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GameStop Corp. 2002 EPS Grows 93% from Pro-Forma EPS of 2001; EBITDA Grows 70% to $110 Million; 235 - 265 New Stores Projected for 2003
GRAPEVINE, Texas, Mar 19, 2003 (BUSINESS WIRE) -- GameStop Corp. (NYSE:GME), the nation's largest video game and entertainment software specialty retailer, today reported earnings for the fourth quarter and for the full year ended February 1, 2003.

GameStop earnings grew to $52.4 million during the fiscal year ended February 1, 2003, or $0.87 per diluted share, as compared to $7.0 million, or $0.18 per diluted share, in the prior fiscal year. For the fourth quarter of fiscal 2002, earnings were $31.6 million, or $0.52 per diluted share, as compared to $18.8 million, or $0.47 per diluted share, in the prior year quarter.

On a pro forma basis, the company earned $0.39 per diluted share in the fourth quarter of fiscal 2001 and $0.45 per diluted share for fiscal 2001, excluding interest on debt repaid with the IPO proceeds of $4.7 million for the fourth quarter of fiscal 2001, and $20.0 million for fiscal 2001, and goodwill amortization of $2.8 million for the fourth quarter of fiscal 2001, and $11.1 million for fiscal 2001.

GameStop was profitable in every quarter, and each quarter's earnings in 2002 were significantly higher than the corresponding quarter's earnings in 2001.

For the year, EBITDA rose 70% to $109.6 million. GameStop was able to fund the opening of 210 stores and make significant infrastructure investments while completing the year with free cash flow in excess of $51.0 million. See Schedules I and II, attached to this earnings release, for a reconciliation of net income and operating cash flow, presented in accordance with generally accepted accounting principles, to EBITDA and free cash flow, respectively, which are non-GAAP financial measures.

"GameStop's 2002 earnings were very strong. All key elements of the business were significant contributors to our 93% EPS growth: Total sales and comparable store sales increases were strong at 21% and 11%, respectively, and gross margin improvement of just over 160 basis points was exceptional. In addition, expenses were reduced by 80 basis points, due to both economies of scale and meaningful distribution and systems enhancements that increased operating efficiencies," said R. Richard Fontaine, Chairman and CEO.

Based on the strong new store performance in 2002, and the ongoing availability of suitable real estate, GameStop plans to accelerate its store openings to between 235 and 265 new stores in 2003.

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 1,231 retail stores throughout 49 states 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.

Barnes and Noble, Inc. (NYSE:BKS), the world's largest bookseller, has approximately a 60 percent interest in GameStop. General information on GameStop Corp. can be obtained via the Internet by visiting the company's corporate Website: http://www.gamestop.com/investor-relations/

