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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 21, 2006
-------------------------------
GAMESTOP CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-31228 20-27335597
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
625 Westport Parkway, Grapevine, TX 76051
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (817) 424-2000
-----------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
The following information is furnished pursuant to Item 2.02,
"Results of Operations and Financial Condition," and shall not be deemed "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended,
or otherwise subject to the liabilities of that section.
On March 21, 2006, GameStop Corp. issued a press release
announcing its financial results for the fiscal quarter and full year ended
January 28, 2006. A copy of the press release is attached hereto as
Exhibit 99.1.
The information contained in this Current Report, including the
exhibit, shall not be incorporated by reference into any filing of GameStop
Corp., whether made before or after the date hereof, regardless of any general
incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
99.1 Press Release issued by GameStop Corp., dated March 21, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
GAMESTOP CORP.
--------------
(Registrant)
Date: March 21, 2006
/s/ David W. Carlson
--------------------
Name: David W. Carlson
Title: Executive Vice President and
Chief Financial Officer
Table of Contents
- -----------------
GAMESTOP CORP.
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
Exhibit 99.1 Press Release of GameStop Corp., dated March 21, 2006
Exhibit 99.1
GameStop Reports Record Sales and Earnings for 2005;
Fourth Quarter EPS Exceeds Guidance;
2006 Guidance Signals Strong Momentum
GRAPEVINE, Texas--(BUSINESS WIRE)--March 21, 2006--GameStop Corp.
(NYSE:GME)(NYSE:GME.B), the world's largest video game and
entertainment software retailer, today reported record sales and
earnings for the fourth quarter and full year ended January 28, 2006.
Fourth Quarter Financial Results
Earnings were $85.0 million for the fourth quarter of 2005,
including merger- related expenses of $2.3 million ($1.4 million, net
of tax benefits), as compared to earnings of $34.5 million in the
prior year quarter. Diluted earnings per share were $1.10 for the
fourth quarter of 2005, including merger-related expenses of $0.02 per
diluted share, as compared to $0.64 per diluted share in the prior
year quarter, significantly exceeding prior guidance.
GameStop sales increased 135.2% to $1,666.9 million in the fourth
quarter, in comparison to $708.7 million in the prior year quarter,
which was primarily due to the addition of the Electronics Boutique
stores acquired in October 2005. On a comparable store basis, sales
decreased 0.3% during the fourth quarter.
Full Year Financial Results
Earnings were $100.8 million for fiscal 2005, including
merger-related expenses of $21.1 million ($13.3 million, net of tax
benefits), as compared to earnings of $60.9 million in fiscal 2004.
Diluted earnings per share were $1.61 for fiscal 2005, including
merger related expenses of $0.21 per diluted share, as compared to
$1.05 per diluted share in 2004.
GameStop sales were $3,091.8 million for fiscal 2005, an increase
of 67.8% over fiscal 2004 sales of $1,842.8 million. On a comparable
store basis, sales decreased 1.4% during fiscal 2005.
"2005 was an exceptional year for GameStop and our shareholders,"
indicated R. Richard Fontaine, Chairman and Chief Executive Officer.
"Our Class A shares began the fiscal year at $18.90 and closed fiscal
2005 at $39.14, a 107% increase, and have continued to rise in 2006.
Clearly, our merger with EB Games in October was well received in the
market and, I believe, is a reflection of our outstanding position and
immense potential in a growing business."
"We achieved record sales, increased gross margins, and kept
expenses well under control in the midst of explosive growth. Our
operating margins increased to 6.2%, and net earnings for the year
surpassed $100 million," reported Fontaine. "Tight execution of our
integration plans have already begun to yield significant synergies
and have resulted in improved cash flow with a year end cash balance
of over $400 million."
"GameStop's market share has grown every year," noted Fontaine.
"And with the merger completed, we now have a 21% share of all new
video game sales in the U.S. according to the NPD Group."
"We continue to define ourselves as a growth company. That
commitment was never more evident than in 2005, when we opened 792 new
stores, including 450 in the U.S. and 342 internationally," remarked
Fontaine. "In 2006, we plan to open 400 new stores, slowing slightly
to give our field organization time to digest all of the changes of
the integration, and ramp up to an estimated 600 stores in each of the
next two years."
