GameStop 2006 Annual Report Download - page 75

Download and view the complete annual report

Please find page 75 of the 2006 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 116

  • 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

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Background and Basis of Presentation
GameStop Corp., formerly known as GSC Holdings Corp., (the “Company” or “GameStop”), is a Delaware
corporation formed for the purpose of consummating the business combination (the “mergers”) of GameStop
Holdings Corp., formerly known as GameStop Corp. (“Historical GameStop”), and Electronics Boutique Holdings
Corp. (“EB” or “Electronics Boutique”), which was completed on October 8, 2005. The Company is the world’s
largest retailer of new and used video game systems and software and personal computer entertainment software
and related accessories primarily through its GameStop and EB Games trade names, websites (www.gamestop.com
and www.ebgames.com) and Game Informer magazine. The Company’s stores, which totaled 4,778 at February 3,
2007, are located in major regional shopping malls and strip centers in the United States, Australia, Canada and
Europe. The Company operates its business in four segments: United States, Australia, Canada and Europe.
The merger of Historical GameStop and EB has been treated as a purchase business combination for
accounting purposes, with Historical GameStop designated as the acquirer. Therefore, the historical financial
statements of Historical GameStop became the historical financial statements of the Company. The accompanying
condensed consolidated statements of operations and cash flows for the 52 weeks ended January 28, 2006 include
the results of operations of EB from October 9, 2005 forward. Therefore, the Company’s operating results for the
52 weeks ended January 28, 2006 include 16 weeks of EB’s results and 52 weeks of Historical GameStop’s results.
The Company’s operating results for the fiscal year ended February 3, 2007 include 53 weeks for both Historical
GameStop and EB. Note 2 provides summary unaudited pro forma information and details on the purchase
accounting.
Historical GameStop’s wholly-owned subsidiary Babbage’s Etc. LLC (“Babbage’s”) began operations in
November 1996. In October 1999, Babbage’s was acquired by, and became a wholly-owned subsidiary of, Barnes &
Noble, Inc. (“Barnes & Noble”). In June 2000, Barnes & Noble acquired Funco, Inc. (“Funco”) and thereafter,
Babbage’s became a wholly-owned subsidiary of Funco. In December 2000, Funco changed its name to GameStop,
Inc. Historical GameStop was incorporated under the laws of the State of Delaware in August 2001 as a holding
company for GameStop, Inc. In February 2002, Historical GameStop completed a public offering of 41,528 shares
of Class A common stock at $9.00 per share (the “Offering”). Upon the effective date of the Offering, Historical
GameStop’s Board of Directors approved the authorization of 5,000 shares of preferred stock and 300,000 shares of
Class A common stock. At the same time, Historical GameStop’s common stock outstanding was converted to
72,018 shares of common stock.
Until October 2004, Barnes & Noble held 72,018 shares of Historical GameStop common stock. In October
2004, Historical GameStop’s Board of Directors authorized a repurchase of 12,214 shares of common stock held by
Barnes & Noble. Historical GameStop repurchased the shares at a price equal to $9.13 per share for aggregate
consideration of $111,520 before costs of $261. The repurchased shares were immediately retired. On November 12,
2004, Barnes & Noble distributed to its stockholders its remaining 59,804 shares of Historical GameStop’s common
stock in a tax-free dividend. All of the outstanding shares of Historical GameStop’s common stock were exchanged
for the Company’s common stock.
Consolidation
The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and
its majority-owned subsidiary, GameStop Group Limited (formerly Gamesworld Group Limited). All significant
intercompany accounts and transactions have been eliminated in consolidation. All dollar and share amounts in the
consolidated financial statements and notes to the consolidated financial statements are stated in thousands unless
otherwise indicated.
F-7