Non-GAAP Net Revenue Grew 71% to $405.0 Million
Non-GAAP Net Income Increased 148% to $0.67 Per Diluted Share
Increases Low-End of Financial Outlook Range for Fiscal Year 2013
Announces Share Repurchase Authorization
NEW YORK--(BUSINESS WIRE)--Feb. 5, 2013--
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported
financial results for its third quarter fiscal 2013, ended December 31,
2012, and increased the low-end of its financial outlook range for its
fiscal year 2013, ending March 31, 2013. In addition, the Company
announced that its Board of Directors has authorized the repurchase of
up to 7.5 million shares of the Company’s common stock.
For its third quarter fiscal 2013, GAAP net revenue was $415.8 million,
as compared to $236.3 million for its third quarter fiscal 2012.
Non-GAAP net revenue was $405.0 million, as compared to $236.3 million
for the year-ago period. GAAP net income from continuing operations was
$70.9 million, or $0.66 per diluted share, as compared to $14.2 million,
or $0.16 per diluted share, for the year-ago period. Non-GAAP net income
was $78.8 million, or $0.67 per diluted share, as compared to $29.0
million, or $0.27 per diluted share, for the year-ago period. As of
December 31, 2012, the Company had cash and cash equivalents of $448.7
million.
The strongest contributors to net revenue in the third quarter were the
release of NBA 2K13, continuing sales of Borderlands 2,
the release of XCOM: Enemy Unknown, and catalog sales led by Grand
Theft Auto IV and Red Dead Redemption. Catalog sales
accounted for 22% of Non-GAAP net revenue. Revenue from digitally
delivered content grew 244% year-over-year and accounted for 23% of
Non-GAAP net revenue, driven by offerings for the Borderlands
franchise – particularly digital sales of Borderlands 2 and its
add-on content, XCOM: Enemy Unknown, the Grand Theft
Auto franchise, and NBA 2K13.
Management Comments
“Take-Two’s positive business momentum continued in the third quarter,
enabling us to deliver growth and profits that exceeded our outlook,”
said Strauss Zelnick, Chairman and CEO of Take-Two. “Our results
benefited from the record-breaking launch of NBA 2K13, along with
continued strong demand for Borderlands 2, the successful launch
of XCOM: Enemy Unknown, and robust holiday sales of our catalog
and growing portfolio of digitally delivered offerings. With consumer
anticipation building for the launches of BioShock Infinite and Grand
Theft Auto V, we are well positioned for a solid finish to fiscal
year 2013 and substantial revenue and earnings growth in fiscal year
2014.
“I am also pleased to report that our Board of Directors has authorized
the Company to return capital to shareholders through the repurchase of
its common stock. Given our strong balance sheet and favorable business
outlook in both the short and long-term, we have ample capital to pursue
a variety of investment opportunities.”
Business and Product Highlights
Since October 1, 2012:
Rockstar Games:
-
Released Rockstar Games Collection: Edition 1. This box set
features four of the most critically acclaimed titles of the current
console generation, including Red Dead Redemption, L.A. Noire,
Grand Theft Auto: Episodes from Liberty City and Midnight
Club: Los Angeles Complete Edition.
-
Released Grand Theft Auto: Vice City for a wide range of iOS
and Android devices to celebrate the 10th anniversary of
one of the highest-rated and top-selling games of all time for the
PlayStation 2.*
-
Announced that it plans to launch Grand Theft Auto V worldwide
on September 17, 2013.
2K:
-
Released NBA 2K13, the next installment in its top-rated and
top-selling basketball franchise,* which has sold-in more than 15
million units since the release of NBA 2K11 in October 2010. NBA
2K13 received critical acclaim, achieved franchise record-setting
first week sales, and has sold-in nearly 4.5 million units to date.
The title is being supported by the new NBA 2K Everywhere
offerings, which gives fans the opportunity to experience NBA 2K
virtually anywhere via an all-new mobile companion app, a social game
on Facebook, and a full-featured mobile version of NBA 2K13.
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Launched XCOM: Enemy Unknown, reintroducing one of the greatest
video game franchises of all time. The title is a critical and
commercial success, with strong digital sales and a near 90 average
review score on Metacritic. 2K has released two downloadable add-on
content packs for XCOM: Enemy Unknown and has additional
content planned for later this year.
