-----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, OUMvuhwSFlu+flAFZIN1iHBfVA8ljzl7IzXbylA6UMgb6gdh3hITGsGX1kY0nXQ4 Hfi6xgFFO5PJCznj08kdlA== 0001157523-07-005529.txt : 20070523 0001157523-07-005529.hdr.sgml : 20070523 20070523120102 ACCESSION NUMBER: 0001157523-07-005529 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070523 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070523 DATE AS OF CHANGE: 20070523 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: 0203 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32637 FILM NUMBER: 07873057 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 a5409898.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) May 23, 2007 ------------------------------- GAMESTOP CORP. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-32637 20-2733559 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) 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: [ ] 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 May 23, 2007, GameStop Corp. issued a press release announcing its financial results for the fiscal quarter ended May 5, 2007. 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 May 23, 2007. 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: May 23, 2007 /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 May 23, 2007 EX-99.1 2 a5409898ex991.txt EXHIBIT 99.1 Exhibit 99.1 GameStop Reports Best Ever First Quarter Results; First Quarter EPS Exceeds Guidance; Net Earnings Increase 111%; Robust Sales of Next-Generation Hardware Drive Quarter; Fiscal 2007 EPS Guidance Raised GRAPEVINE, Texas--(BUSINESS WIRE)--May 23, 2007--GameStop Corp. (NYSE: GME), the world's largest video game and entertainment software retailer, today announced financial results for the first quarter ended May 5, 2007. Please note that all per share data has been adjusted for the Class B share conversion and the two-for-one stock split that occurred subsequent to February 3, 2007. GameStop's net earnings were $24.7 million for the first quarter of 2007, including debt retirement costs of $6.7 million ($4.2 million, net of tax benefits), an 111% increase over the first quarter of 2006. Diluted earnings per share were $0.15 for the first quarter of 2007, including debt retirement costs of $0.03 per diluted share, exceeding previously released guidance. Total company sales increased 23.0% to $1,279.0 million in comparison to $1,040.0 million in the prior year quarter. Comparable store sales increased 15.3% during the first quarter, also beating previously released guidance of 12.0% to 14.0%. Hardware sales grew 75.1% in the first quarter, driven by overwhelming demand for Nintendo's Wii and DS Lite systems, and strong sales of Microsoft's Xbox 360 and Sony's PS3. R. Richard Fontaine, GameStop's Chairman and Chief Executive Officer, stated, "Our first quarter results were driven by the strong growth of next generation hardware despite both Nintendo products, the Wii and DS Lite, being in short supply throughout the quarter. Our business is benefiting from unmatched platform expansion. For much of the quarter, seven different platforms were represented among our top 25 best sellers. Not only was this unprecedented, but there is every indication that the Wii and DS Lite titles are attracting a new audience of gamers, while the allure of genre breakthrough titles like Guitar Hero II are expanding the audience for video game product. "The quarter also reflected strong operational control and efficiencies. Our operating margins increased by 100 basis points even in the face of lower gross margins due to the very strong sale of lower margin hardware. SG&A expenses decreased by 260 basis points due to the excellent expense leveraging of our increasing sales, continued distribution efficiencies as a result of our synergies from the EB Games merger, and an improved system of in-store scheduling. "I am also happy to announce that during the first quarter GameStop was added to the Fortune 500 list of largest U.S. corporations," concluded Fontaine. The top selling video games during the quarter were Nintendo's POKEMON DIAMOND and PEARL, Sony's GOD OF WAR II, Activision's GUITAR HERO II, Microsoft's CRACKDOWN, and Ubisoft's GHOST RECON: ADVANCED WARFIGHTER 2. Updated Guidance For the second quarter of fiscal 2007, the company expects comparable store sales to range from +16.0% to +18.0%. Diluted earnings per share are expected to range from $0.07 to $0.08. This compares to earnings per share of $0.02 in the second quarter of 2006. Due to the excellent results in the first quarter, we are raising our full year 2007 diluted earnings per share guidance to range from $1.39 to $1.42. Total revenues are still projected to grow between 19.0% and 21.0%, with comparable store sales ranging from +14.0% to +16.0%. Note that guidance does not include debt retirement costs. Conference Call and Webcast Information A conference call with GameStop Corp.'s management is scheduled for May 23, 2007 at 11:00 AM ET to discuss the first 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 June 6, 2007. About GameStop Corp. Headquartered in Grapevine, TX, GameStop Corp. is the