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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) May 23, 2007
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GAMESTOP CORP.
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(Exact name of registrant as specified in its charter)
Delaware 1-32637 20-2733559
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
625 Westport Parkway, Grapevine, TX 76051
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (817) 424-2000
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(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.
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(Registrant)
Date: May 23, 2007
/s/ David W. Carlson
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Name: David W. Carlson
Title: Executive Vice President and Chief
Financial Officer
Table of Contents
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GAMESTOP CORP.
EXHIBIT INDEX
Exhibit Number Description
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Exhibit 99.1 Press Release of GameStop Corp., dated May 23, 2007
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
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Sales $ 1,278,983 $ 1,040,027
Cost of sales 930,214 737,993
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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
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Operating earnings 60,618 38,116
Interest expense, net 14,116 19,329
Debt extinguishment expense 6,724 --
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Earnings before income tax expense 39,778 18,787
Income tax expense 15,055 7,086
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Net earnings $ 24,723 $ 11,701
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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:
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Sales 100.0% 100.0%
Cost of sales 72.7% 71.0%
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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%
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Operating earnings 4.7% 3.7%
Interest expense, net 1.1% 1.9%
Debt extinguishment expense 0.5% --
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Earnings before income tax expense 3.1% 1.8%
Income tax expense 1.2% 0.7%
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Net earnings 1.9% 1.1%
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GameStop Corp.
Balance Sheets
(in thousands, except per share data)
May 5, April 29,
2007 2006
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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
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Total current assets 1,273,778 1,022,670
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Property and equipment:
Land 11,168 10,498
Buildings & leasehold improvements 318,215 272,578
Fixtures and equipment 447,649 358,604
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777,032 641,680
Less accumulated depreciation and
amortization 317,276 210,799
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Net property and equipment 459,756 430,881
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Goodwill, net 1,403,557 1,392,467
Assets held for sale -- 19,315
Other noncurrent assets 49,687 47,977
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Total assets $3,186,778 $2,913,310
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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
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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
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Total liabilities 1,705,336 1,731,262
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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
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Total stockholders' equity 1,481,442 1,182,048
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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
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Percent Percent
Sales of Sales of
Total Total
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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%
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Total $1,279.0 100.0%$ 1,040.0 100.0%
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Schedule II
GameStop Corp.
Gross Profit Mix
13 Weeks Ended 13 Weeks Ended
May 5, 2007 April 29, 2006
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Gross Gross
Gross Profit Gross Profit
Profit Percent Profit Percent
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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%
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Total $ 348.8 27.3%$ 302.0 29.0%
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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