NEW YORK, Mar 03, 2010 (BUSINESS WIRE) -- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today announced
financial results for its first quarter ended January 31, 2010.
Net revenue for the first fiscal quarter was $163.2 million, compared to
$149.4 million for the same quarter of fiscal 2009. First quarter fiscal
2010 sales were led by Borderlands(TM), NBA(R) 2K10, Grand
Theft Auto IV, Grand Theft Auto: Episodes from Liberty City and Carnival
Games(TM).
Net loss from continuing operations for the first quarter was $33.8
million or $0.43 per share, compared to a net loss from continuing
operations of $53.8 million or $0.71 per share in the first quarter of
fiscal 2009.
The first quarter 2010 results from continuing operations included $6.4
million in stock-based compensation expense ($0.08 per share); $1.7
million in non-cash interest expense on the Company's convertible notes
($0.02 per share); $0.7 million in professional fees and expenses
related to unusual matters ($0.01 per share); and $0.6 million in
non-cash tax expense ($0.01 per share). Results from continuing
operations for the first quarter of 2009 included $6.2 million in
stock-based compensation expense ($0.08 per share); and $4.9 million in
professional fees and expenses related to unusual matters ($0.06 per
share).
Non-GAAP net loss from continuing operations was $24.4 million or $0.31
per share in the first quarter of fiscal 2010, compared to non-GAAP net
loss from continuing operations of $42.8 million or $0.56 per share in
the first quarter of 2009. (Please refer to Non-GAAP Financial Measures
and reconciliation tables included later in this release for additional
information and details on non-GAAP items).
Business Highlights
-
Consistent with Take-Two's strategy to focus its resources on its core
publishing business, the Company completed the previously announced
sale of its Jack of All Games distribution business to SYNNEX
Corporation on February 26, 2010. The transaction was valued at
approximately $44 million, including $37.5 million in cash at closing
and up to an additional $6.75 million in deferred payments subject to
the achievement of certain objectives after the close of the
transaction. For the first quarter ended January 31, 2010, the results
of the Company's distribution segment were excluded from continuing
operations and have been reclassified to discontinued operations. Net
loss from discontinued operations for the first quarter was $0.1
million or $0.00 per share.
-
Take-Two is in the process of implementing a targeted restructuring of
its corporate departments in order to align resources more closely
with its current goals. The restructuring involves a 15% reduction in
corporate headcount and other cost savings initiatives, and is
expected to result in approximately $8 million in savings in fiscal
2010, and $15 million on an annualized basis.
Product Milestones
-
2K Games launched BioShock 2 globally on February 9. The title
has been a commercial and critical success, and has shipped over 3
million units to date. The original BioShock title launched in
August 2007 has now sold over 4 million units, bringing the total
sales of the franchise to 7 million units.
- NBA 2K10 from 2K Sports has shipped over 2 million units. The
title continues to be the #1 selling and #1 rated basketball game for
the Xbox 360 and PlayStation 3 through January 2010, according to The
NPD Group's estimates of U.S. retail video game sales and
Metacritic.com.
- Grand Theft Auto IV from Rockstar Games has sold over 15
million units globally.
-
2K Play's Carnival Games franchise has sold over 6 million
units worldwide on the Wii and DS.
Product Highlights
- Red Dead Redemption from Rockstar Games is now planned for
release on May 18, 2010 in North America and May 21, 2010
internationally.
-
Rockstar Games announced Grand Theft Auto: Episodes from Liberty
City for the PlayStation 3 and Games for Windows(R) - LIVE, both
planned for release on March 30, 2010. The Lost and Damned and The
Ballad of Gay Tony will be available at the same time for digital
download.
-
2K Games announced the development of Sid Meier's Civilization(R) V,
the newest entry from the strategy-based franchise, coming to PC this
fall.
