Take-Two News Release
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Take-Two Interactive Software, Inc. Reports Strong Second Quarter Fiscal 2008 Financial Results
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Top and Bottom Line Results Exceed High End of Guidance
Company Raises Fiscal 2008 Guidance Significantly and Provides
Third and Fourth Quarter Guidance
NEW YORK--(BUSINESS WIRE)--June 5, 2008--Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today announced financial results for its second quarter ended April 30, 2008. Net revenue for the second fiscal quarter was $539.8 million, compared to $205.4 million for the same quarter of fiscal 2007. Second quarter sales were led by the blockbuster, critically acclaimed Grand Theft Auto IV for Xbox 360(R) video game and entertainment system and PLAYSTATION(R)3 computer entertainment system. Net income for the second quarter was $98.2 million or $1.29 per share, compared to a net loss of $51.2 million or $0.71 per share in the second quarter of fiscal 2007. The second quarter results include $12.4 million in stock-based compensation expense ($0.16 per share); $3.8 million in professional fees and legal expenses, primarily related to Electronic Arts' unsolicited tender offer ($0.05 per share) and $0.9 million in business reorganization costs ($0.01 per share). Results for the second quarter of 2007 included $16.3 million of business reorganization and related costs due to the Company's management and board changes, legal expenses and other professional fees associated with the investigation of stock option grants, responses to the New York County District Attorney's subpoenas, and other legal matters ($0.22 per share), as well as $5.8 million in stock-based compensation expense ($0.08 per share). Non-GAAP net income was $115.4 million or $1.52 per share in the second quarter, compared to a net loss of $29.2 million or $0.41 per share in the second quarter of 2007. (Please refer to Non-GAAP Financial Measures and reconciliation tables included later in this release for additional information and details on non-GAAP items.) For the six months ended April 30, 2008, net revenues were $780.3 million, compared to $482.8 million for the same period a year ago. Net income for the first half of fiscal 2008 was $60.2 million or $0.80 per share, compared to a loss of $72.8 million or $1.02 for the 2007 period. Results for the first six months of fiscal 2008 include $18.5 million in stock-based compensation expense ($0.25 per share); $5.3 million in professional fees and legal expenses, with the majority related to Electronic Arts' unsolicited tender offer ($0.07 per share) and $1.1 million in business reorganization costs ($0.01 per share). Results for the first six months of fiscal 2007 included $23.5 million of business reorganization and related costs due to the Company's management and board changes, legal expenses and other professional fees associated with the investigation of stock option grants, responses to the New York County District Attorney's subpoenas, and other legal matters ($0.33 per share), as well as $9.8 million in stock-based compensation expense ($0.14 per share). Non-GAAP net income was $85.1 million or $1.14 per share in the first six months of 2008, versus a net loss of $39.5 million or $0.55 per share in the comparable period of 2007. (Please refer to Non-GAAP Financial Measures and reconciliation information included later in this release.) Business Highlights Among the significant recent business developments, Take-Two noted the following:
-- Rockstar Games released the highly anticipated Grand Theft
Auto IV on April 29, 2008. The title surpassed all-time
entertainment records for day one and week one sales, with
approximately 6 million units sold through globally in the
first week at an estimated retail value of more than $500
million. As of May 31, 2008, over 11 million units have been
sold in to retailers and approximately 8.5 million units have
been sold through to consumers.
-- BioShock(R), a wholly owned and internally developed title for
Xbox 360 and Games for Windows(R) shipped over 2.2 million
units since its debut in late August. 2K Games will be
bringing this popular title to the PLAYSTATION(R)3 this fall,
and Universal Pictures is developing a feature film based on
BioShock to be directed by Gore Verbinski, director of the
Pirates of the Caribbean trilogy.
-- Rockstar Games announced the acquisition of Mad Doc Software,
one of the premier independent development studios in North
America. The studio, renamed Rockstar New England, most
recently worked with Rockstar on the Xbox 360 version of the
critically acclaimed Bully: Scholarship Edition.
-- Hubert Larenaudie was named President for Asia to head
Take-Two's growth initiatives in the Asia Pacific region
including expanding distribution of the Company's interactive
entertainment products; developing a strong presence in Japan;
and working to establish an online game operation, especially
in China and Korea. He had previously served in senior roles
at Electronic Arts and Vivendi.
