be a reduction of the prices of the vendor’s products and should, therefore, be recognized as a reduction of cost of merchandise sold when
recognized in the reseller’s financial statements. However, that presumption is overcome when the consideration is either (a) a payment for assets or services delivered
to the vendor, in which case the cash consideration should be recognized as revenue (or other income, as appropriate) when recognized in the reseller’s income
statement, or (b) a reimbursement of a specific, incremental, identifiable cost incurred by the reseller in selling the vendor’s
F-11