NEW YORK--(BUSINESS WIRE)--Sep. 1, 2009--
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today announced
financial results for its third quarter ended July 31, 2009.
Net revenue for the third fiscal quarter was $138.6 million, compared to
$433.8 million for the same quarter of fiscal 2008, which benefited from
the post-launch performance of Grand Theft Auto IV, the
blockbuster title that surpassed all-time records for the launch of an
entertainment property. Third quarter fiscal 2009 sales were led by catalog
titles, including Grand Theft Auto IV, along with The BIGS 2™
and Major League Baseball® 2K9.
Net loss for the third quarter was $55.5 million or $0.72 per share,
compared to net income of $51.8 million or $0.67 per share in the third
quarter of fiscal 2008.
The third quarter results include $4.6 million in stock-based
compensation expense ($0.06 per share) and $0.4 million in professional
fees and expenses related to unusual matters ($0.01 per share). Results
for the third quarter of 2008 included $12.6 million in stock-based
compensation expense ($0.16 per share) and $7.2 million in professional
fees and expenses related to unusual matters, as well as business
reorganization costs ($0.09 per share).
Non-GAAP net loss was $50.4 million or $0.66 per share in the third
quarter of fiscal 2009, compared to non-GAAP net income of $71.5 million
or $0.93 per share in the third quarter of 2008. (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 nine months ended July 31, 2009, net revenue was $625.1 million,
compared to $1,214.1 million for the same period a year ago, which
included the release and strong post-launch performance of Grand
Theft Auto IV. Net loss for the first nine months of fiscal 2009 was
$115.9 million or $1.51 per share, compared to net income of $112.1
million or $1.48 for the 2008 period. Results for the first nine months
of fiscal 2009 include $16.1 million in stock-based compensation expense
($0.21 per share) and $7.1 million in professional fees and expenses
related to unusual matters ($0.09 per share). Results for the first nine
months of fiscal 2008 included $31.1 million in stock-based compensation
expense ($0.41 per share) and $13.5 million in professional fees and
expenses related to unusual matters, as well as business reorganization
costs ($0.18 per share).
Non-GAAP net loss was $92.7 million or $1.21 per share in the first nine
months of 2009, compared to non-GAAP net income of $156.6 million or
$2.07 per share in the comparable period of 2008. (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 recent developments, Take-Two noted the following:
-
Take-Two completed a $138 million convertible debt offering.
-
Rockstar Games announced Agent, a new wholly owned intellectual
property being developed exclusively for the PLAYSTATION®3 system by
Rockstar North.
-
2K Sports secured a multi-year license to develop an online version of
the NBA simulation game in China, Taiwan, South Korea and Southeast
Asia; and announced a partnership with Tencent Holdings Limited, one
of China’s leading online game operators, to co-develop and distribute NBA
2K Online in China.
-
2K Games launched its celebrated Sid Meier’s Civilization®
Revolution™ for iPhone™ and iPod® touch.
Financial Guidance
Take-Two‘s guidance for the fourth fiscal quarter and fiscal year ending
October 31, 2009 is provided below.
|
|
Fourth quarter ending
|
|
Fiscal year ending
|
|
|
10/31/2009
|
|
10/31/2009
|
Revenue
|
|
$350 to $375 million
|
|
$0.975 to $1.0 billion
|
Non-GAAP EPS
|
|
$0.30 to $0.35
|
|
$(0.81) to $(0.87)
|
Stock-based compensation
|
|
|
|
|
expense per share (a)
|
|
$0.08
|
|
$0.30
|
Expenses related to unusual
|
|
|
|
|
legal matters per share
|
|
$0.01
|
|
$0.10
|
(a) The Company's stock-based compensation expense for the fourth
quarter and fiscal year 2009 includes the cost of approximately 2
million stock options and 1.5 million shares previously issued to
ZelnickMedia that are subject to variable accounting. Actual expense
to be recorded in connection with these options and shares is
dependent upon several factors, including future changes in
Take-Two's stock price.
|
Key assumptions and dependencies underlying the Company’s guidance
include continued consumer acceptance of the Xbox 360® video game and
entertainment system from Microsoft, PLAYSTATION®3 computer
entertainment system and Wii™ 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 certain prior generation platforms; as well as the
timely delivery of the titles detailed in this release.
