GameStop 2010 Annual Report Download - page 44

Table of Contents
(fiscal 2008) and the EB merger (fiscal 2006), which included $4.6 million and $6.8 million, respectively, considered in operating earnings. In
fiscal 2008, the $4.6 million included $3.5 million related to foreign currency losses on funds used to purchase Micromania. In fiscal 2006, the
$6.8 million included $1.9 million in charges associated with assets of the Company considered to be impaired as a result of the EB merger and
$4.9 million in costs associated with integrating the operations of GameStop and EB.
(2) Weighted average shares outstanding and earnings per common share have been adjusted to reflect the conversion of Class B common stock
that was outstanding prior to its conversion into Class A common stock on a one-for-one basis on February 7, 2007 and a two-for-one stock split
on March 16, 2007. The Company's Class B common stock was traded on the NYSE under the symbol "GME.B" until February 7, 2007.
(3) Stores are included in our comparable store sales base beginning in the 13th month of operation.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the information contained in our consolidated financial statements, including the
notes thereto. Statements regarding future economic performance, management's plans and objectives, and any statements concerning assumptions
related to the foregoing contained in Management's Discussion and Analysis of Financial Condition and Results of Operations constitute forward-
looking statements. Certain factors, which may cause actual results to vary materially from these forward-looking statements, accompany such
statements or appear elsewhere in this Form 10-K, including the factors disclosed under "Item 1A. — Risk Factors."
General
GameStop Corp. (together with its predecessor companies, "GameStop," "we," "us," "our," or the "Company") is the world's largest
multichannel retailer of video game products and PC entertainment software. We sell new and used video game hardware, video game software and
accessories, PC entertainment software and other merchandise primarily through our GameStop, EB Games and Micromania stores. As of
January 29, 2011, we operated 6,670 stores, in the United States, Australia, Canada and Europe, which are primarily located in major shopping malls
and strip centers. We also operate electronic commerce Web sites www.gamestop.com, www.ebgames.com.au, www.gamestop.ca,
www.gamestop.it, www.gamestop.es, www.gamestop.ie, www.gamestop.de and www.micromania.fr. In addition, we publish Game Informer
magazine, the industry's largest multi-platform video game magazine in the United States based on circulation and operate the online video gaming
Web site www.kongregate.com.
Our fiscal year is composed of 52 or 53 weeks ending on the Saturday closest to January 31. The fiscal years ended January 29, 2011 ("fiscal
2010"), January 30, 2010 ("fiscal 2009") and January 31, 2009 ("fiscal 2008") consisted of 52 weeks.
The Company began operations in November 1996. In February 2002, GameStop completed an initial public offering of its Class A common
stock. 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 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 in the transaction. Micromania is
the leading retailer of video and computer games in France with 379 locations, 328 of which were operating on the date of acquisition (the
"Micromania acquisition"). The Company's operating results for fiscal 2010 and fiscal 2009 include Micromania's results and the Company's
operating results for fiscal 2008 include 11 weeks of Micromania's results.
The acquisition of Micromania is an important part of the Company's European and overall growth strategy and gave the Company an
immediate entrance into the second largest video game market in Europe. The amount the Company paid in excess of the fair value of the net assets
acquired was primarily for (i) the expected future cash flows derived from the existing business and its infrastructure, (ii) the geographical benefits
from adding stores in a new large, growing market without cannibalizing existing sales, (iii) expanding the Company's expertise in the
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