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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) September 9, 2004
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TAKE-TWO INTERACTIVE SOFTWARE, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-29230 51-0350842
- ---------------------------------- ------------------- -----------------------
(State or other jurisdiction (Commission (I.R.S. 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
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On September 9, 2004 Take-Two Interactive Software, Inc. (the "Company")
issued a news release reporting the earnings results of the Company for its
fiscal quarter ended July 31, 2004. A copy of the news release is attached to
this Current Report as Exhibit 99.1.
The information in this Current Report on Form 8-K, including the exhibit
included herewith, is furnished pursuant to Item 2.02 and shall not be deemed to
be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liabilities of that section.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release dated September 9, 2004 relating to Take-Two
Interactive Software, Inc.'s financial results for the third
fiscal quarter ended July 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: September 10, 2004 By: /s/ Karl H. Winters
--------------------------------
Karl H. Winters
Chief Financial Officer
INDEX TO EXHIBITS
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Exhibit No. Description
99.1 Press Release dated September 9, 2004 relating to
Take-Two Interactive Software, Inc.'s financial
results for the third fiscal quarter ended July 31,
2004.
Exhibit 99.1
Take-Two Interactive Software, Inc. Reports Third Quarter Fiscal 2004 Financial
Results
NEW YORK--(BUSINESS WIRE)--Sept. 9, 2004--Take-Two Interactive
Software, Inc. (NASDAQ:TTWO) today announced financial results for its
third quarter and nine months ended July 31, 2004.
Net sales for the third quarter ended July 31, 2004 were $160.9
million, compared to $152.1 million for last year's third quarter. Net
loss for the quarter was $14.4 million, compared to net income of $5.7
million last year, with a net loss of $0.32 per share compared to net
income per share of $0.13 last year.
Net sales for the nine months ended July 31, 2004 were $689.7
million, compared to $756.1 million for the same period a year ago, a
period which included significant sales of the blockbuster title Grand
Theft Auto: Vice City for PlayStation(R)2 and the then newly released
titles Midnight Club 2 for PlayStation 2 and Grand Theft Auto: Vice
City for PC. Net income of $2.7 million compared to $71.9 million in
the comparable period last year, with diluted net income per share of
$0.06 compared to $1.68.
Guidance
Take-Two is updating its guidance for fiscal 2004 as follows:
-- For the fiscal year ending October 31, 2004, Take-Two's
guidance is $1.145 to $1.160 billion in net sales and $1.60 to
$1.62 in diluted net income per share.
Take-Two is issuing initial guidance for fiscal 2005 as follows:
-- For the fiscal year ending October 31, 2005, $1.2 to $1.3
billion in net sales and $2.00 to $2.20 in diluted net income
per share.
-- For the first quarter ending January 31, 2005, $420 to $460
million in net sales and $1.00 to $1.10 in diluted net income
per share.
Liquidity and Selected Balance Sheet Items
Take-Two used approximately $60 million in cash for operating
activities in the quarter. Working capital was approximately $351
million at July 31, 2004, as compared with approximately $296 million
at the same time a year ago. The Company had approximately $198
million in cash as of July 31, 2004, as compared to $226 million in
cash at July 31, 2003.
Publishing Highlights - Third Quarter
Rockstar's new title Red Dead Revolver, released in late April for
PlayStation 2 and Xbox, was a significant contributor to third quarter
results. Designed by Rockstar San Diego, the developers of Rockstar
Games' successful Midnight Club and Smuggler's Run franchises, Red
Dead Revolver was the top-performing product in Take-Two's publishing
business this quarter and was a top ten title in the United States in
May, June and July according to NPDFunworld(SM). Rockstar's Grand
Theft Auto: Vice City was released in Japan for the PlayStation 2 and
PC in late May, under a license agreement with Capcom Co., Ltd.
According to Media Create Co., Ltd., a leading market research firm
covering the Japanese console gaming market, the PlayStation 2 title
has sold over 400,000 copies as of the week ended August 29, 2004,
making it one of the most successful debuts of a Western video game in
Japan.
Rockstar also launched the PlayStation 2 Greatest Hits versions of
Midnight Club 2 and Grand Theft Auto: Vice City, bringing Take-Two's
catalog of Greatest Hits products for PlayStation 2 to eight titles.