world's largest video game and entertainment software retailer. The company operates 4,816 retail stores across the United States and in fifteen countries worldwide. The company also operates two e-commerce sites, GameStop.com and EBgames.com, and publishes 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 fiscal 2007 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 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; the risks associated with expanded international operations, 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 February 3, 2007 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 May 5, 2007 April 29, 2006 ------------- -------------- Sales $ 1,278,983 $ 1,040,027 Cost of sales 930,214 737,993 ------------- -------------- Gross profit 348,769 302,034 Selling, general and administrative expenses 250,154 231,470 Depreciation and amortization 31,035 25,932 Stock-based compensation 6,962 5,190 Merger-related expenses -- 1,326 ------------- -------------- Operating earnings 60,618 38,116 Interest expense, net 14,116 19,329 Debt extinguishment expense 6,724 -- ------------- -------------- Earnings before income tax expense 39,778 18,787 Income tax expense 15,055 7,086 ------------- -------------- Net earnings $ 24,723 $ 11,701 ============= ============== Earnings per common share: Basic $0.16 $0.08 Diluted $0.15 $0.07 Weighted average common shares outstanding: Basic 153,439 146,782 Diluted 161,256 156,944 Percentage of Sales: - ------------------------------------- Sales 100.0% 100.0% Cost of sales 72.7% 71.0% ------------- -------------- Gross profit 27.3% 29.0% SG&A expenses 19.6% 22.2% Depreciation and amortization 2.4% 2.5% Stock-based compensation 0.6% 0.5% Merger-related expenses 0.0% 0.1% ------------- -------------- Operating earnings 4.7% 3.7% Interest expense, net 1.1% 1.9% Debt extinguishment expense 0.5% -- ------------- -------------- Earnings before income tax expense 3.1% 1.8% Income tax expense 1.2% 0.7% ------------- -------------- Net earnings 1.9% 1.1% ============= ============== GameStop Corp. Balance Sheets (in thousands, except per share data) May 5, April 29, 2007 2006 ---------- ---------- ASSETS: Current assets: Cash and cash equivalents $ 307,328 $ 224,881 Receivables, net 38,856 33,375 Merchandise inventories 793,517 631,874 Prepaid expenses and other current assets 45,721 35,357 Prepaid taxes 52,136 53,340 Deferred taxes 36,220 43,843 ---------- ---------- Total current assets 1,273,778 1,022,670 ---------- ---------- Property and equipment: Land 11,168 10,498 Buildings & leasehold improvements 318,215 272,578 Fixtures and equipment 447,649 358,604 ---------- ---------- 777,032 641,680 Less accumulated depreciation and amortization 317,276 210,799 ---------- ---------- Net property and equipment 459,756 430,881 ---------- ---------- Goodwill, net 1,403,557 1,392,467 Assets held for sale -- 19,315 Other noncurrent assets 49,687 47,977 ---------- ---------- Total assets $3,186,778 $2,913,310 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $ 597,444 $ 410,808 Accrued liabilities 287,394 294,850 Note payable, current portion 12,173 12,173 ---------- ---------- Total current liabilities 897,011 717,831 Deferred taxes -- 12,307 Other long-term liabilities 70,951 37,984 Notes payable, long-term portion -- 21,117 Senior floating and fixed rate notes payable, net of discount 737,374 942,023 ---------- ---------- Total liabilities 1,705,336 1,731,262 ---------- ---------- Stockholders' equity: Preferred stock - authorized 5,000 shares; no shares issued or outstanding -- -- Class A common stock - $.001 par value; authorized 300,000 shares; 157,414 and 149,890 shares issued and outstanding, respectively 157 150 Additional paid-in-capital 1,109,130 973,406 Accumulated other comprehensive income 13,515 4,445 Retained earnings 358,640 204,047 ---------- ---------- Total stockholders' equity 1,481,442 1,182,048 ---------- ---------- Total liabilities and stockholders' equity $3,186,778 $2,913,310 ========== ========== Schedule I GameStop Corp. Sales Mix 13 Weeks Ended 13 Weeks Ended May 5, 2007 April 29, 2006 --------------- ---------------- Percent Percent Sales of Sales of Total Total -------- ------- -------- ------- Sales (in millions): New video game hardware $ 281.4 22.0%$ 160.7 15.4% New video game software 460.6 36.0% 406.3 39.1% Used video game products 326.4 25.5% 275.4 26.5% Other 210.6 16.5% 197.6 19.0% -------- ------ -------- ------- Total $1,279.0 100.0%$ 1,040.0 100.0% ======== ====== ======== ======= ====================================================================== Schedule II GameStop Corp. Gross Profit Mix 13 Weeks Ended 13 Weeks Ended May 5, 2007 April 29, 2006 --------------- ---------------- Gross Gross Gross Profit Gross Profit Profit Percent Profit Percent -------- ------- -------- ------- Gross Profit (in millions): New video game hardware $ 21.6 7.7%$ 13.0 8.1% New video game software 91.8 19.9% 82.0 20.2% Used video game products 164.3 50.3% 141.1 51.2% Other 71.1 33.8% 65.9 33.4% -------- -------- Total $ 348.8 27.3%$ 302.0 29.0% ======== ======== 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-----