SAFE HARBOR

This press release (including any 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, seasonality, 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     13 weeks
                                                 ended        ended
                                              February 1,  February 2,
                                                 2003         2002
                                             ------------ ------------
Sales                                           $520,396     $514,211
Cost of sales                                    393,477      403,405
                                             ------------ ------------
   Gross profit                                  126,919      110,806
Selling, general and administrative
    expenses                                      68,459       66,733
Depreciation and amortization                      5,948        5,149
Amortization of goodwill                               -        2,781
                                             ------------ ------------
Operating earnings                                52,512       36,143
Interest expense (income), net                      (375)       4,002
                                             ------------ ------------
Earnings before income
     tax expense                                  52,887       32,141
Income tax expense                                21,300       13,355
                                             ------------ ------------
Net earnings                                     $31,587      $18,786
                                             ============ ============
Net earnings per common share:
     Basic                                         $0.55        $0.52
     Diluted                                       $0.52        $0.47
Weighted average common shares
     outstanding
     Basic                                    57,040,000   36,009,000
     Diluted                                  60,561,000   40,114,000
Percentage of sales:
---------------------------------------------
Sales                                              100.0%       100.0%
Cost of sales                                       75.6%        78.5%
                                             ------------ ------------
Gross profit                                        24.4%        21.5%
SG&A expenses                                       13.2%        13.0%
Depreciation and amortization                        1.1%         1.0%
Amortization of goodwill                             0.0%         0.5%
                                             ------------ ------------
Operating earnings                                  10.1%         7.0%
Interest expense (income), net                     (0.1%)         0.7%
                                             ------------ ------------
Earnings before income
     tax expense                                    10.2%         6.3%
Income tax expense                                   4.1%         2.6%
                                             ------------ ------------
Net earnings                                         6.1%         3.7%
                                             ============ ============
                            GameStop Corp.
                       Statements of Operations
           (in thousands of dollars, except per share data)
                                                52 weeks    53 weeks
                                                  ended       ended
                                               February 1, February 2,
                                                  2003        2002
                                               ----------- -----------
Sales                                          $1,352,791  $1,121,138
Cost of sales                                   1,009,491     854,035
                                               ----------- -----------
   Gross profit                                   343,300     267,103
Selling, general and administrative
    expenses                                      233,676     202,719
Depreciation and amortization                      22,553      19,172
Amortization of goodwill                                -      11,125
                                               ----------- -----------
Operating earnings                                 87,071      34,087
Interest expense (income), net                       (630)     19,452
                                               ----------- -----------
Earnings before income
     tax expense                                   87,701      14,635
Income tax expense                                 35,297       7,675
                                               ----------- -----------
Net earnings                                      $52,404      $6,960
                                               =========== ===========
Net earnings per common share:
     Basic                                          $0.93       $0.19
     Diluted                                        $0.87       $0.18
Weighted average common shares
     outstanding
     Basic                                     56,289,000  36,009,000
     Diluted                                   60,419,000  39,397,000
Percentage of sales:
----------------------------------------------
Sales                                               100.0%      100.0%
Cost of sales                                        74.6%       76.2%
                                               ----------- -----------
Gross profit                                         25.4%       23.8%
SG&A expenses                                        17.3%       18.1%
Depreciation and amortization                         1.7%        1.7%
Amortization of goodwill                              0.0%        1.0%
                                               ----------- -----------
Operating earnings                                    6.4%        3.0%
Interest expense (income), net                      (0.1%)        1.7%
                                               ----------- -----------
Earnings before income
     tax expense                                      6.5%        1.3%
Income tax expense                                    2.6%        0.7%
                                               ----------- -----------
Net earnings                                          3.9%        0.6%
                                               =========== ===========
                            GameStop Corp.
                            Balance Sheets
           (in thousands of dollars, except per share data)
                                                   February  February
                                                    1, 2003   2, 2002
                                                   --------- ---------
ASSETS:
Current assets:
 Cash and cash equivalents                         $232,030   $80,750
 Receivables, net                                     6,893     5,930
 Merchandise inventories                            161,369   138,351
 Prepaid expenses and other current assets           10,127     8,255
 Deferred taxes                                       6,034     3,418
                                                   --------- ---------
  Total current assets                              416,453   236,704
                                                   --------- ---------
Property and equipment:
 Leasehold improvements                              39,927    27,898
 Fixtures and equipments                             84,726    57,579
                                                   --------- ---------
                                                    124,653    85,477
 Less accumulated depreciation and amortization      56,259    33,854
                                                   --------- ---------
  Net property and equipment                         68,394    51,623
                                                   --------- ---------
Goodwill, net                                       317,957   317,957
Other noncurrent assets                               1,105       559
                                                   --------- ---------
  Total assets                                     $803,909  $606,843
                                                   ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Current liabilities:
 Accounts payable                                  $160,378  $148,597
 Accrued liabilities                                 65,779    55,610
 Accrued income taxes payable                        20,614     1,390
                                                   --------- ---------
  Total current liabilities                         246,771   205,597
Payable to Barnes & Noble, Inc.                           -   399,623
Deferred taxes                                        5,591     3,065
Other long-term liabilities                           2,872     2,543
                                                   --------- ---------
  Total liabilities                                 255,234   610,828
                                                   --------- ---------
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; 21,050 shares issued or
  outstanding                                            21         -
 Class B common stock - $.001 par value; authorized
 100,000 shares; 36,009 shares issued and
  outstanding                                            36        36
 Additional paid-in capital                         493,998    (6,237)
 Retained earnings                                   54,620     2,216
                                                   --------- ---------
 Total stockholders' equity (deficit)               548,675    (3,985)
                                                   --------- ---------
 Total liabilities and stockholders' equity
  (deficit)                                        $803,909  $606,843
                                                   ========= =========
                            GameStop Corp.
                Schedule I - Reconciliation of EBITDA
                                        52 Weeks          52 Weeks
                                          ended            ended
                                     February 1, 2003 February 2, 2002
                                     ---------------- ----------------
Net earnings                                 $52,404           $6,960
Interest expense (income), net                  (630)          19,452
Income tax expense                            35,297            7,675
Depreciation and amortization                 22,553           19,172
Amortization of goodwill                           -           11,125
                                     ---------------- ----------------
Earnings before interest, taxes,
depreciation & amortization (EBITDA)        $109,624          $64,384
                                     ================ ================
                            GameStop Corp.
            Schedule II - Reconciliation of Free Cash Flow
                                                            Fiscal
                                                             2002
                                                         -------------
Operating cash flow                                           $90,964
Less: Capital expenditures                                    (39,529)
                                                         -------------
Free cash flow                                                 51,435
                                                         =============
CONTACT:          GameStop Corp.
                  Media Contact:
                  Lori M. Milovich, Director, Public & Investor Relations
                  817/424-2130
                  or
                  Investor Contact:
                  David W. Carlson, Executive Vice President &
                  Chief Financial Officer
                  817/424-2130

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