Product Releases
The following titles shipped during the third quarter of fiscal 2009:
Title
|
|
|
Platform
|
|
|
|
|
Birthday Party Bash
|
|
|
Wii
|
The BIGS™ 2
|
|
|
Multiple platforms
|
Sid Meier’s Civilization IV®: The Complete Edition
|
|
|
Games for Windows®
|
Following are the key titles planned for release in the fourth quarter
of fiscal 2009:
Title
|
|
|
Platform
|
|
|
|
|
Borderlands™
|
|
|
Xbox 360, PS3, PC
|
Grand Theft Auto: Chinatown Wars
|
|
|
PSP, iPhone, iPod touch
|
Grand Theft Auto: Episodes from Liberty City
|
|
|
Xbox 360
|
Grand Theft Auto: The Ballad of Gay Tony
|
|
|
Xbox LIVE® (downloadable episode)
|
NBA® 2K10
|
|
|
Multiple platforms
|
NHL® 2K10
|
|
|
Multiple platforms
|
Rockstar Games and Timbaland present Beaterator
|
|
|
PSP, iPhone, iPod touch
|
Take-Two's lineup of key titles announced to date for fiscal 2010
includes:
Title
|
|
|
Platform
|
|
|
|
|
BioShock® 2
|
|
|
Xbox 360, PS3, PC
|
Mafia® II
|
|
|
Xbox 360, PS3, PC
|
Max Payne 3
|
|
|
Xbox 360, PS3, PC
|
Red Dead Redemption
|
|
|
Xbox 360, PS3
|
Management Comment
“We remain focused on our core strategy of delivering high quality
interactive entertainment experiences and exceptional value through our
catalog of proven titles. While the economy and retail environment
continue to be challenging, we are optimistic that ‘must have’ triple-A
and value products will be key drivers this holiday season. That said,
we are maintaining a prudent approach to our business outlook for the
remainder of this year and as we head into fiscal 2010. We will continue
to invest our resources in initiatives that will enhance our
industry-leading creativity and innovation,” said Strauss Zelnick,
Chairman of Take-Two.
Ben Feder, Chief Executive Officer of Take-Two, noted, “Our strong
lineup for the balance of this year includes a broad array of titles
that we believe will appeal to both hard core and casual gamers.
Anchored by several new titles from our blockbuster Grand Theft Auto series
and the latest installment of our #1-rated NBA 2K franchise, our
holiday portfolio will also feature Borderlands, a genre-defining
new intellectual property. Looking ahead, we will continue to support
our product development efforts with a solid balance sheet, operational
improvements, and a creative team that is among the most talented in our
industry.”
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 unusual legal and other
matters, including the Company's concluded process to evaluate its
strategic alternatives
-
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 fiscal years ended October 31,
2007 and October 31, 2008 to reduce headcount, relocate employees and
consolidate sales and operational functions. These costs were related to
severance, asset write-offs and associated professional fees. As of
October 31, 2008, the Company had substantially concluded the
reorganization plan.
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 its short and long-term operating
plans. The Company places greater emphasis on stockholder dilution than
accounting charges when assessing the impact of stock-based equity
awards.
Professional fees and expenses associated with unusual legal and
other matters, including the Company’s concluded strategic review process
The Company incurred significant legal, consulting and investment
banking expenses in the fiscal year ended October 31, 2008 related to
the tender offer by Electronic Arts Inc. to acquire all of the Company’s
outstanding shares, which was launched in March 2008 and expired in
August 2008, and the Company’s related strategic review process which
was completed in October 2008.
Additionally, the Company has realized significant legal and other
professional fees associated with both the investigation of its
historical stock option granting process and the Company’s responses to
related governmental inquiries and civil lawsuits. The Company has also
incurred legal expenses related to the tender offer by Electronic Arts.
One of management’s primary objectives is to bring conclusion to its
outstanding legal matters. The Company continues to incur expenses for
professional fees and has accrued for legal settlements that are outside
its ordinary course of business. As a result, the Company has excluded
such expenses from its non-GAAP financial measures.
EBITDA and Adjusted EBITDA
Earnings (loss) before interest, taxes, depreciation and amortization
(“EBITDA”) is a financial measure not calculated and presented in
accordance with U.S. GAAP. Management uses EBITDA adjusted for business
reorganization and related expenses (“Adjusted EBITDA”), among other
measures, in evaluating the performance of the Company’s business units.
Adjusted EBITDA is also a significant component of the Company’s
incentive compensation plans. Adjusted EBITDA should not be considered
in isolation from, or as a substitute for, net income/(loss) prepared in
accordance with GAAP.
Reclassifications
Certain prior year amounts have been reclassified to conform to current
year presentation.
About Take-Two Interactive Software
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®3 and PlayStation®2
computer entertainment systems, PSP® (PlayStation®Portable) system, Xbox
360® video game and entertainment system from Microsoft, Wii™ and
Nintendo DS™. 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.
