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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 4, 2004
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TAKE-TWO INTERACTIVE SOFTWARE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-29230 51-0350842
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(State or other jurisdiction (Commission (I.R.C. Employer
of incorporation) File Number) Identification No.)
622 Broadway, New York, New York 10012
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (646) 536-2842
Not Applicable
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Former name or former address, if changed since last report
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99.1 Press Release dated March 4, 2004 relating to Take-Two
Interactive Software, Inc.'s financial results for the
first fiscal quarter ended January 31, 2004.
Item 9. Regulation FD Disclosure
The information on this Form 8-K is being furnished to, but not filed
with, the Securities and Exchange Commission solely under Item 12 of
Form 8-K.
Item 12. Results of Operations and Financial Condition
On March 4, 2004, the Company issued a press release announcing its
financial results for the first fiscal quarter ended January 31, 2004.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TAKE-TWO INTERACTIVE SOFTWARE, INC.
Date: March 4, 2004 By: /s/ Karl H. Winters
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Karl H. Winters
Chief Financial Officer
Exhibit No. Description
99.1 Press Release dated March 4, 2004 relating
to Take-Two Interactive Software, Inc.'s
financial results for the first fiscal
quarter ended January 31, 2004.
Exhibit 99.1
Take-Two Interactive Software, Inc. Reports
First Quarter Fiscal 2004 Financial Results
NEW YORK--(BUSINESS WIRE)--March 4, 2004--Take-Two Interactive
Software, Inc. (NASDAQ:TTWO) today announced financial results for its
first quarter ended January 31, 2004.
Net sales for the first quarter ended January 31, 2004 were $375.5
million, compared to $411.0 million for last year's first quarter, a
period which included holiday sales of the then newly released
blockbuster title Grand Theft Auto: Vice City for PlayStation(R)2. Net
income for the quarter was $31.8 million, compared to $51.5 million
last year, with diluted net income per share of $0.70 compared to
$1.22 last year.
Guidance
For the fiscal year ending October 31, 2004, Take-Two is
reiterating its net sales guidance of $1.22 billion and diluted net
income per share guidance of $2.45. For the second quarter ending
April 30, 2004, Take-Two is reiterating its guidance of $220 million
in net sales, but reducing its diluted net income per share guidance
to $0.33 from its previous guidance of $0.39. The reduction in
earnings is due primarily to the shift in the release of Grand Theft
Auto: Vice City for PlayStation 2 and PC in Japan from the second
fiscal quarter to the third fiscal quarter. Net sales guidance has
remained the same due to the strength of the Company's distribution
business. Take-Two is issuing initial guidance for its third quarter
ending July 31, 2004 of net sales between $180 and $200 million and
diluted net income per share between $0.12 and $0.17.
Liquidity and Selected Balance Sheet Items
Take-Two generated approximately $85 million in cash flow from
operations for the quarter. Working capital was approximately $380
million at January 31, 2004, as compared with approximately $243
million at the same time a year ago. The Company had more than $254
million in cash as of January 31, 2004, as compared to $164 million in
cash at January 31, 2003.
Publishing Highlights - First Quarter
Take-Two's Rockstar Games publishing label shipped the Grand Theft
Auto Double Pack for the Xbox(R), consisting of Grand Theft Auto 3 and
Grand Theft Auto: Vice City; Max Payne 2: The Fall of Max Payne for
PlayStation 2 and Xbox; Manhunt for PlayStation 2; and Max Payne for
the Game Boy(R) Advance in North America.
The Company's Gathering label shipped Mafia for PlayStation 2 in
North America and the United Kingdom, and Vietcong: Fist Alpha, an
add-on to the popular Vietcong, and Vietcong: Purple Haze, which
includes Vietcong and Fist Alpha together, both for the PC. The
Company also shipped Conflict: Desert Storm II for the GameCube(TM)
and introduced the Xbox Platinum Hits version of Conflict: Desert
Storm, both in North America only.
The Company also shipped Star Trek(TM): Shattered Universe for the
PlayStation 2 and Xbox; and Ford Racing 2 and School Tycoon, both for
the PC. Global Star's value-priced releases included Corvette for the
Xbox and Game Boy Advance; and various titles under the Dora the
Explorer, Muppets and Tonka brands.
