Take-Two News Release
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Take-Two Interactive Software, Inc. Reports Fourth Quarter and Fiscal 2007 Financial Results
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Fourth Quarter Bottom Line Exceeds Guidance; Net Loss Declines on
Revenue Growth and Reduced Expenses
Company Reiterates Fiscal Year 2008 Guidance and Provides First
Quarter Guidance
NEW YORK--(BUSINESS WIRE)--Dec. 18, 2007--Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today announced financial results for its fourth quarter and fiscal year ended October 31, 2007. Net revenue for the fourth quarter was $292.6 million, compared to $266.6 million for the same period of fiscal 2006. Fourth quarter sales were led by BioShock, NBA 2K8 and Carnival Games, all of which were new titles released this quarter, as well as Grand Theft Auto catalog titles. Distribution revenue rose year over year, as next generation hardware sales were fueled by the strength of new front-line software titles, along with robust demand for Wii products. Net loss for the fourth quarter was $7.1 million or $0.10 per share, compared to a net loss of $14.0 million or $0.20 per share in the fourth quarter of fiscal 2006. The fourth quarter 2007 results include $4.8 million in stock-based compensation expenses ($0.06 per share); $4.5 million in business reorganization costs ($0.06 per share), including a $3.1 million loss related to the sale of Joytech ($0.04 per share); and $1.5 million in expenses related to unusual legal matters ($0.02 per share). Results for the fourth quarter of 2006 included $6.8 million in stock-based compensation expenses ($0.08 per share); $5.5 million in expenses related to unusual legal matters ($0.06 per share); and $2.3 million in expenses primarily related to studio closures ($0.03 per share). Non-GAAP net income was $3.4 million or $0.05 per share in the fourth quarter of 2007, compared to a net loss of $1.8 million or $0.03 per share in the fourth quarter of 2006. (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 Among the significant recent business developments, Take-Two noted the following:
-- 2K Games' wholly owned and internally developed BioShock for
Xbox 360 and Games for Windows(R) has shipped over 2 million
units worldwide since its launch in late August. This
critically acclaimed title has received numerous accolades,
including Game of the Year from the British Academy of Film
and Television Arts (BAFTA), and from the Associated Press.
Additionally, the title won Game of the Year, Best Xbox 360
Game and Best Original Score at the 2007 Spike TV Video Game
Awards on December 9th.
-- Carnival Games, a wholly owned and internally developed title
for Nintendo's Wii(TM), has shipped over 500,000 units since
its debut in late August. 2K Play will be bringing this
popular title to Nintendo DS(TM) in fiscal 2008.
-- The Company closed on an expanded $140 million senior secured
revolving credit facility.
-- 2K announced the formation of 2K Marin, a new development
studio in Novato, California, which will develop original
intellectual property, as well as co-develop products with
other 2K studios around the world.
-- Gary Dale was named Executive Vice President of Take-Two,
responsible for business development and optimizing sales and
distribution activities. He had previously served as Chief
Operating Officer of Rockstar Games.
Strauss Zelnick, Chairman of Take-Two, stated, "Fiscal 2007 was a year of progress for Take-Two, capped by better-than-expected bottom line financial performance in the fourth quarter. The Company has benefited from initiatives to streamline operations and improve our cost structure, while continuing to expand our portfolio of powerful video game franchises. As a result of this progress, Take-Two today is sharply focused on its core publishing business and is operating more productively and efficiently, while continuing to foster the extraordinary creative talent of our development teams. We are fully committed to building on this solid foundation to produce great entertainment and to enhance shareholder value." Ben Feder, Chief Executive Officer of Take-Two, added, "Take-Two enters fiscal 2008 with the strongest, most diverse product lineup in our history - much of it internally developed and owned IP - which positions us well for the continued growth of the interactive entertainment market. We are building on our existing franchises while creating new hits such as the award-winning BioShock and Carnival Games. Our releases for the coming year include six titles that have sold over one million units in earlier versions, ranging from Grand Theft Auto IV, shipping in the second quarter of fiscal 2008, to Midnight Club: Los Angeles, Bully: Scholarship Edition, Sid Meier's Civilization: Revolution, Major League Baseball 2K8 and NBA 2K9. We'll also release several new brands, including Borderlands and Don King Presents: Prizefighter, as well as Nick Jr. titles based on our partnership with Nickelodeon." Fiscal Year 2007 Results Net revenues were $981.8 million for the fiscal year ended October 31, 2007, compared to $1.038 billion in fiscal 2006. Net loss for fiscal 2007 was $138.4 million or $1.93 per share, compared to $184.9 million or $2.60 per share in fiscal 2006. Fiscal 2007 results include $17.3 million in stock-based compensation expenses ($0.24 per share); $23.6 million in business reorganization costs ($0.32 per share), which included a $3.1 million loss related to the sale of Joytech ($0.04 per share); and $16.7 million in expenses related to unusual legal matters ($0.23 per share). Results for fiscal 2006 included $21.9 million in stock-based compensation expenses ($0.19 per share); $32.2 million in expenses primarily related to studio closures ($0.34 per share); and $6.9 million in expenses related to unusual legal matters ($0.06 per share). Fiscal 2006 results also reflected a non-cash charge of $59.5 million ($0.84 per share) to record a valuation allowance on deferred tax assets. Non-GAAP net loss was $81.0 million or $1.13 per share in fiscal 2007, versus $84.0 million or $1.18 per share in the comparable period of 2006. (Please refer to Non-GAAP Financial Measures and reconciliation tables included later in this release for additional information and details on Non-GAAP items.) Financial Guidance The Company is providing guidance for the first quarter ending January 31, 2008 and reiterating its guidance for the fiscal year ending October 31, 2008 as follows:
Revenue* Non-GAAP EPS (a)
----------------------- ------------------------
First quarter ending $175 to $225 $(0.50) to $(0.60)
1/31/2008
Fiscal year ending $1,100 to $1,400 $1.30 to $1.50 (b)
10/31/2008
* Dollars in millions
(a) The Company's non-GAAP EPS estimates for the first quarter ending
January 31, 2008 and fiscal year ending October 31, 2008 exclude
approximately $0.07 and $0.45 per share, respectively, of stock-based
compensation expenses; and approximately $0.02 and $0.05 per share,
respectively, of business reorganization charges and expenses related
to unusual legal matters. The Company's stock-based compensation
expense for the first quarter and fiscal 2008 reflects the cost of
approximately two million stock options that are subject to variable
accounting. Actual expense to be recorded in connection with these
options is dependent upon several factors, including future changes
in the Company's stock price.
(b) 2008 fiscal year EPS estimates reflect tax expense on
international operations only.
Key assumptions and dependencies underlying the Company's guidance include continued consumer acceptance of the Xbox 360(R) video game and entertainment system from Microsoft, PLAYSTATION(R)3 computer entertainment system and Wii(TM) home video game system from Nintendo; the ability to develop and publish products that capture market share for these next generation systems while continuing to leverage opportunities on legacy platforms; as well as the timely delivery of the titles detailed in this release. Product Pipeline The following titles shipped during the first quarter of 2008:
Title Platform
----------------------------------------------------------------------
College Hoops 2K8 Xbox 360, PS3, PS2
Dora the Explorer: Dora Saves the
Mermaids(TM) DS
Go, Diego, Go!: Safari Rescue(TM) DS
Deal or No Deal: Secret Vault Games PC
Grand Theft Auto: Vice City Stories
(Japan) PS2, PSP
Take-Two's lineup announced to date for the remainder of fiscal 2008
includes the following titles:
Title Platform
----------------------------------------------------------------------
Xbox 360, PS3, Games for
Borderlands(TM) Windows(R)
Bully: Scholarship Edition Xbox 360, Wii
Carnival Games DS
Don King Presents: Prizefighter Xbox 360, Wii, DS
Dora the Explorer: Dora Saves the
Mermaids(TM) PS2
Go, Diego, Go!: Safari Rescue(TM) Wii, PS2
Grand Theft Auto IV Xbox 360, PS3
Grand Theft Auto IV episodic content Xbox 360
Major League Baseball(R) 2K8 Multiple platforms
Midnight Club: Los Angeles Xbox 360, PS3
NBA(R) 2K9 Multiple platforms
NHL(R) 2K9 Multiple platforms
Sid Meier's Civilization(R)
Revolution(TM) Xbox 360, PS3, DS
Top Spin 3 Xbox 360, PS3, Wii
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 also uses non-GAAP measures of financial performance that exclude certain non-recurring or non-cash items. Non-GAAP gross profit, operating income (loss), net income (loss) and basic and diluted 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, and 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:
-- Business reorganization, restructuring and related expenses,
including losses on sale of subsidiaries
-- Stock-based compensation
-- Professional fees and expenses associated with the Company's
stock options investigation and certain other unusual
regulatory and legal matters
-- Non-cash charges related to asset write-offs
-- Severance, relocation and other expenses outside of the
Company's planned business reorganization initiatives,
primarily related to certain studio closures in the 2006
periods
-- Charge recorded to income tax expense for a valuation
allowance, reflecting the uncertain utilization of deferred
tax assets
-- Income tax effects of the items listed above
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. In addition, the Company believes it is appropriate to exclude certain items as follows: Business reorganization, restructuring and related expenses In March 2007, the Company's stockholders elected a new slate of members to Take-Two's Board of Directors, who immediately removed the Company's former President and Chief Executive Officer. Subsequently, the Company's former Chief Financial Officer resigned. As a result of these actions and the implementation of a business reorganization plan, the Company incurred significant costs in the three months and year ended October 31, 2007 to reduce headcount, relocate employees and consolidate sales and operational functions. In addition, certain intellectual property was impaired and written off as a component of cost of good sold in the year ended October 31, 2007, based on a determination made by the newly appointed management team. In September 2007, the Company sold substantially all of the net assets, primarily inventory and accounts receivable, of its wholly owned Joytech video game accessories subsidiary for approximately $3.6 million in cash. The disposition of Joytech did not involve a significant amount of assets or materially impact the comparability of the Company's operating results. The Company recorded a loss of $3.1 million related to the sale of Joytech. The Company expects that additional business reorganization, restructuring and related costs will be recorded in the 2008 fiscal year. Such costs are expected to relate 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 expenses from its non-GAAP financial measures. 