Cautionary Note Regarding Forward-Looking Statements
The statements contained herein which are not historical facts are
considered forward-looking statements under federal securities laws and
may be identified by words such as "anticipates," "believes,"
"estimates," "expects," "intends," "plans," "potential," "predicts,"
"projects," "seeks," "will," or words of similar meaning and include,
but are not limited to, statements regarding the outlook for the
Company's future business and financial performance. Such
forward-looking statements are based on the current beliefs of our
management as well as assumptions made by and information currently
available to them, which are subject to inherent uncertainties, risks
and changes in circumstances that are difficult to predict. Actual
outcomes and results may vary materially from these forward-looking
statements based on a variety of risks and uncertainties including: our
dependence on key management and product development personnel, our
dependence on our Grand Theft Auto products and our ability to develop
other hit titles for current generation platforms, the timely release
and significant market acceptance of our games, the ability to maintain
acceptable pricing levels on our games, our reliance on a primary
distribution service provider for a significant portion of our products,
our ability to raise capital if needed, risks associated with
international operations, and the matters relating to the investigation
by a special committee of our board of directors of the Company's stock
option grants and the claims and proceedings relating thereto (including
stockholder and derivative litigation and negative tax or other
implications for the Company resulting from any accounting adjustments
or other factors). Other important factors and information are contained
in the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 2008, in the section entitled "Risk Factors," as updated in
the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
April 30, 2009, and the Company's other periodic filings with the SEC,
which can be accessed at www.take2games.com.
All forward-looking statements are qualified by these cautionary
statements and apply only as of the date they are made. The Company
undertakes no obligation to update any forward-looking statement,
whether as a result of new information, future events or otherwise.
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended July 31,
|
|
Nine months ended July 31,
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
138,564
|
|
|
$
|
433,836
|
|
|
$
|
625,096
|
|
|
$
|
1,214,088
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
Product costs
|
|
|
80,550
|
|
|
|
154,362
|
|
|
|
339,493
|
|
|
|
487,557
|
|
Software development costs and royalties
|
|
|
17,156
|
|
|
|
45,721
|
|
|
|
68,470
|
|
|
|
126,122
|
|
Internal royalties
|
|
|
368
|
|
|
|
51,971
|
|
|
|
30,498
|
|
|
|
110,769
|
|
Licenses
|
|
|
16,835
|
|
|
|
7,602
|
|
|
|
38,951
|
|
|
|
39,475
|
|
Total cost of goods sold
|
|
|
114,909
|
|
|
|
259,656
|
|
|
|
477,412
|
|
|
|
763,923
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
23,655
|
|
|
|
174,180
|
|
|
|
147,684
|
|
|
|
450,165
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing
|
|
|
25,335
|
|
|
|
42,856
|
|
|
|
97,153
|
|
|
|
122,534
|
|
General and administrative
|
|
|
29,583
|
|
|
|
45,678
|
|
|
|
100,745
|
|
|
|
126,916
|
|
Research and development
|
|
|
13,887
|
|
|
|
17,239
|
|
|
|
49,589
|
|
|
|
47,877
|
|
Business reorganization and related
|
|
|
-
|
|
|
|
1,771
|
|
|
|
-
|
|
|
|
2,877
|
|
Depreciation and amortization
|
|
|
4,456
|
|
|
|
6,201
|
|
|
|
14,342
|
|
|
|
20,126
|
|
Total operating expenses
|
|
|
73,261
|
|
|
|
113,745
|
|
|
|
261,829
|
|
|
|
320,330
|
|
Income (loss) from operations
|
|
|
(49,606
|
)
|
|
|
60,435
|
|
|
|
(114,145
|
)
|
|
|
129,835
|
|
Interest and other expense, net
|
|
|
(3,192
