GameStop 2006 Annual Report Download - page 83

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2007. The Company is currently assessing the potential impact, if any, of the adoption of SFAS No. 159 on its
consolidated financial statements.
2. Acquisitions
On October 8, 2005, Historical GameStop and EB completed their previously announced mergers pursuant to
the Agreement and Plan of Merger, dated as of April 17, 2005 (the “Merger Agreement”). Upon the consummation
of the mergers, Historical GameStop and EB became wholly-owned subsidiaries of the Company. Both manage-
ment and the respective Boards of Directors of EB and Historical Gamestop believed that the merger of the
companies would create significant synergies in operations when the companies were integrated and would enable
the Company to increase profitability as a result of combined market share.
Under the terms of the Merger Agreement, Historical GameStop’s stockholders received one share of the
Company’s common stock for each share of Historical GameStop’s common stock owned. Approximately 104,135
shares of the Company’s common stock were issued in exchange for all outstanding common stock of Historical
GameStop based on the one-for-one ratio. EB stockholders received $19.08 in cash and .39398 of a share of the
Company’s common stock for each EB share owned. In aggregate, 40,458 shares of the Company’s Class A
common stock were issued to EB stockholders at a value of approximately $437,144 (based on the closing price of
$10.81 per share of Historical GameStop’s Class A common stock on April 15, 2005, the last trading day before the
date the merger was announced). In addition, approximately $993,254 in cash was paid in consideration for (i) all
outstanding common stock of EB, and (ii) all outstanding stock options of EB. Including transaction costs of
$13,558 incurred by Historical GameStop, the total consideration paid was approximately $1,443,956.
The consolidated financial statements include the results of EB from the date of acquisition. The purchase
price has been allocated based on estimated fair values as of the acquisition date. The following represents the final
allocation of the purchase price (table in thousands):
October 8,
2005
Current assets ....................................................... $ 539,860
Property, plant & equipment ............................................ 229,256
Goodwill . . . ........................................................ 1,074,937
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 ................................................. 38,995
Current liabilities ..................................................... (420,202)
Long-term liabilities .................................................. (39,621)
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.
F-15
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)