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 their short and long-term operating plans. Furthermore, executive and management incentive compensation plans are generally based on measures that exclude the impact of stock-based compensation. The Company places greater emphasis on shareholder dilution than accounting charges when assessing the impact of stock-based equity awards. Professional fees and expenses associated with the Company's stock options investigation and certain other unusual regulatory and legal matters The Company incurred significant legal and other professional fees associated with both the investigation of stock option grants and the Company's responses to the New York County District Attorney's subpoenas. One of management's primary objectives is to bring conclusion to its regulatory matters. The Company continues to incur substantial 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 charges related to asset write-offs In 2006, impairment charges were recorded in connection with studio closings to write-off software development costs related to several titles in development. The impairment charges were based on an assessment of the future recoverability of capitalized software balances related to these titles and the determination that these titles were unlikely to recover capitalized costs given a change in sales expectations as a result of weaker market conditions, the closure and anticipated closure of development studios, uncertainty involved in the console transition and historical performance of the titles. This charge was recorded as a component of cost of goods sold. In addition, impairment charges were incurred related to the write-off of certain trademarks, acquired intangibles, goodwill and other assets based on management's assessment of the future value of these assets, including future business prospects and estimated cash flows to be derived from them. These charges were recorded in depreciation and amortization expense and impairment of long lived assets. The Company believes these charges were each based on a unique set of business objectives and circumstances, and therefore believes it is appropriate to exclude these non-cash charges related to asset write-offs from its non-GAAP financial measures. Severance, relocation and other In connection with certain studio closures in 2006, the Company incurred severance and other costs. The Company also relocated its European headquarters to Geneva. The Company does not regularly close development studios and does not plan to move its European headquarters, and therefore believes it is appropriate to exclude these expenses from its non-GAAP financial measures. These costs were recorded in research and development and general and administrative expenses. Charge for tax valuation allowance In July 2006, the Company recorded income tax expense for a valuation allowance, to reflect the uncertain utilization of deferred tax assets relating to net operating losses carried forward from prior periods and deductible temporary differences. This charge represents the income tax impact of the Company's aggregate net operating losses and temporary differences existing at the beginning of the period. EBITDA and Adjusted EBITDA Earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA") is a financial measure not calculated and presented in accordance with accounting principles generally accepted in the United States. 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 or as a substitute for net income/(loss) prepared in accordance with GAAP. About Take-Two Interactive Software Headquartered in New York City, Take-Two Interactive Software, Inc. is a global developer, marketer, distributor 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) and Xbox(R) video game and entertainment systems from Microsoft, Wii(TM), Nintendo GameCube(TM), Nintendo DS(TM) and Game Boy(R) Advance. The Company publishes and develops products through its wholly owned labels Rockstar Games, 2K Games, 2K Sports and 2K Play; and distributes software, hardware and accessories in North America through its Jack of All Games subsidiary. Take-Two'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. Microsoft, Xbox, Xbox 360, Xbox LIVE, and the Xbox logos are trademarks of the Microsoft group of companies. "PlayStation", "PLAYSTATION", "PSP" and the "PS" Family logo are registered trademarks of Sony Computer Entertainment Inc. Memory Stick Duo(TM) may be required (sold separately). (TM), (R), Game Boy Advance, Nintendo GameCube, Nintendo DS and the Wii logo are trademarks of Nintendo. (C) 2006 Nintendo. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws. Such forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to them. The Company has no obligation to update such forward-looking statements. Actual results may vary significantly from these forward-looking statements based on a variety of factors. These risks and uncertainties include the matters relating to the Special Committee's investigation of the Company's stock option grants and the restatement of our consolidated financial statements. The investigation and conclusions of the Special Committee may result in claims and proceedings relating to such matters, including previously disclosed shareholder and derivative litigation and actions by the Securities and Exchange Commission and/or other governmental agencies and negative tax or other implications for the Company resulting from any accounting adjustments or other factors. Other important factors are described in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2006, and in the Company's Form 10-Q for the third quarter ended July 31, 2007 in the section entitled "Risk Factors."