|
)
|
|
|
(518
|
)
|
|
|
(2,310
|
)
|
|
|
(865
|
)
|
Income (loss) before income taxes
|
|
|
(52,798
|
)
|
|
|
59,917
|
|
|
|
(116,455
|
)
|
|
|
128,970
|
|
Provision (benefit) for income taxes
|
|
|
2,675
|
|
|
|
8,091
|
|
|
|
(515
|
)
|
|
|
16,919
|
|
Net income (loss)
|
|
$
|
(55,473
|
)
|
|
$
|
51,826
|
|
|
$
|
(115,940
|
)
|
|
$
|
112,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.72
|
)
|
|
$
|
0.68
|
|
|
$
|
(1.51
|
)
|
|
$
|
1.50
|
|
Diluted
|
|
$
|
(0.72
|
)
|
|
$
|
0.67
|
|
|
$
|
(1.51
|
)
|
|
$
|
1.48
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
76,994
|
|
|
|
75,866
|
|
|
|
76,561
|
|
|
|
74,701
|
|
Diluted
|
|
|
76,994
|
|
|
|
76,975
|
|
|
|
76,561
|
|
|
|
75,640
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended July 31,
|
|
Nine months ended July 31,
|
OTHER INFORMATION
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
Total revenue mix
|
|
|
|
|
|
|
|
|
Publishing
|
|
|
69
|
%
|
|
|
88
|
%
|
|
|
67
|
%
|
|
|
81
|
%
|
Distribution
|
|
|
31
|
%
|
|
|
12
|
%
|
|
|
33
|
%
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
Geographic revenue mix
|
|
|
|
|
|
|
|
|
North America
|
|
|
74
|
%
|
|
|
54
|
%
|
|
|
75
|
%
|
|
|
65
|
%
|
International
|
|
|
26
|
%
|
|
|
46
|
%
|
|
|
25
|
%
|
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
Publishing revenue platform mix
|
|
|
|
|
|
|
|
|
Microsoft Xbox 360
|
|
|
32
|
%
|
|
|
44
|
%
|
|
|
33
|
%
|
|
|
43
|
%
|
Nintendo Wii
|
|
|
16
|
%
|
|
|
7
|
%
|
|
|
15
|
%
|
|
|
8
|
%
|
PC
|
|
|
14
|
%
|
|
|
2
|
%
|
|
|
14
|
%
|
|
|
3
|
%
|
Sony PLAYSTATION 3
|
|
|
12
|
%
|
|
|
37
|
%
|
|
|
13
|
%
|
|
|
33
|
%
|
Sony PlayStation 2
|
|
|
12
|
%
|
|
|
5
|
%
|
|
|
9
|
%
|
|
|
8
|
%
|
Sony PSP
|
|
|
10
|
%
|
|
|
3
|
%
|
|
|
8
|
%
|
|
|
4
|
%
|
Nintendo DS
|
|
|
4
|
%
|
|
|
2
|
%
|
|
|
8
|
%
|
|
|
1
|
%
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
July 31,
|
|
October 31,
|
|
|
2009
|
|
2008
|
ASSETS
|
|
(Unaudited)
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
174,789
|
|
|
$
|
280,277
|
|
Accounts receivable, net of allowances of $44,412 and $68,448
|
|
|
|
|
at July 31, 2009 and October 31, 2008, respectively
|
|
|
70,133
|
|
|
|
157,458
|
|
Inventory
|
|
|
63,617
|
|
|
|
104,235
|
|
Software development costs and licenses
|
|
|
142,385
|
|
|
|
113,436
|
|
Prepaid taxes and taxes receivable
|
|
|
8,256
|
|
|
|
23,763
|
|
Prepaid expenses and other
|
|
|
38,894
|
|
|
|
44,605
|
|
Total current assets
|
|
|
498,074
|
|
|
|
723,774
|
|
|
|
|
|
|
Fixed assets, net
|
|
|
27,634
|
|
|
|
32,361
|
|
Software development costs and licenses, net of current portion
|
|
|
87,673
|
|
|
|
61,991
|
|
Goodwill
|
|
|
233,605
|
|
|
|
230,809
|
|
Other intangibles, net
|
|
|
23,897
|
|
|
|
26,123
|
|
Other assets
|
|
|
15,515
|
|
|
|
8,294
|
|
Total assets
|
|
$
|
886,398
|
|
|
$
|
1,083,352
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
72,351
|
|
|
$
|
156,167
|
|
Accrued expenses and other current liabilities
|
|
|
128,441
|
|
|
|
153,089
|
|
Deferred revenue
|
|
|
25,705
|
|
|
|
56,163
|
|
Total current liabilities
|
|
|
226,497
|
|
|
|
365,419
|
|
|
|
|
|
|
Long-term debt
|
|
|
138,000
|
|
|
|
70,000
|
|
Income taxes payable
|
|
|
10,540
|
|
|
|
26,399
|
|
Other long-term liabilities
|
|
|
1,311
|
|
|
|
6,416
|
|
Total liabilities
|
|
|
376,348
|
|
|
|
468,234
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred stock, $.01 par value, 5,000 shares authorized
|
|
|
-
|
|
|
|
-
|
|
Common stock, $.01 par value, 150,000 shares authorized; 79,663 and
77,694 shares
|
|
|
797
|
|
|
|
777
|
|
issued and outstanding at July 31, 2009 and October 31, 2008,
respectively
|
|
|
|
|
Additional paid-in capital
|
|
|
603,751
|
|
|
|
603,579
|
|
Retained earnings (accumulated deficit)
|
|
|
(97,665
|
)
|
|
|
18,275
|
|
Accumulated other comprehensive income (loss)
|
|
|
3,167
|
|
|
|
(7,513
|
)
|
Total stockholders' equity
|
|
|
510,050
|
|
|
|
615,118
