Thursday, November 10, 2005 1:17:38 AM
Press Release, Tuesday October 25, 8:30 am ET
For the fourth quarter of fiscal 2005, the combined company expects comparable store sales to range from +8% to +10%, while diluted earnings per share are expected to range from $0.98 to $1.06.
For the fiscal year ending January 28, 2006, the combined company expects comparable store sales to range from +4% to +6%. Diluted earnings per share for the full year are expected to range from $1.65 to $1.75.
GRAPEVINE, Texas--(BUSINESS WIRE)--Oct. 25, 2005--GameStop Corp. (NYSE:GME - News; NYSE:GME.B - News), a leading global video game and entertainment software retailer, today announced its updated fiscal 2005 guidance related to the completion of the business combination between GameStop and Electronics Boutique on October 9, 2005.
"The merger with Electronics Boutique is coming together extremely well. In a very short period of time, we have made exceptional strides bringing the two companies together," remarked R. Richard Fontaine, GameStop's Chairman and Chief Executive Officer. "Our unifying theme, 'Better Together,' is being proven every day as we combine the operating strengths of each company. As both companies had a history of rapid expansion, together we are well prepared for growth and change. I am confident that GameStop is well on its way to fulfilling all the promises of the merger that we envisioned."
"The timing of our combination couldn't be better," continued Fontaine. "With Sony's PSP going into its first holiday gift season, Microsoft's Xbox 360 releasing in the U.S. on November, 22, 2005 and in Europe on December 2, 2005, GameStop is well positioned to end the year with real sales momentum. Adding to the opportunities as we move into 2006, are the expected releases of Sony's PlayStation 3 and Nintendo's Revolution. This is the absolute right time to combine the two companies and we are well on our way to realizing the benefits of the merger."
Several items related to the business combination will affect GameStop's financial statements going forward:
GameStop was required to write-up Electronic Boutique's assets to fair value. As such, in the purchase accounting for the merger, GameStop capitalized various intangible assets and will incur incremental amortization on those assets on an on-going basis.
GameStop issued an aggregate of $950 million of senior floating rate notes and senior notes to partially finance the combination of the two companies. This outstanding debt will cause GameStop to incur increased interest expense going forward.
GameStop exchanged 20.2 million shares of GameStop Class A common stock for Electronics Boutique's common stock as part of the combination of the two companies, thus increasing GameStop's weighted average diluted shares outstanding.
See the attached table below for further details on each of these items.
Third Quarter Guidance
For the third quarter of fiscal 2005, the combined company expects comparable store sales to range from -12.0% to -12.5% due to difficult comparisons with the prior year when Grand Theft Auto: San Andreas and Fable were released and sluggish traffic in September 2005 resulting from Hurricanes Katrina and Rita. Diluted earnings per share are expected to range from $0.14 to $0.15, including a $1.0 million charge, or approximately $0.01 per diluted share, related to losses and disaster relief from both hurricanes.
GameStop, on a pre-merger stand-alone basis, would have expected diluted earnings per share of $0.18, in line with previous guidance of $0.18 to $.20 per diluted share. This estimate includes the aforementioned $0.01 per diluted share charge related to the impact of the hurricanes.
Fourth Quarter Guidance
For the fourth quarter of fiscal 2005, the combined company expects comparable store sales to range from +8% to +10%, while diluted earnings per share are expected to range from $0.98 to $1.06.
Full Year Guidance
For the fiscal year ending January 28, 2006, the combined company expects comparable store sales to range from +4% to +6%. Diluted earnings per share for the full year are expected to range from $1.65 to $1.75.
Please note this updated fiscal 2005 guidance does not include merger costs related to the business combination.
http://biz.yahoo.com/bw/051025/255256.html?.v=1
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