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GameStop Corp. Comparable Sales Up 32.0 Percent in 2001; EPS for 2001 Exceeds Estimate
GRAPEVINE, Texas, Mar 11, 2002 (BUSINESS WIRE) --

GameStop IPO Completed; Raises $348.0 Million; Earnings Guidance for 2002 Provided

GameStop Corp. (NYSE:GME), the nation's largest video game and entertainment software specialty retailer, today reported sales and earnings for the fourth quarter and for the full year ended Feb. 2, 2002.

GameStop sales were $514.2 million for the quarter, an increase of 57.2 percent, and $1,121.1 million for the year, an increase of 48.2 percent. On a comparable store basis, sales increased 58.7 percent for the fourth quarter and 32.0 percent for the year.

Completing a strong year-long sales trend with a very successful fourth quarter, the company earned $7.0 million, or $.18 per share, for fiscal 2001, as compared to a loss of $12.0 million, or ($.33) per share, in the prior fiscal year. On a pro forma basis, excluding interest on debt repaid with the IPO proceeds of $4.7 million for the fourth quarter, and $20.0 million for the fiscal year, and goodwill amortization of $2.8 million for the fourth quarter, and $11.1 million for the fiscal year, the company earned $.39 per share in the fourth quarter, and $.45 per share for fiscal 2001, which exceeded previous estimates.

For the year, EBITDA rose 132% to $64.4 million. The strong cash flows enabled the company to complete its new store openings and system enhancements, and fund other initiatives.

    GameStop IPO
In February 2002, GameStop Corp. successfully completed its initial public offering, raising net proceeds of $348.0 million, including the exercise of the underwriter's over-allotment option. GameStop Corp. used $250.0 million to repay indebtedness to Barnes & Noble and the remainder will be used for working capital and general corporate purposes.

    Guidance for Fiscal 2002
The following guidance is based upon market factors and trends that we can reasonably forecast at this time. It is important to note that quarterly results may fluctuate due to the release dates of certain major titles, and/or the timing of potential price reductions on existing hardware systems.

In addition, the Christmas season, a critical portion of the fourth quarter, is much more influenced by external factors to our business: the strength of the economy, employment levels, and other events that would influence gift purchasing.

We forecast that earnings per share will range from $.84 to $.90 for fiscal 2002, with comparable store sales increasing between 15% and 20%. The first three quarters of fiscal 2002 are expected to contribute EPS of $.05, $.05 and $.12, respectively, while comparable store sales should increase 20%, 15% and 20%, respectively, during these quarters. The fourth quarter, which contains the holiday shopping season, is expected to contribute between $.62 and $.68 per share, with comparable store sales increases ranging from 8% to 12%.

"Our very successful IPO has resulted in GameStop having a strong, debt-free balance sheet, and the funds needed to accelerate the expansion of our business," said Dick Fontaine, GameStop's Chairman and CEO. "In addition, the large and growing installed base of new hardware systems, coupled with strong new title releases for each platform throughout the year, has set the table for GameStop to have an outstanding year."

    About GameStop Corp.
Headquartered in Grapevine, Texas, GameStop Corp. (NYSE:GME), is the nation's largest video game and entertainment software specialty retailer. The company operates 1,039 retail stores throughout 49 states, the District of Columbia and Puerto Rico, under the GameStop(R), Babbage's(R), Software Etc.(TM) and FuncoLand(R) brands. In addition, the company owns a commerce-enabled Web property, GameStop.com, and Game Informer magazine, a leading video and computer game publication.

GameStop Corp. sells the most popular new software, hardware and game accessories for the PC and next generation video game systems from Sony, Nintendo, and Microsoft, and is also the industry's largest reseller of used video games. In addition, the company sells computer and video game magazines and strategy guides, action figures, and other related merchandise to more than 30 million customers.

