-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FNg5kcn3uQDhCtVfwpK62aow38DzNomS0SM7+FwISb0oxr2ET1C3D0y+BOBAR7SU kgyy+8JlMxX0er92HULP3w== 0001157523-06-011569.txt : 20061121 0001157523-06-011569.hdr.sgml : 20061121 20061121122126 ACCESSION NUMBER: 0001157523-06-011569 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061121 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061121 DATE AS OF CHANGE: 20061121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GameStop Corp. CENTRAL INDEX KEY: 0001326380 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-COMPUTER & COMPUTER SOFTWARE STORES [5734] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32637 FILM NUMBER: 061232155 BUSINESS ADDRESS: STREET 1: 625 WESTPORT PARKWAY CITY: GRAPEVINE STATE: TX ZIP: 76051 BUSINESS PHONE: 817-424-2000 MAIL ADDRESS: STREET 1: 625 WESTPORT PARKWAY CITY: GRAPEVINE STATE: TX ZIP: 76051 FORMER COMPANY: FORMER CONFORMED NAME: GSC Holdings Corp. DATE OF NAME CHANGE: 20050506 8-K 1 a5279198.txt GAMESTOP CORP. 8-K 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) November 21, 2006 ------------------------------ GAMESTOP CORP. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-32637 20-2733559 - -------------------------------------------------------------------------------- (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 November 21, 2006, GameStop Corp. issued a press release announcing its financial results for the fiscal quarter ended October 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 November 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: November 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 November 21, 2006 EX-99.1 2 a5279198ex991.txt GAMESTOP CORP. EXHIBIT 99.1 Exhibit 99.1 GameStop Corp. Comparable Store Sales Up 8.8% Third Quarter 2006 EPS at High End of Guidance Strong Holiday Guidance Issued GRAPEVINE, Texas--(BUSINESS WIRE)--Nov. 21, 2006--GameStop Corp. (NYSE:GME)(NYSE:GME.B), the world's largest video game and entertainment software retailer, today reported sales and earnings for the third quarter ended October 28, 2006. GameStop sales increased 89% to $1,011.6 million in the third quarter of 2006, compared with $534.2 million in the prior year quarter. Comparable store sales increased 8.8% during the quarter, exceeding our previously indicated guidance. New video game software sales grew 14%, led by titles such as MADDEN NFL 2007 from Electronic Arts, SAINTS ROW by THQ, DEAD RISING by Capcom, and SPLINTER CELL: DOUBLE AGENT by Ubisoft. In addition, hardware sales increased 69% over the prior year quarter, led by Microsoft's Xbox 360 and Nintendo's DS Lite. GameStop's net earnings for the third quarter of 2006 were $13.6 million. This includes merger-related expenses of $2.9 million ($1.8 million, net of tax benefits) and debt retirement costs related to the bond buy-back program of $3.4 million ($2.1 million, net of tax benefits). Diluted earnings per share were $0.17, including merger-related expenses and debt retirement costs of $0.05 per diluted share. "Not only did we have an excellent third quarter, but the sales during the period indicate that GameStop is building momentum heading into the holiday season," reported R. Richard Fontaine, Chairman and Chief Executive Officer of GameStop Corp. "Strong sales of Microsoft's Xbox 360, an unexpected resilient performance from Sony's PlayStation 2, and robust sales of Nintendo's DS Lite reflect a growing installed base of game customers measured by our 69% increase in hardware sales. We have a contemporary platform attracting core customers, a seven year-old platform attracting a value customer, hand-helds attracting a broader demographic gamer, and the latest revolutionary systems just coming to the market. Never before in video game history have we had so many outstanding consoles to energize the existing gamers, entice the upgrade customer, and attract new customers to gaming and GameStop." Guidance Update For the fourth quarter of fiscal 2006, comparable store sales are projected to range from +14.0% to +18.0%. Diluted earnings per share for the fourth quarter are expected to range from $1.53 to $1.59. Full year fiscal 2006 diluted earnings per share are now expected to range from $1.98 to $2.04. We continue to believe that full year fiscal 2006 comparable store sales will increase between 7.0% and 9.0%, and total sales will increase between 15.0% and 17.0%, both on a pro forma basis. Note that guidance includes projected stock-based compensation expenses of $0.17 per diluted share for fiscal 2006. In addition, guidance does not include merger costs related to the business combination, which were $0.05 per diluted share for fiscal 2006, nor debt retirement costs, which could range from $0.03 to $0.05 per diluted share for fiscal 2006. Third quarter fiscal 2005 pro forma statements of operations have been provided in Schedule III 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. GameStop will report holiday sales on or about January 4, 2007. Conference Call and Webcast Information A conference call with GameStop Corp.'s management is scheduled for November 21, 2006 at 11:00 AM EST to discuss the third quarter 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 December 5, 2006. About GameStop Corp. Headquartered in Grapevine, TX, GameStop Corp. is the world's largest video game and entertainment software retailer. The company operates 4,633 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 multi-platform video game publication. GameStop Corp. sells new and used video game software, hardware and accessories for next generation video game systems from Sony, Nintendo, and Microsoft. In addition, the company sells PC entertainment software, related accessories and other merchandise. General information on GameStop Corp. can be obtained at the company's corporate website: http://www.gamestop.com/corporate. 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 the fourth quarter of 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 cost savings and other synergies from the combination with Electronics Boutique 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, including Sony's PlayStation 3 and Nintendo's Wii; the timing of release of video game titles for next generation consoles; 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 GameStop's Annual Report on Form 10-K for the fiscal year ended January 28, 2006 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 Oct. 28, Oct. 29, 2006 2005 ----------- --------- Sales $1,011,560 $534,212 Cost of sales 695,904 357,492 ----------- --------- Gross profit 315,656 176,720 Selling, general and administrative expenses 235,389 136,072 Depreciation and amortization 27,281 19,224 Stock-based compensation 5,156 -- Merger-related expenses 2,890 11,329 ----------- --------- Operating earnings 44,940 10,095 Interest expense, net 19,648 6,430 Merger-related financing costs -- 7,518 Debt extinguishment expense 3,371 -- ----------- --------- Earnings (loss) before income tax expense (benefit) 21,921 (3,853) Income tax expense (benefit) 8,352 (1,393) ----------- --------- Net earnings (loss) $ 13,569 (2,460) =========== ========= Earnings (loss) per common share: Basic $ 0.18 $ (0.04) Diluted $ 0.17 $ (0.04) Weighted average common shares outstanding: Basic 75,393 56,630 Diluted 79,291 56,630 Percentage of Sales: - ------------------------------------------------ Sales 100.0% 100.0% Cost of sales 68.8% 66.9% ----------- --------- Gross profit 31.2% 33.1% SG&A expenses 23.3% 25.5% Depreciation and amortization 2.7% 3.6% Stock-based compensation 0.5% -- Merger-related expenses 0.3% 2.1% ----------- --------- Operating earnings 4.4% 1.9% Interest expense, net 1.9% 1.2% Merger-related financing costs -- 1.4% Debt extinguishment expense 0.3% -- ----------- --------- Earnings (loss) before income tax expense (benefit) 2.2% (0.7)% Income tax expense (benefit) 0.9% (0.2)% ----------- --------- Net earnings (loss) 1.3% (0.5)% =========== ========= GameStop Corp. Statements of Operations (in thousands, except per share data) 39 weeks 39 weeks ended ended Oct. 28, Oct. 29, 2006 2005 ----------- ----------- Sales $3,014,934 $1,424,869 Cost of sales 2,097,980 993,957 ----------- ----------- Gross profit 916,954 430,912 Selling, general and administrative expenses 706,110 339,369 Depreciation and amortization 79,541 40,072 Stock-based compensation 15,706 -- Merger-related expenses 6,788 11,329 ----------- ----------- Operating earnings 