"Take-Two's performance has exceeded expectations through the first half of fiscal 2008, clearly demonstrating the creative, operational and financial strength of our business," noted Strauss Zelnick, Chairman of Take-Two. "Our results reflected the extraordinary success of Grand Theft Auto IV, the value of our catalog of titles, and our ongoing initiatives to improve the efficiency of our operations. We look forward to continuing to enhance stockholder value by building on our broad portfolio of internally developed and owned interactive entertainment brands, leveraging the opportunities in the current industry cycle, and operating our business in an effective manner." Ben Feder, Chief Executive Officer of Take-Two, added, "Based on the Company's stronger than expected results, we have increased our financial guidance for fiscal 2008 and are confident in our ability to continue to perform for the balance of the year. Furthermore, Take-Two is extremely well positioned in an industry that is experiencing explosive growth. We believe that our exceptional creative talent, diverse range of hit products, and the proven global demand for our titles will be the drivers of increasing value over time." Financial Guidance The Company is providing guidance for the third fiscal quarter ending July 31, 2008 and fourth fiscal quarter ending October 31, 2008 and is raising its guidance for the fiscal year ending October 31, 2008 as detailed below. Fiscal 2008 guidance reflects the release of the first installment of episodic content for Grand Theft Auto IV for Xbox 360 in the first quarter of fiscal 2009 instead of the fourth quarter of fiscal 2008 in order to provide a better balance in Take-Two's release schedule.
Revenue* Non-GAAP EPS (a)(b)
------------------- -------------------------
Third quarter ending $325 to $375 $0.45 to $0.55
7/31/2008
Fourth quarter ending $300 to $350 $0.10 to $0.20
10/31/2008
Fiscal year ending $1,400 to $1,500 $1.65 to $1.85
10/31/2008
* In millions
(a) The Company's non-GAAP EPS estimates for the third quarter ending
July 31, 2008, and fourth quarter and fiscal year ending October 31,
2008 exclude approximately $0.17, $0.18 and $0.59 per share,
respectively, of stock-based compensation expense; and approximately
$0.13, $0.01 and $0.23 per share, respectively, of professional fees
and legal expenses related to unusual matters, including the
Electronic Arts tender offer, and business reorganization costs. The
Company's stock-based compensation expense for the third and fourth
quarters and fiscal 2008 reflects the cost of approximately two
million stock options issued to ZelnickMedia 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 Take-Two's stock price.
(b) EPS estimates reflect tax expense primarily for international
operations.
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 current generation systems while continuing to leverage opportunities on prior generation platforms; as well as the timely delivery of the titles detailed in this release. Product Pipeline The following titles shipped during the second quarter of fiscal 2008: Title Platform ---------------------------------------------------------------------- Bully: Scholarship Edition Xbox 360, Wii Dora the Explorer: Dora Saves the Mermaids(TM) PS2 Go, Diego, Go!: Safari Rescue(TM) Wii, PS2 Grand Theft Auto IV Xbox 360, PS3 Major League Baseball(R) 2K8 Xbox 360, PS3, Wii, PSP, PS2 Major League Baseball(R) 2K8 Fantasy All-Stars DS Take-Two's lineup announced to date for the remainder of fiscal 2008 includes the following titles: Title Platform -------------------------------------------- ------------------------- BioShock(R) PS3 Carnival Games(TM) DS Carnival Games: Mini-Golf(TM) Wii Don King Presents: Prizefighter Xbox 360, Wii, DS Midnight Club: Los Angeles Xbox 360, PS3 Midnight Club: LA Remix PSP MLB (R) Power Pros 2008 Wii, PS2, DS 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, DS 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:
-- Business reorganization, restructuring and related expenses
-- Stock-based compensation
-- Professional fees and expenses associated with the tender
offer by Electronic Arts Inc., the Company's stock options
investigation and certain other unusual regulatory and legal
matters
-- 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. Therefore, 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 year ended October 31, 2007 to reduce headcount, relocate employees and consolidate sales and operational functions. The Company recorded additional business reorganization costs in the three and six months ended April 30, 2008, and expects that additional business reorganization, restructuring and related costs will be recorded in the remainder of 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 stockholder dilution than accounting charges when assessing the impact of stock-based equity awards. Professional fees and expenses associated with the tender offer by Electronic Arts Inc., the Company's stock options investigation and certain other unusual regulatory and legal matters The Company has incurred significant legal and investment banking expenses related to the tender offer launched by Electronic Arts Inc. on March 13, 2008 to acquire all of the Company's outstanding shares. Additionally, the Company has realized 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 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. 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 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 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, Windows, the Windows Vista Start button, Xbox, Xbox 360, Xbox LIVE, and the Xbox logos are trademarks of the Microsoft group of companies, and 'Games for Windows' and the Windows Vista Start button logo are used under license from Microsoft. "PlayStation", "PLAYSTATION", and "PS" Family logo are registered trademarks of Sony Computer Entertainment Inc.
