Take-Two News Release

Printer Friendly Version View printer-friendly version
<< Back
Take-Two Interactive Software, Inc. Reports First Quarter Fiscal 2008 Financial Results
Download PDF Download PDF
    Top and Bottom Line Results Exceed Guidance

    Company Raises Fiscal 2008 Guidance and Provides Second Quarter
                               Guidance

NEW YORK--(BUSINESS WIRE)--March 11, 2008--Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today announced financial results for its first quarter ended January 31, 2008.

Net revenue for the first quarter was $240.4 million, compared to $277.3 million for the same quarter of fiscal 2007, which benefited from more new game releases in last year's holiday season. First quarter sales were led by BioShock, Carnival Games(TM), NBA 2K8, Grand Theft Auto catalog titles, and the release of Grand Theft Auto: Vice City Stories in Japan. Distribution revenue rose year over year, fueled by the strength of next generation software and hardware sales, including robust demand for Wii(TM) products.

Net loss for the first quarter was $38.0 million or $0.52 per share, compared to a net loss of $21.5 million or $0.30 per share in the first quarter of fiscal 2007.

The first quarter results include $6.1 million in stock-based compensation expense ($0.08 per share); and $1.7 million in expenses related to unusual legal matters and business reorganization costs ($0.02 per share). Results for the first quarter of 2007 included $4.0 million in stock-based compensation expense ($0.06 per share); and $7.2 million in expenses related to unusual legal matters ($0.10 per share).

Non-GAAP net loss was $30.3 million or $0.41 per share in the first quarter, compared to a net loss of $10.3 million or $0.14 per share in the first 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.)

Business Highlights

Among the significant recent business developments, Take-Two noted the following:

    --  Rockstar Games announced a worldwide release date of April 29,
        2008 for the highly anticipated Grand Theft Auto IV.

    --  2K Games said today that BioShock 2, the sequel to the wholly
        owned and internally developed title, is being developed by 2K
        Marin and is planned for release in the fourth quarter of
        fiscal 2009. The critically acclaimed BioShock title has sold
        over 2 million units worldwide since its launch in August.

    --  Carnival Games, a wholly owned and internally developed title
        for the Wii(TM), shipped over 1 million units since its debut
        in late August. 2K Play will be bringing this popular title to
        the Nintendo DS(TM) this summer.

    --  2K Play announced today that Carnival Games: Mini-Golf(TM), a
        brand extension of the Carnival Games franchise, is coming
        exclusively to the Wii this fall.

    --  2K announced the acquisition of Illusion Softworks, the
        creator and owner of several hit video game franchises,
        including Mafia, Hidden & Dangerous and Vietcong. Renamed 2K
        Czech, the Czech Republic based studio is currently developing
        Mafia II for next generation consoles and Games for
        Windows(R).

Strauss Zelnick, Chairman of Take-Two, stated, "We are pleased with Take-Two's stronger than expected top and bottom line results for the first quarter. Our performance benefited from a diverse range of hit titles in the first quarter, and we are eagerly awaiting the release of Grand Theft Auto IV in the second quarter. We believe that our extraordinary creative assets and improving operational efficiency will be sources of significant value for shareholders as the interactive entertainment industry moves further into the current growth cycle."

Ben Feder, Chief Executive Officer of Take-Two, added, "We're excited about our robust product lineup, most of which is based on internally-owned and developed IP. With one of the strongest release schedules in the industry, Take-Two is clearly well positioned for the future. In addition to Grand Theft Auto IV, for the balance of fiscal 2008 our releases will include Midnight Club: Los Angeles, Sid Meier's Civilization Revolution, Top Spin 3, Don King Presents: Prizefighter, Carnival Games for DS, Carnival Games: Mini-Golf for Wii, NBA(R) 2K9, NHL(R) 2K9, episodic content for Grand Theft Auto IV on Xbox 360, as well as other titles. We also have significant visibility into fiscal 2009, which includes additional episodic content for Grand Theft Auto IV, Mafia II, Borderlands(TM), BioShock 2, our complete sports lineup, additional Nick Jr. titles under our agreement with Nickelodeon, and several new brands."