108,809 40,142 Interest expense, net 59,186 6,657 Merger-related financing costs -- 7,518 Debt extinguishment expense 3,562 -- ----------- ----------- Earnings before income tax expense 46,061 25,967 Income tax expense 17,614 10,198 ----------- ----------- Net earnings $ 28,447 $ 15,769 =========== =========== Earnings per common share: Basic $ 0.38 $ 0.30 Diluted $ 0.36 $ 0.27 Weighted average common shares outstanding: Basic 74,619 53,092 Diluted 78,864 57,519 Percentage of Sales: - ---------------------------------------------- Sales 100.0% 100.0% Cost of sales 69.6% 69.8% ----------- ----------- Gross profit 30.4% 30.2% SG&A expenses 23.4% 23.8% Depreciation and amortization 2.7% 2.8% Stock-based compensation 0.5% -- Merger-related expenses 0.2% 0.8% ----------- ----------- Operating earnings 3.6% 2.8% Interest expense, net 2.0% 0.5% Merger-related financing costs -- 0.5% Debt extinguishment expense 0.1% -- ----------- ----------- Earnings before income tax expense 1.5% 1.8% Income tax expense 0.6% 0.7% ----------- ----------- Net earnings 0.9% 1.1% =========== =========== GameStop Corp. Balance Sheets (in thousands, except per share data) October 28, October 29, 2006 2005 ---------- ---------- ASSETS: Current assets: Cash and cash equivalents $ 180,948 $ 81,031 Receivables, net 32,841 34,662 Merchandise inventories 844,979 746,563 Prepaid expenses and other current assets 33,346 35,953 Prepaid taxes 68,307 48,929 Deferred taxes 48,391 38,622 ---------- ---------- Total current assets 1,208,812 985,760 ---------- ---------- Property and equipment: Land 10,106 10,008 Buildings & leasehold improvements 291,692 252,243 Fixtures and equipment 394,712 325,387 ---------- ---------- 696,510 587,638 Less accumulated depreciation and amortization 257,981 162,141 ---------- ---------- Net property and equipment 438,529 425,497 ---------- ---------- Goodwill, net 1,395,824 1,440,939 Assets to be disposed of -- 19,190 Other noncurrent assets 43,605 54,446 ---------- ---------- Total assets $3,086,770 $2,925,832 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $ 605,773 519,972 Accrued liabilities 308,125 297,799 Note payable, current portion 12,240 12,936 ---------- ---------- Total current liabilities 926,138 830,707 Deferred taxes 11,300 69,491 Other long-term liabilities 38,756 42,458 Notes payable, long-term portion 412 22,171 Senior floating and fixed rate notes payable, net of discount 876,592 941,557 ---------- ---------- Total liabilities 1,853,198 1,906,384 ---------- ---------- Stockholders' equity: Preferred stock - authorized 5,000 shares; no shares issued or outstanding -- -- Class A common stock - $.001 par value; authorized 300,000 shares; 45,908 and 42,404 shares issued and outstanding, respectively 46 42 Class B common stock - $.001 par value; authorized 100,000 shares; 29,902 shares issued and outstanding 30 30 Additional paid-in-capital 1,006,811 911,886 Accumulated other comprehensive income 5,833 100 Retained earnings 220,852 107,390 ---------- ---------- Total stockholders' equity 1,233,572 1,019,448 ---------- ---------- Total liabilities and stockholders' equity $3,086,770 $2,925,832 ========== ========== Schedule I GameStop Corp. Sales Mix 13 Weeks Ended 13 Weeks Ended Oct. 28, 2006 Oct. 29, 2005 ----------------- --------------- Percent Percent Sales of Sales of Total Total -------- ------- ------ ------- Sales (in millions): New video game hardware $ 150.5 14.9% $ 48.4 9.0% New video game software 401.8 39.7% 216.2 40.5% Used video game products 295.4 29.2% 170.2 31.9% Other 163.9 16.2% 99.4 18.6% -------- ------- ------ ------- Total $1,011.6 100.0% $534.2 100.0% ======== ======= ====== ======= Schedule II GameStop Corp. Gross Profit Mix 13 Weeks Ended 13 Weeks Ended Oct. 28, 2006 Oct. 29, 2005 ----------------- --------------- Gross Gross Gross Profit Gross Profit Profit Percent Profit Percent ------ ------- ------ ------- Gross Profit (in millions): New video game hardware $ 16.5 11.0% $ 5.2 10.7% New video game software 94.0 23.4% 53.8 24.9% Used video game products 143.9 48.7% 77.2 45.4% Other 61.3 37.4% 40.5 40.7% ------ ------ Total $315.7 31.2% $176.7 33.1% ====== ====== Schedule III GAMESTOP CORP. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per share data) Historical For the GameStop Historical thirteen Corp. Electronics weeks ended October Boutique GameStop October 29, 29, October 8, Pro Forma Corp 2005 2005 (a) 2005 (a) Adjustments Pro 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 Selling, general and administrative expenses 136,072 96,992 -- 233,064 Depreciation and amortization 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 (loss) 10,095 (3,242) 12,802 19,655 Interest expense, net 6,430 (335) 14,176 (d),(e) 20,271 Merger-related interest expense 7,518 -- (7,518)(b) -- ---------- ----------- -------- -------- Earnings (loss) before income tax expense (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 loss per common share- basic $ (0.04)(h)$ (0.07) $ (0.01)(i) ========== =========== ======== Weighted average shares of common stock-basic 56,630 25,504 (9,943)(g) 72,191 ========== =========== ======== ======== Net loss per common share- diluted $ (0.04)(h)$ (0.07) $ (0.01)(i) ========== =========== ======== Weighted average shares of common stock-diluted 56,630 25,715 (10,154)(g),(k) 72,191 ========== =========== ======== ======== Schedule III GAMESTOP CORP. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per share data) Historical For the GameStop Historical thirty-nine Corp. Electronics weeks ended October Boutique GameStop October 29, 29, October 8, Pro Forma Corp. 2005 2005 (a) 2005 (a) Adjustments Pro Forma ---------- ----------- ----------- ------------- Sales $1,424,869 $ 1,302,107 $ -- $2,726,976 Cost of sales 993,957 935,175 -- 1,929,132 ---------- ----------- -------- ---------- Gross profit 430,912 366,932 -- 797,844 Selling, general and administrative expenses 339,369 331,424 -- 670,793 Depreciation and amortization 40,072 30,573 (2,640)(c) 68,005 Merger-related expenses 11,329 2,900 (14,229)(b) -- Stock based compensation -- -- 8,159 (j) 8,159 ---------- ----------- -------- ---------- Operating earnings 40,142 2,035 8,710 50,887 Interest expense, net 6,657 (1,927) 54,974 (d),(e) 59,704 Merger-related interest expense 7,518 -- (7,518)(b) -- ---------- ----------- -------- ---------- Earnings (loss) before income tax expense (benefit) 25,967 3,962 (38,746) (8,817) Income tax expense (benefit) 10,198 1,415 (14,877)(f) (3,264) ---------- ----------- -------- ---------- Net earnings (loss) $ 15,769 $ 2,547 $(23,869) $ (5,553) ========== =========== ======== ========== Net earnings (loss) per common share- basic $ 0.30 (h)$ 0.10 $ (0.08)(i) ========== =========== ========== Weighted average shares of common stock- basic 53,092 25,098 (6,426)(g) 71,764 ========== =========== ======== ========== Net earnings (loss) per common share- diluted $ 0.27 (h)$ 0.10 $ (0.08)(i) ========== =========== ========== Weighted average shares of common stock- diluted 57,519 25,420 (11,175)(g),(k) 71,764 ========== =========== ======== ========== GAMESTOP CORP. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT 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 condensed consolidated statement of operations. (b) To give effect to the exclusion of certain expenses of $11,329 and $14,229 for the 13 weeks and 39 weeks, respectively, ended October 29, 2005 and financing costs of $7,518 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 preliminary allocation of the purchase price over 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 relating to the $400 million revolving credit facility, the senior floating rate notes and the senior notes over five, six and seven years to match the terms, respectively. (f) Represents the aggregate pro forma effective income tax effect of Notes (b), (c), (d), (e) and (i) above. (g) The pro forma earnings per share have been adjusted to reflect the issuance of 20,229 shares of GameStop Class A common 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. (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 securities that are anti-dilutive in nature due to the pro forma loss in the 13 weeks and 39 weeks ended October 29, 2005. CONTACT: GameStop Corp. Media Contact: Chris Olivera, 817-424-2130 Divisional Vice President, Corporate Communications or Investor Contact: David W. Carlson, 817-424-2130 Executive Vice President & Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----