-
Launched its holiday lineup of family-oriented titles, including Nickelodeon
Dance 2 for consoles and Bubble Guppies and Team
Umizoomi & Dora’s Fantastic Flight for the Nintendo DS.
-
Launched Borderlands Legends, an all-new action packed Borderlands
experience designed specifically for mobile devices.
-
NBA 2K Online launched commercially on the Tencent Games portal
in China. Co-developed by Visual Concepts and Tencent, this
free-to-play game builds on 2K’s award-winning basketball simulation
franchise in an exciting massively multiplayer online game (MMOG)
format.
-
Pro Baseball 2K, an online baseball simulation game created by
2K in partnership with Nexon, entered closed beta in Korea in November.
Pro Baseball 2K features authentic and true-to-life
representations of the professional players of the Korean Baseball
Organization (KBO), and is planned for open beta release in spring
2013.
-
Announced that Major League Baseball 2K13 is planned for
release on March 5, 2013. The title will feature Tampa Bay Rays’ Cy
Young Award winning pitcher David Price as cover athlete and will once
again be supported with the Perfect Game Challenge, 2K Sports’
groundbreaking $1 million competition.
-
Announced that the MMOG which 2K has been developing in partnership
with South Korean-based studio XLGAMES is based on 2K’s successful Civilization
franchise. Under the leadership of XLGAMES’ CEO and MMOG design
luminary, Jake Song, Civilization Online (working title) is
being designed from the ground up as an entirely new online
entertainment experience, which will initially launch in Asian markets.
* According to 2008-2012 Metacritic.com and The NPD Group estimates
of U.S. retail video game sales through December 2012.
Share Repurchase Authorization
Take-Two also announced that its Board of Directors has authorized the
repurchase of up to 7.5 million shares of its common stock. The
authorization permits the Company to purchase shares from time to time
through a variety of methods, including in the open market or through
privately negotiated transactions, in accordance with applicable
securities laws. It does not obligate the Company to make any purchases
at any specific time or situation. Repurchases are subject to the
availability of stock, prevailing market conditions, the trading price
of the stock, the Company's financial performance and other conditions.
The program may be suspended or discontinued at any time for any reason.
As of February 1, 2013, the Company had approximately 91.64 million
common shares outstanding.
Financial Outlook for Fiscal 2013
Take-Two is increasing the low-end of its outlook range for fiscal year
2013 to reflect its strong recent business trends. In addition, the
Company is providing its financial outlook for the fourth quarter ending
March 31, 2013 as follows:
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Fourth Quarter
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Fiscal Year
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Ending 3/31/2013
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Ending 3/31/2013
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Non-GAAP Net Revenue
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$235 to $285 Million
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$1.15 to $1.20 Billion
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Non-GAAP net income per diluted share (1)
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$0.10 to $0.25
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$0.05 to $0.20
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Net reduction (increase) to income per share from deferral
in net revenues
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($0.01)
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$0.02
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Stock-based compensation expense per share (2)
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$0.08
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$0.33
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Non-cash amortization of discount on convertible notes per
share
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$0.04
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$0.19
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Expenses related to reorganization and unusual legal matters
per share
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$0.01
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$0.02
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Non-cash tax expense per share
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$0.00
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$0.02
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1)
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The Company’s Non-GAAP net income per diluted share outlook for
the fiscal year ending March 31, 2013 includes the negative impact
from a one-time contractual obligation of $15 million, or $0.16
per diluted share.
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2)
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The Company's stock-based compensation expense for the periods
above includes the cost of approximately 2.2 million shares issued
to ZelnickMedia that are subject to variable accounting. Actual
expense to be recorded in connection with these shares is
dependent upon several factors, including future changes in
Take-Two's stock price.
|
Key assumptions and dependencies underlying the Company’s financial
outlook include: the timely delivery of the titles included in this
financial outlook; the ability to develop and publish products that
capture market share for the current generation video game and computer
entertainment systems; and stable foreign exchange rates. See also
“Cautionary Note Regarding Forward Looking Statements” below.