"We have an excellent and deep management team, our business plan
is sound, and our opportunities are great. We are very excited about
the future of GameStop," concluded Fontaine.
Business Outlook
For fiscal 2006 (the 53-week year ending February 3, 2007), sales
are projected to grow between 14.0% and 17.0% on a pro forma basis,
with comparable store sales increasing from +6.0% to +9.0%,
highlighted by the anticipated launches of Sony's PlayStation 3 and
Nintendo's Revolution in November. Diluted earnings per share for the
full year are expected to range from $1.83 to $1.93, including
projected stock-based compensation expense of $21.2 million ($13.4
million, net of tax benefits), or $0.17 per diluted share. Excluding
projected stock-based compensation, full year diluted earnings per
share are expected to range from $2.00 to $2.10.
For the first quarter of fiscal 2006, the company expects
comparable store sales to range from -7.0% to -9.0%, due primarily to
the launch of Sony's PSP in the prior year quarter, while diluted
earnings per share are expected to range from $0.04 to $0.05,
including expected stock-based compensation expense of $5.2 million
($3.2 million, net of tax benefit), or $0.04 per diluted share. This
compares to a pro forma loss of $0.01 per diluted share in the prior
year quarter.
Synergies related to the merger with Electronics Boutique remain
on schedule and the company now forecasts savings ranging from $70 to
$80 million in fiscal 2006. These synergies represent the elimination
of duplicate general office and warehousing costs, advertising
efficiencies, freight savings, benefits from applying GameStop's
merchandising algorithms to EB's used video game category, and other
fixed cost savings.
Including projected pro forma fiscal 2006 EPS growth of 81%, the
company currently expects that EPS could grow approximately 25%
annually for each of the next three years based upon expected strong
video game industry fundamentals, continued merger synergies and
excellent cash generation.
Note that guidance does not include merger costs related to the
business combination.
Fiscal 2005 pro forma statements of operations have been provided
in Schedule C as if the acquisition of Electronics Boutique Holding
Corp. took place at the beginning of fiscal 2005. In addition, the pro
forma statements of operations include stock-based compensation
expense as if SFAS No. 123(R) was implemented at the beginning of
fiscal 2005.
Conference Call and Webcast Information
A conference call with GameStop Corp.'s management is scheduled
for March 21, 2006 at 11:00 a.m. ET to discuss the fourth quarter and
full year 2005 sales and earnings results. The conference call will be
simulcast on the Internet at
(http://www.gamestop.com/investor-relations/). The conference call
will be archived on the website until April 4, 2006.
About GameStop Corp.
Headquartered in Grapevine, TX, GameStop Corp.
(NYSE:GME)(NYSE:GME.B) is the world's largest video game and
entertainment software retailer. The company operates 4,490 retail
stores across the United States and in fourteen countries worldwide.
The company also owns two e-commerce sites, GameStop.com and
EBgames.com, and Game Informer(R) 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. In addition,
the company sells computer and video game magazines and strategy
guides, action figures, and other related merchandise. General
information on GameStop Corp. can be obtained at the company's
corporate Website: http://www.gamestop.com/investor-relations/.
Safe Harbor
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements include, but are not limited to, the outlook for fiscal
2006 and beyond, future financial and operating results, projected
store openings, the company's plans, objectives, expectations and
intentions and other statements that are not historical facts. Such
statements are based upon the current beliefs and expectations of
GameStop's management and are subject to significant risks and
uncertainties. Actual results may differ from those set forth in the
forward-looking statements. The following factors, among others, could
cause actual results to differ from those set forth in the
forward-looking statements: the risk that the businesses of GameStop
and Electronics Boutique will not be integrated successfully or that
the cost savings and other synergies from the combination may not be
fully realized or may take longer to realize than expected; the
inability to obtain sufficient quantities of product to meet consumer
demand; the timing of the release of the next generation consoles,
including Sony's PlayStation 3 and Nintendo's Revolution; and economic
and other events that could reduce or impact consumer demand.