Financial Guidance

The Company is providing guidance for the second quarter ending April 30, 2008 and is raising its guidance for the fiscal year ending October 31, 2008 as detailed below. Fiscal 2008 guidance reflects the release of Borderlands for Xbox 360, PLAYSTATION 3 and Games for Windows(R) in fiscal 2009 instead of fiscal 2008 in order to allow additional development time for this highly anticipated game and provide a better balance in the release of Take-Two's triple-A titles.

                              Revenue*          Non-GAAP EPS (a)(b)
                         ------------------   ------------------------
Second quarter ending       $450 to $500           $1.00 to $1.10
            4/30/2008
   Fiscal year ending     $1,250 to $1,400         $1.35 to $1.55
           10/31/2008

* In millions
(a) The Company's non-GAAP EPS estimates for the second quarter ending
 April 30, 2008 and fiscal year ending October 31, 2008 exclude
 approximately $0.16 and $0.49 per share, respectively, of stock-based
 compensation expense; and approximately $0.04 and $0.08 per share,
 respectively, of business reorganization charges and expenses related
 to unusual legal matters. The Company's stock-based compensation
 expense for the second quarter 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 on international operations
 only.

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 next generation systems while continuing to leverage opportunities on legacy platforms; as well as the timely delivery of the titles detailed in this release.

Product Pipeline

The following titles shipped during the first and second quarters of 2008:

Title                                           Platform
----------------------------------------------  ----------------------

Bully: Scholarship Edition                      Xbox 360, Wii
College Hoops 2K8                               Xbox 360, PS3, PS2
Deal or No Deal(TM): Secret Vault Games         PC
Dora the Explorer: Dora Saves the Mermaids(TM)  PS2, DS
Go, Diego, Go!: Safari Rescue(TM)               Wii, PS2, DS
Grand Theft Auto: Vice City Stories (Japan)     PS2, PSP
Major League Baseball(R) 2K8                    Xbox 360, PS3, Wii,
                                                PSP, PS2

Take-Two's lineup announced to date for the remainder of fiscal 2008 includes the following titles:

Title                                           Platform
----------------------------------------------  ----------------------

Carnival Games(TM)                              DS
Carnival Games: Mini-Golf(TM)                   Wii
Don King Presents: Prizefighter                 Xbox 360, Wii, DS
Grand Theft Auto IV                             Xbox 360, PS3
Grand Theft Auto IV episodic content            Xbox 360
Major League Baseball(R) 2K8 Fantasy All-Stars  DS
Midnight Club: Los Angeles                      Xbox 360, PS3
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, operating loss, net loss and basic and diluted 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 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 first quarter ended January 31, 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 shareholder dilution than accounting charges when assessing the impact of stock-based equity awards.

Professional fees and expenses associated with the Company's stock options investigation and certain other unusual regulatory and legal matters

The Company has incurred 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.

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.

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 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' unsolicited proposal to acquire the Company include: 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' unsolicited proposal, 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 January 31,
                                        ------------------------------
                                             2008            2007
                                        --------------  --------------

Net revenue                                $  240,442     $   277,340
--------------------------------------- --------------  --------------

Cost of goods sold:
Product costs                                 148,152         164,143
Software development costs and
 royalties                                     22,713          22,879
Internal royalties                              6,145           9,478
Licenses                                        8,998           7,725
--------------------------------------- --------------  --------------
Total cost of goods sold                      186,008         204,225
--------------------------------------- --------------  --------------

