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GameStop Reports Third Quarter 2012 Results

  GameStop Reports Third Quarter 2012 Results

       Company increases share repurchase authorization to $500 million

                  Company declares $0.25 quarterly dividend

Business Wire

GRAPEVINE, Texas -- November 15, 2012

GameStop Corp. (NYSE: GME), the world’s largest multichannel video game
retailer, today reported sales and earnings for the third quarter ended Oct.
27, 2012.

Third Quarter Results

Total global sales for the third quarter of 2012 were $1.77 billion compared
to $1.95 billion in the prior year quarter, a decrease of 8.9%. Consolidated
comparable store sales decreased 8.3%. Sales of new software, pre-owned
software and new hardware declined during the quarter due to the longevity of
the current console cycle and the difficult comparison of major new software
titles released during the third quarter of 2012.

Sales in the Other category increased 31.1% during the quarter, primarily
driven by new business channels. Digital receipts increased 31.8% to $127
million. Mobile sales, made up of tablet and pre-owned mobile products, were
$43.2 million, on course to reach the company’s 2012 forecast of $150 to $200
million.

Excluding impairment charges, GameStop’s adjusted net earnings for the third
quarter were $47.2 million compared to adjusted net earnings of $53.9 million
in the prior year quarter. Adjusted diluted earnings per share were $0.38,
exceeding the high-end of guidance by $0.02 per share.

Paul Raines, chief executive officer, stated, “Diligent operational efforts in
a tough video game market as well as continued margin expansion of 200 basis
points resulted in third quarter earnings exceeding expectations. We are now
focused on delivering a successful holiday quarter driven by great titles, an
unrivaled loyalty program, exciting new businesses and the Wii U launch.”

During the third quarter, GameStop recorded goodwill and other impairment
charges of $678.8 million ($671.5 million, net of tax benefits) primarily as a
result of finalizing a previously disclosed interim impairment test of the
company’s goodwill and other intangible assets. This impairment test was
required under ASC 350 of generally accepted accounting principles due to a
temporary decline in the company’s stock price during the second quarter. The
charges primarily relate to GameStop’s international reporting segments and
are non-cash charges, which do not affect future operations, cash flows or
liquidity position. A reconciliation of non-GAAP, or adjusted, net income to
GAAP net income (loss) is included with this release (Schedule III).

Including the impairment charge, GameStop’s net loss for the third quarter was
$624.3 million, compared to net earnings of $53.9 million in the prior year
quarter. Diluted loss per share was $5.08, compared to diluted earnings per
share of $0.39 in the prior year quarter.

Capital Allocation Update

During the third quarter of 2012, GameStop repurchased 3.7 million shares of
common stock at an average price of $20.59, or $76.8 million worth of stock.
Today, the company also announced that the board of directors has approved a
new $500 million share repurchase plan, replacing the remaining $242 million
available on the existing authorization.

Rob Lloyd, chief financial officer, said, “During the quarter, we reached an
important milestone of repurchasing $1 billion of our stock since 2009. Our
on-going buyback program and quarterly dividends highlight our commitment to
improving total shareholder return through disciplined capital allocation.”

GameStop’s board of directors also declared a quarterly cash dividend of $0.25
per common share payable on Dec. 12, 2012 to shareholders of record at the
close of business on Nov. 28, 2012.

Earnings Guidance

For the fourth quarter of fiscal 2012, GameStop expects comparable store sales
to range from -7.0% to +1.0%. Diluted earnings per share are expected to range
from $2.07 to $2.27. For the full year, the company is maintaining its
previously announced adjusted diluted earnings per share guidance range of
$3.10 to $3.30, excluding goodwill and impairment charges, based on weighted
average fully diluted shares outstanding of approximately 127,000,000.
Incorporating third quarter results, full year comparable store sales are now
expected to range from -9.0% to -6.0%.

Note: Current guidance only includes the effect of the shares purchased thus
far in fiscal 2012.

Conference Call and Webcast Information

GameStop will host a conference call at 10:00 a.m. CST on Nov. 15, 2012 to
discuss the third quarter earnings results. The dial-in number for the call is
800-723-6751 and the pass code is 2817495. The call can also be accessed at
GameStop Corp.’s investor relations website at http://investor.GameStop.com/.
The conference call will be archived for two months on GameStop’s investor
website.

