ELBO Electronics Boutique Hldgs (MM)

Electronics Boutique Announces Third Quarter Fiscal 2004 Results -- Reports 15 Percent Increase in Revenues -- WEST CHESTER, Pa., Nov. 20 /PRNewswire-FirstCall/ -- Electronics Boutique Holdings Corp. today announced financial results for its third quarter ended November 1, 2003, highlighted by a 15 percent increase in revenues. The company's total revenues for the fiscal 2004 third quarter rose to $324.7 million, up from $283.0 million in the prior year period. Net income for the third quarter was $1.5 million, or $0.06 per diluted share, compared with net income of $3.7 million, or $0.14 per diluted share, for the same quarter last year. For the 39-week period of fiscal 2004, total revenues increased 19 percent to $930.3 million from $783.2 million in the prior year. Fiscal 2004 net income for the same period was $6.3 million, or $0.25 per diluted share. This compares with $5.8 million, or $0.22 per diluted share in the first 39 weeks of fiscal 2003, before the cumulative effect of a change in accounting principle relating to the recognition of vendor allowances of $4.8 million. In fiscal 2003, the company exited two business lines - EB Kids and BC Sports Collectibles. Accordingly, in the third quarter of fiscal 2003, the company's non-GAAP adjusted revenues were $279.2 million, and its adjusted net income was $2.7 million, or $0.10 per diluted share. For the 39-week period of fiscal 2003, the company's non-GAAP adjusted revenues were $769.8 million and its adjusted net income, before the cumulative effect of a change in accounting principle, was $6.1 million, or $0.23 per diluted share. "During the quarter, Electronics Boutique continued to post positive sales growth in contrast with NPD Group statistics, which reflected a 13-percent decline in industry-wide sales," said Jeffrey Griffiths, president and chief executive officer. "As we enter the fourth quarter, our business fundamentals are healthy. Our strip-center stores and international locations continue to deliver strong results, and our store-opening plan is on schedule. More importantly, we remain on target to report record earnings for the full fiscal year 2004." Comparable stores sales decreased 6.5 percent for the fiscal 2004 third quarter. The decline was primarily due to a difficult software sales comparison and weakness in hardware sales year over year. During the current quarter, the company opened 133 net new stores, increasing the total store count to 1,436 as of November 1, 2003. The company had 1,078 stores as of November 2, 2002. In the fiscal 2004 second quarter, the company completed the repurchase of 1.5 million shares of its common stock. On November 17, 2003, the company announced that its Board of Directors approved a new program to purchase up to an additional 2.0 million shares of the company's outstanding common stock. Business Outlook The company reaffirms its previous guidance for fiscal 2004 fourth quarter earnings to be in the range of $1.32 to $1.42 per diluted share. Comparable store sales are expected to decline in the range of 4 to 7 percent in the quarter. As a result of year-to-date performance and the outlook for the fourth fiscal quarter, the company expects full-year fiscal 2004 earnings in the range of $1.56 to $1.66 per diluted share based on an average diluted share base of 25.4 million shares. The company will host an investor conference call at 5:00 p.m. (Eastern) today to review its financial results and operations. The call will be open to all interested investors through a simultaneous Internet broadcast at http://www.ebholdings.com/. The call will be archived for two weeks on the website. A recording of the call will also be available November 20, 2003 at 8 p.m. (Eastern) through November 27, 2003 at midnight (Eastern). Listeners should call (800) 642-1687 (domestic) or (706) 645-9291 (international) and use access code: 3593239. About Electronics Boutique Holdings Corp. Electronics Boutique, a Fortune 1000 company, is among the world's largest specialty retailers dedicated exclusively to video game hardware, software and PC entertainment software and accessories. The company operates 1,436 stores in the United States, Australia, Canada, Denmark, Germany, Italy, New Zealand, Norway, Puerto Rico, Sweden and South Korea -- primarily under the names EB Games and Electronics Boutique. The company operates an e-commerce website at http://www.ebgames.com/. Additional company information is available at http://www.ebholdings.com/. This release contains forward-looking statements, including statements by Jeffrey Griffiths and in our Business Outlook related to the financial performance of Electronics Boutique for the fourth quarter and full year for the fiscal year ending January 31, 2004, and to store opening plans. 