Take-Two News Release

Printer Friendly Version View printer-friendly version
<< Back
Take-Two Interactive Software, Inc. Reports Results for the Three and Twelve Months Ended October 31, 2010
Download PDF Download PDF
Net Revenue for the Twelve Months Ended October 31, 2010 Increased 65% Year-Over-Year to $1.16 Billion
Non-GAAP Income from Continuing Operations per Diluted Share for the Twelve Months Ended October 31, 2010 Increased to $1.06

NEW YORK, Dec 16, 2010 (BUSINESS WIRE) -- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today announced financial results for the three and twelve months ended October 31, 2010. In addition, as previously announced, the Company's Board of Directors has approved a fiscal year-end change from October 31 to March 31. In accordance with this change, the Company provided guidance for the three months ending December 31, 2010 and the new fiscal fourth quarter and full year ending March 31, 2011.

For the twelve months ended October 31, 2010, net revenue grew 65% year-over-year to $1.16 billion. GAAP income from continuing operations increased to $49.7 million, or $0.58 per diluted share, as compared to a loss of $130.4 million, or $1.70 per share, for the year-ago period. Non-GAAP income from continuing operations increased to $97.5 million, or $1.06 per diluted share, as compared to a Non-GAAP loss of $90.4 million, or $1.18 per share, for the year-ago period. Non-GAAP income from continuing operations excludes certain non-cash and non-operational gains and losses identified on the attached reconciliation of GAAP and Non-GAAP measures.

For the three months ended October 31, 2010, net revenue grew 32% year-over-year to $373.7 million. GAAP income from continuing operations increased to $54.2 million, or $0.58 per diluted share, as compared to a loss of $7.9 million, or $0.10 per share, for the year-ago period. Non-GAAP income from continuing operations increased to $64.0 million, or $0.67 per diluted share, as compared to $7.9 million, or $0.10 per diluted share, for the year-ago period.

The strongest contributors to net revenue and profitability in the three month period ended October 31, 2010 were new titles, including NBA(R) 2K11, Mafia(R) II, Red Dead Redemption,Sid Meier's Civilization(R) V, Grand Theft Auto IV: Complete and New Carnival Games(R). Catalog titles that contributed to the strength in the recent period included Borderlands(TM), Grand Theft Auto IV and several Nickelodeon titles. In addition, digitally delivered content has continued to be a meaningful component of Take-Two's sales.

Management Comments

Ben Feder, CEO of Take-Two, commented, "We have achieved our goal of profitability in a year without a new release of Grand Theft Auto. Our better-than-expected revenue growth and margin expansion were driven by strong demand for our diverse portfolio of games, including the hit new titles Red Dead Redemption and NBA 2K11, as well as strong sales of catalog titles and digitally delivered content. I am also pleased to report that our 2K Sports division was profitable during the period."

Strauss Zelnick, Chairman of Take-Two, added, "As we finish 2010, our Company is better positioned for success than ever, creatively, operationally and financially. We plan to build on the talents of our world-class creative team to deliver an increasingly diverse portfolio of high-quality titles. We will also pursue opportunities to enter newer areas of the interactive entertainment business, such as digitally delivered content and the expanding Asian and Latin American markets. In addition, we will continue to optimize our efficient operating infrastructure and sound balance sheet to support our future initiatives for profitable growth."

Product Highlights

During the three months ended October 31, 2010:

  • Rockstar Games released several downloadable content packs for Red Dead Redemption, which has sold-in nearly 8 million units worldwide since launching in May.
  • 2K Games launched Mafia II and several downloadable content packs for the title.
  • 2K Sports launched NBA 2K11, which sold-in more than three million units worldwide and received the highest scores in the history of the franchise (89 - Metacritic.com).
  • 2K Sports signed pitcher Roy Halladay of the Philadelphia Phillies as the cover athlete for Major League Baseball 2K11 that will launch in spring 2011.
  • 2K Games announced that it will release Duke Nukem Forever during calendar year 2011.
  • 2K Games' Sid Meier's Civilization V launched to critical acclaim and was heralded for advancing the real-time strategy genre.

Financial Guidance

In connection with the change to its fiscal year-end, Take-Two is providing guidance for the three months ending December 31, 2010 and the fiscal fourth quarter and full year ending March 31, 2011.