About GameStop

GameStop Corp. (NYSE: GME), a Fortune 500 and S&P 500 company headquartered in
Grapevine, Texas, is the world's largest multichannel video game retailer.
GameStop’s retail network and family of brands include 6,650 company-operated
stores in 15 countries worldwide and online at www.GameStop.com. The network
also includes: www.Kongregate.com, a leading browser-based game site; Game
Informer(R) magazine, the leading multi-platform video game publication; Spawn
Labs, a streaming technology company; and a digital PC game distribution
platform available at www.GameStop.com/pc.

General information on GameStop Corp. can be obtained at the company's
corporate website. Follow GameStop on Twitter @ www.twitter.com/GameStop and
find GameStop on Facebook @ www.facebook.com/GameStop.

Safe Harbor

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements may
include, but are not limited to, the outlook for the fourth quarter and fiscal
2012, 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. GameStop undertakes no obligation to
publicly update or revise any 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 console hardware and
accessories; the timing of release of video game titles for current generation
consoles; the launch of next generation consoles and the features of such
consoles; the cyclical nature of the video game industry; the risks associated
with international operations and the integration of acquisitions; the impact
of increased competition and changing technology in the video game industry,
including browser and mobile games and alternative methods of distribution;
and economic, regulatory and other events, including litigation, that could
reduce or impact consumer demand or affect the company’s business. 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 Jan. 28, 2012 filed with the SEC
and available at the SEC's Internet site at http://www.sec.gov or
http://investor.GameStop.com.

                                                               
                                                                  
GameStop Corp.
Condensed Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
                                                                  
                                                   13 weeks       13 weeks
                                                   ended          ended
                                                   Oct 27, 2012   Oct 29, 2011
                                                                  
Net sales                                          $  1,772.8     $  1,946.8
Cost of sales                                        1,215.4      1,373.9 
                                                                  
Gross profit                                          557.4          572.9
                                                                  
Selling, general and administrative
expenses                                              438.2          443.3
Depreciation and amortization                         43.9           47.0
Goodwill impairments                                  627.0          -
Asset impairments                                    51.8         -       
                                                                  
Operating earnings (loss)                             (603.5  )      82.6
                                                                  
Interest expense, net                                 1.0            5.2
Debt extinguishment expense                          -            0.6     
                                                                  
Earnings (loss) before income
tax expense                                           (604.5  )      76.8
                                                                  
Income tax expense                                   19.8         23.1    
                                                                  
Consolidated net income (loss)                        (624.3  )      53.7
Net loss attributable to noncontrolling              -            0.2     
interests
Consolidated net income (loss) attributable to     $  (624.3  )   $  53.9    
GameStop
                                                                  
Net income (loss) per common share:
Basic^1                                            $  (5.08   )   $  0.39
Diluted^1                                          $  (5.08   )   $  0.39
                                                                  
Weighted average common shares
outstanding:
Basic                                                 122.8          138.8
Diluted                                               122.8          139.8
                                                                  
                                                                  
                                                                  
Percentage of Sales:
                                                                  
Net sales                                             100.0   %      100.0   %
Cost of sales                                        68.6    %     70.6    %
                                                                  
Gross profit                                          31.4    %      29.4    %
                                                                  
Selling, general and administrative
expenses                                              24.7    %      22.8    %
Depreciation and amortization                         2.5     %      2.4     %
Goodwill impairments                                  35.3    %      0.0     %
Asset impairments                                    2.9     %     0.0     %
                                                                  
Operating earnings (loss)                             -34.0   %      4.2     %
                                                                  
Interest expense, net                                 0.1     %      0.3     %
Debt extinguishment expense                          0.0     %     0.0     %
                                                                  
Earnings (loss) before income
tax expense                                           -34.1   %      3.9     %
                                                                  
Income tax expense                                   1.1     %     1.1     %
Consolidated net income (loss)                        -35.2   %      2.8     %
                                                                  
Net loss attributable to noncontrolling              0.0     %     0.0     %
interests
                                                                  
Consolidated net income (loss) attributable to       -35.2   %     2.8     %
GameStop

^1 Basic net income per share and diluted net income per share are calculated
based on consolidated net income (loss) attributable to GameStop.