Financial Guidance
The Company is providing initial guidance for the second quarter ending
April 30, 2010 and updating its guidance for the fiscal year ending
October 31, 2010. The Company's fiscal year 2010 guidance provided below
assumes the following factors:
-
a non-GAAP net loss from the Company's Major League Baseball(R)
business in the range of $30 to $35 million, or $0.38 to $0.44 per
share;
-
the launch of Red Dead Redemption in the third fiscal quarter;
and
- L.A. Noire, Mafia II, Max Payne 3 and Sid Meier's
Civilization V are all planned for releasein the fourth
fiscal quarter; however, the Company's fiscal year 2010 guidance
reflects the potential movement of one of these titles into fiscal
2011.
|
|
|
|
|
|
|
Second quarter ending
|
|
Fiscal year ending
|
|
|
4/30/2010
|
|
10/31/2010
|
Revenue
|
|
$250 to $300 million
|
|
$725 to $925 million
|
|
|
|
|
|
Non-GAAP EPS from continuing operations
|
|
$0.20 to $0.30
|
|
$(0.40) to $(0.60)
|
|
|
|
|
|
Stock-based compensation
expense per share (a)
|
|
$0.08
|
|
$0.40
|
|
|
|
|
|
Non-cash interest expense related to convertible
debt (b)
|
|
$0.02
|
|
$0.09
|
|
|
|
|
|
Business restructuring costs and expenses related to unusual
legal matters
|
|
$0.01
|
|
$0.02
|
|
|
|
|
|
Non-cash tax expense
|
|
$0.01
|
|
$0.04
|
|
(a) The Company's stock-based compensation expense for the second
quarter and fiscal year 2010 includes the cost of approximately 2
million stock options and 1.5 million shares previously issued to
ZelnickMedia that are subject to variable accounting. Actual
expense to be recorded in connection with these options and shares
is dependent upon several factors, including future changes in
Take-Two's stock price.
|
(b) The Company adopted a new accounting standard in the first
quarter of fiscal 2010 that requires convertible debt to be
bifurcated into debt and equity components. As a result of the new
standard, the Company has begun to record non-cash interest
expense on its convertible notes, in addition to the interest
expense already recorded for coupon payments.
|
|
Key assumptions and dependencies underlying the Company's guidance
include continued consumer acceptance of the Xbox 360, PlayStation 3 and
Wii; the ability to develop and publish products that capture market
share for these current generation systems while continuing to leverage
opportunities on certain prior generation platforms; as well as the
timely delivery of the titles detailed in this release.
Product Releases
The following titles shipped to date during fiscal 2010:
Title |
|
|
Platform |
|
|
|
|
BioShock(R) 2 |
|
|
Xbox 360, PS3, PC
|
Borderlands: Mad Moxxi's Underdome Riot (DLC) |
|
|
Xbox 360, PS3, PC
|
Borderlands: The Secret Armory of General Knoxx (DLC) |
|
|
Xbox 360, PS3, PC
|
Borderlands: The Zombie Island of Dr. Ned (DLC) |
|
|
Xbox 360, PS3, PC
|
Dora the Explorer: Dora Saves the Crystal Kingdom |
|
|
PS2
|
Grand Theft Auto: Chinatown Wars |
|
|
iPhone and iPod touch
|
Major League Baseball(R) 2K10 |
|
|
Xbox 360, PS3, PS2, PSP, Wii, DS, PC
|
The Misadventures of P.B. Winterbottom |
|
|
Xbox LIVE(R)
|
NBA(R) 2K10 |
|
|
Wii
|
Ringling Bros. and Barnum & Bailey(TM)
|
|
|
Wii, DS
|
|
|
|
|
Take-Two's lineup of key titles announced to date for the remainder of
fiscal 2010 includes:
Title |
|
|
Platform |
|
|
|
|
L.A. Noire |
|
|
Xbox 360, PS3
|
Mafia(R) II |
|
|
Xbox 360, PS3, PC
|
Max Payne 3 |
|
|
Xbox 360, PS3, PC
|
NBA(R) 2K11 |
|
|
TBA
|
NHL(R) 2K11 |
|
|
Wii
|
Red Dead Redemption |
|
|
Xbox 360, PS3
|
Sid Meier's Civilization(R) V |
|
|
PC
|
Management Comment
Strauss Zelnick, Chairman of Take-Two, stated, "We are pleased to begin
this fiscal year with better than expected results that reflect our
ability to produce compelling titles and to enhance the potential of our
franchises through downloadable content and digital offerings. We've
also taken important steps to improve the efficiency of our business and
align our corporate cost structure more closely with our current goals.
Our updated outlook for 2010 underscores a prudent approach toward what
we still believe to be a challenging year ahead. We remain committed to
creating long term value, and continuing to improve upon our execution
and efficiency."