Wii and Nintendo DS are trademarks of Nintendo. (C) 2006 Nintendo.
Important Legal Information
In connection with the tender offer commenced by Electronic Arts Inc., the Company has filed with the Securities Exchange Commission a Solicitation/Recommendation Statement on Schedule 14D-9. The Company's stockholders should read carefully the Solicitation/Recommendation Statement on Schedule 14D-9 (including any amendments or supplements thereto) prior to making any decisions with respect to Electronic Arts' tender offer because it contains important information. Free copies of the Solicitation/Recommendation Statement on Schedule 14D-9 and the related amendments or supplements thereto that the Company has filed with the SEC are available at the SEC's website at www.sec.gov. This communication does not constitute an offer to sell or invitation to purchase any securities or the solicitation of an offer to buy any securities, pursuant to Electronic Arts' tender offer or otherwise. This press release may contain 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. Further risks and uncertainties associated with Electronic Arts' tender offer to acquire the Company's outstanding shares are as follows: the risk that key employees may pursue other employment opportunities due to concerns as to their employment security with the Company; the risk that the acquisition proposal will make it more difficult for the Company to execute its strategic plan and pursue other strategic opportunities; the risk that the future trading price of our common stock is likely to be volatile and could be subject to wide price fluctuations; and the risk that stockholder litigation in connection with Electronic Arts' tender offer, or otherwise, may result in significant costs of defense, indemnification and liability. Other important factors are described in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2007, in the section entitled "Risk Factors," as updated in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2008, in the section entitled "Risk Factors." All forward-looking statements are qualified by these cautionary statements and are made only as of the date they are made.
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Three months ended Six months ended
April 30, April 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net revenue $539,810 $205,436 $780,252 $482,776
------------------------------ --------- --------- --------- ---------
Cost of goods sold:
Product costs 185,043 105,679 333,195 269,822
Software development costs and
royalties 57,688 30,311 80,402 53,190
Internal royalties 52,653 4,875 58,797 14,354
Licenses 22,875 18,717 31,873 26,441
------------------------------ --------- --------- --------- ---------
Total cost of goods sold 318,259 159,582 504,267 363,807
------------------------------ --------- --------- --------- ---------
Gross profit 221,551 45,854 275,985 118,969
Selling and marketing 45,949 28,159 79,678 63,183
General and administrative 49,201 40,471 80,603 79,085
Research and development 14,828 11,936 30,638 26,086
Business reorganization and
related 944 8,962 1,106 8,962
Depreciation and amortization 7,516 7,076 13,925 13,737
------------------------------ --------- --------- --------- ---------
Total operating expenses 118,438 96,604 205,950 191,053
------------------------------ --------- --------- --------- ---------
Income (loss) from operations 103,113 (50,750) 70,035 (72,084)
Interest and other income
(expense), net (830) 1,022 (982) 1,884
------------------------------ --------- --------- --------- ---------
Income (loss) before income
taxes 102,283 (49,728) 69,053 (70,200)
Income taxes 4,061 1,521 8,828 2,597
------------------------------ --------- --------- --------- ---------
Net income (loss) $ 98,222 $(51,249) $ 60,225 $(72,797)
============================== ========= ========= ========= =========
Earnings (loss) per share:
------------------------------ --------- --------- --------- ---------
Basic $ 1.31 $ (0.71) $ 0.81 $ (1.02)
Diluted $ 1.29 $ (0.71) $ 0.80 $ (1.02)
============================== ========= ========= ========= =========
Weighted average shares