Product Releases
The following titles were released since October 1, 2012:
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Label
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Title
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Platforms
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Release Date
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2K Sports
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NBA 2K13
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Xbox 360, PS3, Wii, PSP, PC
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October 2, 2012*
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2K Sports
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NBA 2K13
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iOS, Android
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October 2, 2012*
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2K Sports
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MyNBA2K
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iOS, Android
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October 2, 2012
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2K Sports
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NBA 2KMyLIFE
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Facebook
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October 2, 2012
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2K Games
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XCOM: Enemy Unknown
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Xbox 360, PS3, PC
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October 9, 2012*
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2K Games
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Borderlands 2: Captain Scarlett and her Pirates Booty (DLC)
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Xbox 360, PS3, PC
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October 16, 2012
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2K Games
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XCOM: Enemy Unknown: Elite Soldier Pack (DLC)
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Xbox 360, PS3, PC
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October 23, 2012
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2K Sports
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NBA 2K Online
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Tencent (China only)
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October 24, 2012
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Rockstar Games
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Max Payne 3: Hostage Negotiation Map Pack (DLC)
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Xbox 360, PS3, PC
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October 30, 2012
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2K Games
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Borderlands Legends
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iOS
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October 31, 2012
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Rockstar Games
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Rockstar Games Collection: Edition 1
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Xbox 360, PS3
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November 6, 2012
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2K Play
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Nickelodeon Dance 2
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Xbox 360, Wii
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November 12, 2012
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2K Play
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Bubble Guppies
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DS
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November 12, 2012
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2K Play
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Team Umizoomi & Dora’s Fantastic Flight
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DS
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November 12, 2012
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2K Sports
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NBA 2K13
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WiiU
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November 19, 2012
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2K Games
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Borderlands 2: Mr. Torgue’s Campaign of Carnage (DLC)
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Xbox 360, PS3, PC
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November 20, 2012
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Rockstar Games
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Max Payne 3: Painful Memories Map Pack (DLC)
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Xbox 360, PS3, PC
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December 4, 2012
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2K Games
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XCOM: Enemy Unknown: Slingshot Content Pack (DLC)
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Xbox 360, PS3, PC
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December 4, 2012
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2K Play
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Herd, Herd, Herd
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iOS
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December 6, 2012
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Rockstar Games
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Grand Theft Auto: Vice City
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iOS
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December 6, 2012
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Rockstar Games
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Grand Theft Auto: Vice City
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Android
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December 12, 2012
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2K Play
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Herd, Herd, Herd
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Android
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January 9, 2013
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2K Sports
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NBA 2K13 All-Star presented by Sprite (DLC)
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Xbox 360, PS3
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January 9, 2013
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2K Games
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BioShock: Ultimate Rapture Edition
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Xbox 360, PS3
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January 15, 2013
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2K Games
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Borderlands 2: Sir Hammerlock’s Big Game Hunt (DLC)
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Xbox 360, PS3, PC
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January 15, 2013
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Rockstar Games
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Max Payne 3: Deathmatch Made In Heaven Mode Pack (DLC)
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Xbox 360, PS3, PC
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January 22, 2013
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*North American release date; international release date
typically follows three days after.
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Take-Two's lineup of future titles announced to date includes:
Label
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Title
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Platforms
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Planned Release
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2K Games
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Borderlands 2: Add-On Content Pack
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Xbox 360, PS3
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February 26, 2013
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2K Sports
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Major League Baseball 2K13
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Xbox 360, PS3
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March 5, 2013
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2K Games
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BioShock Infinite
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Xbox 360, PS3, PC
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March 26, 2013
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Rockstar Games
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Grand Theft Auto V
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Xbox 360, PS3
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September 17, 2013
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2K Games
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XCOM
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Xbox 360, PS3, PC
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Fiscal Year 2014
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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. 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 the
impact of certain items as follows:
-
Net effect from deferral in net revenues - the Company defers
revenue and related costs from the sale of certain titles that have
undelivered elements upon the sale of the game and recognizes that
revenue upon the delivery of the undelivered elements. As there is no
impact to the Company’s operating cash flow, management excludes the
impact of deferred net revenue and related costs from its Non-GAAP
financial measures when evaluating the Company's operating
performance, when planning, forecasting and analyzing future periods,
and when assessing the performance of its management team. In
addition, we believe that these Non-GAAP financial measures provide a
more timely indication of trends in our business, provide
comparability with the way our business is measured by analysts, and
consistency with industry data sources.