Additional factors that could cause GameStop's results to differ
materially from those described in the forward-looking statements can
be found in the Annual Reports on Forms 10-K/A of GameStop and
Electronics Boutique for the fiscal year ended January 29, 2005 filed
with the SEC and available at the SEC's Internet site at
http://www.sec.gov.
GameStop Corp.
Statements of Operations
(in thousands, except per share data)
13 weeks 13 weeks
ended ended
January 28, 2006 January 29, 2005
---------------- ----------------
Sales $1,666,914 $708,740
Cost of sales 1,225,796 529,327
---------------- ----------------
Gross profit 441,118 179,413
Selling, general and administrative
expenses 259,974 113,149
Depreciation and amortization 26,283 10,284
Merger-related expenses 2,271 -
---------------- ----------------
Operating earnings 152,590 55,980
Interest expense, net 18,635 489
---------------- ----------------
Earnings before income tax expense 133,955 55,491
Income tax expense 48,940 20,974
---------------- ----------------
Net earnings $85,015 $34,517
================ ================
Earnings per common share:
Basic $1.17 $0.68
Diluted $1.10 $0.64
Weighted average common shares
outstanding:
Basic 72,406 50,702
Diluted 77,387 54,155
Percentage of Sales:
- --------------------
Sales 100.0% 100.0%
Cost of sales 73.5% 74.7%
---------------- ----------------
Gross profit 26.5% 25.3%
SG&A expenses 15.6% 16.0%
Depreciation and amortization 1.6% 1.4%
Merger-related expenses 0.2% --
---------------- ----------------
Operating earnings 9.1% 7.9%
Interest expense, net 1.1% 0.1%
---------------- ----------------
Earnings before income tax expense 8.0% 7.8%
Income tax expense 2.9% 2.9%
---------------- ----------------
Net earnings 5.1% 4.9%
================ ================
GameStop Corp.
Statements of Operations
(in thousands, except per share data)
52 weeks 52 weeks
ended ended
January 28, 2006 January 29, 2005
---------------- -----------------
Sales $3,091,783 $1,842,806
Cost of sales 2,219,753 1,333,506
--------------- -----------------
Gross profit 872,030 509,300
Selling, general and administrative
expenses 599,343 373,364
Depreciation and amortization 66,355 36,789
Merger-related expenses 13,600 -
--------------- -----------------
Operating earnings 192,732 99,147
Interest expense, net 25,292 236
Merger-related interest expense 7,518 -
--------------- -----------------
Earnings before income tax expense 159,922 98,911
Income tax expense 59,138 37,985
--------------- -----------------
Net earnings $100,784 $60,926
=============== =================
Earnings per common share:
Basic $1.74 $1.11
Diluted $1.61 $1.05
Weighted average common shares
outstanding:
Basic 57,920 54,662
Diluted 62,486 57,796
Percentage of Sales:
- --------------------
Sales 100.0% 100.0%
Cost of sales 71.8% 72.4%
--------------- -----------------
Gross profit 28.2% 27.6%
SG&A expenses 19.4% 20.2%
Depreciation and amortization 2.2% 2.0%
Merger-related expenses 0.4% --
--------------- -----------------
Operating earnings 6.2% 5.4%
Interest expense, net 0.8% 0.0%
Merger-related interest expense 0.2% --
--------------- -----------------
Earnings before income tax expense 5.2% 5.4%
Income tax expense 1.9% 2.1%
--------------- -----------------
Net earnings 3.3% 3.3%
=============== =================
GameStop Corp.