Gross profit                                   54,434          73,115

Selling and marketing                          33,729          35,024
General and administrative                     31,402          38,614
Research and development                       15,810          14,150
Business reorganization and related               162               -
Depreciation and amortization                   6,409           6,661
--------------------------------------- --------------  --------------
Total operating expenses                       87,512          94,449
--------------------------------------- --------------  --------------
Loss from operations                          (33,078)        (21,334)
Interest and other, net                          (152)            862
--------------------------------------- --------------  --------------
Loss before income taxes                      (33,230)        (20,472)
Income taxes                                    4,767           1,076
--------------------------------------- --------------  --------------
Net loss                                   $  (37,997)    $   (21,548)
======================================= ==============  ==============

Basic and diluted loss per share           $    (0.52)    $     (0.30)
======================================= ==============  ==============

Basic and diluted weighted average
 shares outstanding                            73,148          71,360
======================================= ==============  ==============


                                        Three months ended January 31,
                                        ------------------------------
OTHER INFORMATION                            2008            2007
--------------------------------------- --------------  --------------

Total revenue mix
Publishing                                         51%             58%
Distribution                                       49%             42%

Geographic revenue mix
North America                                      84%             77%
International                                      16%             23%

Publishing revenue platform mix
Sony PlayStation 2                                 25%             36%
Microsoft Xbox 360                                 21%             15%
Nintendo Wii                                       19%              0%
Sony PSP                                           13%             20%
PC                                                 10%             12%
Sony PLAYSTATION 3                                  8%              6%
Nintendo Handhelds                                  3%              1%
Microsoft Xbox                                      1%              4%
Accessories and other                               0%              6%
         TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS
               (in thousands, except per share amounts)

                                              ------------ -----------
                                              January 31,  October 31,
                                                  2008        2007
                                              ------------ -----------
                   ASSETS                     (Unaudited)
Current assets:
 Cash and cash equivalents                    $    54,388    $ 77,757
 Accounts receivable, net of allowances of
  $52,778 and $63,324 at January 31, 2008 and
  October 31, 2007, respectively                   63,337     104,937
 Inventory                                         82,487      99,331
 Software development costs and licenses          157,153     141,441
 Prepaid taxes and taxes receivable                23,479      40,316
 Prepaid expenses and other                        34,805      34,741
--------------------------------------------- ------------ -----------
     Total current assets                         415,649     498,523
--------------------------------------------- ------------ -----------

 Fixed assets, net                                 41,515      44,986
 Software development costs and licenses, net
  of current portion                               35,199      34,465
 Goodwill                                         233,008     204,845
 Other intangibles, net                            30,170      31,264
 Other assets                                      17,544      17,060
--------------------------------------------- ------------ -----------
     Total assets                             $   773,085    $831,143
============================================= ============ ===========

    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                             $    68,096    $128,782
 Accrued expenses and other current
  liabilities                                     115,647     146,835
 Deferred revenue                                  32,527      36,544
--------------------------------------------- ------------ -----------
     Total current liabilities                    216,270     312,161
--------------------------------------------- ------------ -----------
 Deferred revenue                                  25,000      25,000
 Line of credit                                    36,000      18,000
 Income taxes payable                              28,414           -
 Other long-term liabilities                        5,285       4,828
--------------------------------------------- ------------ -----------
     Total liabilities                            310,969     359,989
--------------------------------------------- ------------ -----------
Commitments and contingencies

Stockholders' equity:
 Common stock, $.01 par value, 100,000 shares         761         743
  authorized; 76,126 and 74,273 shares issued
  and outstanding at January 31, 2008 and
  October 31, 2007, respectively
 Additional paid-in capital                       549,562     513,297
 Accumulated deficit                             (116,819)    (77,747)
 Accumulated other comprehensive income            28,612      34,861
--------------------------------------------- ------------ -----------
     Total stockholders' equity                   462,116     471,154
--------------------------------------------- ------------ -----------

--------------------------------------------- ------------ -----------
     Total liabilities and stockholders'
      equity                                  $   773,085    $831,143
============================================= ============ ===========
         TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                            (in thousands)