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
Three months ended For the Years Ended
October 31, October 31,
------------------- ----------------------
2007 2006 2007 2006
--------- --------- ---------- -----------
Net revenue $292,600 $266,556 $ 981,791 $1,037,840
--------------------------- --------- --------- ---------- -----------
Cost of goods sold:
Product costs 133,808 131,723 511,088 538,761
Software development costs
and royalties 42,695 34,165 136,485 193,539
Internal royalties 11,002 9,857 28,892 40,413
Licenses 15,443 9,012 58,569 52,763
--------------------------- --------- --------- ---------- -----------
Total cost of goods sold 202,948 184,757 735,034 825,476
--------------------------- --------- --------- ---------- -----------
Gross profit 89,652 81,799 246,757 212,364
Selling and marketing 32,246 37,827 130,652 139,250
General and administrative 35,000 37,597 148,788 154,015
Research and development 11,159 13,046 48,455 64,258
Business reorganization and
related 1,405 - 17,467 -
Impairment of goodwill and
long-lived assets - 830 - 15,608
Depreciation and
amortization 6,706 6,763 27,449 26,399
--------------------------- --------- --------- ---------- -----------
Total operating expenses 86,516 96,063 372,811 399,530
--------------------------- --------- --------- ---------- -----------
Income (loss) from
operations 3,136 (14,264) (126,054) (187,166)
Loss on sale and
deconsolidation (1) (4,469) - (4,469) -
Interest and other, net (324) 1,228 2,308 2,684
--------------------------- --------- --------- ---------- -----------
Loss before income taxes (1,657) (13,036) (128,215) (184,482)
Provision for income taxes 5,406 979 10,191 407
--------------------------- --------- --------- ---------- -----------
Net loss $ (7,063) $(14,015) $(138,406) $ (184,889)
=========================== ========= ========= ========== ===========
Basic and diluted loss per
share $ (0.10) $ (0.20) $ (1.93) $ (2.60)
=========================== ========= ========= ========== ===========
Basic and diluted weighted
average shares outstanding 72,321 71,199 71,860 71,012
===================================== ========= ========== ===========
Three months ended For the Years Ended
October 31, October 31,
------------------- ----------------------
OTHER INFORMATION 2007 2006 2007 2006
--------------------------- --------- --------- ---------- -----------
Total revenue mix
Publishing 75% 76% 70% 73%
Distribution 25% 24% 30% 27%
Geographic revenue mix
North America 74% 66% 75% 69%
International 26% 34% 25% 31%
Publishing platform revenue
mix
Microsoft Xbox 360 44% 17% 30% 23%
PC 19% 13% 14% 17%
Sony PlayStation 2 14% 32% 26% 30%
Nintendo Wii 11% 0% 5% 0%
Sony PLAYSTATION 3 5% 0% 10% 0%
Sony PSP 4% 29% 10% 18%
Accessories and other 2% 3% 2% 4%
Nintendo Handhelds 1% 1% 1% 2%
Microsoft Xbox 0% 5% 2% 6%
(1) Reflects $3,080 loss on the sale of Joytech, a video game
accessories company; and $1,389 loss on the deconsolidation of Blue
Castle Games, Inc., which previously was accounted for as a wholly
owned subsidiary in accordance with FIN 46(R).
