GameStop 2005 Annual Report Download - page 88

Download and view the complete annual report

Please find page 88 of the 2005 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 120

  • 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
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

52 Weeks
Ended
January 28,
2006
52 Weeks
Ended
January 29,
2005
(In thousands, except per
share data)
Income tax expense ........................................ 49,482 38,477
Net earnings ........................................... $ 86,086 $ 66,058
Net earnings per Class A and Class B common share — basic......... $ 1.20 $ 0.88
Weighted average shares of common stock — basic ................ 71,925 74,891
Net earnings per Class A and Class B common share — diluted ....... $ 1.13 $ 0.85
Weighted average shares of common stock — diluted ............... 76,491 78,025
In connection with the merger, management incurred merger-related costs and commenced integration
activities which have resulted in, or will result in, involuntary employment terminations, lease terminations,
disposals of property and equipment and other costs and expenses. The liability for involuntary termination benefits
covers severance amounts, payroll taxes and benefit costs for approximately 680 employees, primarily in general
and administrative functions in EB’s Pennsylvania corporate office and distribution center and Nevada call center,
which are expected to be closed in the first half of fiscal 2006. Termination of these employees began in October
2005 and is expected to be completed by July 2006. Certain senior executives with EB received payments in the
amount of $3,960 in accordance with employment contracts. The Pennsylvania corporate office and distribution
center are owned facilities which are currently being marketed for sale and are classified in the accompanying
balance sheet as “Assets held for sale”.
The liability for lease terminations is associated with stores and the Nevada call center to be closed and will be
paid over the remaining lease terms through 2015, if the Company is unsuccessful in negotiating lease terminations
or sublease agreements. The Company began closing these stores in fiscal 2005 and intends to close the remainder
of these stores in the next year. The disposals of property and equipment are related to assets of Historical GameStop
which are either impaired or have been, or will be, either abandoned or disposed of due to the merger. Certain costs
associated with the disposition of these assets remain as an accrual until the assets are disposed of and the costs are
paid, which is expected to occur in the next few months.
Merger-related costs include professional fees, financing costs and other costs associated with the merger and
include certain ongoing costs associated with integrating the operations of Historical GameStop and EB, including
relocation costs. The Company is working to finalize integration plans which may result in additional involuntary
employment terminations, lease and other contractual terminations and employee relocations. The Company will
finalize integration plans and related liabilities in fiscal 2006 and management anticipates completion of all
integration activities in fiscal 2006. Finalization of integration plans may result in additional liabilities which will
increase goodwill.
79
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)