Three months

Three months

Twelve months

ending 12/31/2010

ending 3/31/2011

ending 3/31/2011

Revenue

$290 to $315 million

$100 to $150 Million

$1.0 to $1.1 Billion

Non-GAAP EPS

$0.25 to $0.35

($0.60) to ($0.50)

$0.50 to $0.65

Stock-based

compensation

$0.06

$0.06

$0.29

expense per share (a)

Non-cash interest

expense related to

$0.02

$0.02

$0.07

convertible debt (b)

Business

restructuring costs

and expenses related

$0.00

$0.00

$0.05

to unusual legal

matters

Non-cash tax expense

$0.01

$0.01

$0.05

(a) The Company's stock-based compensation expense for the periods above 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.

(b) The Company adopted a new accounting standard on November 1, 2009 that requires convertible debt to be bifurcated into debt and equity components. As a result of the new standard, the Company has begun to record non-cash interest expense on its convertible notes, in addition to the interest expense already recorded for coupon payments.

Key assumptions and dependencies underlying the Company's guidance include continued consumer acceptance of the Xbox 360, PlayStation 3 and Wii; 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; the timely delivery of the titles detailed in this release; and stable foreign exchange rates.

Product Releases

The following titles released during the three months ended October 31, 2010:

Title Platform
BioShock(R) 2: Minerva's Den (DLC)

Xbox 360, PS3

BioShock(R) 2: Protector Trials (DLC) Xbox 360, PS3
Borderlands(TM): Claptrap's New Robot Revolution (DLC) Xbox 360, PS3, PC
Borderlands(TM) Game of the Year

Xbox 360, PS3, PC

Carnival Games(R) iPhone, iPod touch
Dora's Big Birthday Adventure

Wii, PS2, DS

Dora's Cooking Club

DS

Grand Theft Auto IV: Complete

Xbox 360, PS3, PC

Grand Theft Auto: Chinatown Wars HD

iPad

Mafia(R) II Xbox 360, PS3, PC
Mafia II: Jimmy's Vendetta(DLC)

Xbox 360, PS3, PC

Mafia(R) II: The Betrayal of Jimmy (DLC)

PS3

Mega Bloks: Diego's Build and Rescue

DS

New Carnival Games Wii, DS
NBA(R) 2K11 Xbox 360, PS3, PS2, PSP, Wii, PC
NHL(R) 2K11 iPhone, iPod touch, Wii
Red Dead Redemption: Legends and Killers Pack (DLC) Xbox 360, PS3
Red Dead Redemption: Liars and Cheats Pack (DLC) Xbox 360, PS3
Red Dead Redemption: Undead Nightmare Pack (DLC) Xbox 360, PS3
Sid Meier's Civilization V PC
Sid Meier's Civilization V: Babylonian Civilization Pack (DLC) PC
Sid Meier's Civilization V: Mongols and Scenario Pack (DLC) PC
Sid Meier's Pirates!(TM) Wii

The following titles have released to date since November 1, 2010:

Title Platform
Grand Theft Auto Trilogy Mac
Mafia(R) II: Joe's Adventures (DLC) Xbox 360, PS3, PC
Nickelodeon(R) Fit Wii
Red Dead Redemption: Undead Nightmare (standalone disc) Xbox 360, PS3
Sid Meier's Civilization V: The Double Civilization and Scenario Pack: Spain and Inca (DLC) PC

Take-Two's lineup of future titles announced to date includes:

Title

Platforms

Planned For Release

L.A. Noire

Xbox 360, PS3

Spring 2011

Top Spin 4

Xbox 360, PS3, Wii

Fiscal 4Q 2011

Major League Baseball 2K11

Xbox 360, PS3, PS2, PSP, Wii, PC

Fiscal 4Q 2011

Duke Nukem Forever

Xbox 360, PS3, PC

Calendar Year 2011

Spec Ops: The Line

Xbox 360, PS3, PC

Fiscal Year 2012

XCOM

Xbox 360, PC

Fiscal Year 2012

BioShock(R) Infinite

Xbox 360, PS3, PC

Calendar Year 2012

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 ir.take2games.com and a replay will be available following the call at the same location.

Change in Fiscal Year

On October 25, 2010, the Company's Board of Directors approved a change in the Company's fiscal year end from October 31 to March 31. Accordingly, the Company expects to file a transition report for the five-month transition period of November 1, 2009 to March 31, 2010 on Form 10-KT within 60 days from October 25, 2010.