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
October 31,
------------------
2007 2006
--------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 77,757 $132,480
Accounts receivable, net of allowances of $63,324
and $91,509 at October 31, 2007 and October 31,
2006, respectively 104,937 143,199
Inventory 99,331 95,520
Software development costs and licenses 141,441 85,207
Prepaid taxes and taxes receivable 40,316 60,407
Prepaid expenses and other 34,741 28,060
--------------------------------------------------- --------- --------
Total current assets 498,523 544,873
--------------------------------------------------- --------- --------
Fixed assets, net 44,986 47,496
Software development costs and licenses, net of
current portion 34,465 31,354
Goodwill 204,845 187,681
Other intangibles, net 31,264 43,248
Other assets 17,060 14,154
--------------------------------------------------- --------- --------
Total assets $831,143 $868,806
=================================================== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $128,782 $123,947
Accrued expenses and other current liabilities 146,835 128,282
Deferred revenue 36,544 11,317
--------------------------------------------------- --------- --------
Total current liabilities 312,161 263,546
--------------------------------------------------- --------- --------
Deferred revenue 25,000 50,000
Line of credit 18,000 -
Other long-term liabilities 4,828 4,868
--------------------------------------------------- --------- --------
Total liabilities 359,989 318,414
--------------------------------------------------- --------- --------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 100,000 shares 743 727
authorized; 74,273 and 72,745 shares issued and
outstanding at October 31, 2007 and October 31,
2006, respectively
Additional paid-in capital 513,297 482,104
Retained earnings (accumulated deficit) (77,747) 60,659
Accumulated other comprehensive income 34,861 6,902
--------------------------------------------------- --------- --------
Total stockholders' equity 471,154 550,392
--------------------------------------------------- --------- --------
--------------------------------------------------- --------- --------
Total liabilities and stockholders' equity $831,143 $868,806
=================================================== ========= ========
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Years Ended
October 31,
---------------------
2007 2006
---------- ----------
Operating activities:
Net loss $(138,406) $(184,889)
----------------------------------------------- ---------- ----------
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Amortization and write-off of software
development costs and licenses 109,891 147,832
Depreciation and amortization of long-lived
assets 27,449 26,399
Impairment of goodwill and long-lived assets - 15,608
Amortization and write-off of intellectual
property 8,626 10,500
Stock-based compensation 17,329 21,931
Provision (benefit) for deferred income taxes (1,718) 17,360
Foreign currency transaction gain and other (1,656) (2,070)
Loss on sale and deconsolidation 4,469 -
Changes in assets and liabilities, net of
effect from purchases and disposal of
businesses:
Accounts receivable, net 39,159 56,651
Inventory (10,203) 40,707
Software development costs and licenses (163,859) (143,248)
Prepaid expenses, other current and other non-
current assets 18,270 (30,086)
Accounts payable, accrued expenses, deferred
revenue and other liabilities 26,604 66,667
----------------------------------------------- ---------- ----------
Total adjustments 74,361 228,251
----------------------------------------------- ---------- ----------
Net cash (used for) provided by operating
activities (64,045) 43,362
----------------------------------------------- ---------- ----------
Investing activities:
Purchase of fixed assets (21,594) (25,084)
Cash received from sale of business 2,778 -
Payments for purchases of businesses, net of
cash acquired (5,795) (191)
----------------------------------------------- ---------- ----------
Net cash used for investing activities (24,611) (25,275)
----------------------------------------------- ---------- ----------
Financing activities:
Proceeds from exercise of options 9,503 2,808
Borrowings on line of credit 18,000 -
Payment of debt issuance costs (1,809) -
Excess tax benefit on exercise of stock options - 163
----------------------------------------------- ---------- ----------
Net cash provided by financing activities 25,694 2,971
----------------------------------------------- ---------- ----------
Effects of exchange rates on cash and cash
equivalents 8,239 4,227
----------------------------------------------- ---------- ----------
Net (decrease) increase in cash and cash
equivalents (54,723) 25,285