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
886,398
|
|
|
$
|
1,083,352
|
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
(in thousands)
|
|
|
Nine months ended July 31,
|
|
|
2009
|
|
2008
|
Operating activities:
|
|
|
|
|
Net income (loss)
|
|
$
|
(115,940
|
)
|
|
$
|
112,051
|
|
Adjustments to reconcile net income (loss) to net cash provided by
(used for)
|
|
|
|
|
operating activities:
|
|
|
|
|
Amortization and impairment of software development costs and
licenses
|
|
|
61,163
|
|
|
|
104,565
|
|
Depreciation and amortization of long-lived assets
|
|
|
14,342
|
|
|
|
20,126
|
|
Amortization and impairment of intellectual property
|
|
|
448
|
|
|
|
1,632
|
|
Stock-based compensation
|
|
|
16,114
|
|
|
|
31,062
|
|
Deferred income taxes
|
|
|
(488
|
)
|
|
|
99
|
|
Foreign currency transaction gain and other
|
|
|
(1,898
|
)
|
|
|
1,203
|
|
Changes in assets and liabilities, net of effect from purchases of
businesses:
|
|
|
|
|
Accounts receivable
|
|
|
87,325
|
|
|
|
(1,417
|
)
|
Inventory
|
|
|
40,618
|
|
|
|
27,757
|
|
Software development costs and licenses
|
|
|
(111,602
|
)
|
|
|
(115,913
|
)
|
Prepaid expenses, other current and other non-current assets
|
|
|
18,727
|
|
|
|
9,474
|
|
Deferred revenue
|
|
|
(30,458
|
)
|
|
|
(3,212
|
)
|
Accounts payable, accrued expenses, income taxes payable and other
liabilities
|
|
|
(125,111
|
)
|
|
|
80,421
|
|
Total adjustments
|
|
|
(30,820
|
)
|
|
|
155,797
|
|
Net cash provided by (used for) operating activities
|
|
|
(146,760
|
)
|
|
|
267,848
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
Purchase of fixed assets
|
|
|
(7,788
|
)
|
|
|
(9,026
|
)
|
Purchases of businesses, net of cash acquired
|
|
|
(500
|
)
|
|
|
(4,037
|
)
|
Net cash used for investing activities
|
|
|
(8,288
|
)
|
|
|
(13,063
|
)
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
Proceeds from exercise of employee stock options
|
|
|
4
|
|
|
|
25,363
|
|
Net payments on line of credit
|
|
|
(70,000
|
)
|
|
|
(18,000
|
)
|
Proceeds from issuance of Convertible Notes
|
|
|
138,000
|
|
|
|
-
|
|
Purchase of convertible note hedges
|
|
|
(43,592
|
)
|
|
|
-
|
|
Issuance of warrants to purchase common stock
|
|
|
26,342
|
|
|
|
-
|
|
Payment of debt issuance costs
|
|
|
(4,833
|
)
|
|
|
(962
|
)
|
Net cash provided by financing activities
|
|
|
45,921
|
|
|
|
6,401
|
|
|
|
|
|
|
Effects of exchange rates on cash and cash equivalents
|
|
|
3,639
|
|
|
|
(242
|
)
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(105,488
|
)
|
|
|
260,944
|
|
Cash and cash equivalents, beginning of year
|
|
|
280,277
|
|
|
|
77,757
|
|
Cash and cash equivalents, end of period
|
|
$
|
174,789
|
|
|
$
|
338,701
|
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
(in thousands, except per share amounts)
|
|
|
|
|
|
Non-GAAP Reconciling Items
|
|
|
|
|
Three months
|
|
Professional
|
|
|
|
Non-GAAP three
|
|
|
ended July 31,
|
|
fees and
|
|
Stock-based
|
|
months ended July 31,
|
|
|
2009
|
|
legal matters
|
|
compensation
|
|
2009
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
138,564
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
138,564
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
Product costs
|
|
|
80,550
|
|
|
|
-
|
|
|
|
-
|
|
|
|
80,550
|
|
Software development costs and royalties
|
|
|
17,156
|
|
|
|
-
|
|
|
|
(631
|
)
|
|
|
16,525
|
|
Internal royalties
|
|
|
368
|
|
|
|
-
|
|
|
|
-
|
|
|
|
368
|
|
Licenses
|
|
|
16,835
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,835
|
|
Total cost of goods sold
|
|
|
114,909
|
|
|
|
-
|
|
|
|
(631
|
)
|
|
|
114,278
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
23,655
|
|
|
|
-
|
|
|
|
631
|
|
|
|
24,286
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing
|
|
|
25,335
|
|
|
|
-
|
|
|
|
(501
|
)
|
|
|
24,834
|
|
General and administrative
|
|
|
29,583
|
|
|
|
(421
|
)
|
|
|
(3,054
|
)
|
|
|
26,108
|
|