                                                               
GameStop Corp.
Condensed Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
                                                                  
                                                   39 weeks       39 weeks
                                                   ended          ended
                                                   Oct 27, 2012   Oct 29, 2011
                                                                  
Net sales                                          $  5,325.2     $  5,971.9
Cost of sales                                        3,648.6      4,235.6 
                                                                  
Gross profit                                          1,676.6        1,736.3
                                                                  
Selling, general and administrative
expenses                                              1,319.4        1,328.5
Depreciation and amortization                         132.3          140.4
Goodwill impairments                                  627.0          -
Asset impairments                                    51.8         -       
                                                                  
Operating earnings (loss)                             (453.9  )      267.4
                                                                  
Interest expense, net                                 2.3            17.8
Debt extinguishment expense                          -            0.6     
                                                                  
Earnings (loss) before income
tax expense                                           (456.2  )      249.0
                                                                  
Income tax expense                                   74.7         84.8    
                                                                  
Consolidated net income (loss)                        (530.9  )      164.2
Net loss attributable to noncontrolling              0.1          1.0     
interests
Consolidated net income (loss) attributable to     $  (530.8  )   $  165.2   
GameStop
                                                                  
Net income (loss) per common share:
Basic^1                                            $  (4.13   )   $  1.17
Diluted^1                                          $  (4.13   )   $  1.16
                                                                  
Weighted average common shares
outstanding:
Basic                                                 128.5          140.8
Diluted                                               128.5          141.9
                                                                  
                                                                  
                                                                  
Percentage of Sales:
                                                                  
Net sales                                             100.0   %      100.0   %
Cost of sales                                        68.5    %     70.9    %
                                                                  
Gross profit                                          31.5    %      29.1    %
                                                                  
Selling, general and administrative
expenses                                              24.8    %      22.2    %
Depreciation and amortization                         2.4     %      2.4     %
Goodwill impairments                                  11.8    %      -
Asset impairments                                    1.0     %     -       
                                                                  
Operating earnings (loss)                             -8.5    %      4.5     %
                                                                  
Interest expense, net                                 0.1     %      0.3     %
Debt extinguishment expense                          0.0     %     0.0     %
                                                                  
Earnings (loss) before income
tax expense                                           -8.6    %      4.2     %
                                                                  
Income tax expense                                   1.4     %     1.4     %
Consolidated net income (loss)                        -10.0   %      2.8     %
                                                                  
Net loss attributable to noncontrolling              0.0     %     0.0     %
interests
                                                                  
Consolidated net income (loss) attributable to       -10.0   %     2.8     %
GameStop

^1 Basic net income per share and diluted net income per share are calculated
based on consolidated net income (loss) attributable to GameStop.

                                                                
                                                                   
GameStop Corp.
Condensed Consolidated Balance Sheets
(in millions, except per share data)
(unaudited)

                                                       Oct 27,     Oct 29,
                                                       2012        2011
ASSETS:
Current assets:
          Cash and cash equivalents                    $ 366.4     $ 442.6
          Receivables, net                               49.6        58.1
          Merchandise inventories                        1,645.7     1,778.3
          Prepaid expenses and other current assets      146.1       126.7
          Deferred taxes                                44.6       30.4    
                       Total current assets             2,252.4    2,436.1 
                                                                   
Property and equipment:
          Land                                           22.2        25.0
          Buildings & leasehold improvements             597.4       613.2
          Fixtures and equipment                        897.9      866.2   
          Total property and equipment                   1,517.5     1,504.4
          Less accumulated depreciation and             997.6      901.5   
          amortization
                       Net property and equipment       519.9      602.9   
                                                                   
Goodwill                                                 1,377.9     2,060.3
Other noncurrent assets                                 199.1      333.3   
                       Total assets                    $ 4,349.3   $ 5,432.6 
                                                                   
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
          Accounts payable                             $ 1,277.6   $ 1,464.3
          Accrued liabilities                            823.0       709.8
          Senior notes payable, current portion, net    -          124.7   
                       Total current liabilities         2,100.6     2,298.8
                                                                   
                                                                   
Other long-term liabilities                             151.1      172.3   
                       Total liabilities                2,251.7    2,471.1 
                                                                   