                                        Three months ended January 31,
                                        ------------------------------
                                             2008            2007
                                        --------------- --------------
Operating activities:
 Net loss                                  $  (37,997)    $   (21,548)
 -------------------------------------- --------------- --------------
 Adjustments to reconcile net loss to
  net cash provided by (used for)
  operating activities:
  Amortization and impairment of
   software development costs and
   licenses (1)                                18,581          18,835
  Depreciation and amortization of
   long-lived assets                            6,409           6,661
  Amortization and impairment of
   intellectual property                          351             925
  Stock-based compensation (2)                  6,073           3,992
  Benefit for deferred income taxes              (107)            (80)
  Foreign currency transaction gain and
   other                                       (1,387)           (604)
 Changes in assets and liabilities, net
  of effect from purchases of
  businesses:
  Accounts receivable                          42,420          63,891
  Inventory                                    16,844          13,326
  Software development costs and
   licenses                                   (34,023)        (38,315)
  Prepaid expenses, other current and
   other non-current assets                    17,551          25,431
  Accounts payable, accrued expenses,
   deferred revenue, income taxes
   payable and                                (74,080)        (60,391)
  other liabilities
 -------------------------------------- --------------- --------------
 Total adjustments                             (1,368)         33,671
 -------------------------------------- --------------- --------------
 Net cash (used for) provided by
  operating activities                        (39,365)         12,123
 -------------------------------------- --------------- --------------

Investing activities:
 Purchase of fixed assets                      (1,370)         (7,742)
 Payments for purchases of businesses,
  net of cash acquired                           (151)              -
 -------------------------------------- --------------- --------------
 Net cash used for investing activities        (1,521)         (7,742)
 -------------------------------------- --------------- --------------

Financing activities:
 Proceeds from exercise of options                937               -
 Net borrowings on line of credit              18,000               -
 Payment of debt issuance costs                  (979)              -
 Repurchase of common stock                         -             (12)
 -------------------------------------- --------------- --------------
 Net cash provided by (used for)
  financing activities                         17,958             (12)
 -------------------------------------- --------------- --------------
 Effects of exchange rates on cash and
  cash equivalents                               (441)          1,302
 -------------------------------------- --------------- --------------
 Net (decrease) increase in cash and
  cash equivalents                            (23,369)          5,671
 Cash and cash equivalents, beginning
  of year                                      77,757         132,480
 -------------------------------------- --------------- --------------
 Cash and cash equivalents, end of
  period                                   $   54,388     $   138,151
 ====================================== =============== ==============

(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
                       January     and     legal    compen-   January
                      31, 2008   related  matters   sation   31, 2008
                      --------- --------- -------- --------- ---------

Net revenue           $240,442    $    -  $     -  $     -   $240,442
--------------------- --------- --------- -------- --------- ---------

Cost of goods sold:
Product costs          148,152         -        -        -    148,152
Software development
 costs and royalties    22,713         -        -     (746)    21,967
Internal royalties       6,145         -        -        -      6,145
Licenses                 8,998         -        -        -      8,998
--------------------- --------- --------- -------- --------- ---------
Total cost of goods
 sold                  186,008         -        -     (746)   185,262
--------------------- --------- --------- -------- --------- ---------

Gross profit            54,434         -        -      746     55,180

Selling and marketing   33,729         -        -     (867)    32,862
General and
 administrative         31,402         -   (1,494)  (3,372)    26,536
Research and
 development            15,810         -        -   (1,088)    14,722
Business
 reorganization and
 related                   162      (162)       -        -          -
Depreciation and
 amortization            6,409         -        -        -      6,409
--------------------- --------- --------- -------- --------- ---------
Total operating
 expenses               87,512      (162)  (1,494)  (5,327)    80,529
--------------------- --------- --------- -------- --------- ---------
Loss from operations   (33,078)      162    1,494    6,073    (25,349)
Interest and other,
 net                      (152)        -        -        -       (152)
--------------------- --------- --------- -------- --------- ---------
Loss before income
 taxes                 (33,230)      162    1,494    6,073    (25,501)
Income taxes             4,767         -        -        -      4,767
--------------------- --------- --------- -------- --------- ---------
Net loss              $(37,997)   $  162  $ 1,494  $ 6,073   $(30,268)
===================== ========= ========= ======== ========= =========

