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|GameStop Announces Capital Allocation Strategy Including $300 Million Share Repurchase Program|
|GRAPEVINE, Texas, Jan 11, 2010 (BUSINESS WIRE) -- GameStop Corp. (NYSE: GME), the world's largest video game and
entertainment software retailer, today announced its capital allocation
GameStop, one of the world's fastest growing retailers with a unique business model generating outstanding free cash flow, today announced its 2010 Capital Allocation Plan. The plan will provide ample investment capital for continued aggressive new store expansion worldwide and allow GameStop to enhance shareholder value through a $300 million share repurchase program approved by its Board of Directors today. Purchases will be executed according to market conditions. The impact of the entire $300 million buyback at today's share price would result in accretion to EPS of approximately 10%.
Over the past three years, GameStop has generated sufficient cash flow to fund the opening of almost 2,000 new stores, redeemed $500 million dollars in long-term debt, and completed the acquisition of Micromania for $580 million. The company believes its cash flow will remain at or above existing levels for the year ahead and believes the video game industry and GameStop will continue to grow in the years to come.
The company intends to continue its aggressive roll-out strategy of opening new stores worldwide, exploring acquisition opportunities in retail or in technologies related to the video game business, and implement the capital allocation plan as follows:
The company expects to end fiscal year 2009 with $700 million of cash on hand and, assuming similar levels of cash from operations as generated in fiscal year 2009, the company should end fiscal 2010 with $700 million of cash after having executed the program above.
Daniel DeMatteo, Chief Executive Officer, stated, "As GameStop expects to generate significant excess cash over the next several years, we are pleased that the Board has authorized this program as our equity represents a very attractive investment opportunity. This capital allocation plan underscores the financial strength and long-term confidence of our company and returns significant capital to shareholders even as we continue to expand worldwide."
The capital allocation program does not have any specific limitations and may be suspended or terminated at any time.
Headquartered in Grapevine, TX, GameStop Corp., a Fortune 500 and S&P 500 company, is the world's largest video game and entertainment software retailer. The company operates 6,457 retail stores in 17 countries worldwide. The company also operates an e-commerce site, GameStop.com, and publishes Game Informer(R) magazine, a leading multi-platform video game publication. GameStop Corp. sells new and used video game software, hardware and accessories for video game systems from Sony, Nintendo, and Microsoft. In addition, the company sells PC entertainment software, related accessories and other merchandise. General information on GameStop Corp. can be obtained at the company's corporate website: http://www.gamestopcorp.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, the outlook for the fourth quarter and fiscal year 2009, future financial and operating results, the company's plans, objectives, expectations and intentions, and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of GameStop's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. GameStop undertakes no obligation to publicly update or revise any forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: economic and other events and market conditions, including those that reduce or impact consumer demand; the inability to obtain sufficient quantities of product to meet consumer demand; the timing of release of video game titles for next generation consoles; the risks associated with expanded international operations and the integration of recent acquisitions, including Micromania; and the impact of increased competition and changing technology in the video game industry. Additional factors that could cause GameStop's results to differ materially from those described in the forward-looking statements can be found in GameStop's Annual Report on Form 10-K for the fiscal year ended January 31, 2009, filed with the SEC and available at the SEC's Internet site at http://www.sec.gov or http://investor.gamestop.com.
SOURCE: GameStop Corp.