Exhibit 99.1
FOR
IMMEDIATE RELEASE
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CONTACTS:
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James A. Smith, Chief Financial Officer
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Financial Dynamics
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Electronics Boutique Holdings Corp.
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Investors: Cara O’Brien/Melissa Myron
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(610) 430-8100
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Media: Melissa Merrill
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(212) 850-5600
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ELECTRONICS BOUTIQUE REPORTS SECOND
QUARTER RESULTS
~ Total Revenue Increases 23.9% ~
~ Video Game Software Sales Grow 17.8% ~
~ Comparable Store Sales Up 2.6% ~
~ Company Reiterates Outlook for Fiscal 2006
~
WEST
CHESTER, PA – August 29, 2005 – Electronics Boutique
Holdings Corp. (Nasdaq: ELBO), a leading global specialty retailer of video
games and related products, today announced financial results for the second
quarter and six months ended July 30, 2005.
Financial
Results and Company Outlook
For the second quarter of fiscal 2006, total revenue
increased 23.9% to $448.3 million from $361.9 million in the comparable period
last year. Comparable store sales
increased 2.6% driven primarily by continued demand for Sony’s PSP and 17.8%
growth in video game software sales. Second quarter gross margin on sales was
30.3% versus 29.5% last year due to strong sales of higher-margin pre-played
hardware and software and accessories. Leading
titles during the quarter included NCAA Football 2006 from Electronic Arts,
Star Wars Episode III: Revenge of the Sith from Lucas Arts, and Pokemon Emerald
from Nintendo.
As previously announced, during the second quarter the
Company acquired a 138 store retail chain located in Spain, Jump Ordenadores
S.L.U. (“Jump”), which primarily sells PCs, software, digital cameras, and
related electronics products. The
Company has started to introduce new video game software and hardware and
pre-played products into Jump’s stores. As
a result of the acquisition and the Company’s transition efforts, net income
for the second quarter of fiscal 2006 includes a net loss of $1.0 million, or
$0.04 per diluted share, related to the Jump business.
Excluding costs related to the pending merger with
GameStop Corp. and the net loss associated with the Jump acquisition, net
income for the second quarter of fiscal 2006 was $3.5 million, or $0.14 per
diluted share. On
a GAAP basis, which
includes $1.4 million of pre-tax merger related costs ($0.9 million after-tax) and
the net loss of $1.0 million from the Jump business, net income for the second
quarter of fiscal 2006 was $1.6 million, or $0.06 per diluted share. This compares to net income of $3.9 million,
or $0.16 per diluted share, in the same period last year. Please see the schedule accompanying
this release for the full reconciliation of GAAP to comparable basis net income
and net income per share.
During the quarter, the Company added 227 new stores, including
the 138 stores located throughout Spain that were acquired from Jump. The Company ended the second quarter of
fiscal 2006 with 2,280 stores compared to 1,733 at the end of the second
quarter of fiscal 2005.
During the first six months of fiscal 2006, total
revenue rose 30.1% to $955.4 million from $734.4 million in the comparable period
last year. Excluding costs related to
the pending merger with GameStop Corp. and the net loss associated with the
Jump acquisition, net income was $7.2 million, or $0.29 per diluted share. On a GAAP basis, which includes $2.9 million of
pre-tax merger related costs ($1.8 million after-tax) and a net loss of $1.0
million from the Jump business, net income for the first six months of fiscal
2006 was $4.4 million, or $0.17 per diluted share. This compares to net income
of $6.9 million, or $0.28 per diluted share, in the same period last year. Please see the schedule accompanying this
release for the full reconciliation of GAAP to comparable basis net income and
net income per share.
Based on results to date and current business trends,
the Company reiterates its previous fiscal 2006 outlook for diluted earnings
per share to range from approximately $2.34 to $2.44. The Company’s outlook excludes the impact of the
Jump acquisition or any merger related costs.
Business Update
In
early August, the Company established a presence in Switzerland by acquiring
PC-Joy AG, a Zurich-based retailer with nine locations that offer video games, PC
games, video game hardware, computer hardware, and related accessories.
Jeffrey
Griffiths, President and Chief Executive Officer, stated, “During the quarter,
our team continued to execute our key business initiatives and delivered solid second
quarter results that were in-line with our expectations. In addition, the acquisition of PC-Joy in
Switzerland furthers our longstanding strategy to expand into international
markets and provides a new opportunity for global growth. We look forward to leveraging our existing
European infrastructure to develop a strong presence in this market.”
Pending
Merger Agreement
As
previously announced on April 18, 2005, Electronics Boutique and GameStop
Corp. entered into a definitive agreement and plan of merger that will create a
leading video game retailer with over 4,000 stores
worldwide. The waiting period under the Hart-Scott-Rodino
Improvements Act expired on June 9, 2005 and the Company and GameStop are now
responding to questions from the Securities and Exchange Commission regarding
their S-4 registration statement and Form 10-Ks. The merger is now expected to close in early October 2005.
Jeffrey Griffiths, President and Chief Executive
Officer, stated, “We believe joining forces with GameStop will result in
a compelling combination and we look forward to our future as a combined
entity. Under the assistance of our
advisors, we are working closely with GameStop to help the transition move
forward smoothly and we are pleased with the progress our integration teams are
making.”
About
Electronics Boutique Holdings Corp.
Electronics
Boutique, a Fortune 1000 company, is a leading global specialty retailer
dedicated exclusively to video game hardware and software, PC entertainment
software, accessories and related products. As of July 30, 2005, the
company operated 2,280 stores in the United States, Australia, Canada, Denmark,
Finland, Germany, Italy, New Zealand, Norway, Puerto Rico, Spain and Sweden — primarily
under the names EB Games and Electronics Boutique. The company operates an
e-commerce website at www.ebgames.com. Additional company information is
available at www.ebholdings.com.