Stockholders' equity:
          Preferred stock - authorized 5.0 shares;
          no shares
                       issued or outstanding             0.0         0.0
          Class A common stock - $.001 par value;
          authorized 300.0 shares;
                       120.9 and 138.4 shares            0.1         0.1
                       outstanding, respectively
          Additional paid-in-capital                     409.8       762.0
          Accumulated other comprehensive income         144.6       230.0
          Retained earnings                             1,543.1    1,971.0 
                       Equity attributable to            2,097.6     2,963.1
                       GameStop Corp. stockholders
          Equity (deficit) attributable to              -          (1.6    )
          noncontrolling interest
                       Total equity                     2,097.6    2,961.5 
                       Total liabilities and           $ 4,349.3   $ 5,432.6 
                       stockholders' equity

                                                            
                                                                 
Schedule I
GameStop Corp.
Sales Mix
                                                                 
                                                                 
                              13 Weeks Ended         13 Weeks Ended
                              Oct 27, 2012           Oct 29, 2011
                                          Percent                Percent
                              Net sales   of Total   Net sales   of Total
Net sales (in millions):
                                                                 
New video game hardware       $ 184.8     10.4   %   $ 277.6     14.3   %
New video game software         769.8     43.4   %     879.1     45.1   %
Used video game products        496.3     28.0   %     544.5     28.0   %
Other                           321.9     18.2   %     245.6     12.6   %
                                                              
Total                         $ 1,772.8   100.0  %   $ 1,946.8   100.0  %
                                                                 
                                                                 
                                                                 
                                                                 
                                                         
                                                                 
Schedule II
GameStop Corp.
Gross Profit Mix
                                                                 
                                                                 
                              13 Weeks Ended         13 Weeks Ended
                              Oct 27, 2012           Oct 29, 2011
                                          Gross                  Gross
                              Gross       Profit     Gross       Profit
                              Profit      Percent    Profit      Percent
                                                                 
Gross Profit (in millions):
                                                                 
New video game hardware       $ 18.8      10.2   %   $ 22.9      8.2    %
New video game software         174.9     22.7   %     194.1     22.1   %
Used video game products        239.9     48.3   %     250.3     46.0   %
Other                           123.8     38.5   %     105.6     43.0   %
                                                    
Total                         $ 557.4     31.4   %   $ 572.9     29.4   %



GameStop Corp.
Schedule III
                                                               
                                                                     
Reconciliation of net income to adjusted net income
The following table reconciles the company's net income (loss) and earnings
per share as presented in its Condensed Consolidated Statements of Operations
and prepared in accordance with generally accepted accounting principles
("GAAP") to its non-GAAP, or adjusted, net income and earnings per share,
excluding the goodwill and asset impairment.
                                                                     
                                                                     
                     13 Weeks Ended                 39 Weeks Ended
                     Oct 27, 2012      Oct 29,      Oct 27, 2012     Oct 29,
                                       2011                          2011
Net income           $   (624.3  )     $  53.9      $  (530.8  )     $  165.2
(loss)
                                                                     
Goodwill                 627.0            -            627.0            -
impairments
Asset
impairments (net         44.5             -            44.5             -
of income taxes)
                                                                  
Adjusted net         $   47.2         $  53.9      $  140.7        $  165.2
income
                                                                     
Adjusted
earnings per
share
Basic                $   0.38          $  0.39      $  1.09          $  1.17
Diluted              $   0.38          $  0.39      $  1.09          $  1.16
                                                                     
Number of common
shares used in
adjusted
calculation
Basic                    122.8            138.8        128.5            140.8
Diluted                  123.5            139.8        129.1            141.9
                                                                     
                                                                     
                                                                     
During the third quarter, GameStop recorded goodwill and other impairment
charges of $678.8 million ($671.5 million, net of tax benefits) primarily as a
result of finalizing a previously disclosed interim impairment test of the
company's goodwill and other intangible assets. This impairment test was
required under ASC 350 of generally accepted accounting principles due to a
temporary decline in the company's stock price during the second quarter. The
charges primarily relate to GameStop's international reporting segments and
are non-cash charges, which do not affect future operations, cash flows or
liquidity position.

Contact:

Matt Hodges
Vice President,
Public and Investor Relations
GameStop Corp.
(817) 424-2130