GameStop 2004 Annual Report Download - page 72

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
The cooperate advertising programs and other vendor marketing programs generally cover a period from a
few days up to a few weeks and include items such as product catalog advertising, in-store display promotions,
internet advertising, co-op print advertising, product training and promotion at the Company's annual store
managers conference. The allowance for each event is negotiated with the vendor and requires speciÑc
performance by the Company to be earned.
Vendor allowances received in the amount of $21,913 and $20,035 were netted against advertising
expenses in the 52 weeks ended January 29, 2005 and January 31, 2004, respectively. Vendor allowances
received in excess of advertising expenses were recorded as a reduction of cost of sales of $29,917 and $26,779
for the 52 weeks ended January 29, 2005 and January 31, 2004, respectively, less $66 and $5,210, respectively,
for the eÅect of the amounts deferred as a reduction in inventory.
Because prior periods have not been restated, the following table presents the 52 weeks ended January 31,
2004 and February 1, 2003 on a pro forma basis as if EITF 02-16 had been implemented prior to the beginning
of Ñscal 2002:
52 Weeks 52 Weeks
Ended Ended
January 31, February 1,
2004 2003
(In thousands, except per
share data)
Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,578,838 $1,352,791
Cost of sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,142,225 987,184
Gross proÑt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 436,613 365,607
Selling, general and administrative expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 299,193 255,757
Depreciation and amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 29,368 23,114
Operating earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 108,052 86,736
Interest incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,467) (1,998)
Interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 663 1,368
Earnings before income tax expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 108,856 87,366
Income tax expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 43,108 35,160
Net earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 65,748 $ 52,206
Net earnings per Class A and Class B common share Ì basic ÏÏÏÏÏÏÏ $ 1.17 $ 0.93
Weighted average shares of common stock Ì basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 56,330 56,289
Net earnings per Class A and Class B common share Ì diluted ÏÏÏÏÏ $ 1.10 $ 0.86
Weighted average shares of common stock Ì dilutedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 59,764 60,419
3. Acquisitions
On June 23, 2003, the Company acquired a controlling interest in Gamesworld, an Ireland-based
electronic games retailer, for approximately $3,340. The acquisition was accounted for using the purchase
method of accounting and, accordingly, the results of operations for the period subsequent to the acquisition
are included in the consolidated Ñnancial statements. The excess of purchase price over the net assets
acquired, in the amount of approximately $2,931, has been recorded as goodwill. The pro forma eÅect
assuming the acquisition of Gamesworld at the beginning of Ñscal 2002 and Ñscal 2003 is not material.
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