General information on GameStop Corp. can be obtained via the Internet by visiting the company's corporate Web site: http://www.gamestop.com/investor-relations

    SAFE HARBOR
This press release (including the attached schedules) contains "forward-looking statements." GameStop Corp. is including this statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. These forward-looking statements are based on currently available information and represent the beliefs of the management of the company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks include, but are not limited to, general economic and market conditions, decreased consumer demand for the company's products, possible disruptions in the company's computer or telephone systems, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible disruptions or delays in the opening of new stores or the inability to obtain suitable sites for new stores, higher than anticipated store closing or relocation costs, higher interest rates, the performance of the company's online and other initiatives, the successful integration of acquired businesses, unanticipated increases in merchandise or occupancy costs, unanticipated adverse litigation results or effects, product shortages, and other factors which may be outside of the company's control. Please refer to the company's reports on file with the SEC for a more detailed discussion of these and other risks that could cause results to differ materially.

                            GameStop Corp.
                       Statements of Operations
           (in thousands of dollars, except per share data)
                                           13 weeks       14 weeks
                                             ended          ended
                                          Feb. 2, 2002   Feb. 3, 2001
                                          -----------    -----------
Sales                                     $   514,211    $   327,054
Cost of sales                                 403,405        252,361
                                          -----------    -----------
   Gross profit                               110,806         74,693
Selling, general and
 administrative expenses                       66,733         53,473
Depreciation and amortization                   5,149          4,323
Amortization of goodwill                        2,781          2,748
                                          -----------    -----------
Operating earnings                             36,143         14,149
Interest expense, net                           4,002          7,397
                                          -----------    -----------
Earnings before income
 tax expense                                   32,141          6,752
Income tax expense                             13,355          3,245
                                          -----------    -----------
Net earnings                              $    18,786    $     3,507
                                          ===========    ===========
Net earnings per common share:
 Basic                                    $      0.52    $      0.10
 Diluted                                  $      0.47    $      0.10
Weighted average common shares
 outstanding
 Basic                                     36,009,000     36,009,000
 Diluted                                   40,114,070     36,009,000
    Percentage of sales:
Sales                                          100.0%         100.0%
Cost of sales                                   78.5%          77.2%
                                          -----------    -----------
Gross profit                                    21.5%          22.8%
SG&A expenses                                   13.0%          16.3%
Depreciation and amortization                    1.0%           1.3%
Amortization of goodwill                         0.5%           0.8%
                                          -----------    -----------
Operating earnings                               7.0%           4.4%
Interest expense, net                            0.7%           2.3%
                                          -----------    -----------
Earnings before income
 tax expense                                     6.3%           2.1%
Income tax expense                               2.6%           1.0%
                                          -----------    -----------
Net earnings                                     3.7%           1.1%
                                          ===========    ===========
Note: Income tax expense is presented as if tax returns were filed on
a stand-alone basis.
                            GameStop Corp.
                       Statements of Operations
           (in thousands of dollars, except per share data)
                                            52 weeks       53 weeks
                                             ended          ended
                                          Feb. 2, 2002   Feb. 3, 2001
                                          -----------    -----------
Sales                                     $ 1,121,138    $   756,697
Cost of sales                                 854,035        570,995
                                          -----------    -----------
   Gross profit                               267,103        185,702
Selling, general and administrative
 expenses                                     202,719        157,891
Depreciation and amortization                  19,172         12,974
Amortization of goodwill                       11,125          9,223
                                          -----------    -----------
Operating earnings                             34,087          5,614
Interest expense, net                          19,452         23,411
                                          -----------    -----------
Earnings (loss) before income
 tax expense (benefit)                         14,635        (17,797)
Income tax expense (benefit)                    7,675         (5,836)
                                          -----------    -----------
Net earnings (loss)                       $     6,960    $   (11,961)
                                          ===========    ===========
Net earnings (loss) per common share:
 Basic                                    $      0.19    $     (0.33)
 Diluted                                  $      0.18    $     (0.33)
Weighted average common shares
 outstanding
 Basic                                     36,009,000     36,009,000
