GameStop 2009 Annual Report Download - page 81

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Stock Options
The Company records share-based compensation expense in earnings based on the grant-date fair value of
options granted. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option
pricing model. This valuation model requires the use of subjective assumptions, including expected option life and
expected volatility. The Company uses historical data to estimate the option life and the employee forfeiture rate,
and uses historical volatility when estimating the stock price volatility. The weighted-average fair values of the
options granted during the 52 weeks ended January 30, 2010, January 31, 2009 and February 2, 2008 were estimated
at $9.45, $15.45 and $10.16, respectively, using the following assumptions:
52 Weeks
Ended
January 30,
2010
52 Weeks
Ended
January 31,
2009
52 Weeks
Ended
February 2,
2008
Volatility ....................................... 47.9% 38.2% 40.5%
Risk-free interest rate .............................. 1.5% 2.4% 4.8%
Expected life (years)............................... 3.5 3.5 4.0
Expected dividend yield ............................ 0% 0% 0%
In addition to requiring companies to recognize the estimated fair value of share-based payments in earnings,
companies now have to present tax benefits received in excess of amounts determined based on the compensation
expense recognized on the statements of cash flows. Such tax benefits are presented as a use of cash in the operating
section and a source of cash in the financing section of the Statement of Cash Flows. Note 13 provides additional
information regarding the Company’s stock option plan.
Fair Values of Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities
reported in the accompanying consolidated balance sheets approximate fair value due to the short-term maturities of
these assets and liabilities. The fair value of the Company’s senior notes payable in the accompanying consolidated
balance sheets is estimated based on recent quotes from brokers. Note 5 provides additional information regarding
the Company’s fair values of our financial assets and liabilities.
Guarantees
The Company had bank guarantees relating to international store leases totaling $15,982 as of January 30,
2010 and $12,930 as of January 31, 2009.
Vendor Concentration
The Company’s largest vendors worldwide are Nintendo, Sony Computer Entertainment, Microsoft, Elec-
tronic Arts, Inc. and Activision, which accounted for 23%, 17%, 12%, 12% and 11%, respectively, of the
Company’s new product purchases in fiscal 2009 and 25%, 13%, 13%, 11% and less than 10%, respectively,
in fiscal 2008.
Stock Split
On February 9, 2007, the Board of Directors of the Company authorized a two-for-one stock split, effected by a
one-for-one stock dividend to stockholders of record at the close of business on February 20, 2007, paid on
March 16, 2007 (the “Stock Split”). The effect of the Stock Split has been retroactively applied to all periods
presented in the consolidated financial statements and notes thereto.
F-13
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)