Gamestop Corp. Annual Report
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GameStop Corp. Annual Report MADDEN 2005 GTA: SAN ANDREAS FABLE 2004 Letter to the Shareholders Dear Shareholders, 2004 proved to be another year of milestones During the peak holiday season, GameStop for GameStop. As we have been stating since employed 23,000 people. Throughout the going public in February 2002, we believe it is year, we added 700 new full time positions imperative that we not only perform fi nancially and 4,000 new part time associates across every year, but that we build the company to take the country. advantage of the signifi cant growth opportunities that a growing industry presents. In the course of this year we set sales records with two titles, selling over 860,000 copies of And with the launch in March 2005 of Sony’s Halo 2 and over 780,000 copies of Grand Theft PlayStation Portable (PSP), scheduled to be Auto: San Andreas. Both titles have continued to sell followed in November 2005 by Microsoft’s and are the all-time best sellers for GameStop. Xbox 360, we are at the beginning stages of another strong cycle of new hardware In preparation for continued growth, and with products and software launches that will take an eye on improving distribution effi ciency, advantage of the ever-improving technology. we purchased a new 420,000 square foot Furthermore, with GameStop’s merger with general offi ce and distribution center in close Electronics Boutique moving forward on proximity to our old facility, with no resulting schedule, we have positioned our company to disruption to the support of our stores and no take maximum advantage of these emerging relocation issues for our people. We managed growth trends. to grow our company from approximately 500 stores in 1997 to over 1,900 stores today Some of the 2004 highlights: without expanding our facilities; the new • Our revenues grew 16.7%, from distribution center is intended to ensure that $1,579,000,000 to $1,843,000,000 our rapid growth is not compromised, and that • Earnings per share grew over 10%, our effi ciency goals will continue to be met. from $1.06 per diluted share to $1.17 per diluted share* Game Informer, GameStop’s magazine • Our stock price increased over 13%, division, grew to over 2,000,000 subscribers - from $16.60 to $18.80 four times larger than our closest competitor. • We repurchased over 7 million According to Advertising Age, Game Informer shares of our common stock is now the 26th largest consumer publication • We invested over $98 million in in the US and had the 3rd largest growth in new stores and infrastructure paid circulation in 2004. • Our store count grew from 1,514 to 1,826 As has been the case every year since we have been a public company, GameStop’s market In addition, GameStop opened 338 stores share has grown; 2004 was no exception. worldwide during 2004 - our most aggressive According to NPD Group data, our total share expansion year ever. In December, we opened of the growing video game market was 11.4%, our fi rst store in Wyoming, giving GameStop up from 9.8% in 2003. What is particularly a presence in all 50 states. encouraging about our share growth is that we have continuously found better ways to serve new markets. * Before special charges of $0.12 per diluted share for California litigation settlement costs, professional fees relating to the spin-off by Barnes & Noble, Inc. of our Class B common stock and the change in our method of accounting for leases. During the year, we refi ned our approach We are now at the start of another innovative to entering smaller communities by fi ne- game technology cycle. In March, Sony’s PSP tuning our site selection criteria, store size, – their fi rst handheld unit ever – was launched merchandise selections and staffi ng to and has been exceptionally well received by our better serve markets with a small immediate customers; in November, we expect Microsoft population, but a wide geographic draw. to release the Xbox 360 and Nintendo to launch another handheld, the Game Boy Micro. 