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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) November 15, 1999
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ELECTRONICS BOUTIQUE HOLDINGS CORP.
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(Exact name of registrant as specified in charter)
Delaware 000-24603 51-0379406
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(State or Other Juris- (Commission File Number) (IRS Employer Identi-
diction of Incorporation) fication No.)
931 South Matlack Street, West Chester, PA 19382
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(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code 610-430-8100
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(Former name or former address, if changed since last report.)
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Exhibit Index appears on Page 4 hereof.
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ITEM 5. OTHER EVENTS.
On November 15, 1999, Electronics Boutique Holdings Corp. ("EB") issued
a press release setting forth EB's financial results for its third fiscal
quarter ended October 30, 1999. A copy of EB's press release dated November 15,
1999 is attached hereto as Exhibit 99 and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99 Press Release dated November 15, 1999.
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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.
ELECTRONICS BOUTIQUE HOLDINGS CORP.
(Registrant)
Date: November 15, 1999 By: /s/ James A. Smith
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Name: James A. Smith
Title: Vice President of Finance
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EXHIBIT INDEX
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No.
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<S> <C>
99 Press Release dated November 15, 1999.
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Exhibit 99
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<CAPTION>
AT THE COMPANY AT THE FINANCIAL RELATIONS BOARD
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<S> <C> <C>
JOHN R. PANICHELLO KELLY LOFTS (GENERAL INFO)
CHIEF FINANCIAL OFFICER LYNN SAWYER-LANDAU (ANALYST INFO)
610-430-8100 JASON RANDO (MEDIA INFO)
(212) 661-8030
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FOR IMMEDIATE RELEASE
ELECTRONICS BOUTIQUE REPORTS 138% INCREASE IN EARNINGS
PER SHARE TO $0.19 FOR THIRD QUARTER OF FISCAL 2000
- - COMPARABLE STORE SALES UP 37.5%
- - REVENUES INCREASE 59%
- - DREAMCAST, GAMEBOY & NEW PLAYSTATION TITLES ALL DRIVE GROWTH
- - POKEMON CRAZE CONTINUES TO IMPACT SALES AND MARGINS
WEST CHESTER, PA., NOVEMBER 15, 1999 -- Electronics Boutique Holdings Corp.
(Nasdaq: ELBO), among the world's largest specialty retailers of electronic
games, today reported results for the third quarter of its fiscal 2000 year,
which ended October 30, 1999. Net income for the third quarter of 2000 totaled
$3.9 million, or $0.19 per share fully diluted, compared with $1.6 million, or
$0.08 per share fully diluted, for the year-ago quarter. Earnings per share for
the third quarter of 2000 includes a $0.06 charge for e-commerce related
advertising expenses. Before these expenses, earnings would have been $0.25 per
share fully diluted.
Total revenues increased 59.4% to $177.4 million in the third quarter
of fiscal 2000, compared with $111.3 million in the prior-year period. Revenue
growth was driven by a 37.5% increase in comparable store sales, as well as an
increase in the retail store base. The Company had 595 stores in operation as of
October 30, 1999, compared with 500 stores a year earlier.
For the first nine months of fiscal 2000, the Company reported net
income of $7.3 million, or $0.36 per share fully diluted, compared with pro
forma net income of $3.0 million, or $0.18 per share fully diluted, for the
year-ago period. Per share earnings for the first nine months of fiscal 2000 are
net of third quarter e-commerce related advertising expenses. The pro forma
results for the nine-month period reflect that Electronics Boutique converted
from S corporation to C corporation status in July 1998 in connection with its
initial public offering. Total revenues for the first nine months of fiscal 2000
totaled $414.1 million, compared with $321.1 million for the year-ago period.
Joseph J. Firestone, President and Chief Executive Officer, commented,
"We are extremely proud and pleased to report a successful quarter, impacted by
continued success across
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Electronics Boutique -- 6
all major game systems. Electronics Boutique was the number one retailer on the
release day of Sega's Dreamcast and had a 22% market share in the US over the
first three days of sales. The quarter was also positively impacted by strong
performance in the Nintendo Gameboy category, new release titles for the Sony
PlayStation and a strong surge in toy categories including Pokemon trading
cards."
The gross margin on sales of 22.9% for the third quarter of fiscal 2000
exceeded the Company's expectations. The gross margin declined by only 1.5%
compared with the year-ago quarter, despite the significant sales levels of
lower margin Sega Dreamcast hardware. "We are successful at selling multiple
pieces of software with each hardware system," continued Mr. Firestone. "This
coupled with sales of higher margin products such as Gameboys, toys and trading
cards, resulted in the better than expected gross margin."
During the third quarter, the Company initiated a marketing campaign
for its Internet subsidiary, EBWorld.com, Inc., which included print and media
advertising. Initial response to the campaign has been very strong. During
October 1999, the first month of the marketing campaign, visits to the site
increased more than 40% compared with September 1999. During the third quarter
the web site attracted 5.1 million visits and sales totaled $2.7 million.