-
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. As a result, the Company
has excluded such expenses from its Non-GAAP financial measures.
-
Business reorganization, restructuring and related expenses –
although the Company has incurred business reorganization expenses in
the past, each charge relates to a discrete event based on a unique
set of business objectives. Management does not believe these charges
reflect the Company's primary business, ongoing operating results or
future outlook. As such, the Company believes it is appropriate to
exclude these expenses and related charges from its Non-GAAP financial
measures.
-
Income (loss) from discontinued operations – the Company does
not engage in sales of subsidiaries on a regular basis and therefore
believes it is appropriate to exclude such gains (losses) from its
Non-GAAP financial measures. As the Company is no longer active in its
discontinued operations, it believes it is appropriate to exclude
income (losses) thereon from its Non-GAAP financial measures.
-
Professional fees and expenses associated with unusual legal and
other matters – the Company has incurred expenses for legal
professional fees 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 amortization of discount on convertible notes – the
Company records non-cash amortization of discount on convertible notes
as interest expense 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 – 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.
These Non-GAAP financial measures 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.
About Take-Two Interactive Software
Headquartered in New York City, Take-Two Interactive Software, Inc. is a
leading developer, marketer and publisher of interactive entertainment
for consumers around the globe. The Company develops and publishes
products through its two wholly-owned labels Rockstar Games and 2K,
which publishes its titles under the 2K Games, 2K Sports and 2K Play
brands. Our products are designed for console systems, handheld gaming
systems and personal computers, including smartphones and tablets, and
are delivered through physical retail, digital download, online
platforms and cloud streaming services. 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 http://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 ability to raise capital if
needed and risks associated with international operations. Other
important factors and information are contained in the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 2012, 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.
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TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
(in thousands, except per share amounts)
|
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Three months ended December 31,
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Nine months ended December 31,
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2012
|
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|
2011
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
|
$
|
415,773
|
|
|
|
$
|
236,325
|
|
|
|
$
|
914,996
|
|
|
|
$
|
677,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
Software development costs and royalties
|
|
|
|
77,641
|
|
|
|
|
27,236
|
|
|
|
|
260,180
|
|
|
|
|
129,086
|
|
Product costs
|
|
|
|
99,020
|
|
|
|
|
68,803
|
|
|
|
|
244,593
|
|
|
|
|
207,391
|
|
Licenses
|
|
|
|
31,735
|
|