outstanding:
------------------------------ --------- --------- --------- ---------
Basic 75,098 71,736 74,112 71,548
Diluted 75,954 71,736 74,894 71,548
============================== ========= ========= ========= =========
Three months ended Six months ended
April 30, April 30,
------------------- -------------------
OTHER INFORMATION 2008 2007 2008 2007
------------------------------ --------- --------- --------- ---------
Total revenue mix
Publishing 90% 75% 78% 65%
Distribution 10% 25% 22% 35%
Geographic revenue mix
North America 65% 73% 71% 75%
International 35% 27% 29% 25%
Publishing revenue platform
mix
Microsoft Xbox 360 46% 21% 41% 18%
Sony PLAYSTATION 3 36% 10% 31% 8%
Nintendo Wii 6% 0% 9% 0%
Sony PlayStation 2 6% 38% 10% 37%
Sony PSP 3% 11% 5% 16%
PC 2% 12% 3% 12%
Nintendo Handhelds 1% 2% 1% 1%
Other 0% 6% 0% 8%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
----------- -----------
April 30, October 31,
2008 2007
----------- -----------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 72,918 $ 77,757
Accounts receivable, net of allowances of
$66,757 and $63,324 at April 30, 2008 and
October 31, 2007, respectively 362,765 104,937
Inventory 91,821 99,331
Software development costs and licenses 136,640 141,441
Prepaid taxes and taxes receivable 24,738 40,316
Prepaid expenses and other 34,416 34,741
---------------------------------------------- ----------- -----------
Total current assets 723,298 498,523
---------------------------------------------- ----------- -----------
Fixed assets, net 39,727 44,986
Software development costs and licenses, net
of current portion 49,210 34,465
Goodwill 237,251 204,845
Other intangibles, net 29,427 31,264
Other assets 18,215 17,060
---------------------------------------------- ----------- -----------
Total assets $1,097,128 $831,143
============================================== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 185,530 $128,782
Accrued expenses and other current
liabilities 201,708 146,835
Deferred revenue 39,857 36,544
---------------------------------------------- ----------- -----------
Total current liabilities 427,095 312,161
---------------------------------------------- ----------- -----------
Deferred revenue 25,000 25,000
Line of credit 16,000 18,000
Income taxes payable 28,076 -
Other long-term liabilities 5,601 4,828
---------------------------------------------- ----------- -----------
Total liabilities 501,772 359,989
---------------------------------------------- ----------- -----------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 100,000 shares 771 743
authorized; 77,146 and 74,273 shares issued
and outstanding at April 30, 2008 and
October 31, 2007, respectively
Additional paid-in capital 578,822 513,297
Accumulated deficit (18,597) (77,747)
Accumulated other comprehensive income 34,360 34,861
---------------------------------------------- ----------- -----------
Total stockholders' equity 595,356 471,154
---------------------------------------------- ----------- -----------
---------------------------------------------- ----------- -----------
Total liabilities and stockholders'
equity $1,097,128 $831,143
============================================== =========== ===========
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
Six months ended
April 30,
--------------------
2008 2007
---------- ---------
Operating activities:
Net income (loss) $ 60,225 $(72,797)
------------------------------------------------ ---------- ---------
Adjustments to reconcile net income (loss) to
net cash used for operating activities:
Amortization and impairment of software
development costs and licenses (1) 64,544 41,964
Depreciation and amortization of long-lived
assets 13,925 13,737
Amortization and impairment of intellectual
property 537 6,691
Stock-based compensation (2) 18,500 9,810
Benefit for deferred income taxes (117) (135)
Foreign currency transaction gain and other (360) (959)
Changes in assets and liabilities, net of effect
from purchases of businesses:
Accounts receivable (257,828) 76,257
Inventory 7,510 15,292
Software development costs and licenses (74,229) (77,589)
Prepaid expenses, other current and other non-