Global Star launched ESPN NFL 2K5 for both the PlayStation 2 and
Xbox in North America at the end of July, the first title released
under the co-publishing and exclusive distribution agreement with Sega
Corporation for the ESPN Videogames sports titles. Global Star also
shipped Army Men: Sarge's War and Dragon Tales.
To streamline Take-Two's publishing operations, the Company is
reorganizing its publishing business into two labels: Rockstar Games
and Global Star Software. Rockstar will continue to focus on premium
priced, groundbreaking entertainment, while Global Star's portfolio
will be significantly broadened. In addition to publishing the ESPN
Videogames sports line and all value priced titles, Global Star will
publish both premium and value priced licensed properties, as well as
the products that were formerly under the Company's Gathering label.
Publishing Highlights - Fourth Quarter
Take-Two has an extensive product lineup planned this holiday
season, beginning in the fourth quarter. Rockstar will introduce Grand
Theft Auto: San Andreas, the next iteration in the globally successful
franchise which has sold over 32 million units. Developed by
world-class designers Rockstar North, Grand Theft Auto: San Andreas
will be available exclusively for the PlayStation 2 and is expected to
be in stores in North America on October 26, 2004 and in Europe on
October 29, 2004. The title's launch date was moved to allow
additional time for final testing of the game, which exceeds the size,
depth and scope of traditional videogames. Rockstar has been
extensively previewing the game to the trade press, and the title has
appeared on the cover of several key trade publications since it was
revealed to the public at this year's E3 industry tradeshow. Rockstar
also plans to release an extension of the Grand Theft Auto franchise
for the Game Boy Advance in late October.
Global Star's fourth quarter line-up leads with ESPN NHL 2K5 for
both the PlayStation 2 and Xbox, which is in North American retail
stores now. Later this quarter Global Star will release ESPN NBA 2K5,
also for PlayStation 2 and Xbox. Other fourth quarter releases include
Conflict: Vietnam, the next game in the successful Conflict series, to
be distributed in North America on the PlayStation 2, Xbox and PC;
Kohan II: Kings of War for PC; Robotech: Invasion and Outlaw Golf 2
for PlayStation 2 and Xbox; and a Game Boy Advance title based on
Cartoon Network's hit series Codename: Kids Next Door. Gathering's
product lineup for the fourth quarter includes Wings of War for the
Xbox and PC; and The Guy Game for PlayStation 2 and Xbox, which are
all in retail stores now; and Vietcong: Purple Haze for PlayStation 2
and Xbox.
Future Publishing Highlights
Midnight Club 3: DUB Edition, the third installment in the
multi-million unit selling, genre-defining Midnight Club racing
franchise developed by Rockstar San Diego, is planned for release on
PlayStation 2 and Xbox in January 2005. The Warriors(TM), a new title
based on the Paramount Pictures feature film, is scheduled for launch
on PlayStation 2 in April 2005. Additional products planned for fiscal
2005 from Rockstar Games include Grand Theft Auto: San Andreas for PC
in the third quarter, as well as two new console titles based on
proven brands from Rockstar's internal studios, in the third and
fourth quarters. Rockstar also plans to release Grand Theft Auto: San
Andreas in Japan in fiscal 2005.
Global Star's fiscal 2005 lineup includes the full line of ESPN
Videogames sports titles, beginning with ESPN College Hoops in the
first quarter, followed by ESPN Major League Baseball in the second
quarter.
As recently announced, Global Star will be introducing videogame
and PC titles based on the Warner Bros. Pictures film, Charlie and the
Chocolate Factory, directed by Tim Burton and starring Oscar nominated
actor Johnny Depp as Willy Wonka. The launch of the videogames is
scheduled to coincide with the Summer 2005 release of the feature
film.
Other products planned for fiscal 2005 release by Global Star
include Close Combat: First to Fight for Xbox and PC; Dora The
Explorer: Super Star Adventures for Game Boy Advance; Stronghold 2 for
PC; Ford Mustang: 40th Anniversary Edition for PlayStation 2 and Xbox;
a deluxe version of Outlaw Volleyball for the PlayStation 2 featuring
new content and enhancements to the franchise; and console versions of
Codename: Kids Next Door, Spy vs. Spy, Motocross Mania 3 and Outlaw
Tennis.