|
|
|
20,521
|
|
|
|
|
47,483
|
|
|
|
|
42,914
|
|
Internal royalties
|
|
|
|
7,903
|
|
|
|
|
9,907
|
|
|
|
|
9,261
|
|
|
|
|
32,998
|
|
Total cost of goods sold
|
|
|
|
216,299
|
|
|
|
|
126,467
|
|
|
|
|
561,517
|
|
|
|
|
412,389
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Gross profit
|
|
|
|
199,474
|
|
|
|
|
109,858
|
|
|
|
|
353,479
|
|
|
|
|
265,350
|
|
|
|
|
|
|
|
|
|
|
|
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|
Selling and marketing
|
|
|
|
60,724
|
|
|
|
|
40,228
|
|
|
|
|
205,582
|
|
|
|
|
143,684
|
|
General and administrative
|
|
|
|
32,880
|
|
|
|
|
29,705
|
|
|
|
|
106,891
|
|
|
|
|
86,067
|
|
Research and development
|
|
|
|
22,369
|
|
|
|
|
16,823
|
|
|
|
|
57,001
|
|
|
|
|
49,340
|
|
Depreciation and amortization
|
|
|
|
2,509
|
|
|
|
|
2,854
|
|
|
|
|
7,828
|
|
|
|
|
9,383
|
|
Total operating expenses
|
|
|
|
118,482
|
|
|
|
|
89,610
|
|
|
|
|
377,302
|
|
|
|
|
288,474
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|
Income (loss) from operations
|
|
|
|
80,992
|
|
|
|
|
20,248
|
|
|
|
|
(23,823
|
)
|
|
|
|
(23,124
|
)
|
Interest and other, net
|
|
|
|
(8,094
|
)
|
|
|
|
(6,190
|
)
|
|
|
|
(23,562
|
)
|
|
|
|
(14,203
|
)
|
Income (loss) from continuing operations before income taxes
|
|
|
|
72,898
|
|
|
|
|
14,058
|
|
|
|
|
(47,385
|
)
|
|
|
|
(37,327
|
)
|
Provision (benefit) for income taxes
|
|
|
|
2,021
|
|
|
|
|
(127
|
)
|
|
|
|
4,947
|
|
|
|
|
4,368
|
|
Income (loss) from continuing operations
|
|
|
|
70,877
|
|
|
|
|
14,185
|
|
|
|
|
(52,332
|
)
|
|
|
|
(41,695
|
)
|
Income (loss) from discontinued operations, net of taxes
|
|
|
|
488
|
|
|
|
|
(81
|
)
|
|
|
|
368
|
|
|
|
|
(285
|
)
|
Net income (loss)
|
|
|
$
|
71,365
|
|
|
|
$
|
14,104
|
|
|
|
$
|
(51,964
|
)
|
|
|
$
|
(41,980
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
$
|
0.76
|
|
|
|
$
|
0.16
|
|
|
|
$
|
(0.61
|
)
|
|
|
$
|
(0.50
|
)
|
Discontinued operations
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(0.01
|
)
|
Basic earnings (loss) per share
|
|
|
$
|
0.76
|
|
|
|
$
|
0.16
|
|
|
|
$
|
(0.61
|
)
|
|
|
$
|
(0.51
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
$
|
0.66
|
|
|
|
$
|
0.16
|
|
|
|
$
|
(0.61
|
)
|
|
|
$
|
(0.50
|
)
|
Discontinued operations
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(0.01
|
)
|
Diluted earnings (loss) per share (1) |
|
|
$
|
0.66
|
|
|
|
$
|
0.16
|
|
|
|
$
|
(0.61
|
)
|
|
|
$
|
(0.51
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
93,338
|
|
|
|
|
89,523
|
|
|
|
|
85,382
|
|
|
|
|
83,003
|
|
Diluted
|
|
|
|
119,359
|
|
|
|
|
89,523
|
|
|
|
|
85,382
|
|
|
|
|
83,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For the three months ended December 31, 2012, diluted EPS has been
calculated using the “if-converted” method as a result of the
issuances of the 4.375% Convertible Notes in June 2009 (the
"4.375% Convertible Notes") and the 1.75% Convertible Notes in
November 2011 (the "1.75% Convertible Notes" and together with the
4.375% Convertible Notes, the "Convertible Notes") for which
diluted net income has been adjusted by $7,834 related to interest
and debt issuance costs, net of tax. The shares used for computing
the three months ended December 31, 2012 diluted EPS include
26,021 shares related to the potential dilution from the
Convertible Notes.
|
|
|
|
|
|
The “if-converted” method was not used for the other periods
presented as the assumed conversion would have been anti-dilutive.
