GameStop 2008 Annual Report Download - page 17

PART I
Item 1. Business
General
GameStop Corp. (together with its predecessor companies ,“GameStop,” “we,” “us,” “our,” or the “Company”)
is the world’s largest retailer of video game products and PC entertainment software. We sell new and used video
game hardware, video game software and accessories, as well as PC entertainment software, and related accessories
and other merchandise. As of January 31, 2009, we operated 6,207 stores in the United States, Australia, Canada
and Europe, primarily under the names GameStop and EB Games. We also operate the electronic commerce
website www.gamestop.com and publish Game Informer, the industry’s largest multi-platform video game
magazine in the United States based on circulation, with approximately 3.5 million subscribers.
In the fiscal year ended January 31, 2009, we operated our business in the following segments: United States,
Canada, Australia and Europe. Of our 6,207 stores, 4,331 stores are included in the United States segment and 325,
350 and 1,201 stores are included in the Canadian, Australian and European segments, respectively. Each of the
segments consists primarily of retail operations, with all stores engaged in the sale of new and used video game
systems, software and accessories, which we refer to as video game products, and PC entertainment software and
related accessories. Our used video game products provide a unique value proposition to our customers, and our
purchasing of used video game products provides our customers with an opportunity to trade in their used video
game products for store credits and apply those credits towards other merchandise, which in turn, increases sales.
Our products are substantially the same regardless of geographic location, with the primary differences in
merchandise carried being the timing of release of new products in the various segments. Stores in all segments
are similar in size at an average of approximately 1,500 square feet. Our corporate office and one of our distribution
facilities are housed in a 510,000 square foot facility in Grapevine, Texas.
The Company began operations in November 1996. In October 1999, the Company was acquired by, and
became a wholly-owned subsidiary of, Barnes & Noble, Inc. (“Barnes & Noble”). In February 2002, GameStop
completed an initial public offering of its Class A common stock and was a majority-owned subsidiary of Barnes &
Noble until November 2004, when Barnes & Noble distributed its holdings of outstanding GameStop Class B
common stock to its stockholders. In October 2005, GameStop acquired the operations of Electronics Boutique
Holdings Corp. (“EB”), a 2,300-store video game retailer in the U.S. and 12 other countries, by merging its existing
operations with EB under GameStop Corp. (the “EB merger”).
On February 7, 2007, all outstanding Class B common stock of the Company was converted into Class A
common stock of the Company on a one-for-one basis and the Company no longer has any Class B common stock.
On March 16, 2007, the Company completed a two-for-one stock split of its Class A common stock (the “Stock
Split”). As of January 31, 2009, our Class A common stock traded on the New York Stock Exchange (“NYSE”)
under the symbol GME.
On November 17, 2008, GameStop France SAS, a wholly-owned subsidiary of the Company, completed the
acquisition of substantially all of the outstanding capital stock of SFMI Micromania SAS (“Micromania”) for
$580.4 million, net of cash acquired (the “Micromania acquisition”). Micromania is a leading retailer of video and
computer games in France with 332 locations, 328 of which were operating at the date of acquisition. The Company
funded the transaction with cash on hand, funds drawn against its revolving credit facility totaling $275 million, and
term loans totaling $150 million. As of January 31, 2009, all amounts drawn against the revolving credit facility and
the term loans have been repaid. The Company’s operating results for the 52 weeks ended January 31, 2009 (“fiscal
2008”) include 11 weeks of Micromania’s results.
Disclosure Regarding Forward-looking Statements
This report on Form 10-K and other oral and written statements made by the Company to the public contain
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The
forward-looking statements involve a number of risks and uncertainties. A number of factors could cause our actual
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