Cash and cash equivalents, beginning of year 132,480 107,195
----------------------------------------------- ---------- ----------
Cash and cash equivalents, end of year $ 77,757 $ 132,480
=============================================== ========== ==========
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
--------------------------------
Non-GAAP
Three Business Profess- three
months reorgani- ional Stock- months
ended zation fees and based ended
October and legal compen- October
31, 2007 related matters sation 31, 2007
----------------------------------------------------
Net revenue $292,600 $ - $ - $ - $292,600
----------------- --------- ---------- ---------- --------- ---------
Cost of goods
sold:
Product costs 133,808 - - - 133,808
Software
development
costs and
royalties 42,695 - - (1,008) 41,687
Internal
royalties 11,002 - - - 11,002
Licenses 15,443 - - - 15,443
----------------- --------- ---------- ---------- --------- ---------
Total cost of
goods sold 202,948 - - (1,008) 201,940
----------------- --------- ---------- ---------- --------- ---------
Gross profit 89,652 - - 1,008 90,660
Selling and
marketing 32,246 - - (353) 31,893
General and
administrative 35,000 - (1,546) (2,636) 30,818
Research and
development 11,159 - - (757) 10,402
Business
reorganization
and related 1,405 (1,405) - - -
Impairment of
goodwill and
long-lived
assets - - - - -
Depreciation and
amortization 6,706 - - - 6,706
----------------- --------- ---------- ---------- --------- ---------
Total operating
expenses 86,516 (1,405) (1,546) (3,746) 79,819
----------------- --------- ---------- ---------- --------- ---------
Income from
operations 3,136 1,405 1,546 4,754 10,841
Loss on sale and
deconsolidation (4,469) 3,080 - - (1,389)
Interest and
other, net (324) - - - (324)
----------------- --------- ---------- ---------- --------- ---------
Income (loss)
before income
taxes (1,657) 4,485 1,546 4,754 9,128
Provision
(benefit) for
income taxes 5,406 322 - - 5,728
--------------------------- ---------- ---------- --------- ---------
Net income (loss) $ (7,063) $ 4,163 $ 1,546 $ 4,754 $ 3,400
================= ========= ========== ========== ========= =========
Basic income
(loss) per
share* $ (0.10) $ 0.06 $ 0.02 $ 0.07 $ 0.05
================= ========= ========== ========== ========= =========
Diluted income
(loss) per
share* $ (0.10) $ 0.06 $ 0.02 $ 0.06 $ 0.05
================= ========= ========== ========== ========= =========
Basic weighted
average shares
outstanding 72,321 72,321
================= ========= =========
Diluted weighted
average shares
outstanding 72,321 73,527
================= ========= =========
EBITDA:
Income (loss)
before income
taxes $ (1,657) $ 9,128
Interest income 324 324
Depreciation and
amortization 6,706 6,706
--------- ---------
EBITDA $ 5,373 $ 16,158
Add: Business
reorganization
and related 1,405 -
Loss on sale and
deconsolidation 4,469 1,389
--------- ---------
Adjusted EBITDA $ 11,247 $ 17,547
========= =========
*Basic and diluted income (loss) per share may not add due to rounding
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
---------------------------------------
Three
months Asset Professional
ended impairments Severance, fees and
October and write- relocation legal
31, 2006 offs and other matters
-------------------------------------------------
Net revenue $266,556 $ - $ - $ -
-------------------- --------- ------------ ----------- ------------
Cost of goods sold:
Product costs 131,723 - - -
Software development
costs and royalties 34,165 - - -
Internal royalties 9,857 - - -
Licenses 9,012 - - -
-------------------- --------- ------------ ----------- ------------
Total cost of goods
sold 184,757 - - -
-------------------- --------- ------------ ----------- ------------
Gross profit 81,799 - - -
Selling and
marketing 37,827 - - -
General and
administrative 37,597 - (1,568) (5,455)
Research and
development 13,046 - (189) -
Business
reorganization and
related - - - -
Impairment of
goodwill and long-
lived assets 830 (500) - -
Depreciation and
amortization 6,763 - - -
-------------------- --------- ------------ ----------- ------------
Total operating
expenses 96,063 (500) (1,757) (5,455)
-------------------- --------- ------------ ----------- ------------
Income (loss) from
operations (14,264) 500 1,757 5,455
Loss on sale and
deconsolidation - - - -
Interest income and
other, net 1,228 - - -
-------------------- --------- ------------ ----------- ------------
Income (loss) before
income taxes (13,036) 500 1,757 5,455
Provision (benefit)
for income taxes 979 - 288 895
------------------------------ ------------ ----------- ------------
Net loss $(14,015) $ 500 $ 1,469 $ 4,560
==================== ========= ============ =========== ============
Basic and diluted
loss per share* $ (0.20) $0.01 $ 0.02 $ 0.06