Ben Feder, Chief Executive Officer of Take-Two, commented, "Our first
quarter performance was driven by the market dominance of NBA 2K10,
successful launch of Borderlands, growth of our digital business
and continued strength of our catalog titles. We are building upon this
success with the global launch of BioShock 2, and have a strong
line up of triple-A titles from our diverse portfolio of proven brands
planned for release this fiscal year. Take-Two has been strengthened
through our cost savings initiatives and the sale of Jack of All Games,
which allows us to focus our resources solely on our core business. We
will continue to evaluate our cost structure for additional savings, and
work to maximize the value of our intellectual property by selectively
engaging in strategic opportunities in emerging markets and new
platforms."
Conference Call
Take-Two will host a conference call today at 4:30 p.m. Eastern Time to
review these results and discuss other topics. The call can be accessed
by dialing (877) 407-0984 or (201) 689-8577. A live listen-only webcast
of the call will be available by visiting http://ir.take2games.com
and a replay will be available following the call at the same location.
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with U.S.
generally accepted accounting principles (GAAP), the Company uses
non-GAAP measures of financial performance that exclude certain
non-recurring or non-cash items. Non-GAAP gross profit, income (loss)
from operations, net income (loss) and earnings (loss) per share are
measures that exclude certain non-recurring or non-cash items and should
be considered in addition to results prepared in accordance with GAAP.
They are not intended to be considered in isolation from, as a
substitute for, or superior to, GAAP results. These non-GAAP financial
measures may be different from similarly titled measures used by other
companies.
The non-GAAP measures exclude the following items from the Company's
statements of operations:
-
Stock-based compensation;
-
Business reorganization, restructuring and related expenses;
-
Professional fees and expenses associated with unusual legal and other
matters;
-
Non-cash interest expense related to convertible debt; and
-
Non-cash tax expense for the impact of deferred tax liabilities
associated with tax deductible amortization of goodwill.
In addition, the Company may consider whether other significant
non-recurring items that arise in the future should also be excluded
from the non-GAAP financial measures it uses.
The Company believes that these non-GAAP financial measures, when taken
into consideration with the corresponding GAAP financial measures, are
important in gaining an understanding of the Company's ongoing business.
These non-GAAP financial measures also provide for comparative results
from period to period. Therefore, the Company believes it is appropriate
to exclude certain items as follows:
Stock-based compensation
The Company does not consider stock-based compensation charges when
evaluating business performance and management does not contemplate
stock-based compensation expense in its short and long-term operating
plans. The Company places greater emphasis on stockholder dilution than
accounting charges when assessing the impact of stock-based equity
awards.
Business reorganization, restructuring and related expenses
From time to time, the Company may engage in business reorganization and
restructuring activities, which may result in costs related to
severance, asset write-offs and associated professional fees. The
Company does not engage in reorganization activities on a regular basis
and therefore believes it is appropriate to exclude business
reorganization, restructuring and related expenses from its non-GAAP
financial measures.
Professional fees and expenses associated with unusual legal and
other matters
The Company has incurred significant legal and other professional fees
associated with both the investigation of its historical stock option
granting practices and the Company's responses to related governmental
inquiries and civil lawsuits. One of management's primary objectives is
to bring conclusion to its outstanding legal matters. The Company
continues to incur expenses for professional fees and has accrued for
legal settlements that are outside its ordinary course of business. As a
result, the Company has excluded such expenses from its non-GAAP
financial measures.
Non-cash interest expense related to convertible debt
The Company adopted a new accounting standard in the first quarter of
fiscal 2010 that requires convertible debt to be bifurcated into debt
and equity components. As a result of the new standard, the Company has
begun to record non-cash interest expense on its convertible notes, in
addition to the interest expense already recorded for coupon payments.
The Company excludes the non-cash portion of the interest expense from
its non-GAAP financial measures because these amounts are unrelated to
its ongoing business operations.
Non-cash tax expense for the impact of deferred tax liabilities
associated with tax deductible amortization of goodwill
The Company records non-cash tax expense for the impact of deferred tax
liabilities associated with tax deductible amortization of goodwill. Due
to the nature of the adjustment as well as the expectation that it will
not have any cash impact in the foreseeable future, the Company believes
it is appropriate to exclude this expense from its non-GAAP financial
measures.
EBITDA and Adjusted EBITDA
Earnings (loss) before interest, taxes, depreciation and amortization
("EBITDA") is a financial measure not calculated and presented in
accordance with U.S. GAAP. Management uses EBITDA adjusted for business
reorganization and related expenses ("Adjusted EBITDA"), among other
measures, in evaluating the performance of the Company's business units.
Adjusted EBITDA is also a significant component of the Company's
incentive compensation plans. Adjusted EBITDA should not be considered
in isolation from, or as a substitute for, net income/(loss) prepared in
accordance with GAAP.