Research and development
|
|
|
13,887
|
|
|
|
-
|
|
|
|
(430
|
)
|
|
|
13,457
|
|
Business reorganization and related
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
4,456
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,456
|
|
Total operating expenses
|
|
|
73,261
|
|
|
|
(421
|
)
|
|
|
(3,985
|
)
|
|
|
68,855
|
|
Income (loss) from operations
|
|
|
(49,606
|
)
|
|
|
421
|
|
|
|
4,616
|
|
|
|
(44,569
|
)
|
Interest and other expense, net
|
|
|
(3,192
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,192
|
)
|
Income (loss) before income taxes
|
|
|
(52,798
|
)
|
|
|
421
|
|
|
|
4,616
|
|
|
|
(47,761
|
)
|
Provision (benefit) for income taxes
|
|
|
2,675
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,675
|
|
Net income (loss)
|
|
$
|
(55,473
|
)
|
|
$
|
421
|
|
|
$
|
4,616
|
|
|
$
|
(50,436
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:*
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.72
|
)
|
|
$
|
0.01
|
|
|
$
|
0.06
|
|
|
$
|
(0.66
|
)
|
Diluted
|
|
$
|
(0.72
|
)
|
|
$
|
0.01
|
|
|
$
|
0.06
|
|
|
$
|
(0.66
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
76,994
|
|
|
|
76,994
|
|
|
|
76,994
|
|
|
|
76,994
|
|
Diluted
|
|
|
76,994
|
|
|
|
76,994
|
|
|
|
76,994
|
|
|
|
76,994
|
|
|
|
|
|
|
|
|
|
|
EBITDA:
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
(52,798
|
)
|
|
|
|
|
|
$
|
(47,761
|
)
|
Interest
|
|
|
1,928
|
|
|
|
|
|
|
|
1,928
|
|
Depreciation and amortization
|
|
|
4,456
|
|
|
|
|
|
|
|
4,456
|
|
EBITDA
|
|
$
|
(46,414
|
)
|
|
|
|
|
|
$
|
(41,377
|
)
|
Add: Business reorganization and related
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Adjusted EBITDA
|
|
$
|
(46,414
|
)
|
|
|
|
|
|
$
|
(41,377
|
)
|
|
|
*Basic and diluted earnings (loss) per share may not add due to
rounding
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
(in thousands, except per share amounts)
|
|
|
|
|
|
Non-GAAP Reconciling Items
|
|
|
|
|
Three months
|
|
Business
|
|
Professional
|
|
|
Non-GAAP three
|
|
|
ended July 31,
|
|
reorganization
|
|
fees and
|
|
Stock-based
|
|
months ended July 31,
|
|
|
2008
|
|
and related
|
|
legal matters
|
|
compensation
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
433,836
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
433,836
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
|
|
Product costs
|
|
|
154,362
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
154,362
|
|
Software development costs and royalties
|
|
|
45,721
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,404
|
)
|
|
|
42,317
|
|
Internal royalties
|
|
|
51,971
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
51,971
|
|
Licenses
|
|
|
7,602
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,602
|
|
Total cost of goods sold
|
|
|
259,656
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,404
|
)
|
|
|
256,252
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
174,180
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,404
|
|
|
|
177,584
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing
|
|
|
42,856
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(545
|
)
|
|
|
42,311
|
|
General and administrative
|
|
|
45,678
|
|
|
|
-
|
|
|
|
(5,379
|
)
|
|
|
(6,922
|
)
|
|
|
33,377
|
|
Research and development
|
|
|
17,239
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,687
|
)
|
|
|
15,552
|
|
Business reorganization and related
|
|
|
1,771
|
|
|
|
(1,771
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
6,201
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,201
|
|
Total operating expenses
|
|
|
113,745
|
|
|
|
(1,771
|
)
|
|
|
(5,379
|
)
|
|
|
(9,154
|
)
|
|
|
97,441
|
|
Income (loss) from operations
|
|
|
60,435
|
|
|
|
1,771
|
|
|
|
5,379
|
|
|
|
12,558
|
|
|
|
80,143
|
|
Interest and other expense, net
|
|
|
(518
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(518
|
)
|
Income (loss) before income taxes
|
|
|
59,917
|
|
|
|
1,771