Non-GAAP Financial Measures

In addition to reporting unaudited 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) 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 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:

  • 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.
  • Business reorganization, restructuring and related expenses - the Company does not engage in reorganization activities on a regular basis and therefore believes it is appropriate to exclude business reorganization, restructuring and related expenses from its Non-GAAP financial measures.
  • Gain (loss) on sale of subsidiaries and income (loss) from discontinued operations - the Company does not engage in sales of subsidiaries on a regular basis and therefore believes it is appropriate to exclude such gains (losses) from its Non-GAAP financial measures. As the company is no longer active in its discontinued operations, it believes it is appropriate to exclude income (losses) thereon from its Non-GAAP financial measures.
  • Professional fees and expenses associated with unusual legal and other matters - the Company has incurred 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.
  • Non-cash interest expense related to convertible debt - as a result of a new accounting standard adopted on November 1, 2009, the Company records non-cash interest expense on its convertible notes, in addition to the interest expense already recorded for coupon payments. The Company excludes the non-cash portion of the interest expense from its Non-GAAP financial measures because these amounts are unrelated to its ongoing business operations.
  • Non-cash tax expense for the impact of deferred tax liabilities associated with tax deductible amortization of goodwill and the impact of the cancellation of stock options - due to the nature of the adjustment as well as the expectation that it will not have any cash impact in the foreseeable future, the Company believes it is appropriate to exclude this expense 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 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) video game and entertainment system from Microsoft, Wii(TM), Nintendo DS(TM), iPhone(R), iPod(R) touch and iPad(TM). The Company publishes and develops products through its wholly owned labels Rockstar Games and 2K, which publishes its titles under 2K Games, 2K Sports and 2K Play. The Company'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 ability to raise capital if needed and risks associated with international operations. Other important factors and information are contained in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2009, in the section entitled "Risk Factors," as updated in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2010, 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 October 31, Twelve months ended October 31,
2010 2009 2010 2009
(As adjusted)(1) (As adjusted)(1)
Net revenue $ 373,701 $ 282,527 $ 1,159,017 $ 701,057
Cost of goods sold:
Product costs 106,082 84,900 333,372 236,512
Software development costs and royalties 63,205 47,490 202,440 115,960
Internal royalties 13,564 27,725 99,826 58,224
Licenses 23,200 17,928 67,809 56,880
Total cost of goods sold 206,051 178,043 703,447 467,576
Gross profit 167,650 104,484 455,570 233,481
Selling and marketing 60,071 50,033 191,347 141,962
General and administrative 27,672 33,230 105,722 130,376
Research and development 16,669 14,160 62,614 63,748
Depreciation and amortization 3,794 4,077 15,643 17,574
Total operating expenses 108,206 101,500 375,326 353,660
Income (loss) from operations 59,444 2,984 80,244 (120,179 )
Interest and other, net (848 ) (2,486 ) (17,883 ) (5,771 )
Income (loss) from continuing operations before income taxes 58,596 498 62,361 (125,950 )
Provision for income taxes 4,388 8,359 12,680 4,487
Income (loss) from continuing operations 54,208 (7,861 ) 49,681 (130,437 )
Loss from discontinued operations, net of taxes (419 ) (15,660 ) (7,088 ) (10,017 )
Net income (loss) $ 53,789 $ (23,521 ) $ 42,593 $ (140,454 )
Earnings (loss) per share:
Continuing operations $ 0.63 $ (0.10 ) $ 0.58 $ (1.70 )
Discontinued operations 0.00 (0.20 ) (0.08 ) (0.13 )
Basic earnings (loss) per share $ 0.63 $ (0.30 ) $ 0.50 $ (1.83 )
Continuing operations $ 0.58 $ (0.10 ) $ 0.58 $ (1.70 )
Discontinued operations 0.00 (0.20 ) (0.08 ) (0.13 )
Diluted earnings (loss) per share (2) $ 0.58 $ (0.30 ) $ 0.50 $ (1.83 )
Weighted average shares outstanding: (3)
Basic 85,534 77,569 84,975 76,815
Diluted 98,461 77,569 84,975 76,815
(1) As adjusted to reflect the retroactive adoption of new convertible debt accounting guidance and discontinued operations accounting for the sale of Jack of All Games which was completed in February 2010.
(2) For the three months ended October 31, 2010, diluted EPS has been calculated using the "if-converted" method as a result of the Convertible Senior Notes ("Convertible Notes") issued in June 2009. Net income used for computing diluted EPS has been adjusted by $3,512 related to interest and debt issuance costs, net of tax. The shares used for computing includes 12,927 shares related to the potential dilution from the Convertible Notes. The "if-converted" method was not used for the other periods presented as the assumed conversion would have been anti-dilutive.
(3) Basic and diluted include participating shares of 5,737 and 5,978 for the three and twelve months ended October 31, 2010, respectively.
Three months ended October 31, Twelve months ended October 31,
OTHER INFORMATION 2010 2009 2010 2009
Geographic revenue mix
North America 59 % 62 % 62 % 63 %
International 41 % 38 % 38 % 37 %
Platform revenue mix
Microsoft Xbox 360 34 %