==================== ========= ============ =========== ============
Basic and diluted
weighted average
shares outstanding 71,199
==================== =========
EBITDA:
Income (loss) before
income taxes $(13,036)
Interest income (1,228)
Depreciation and
amortization 6,763
---------
EBITDA $ (7,501)
Add: Business
reorganization and
related -
---------
Adjusted EBITDA $ (7,501)
=========
Non-GAAP Reconciling Items
---------------------------
Non-GAAP
three
Charge for months
tax ended
Stock-based valuation October
compensation allowance 31, 2006
-------------------------------------
Net revenue $ - $ - $266,556
-------------------------------- ---------------- ---------- ---------
Cost of goods sold:
Product costs - - 131,723
Software development costs and
royalties (526) - 33,639
Internal royalties - - 9,857
Licenses - - 9,012
-------------------------------- ---------------- ---------- ---------
Total cost of goods sold (526) - 184,231
-------------------------------- ---------------- ---------- ---------
Gross profit 526 - 82,325
Selling and marketing (314) - 37,513
General and administrative (3,213) - 27,361
Research and development (2,722) - 10,135
Business reorganization and
related - - -
Impairment of goodwill and long-
lived assets - - 330
Depreciation and amortization - - 6,763
-------------------------------- ---------------- ---------- ---------
Total operating expenses (6,249) - 82,102
-------------------------------- ---------------- ---------- ---------
Income (loss) from operations 6,775 - 223
Loss on sale and deconsolidation - - -
Interest income and other, net - - 1,228
-------------------------------- ---------------- ---------- ---------
Income (loss) before income
taxes 6,775 - 1,451
Provision (benefit) for income
taxes 1,112 - 3,274
------------------------------------------------- ---------- ---------
Net loss $ 5,663 $ - $ (1,823)
================================ ================ ========== =========
Basic and diluted loss per
share* $ 0.08 $ - $ (0.03)
================================ ================ ========== =========
Basic and diluted weighted
average shares outstanding 71,199
================================ =========
EBITDA:
Income (loss) before income
taxes $ 1,451
Interest income (1,228)
Depreciation and amortization 6,763
---------
EBITDA $ 6,986
Add: Business reorganization and
related -
---------
Adjusted EBITDA $ 6,986
=========
*Basic and diluted loss per share may not add due to rounding
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
-------------------------------
Non-GAAP
For the Business Profess- for the
year reorgani- ional Stock- year
ended zation fees and based ended
October and legal compen- October
31, 2007 related matters sation 31, 2007
-----------------------------------------------------
Net revenue $ 981,791 $ - $ - $ - $981,791
---------------- ---------- ---------- --------- ---------- ----------
Cost of goods
sold:
Product costs 511,088 (5,164) - - 505,924
Software
development
costs and
royalties 136,485 - - (3,216) 133,269
Internal
royalties 28,892 - - - 28,892
Licenses 58,569 - - - 58,569
---------------- ---------- ---------- --------- ---------- ----------
Total cost of
goods sold 735,034 (5,164) - (3,216) 726,654
---------------- ---------- ---------- --------- ---------- ----------
Gross profit 246,757 5,164 - 3,216 255,137
Selling and
marketing 130,652 - - (1,232) 129,420
General and
administrative 148,788 - (16,726) (7,080) 124,982
Research and
development 48,455 - - (3,735) 44,720
Business
reorganization
and related 17,467 (15,401) - (2,066) -
Impairment of
goodwill and
long-lived
assets - - - - -
Depreciation and
amortization 27,449 - - - 27,449
---------------- ---------- ---------- --------- ---------- ----------
Total operating
expenses 372,811 (15,401) (16,726) (14,113) 326,571
---------------- ---------- ---------- --------- ---------- ----------
Loss from
operations (126,054) 20,565 16,726 17,329 (71,434)
Loss on sale and
deconsolidation (4,469) 3,080 - - (1,389)
Interest and
other, net 2,308 - - - 2,308
---------------- ---------- ---------- --------- ---------- ----------
Loss before
income taxes (128,215) 23,645 16,726 17,329 (70,515)
Provision
(benefit) for
income taxes 10,191 322 - - 10,513
---------------- ---------- ---------- --------- ---------- ----------
Net loss $(138,406) $ 23,323 $ 16,726 $ 17,329 $(81,028)
================ ========== ========== ========= ========== ==========
Basic and
diluted loss
per share* $ (1.93) $ 0.32 $ 0.23 $ 0.24 $ (1.13)
================ ========== ========== ========= ========== ==========
Basic and
diluted
weighted
average shares
outstanding 71,860 71,860
================ ========== ==========
EBITDA:
Loss before
income taxes $(128,215) $(70,515)
Interest income (2,570) (2,570)
Depreciation and
amortization 27,449 27,449