2005 and Beyond: Moving into 2006, the future continues to look even brighter with Sony expected to release GameStop and Electronics Boutique the PlayStation 3, and Nintendo to follow with announced a combination on April 18, 2005 their next generation console, the Revolution. which, when completed, will create one of the world’s largest retailers of video games And it gets better: At GameStop, thanks to with over 4,000 stores, including over 600 our unique new and used video game product international stores, with a total projected synergy, we also capitalize on the “cycles revenue of over $4 billion. After integrating within cycles”. When new hardware and titles our two companies, and adopting the best hit the market, we buy back and resell the practices of each, we anticipate up to $50 older units and get more game product into million in annual cost savings starting in 2006. the hands of more value-oriented customers. This combination not only demonstrates the faith we have in our business model and our We are confi dent in how we have positioned people, but is testimony to our belief that the GameStop for the future. We have built our video game industry will continue to grow company to capitalize on all the opportunities of both domestically and internationally. This this dynamic business. I believe both our past combination will signifi cantly improve our growth, and the huge incremental potential that our position within the very competitive US market, soon to be completed combination will unleash, and will give GameStop a leadership position puts GameStop in an even better position to be a in 10 countries around the world. superior performer and an excellent investment. Over the next three years, the US video game As always, thanks to our thousands of store market is expected to grow by an average of managers who meet our customers and serve 17%* per year. By 2008, consumer spending on them well every day. And thanks to all of you video games is projected to surpass other major for your continued support. forms of comparable entertainment including movie box offi ce receipts and pre-recorded music** and GameStop is in an outstanding position to reap the benefi ts. R. Richard Fontaine Chairman of the Board and Chief Executive Offi cer * Source: Industry Analysts **Source: PriceWaterhouseCoopers Media Outlook 2004-2008 Top Selling Games of 2004 HALO 2 Halo 2 Grand Theft Auto: Madden NFL 2005 867,983 Units San Andreas PlayStation 2 $45,665,000 780,941 Units 421,071 Units $39,089,000 $20,143,000 GTA: SAN ANDREAS Madden NFL Dragon Ball Z: Fable 2005 Budokai 3 XBOX Need for Speed: Metal Gear Solid 3: Need for Speed: Underground 2 Snake Eater Underground 2 PlayStation 2 XBOX WWE NCAA Football Fight Night 2004 Smackdown vs Raw 2005 NBA Live 2005 World of Ninja Gaiden Warcraft Online MADDEN 2005 Growth in Installed FABLE Video Game Hardware Totals are a combination of Sony PlayStation 2, Microsoft Xbox, Nintendo Game Cube, Nintendo Game Boy Advance SP, and Nintendo DS platforms. .UMBERSINTHOUSANDS 3OURCE.0$'ROUP NFS: UNDERGROUND 2 Growth in Video Game Software Unit Sales Totals are a combination of Sony PlayStation 2, Microsoft Xbox, Nintendo Game Cube, Nintendo Game Boy Advance SP, and Nintendo DS platforms. METAL GEAR SOLID 3 .UMBERSINTHOUSANDS 3OURCE.0$'ROUP .OTE%XCLUDESUSEDVIDEOGAMES GameStop Revenue Growth &9 &9 &9 &9 &9 &9 &9 .UMBERSINMILLIONS The average gamer spends 10.4 hours per week playing games. (Source: Entertainment Software Association) GameStop Store Count &9 &9 &9 &9 &9 &9 &9 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K/A (Amendment No. 2) FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ¥ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Ñscal year ended January 29, 2005 or n TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-31228 GameStop Corp. (Exact name of registrant as speciÑed in its Charter) Delaware 75-2951347 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) IdentiÑcation No.) 625 Westport Parkway 76051 Grapevine, Texas (Zip Code) (Address of principal executive oÇces) Registrant's telephone number, including area code: (817) 424-2000 Securities registered pursuant to Section 12(b) of the Act: (Title of Class) (Name of Exchange on Which Registered) Class A Common Stock, $.001 par value per share New York Stock Exchange Class B Common Stock, $.001 par value per share New York Stock Exchange Rights to Purchase Series A Junior Participating Preferred Stock, New York Stock Exchange $.001 par value per share Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant: (1) has Ñled all reports required to be Ñled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to Ñle such reports), and (2) has been subject to such Ñling requirements for the past 90 days. Yes ¥ No n Indicate by check mark if disclosure of delinquent Ñlers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in deÑnitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.