|
|
|
|
(2)
|
|
Basic and diluted include participating shares of 7,596 and 5,958
for the three months ended December 31, 2012 and 2011,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31,
|
|
|
Nine months ended December 31,
|
OTHER INFORMATION
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographic revenue mix
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
65%
|
|
|
65%
|
|
|
58%
|
|
|
52%
|
International
|
|
|
35%
|
|
|
35%
|
|
|
42%
|
|
|
48%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform revenue mix
|
|
|
|
|
|
|
|
|
|
|
|
|
Microsoft Xbox 360
|
|
|
43%
|
|
|
39%
|
|
|
44%
|
|
|
44%
|
Sony PlayStation 3
|
|
|
34%
|
|
|
38%
|
|
|
34%
|
|
|
38%
|
PC and other
|
|
|
18%
|
|
|
11%
|
|
|
18%
|
|
|
10%
|
Nintendo Wii
|
|
|
2%
|
|
|
4%
|
|
|
1%
|
|
|
2%
|
Sony PSP
|
|
|
1%
|
|
|
3%
|
|
|
1%
|
|
|
2%
|
Nintendo DS
|
|
|
1%
|
|
|
3%
|
|
|
1%
|
|
|
2%
|
Sony PlayStation 2
|
|
|
1%
|
|
|
2%
|
|
|
1%
|
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
March 31,
|
|
|
|
|
2012
|
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
(Unaudited)
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
448,723
|
|
|
|
$
|
420,279
|
|
Accounts receivable, net of allowances of $62,746 and $51,002 at
December 31, 2012
|
|
|
|
|
|
|
and March 31, 2012, respectively
|
|
|
|
94,241
|
|
|
|
|
45,035
|
|
Inventory
|
|
|
|
29,687
|
|
|
|
|
22,477
|
|
Software development costs and licenses
|
|
|
|
199,813
|
|
|
|
|
211,224
|
|
Prepaid expenses and other
|
|
|
|
45,426
|
|
|
|
|
44,602
|
|
Total current assets
|
|
|
|
817,890
|
|
|
|
|
743,617
|
|
|
|
|
|
|
|
|
Fixed assets, net
|
|
|
|
23,701
|
|
|
|
|
18,949
|
|
Software development costs and licenses, net of current portion
|
|
|
|
74,327
|
|
|
|
|
104,755
|
|
Goodwill
|
|
|
|
228,786
|
|
|
|
|
228,169
|
|
Other intangibles, net
|
|
|
|
9,301
|
|
|
|
|
16,266
|
|
Other assets
|
|
|
|
35,776
|
|
|
|
|
37,671
|
|
Total assets
|
|
|
$
|
1,189,781
|
|
|
|
$
|
1,149,427
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
42,263
|
|
|
|
$
|
46,681
|
|
Accrued expenses and other current liabilities
|
|
|
|
211,425
|
|
|
|
|
156,768
|
|
Deferred revenue
|
|
|
|
26,348
|
|
|
|
|
13,864
|
|
Liabilities of discontinued operations
|
|
|
|
1,181
|
|
|
|
|
1,412
|
|
Total current liabilities
|
|
|
|
281,217
|
|
|
|
|
218,725
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
330,311
|
|
|
|
|
316,340
|
|
Other long-term liabilities
|
|
|
|
12,480
|
|
|
|
|
16,316
|
|
Liabilities of discontinued operations, net of current portion
|
|
|
|
959
|
|
|
|
|
2,319
|
|
Total liabilities
|
|
|
|
624,967
|
|
|
|
|
553,700
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Preferred stock, $.01 par value, 5,000 shares authorized
|
|
|
|
-
|
|
|
|
|
-
|
|
Common stock, $.01 par value, 200,000 and 150,000 shares authorized
at
|
|
|
|
|
|
|
December 31, 2012 and March 31, 2012, respectively; 93,659 and
90,215 shares
|
|
|
|
|
|
|
issued and outstanding at December 31, 2012 and March 31, 2012,
respectively
|
|
937
|
|
|
|
|
902
|
|
Additional paid-in capital
|
|
|
|
819,871
|
|
|
|
|
799,431
|
|
Accumulated deficit
|
|
|
|
(263,303
|
)
|
|
|
|
(211,339
|
)
|
Accumulated other comprehensive income
|
|
|
|
7,309
|
|
|
|
|
6,733
|
|
Total stockholders' equity
|
|
|
|
564,814
|
|
|
|
|
595,727
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
1,189,781
|
|
|
|
$
|
1,149,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
Nine months ended December 31,
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
Operating activities:
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(51,964
|
)
|
|
|
$
|
(41,980
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
Amortization and impairment of software development costs and
licenses
|
|
|
|
189,319
|
|
|
|
|
117,158
|
|
Depreciation and amortization
|
|
|
|
7,828
|
|
|
|
|
9,383
|
|
(Income) loss from discontinued operations
|
|
|
|
(368
|
)
|
|
|
|
285
|
|
Amortization and impairment of intellectual property
|
|
|
|
6,678
|
|
|
|
|
979
|
|
Stock-based compensation
|
|
|
|
22,778
|
|
|
|
|
23,463
|
|
Amortization of discount on Convertible Notes
|
|
|
|
13,971
|
|
|
|
|
7,294
|
|
Amortization of debt issuance costs
|
|
|
|
1,521
|
|
|
|
|
1,014
|
|
Other, net
|
|
|
|
735
|
|
|
|
|
778
|
|
Changes in assets and liabilities, net of effect from purchases of
businesses:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(49,206
|
)
|
|
|
|
30,943
|
|
Inventory
|
|
|
|
(7,210
|
)
|
|
|
|
2,062
|
|
Software development costs and licenses
|
|
|
|
(150,479
|
)
|
|
|
|
(147,315
|
)
|
Prepaid expenses, other current and other non-current assets
|
|
|
|
(474
|
)
|
|
|
|
4,125
|
|
Deferred revenue
|
|
|
|
12,484
|
|
|
|
|
(1,640
|
)
|
Accounts payable, accrued expenses and other liabilities
|
|
|
|
47,072
|
|
|
|
|
(59,574
|
)
|
Net cash used in discontinued operations
|
|
|
|
(1,223
|
)
|
|
|
|
(1,580
|
)
|
Net cash provided by (used in) operating activities
|
|
|
|
41,462
|
|
|
|
|
(54,605
|
)
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
Purchase of fixed assets
|
|
|
|
(12,317
|
)
|
|
|
|
(7,984
|
)
|
Net cash used in discontinued operations
|
|
|
|
-
|
|
|
|
|
(1,475
|
)
|
Net cash used in investing activities
|
|
|
|
(12,317
|
)
|
|
|
|
(9,459
|
)
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
Proceeds from exercise of employee stock options
|
|
|
|
-
|
|
|
|
|
238
|
|
Proceeds from issuance of Convertible Notes
|
|
|
|
-
|
|
|
|
|
250,000
|
|
Payment of debt issuance costs
|
|
|
|
-
|
|
|
|
|
(6,875
|
)
|
Net cash provided by financing activities
|
|
|
|
-
|
|
|
|
|
243,363
|
|
|
|
|
|
|
|
|
Effects of foreign exchange rates on cash and cash equivalents
|
|
|
|
(701
|
)
|
|
|
|
(6,342
|
)
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
|
28,444
|
|
|
|
|
172,957
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
420,279
|
|
|
|
|
280,359
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
448,723
|
|
|
|
$
|
453,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
RECONCILIATION OF GAAP TO Non-GAAP MEASURES (Unaudited)
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31,
|
|
|
Nine months ended December 31,
|
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
|
2011
|
|
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Revenues
|
|
|
$
|
415,773
|
|
|
|
$
|
236,325
|
|
|
$
|
914,996
|
|
|
|
$
|
677,739
|
|
Net effect from deferral in net revenues
|
|
|
|
(10,766
|
)
|
|
|
|
-
|
|
|
|
4,183
|
|
|
|
|
-
|
|
Non-GAAP Net Revenues
|
|
|
$
|
405,007
|
|
|
|
$
|
236,325
|
|
|
$
|
919,179
|
|
|
|
$
|
677,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Gross Profit
|
|
|
$
|
199,474
|
|
|
|
$
|
109,858
|
|
|
$
|
353,479
|
|
|
|
$
|
265,350
|
|
Net effect from deferral in net revenues
|
|
|
|
(6,421
|
)
|
|
|
|
-
|
|
|
|
3,611
|
|
|
|
|
-
|
|
Stock-based compensation
|
|
|
|
1,790
|
|
|
|
|
794
|
|
|
|
8,034
|
|
|
|
|
4,379
|
|
Non-GAAP Gross Profit
|
|
|
$
|
194,843
|
|
|
|
$
|
110,652
|
|
|
$
|
365,124
|
|
|
|
$
|
269,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Income (Loss) from Operations
|
|
|
$
|