Publishing Highlights - Second Quarter
Rockstar's lineup for the second quarter includes the launch of
Red Dead Revolver on PlayStation 2 and Xbox from Rockstar San Diego,
the developers of Rockstar Games' successful Midnight Club and
Smuggler's Run franchises. The title will be in stores at the end of
April. Manhunt for Xbox and the PC are expected to ship to North
American retailers on April 20th, and are scheduled to be in European
retail stores on April 23rd. Additionally, Max Payne for the Game Boy
Advance will ship to European retailers in late March.
Earlier this month, Gathering shipped the international language
versions of Mafia for PlayStation 2. The Xbox version of Mafia is also
scheduled for release in North America and Europe this quarter. Also
planned this quarter from Gathering in North America is Destruction
Derby Arenas on PlayStation 2, the next generation installment to the
successful PlayStation(R) franchise, Destruction Derby, complete with
full online playability.
Global Star continues to focus on building strong, aggressively
priced game franchises based on licensed brands, across various
popular genres including racing, sports and action games. Earlier this
quarter, Global Star shipped Carve, a personal watercraft based racing
game for the Xbox, with online racing capability on Xbox Live, and a
Disney compilation for the PlayStation. Other titles planned for
release this quarter include The Muppets, The Haunted Mansion, Virtual
Pool 3, Ultimate Tycoon Pack, and Tropico Masters Edition, all for the
PC; UFC: Sudden Impact and Corvette for PlayStation 2; Serious Sam:
Next Encounter for the PlayStation 2 and Game Cube; and Serious Sam
Advance for the Game Boy Advance.
Future Publishing Highlights
Rockstar expects to introduce The Warriors(TM), a new title based
on the Paramount Pictures feature film in the third fiscal quarter.
Rockstar also plans to release an extension of the Grand Theft Auto
franchise for the Game Boy Advance in the third quarter. The release
of Grand Theft Auto: Vice City for PlayStation 2 and PC in Japan,
under a license agreement with Capcom Co., Ltd., has been moved from
the second fiscal quarter to the third fiscal quarter.
Earlier this week Rockstar announced Grand Theft Auto: San
Andreas, the next iteration in the globally successful franchise. Over
30 million units of the Grand Theft Auto franchise have been shipped
to date, including over 11.5 million units of Grand Theft Auto: Vice
City and over 10.5 million units of Grand Theft Auto 3. Developed by
world-class designers Rockstar North, Grand Theft Auto: San Andreas
will be available exclusively for the PlayStation 2 computer
entertainment system and is expected to be in stores in North America
on October 19, 2004 and in Europe on October 22, 2004.
As recently announced, Gathering has secured the North American
publishing rights for Conflict: Vietnam, the next game in the
successful Conflict series, scheduled for release on multiple
platforms this fall. Products planned for release later this year also
include several new titles from Gathering's distribution arrangement
with Destineer Publishing.
Global Star's lineup of products for the balance of fiscal 2004
includes titles based on the Army Men and Virtual Pool franchises, as
well as a title based on Cartoon Network's hit series Codename: Kids
Next Door.
Distribution Highlights
The Company's Jack of All Games subsidiary, the leading North
American distributor of videogame software, achieved record financial
results in the first quarter, with net sales increasing 39%. Jack of
All Games continues to capitalize on the growing installed base of
hardware and proliferation of software titles and outlets to purchase
software by emphasizing sales of both exclusive and non-exclusive mid-
and budget-priced software to its expanding customer base.
During the first quarter, Jack of All Games continued to
successfully execute on its strategy targeting the budget segment of
the business. Several new exclusive titles were added to Jack of All
Games' expanding portfolio, including products based on the popular
Tom and Jerry, Sesame Street and Dr. Seuss brands, as well as all of
Global Star's value-priced products.
Management Comments
Jeffrey C. Lapin, Chief Executive Officer, stated, "We believe
2004 presents a tremendous opportunity for Take-Two, particularly with
the release of three major titles: Red Dead Revolver, The Warriors and
Rockstar Games' most anticipated release of the year Grand Theft Auto:
San Andreas. Additionally, we are leveraging the strengths of our
Gathering and Global Star publishing labels and the strongest
distribution network in North America to further build our position in
the interactive entertainment industry."
Conference Call
Take-Two will host a conference call today at 8:30 am Eastern Time
to review its results for the first quarter and to discuss its
outlook. A live webcast of the call is available by visiting
www.take2games.com, and a replay of the call will be archived through
the close of business on Thursday, March 11, 2004.