Reclassifications
Certain prior year amounts have been reclassified to conform to current
year presentation.
About Take-Two Interactive Software, Inc.
Headquartered in New York City, Take-Two Interactive Software, Inc. is a
global developer, marketer and publisher of interactive entertainment
software games for the PC, PlayStation(R)3 and PlayStation(R)2 computer
entertainment systems, PSP(R) (PlayStation(R)Portable) system, Xbox 360(R)
video game and entertainment system from Microsoft, Wii(TM), Nintendo DS(TM),
iPhone(TM) and iPod(R) touch. The Company publishes and develops products
through its wholly owned labels Rockstar Games and 2K, which publishes
its titles under 2K Games, 2K Sports and 2K Play. The Company's common
stock is publicly traded on NASDAQ under the symbol TTWO. For more
corporate and product information please visit our website at www.take2games.com.
All trademarks and copyrights contained herein are the property of their
respective holders.
Cautionary Note Regarding Forward-Looking Statements
The statements contained herein which are not historical facts are
considered forward-looking statements under federal securities laws and
may be identified by words such as "anticipates," "believes,"
"estimates," "expects," "intends," "plans," "potential," "predicts,"
"projects," "seeks," "will," or words of similar meaning and include,
but are not limited to, statements regarding the outlook for the
Company's future business and financial performance. Such
forward-looking statements are based on the current beliefs of our
management as well as assumptions made by and information currently
available to them, which are subject to inherent uncertainties, risks
and changes in circumstances that are difficult to predict. Actual
outcomes and results may vary materially from these forward-looking
statements based on a variety of risks and uncertainties including: our
dependence on key management and product development personnel, our
dependence on our Grand Theft Auto products and our ability to develop
other hit titles for current generation platforms, the timely release
and significant market acceptance of our games, the ability to maintain
acceptable pricing levels on our games, our reliance on a primary
distribution service provider for a significant portion of our products,
our ability to raise capital if needed, risks associated with
international operations, and the matters relating to the investigation
by a special committee of our board of directors of the Company's stock
option grants and the claims and proceedings relating thereto (including
stockholder and derivative litigation and negative tax or other
implications for the Company resulting from any accounting adjustments
or other factors). Other important factors and information are contained
in the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 2009, in the section entitled "Risk Factors," and the
Company's other periodic filings with the SEC, which can be accessed at www.take2games.com.
All forward-looking statements are qualified by these cautionary
statements and apply only as of the date they are made. The Company
undertakes no obligation to update any forward-looking statement,
whether as a result of new information, future events or otherwise.
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
Three months ended January 31, |
|
|
2010 |
|
2009 |
|
|
|
|
(as adjusted)(1) |
|
|
|
|
|
Net revenue
|
|
$ |
163,238 |
|
|
$
|
149,351
|
|
|
|
|
|
|
Cost of goods sold:
|
|
|
|
|
Product costs
|
|
|
53,079 |
|
|
|
51,762
|
|
Software development costs and royalties
|
|
|
37,330 |
|
|
|
23,302
|
|
Internal royalties
|
|
|
2,118 |
|
|
|
20,472
|
|
Licenses
|
|
|
7,831 |
|
|
|
7,181
|
|
Total cost of goods sold
|
|
|
100,358 |
|
|
|
102,717
|
|
|
|
|
|
|
Gross profit
|
|
|
62,880 |
|
|
|
46,634
|
|
|
|
|
|
|
Selling and marketing
|
|
|
41,094 |
|
|
|
38,671
|
|
General and administrative
|
|
|
28,695 |
|
|
|
38,455
|
|
Research and development
|
|
|
15,455 |
|
|
|
20,943
|
|
Depreciation and amortization
|
|
|
4,159 |
|
|
|
4,782
|
|
Total operating expenses
|
|
|
89,403 |
|
|
|
102,851
|
|
Loss from continuing operations
|
|
|
(26,523 |
) |
|
|
(56,217
|
)
|
Interest and other, net