80,992
|
|
|
|
$
|
20,248
|
|
|
$
|
(23,823
|
)
|
|
|
$
|
(23,124
|
)
|
Net effect from deferral in net revenues
|
|
|
|
(6,421
|
)
|
|
|
|
-
|
|
|
|
3,611
|
|
|
|
|
-
|
|
Stock-based compensation
|
|
|
|
8,681
|
|
|
|
|
10,803
|
|
|
|
22,778
|
|
|
|
|
23,463
|
|
Business reorganization and related
|
|
|
|
384
|
|
|
|
|
247
|
|
|
|
758
|
|
|
|
|
1,015
|
|
Professional fees and legal matters
|
|
|
|
-
|
|
|
|
|
20
|
|
|
|
-
|
|
|
|
|
196
|
|
Non-GAAP Income from Operations
|
|
|
$
|
83,636
|
|
|
|
$
|
31,318
|
|
|
$
|
3,324
|
|
|
|
$
|
1,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income (Loss)
|
|
|
$
|
71,365
|
|
|
|
$
|
14,104
|
|
|
$
|
(51,964
|
)
|
|
|
$
|
(41,980
|
)
|
Net effect from deferral in net revenues
|
|
|
|
(6,421
|
)
|
|
|
|
-
|
|
|
|
3,611
|
|
|
|
|
-
|
|
Stock-based compensation
|
|
|
|
8,681
|
|
|
|
|
10,803
|
|
|
|
22,778
|
|
|
|
|
23,463
|
|
Business reorganization and related
|
|
|
|
384
|
|
|
|
|
247
|
|
|
|
758
|
|
|
|
|
1,015
|
|
Professional fees and legal matters
|
|
|
|
-
|
|
|
|
|
20
|
|
|
|
-
|
|
|
|
|
196
|
|
Non-cash amortization of discount on Convertible Notes
|
|
|
|
4,772
|
|
|
|
|
3,234
|
|
|
|
13,971
|
|
|
|
|
7,294
|
|
Non-cash tax expense
|
|
|
|
482
|
|
|
|
|
465
|
|
|
|
1,438
|
|
|
|
|
1,286
|
|
Discontinued operations
|
|
|
|
(488
|
)
|
|
|
|
81
|
|
|
|
(368
|
)
|
|
|
|
285
|
|
Non-GAAP Net Income (Loss)
|
|
|
$
|
78,775
|
|
|
|
$
|
28,954
|
|
|
$
|
(9,776
|
)
|
|
|
$
|
(8,441
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings (Loss) Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP earnings (loss) per share
|
|
|
$
|
0.66
|
|
|
|
$
|
0.16
|
|
|
$
|
(0.61
|
)
|
|
|
$
|
(0.51
|
)
|
Non-GAAP earnings (loss) per share (1) |
|
|
$
|
0.67
|
|
|
|
$
|
0.27
|
|
|
$
|
(0.11
|
)
|
|
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of diluted shares used in computation
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
|
119,359
|
|
|
|
|
89,523
|
|
|
|
85,382
|
|
|
|
|
83,003
|
|
Non-GAAP (2) |
|
|
|
119,359
|
|
|
|
|
115,544
|
|
|
|
85,382
|
|
|
|
|
83,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For the three months ended December 31, 2012 and 2011, Non-GAAP
diluted EPS has been calculated using the “if-converted” method as
a result of the issuances of the 4.375% Convertible Notes in June
2009 (the "4.375% Convertible Notes") and the 1.75% Convertible
Notes in November 2011 (the "1.75% Convertible Notes" and together
with the 4.375% Convertible Notes, the "Convertible Notes") for
which diluted net income has been adjusted by $3,062 and $2,378,
respectively, related to interest and debt issuance costs, net of
tax. The shares used for computing the three months ended December
31, 2012 and 2011 Non-GAAP diluted EPS include 26,021 shares
related to the potential dilution from the Convertible Notes.
|
|
|
|
|
|
The “if-converted” method was not used for the nine months
ended December 31, 2012 and 2011 as the assumed conversion would
have been anti-dilutive.
|
|
|
|
(2)
|
|
For the three months ended December 31, 2012 and 2011, the
diluted shares used in the computation of Non-GAAP EPS include
participating shares of 7,596 and 5,958, respectively.
|
|
|
|
Source: Take-Two Interactive Software, Inc.
Take-Two Interactive Software, Inc. Investor Relations: Henry
A. Diamond, 646-536-3005 Senior Vice President Investor
Relations & Corporate Communications Henry.Diamond@take2games.com or Corporate
Press: Alan Lewis, 646-536-2983 Vice President Corporate
Communications & Public Affairs Alan.Lewis@take2games.com
|