Distribution Highlights
The Company's Jack of All Games subsidiary, the leading North
American distributor of videogame software, continues to capitalize on
the growing installed base of hardware and proliferation of software
titles and outlets to purchase software. Jack emphasizes sales of both
exclusive and non-exclusive mid- and budget-priced software and serves
as the exclusive distributor for all of Global Star's value-priced
products.
Management
During the quarter, Take-Two added two new executives to its
management team and appointed a new member to its Board of Directors.
Sam Judd joined as Senior Vice President, Planning and Administration,
where he oversees business planning, strategy development and
information technology. Mr. Judd spent the past 11 years at Viacom
Inc., most recently leading the finance, customer service, warehouse,
manufacturing and supply chain functions for the Simon & Schuster
division, a global publishing business. Mr. Judd's prior experience
includes finance and strategy consulting for a variety of clients,
several years at PepsiCo Inc. in corporate and divisional financial
positions and finance roles with IBM.
David Messenger joined as Senior Vice President, Human Resources.
Prior to joining Take-Two, Mr. Messenger was leading Towers Perrin's
change management practice. He has extensive experience in human
resources strategy and operations, compensation and performance
management, mergers and acquisitions, organization design and
leadership development. Mr. Messenger's clients included Universal
Studios, Universal Music, Sony Corporation and Sony Music.
As previously announced, Barbara A. Kaczynski was appointed as a
director of the Company in July. Ms. Kaczynski chairs Take-Two's Audit
Committee and is considered a financial expert as defined by the
Securities and Exchange Commission. Ms. Kaczynski was most recently
Chief Financial Officer of the National Football League (NFL), where
she directed the operations of the finance, treasury, budgeting,
planning, internal audit and information technology organizations of
the NFL. Prior to the NFL, Ms. Kaczynski held several senior financial
positions at various companies, including the position of Vice
President of Finance and Controller for Time, Inc., where she spent
almost 10 years.
Management Comments
Richard W. Roedel, Chairman and Chief Executive Officer,
commented, "We are pleased with the progress we have made in building
and diversifying our product portfolio through the introduction of
several new Rockstar brands and the launch of the ESPN sports titles.
Our product pipeline going into 2005, which includes titles based on
proven franchises, new brands and licensed properties, is one of the
strongest in the Company's history. Combined with the expansion of our
management team and the strengthening of our internal operations, we
believe we are building the foundation for long term, sustained
growth. As a result, we are confident that the continued execution of
our business strategy will enable Take-Two to maintain a leadership
position in the interactive entertainment industry and lead to an even
stronger financial position going forward."
Conference Call
Take-Two will host a conference call today at 4:30 pm Eastern Time
to review its results for the third quarter and to discuss its
outlook. A live webcast of the call is available by visiting
http://ir.take2games.com and a replay of the call will be archived
through the close of business on Friday, September 17, 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 labels Rockstar Games and Global Star Software; and
distributes products in North America through its Jack of All Games
subsidiary. Take-Two also manufactures and markets video game
accessories in Europe, North America and the Asia Pacific region
through its Joytech subsidiary. The Company maintains sales and
marketing offices in Cincinnati, New York, Toronto, London, Paris,
Munich, Madrid, 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 and on Form 10-Q for the quarter ended
April 30, 2004 in the section entitled "Cautionary Statement and Risk
Factors".
