MERGER: Electronic Boutique and Gamestop

Issue:

On 10/10/05 Electronic Boutique (ELBO) merged with Gamestop Class A (GME)

Cause:

This merger involved both cash and stock.

Resolution:

0.78795 shares Gamestop Class A (GME) and 38.15 cash per share of Electronic Boutique (ELBO)

Let's assume you have 100 shares of ELBO.
This will result in 78.795 shares of GME

Cost basis of ELBO Shares: xxxx.xx (your cost)

GME avg price on 10/10/05: 32.42 (rounded) (avg of hi/lo)

Total consideration of Merger:

78.795 GME shares * 32.42 = 2554.53 (rounded)
100 ELBO Shares * 38.15 = 3815.43
Total consideration received: 6369.96

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This assumes that your club owns 100 shares of ELBO. You will need to calculate the total value received in the merger: 78.705 shares GME * $32.42 = $2554.53 (cash value) plus 100 ELBO shares * $38.15 = $3815.43 for a total of $6369.69.

There are three sub-scenarios:

(1a) If the club's cost basis in ELBO was less than $2554.53 (that is, less than $32.42/share), ALL the cash received is reported as a Short or Long Term Capital Gain distribution (based on holding period).

(1b) If the club's cost basis in ELBO was more than $2554.53 (that is, more than $32.42/share) but less than $6369.96 (that is, less than $63.70/share) then the gain (the difference between the $2554.53 and the old cost basis) is entered as a Short or Long Term Capital Gain distribution (based on holding period), and the difference between $3815.43 (cash received) and the GAIN is entered as Return of Capital.

(1c) If the club's cost basis in the ADVP was more than $6369.96 (that is, more than $63.70/share) then the merger is a "loss". The cash received ($3815.43) is entered as a Return of Capital.

Enter the capital gain and/or return of capital against ELBO the day BEFORE the merger.

2) Next, enter the merger of ELBO to GMEA on the merger date of record. Include the fractional share from your calculations AND include the cash received for the fractional share.

3) If you were charged a reorganization fee for the merger, enter this as a Cash Distribution Type Return of Capital for a NEGATIVE dollar amount against GMEA the day AFTER the merger.