|
|
|
(4,813 |
) |
|
|
2,388
|
|
Loss from continuing operations before income taxes
|
|
|
(31,336 |
) |
|
|
(53,829
|
)
|
Provision for income taxes
|
|
|
2,486 |
|
|
|
19
|
|
Net loss from continuing operations
|
|
|
(33,822 |
) |
|
|
(53,848
|
)
|
Income (loss) from discontinued operations, net of taxes
|
|
(52 |
) |
|
|
3,460
|
|
Net loss
|
|
$ |
(33,874 |
) |
|
$
|
(50,388
|
)
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
Continuing operations
|
|
$ |
(0.43 |
) |
|
$
|
(0.71
|
)
|
Discontinued operations
|
|
|
(0.00 |
) |
|
|
0.05
|
|
Basic earnings (loss) per share
|
|
$ |
(0.43 |
) |
|
$
|
(0.66
|
)
|
|
|
|
|
|
Continuing operations
|
|
$ |
(0.43 |
) |
|
$
|
(0.71
|
)
|
Discontinued operations
|
|
|
(0.00 |
) |
|
|
0.05
|
|
Diluted earnings (loss) per share
|
|
$ |
(0.43 |
) |
|
$
|
(0.66
|
)
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
Basic
|
|
|
78,139 |
|
|
|
76,102
|
|
Diluted
|
|
|
78,139 |
|
|
|
76,102
|
|
|
|
|
|
|
(1) As adjusted to reflect the sale of Jack of All Games which was
completed in February 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended January 31, |
OTHER INFORMATION |
|
2010 |
|
2009 |
|
|
|
|
|
Geographic revenue mix
|
|
|
|
|
North America
|
|
|
75
|
%
|
|
|
58
|
%
|
International
|
|
|
25
|
%
|
|
|
42
|
%
|
|
|
|
|
|
Platform revenue mix
|
|
|
|
|
Microsoft Xbox 360
|
|
|
42
|
%
|
|
|
19
|
%
|
Sony PlayStation 3
|
|
|
19
|
%
|
|
|
15
|
%
|
Nintendo Wii
|
|
|
13
|
%
|
|
|
19
|
%
|
PC
|
|
|
8
|
%
|
|
|
24
|
%
|
Sony PSP
|
|
|
6
|
%
|
|
|
8
|
%
|
Sony PlayStation 2
|
|
|
6
|
%
|
|
|
9
|
%
|
Nintendo DS
|
|
|
5
|
%
|
|
|
5
|
%
|
Other
|
|
|
1
|
%
|
|
|
1
|
%
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
January 31, |
|
October 31, |
|
|
2010 |
|
2009 |
|
|
|
|
|
ASSETS |
|
(unaudited) |
|
(as adjusted)(1) |
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
105,984 |
|
|
$
|
102,083
|
|
Accounts receivable, net of allowances of $34,328 and $37,191 at
January 31, 2010
|
|
|
|
|
and October 31, 2009, respectively
|
|
|
45,063 |
|
|
|
181,065
|
|
Inventory
|
|
|
50,662 |
|
|
|
26,687
|
|
Software development costs and licenses
|
|
|
186,846 |
|
|
|
167,341
|
|
Prepaid taxes and taxes receivable
|
|
|
9,686 |
|
|
|
8,814
|
|
Prepaid expenses and other
|
|
|
49,261 |
|
|
|
47,473
|
|
Assets held for sale
|
|
|
73,838 |
|
|
|
95,104
|
|
Total current assets
|
|
|
521,340 |
|
|
|
628,567
|
|
|
|
|
|
|
Fixed assets, net
|
|
|
25,052 |
|
|
|
27,049
|
|
Software development costs and licenses, net of current portion
|
|
|
72,678 |
|
|
|
75,521
|
|
Goodwill
|
|
|
218,826 |
|
|
|
220,881
|
|
Other intangibles, net
|
|
|
22,894 |
|
|
|
23,224
|
|
Other assets
|
|
|
32,554 |
|
|
|
31,886
|
|
Total assets
|
|
$ |
893,344 |
|
|
$
|
1,007,128
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$ |
64,037 |
|
|
$
|
114,379
|
|
Accrued expenses and other current liabilities
|
|
|
164,453 |
|
|
|
172,784
|
|
Deferred revenue
|
|
|
15,939 |
|
|
|
6,334
|
|
Liabilities held for sale
|
|
|
29,154 |
|
|
|
60,796
|
|
Total current liabilities
|
|
|
273,583 |
|
|
|
354,293
|
|
|
|
|
|
|
Long-term debt
|
|
|
98,726 |
|
|
|
97,063
|
|
Income taxes payable
|
|
|
10,242 |
|
|
|
10,146
|
|
Total liabilities
|
|
|
382,551 |
|
|
|
461,502
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred stock, $.01 par value, 5,000 shares authorized
|
|
|
- |
|
|
|
-
|
|
Common stock, $.01 par value, 150,000 shares authorized; 83,790 and
81,925 shares
|
|
|
|
|
issued and outstanding at January 31, 2010 and October 31, 2009,
respectively
|
|
|
838 |
|
|
|
819
|
|
Additional paid-in capital
|
|
|
665,756 |
|
|
|
658,794
|
|
Accumulated deficit
|
|
|
(156,053 |
) |
|
|
(122,179
|
)
|
Accumulated other comprehensive income
|
|
|
252 |
|
|
|
8,192
|
|
Total stockholders' equity
|
|
|
510,793 |
|
|
|
545,626
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$ |
893,344 |
|
|
$
|
1,007,128
|
|
|
|
|
|
|
(1) As adjusted to reflect the following items:
|
|
|
|
|
- the sale of Jack of All Games which was completed in February 2010;
|
- the retroactive adoption of new convertible debt accounting
guidance; and
|
- the reclassification of certain prior year amounts to conform to
current year presentation for comparative purposes.