Balance Sheets
(in thousands, except per share data)
January 28, January 29,
2006 2005
------------ ------------
ASSETS:
Current assets:
Cash and cash equivalents $ 401,593 $ 170,992
Receivables, net 38,738 9,812
Merchandise inventories 603,178 216,296
Prepaid expenses and other current
assets 16,339 18,400
Prepaid taxes 19,135 3,703
Deferred taxes 42,282 5,785
------------ ------------
Total current assets 1,121,265 424,988
------------ ------------
Property and equipment:
Land 10,257 2,000
Buildings & leasehold improvements 262,363 106,428
Fixtures and equipment 340,198 184,536
------------ ------------
612,818 292,964
Less accumulated depreciation and
amortization 180,693 124,565
------------ ------------
Net property and equipment 432,125 168,399
------------ ------------
Goodwill, net 1,392,352 320,888
Assets to be disposed of 19,297 -
Other noncurrent assets 50,080 1,708
------------ ------------
Total assets $ 3,015,119 $ 915,983
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 543,288 206,739
Accrued liabilities 331,859 94,983
Notes payable, current portion 12,527 12,173
------------ ------------
Total current liabilities 887,674 313,895
Deferred taxes 12,938 21,257
Other long-term liabilities 36,331 13,473
Notes payable, long-term portion 21,675 24,347
Senior floating and fixed rate notes
payable, net of discount 941,788 -
------------ ------------
Total liabilities $ 1,900,406 $ 372,972
------------ ------------
Stockholders' equity:
Preferred stock - authorized 5,000
shares; no shares issued or
outstanding - -
Class A common stock - $.001 par
value; authorized 300,000 shares;
42,895 and 24,189 shares issued
and outstanding, respectively 43 24
Class B common stock - $.001 par
value; authorized 100,000 shares;
29,902 shares issued and
outstanding 30 30
Additional paid-in-capital 921,349 500,769
Accumulated other comprehensive
income 886 567
Retained earnings 192,405 91,621
Treasury stock, at cost, 3,263
shares - (50,000)
------------ ------------
Total stockholders' equity 1,114,713 543,011
------------ ------------
Total liabilities and
stockholders' equity $ 3,015,119 $ 915,983
============ ============
Schedule A
GameStop Corp.
Retail Sales Mix
13 Weeks Ended 13 Weeks Ended
January 28, 2006 January 29, 2005
----------------------- -----------------
Percent Percent
Sales of Total Sales of Total
----------- ---------- ------- --------
Sales (in millions):
New video game hardware $ 329.1 19.8% $ 100.3 14.2%
New video game software 705.5 42.3% 319.2 45.0%
Used video game products 348.6 20.9% 156.5 22.1%
Other 283.7 17.0% 132.7 18.7%
----------- ----------- -------- --------
Total $ 1,666.9 100.0% $ 708.7 100.0%
=========== =========== ======== ========
52 Weeks Ended 52 Weeks Ended
January 28, 2006 January 29, 2005
----------------------- -----------------
Percent Percent
Sales of Total Sales of Total
----------- ----------- -------- --------
Sales (in millions):
New video game hardware $ 503.2 16.3% $ 209.2 11.4%
New video game software 1,244.9 40.3% 776.7 42.1%
Used video game products 808.0 26.1% 511.8 27.8%
Other 535.7 17.3% 345.1 18.7%
----------- ----------- -------- --------
Total $ 3,091.8 100.0% $1,842.8 100.0%
=========== =========== ======== ========
Schedule B
GameStop Corp.
Gross Profit Mix
13 Weeks Ended 13 Weeks Ended
January 28, 2006 January 29, 2005
------------------ -----------------
Gross Gross
Gross Profit Gross Profit
Profit Percent Profit Percent
--------- -------- --------- -------
Gross Profit (in millions):
New video game hardware $ 21.0 6.4% $ 3.1 3.1%
New video game software 150.2 21.3% 61.6 19.3%
Used video game products 171.7 49.3% 71.1 45.4%
Other 98.2 34.6% 43.6 32.9%
--------- ---------
Total $ 441.1 26.5% $ 179.4 25.3%
========= =========
52 Weeks Ended 52 Weeks Ended
January 28, 2006 January 29, 2005
------------------ -----------------
Gross Gross
Gross Profit Gross Profit
Profit Percent Profit Percent
--------- -------- --------- -------
Gross Profit (in millions):
New video game hardware $ 30.9 6.1% $ 8.5 4.1%
New video game software 266.5 21.4% 151.9 19.6%
Used video game products 383.0 47.4% 231.6 45.3%
Other 191.6 35.8% 117.3 34.0%
--------- ---------
Total $ 872.0 28.2% $ 509.3 27.6%
========= =========
Schedule C
- ----------------------------------------------------------------------
GAMESTOP CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Historical Historical
For the GameStop Electronics GameStop
thirteen weeks Corp. Boutique Corp
ended April April 30, April 30, Pro Forma Pro
30, 2005 2005(a) 2005(a) Adjustments Forma
---------- ----------- ----------- --------
Sales $ 474,727 $ 504,905 $ -- $979,632
Cost of sales 348,690 374,845 -- 723,535
---------- ----------- ----------- --------
Gross profit 126,037 130,060 -- 256,097
S, G and A
expenses 98,986 114,342 -- 213,328
Depr. and
Amort. 10,194 10,797 1,204 (c) 22,195
Merger-related
expenses -- 1,500 (1,500)(b) --
Stock-based
compensation -- -- 2,576 (j) 2,576
---------- ----------- ----------- --------
Operating
earnings 16,857 3,421 (2,280) 17,998
Interest
expense, net 83 (917) 20,374(d)(e) 19,540
Merger-related
int. expense -- -- -- --
---------- ----------- ----------- --------
Earnings (loss)
before income
tax exp.