 Diluted                                   39,396,714     36,009,000
    Percentage of sales:
Sales                                          100.0%         100.0%
Cost of sales                                   76.2%          75.5%
                                          -----------    -----------
Gross profit                                    23.8%          24.5%
SG&A expenses                                   18.1%          20.9%
Depreciation and amortization                    1.7%           1.7%
Amortization of goodwill                         1.0%           1.2%
                                          -----------    -----------
Operating earnings                               3.0%           0.7%
Interest expense, net                            1.7%           3.1%
                                          -----------    -----------
Earnings (loss) before income
     tax expense (benefit)                       1.3%          -2.4%
Income tax expense (benefit)                     0.7%          -0.8%
                                          -----------    -----------
Net earnings (loss)                              0.6%          -1.6%
                                          ===========    ===========
Note: Income tax expense is presented as if tax returns were filed on
a stand-alone basis.
                            GameStop Corp.
                            Balance Sheets
           (in thousands of dollars, except per share data)
                                          Feb. 2, 2002   Feb. 3, 2001
                                          -----------    -----------
ASSETS:
Current assets:
 Cash and cash equivalents                $    80,750    $     8,641
 Receivables, net                               5,930          3,726
 Merchandise inventories                      138,351        108,853
 Prepaid expenses and other
  current assets                                8,255         13,682
 Deferred taxes                                 3,418          3,533
                                          -----------    -----------
  Total current assets                        236,704        138,435
                                          -----------    -----------
Property and equipment:
 Leasehold improvements                        27,898         20,874
 Fixtures and equipments                       57,579         45,236
                                          -----------    -----------
                                               85,477         66,110
 Less accumulated depreciation
  and amortization                             33,854         14,742
                                          -----------    -----------
  Net property and equipment                   51,623         51,368
                                          -----------    -----------
Goodwill, net                                 308,292        319,418
Other noncurrent assets                           559            536
                                          -----------    -----------
  Total assets                            $   597,178    $   509,757
                                          ===========    ===========
LIABILITIES AND STOCKHOLDERS'
 EQUITY (DEFICIT):
Current liabilities:
 Accounts payable                         $   148,597    $   102,837
 Accrued liabilities                           57,000         37,324
                                          -----------    -----------
  Total current liabilities                   205,597        140,161
Payable to Barnes & Noble, Inc.               399,623        385,148
Deferred taxes                                  3,065          2,862
Other long-term liabilities                     2,543          2,196
                                          -----------    -----------
  Total liabilities                           610,828        530,367
                                          -----------    -----------
Stockholders' equity (deficit):
Preferred stock - authorized 5,000
 shares; no shares issued or outstanding           --             --
Class A common stock - $.001 par value;
 authorized 300,000 shares; no shares
 issued or outstanding                             --             --
Class B common stock - $.001 par value;
 authorized 100,000 shares; 36,009 shares
 issued and outstanding                            36             36
Additional paid-in capital                    (15,902)       (15,902)
Retained earnings (deficit)                     2,216         (4,744)
                                          -----------    -----------
 Total stockholders' equity (deficit)         (13,650)       (20,610)
                                          -----------    -----------
 Total liabilities and stockholders'
  equity (deficit)                        $   597,178    $   509,757
                                          ===========    ===========
                            GameStop Corp.
                           Retail Sales Mix
                                           13 weeks       14 weeks
                                             ended          ended
                                          Feb. 2, 2002   Feb. 3, 2001
                                          -----------    -----------
Video Game Hardware                               29%            18%
Video Game Software                               48%            50%
Video Game Accessories                            13%            12%
PC Software                                        7%            13%
PC Accessories and Other                           3%             7%
                                           52 weeks       53 weeks
                                             ended          ended
                                          Feb. 2, 2002   Feb. 3, 2001
                                          -----------    -----------
Video Game Hardware                               25%            15%
Video Game Software                               48%            49%
Video Game Accessories                            12%            11%
PC Software                                       10%            17%
PC Accessories and Other                           5%             8%
CONTACT:          GameStop Corp., Grapevine    
                  Media Contact:
                  Lori M. Milovich, 817/424-2130
                  or
                  Investor Contact:
                  David W. Carlson, 817/424-2130

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