current assets 15,952 16,150
Accounts payable, accrued expenses, deferred
revenue, income taxes payable and 137,617 (42,461)
other liabilities
------------------------------------------------ ---------- ---------
Total adjustments (73,949) 58,757
------------------------------------------------ ---------- ---------
Net cash used for operating activities (13,724) (14,040)
------------------------------------------------ ---------- ---------
Investing activities:
Purchase of fixed assets (4,998) (13,090)
Payments for purchases of businesses, net of
cash acquired (4,037) (982)
------------------------------------------------ ---------- ---------
Net cash used for investing activities (9,035) (14,072)
------------------------------------------------ ---------- ---------
Financing activities:
Proceeds from exercise of options 20,489 802
Payments on line of credit (67,000) -
Borrowings on line of credit 65,000 -
Payment of debt issuance costs (957) -
------------------------------------------------ ---------- ---------
Net cash provided by financing activities 17,532 802
------------------------------------------------ ---------- ---------
Effects of exchange rates on cash and cash
equivalents 388 3,346
------------------------------------------------ ---------- ---------
Net decrease in cash and cash equivalents (4,839) (23,964)
Cash and cash equivalents, beginning of year 77,757 132,480
------------------------------------------------ ---------- ---------
Cash and cash equivalents, end of period $ 72,918 $108,516
================================================ ========== =========
(1) Excludes stock-based compensation
(2) Includes the net effects of capitalization and amortization of
stock-based compensation
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(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
April and legal compen- April
30, 2008 related matters sation 30, 2008
--------- --------- -------- -------- ---------
Net revenue $539,810 $ - $ - $ - $539,810
---------------------- --------- --------- -------- -------- ---------
Cost of goods sold:
Product costs 185,043 - - - 185,043
Software development
costs and royalties 57,688 - - (6,448) 51,240
Internal royalties 52,653 - - - 52,653
Licenses 22,875 - - - 22,875
---------------------- --------- --------- -------- -------- ---------
Total cost of goods
sold 318,259 - - (6,448) 311,811
---------------------- --------- --------- -------- -------- ---------
Gross profit 221,551 - - 6,448 227,999
Selling and marketing 45,949 - - (514) 45,435
General and
administrative 49,201 - (3,781) (4,576) 40,844
Research and
development 14,828 - - (889) 13,939
Business
reorganization and
related 944 (944) - - -
Depreciation and
amortization 7,516 - - - 7,516
---------------------- --------- --------- -------- -------- ---------
Total operating
expenses 118,438 (944) (3,781) (5,979) 107,734
---------------------- --------- --------- -------- -------- ---------
Income from operations 103,113 944 3,781 12,427 120,265
Interest and other
expense, net (830) - - - (830)
---------------------- --------- --------- -------- -------- ---------
Income before income
taxes 102,283 944 3,781 12,427 119,435
Income taxes 4,061 - - - 4,061
---------------------- --------- --------- -------- -------- ---------
Net income $ 98,222 $ 944 $ 3,781 $12,427 $115,374
====================== ========= ========= ======== ======== =========
Earnings per share:*
---------------------- --------- --------- -------- -------- ---------
Basic $ 1.31 $ 0.01 $ 0.05 $ 0.17 $ 1.54
Diluted $ 1.29 $ 0.01 $ 0.05 $ 0.16 $ 1.52
====================== ========= ========= ======== ======== =========
Weighted average shares
outstanding
-------------------------------- --------- -------- -------- ---------
Basic 75,098 75,098 75,098 75,098 75,098
Diluted 75,954 75,954 75,954 75,954 75,954
====================== ========= ========= ======== ======== =========
EBITDA:
Income before income
taxes $102,283 $119,435
Interest and other
expense, net 830 830
Depreciation and
amortization 7,516 7,516
--------- ---------
EBITDA $110,629 $127,781
Add: Business
reorganization and
related 944 -
--------- ---------
