GameStop 2009 Annual Report Download - page 84

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be determined based partially on the Company’s price to earnings ratio and GameStop Group Limited’s earnings.
Shares representing approximately 16% were purchased in June 2008 for $27,383 and in July 2009 an additional
16% was purchased for $4,667, bringing the Company’s total interest in GameStop Group Limited to approximately
84%. The Company already consolidates the results of GameStop Group Limited; therefore, any additional
amounts acquired will not have a material effect on the Company’s financial statements.
On November 4, 2009, the Company purchased a controlling interest in Omac Global Medial Limited, an
online video game developer and operator, as part of the Company’s overall digital growth strategy. The acquisition
in the amount of $3,790 was accounted for using the acquisition method of accounting, with the excess of the
purchase price over the net assets acquired, in the amount of $3,763, recorded as goodwill.
The pro forma effect assuming the above acquisitions were made at the beginning of fiscal 2007 is not material
to the Company’s consolidated financial statements.
3. Vendor Arrangements
The Company and approximately 50 of its vendors participate in cooperative advertising programs and other
vendor marketing programs in which the vendors provide the Company with cash consideration in exchange for
marketing and advertising the vendors’ products. The Company’s accounting for cooperative advertising arrange-
ments and other vendor marketing programs results in a portion of the consideration received from the Company’s
vendors reducing the product costs in inventory rather than as an offset to the Company’s marketing and advertising
costs. The consideration serving as a reduction in inventory is recognized in cost of sales as inventory is sold. The
amount of vendor allowances to be recorded as a reduction of inventory was determined by calculating the ratio of
vendor allowances in excess of specific, incremental and identifiable advertising and promotional costs to
merchandise purchases. The Company then applied this ratio to the value of inventory in determining the amount
of vendor reimbursements to be recorded as a reduction to inventory reflected on the balance sheet.
The cooperative advertising programs and other vendor marketing programs generally cover a period from a
few days up to a few weeks and include items such as product catalog advertising, in-store display promotions,
Internet advertising, co-op print advertising, product training and promotion at the Company’s annual store
managers conference. The allowance for each event is negotiated with the vendor and requires specific performance
by the Company to be earned.
Specific, incremental and identifiable advertising and promotional costs were $92,952, $92,083 and $76,074
in the 52 week periods ended January 30, 2010, January 31, 2009 and February 2, 2008, respectively. Vendor
allowances received in excess of advertising expenses were recorded as a reduction of cost of sales of $116,877,
$125,115 and $92,425 for the 52 week periods ended January 30, 2010, January 31, 2009 and February 2, 2008,
respectively. The amounts deferred as a reduction in inventory were $654 and $3,193 for the 52 weeks ended
January 30, 2010 and January 31, 2009, respectively. The amount recognized as income related to the capitalization
of excess vendor allowances was $6,113 for the 52 weeks ended February 2, 2008.
F-16
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)