GameStop 2013 Annual Report Download - page 19

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PART I
Item 1. Business
General
GameStop Corp. (together with its predecessor companies, “GameStop,” “we,” “us,” “our,” or the “Company”) is a global,
multichannel video game, consumer electronics and wireless services retailer. As the world’s largest multichannel video game
retailer, we sell new and pre-owned video game hardware, physical and digital video game software, video game accessories, as
well as new and pre-owned mobile and consumer electronics products and other merchandise. As of February 1, 2014, GameStop's
retail network and family of brands include 6,675 company-operated stores in the United States, Australia, Canada and Europe,
primarily under the names GameStopTM (“GameStop”), EB GamesTM (“EB Games”), and Micromania. We also operate electronic
commerce Web sites under the names www.gamestop.com, www.ebgames.com.au, www.ebgames.co.nz, www.gamestop.ca,
www.gamestop.it, www.gamestop.es, www.gamestop.ie, www.gamestop.de, www.gamestop.co.uk and www.micromania.fr. The
network also includes: www.kongregate.comTM, a leading browser-based game site; Game InformerTM (“Game Informer”)
magazine, the world's leading physical and digital video game publication; a digital personal computer (“PC”) distribution platform
available at www.gamestop.com/pcgames; iOS and Android mobile applications; and an online consumer electronics marketplace
available at www.buymytronics.comTM. We also operate Simply Mac©, a U.S. based, certified Apple© (“Apple”) products reseller;
Spring Mobile©, an authorized AT&T® (“AT&T”) reseller operating AT&T branded wireless retail stores in the United States; and
pre-paid wireless stores under the name Aio WirelessTM (“Aio Wireless,” an AT&T brand) as part of our expanding relationship
with AT&T.
We are a Delaware corporation which, through a predecessor, began operations in November 1996. Our corporate office
and one of our distribution facilities are housed in a 519,000 square foot facility in Grapevine, Texas.
Recent Developments
Strategic Activities
Following on the success of extending our buy-sell-trade model into our mobile business, we are seeking other opportunities
to extend our core competencies to other products and retail categories in order to continue to grow our company. Doing so will
allow us to help mitigate the cyclical nature of the video game console cycle. Aligned with this strategy we have executed the
following initiatives in the 52 weeks ended February 1, 2014 (“fiscal 2013”).
Acquisition of Simply Mac. In October 2012, we acquired a minority equity ownership interest in Simply Mac, Inc. (“Simply
Mac”), which operated Apple specialty retail stores in Utah and Wyoming. The investment was structured with an option whereby
we could acquire the remaining ownership interest in Simply Mac's equity for a pre-negotiated price at a future point in time.
Pursuant to this arrangement, in November 2013, we acquired the remaining 50.1% interest in Simply Mac for a total purchase
price of $9.5 million.
Acquisition of Spring Mobile. In November 2013, we purchased Spring Communications, Inc. (“Spring Mobile”), a wireless
retailer, for a purchase price of $62.6 million and the assumption of $34.5 million in term loans and a line of credit, of which $31.9
million was repaid shortly after the acquisition date.
Opening of Aio Wireless stores. In the fourth quarter of fiscal 2013, we began to open and operate pre-paid wireless stores
under the name Aio Wireless.
As a result of the Spring Mobile and Simply Mac acquisitions and the opening of our new Aio Wireless stores, we have
added a new reportable segment, Technology Brands, during the fourth quarter of fiscal 2013.
Decision to abandon investment in Spawn Labs. Spawn Labs, Inc. (“Spawn Labs”) is a streaming technology company
with a patented technology to provide a unique game streaming and virtualization experience. Our decision to abandon this
investment is a result of a lack of consumer demand for video game streaming services. As a result of this decision, we recorded
an impairment charge of $19.7 million during the fourth quarter of fiscal 2013, of which $10.2 million was related goodwill and
is recorded in the goodwill impairments line in our consolidated statements of operations and $9.5 million was related to certain
technology assets and other intangible assets and is reflected in the asset impairments and restructuring charges line item in our
consolidated statements of operations.
Return of Capital Strategies
In an effort to continue our commitment to drive long-term shareholder value we have accomplished the following initiatives
in fiscal 2013 and so far in the 52 weeks ending January 31, 2015 (“fiscal 2014”).