GameStop 2005 Annual Report Download - page 87

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completion of our integration plans. The following represents the preliminary allocation of the purchase price (table
in thousands):
October 8,
2005
Current assets ....................................................... $ 541,171
Property, plant & equipment ............................................ 231,172
Goodwill . . . ........................................................ 1,071,464
Intangible assets:
Point-of-sale software................................................ 3,150
Non-compete agreements ............................................. 282
Leasehold interests .................................................. 17,299
Total intangible assets.............................................. 20,731
Other long-term assets ................................................. 38,068
Current liabilities ..................................................... (420,962)
Long-term liabilities .................................................. (37,688)
Total purchase price ................................................. $1,443,956
In determining the purchase price allocation, management considered, among other factors, the Company’s
intention to use the acquired assets. The total weighted-average amortization period for the intangible assets,
excluding goodwill, is approximately four years. The intangible assets are being amortized based upon the pattern
in which the economic benefits of the intangible assets are being utilized, with no expected residual value. None of
the goodwill is deductible for income tax purposes. Note 7 provides additional information concerning goodwill
and intangible assets.
The following table summarizes unaudited pro forma financial information assuming the merger had occurred
on the first day of fiscal 2004. The unaudited pro forma financial information does not necessarily represent what
would have occurred if the transaction had taken place on the date presented and should not be taken as
representative of our future consolidated results of operations. We have not finalized integration plans, and
accordingly, this pro forma information does not include all costs related to the merger. Management also expects to
realize operating synergies. Synergies will come from reduced costs in logistics, marketing, and administration. The
pro forma information does not reflect these potential expenses and synergies:
52 Weeks
Ended
January 28,
2006
52 Weeks
Ended
January 29,
2005
(In thousands, except per
share data)
Sales ................................................... $4,393,890 $3,827,685
Cost of sales ............................................. 3,154,928 2,786,554
Gross profit ............................................ 1,238,962 1,041,131
Selling, general and administrative expenses ...................... 930,767 788,413
Depreciation and amortization ................................ 94,288 77,964
Operating earnings ....................................... 213,907 174,754
Interest income ........................................... (6,717) (1,998)
Interest expense ........................................... 85,056 72,217
Earnings before income tax expense .......................... 135,568 104,535
78
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)