(benefit) 16,774 4,338 (22,654) (1,542)
Income tax
expense
(benefit) 6,448 1,561 (8,587)(f) (578)
---------- ----------- ----------- --------
Net earnings
(loss) $ 10,326 $ 2,777 $ (14,067) $ (964)
========== =========== =========== ========
Net earnings
(loss) per
Class A & B
common share-
basic $ 0.20(h) $ 0.11 $ (0.01)(i)
========== =========== ========
Weighted avg
shares of
common stock-
basic 51,000 24,696 (4,467)(g) 71,229
========== =========== =========== ========
Net earnings
(loss) per
Class A & B
common share-
diluted $ 0.19(h) $ 0.11 $ (0.01)(i)
========== =========== ========
Weighted avg
shares of
common stock- (g)
diluted 54,490 25,079 (8,340)(k) 71,229
========== =========== =========== ========
GAMESTOP CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Historical Historical
For the GameStop Electronics GameStop
thirteen weeks Corp. Boutique Corp
ended July 30, July 30, July 30, Pro Forma Pro
2005 2005(a) 2005(a) Adjustments Forma
---------- ------------ ----------- --------
Sales $ 415,930 $ 446,511 $ -- $862,441
Cost of sales 287,775 311,592 -- 599,367
---------- ------------ ----------- --------
Gross profit 128,155 134,919 -- 263,074
S, G and A
expenses 104,311 120,090 -- 224,401
Depr. and
Amort. 10,654 11,573 427(c) 22,654
Merger-related
expenses -- 1,400 (1,400)(b) --
Stock-based
compensation -- -- 2,785(j) 2,785
---------- ------------ ----------- --------
Operating
earnings 13,190 1,856 (1,812) 13,234
Interest
expense, net 144 (675) 20,424(d)(e) 19,893
Merger-related
int. expense -- -- -- --
---------- ------------ ----------- --------
Earnings (loss)
before income
tax exp.
(benefit) 13,046 2,531 (22,236) (6,659)
Income tax
expense
(benefit) 5,143 911 (8,502)(f) (2,448)
---------- ------------ ----------- --------
Net earnings
(loss) $ 7,903 $ 1,620 $ (13,734) $ (4,211)
========== ============ =========== ========
Net earnings
(loss) per
Class A & B
common share-
basic $ 0.15(h) $ 0.06 $ (0.06)(i)
========== ============ ========
Weighted avg
shares of
common stock-
basic 51,646 25,096 (4,867)(g) 71,875
========== ============ =========== ========
Net earnings
(loss) per
Class A & B
common share-
diluted $ 0.14(h) $ 0.06 $ (0.06)(i)
========== ============ ========
Weighted avg
shares of
common stock- (g)
diluted 56,508 25,467 (10,100)(k) 71,875
========== ============ =========== ========
GAMESTOP CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Historical Historical
For the GameStop Electronics GameStop
thirteen weeks Corp. Boutique Corp
ended October October 29, October 8, Pro Forma Pro
29, 2005 2005(a) 2005(a) Adjustments Forma
----------- ----------- ----------- --------
Sales $ 534,212 $ 350,691 $ -- $884,903
Cost of sales 357,492 248,738 -- 606,230
----------- ----------- ----------- --------
Gross profit 176,720 101,953 -- 278,673
S, G and A
expenses 136,072 96,992 -- 233,064
Depr. and
Amort. 19,224 8,203 (4,271)(c) 23,156
Merger-related
expenses 11,329 -- (11,329)(b) --
Stock-based
compensation -- -- 2,798(j) 2,798
----------- ----------- ----------- --------
Operating
earnings 10,095 (3,242) 12,802 19,655
Interest (d)
expense, net 6,430 (335) 14,176(e) 20,271
Merger-related
int. expense 7,518 -- (7,518)(b) --
----------- ----------- ----------- --------
Earnings (loss)
before income
tax exp.