|
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
(in thousands) |
|
|
|
Three months ended January 31, |
|
|
|
2010 |
|
2009 |
|
|
|
|
|
(as adjusted)(1) |
Operating activities: |
|
|
|
|
|
Net loss
|
|
$ |
(33,874 |
) |
|
$
|
(50,388
|
)
|
|
Adjustments to reconcile net loss to net cash provided by (used for)
operating activities:
|
|
|
Amortization and impairment of software development costs and
licenses
|
|
|
20,866 |
|
|
|
20,092
|
|
|
Depreciation and amortization
|
|
|
4,159 |
|
|
|
4,782
|
|
|
(Income) loss from discontinued operations
|
|
|
52 |
|
|
|
(3,460
|
)
|
|
Amortization and impairment of intellectual property
|
|
|
30 |
|
|
|
390
|
|
|
Stock-based compensation
|
|
|
6,437 |
|
|
|
6,182
|
|
|
Deferred income taxes
|
|
|
(84 |
) |
|
|
(177
|
)
|
|
Other, net
|
|
|
2,900 |
|
|
|
(3,841
|
)
|
|
Changes in assets and liabilities, net of effect from purchases of
businesses:
|
|
|
|
|
Accounts receivable
|
|
|
136,002 |
|
|
|
78,891
|
|
|
Inventory
|
|
|
(23,975 |
) |
|
|
13,961
|
|
|
Software development costs and licenses
|
|
|
(40,685 |
) |
|
|
(31,613
|
)
|
|
Prepaid expenses, other current and other non-current assets
|
|
|
(3,557 |
) |
|
|
(7,221
|
)
|
|
Deferred revenue
|
|
|
9,605 |
|
|
|
(2,323
|
)
|
|
Accounts payable, accrued expenses, income taxes payable and other
liabilities
|
|
|
(63,144 |
) |
|
|
(78,830
|
)
|
|
Net cash used by discontinued operations
|
|
|
(10,703 |
) |
|
|
(3,254
|
)
|
|
Net cash provided by (used for) operating activities
|
|
|
4,029 |
|
|
|
(56,809
|
)
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
Purchase of fixed assets
|
|
|
(1,820 |
) |
|
|
(2,198
|
)
|
|
Net cash used for investing activities
|
|
|
(1,820 |
) |
|
|
(2,198
|
)
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
Proceeds from exercise of employee stock options
|
|
|
- |
|
|
|
4
|
|
|
Net cash provided by financing activities
|
|
|
- |
|
|
|
4
|
|
|
Effects of exchange rates on cash and cash equivalents
|
|
|
1,692 |
|
|
|
(3,438
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
3,901 |
|
|
|
(62,441
|
)
|
|
Cash and cash equivalents, beginning of year
|
|
|
102,083 |
|
|
|
280,277
|
|
|
Cash and cash equivalents, end of period
|
|
$ |
105,984 |
|
|
$
|
217,836
|
|
|
|
|
|
|
|
(1) As adjusted to reflect the following items:
|
|
|
|
|
|
- the sale of Jack of All Games which was completed in February 2010;
|
|
- the retroactive adoption of new convertible debt accounting
guidance; and
|
|
- the reclassification of certain prior year amounts to conform to
current year presentation for comparative purposes.