Adjusted EBITDA $111,573 $127,781
========= =========
*Basic and diluted earnings 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
---------------------------
Non-GAAP
Three Business Profess- three
months reorgani- ional Stock- months
ended zation fees and based ended
April and legal compen- April
30, 2007 related matters sation 30, 2007
--------- --------- -------- -------- ---------
Net revenue $205,436 $ - $ - $ - $205,436
---------------------- --------- --------- -------- -------- ---------
Cost of goods sold:
Product costs 105,679 - - - 105,679
Software development
costs and royalties 30,311 (5,164) - (488) 24,659
Internal royalties 4,875 - - - 4,875
Licenses 18,717 - - - 18,717
---------------------- --------- --------- -------- -------- ---------
Total cost of goods
sold 159,582 (5,164) - (488) 153,930
---------------------- --------- --------- -------- -------- ---------
Gross profit 45,854 5,164 - 488 51,506
Selling and marketing 28,159 - - (312) 27,847
General and
administrative 40,471 - (3,934) (2,154) 34,383
Research and
development 11,936 - - (1,070) 10,866
Business
reorganization and
related 8,962 (7,161) - (1,801) -
Depreciation and
amortization 7,076 - - - 7,076
---------------------- --------- --------- -------- -------- ---------
Total operating
expenses 96,604 (7,161) (3,934) (5,337) 80,172
---------------------- --------- --------- -------- -------- ---------
Loss from operations (50,750) 12,325 3,934 5,825 (28,666)
Interest and other
income, net 1,022 - - - 1,022
---------------------- --------- --------- -------- -------- ---------
Loss before income
taxes (49,728) 12,325 3,934 5,825 (27,644)
Income taxes 1,521 - - - 1,521
---------------------- --------- --------- -------- -------- ---------
Net loss $(51,249) $12,325 $ 3,934 $ 5,825 $(29,165)
====================== ========= ========= ======== ======== =========
Loss per share:*
---------------------- --------- --------- -------- -------- ---------
Basic $ (0.71) $ 0.17 $ 0.05 $ 0.08 $ (0.41)
Diluted $ (0.71) $ 0.17 $ 0.05 $ 0.08 $ (0.41)
====================== ========= ========= ======== ======== =========
Weighted average shares
outstanding
-------------------------------- --------- -------- -------- ---------
Basic 71,736 71,736 71,736 71,736 71,736
Diluted 71,736 71,736 71,736 71,736 71,736
====================== ========= ========= ======== ======== =========
EBITDA:
Loss before income
taxes $(49,728) $(27,644)
Interest and other
income, net (1,022) (1,022)
Depreciation and
amortization 7,076 7,076
--------- ---------
EBITDA $(43,674) $(21,590)
Add: Business
reorganization and
related 8,962 -
--------- ---------
Adjusted EBITDA $(34,712) $(21,590)
========= =========
*Basic and diluted loss per share may not add due to rounding
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
----------------------------
Non-GAAP
Six Business Profess- six
months reorgani- ional Stock- months
ended zation fees and based ended
April and legal compen- April
30, 2008 related matters sation 30, 2008
--------- --------- -------- --------- ---------
Net revenue $780,252 $ - $ - $ - $780,252
--------------------- --------- --------- -------- --------- ---------
Cost of goods sold:
Product costs 333,195 - - - 333,195
Software development
costs and royalties 80,402 - - (7,194) 73,208
Internal royalties 58,797 - - - 58,797
Licenses 31,873 - - - 31,873
--------------------- --------- --------- -------- --------- ---------
Total cost of goods
sold 504,267 - - (7,194) 497,073
--------------------- --------- --------- -------- --------- ---------
Gross profit 275,985 - - 7,194 283,179
Selling and marketing 79,678 - - (1,381) 78,297
General and
administrative 80,603 - (5,275) (7,948) 67,380
Research and
development 30,638 - - (1,977) 28,661
Business
reorganization and
related 1,106 (1,106) - - -
Depreciation and
amortization 13,925 - - - 13,925
--------------------- --------- --------- -------- --------- ---------
Total operating
expenses 205,950 (1,106) (5,275) (11,306) 188,263
--------------------- --------- --------- -------- --------- ---------
Income from
operations 70,035 1,106 5,275 18,500 94,916
Interest and other