This
release contains forward-looking statements, including statements by Jeffrey
Griffiths and those related to the financial performance of Electronics
Boutique for the full fiscal year ending January 28, 2006, to the proposed
merger with GameStop, video game industry events and trends and the impact of
those events and trends on Electronics Boutique, and to growth prospects for
Electronics Boutique. Forward-looking statements refer to expectations,
projections and other characterizations of future events or circumstances and
are often identified by the use of words such as “may,” “will,” “expect,” “believe,”
“anticipate,” “intend,” “could,” “estimated,” “continue” or comparable
terminology. In addition to factors specified in Electronics Boutique’s recent
filings with the Securities and Exchange Commission, there are other factors
that could cause actual results to materially differ from those expressed or
implied in these forward-looking statements, such as the schedule and
sell-through for new hardware and software releases, consumer demand for video
game hardware and software, the timing of the introduction of new generation
hardware systems, pricing changes by key vendors for hardware and software and
the timing of any such changes, the adequacy of supplies of new and pre-played
products, currency fluctuations, increased competition and promotional activity
from other retailers, and the availability of locations for, and timing of the
opening of, new domestic and international stores, the fulfillment of the
conditions necessary to complete the merger with GameStop, and the ability to
successfully integrate Jump’s business and the operations of PC-Joy with
Electronics Boutique’s existing operations. In light of the risks and
uncertainties inherent in the forward-looking statements, these statements
should not be regarded as a representation by Electronics Boutique or any other
person that the projected results, objectives or plans will be achieved.
Electronics Boutique undertakes no obligation to revise or update the
forward-looking statements to reflect events or circumstances after the date
hereof.
###
Electronics
Boutique Holdings Corp.
Consolidated
Statements of Income
(Amounts
in thousands, except per-share amounts)
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13 Weeks Ended
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26 Weeks Ended
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July 30,
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July 31,
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July 30,
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July 31,
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2005
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2004
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2005
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2004
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Net sales
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$
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447,219
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$
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360,487
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$
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953,180
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$
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731,451
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Management fees
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1,124
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1,461
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2,248
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2,922
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Total revenues
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448,343
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361,948
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955,428
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734,373
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Cost of goods sold
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311,628
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254,302
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685,988
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525,456
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Gross profit
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136,715
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107,646
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269,440
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208,917
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Costs and expenses:
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Selling, general and administrative expense
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123,281
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92,964
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241,783
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181,489
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Depreciation and amortization
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11,578
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8,897
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22,380
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17,258
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Operating income
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1,856
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5,785
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5,277
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10,170
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Interest income, net
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675
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384
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1,592
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836
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Income before income tax expense
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2,531
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6,169
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6,869
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11,006
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Income tax expense
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911
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2,285
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2,472
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4,076
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Net income
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$
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1,620
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$
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3,884
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$
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4,397
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$
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6,930
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Net income per share:
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Basic
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$
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0.06
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$
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0.16
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$
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0.18
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$
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0.29
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Diluted
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$
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0.06
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$
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0.16
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$
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0.17
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$
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0.28
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Weighted average shares outstanding:
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Basic
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25,096
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23,840
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24,896
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24,183
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Diluted
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25,467
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24,176
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25,273
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24,545
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Electronics Boutique Holdings Corp.
Supplemental Information - Reconciliation of Merger
Related Costs and Jump Business
(Amounts in thousands, except per-share amounts)
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13 Weeks Ended
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26 Weeks Ended
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July 30,
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July 30,
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2005
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2005
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Selling, general and administrative expense
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$
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123,281
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$
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241,783
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Less: Merger related costs
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1,389
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2,885
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Selling, general and administrative expense
excluding merger related costs
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$
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121,892
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$
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238,898
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Net income
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$
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1,620
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$
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4,397
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Add: After-tax merger related costs
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889
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1,847
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Add: Net loss of Jump business
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968
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968
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Net income excluding merger related costs
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$
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3,477
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$
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7,212
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Net income per share - diluted
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$
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0.06
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$
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0.17
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Add: After-tax merger related costs per share -
diluted
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0.04
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0.08
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Add: Net loss of Spain business per share - diluted
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0.04
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0.04
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Net income per share excluding merger related costs
- diluted
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$
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0.14
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$
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0.29
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Electronics Boutique Holdings Corp.
Selected Consolidated Balance Sheet Data
(Amounts in thousands)
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July 30,
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July 31,
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January 29,
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2005
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2004
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2005
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Cash and cash equivalents
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$
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71,169
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$
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57,130
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$
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94,345
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Marketable securities
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35,700
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14,000
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80,950
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Merchandise inventories
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273,945
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220,748
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291,678
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Total current assets
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448,359
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332,332
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515,636
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Total assets
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683,949
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508,937
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724,200
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Accounts payable
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166,404
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134,874
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228,825
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Total current liabilities
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263,624
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204,977
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340,214
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Total liabilities
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304,425
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228,943
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372,732
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Total stockholders’ equity
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379,524
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279,994
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351,468
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Schedule 1
Electronics Boutique Holdings Corp.
Domestic Retail Sales Mix
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13 Weeks
Ended
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13 Weeks
Ended
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July 30,
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July 31,
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2005
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2004
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Video Game Software
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59
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%
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62
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%
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Video Game Hardware
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20
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%
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18
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%
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PC Software
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7
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%
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7
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%
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Accessories
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9
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%
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10
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%
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Other
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5
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%
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3
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%
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