|
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciling Items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
|
|
|
|
|
|
Professional
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP three
|
|
|
ended January 31,
|
|
|
Discontinued
|
|
|
fees and
|
|
|
Stock-based
|
|
|
Non-cash
|
|
|
Non-cash
|
|
|
months ended January 31,
|
|
|
2010
|
|
|
operations
|
|
|
legal matters
|
|
|
compensation
|
|
|
interest expense
|
|
|
tax expense
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
163,238
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
163,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product costs
|
|
|
53,079
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
53,079
|
|
Software development costs and royalties
|
|
|
37,330
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(1,670
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
35,660
|
|
Internal royalties
|
|
|
2,118
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
2,118
|
|
Licenses
|
|
|
7,831
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
7,831
|
|
Total cost of goods sold
|
|
|
100,358
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(1,670
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
98,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
62,880
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
1,670
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
64,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing
|
|
|
41,094
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(716
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
40,378
|
|
General and administrative
|
|
|
28,695
|
|
|
|
|
-
|
|
|
|
(682
|
)
|
|
|
|
(2,607
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
25,406
|
|
Research and development
|
|
|
15,455
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(1,444
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
14,011
|
|
Depreciation and amortization
|
|
|
4,159
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
4,159
|
|
Total operating expenses
|
|
|
89,403
|
|
|
|
|
-
|
|
|
|
(682
|
)
|
|
|
|
(4,767
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
83,954
|
|
Loss from continuing operations
|
|
|
(26,523
|
)
|
|
|
|
-
|
|
|
|
682
|
|
|
|
|
6,437
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(19,404
|
)
|
Interest and other, net
|
|
|
(4,813
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1,663
|
|
|
|
-
|
|
|
|
|
(3,150
|
)
|
Loss from continuing operations before income taxes
|
|
|
(31,336
|
)
|
|
|
|
-
|
|
|
|
682
|
|
|
|
|
6,437
|
|
|
|
|
1,663
|
|
|
|
-
|
|
|
|
|
(22,554
|
)
|
Provision for income taxes
|
|
|
2,486
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
(644
|
)
|
|
|
|
1,842
|
|
Net loss from continuing operations
|
|
|
(33,822
|
)
|
|
|
|
-
|
|
|
|
682
|
|
|
|
|
6,437
|
|
|
|
|
1,663
|
|
|
|
644
|
|
|
|
|
(24,396
|
)
|
Income (loss) from discontinued operations, net of taxes
|
|
|
(52
|
)
|
|
|
|
52
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
Net loss
|
|
$
|
(33,874
|
)
|
|
|
$
|
52
|
|
|
$
|
682
|
|
|
|
$
|
6,437
|
|
|
|
$
|
1,663
|
|
|
$
|
644
|
|
|
|
$
|
(24,396
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(0.43
|
)
|
|
|
$
|
-
|
|
|
$
|
0.01
|
|
|
|
$
|
0.08
|
|
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
|
$
|
(0.31
|
)
|
Discontinued operations
|
|
|
(0.00
|
)
|
|
|
|
0.00
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
Basic earnings (loss) per share
|
|
$
|
(0.43
|
)
|
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
|
$
|
0.08
|
|
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
|
$
|
(0.31
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(0.43
|
)
|
|
|
$
|
-
|
|
|
$
|
0.01
|
|
|
|
$
|
0.08
|
|
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
|
$
|
(0.31
|
)
|
Discontinued operations
|
|
|
(0.00
|
)
|
|
|
|
0.00
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
Diluted earnings (loss) per share
|
|
$
|
(0.43
|
)
|
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
|
$
|
0.08
|
|
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
|
$
|
(0.31
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
78,139
|
|
|
|
|
78,139
|
|
|
|
78,139
|
|
|
|
|
78,139
|
|
|
|
|
78,139
|
|
|
|
78,139
|
|
|
|
|
78,139
|
|
Diluted
|
|
|
78,139
|
|
|
|
|
78,139
|
|
|
|
78,139
|
|
|
|
|
78,139
|
|
|
|
|
78,139
|
|
|
|
78,139
|
|
|
|
|
78,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
$
|
(31,336
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(22,554
|
)
|
Interest
|
|
|