|
|
|
|
5,379
|
|
|
|
12,558
|
|
|
|
79,625
|
|
Provision (benefit) for income taxes
|
|
|
8,091
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,091
|
|
Net income (loss)
|
|
$
|
51,826
|
|
|
$
|
1,771
|
|
|
$
|
5,379
|
|
|
$
|
12,558
|
|
|
$
|
71,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:*
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.68
|
|
|
$
|
0.02
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.94
|
|
Diluted
|
|
$
|
0.67
|
|
|
$
|
0.02
|
|
|
$
|
0.07
|
|
|
$
|
0.16
|
|
|
$
|
0.93
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
75,866
|
|
|
|
75,866
|
|
|
|
75,866
|
|
|
|
75,866
|
|
|
|
75,866
|
|
Diluted
|
|
|
76,975
|
|
|
|
76,975
|
|
|
|
76,975
|
|
|
|
76,975
|
|
|
|
76,975
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
59,917
|
|
|
|
|
|
|
|
|
$
|
79,625
|
|
Interest
|
|
|
(689
|
)
|
|
|
|
|
|
|
|
|
(689
|
)
|
Depreciation and amortization
|
|
|
6,201
|
|
|
|
|
|
|
|
|
|
6,201
|
|
EBITDA
|
|
$
|
65,429
|
|
|
|
|
|
|
|
|
$
|
85,137
|
|
Add: Business reorganization and related
|
|
|
1,771
|
|
|
|
|
|
|
|
|
|
-
|
|
Adjusted EBITDA
|
|
$
|
67,200
|
|
|
|
|
|
|
|
|
$
|
85,137
|
|
|
|
*Basic and diluted earnings (loss) per share may not add due to
rounding
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
(in thousands, except per share amounts)
|
|
|
|
|
|
Non-GAAP Reconciling Items
|
|
|
|
|
Nine months
|
|
Professional
|
|
|
|
Non-GAAP nine
|
|
|
ended July 31,
|
|
fees and
|
|
Stock-based
|
|
months ended July 31,
|
|
|
2009
|
|
legal matters
|
|
compensation
|
|
2009
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
625,096
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
625,096
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
Product costs
|
|
|
339,493
|
|
|
|
-
|
|
|
|
-
|
|
|
|
339,493
|
|
Software development costs and royalties
|
|
|
68,470
|
|
|
|
-
|
|
|
|
(3,679
|
)
|
|
|
64,791
|
|
Internal royalties
|
|
|
30,498
|
|
|
|
-
|
|
|
|
-
|
|
|
|
30,498
|
|
Licenses
|
|
|
38,951
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38,951
|
|
Total cost of goods sold
|
|
|
477,412
|
|
|
|
-
|
|
|
|
(3,679
|
)
|
|
|
473,733
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
147,684
|
|
|
|
-
|
|
|
|
3,679
|
|
|
|
151,363
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing
|
|
|
97,153
|
|
|
|
-
|
|
|
|
(1,417
|
)
|
|
|
95,736
|
|
General and administrative
|
|
|
100,745
|
|
|
|
(7,126
|
)
|
|
|
(9,000
|
)
|
|
|
84,619
|
|
Research and development
|
|
|
49,589
|
|
|
|
-
|
|
|
|
(2,018
|
)
|
|
|
47,571
|
|
Business reorganization and related
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
14,342
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,342
|
|
Total operating expenses
|
|
|
261,829
|
|
|
|
(7,126
|
)
|
|
|
(12,435
|
)
|
|
|
242,268
|
|
Income (loss) from operations
|
|
|
(114,145
|
)
|
|
|
7,126
|
|
|
|
16,114
|
|
|
|
(90,905
|
)
|
Interest and other expense, net
|
|
|
(2,310
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,310
|
)
|
Income (loss) before income taxes
|
|
|
(116,455
|
)
|
|
|
7,126
|
|
|
|
16,114
|
|
|
|
(93,215
|
)
|
Provision (benefit) for income taxes
|
|
|
(515
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(515
|
)
|
Net income (loss)
|
|
$
|
(115,940
|
)
|
|
$
|
7,126
|
|
|
$
|
16,114
|
|
|
$
|
(92,700
|
)
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:*
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(1.51
|
)
|
|
$
|
0.09
|
|
|
$
|
0.21
|
|
|
$
|
(1.21
|
)
|
Diluted
|
|
$
|
(1.51
|
)
|
|
$
|
0.09
|
|
|
$
|
0.21
|
|
|
$
|
(1.21
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
76,561
|
|
|
|
76,561
|
|
|
|
76,561
|
|
|
|
76,561
|
|
Diluted
|
|
|
76,561
|
|
|
|
76,561
|
|
|
|
76,561
|
|
|
|
76,561
|
|
|
|
|
|
|
|
|
|
|
EBITDA:
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
(116,455
|
)
|
|
|
|
|
|
$
|
(93,215
|
)
|
Interest
|
|
|
4,899
|
|
|
|
|
|
|
|
4,899
|
|