expense, net (982) - - - (982)
--------------------- --------- --------- -------- --------- ---------
Income before income
taxes 69,053 1,106 5,275 18,500 93,934
Income taxes 8,828 - - - 8,828
--------------------- --------- --------- -------- --------- ---------
Net income $ 60,225 $ 1,106 $ 5,275 $ 18,500 $ 85,106
===================== ========= ========= ======== ========= =========
Earnings per share:*
--------------------- --------- --------- -------- --------- ---------
Basic $ 0.81 $ 0.01 $ 0.07 $ 0.25 $ 1.15
Diluted $ 0.80 $ 0.01 $ 0.07 $ 0.25 $ 1.14
===================== ========= ========= ======== ========= =========
Weighted average
shares outstanding
--------------------- --------- --------- -------- --------- ---------
Basic 74,112 74,112 74,112 74,112 74,112
Diluted 74,894 74,894 74,894 74,894 74,894
===================== ========= ========= ======== ========= =========
EBITDA:
Income before income
taxes $ 69,053 $ 85,106
Interest and other
expense, net 982 982
Depreciation and
amortization 13,925 13,925
--------- ---------
EBITDA 83,960 100,013
Add: Business
reorganization and
related 1,106 -
--------- ---------
Adjusted EBITDA $ 85,066 $100,013
========= =========
*Basic and diluted earnings per share may not add due to rounding
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
----------------------------
Non-GAAP
Six Business Profess- six
months reorgani- ional Stock- months
ended zation fees and based ended
April and legal compen- April
30, 2007 related matters sation 30, 2007
--------- --------- --------- -------- ---------
Net revenue $482,776 $ - $ - $ - $482,776
--------------------- --------- --------- --------- -------- ---------
Cost of goods sold:
Product costs 269,822 (5,164) - - 264,658
Software development
costs and royalties 53,190 - - (1,033) 52,157
Internal royalties 14,354 - - - 14,354
Licenses 26,441 - - - 26,441
--------------------- --------- --------- --------- -------- ---------
Total cost of goods
sold 363,807 (5,164) - (1,033) 357,610
--------------------- --------- --------- --------- -------- ---------
Gross profit 118,969 5,164 - 1,033 125,166
Selling and marketing 63,183 - - (619) 62,564
General and
administrative 79,085 - (11,167) (4,100) 63,818
Research and
development 26,086 - - (2,257) 23,829
Business
reorganization and
related 8,962 (7,161) - (1,801) -
Depreciation and
amortization 13,737 - - - 13,737
--------------------- --------- --------- --------- -------- ---------
Total operating
expenses 191,053 (7,161) (11,167) (8,777) 163,948
--------------------- --------- --------- --------- -------- ---------
Loss from operations (72,084) 12,325 11,167 9,810 (38,782)
Interest and other
income, net 1,884 - - - 1,884
--------------------- --------- --------- --------- -------- ---------
Loss before income
taxes (70,200) 12,325 11,167 9,810 (36,898)
Income taxes 2,597 - - - 2,597
--------------------- --------- --------- --------- -------- ---------
Net loss $(72,797) $12,325 $ 11,167 $ 9,810 $(39,495)
===================== ========= ========= ========= ======== =========
Loss per share:*
--------------------- --------- --------- --------- -------- ---------
Basic $ (1.02) $ 0.17 $ 0.16 $ 0.14 $ (0.55)
Diluted $ (1.02) $ 0.17 $ 0.16 $ 0.14 $ (0.55)
===================== ========= ========= ========= ======== =========
Weighted average
shares outstanding
--------------------- --------- --------- --------- -------- ---------
Basic 71,548 71,548 71,548 71,548 71,548
Diluted 71,548 71,548 71,548 71,548 71,548
===================== ========= ========= ========= ======== =========
EBITDA:
Loss before income
taxes $(70,200) $(39,495)
Interest and other
income, net (1,884) (1,884)
Depreciation and
amortization 13,737 13,737
--------- ---------
EBITDA (58,347) (27,642)
Add: Business
reorganization and
related 8,962 -
--------- ---------
Adjusted EBITDA $(49,385) $(27,642)
========= =========
*Basic and diluted loss per share may not add due to rounding
CONTACT: Take-Two Interactive Software, Inc.
Corporate Press/Investor Relations:
Meg Maise, 646-536-2932
meg.maise@take2games.com
SOURCE: Take-Two Interactive Software, Inc.
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