GameStop 2005 Annual Report Download - page 102

Until June 2005, Historical GameStop participated in Barnes & Noble’s workers’ compensation, property and
general liability insurance programs. The costs incurred by Barnes & Noble under these programs were allocated to
Historical GameStop based upon Historical GameStop’s total payroll expense, property and equipment, and
insurance claim history. Management deemed the allocation methodology to be reasonable. During the 52 weeks
ended January 28, 2006, January 29, 2005 and January 31, 2004, these allocated charges amounted to $1,726,
$2,662 and $2,363, respectively. Although Historical GameStop secured its own insurance coverage, costs will
likely continue to be incurred by Barnes & Noble on insurance claims which were incurred under its programs prior
to June 2005 and any such costs applicable to insurance claims against Historical GameStop will be allocated to the
Company.
In July 2003, the Company purchased an airplane from a company controlled by a member of the Board of
Directors. The purchase price was $9,500 and was negotiated through an independent third party following an
independent appraisal.
In October 2004, the Board of Directors of Historical GameStop authorized a repurchase of Historical
GameStop Class B common stock held by Barnes & Noble. Historical GameStop repurchased 6,107 shares of
Class B common stock at a price equal to $18.26 per share for aggregate consideration before expenses of $111,520.
The repurchase price per share was determined by using a discount of 3.5% on the last reported trade of Historical
GameStop’s Class A common stock on the New York Stock Exchange prior to the time of the transaction. Historical
GameStop paid $37,500 in cash and issued a promissory note in the principal amount of $74,020, which is payable
in installments over the next three years and bears interest at 5.5% per annum, payable when principal installments
are due. The Company made scheduled principal payments of $37,500 and $12,173 on the promissory note in
January 2005 and October 2005, respectively. Interest expense on the promissory note for the 52 weeks ended
January 28, 2006 and January 29, 2005 totaled $1,785 and $1,271, respectively.
In May 2005, we entered into an arrangement with Barnes & Noble under which www.gamestop.com is the
exclusive specialty video game retailer listed on bn.com, Barnes & Noble’s e-commerce site. Under the terms of this
agreement, the Company pays a fee to Barnes & Noble for sales of video game or PC entertainment products sold
through bn.com. For the 52 weeks ended January 28, 2006, the fee to Barnes & Noble totaled $255.
In connection with the merger, Historical GameStop agreed to pay the legal fees and expenses of one if its
directors, Leonard Riggio, including legal fees and expenses incurred in connection with the preparation and filing
of Mr. Riggio’s notification and report form under the Hart Scott Rodino Antitrust Improvements Act of 1976. The
Company estimates that Mr. Riggio’s fees and expenses in connection with the merger were approximately $150.
16. Significant Products
The following table sets forth sales (in millions) by significant product category for the periods indicated:
Sales
Percent
of Total Sales
Percent
of Total Sales
Percent
of Total
52 Weeks Ended
January 28,
2006
52 Weeks Ended
January 29,
2005
52 Weeks Ended
January 31,
2004
Sales:
New video game hardware ...... $ 503.2 16.3% $ 209.2 11.4% $ 198.1 12.6%
New video game software ....... 1,244.9 40.3% 776.7 42.1% 647.9 41.0%
Used video game products ....... 808.0 26.1% 511.8 27.8% 403.3 25.5%
Other ...................... 535.7 17.3% 345.1 18.7% 329.5 20.9%
Total ..................... $3,091.8 100.0% $1,842.8 100.0% $1,578.8 100.0%
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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)