Basic and diluted
 loss per share*      $  (0.52)   $    -  $  0.02  $  0.08   $  (0.41)
===================== ========= ========= ======== ========= =========

Basic and diluted
 weighted average
 shares outstanding     73,148                                 73,148
===================== =========                              =========


EBITDA:
Loss before income
 taxes                $(33,230)                              $(25,501)
Interest and other,
 net                       152                                    152
Depreciation and
 amortization            6,409                                  6,409
                      ---------                              ---------
EBITDA                $(26,669)                              $(18,940)
Add: Business
 reorganization and
 related                   162                                      -
                      ---------                              ---------
Adjusted EBITDA       $(26,507)                              $(18,940)
                      =========                              =========


*Basic and diluted 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
                                ---------------------------
                                                             Non-GAAP
                        Three   Business  Profess-            three
                       months   reorgani-  ional    Stock-    months
                        ended    zation   fees and  based     ended
                       January    and      legal   compen-   January
                      31, 2007   related  matters   sation   31, 2007
                      --------- --------- -------- -------- ----------


Net revenue           $277,340   $      - $     -  $     -  $ 277,340
--------------------- --------- --------- -------- -------- ----------

Cost of goods sold:
Product costs          164,143          -       -        -    164,143
Software development
 costs and royalties    22,879          -       -     (545)    22,334
Internal royalties       9,478          -       -        -      9,478
Licenses                 7,725          -       -        -      7,725
--------------------- --------- --------- -------- -------- ----------
Total cost of goods
 sold                  204,225          -       -     (545)   203,680
--------------------- --------- --------- -------- -------- ----------

Gross profit            73,115          -       -      545     73,660

Selling and marketing   35,024          -       -     (307)    34,717
General and
 administrative         38,614          -  (7,225)  (1,954)    29,435
Research and
 development            14,150          -       -   (1,186)    12,964
Business
 reorganization and
 related                     -          -       -        -          -
Depreciation and
 amortization            6,661          -       -        -      6,661
--------------------- --------- --------- -------- -------- ----------
Total operating
 expenses               94,449          -  (7,225)  (3,447)    83,777
--------------------- --------- --------- -------- -------- ----------
Loss from operations   (21,334)         -   7,225    3,992    (10,117)
Interest and other,
 net                       862          -       -        -        862
--------------------- --------- --------- -------- -------- ----------
Loss before income
 taxes                 (20,472)         -   7,225    3,992     (9,255)
Income taxes             1,076          -       -        -      1,076
--------------------- --------- --------- -------- -------- ----------
Net loss              $(21,548)  $      - $ 7,225  $ 3,992  $ (10,331)
===================== ========= ========= ======== ======== ==========

Basic and diluted
 loss per share*      $  (0.30)  $      - $  0.10  $  0.06  $   (0.14)
===================== ========= ========= ======== ======== ==========

Basic and diluted
 weighted average
 shares outstanding     71,360                                 71,360
===================== =========                             ==========


EBITDA:
Loss before income
 taxes                $(20,472)                             $  (9,255)
Interest and other,
 net                      (862)                                  (862)
Depreciation and
 amortization            6,661                                  6,661
                      ---------                             ----------
EBITDA                $(14,673)                             $  (3,456)
Add: Business
 reorganization and
 related                     -                                      -
                      ---------                             ----------
Adjusted EBITDA       $(14,673)                             $  (3,456)
                      =========                             ==========


*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.