"We have indicated that during fiscal 2000, we intend to spend
approximately $12 million towards branding our e-commerce business. We are
pleased to report that we are currently on target with expectations and
anticipate keeping marketing expenditures within the planned range. During the
third quarter, our EPS was negatively impacted by $0.06 per share due to
advertising and promotional expenses primarily associated with our new marketing
campaign. We do not anticipate earnings to be negatively impacted in fiscal 2001
by the continuation of this campaign. We believe the financial results for the
quarter further substantiate the strong fundamentals supporting the electronic
gaming industry and our leadership position." concluded Mr. Firestone.
Electronics Boutique is one of the leading specialty retailers of video
and computer games and also sells video game hardware, PC productivity software
and accessories. The company currently operates 595 stores in 46 states, Puerto
Rico, Canada, Australia and South Korea, primarily under the names Electronics
Boutique and Stop `N Save Software. The Company has also established a separate
e-commerce division, EBWorld.com, Inc. The Company's website can be found at
HTTP://WWW.EBWORLD.COM.
THIS PRESS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS." ELECTRONICS BOUTIQUE
("EB") 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 SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY. THESE RISKS INCLUDE, BUT ARE NOT
LIMITED TO, EB'S DEPENDENCE ON THE CONTINUED INTRODUCTION OF NEW AND ENHANCED
VIDEO GAMES AND PC HARDWARE AND SOFTWARE; THE CYCLICAL NATURE OF THE VIDEO GAME
MARKET; THE RAPID TECHNOLOGICAL CHANGES WHICH OCCUR IN THE VIDEO GAME AND PC
INDUSTRY; EB'S ABILITY TO OPEN AND OPERATE NEW STORES ON A PROFITABLE BASIS; THE
INTENSELY COMPETITIVE NATURE OF THE ELECTRONIC GAME INDUSTRY AND ITS RAPID
CHANGES IN CONSUMER PREFERENCES AND FREQUENT NEW PRODUCT INTRODUCTIONS; THE
SEASONAL NATURE OF THE RETAIL INDUSTRY; EB'S DEPENDENCE ON ITS SUPPLIERS FOR
PRODUCTS; RISKS INHERENT TO CONDUCTING INTERNATIONAL OPERATIONS; AND CONSUMER
SPENDING PATTERNS AND PREVAILING
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Electronics Boutique -- 7
ECONOMIC CONDITIONS. PLEASE REFER TO ELECTRONICS BOUTIQUE'S ANNUAL REPORT ON
FORM 10-K ON FILE WITH THE SEC FOR A MORE DETAILED DISCUSSION OF THESE AND
OTHER RISKS THAT COULD CAUSE RESULTS TO DIFFER MATERIALLY.
-Financial Tables Follow -
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Electronics Boutique -- 8
Electronics Boutique Holdings Corp.
Consolidated Statements of Income
(Unaudited; Amounts in thousands, except share and per-share amounts)
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<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
October 30, October 31, October 30, October 31,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Net Sales $176,465 $110,664 $411,585 $319,324
Management fees 945 635 2,525 1,736
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Total Revenues 177,410 111,299 414,110 321,060
Costs and Expenses:
Cost of merchandise sold, including freight 135,980 83,628 308,757 239,053
Selling, general and administrative 32,020 22,657 85,020 68,987
Depreciation and amortization 3,119 2,495 8,666 7,154
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Operating Income 6,291 2,519 11,667 5,866
Equity in loss of affiliates -- -- -- (160)
Interest (income) expense, net (65) (149) (317) 660
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Income before income tax expense 6,356 2,668 11,984 5,046
Income tax expense 2,492 1,046 4,698 1,236
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Net income $3,864 1,622 $ 7,286 $3,810
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Net income per share - basic and diluted $0.19 $0.08 $0.36
Weighted average shares outstanding - basic 20,187,898 20,169,200 20,175,438
Weighted average shares outstanding - diluted 20,733,249 20,169,200 20,467,167
PRO FORMA DATA (SEE NOTE)
Pro forma income before income tax expense 5,046
Pro forma income tax expense 1,978
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Pro forma net income $ 3,068
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Pro forma net income per share - basic and diluted $0.18
Pro forma weighted average shares outstanding - 17,316,636
diluted
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Electronics Boutique Holdings Corp. (the "Company") completed its initial public
offering on July 28, 1998. Historical statements of income prior to that date
include the results of operations of the Company's predecessors. Prior to
Electronics Boutique's initial public offering, its predecessors were taxed as
an S Corporation and a partnership. As a result, their taxable income passed
through to their partners and shareholders for federal and certain state income
tax purposes. Accordingly, for periods prior to the initial public offering, the
financial statements do not include a provision for federal and certain state
income taxes. The pro forma net income gives effect to the application of the
pro forma income tax expense that would have been reported had the predecessors
been subject to federal and all state income taxes.
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Electronics Boutique -- 9
Electronics Boutique Holdings Corp.
Selected Consolidated Balance Sheet Data
(Unaudited; Amounts in thousands)
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<CAPTION>
October 30 January 30,
1999 1999
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<S> <C> <C>
Cash and cash equivalents $10,050 $42,006
Merchandise inventories 132,094 65,433
Total current assets 164,217 117,614
Total assets 233,749 172,047
Current liabilities 174,426 120,705
Total liabilities 177,030 123,205
Stockholders' equity 56,719 48,842
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