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Consolidated Condensed Statements of Operations
For the three and nine months ended
July 31, 2004 and 2003 (unaudited)
(In thousands, except per share data)
Three months ended Nine months ended
July 31, July 31,
2003 - 2003 -
2004 Restated 2004 Restated
----------- ---------- ---------- ---------
(Unaudited) (Unaudited)
Net sales $160,858 $152,055 $689,738 $756,086
Cost of sales
Product costs 101,156 81,642 430,107 384,984
Royalties 14,600 10,052 47,614 66,595
Software development costs 2,242 1,842 7,797 8,558
----------- --------- ----------- ---------
Total cost of sales 117,998 93,536 485,518 460,137
----------- --------- ----------- ---------
Gross profit 42,860 58,519 204,220 295,949
Operating expenses
Selling and marketing 24,677 20,013 82,850 76,928
General and administrative 24,685 19,372 72,775 67,701
Research and development 10,529 7,043 32,186 17,419
Depreciation and
amortization 4,327 2,930 11,982 13,689
----------- --------- ----------- ---------
Total operating
expenses 64,218 49,358 199,793 175,737
Income (loss) from
operations (21,358) 9,161 4,427 120,212
Interest income, net 530 625 1,604 1,713
Gain on Internet
investments - - - 39
----------- --------- ----------- ---------
Total non-operating
income 530 625 1,604 1,752
Income (loss) before
income taxes (20,828) 9,786 6,031 121,964
Provision (benefit) for
income taxes (6,393) 4,090 3,284 50,110
----------- --------- ----------- ---------
Net income (loss) $(14,435) $5,696 $2,747 $71,854
=========== ========= =========== =========
Per share data:
Basic:
Weighted average common
shares outstanding 44,840 42,266 44,615 41,424
=========== ========= =========== =========
Net income (loss)
per share - Basic $(0.32) $0.13 $0.06 $1.73
=========== ========= =========== =========
Diluted:
Weighted average common
shares outstanding 44,840 43,548 45,554 42,701
=========== ========= =========== =========
Net income (loss)
per share - Diluted $(0.32) $0.13 $0.06 $1.68
=========== ========= =========== =========
Three months ended Nine months ended
OTHER INFORMATION July 31, July 31,
- ------------------
2003 - 2003 -
2004 Restated 2004 Restated
----------- --------- ----------- ---------
Total revenue mix
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Publishing 61% 59% 61% 69%
Distribution 39% 41% 39% 31%
Geographic revenue mix
-----------------------
North America 75% 75% 76% 72%
International 25% 25% 24% 28%
Publishing platform
revenue mix
-----------------------
Sony PlayStation 2 61% 39% 55% 80%
Sony PlayStation 2% 4% 2% 4%
Microsoft Xbox 26% 15% 34% 4%
GameCube 1% - 1% -
PC 6% 41% 3% 11%
Handheld 2% - 3% -
Accessories 2% 1% 2% 1%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Consolidated Condensed Balance Sheets
As of July 31, 2004 (unaudited) and
October 31, 2003
(In thousands, except share data)
ASSETS July 31, October 31,
2004 2003
--------- -----------
Current assets
Cash and cash equivalents $197,951 $183,477
Accounts receivable, net of allowances of
$51,970 and $62,817 at July 31, 2004 and
October 31, 2003, respectively 79,486 166,536
Inventories, net 96,882 101,748
Prepaid royalties 40,602 12,196
Prepaid expenses and other current assets 56,909 41,112
Deferred tax asset 8,333 8,333
--------- ---------
Total current assets 480,163 513,402
Fixed assets, net 30,589 22,260
Prepaid royalties 3,333 8,439
Capitalized software development costs, net 25,792 16,336
Goodwill, net 123,703 101,498
Intangibles, net 33,586 44,836
Other assets, net 413 527
--------- ---------
Total assets $697,579 $707,298
========= =========
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $63,275 $106,172
Accrued expenses and other current liabilities 65,857 56,883
Income taxes payable 167 2,265
--------- ---------
Total current liabilities 129,299 165,320
Deferred tax liability 8,486 8,486
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Total liabilities 137,785 173,806
--------- ---------
Stockholders' equity
Common stock, par value $.01 per share;
100,000,000 shares authorized; 45,048,528 and
44,227,215 shares issued and outstanding at
July 31, 2004 and October 31, 2003, respectively 450 442
Additional paid-in capital 372,034 350,852
Deferred compensation (2,644) (1,890)
Retained earnings 187,771 185,024
Accumulated other comprehensive income (loss) 2,183 (936)
--------- ---------
Total stockholders' equity 559,794 533,492
--------- ---------
Total liabilities and stockholders'
equity $697,579 $707,298
========= =========
CONTACT: Take-Two Interactive Software, Inc.
Corporate Press/Investor Relations:
Jim Ankner, 646-536-3006
Fax: 646-536-2926
james.ankner@take2games.com
or
Comm-Counsellors, LLC
Corporate Press Relations:
Ed Nebb, 203-972-8350
Fax: 203-966-2768
enebb@optonline.net