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 such forward-looking statements, such as the schedule for new software releases, consumer demand for video game hardware and software, pricing changes by key vendors for hardware and software, increased competition and promotional activity from other retailers, and the ability to open new stores on a timely basis. 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 (unaudited) (Amounts in thousands, except per-share amounts) 13 Weeks Ended 39 Weeks Ended November November November November 1, 2, 1, 2, 2003 2002 2003 2002 Net sales $323,146 $281,704 $925,541 $779,037 Management fees 1,570 1,256 4,722 4,198 Total revenues 324,716 282,960 930,263 783,235 Cost of goods sold 235,538 207,831 678,420 578,888 Gross profit 89,178 75,129 251,843 204,347 Costs and expenses: Selling, general and administrative expense 80,046 65,945 222,884 182,509 Restructuring and asset impairment reversal - (2,237) - (2,611) Depreciation and amortization 7,040 5,739 19,967 16,300 Operating income 2,092 5,682 8,992 8,149 Interest income, net 276 375 1,115 1,248 Income before income tax expense & cumulative effect of change in accounting principle 2,368 6,057 10,107 9,397 Income tax expense 886 2,315 3,783 3,590 Income before cumulative effect of change in accounting principle 1,482 3,742 6,324 5,807 Cumulative effect of change in accounting principle, net of tax - - - (4,773) Net income $1,482 $3,742 $6,324 $1,034 Income per share before cumulative effect of change in accounting principle: Basic $0.06 $0.14 $0.25 $0.22 Diluted $0.06 $0.14 $0.25 $0.22 Per share cumulative effect of change in accounting principle: Basic $- $- $- $(0.18) Diluted $- $- $- $(0.18) Net income per share: Basic $0.06 $0.14 $0.25 $0.04 Diluted $0.06 $0.14 $0.25 $0.04 Weighted average shares outstanding: Basic 24,742 25,844 25,203 25,820 Diluted 25,243 26,234 25,502 26,286 Electronics Boutique Holdings Corp. Consolidated Statements of Income (unaudited) (Amounts in thousands, except per-share amounts) Results excluding EBK and BCSC (1): 13 Weeks Ended 39 Weeks Ended November 2, November 2, 2002 2002 Total revenues $282,960 $783,235 Adjustment for EBK and BCSC (1) (3,795) (13,457) Total revenues excluding EBK and BCSC 279,165 769,778 Cost of goods sold 207,831 578,888 Adjustment for EBK and BCSC (1) (2,470) (9,631) Cost of goods sold excluding EBK and BCSC 205,361 569,257 Selling, general and administrative expense 65,945 182,509 Adjustment for EBK and BCSC (1) (1,839) (6,883) Selling, general and administrative expense excluding EBK and BCSC 64,106 175,626 Depreciation and amortization 5,739 16,300 Adjustment for EBK and BCSC (1) - (78) Depreciation and amortization excluding EBK and BCSC 5,739 16,222 Operating income 5,682 8,149 Adjustment for EBK and BCSC (1) (1,723) 524 Operating income excluding EBK and BCSC 3,959 8,673 Income before cumulative effect of change in accounting principle 3,742 5,807 Adjustment for EBK and BCSC (1) (1,064) 324 Income before cumulative effect of change in accounting principle excluding EBK and BCSC $2,678 $6,131 Income per share before cumulative effect of change in accounting principle - diluted $0.14 $0.22 Adjustment for EBK and BCSC (1) $(0.04) $0.01 Income per share before cumulative effect of change in accounting principle excluding EBK and BCSC - diluted $0.10 $0.23 (1) The company decided to close its EB Kids ("EBK") business and sell its BC Sports Collectibles ("BCSC") business at the end of fiscal 2002. The company believes that the presentation of this information will better enable investors to analyze the results of operations of the continuing business for each period reflected. The adjusted amounts exclude the results of operations and related expenses associated with the company's EBK and BCSC businesses in fiscal 2003 and the reversal of restructuring and asset impairment charges related to these businesses. Electronics Boutique Holdings Corp. Selected Consolidated Balance Sheet Data (unaudited) (Amounts in thousands) November 1, November 2, February 1, 2003 2002 2003 Cash and cash equivalents $72,924 $67,440 $121,873 Merchandise inventories 258,607 270,986 226,866 Total current assets 382,604 380,928 382,480 Total assets 536,250 512,269 521,614 Accounts payable 206,967 225,462 176,146 Current liabilities 260,788 265,757 237,983 Total liabilities 273,885 271,581 247,114 Stockholders' equity 262,365 240,688 274,500 DATASOURCE: Electronics Boutique Holdings Corp. CONTACT: James A. Smith, Chief Financial Officer, Electronics Boutique Holdings Corp., +1-610-430-8100 Web site: http://www.ebholdings.com/ http://www.ebgames.com/

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