(benefit) (3,853) (2,907) 6,144 (616)
Income tax
expense
(benefit) (1,393) (1,057) 2,212(f) (238)
----------- ----------- ----------- --------
Net earnings
(loss) $ (2,460) $ (1,850) $ 3,932 $ (378)
=========== =========== =========== ========
Net earnings
(loss) per
Class A & B
common share-
basic $ (0.04)(h)$ (0.07) $ (0.01)(i)
=========== =========== ========
Weighted avg
shares of
common stock-
basic 56,630 25,504 (9,943)(g) 72,191
=========== =========== =========== ========
Net earnings
(loss) per
Class A & B
common share-
diluted $ (0.04)(h)$ (0.07) $ (0.01)(i)
=========== =========== ========
Weighted avg
shares of
common stock- (g)
diluted 56,630 25,715 (10,154)(k) 72,191
=========== =========== =========== ========
GAMESTOP CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Historical
For the GameStop Historical
thirteen Corp. Electronics
weeks ended January Boutique GameStop
January 28, 28, October 8, Pro Forma Corp
2006 2006(a) 2005(a) Adjustments Pro Forma
---------- ----------- ----------- ----------
Sales $1,666,914 $ -- $ -- $1,666,914
Cost of sales 1,225,796 -- -- 1,225,796
---------- ----------- ----------- ----------
Gross profit 441,118 -- -- 441,118
S, G and A
expenses 259,974 -- -- 259,974
Depr. and
Amort. 26,283 -- -- 26,283
Merger-related
expenses 2,271 -- (2,271) --
Stock-based
compensation -- 2,422(j) 2,422
---------- ----------- ----------- ----------
Operating
earnings 152,590 -- (151) 152,439
Interest
expense, net 18,635 -- -- 18,635
Merger-related
int. expense -- -- -- --
---------- ----------- ----------- ----------
Earnings
(loss) before
income tax
exp.
(benefit) 133,955 -- (151) 133,804
Income tax
expense
(benefit) 48,940 -- (56)(f) 48,884
---------- ----------- ----------- ----------
Net earnings
(loss) $ 85,015 $ -- $ (95) $ 84,920
========== =========== =========== ==========
Net earnings
(loss) per
Class A & B
common
share-basic $ 1.17(h) $ -- $ 1.17(i)
========== =========== ==========
Weighted avg
shares of
common
stock-basic 72,406 -- -- 72,406
========== =========== =========== ==========
Net earnings
(loss) per
Class A & B
common
share-
diluted $ 1.10(h) $ -- $ 1.10(i)
========== =========== ==========
Weighted avg
shares of
common
stock-
diluted 77,387 -- -- 77,387
========== =========== =========== ==========
GAMESTOP CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Historical
For the GameStop Historical
fifty-two Corp. Electronics
weeks ended January Boutique GameStop
January 28, 28, October 8, Pro Forma Corp
2006 2006(a) 2005(a) Adjustments Pro Forma
---------- ----------- ----------- ----------
Sales $3,091,783 $ 1,302,107 $ -- $4,393,890
Cost of sales 2,219,753 935,175 -- 3,154,928
---------- ----------- ----------- ----------
Gross profit 872,030 366,932 -- 1,238,962
S, G and A
expenses 599,343 331,424 -- 930,767
Depr. and
Amort. 66,355 30,573 (2,640)(c) 94,288
Merger-related
expenses 13,600 2,900 (16,500) --
Stock-based
compensation -- -- 10,581(j) 10,581
---------- ----------- ----------- ----------
Operating
earnings 192,732 2,035 8,559 203,326
Interest
expense, net 25,292 (1,927) 54,974(d)(e) 78,339
Merger-related
int. expense 7,518 -- (7,518) --
---------- ----------- ----------- ----------
Earnings
(loss)
before
income tax
exp.
