GameStop 2010 Annual Report Download - page 85

Download and view the complete annual report

Please find page 85 of the 2010 GameStop annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 143

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143

Table of Contents
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The consolidated financial statements include the results of Micromania from the date of acquisition and are reported in the European segment.
The purchase price was allocated based on estimated fair values as of the acquisition date. The purchase price was allocated as follows as of
November 17, 2008:
November 17,
2008
(In millions)
Current assets $ 187.7
Property, plant & equipment 34.2
Goodwill 415.2
Intangible assets:
Tradename 131.5
Leasehold rights and interests 104.0
Total intangible assets 235.5
Other long-term assets 7.8
Current liabilities (223.2)
Long-term liabilities (76.8)
Total purchase price $ 580.4
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 and the Micromania tradename, is approximately ten
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 8 provides additional information concerning
goodwill and intangible assets.
Merger-related expenses totaling $4.6 million shown in the fiscal 2008 statements of operations include a net loss related to the change in
foreign exchange rates related to the funding of the Micromania acquisition and other costs considered to be of a one-time or short-term nature
which are included in operating earnings.
The acquisition of Micromania was 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 European
video game market as a whole, and (iv) increasing the Company's impact on the European market, including increasing the Company's purchasing
power.
In fiscal 2008, in addition to the Micromania acquisition, the Company also completed acquisitions with a total consideration of $50.3 million.
The acquisitions were accounted for using the purchase method of accounting, with the excess of the purchase price over the net assets acquired, in
the amount of $46.0 million for fiscal 2008, recorded as goodwill. During fiscal 2009 and fiscal 2010, the Company completed acquisitions with a
total consideration of $8.4 million and $38.1 million, respectively, which were accounted for using the acquisition method of accounting, with the
excess of the purchase price over the net assets acquired, in the amount of $6.3 million and $28.5 million, respectively, recorded as goodwill. The
Company included the results of operations of the acquisitions, which were not material, in the financial statements beginning on the closing date of
each respective acquisition. The pro forma effect assuming these acquisitions were made at the beginning of each fiscal year is not material to the
Company's consolidated financial statements. F-15