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
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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