About Take-Two Interactive Software
Headquartered in New York City, Take-Two Interactive Software,
Inc. is an integrated global developer, marketer, distributor, and
publisher of interactive entertainment software games and accessories
for the PC, PlayStation(R) game console, PlayStation(R)2 computer
entertainment system, Xbox(R), Nintendo GameCube(TM) and Game Boy(R)
Advance. The Company publishes and develops products through its
wholly owned subsidiary labels: Rockstar Games, Gathering, Global Star
and Joytech. The Company maintains sales and marketing offices in
Cincinnati, New York, Toronto, London, Paris, Munich, Vienna, Milan,
Sydney, Breda (Netherlands) and Auckland. 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.
Safe Harbor Statement under the Private Securities Reform Act of
1995: This press release contains forward-looking statements made in
reliance upon the safe harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The statements contained herein
which are not historical facts are considered forward-looking
statements under federal securities laws. Such forward-looking
statements are based on the beliefs of our management as well as
assumptions made by and information currently available to them. The
Company has no obligation to update such forward-looking statements.
Actual results may vary significantly from these forward-looking
statements based on a variety of factors. These important factors are
described in the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 2003 in the section entitled "Cautionary
Statement and Risk Factors".
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Consolidated Condensed Statements of Operations
For the three months ended January 31,
2004 and 2003 (unaudited)
(In thousands, except per share data)
Three months ended January 31,
2004 2003 - Restated
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(Unaudited)
Net sales $375,512 $411,008
Cost of sales
Product costs 224,378 204,428
Royalties 19,998 37,282
Software development costs 3,982 3,351
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Total cost of sales 248,358 245,061
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Gross profit 127,154 165,947
Operating expenses
Selling and marketing 35,902 34,454
General and administrative 24,040 31,359
Research and development 13,429 5,615
Depreciation and amortization 3,745 7,562
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Total operating expenses 77,116 78,990
Income from operations 50,038 86,957
Interest income, net (426) (345)
Gain on Internet investments - (39)
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Total non-operating (income) expenses (426) (384)
Income before income taxes 50,464 87,341
Provision for income taxes 18,706 35,806
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Net income $31,758 $51,535
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Per share data:
Diluted:
Weighted average common shares
outstanding 45,421 42,202
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Net income per share - Diluted $0.70 $1.22
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OTHER INFORMATION Three months ended January 31,
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2004 2003
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Total revenue mix
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Publishing 62% 75%
Distribution 38% 25%
Geographic revenue mix
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North America 80% 71%
International 20% 29%
Publishing platform revenue mix
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Sony PlayStation 2 57% 94%
Sony PlayStation 2% 3%
Microsoft Xbox 35% 1%
PC 2% 1%
Accessories and other 4% 1%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Consolidated Condensed Balance Sheets
As of January 31, 2004 (unaudited) and October
31, 2003
(In thousands, except share data)
ASSETS January 31, October 31,
2004 2003
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Current assets
Cash and cash equivalents $254,153 $183,477
Accounts receivable, net of allowances of
$82,675 and $62,817 at January 31, 2004
and October 31 2003, respectively 145,464 166,536
Inventories, net 110,879 101,748
Prepaid royalties 16,707 12,196
Prepaid expenses and other current assets 30,732 41,112
Deferred tax asset 8,333 8,333
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Total current assets 566,268 513,402
Fixed assets, net 23,839 22,260
Prepaid royalties 7,023 8,439
Capitalized software development costs, net 16,282 16,336
Goodwill, net 119,619 101,498
Intangibles, net 39,482 44,836
Other assets, net 489 527
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Total assets $773,002 $707,298
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LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $107,935 $106,172
Accrued expenses and other current liabilities 67,199 56,707
Income taxes payable 10,841 2,265
Current portion of capital lease obligation 112 103
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Total current
liabilities 186,087 165,247
Capital lease obligation, net of current
portion 56 73
Deferred tax liability 8,486 8,486
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Total liabilities 194,629 173,806
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Stockholders' equity
Common stock, par value $.01 per share;
100,000,000 shares authorized;
44,580,156 and 44,227,215 shares issued and
outstanding at January 31, 2004 and
October 31, 2003, respectively 446 442
Additional paid-in capital 359,158 350,852
Deferred compensation (1,057) (1,890)
Retained earnings 216,782 185,024
Accumulated other comprehensive income (loss) 3,044 (936)
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Total stockholders'
equity 578,373 533,492
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Total liabilities and
stockholders' equity $773,002 $707,298
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CONTACT: Take-Two Interactive Software, Inc.
Jim Ankner, 646-536-3006
james.ankner@take2games.com
or
Euro RSCG Middleberg
Ed Nebb, 212-699-2745
ed.nebb@eurorscg.com