(benefit) 159,922 3,962 (38,897) 124,987
Income tax
expense
(benefit) 59,138 1,415 (14,933)(f) 45,620
---------- ----------- ----------- ----------
Net earnings
(loss) $ 100,784 $ 2,547 $ (23,964)(g)$ 79,367
========== =========== =========== ==========
Net earnings
(loss) per
Class A & B
common
share-basic $ 1.74(h) $ 0.10 $ 1.10(i)
========== =========== ==========
Weighted avg
shares of
common
stock-basic 57,920 25,065 (11,060)(g) 71,925
========== =========== =========== ==========
Net earnings
(loss) per
Class A & B
common
share-
diluted $ 1.61(h) $ 0.10 $ 1.04(i)
========== =========== ==========
Weighted avg
shares of
common
stock-
diluted 62,486 25,396 (11,391)(g) 76,491
========== =========== =========== ==========
GAMESTOP CORP.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(a) Certain reclassifications have been made to the historical
presentation of GameStop and EB to conform to the presentation
used in the unaudited pro forma consolidated statements of
operations.
(b) The Unaudited Pro Forma Condensed Consolidated Statements of
Operations exclude certain expenses of $1,500, $1,400 and $11,329
during the 13 weeks ended April 30, 2005, July 30, 2005 and
October 29, 2005, respectively, and financing costs of $7,518
during the 13 weeks ended October 29, 2005, which are directly
attributable to the merger and are believed to be of a one-time or
short-term nature.
(c) To give effect to the intangible asset amortization and
depreciation on the property and equipment adjustment based on the
allocation of the purchase price over the estimated useful lives.
(d) To give effect to the interest expense incurred related to the
receipt of $941,472 resulting from issuance of $650,000 in senior
notes, at an interest rate of 8.0% and $300,000 in senior floating
rate notes at an interest rate of LIBOR plus 3.875%. The senior
notes were issued at a discount of $8,528 and interest expense
includes the amortization of this discount over seven years.
(e) To give effect to the amortization of deferred financing fees over
six and seven years to match the terms of the senior floating rate
notes and the senior notes, respectively.
(f) Represents the aggregate pro forma effective income tax effect of
Notes (c), (d), and (e) above.
(g) The pro forma earnings per share has been adjusted to reflect the
issuance of 20,229 shares of GameStop Class A stock to EB common
stockholders as if they were issued on January 30, 2005 and to
reflect the elimination of the outstanding shares of Electronics
Boutique as of October 8, 2005.
(h) The holders of Historical GameStop Class A and Class B common
stock generally had identical rights, except that the holders of
Historical GameStop Class A common stock were entitled to one vote
per share and the holders of Historical GameStop Class B common
stock were entitled to ten votes per share on all matters to be
voted on by stockholders. Earnings per common share amounts
represent per share amounts for both classes of common stock.
(i) The holders of GameStop Class A and Class B common stock generally
have identical rights, except that the holders of GameStop Class A
common stock are entitled to one vote per share and the holders of
GameStop Class B common stock are entitled to ten votes per share
on all matters to be voted on by stockholders. Earnings per common
share amounts represent per share amounts for both classes of
common stock.
(j) To give effect to the stock based compensation expense as if SFAS
123 (R) had been adopted as of January 30, 2005.
(k) To remove the effect of dilutive securities that are anti-dilutive
in nature due to the pro forma loss in the 13 weeks ended April
30, 2005, July 20, 2005 and October 29, 2005.
CONTACT: Media Contact:
Chris Olivera
Director, Public & Media Relations
GameStop Corp.
(817) 424-2130
or
Investor Contact:
David W. Carlson
Executive Vice President & Chief Financial Officer
GameStop Corp.
(817) 424-2130