3,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,246
|
|
Depreciation and amortization
|
|
|
4,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,159
|
|
EBITDA |
|
$
|
(23,268
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(16,149
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Earnings (loss) per share may not add due to rounding |
|
|
|
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciling Items |
|
|
|
|
|
Three months
|
|
|
|
|
|
Professional
|
|
|
|
|
|
Non-GAAP three
|
|
|
ended January 31,
|
|
|
Discontinued
|
|
|
fees and
|
|
|
Stock-based
|
|
|
months ended January 31,
|
|
|
2009
|
|
|
operations
|
|
|
legal matters
|
|
|
compensation
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
149,351
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
149,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product costs
|
|
|
51,762
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
51,762
|
|
Software development costs and royalties
|
|
|
23,302
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(1,172
|
)
|
|
|
|
22,130
|
|
Internal royalties
|
|
|
20,472
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
20,472
|
|
Licenses
|
|
|
7,181
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
7,181
|
|
Total cost of goods sold
|
|
|
102,717
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(1,172
|
)
|
|
|
|
101,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
46,634
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1,172
|
|
|
|
|
47,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing
|
|
|
38,671
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(493
|
)
|
|
|
|
38,178
|
|
General and administrative
|
|
|
38,455
|
|
|
|
|
-
|
|
|
|
|
(4,859
|
)
|
|
|
|
(3,391
|
)
|
|
|
|
30,205
|
|
Research and development
|
|
|
20,943
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(1,126
|
)
|
|
|
|
19,817
|
|
Depreciation and amortization
|
|
|
4,782
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
4,782
|
|
Total operating expenses
|
|
|
102,851
|
|
|
|
|
-
|
|
|
|
|
(4,859
|
)
|
|
|
|
(5,010
|
)
|
|
|
|
92,982
|
|
Loss from continuing operations
|
|
|
(56,217
|
)
|
|
|
|
-
|
|
|
|
|
4,859
|
|
|
|
|
6,182
|
|
|
|
|
(45,176
|
)
|
Interest and other, net
|
|
|
2,388
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2,388
|
|
Loss from continuing operations before income taxes
|
|
|
(53,829
|
)
|
|
|
|
-
|
|
|
|
|
4,859
|
|
|
|
|
6,182
|
|
|
|
|
(42,788
|
)
|
Provision for income taxes
|
|
|
19
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
19
|
|
Net loss from continuing operations
|
|
|
(53,848
|
)
|
|
|
|
-
|
|
|
|
|
4,859
|
|
|
|
|
6,182
|
|
|
|
|
(42,807
|
)
|
Income (loss) from discontinued operations, net of taxes
|
|
|
3,460
|
|
|
|
|
(3,460
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Net loss
|
|
$
|
(50,388
|
)
|
|
|
$
|
(3,460
|
)
|
|
|
$
|
4,859
|
|
|
|
$
|
6,182
|
|
|
|
$
|
(42,807
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(0.71
|
)
|
|
|
$
|
-
|
|
|
|
$
|
0.06
|
|
|
|
$
|
0.08
|
|
|
|
$
|
(0.56
|
)
|
Discontinued operations
|
|
|
0.05
|
|
|
|
|
(0.05
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Basic earnings (loss) per share
|
|
$
|
(0.66
|
)
|
|
|
$
|
(0.05
|
)
|
|
|
$
|
0.06
|
|
|
|
$
|
0.08
|
|
|
|
$
|
(0.56
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(0.71
|
)
|
|
|
$
|
-
|
|
|
|
$
|
0.06
|
|
|
|
$
|
0.08
|
|
|
|
$
|
(0.56
|
)
|
Discontinued operations
|
|
|
0.05
|
|
|
|
|
(0.05
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Diluted earnings (loss) per share
|
|
$
|
(0.66
|
)
|
|
|
$
|
(0.05
|
)
|
|
|
$
|
0.06
|
|
|
|
$
|
0.08
|
|
|
|
$
|
(0.56
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
76,102
|
|
|
|
|
76,102
|
|
|
|
|
76,102
|
|
|
|
|
76,102
|
|
|
|
|
76,102
|
|
Diluted
|
|
|
76,102
|
|
|
|
|
76,102
|
|
|
|
|
76,102
|
|
|
|
|
76,102
|
|
|
|
|
76,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
$
|
(53,829
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(42,788
|
)
|
Interest
|
|
|
1,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,545
|
|
Depreciation and amortization
|
|
|
4,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,782
|
|
EBITDA |
|
$
|
(47,502
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(36,461
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Earnings (loss) per share may not add due to rounding |
SOURCE: Take-Two Interactive Software, Inc.
Take-Two Interactive Software, Inc. Corporate Press/Investor Relations: Meg Maise, 646-536-2932 meg.maise@take2games.com
|