---------- ----------
EBITDA (103,336) (45,636)
Add: Business
reorganization
and related 22,631 -
Loss on sale and
deconsolidation 4,469 1,389
---------- ----------
Adjusted EBITDA $ (76,236) $(44,247)
========== ==========
*Basic and diluted loss per share may not add due to rounding
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
---------------------------------------
For the Asset Professional
year ended impairments Severance, fees and
October and write- relocation legal
31, 2006 offs and other matters
---------------------------------------------------
Net revenue $1,037,840 $ - $ - $ -
------------------ ----------- ------------ ----------- ------------
Cost of goods
sold:
Product costs 538,761 (1,128) - -
Software
development costs
and royalties 193,539 (11,913) - -
Internal royalties 40,413 - - -
Licenses 52,763 - - -
------------------ ----------- ------------ ----------- ------------
Total cost of
goods sold 825,476 (13,041) - -
------------------ ----------- ------------ ----------- ------------
Gross profit 212,364 13,041 - -
Selling and
marketing 139,250 - - -
General and
administrative 154,015 - (4,195) (6,861)
Research and
development 64,258 - (3,445) -
Business
reorganization
and related - - - -
Impairment of
goodwill and
long-lived assets 15,608 (11,471) - -
Depreciation and
amortization 26,399 - - -
------------------ ----------- ------------ ----------- ------------
Total operating
expenses 399,530 (11,471) (7,640) (6,861)
------------------ ----------- ------------ ----------- ------------
Loss from
operations (187,166) 24,512 7,640 6,861
Loss on sale and
deconsolidation - - - -
Interest and
other, net 2,684 - - -
------------------ ----------- ------------ ----------- ------------
Loss before income
taxes (184,482) 24,512 7,640 6,861
Provision
(benefit) for
income taxes 407 5,158 3,022 2,713
------------------ ----------- ------------ ----------- ------------
Net loss $ (184,889) $ 19,354 $ 4,618 $ 4,148
================== =========== ============ =========== ============
Basic and diluted
loss per share* $ (2.60) $ 0.27 $ 0.07 $ 0.06
==================-=========== ============ =========== ============
Basic and diluted
weighted average
shares
outstanding 71,012
================== ===========
EBITDA:
Loss before income
taxes $ (184,482)
Interest income (2,684)
Depreciation and
amortization 26,399
-----------
EBITDA (160,767)
Add: Business
reorganization
and related -
Adjusted EBITDA $ (160,767)
===========
Non-GAAP Reconciling Items
---------------------------
Non-GAAP
Charge for for the
tax year ended
Stock-based valuation October
compensation allowance 31, 2006
---------------------------------------
Net revenue $ - $ - $1,037,840
----------------------------------------------- ---------- -----------
Cost of goods sold:
Product costs - - 537,633
Software development costs and
royalties (1,263) - 180,363
Internal royalties - - 40,413
Licenses - - 52,763
----------------------------------------------- ---------- -----------
Total cost of goods sold (1,263) - 811,172
----------------------------------------------- ---------- -----------
Gross profit 1,263 - 226,668
Selling and marketing (1,256) - 137,994
General and administrative (13,277) - 129,682
Research and development (6,135) - 54,678
Business reorganization and
related - - -
Impairment of goodwill and
long-lived assets - - 4,137
Depreciation and amortization - - 26,399
----------------------------------------------- ---------- -----------
Total operating expenses (20,668) - 352,890
----------------------------------------------- ---------- -----------
Loss from operations 21,931 - (126,222)
Loss on sale and
deconsolidation - - -
Interest and other, net - - 2,684
----------------------------------------------- ---------- -----------
Loss before income taxes 21,931 - (123,538)
Provision (benefit) for income
taxes 8,673 (59,469) (39,496)
----------------------------------------------- ---------- -----------
Net loss $ 13,258 $ 59,469 $ (84,042)
=============================================== ========== ===========
Basic and diluted loss per
share* $ 0.19 $ 0.84 $ (1.18)
=============================================== ========== ===========
Basic and diluted weighted
average shares outstanding 71,012
=============================== ===========
EBITDA:
Loss before income taxes $ (123,538)
Interest income (2,684)
Depreciation and amortization 26,399
-----------
EBITDA (99,823)
Add: Business reorganization
and related -
Adjusted EBITDA $ (99,823)
===========
*Basic and diluted loss per share may not add due to rounding
CONTACT: Take-Two Interactive Software, Inc.
Meg Maise (Corporate Press/Investor Relations)
646-536-2932
meg.maise@take2games.com
SOURCE: Take-Two Interactive Software, Inc.
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