Depreciation and amortization
|
|
|
14,342
|
|
|
|
|
|
|
|
14,342
|
|
EBITDA
|
|
|
(97,214
|
)
|
|
|
|
|
|
|
(73,974
|
)
|
Add: Business reorganization and related
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Adjusted EBITDA
|
|
$
|
(97,214
|
)
|
|
|
|
|
|
$
|
(73,974
|
)
|
|
|
*Basic and diluted earnings (loss) per share may not add due to
rounding
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
(in thousands, except per share amounts)
|
|
|
|
|
|
Non-GAAP Reconciling Items
|
|
|
|
|
Nine months
|
|
Business
|
|
Professional
|
|
|
|
Non-GAAP nine
|
|
|
ended July 31,
|
|
reorganization
|
|
fees and
|
|
Stock-based
|
|
months ended July 31,
|
|
|
2008
|
|
and related
|
|
legal matters
|
|
compensation
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
1,214,088
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,214,088
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
|
|
Product costs
|
|
|
487,557
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
487,557
|
|
Software development costs and royalties
|
|
|
126,122
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,598
|
)
|
|
|
115,524
|
|
Internal royalties
|
|
|
110,769
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
110,769
|
|
Licenses
|
|
|
39,475
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39,475
|
|
Total cost of goods sold
|
|
|
763,923
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,598
|
)
|
|
|
753,325
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
450,165
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,598
|
|
|
|
460,763
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing
|
|
|
122,534
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,926
|
)
|
|
|
120,608
|
|
General and administrative
|
|
|
126,916
|
|
|
|
-
|
|
|
|
(10,654
|
)
|
|
|
(14,874
|
)
|
|
|
101,388
|
|
Research and development
|
|
|
47,877
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,664
|
)
|
|
|
44,213
|
|
Business reorganization and related
|
|
|
2,877
|
|
|
|
(2,877
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
20,126
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,126
|
|
Total operating expenses
|
|
|
320,330
|
|
|
|
(2,877
|
)
|
|
|
(10,654
|
)
|
|
|
(20,464
|
)
|
|
|
286,335
|
|
Income (loss) from operations
|
|
|
129,835
|
|
|
|
2,877
|
|
|
|
10,654
|
|
|
|
31,062
|
|
|
|
174,428
|
|
Interest and other expense, net
|
|
|
(865
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(865
|
)
|
Income (loss) before income taxes
|
|
|
128,970
|
|
|
|
2,877
|
|
|
|
10,654
|
|
|
|
31,062
|
|
|
|
173,563
|
|
Provision (benefit) for income taxes
|
|
|
16,919
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,919
|
|
Net income (loss)
|
|
$
|
112,051
|
|
|
$
|
2,877
|
|
|
$
|
10,654
|
|
|
$
|
31,062
|
|
|
$
|
156,644
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:*
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.50
|
|
|
$
|
0.04
|
|
|
$
|
0.14
|
|
|
$
|
0.42
|
|
|
$
|
2.10
|
|
Diluted
|
|
$
|
1.48
|
|
|
$
|
0.04
|
|
|
$
|
0.14
|
|
|
$
|
0.41
|
|
|
$
|
2.07
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
74,701
|
|
|
|
74,701
|
|
|
|
74,701
|
|
|
|
74,701
|
|
|
|
74,701
|
|
Diluted
|
|
|
75,640
|
|
|
|
75,640
|
|
|
|
75,640
|
|
|
|
75,640
|
|
|
|
75,640
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
128,970
|
|
|
|
|
|
|
|
|
$
|
173,563
|
|
Interest
|
|
|
464
|
|
|
|
|
|
|
|
|
|
464
|
|
Depreciation and amortization
|
|
|
20,126
|
|
|
|
|
|
|
|
|
|
20,126
|
|
EBITDA
|
|
|
149,560
|
|
|
|
|
|
|
|
|
|
194,153
|
|
Add: Business reorganization and related
|
|
|
2,877
|
|
|
|
|
|
|
|
|
|
-
|
|
Adjusted EBITDA
|
|
$
|
152,437
|
|
|
|
|
|
|
|
|
$
|
194,153
|
|
|
|
*Basic and diluted earnings (loss) per share may not add due to
rounding
|
Source: Take-Two Interactive Software, Inc.
Take-Two Interactive Software, Inc. Corporate Press/Investor
Relations: Meg Maise, 646-536-2932 meg.maise@take2games.com
|