GameStop 2004 Annual Report Download - page 70

Download and view the complete annual report

Please find page 70 of the 2004 GameStop annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 92

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
The following table illustrates the eÅect on net earnings and net earnings per Class A and Class B
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 29, January 31, February 1,
2005 2004 2003
(In thousands, except per share data)
Net earnings, as reportedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $60,926 $63,467 $52,404
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of related tax eÅects ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,405 7,888 8,287
Pro forma net earningsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $51,521 $55,579 $44,117
Net earnings per Class A and Class B common share Ì
basic, as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.11 $ 1.13 $ 0.93
Net earnings per Class A and Class B common share Ì
basic, pro forma ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.94 $ 0.99 $ 0.78
Net earnings per Class A and Class B common share Ì
diluted, as reportedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.05 $ 1.06 $ 0.87
Net earnings per Class A and Class B common share Ì
diluted, pro formaÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.89 $ 0.93 $ 0.73
The weighted-average fair value of the options granted during the 52 weeks ended January 29, 2005,
January 31, 2004 and February 1, 2003 were estimated at $7.86, $5.30 and $8.08, respectively, using the
Black-Scholes option pricing model with the following assumptions:
52 Weeks 52 Weeks 52 Weeks
Ended Ended Ended
January 29, January 31, February 1,
2005 2004 2003
Volatility ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 60.1% 61.6% 61.9%
Risk-free interest rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.3% 3.2% 4.6%
Expected life (years) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6.0 6.0 6.0
Expected dividend yield ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0% 0% 0%
In December 2004, the FASB issued Statement of Financial Accounting Standard No. 123 (Revised
2004), Share-Based Payment, (""FAS 123(R)''). This Statement requires companies to expense the
estimated fair value of stock options and similar equity instruments issued to employees. The fair value
concepts were not changed signiÑcantly in FAS 123(R), however, in adopting this Standard, companies must
choose among alternative valuation models and amortization assumptions. The valuation model and amortiza-
tion assumption the Company has used above continue to be available, but the Company has not yet
completed its assessment of the alternatives. FAS 123(R) will be eÅective for the Company beginning with
the third quarter of 2005. Transition options allow companies to choose whether to adopt prospectively, restate
results to the beginning of the year, or to restate prior periods with the amounts on a basis consistent with pro
forma amounts that have been included in the footnotes. The Company has not yet concluded which transition
option it will select.
F-14