53

%

42

%

41

%
Sony PlayStation 3 38 %

21

%

37

%

16

%
PC 15 %

7

%

9

% 11 %
Nintendo Wii 5 %

5

%

5

% 11 %
Sony PSP 2 %

7

%

2

% 7 %
Sony PlayStation 2 3 %

4

%

2

% 7 %
Nintendo DS

3

%

3

%

3

%

7

%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
October 31, October 31,
2010 2009
ASSETS (Unaudited) (As adjusted)(1)
Current assets:
Cash and cash equivalents $ 251,180 $ 102,083
Accounts receivable, net of allowances of $62,188 and $37,191 at October 31, 2010
and October 31, 2009, respectively 165,542 181,065
Inventory 30,305 26,687
Software development costs and licenses 142,077 167,341
Prepaid taxes and taxes receivable 8,186 8,814
Prepaid expenses and other 79,122 47,473
Assets of discontinued operations - 95,104
Total current assets 676,412 628,567
Fixed assets, net 22,307 27,049
Software development costs and licenses, net of current portion 100,775 75,521
Goodwill 221,746 220,881
Other intangibles, net 19,785 23,224
Other assets 7,231 31,886
Total assets $ 1,048,256 $ 1,007,128
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 73,549 $ 114,379
Accrued expenses and other current liabilities 213,780 172,784
Deferred revenue 10,352 6,334
Liabilities of discontinued operations 3,794 60,796
Total current liabilities 301,475 354,293
Long-term debt 104,050 97,063
Income taxes payable 9,201 10,146
Deferred income taxes, net 9,059 -
Liabilities of discontinued operations, net of current portion 3,288 -
Total liabilities 427,073 461,502
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 5,000 shares authorized - -
Common stock, $.01 par value, 150,000 shares authorized; 84,611 and 81,925 shares
issued and outstanding at October 31, 2010 and October 31, 2009, respectively 846 819
Additional paid-in capital 694,022 658,794
Accumulated deficit (79,586 ) (122,179 )
Accumulated other comprehensive income 5,901 8,192
Total stockholders' equity 621,183 545,626
Total liabilities and stockholders' equity $ 1,048,256 $ 1,007,128
(1) As adjusted to reflect the following items:
- discontinued operations accounting for the sale of Jack of All Games which was completed in February 2010;
- the retroactive adoption of new convertible debt accounting guidance; and
- the reclassification of certain prior year amounts to conform to current year presentation for comparative purposes.
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
Twelve months ended October 31,
2010 2009
(As adjusted)(1)
Operating activities:
Net income (loss) $ 42,593 $ (140,454 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization and impairment of software development costs and licenses

158,572

105,521
Depreciation and amortization 15,643 17,574
Income (loss) from discontinued operations 7,088 10,017
Amortization and impairment of intellectual property 2,340 478
Stock-based compensation 30,387 25,933
Loss on sale of subsidiary 3,831 -
Deferred income taxes 2,275 3,432
Amortization of discount on Convertible Notes 6,987 2,655
Amortization of debt issuance costs 1,251 852
Other, net (709 ) (4,456 )
Changes in assets and liabilities, net of effect from purchases of businesses:
Accounts receivable 15,523 (57,275 )
Inventory (3,934 ) 11,792
Software development costs and licenses

(158,724

) (164,828 )
Prepaid expenses, other current and other non-current assets (30,131 ) (309 )
Deferred revenue 4,018 (49,829 )
Accounts payable, accrued expenses, income taxes payable and other liabilities 22,107 13,728
Net cash (used in) provided by discontinued operations (2,948 ) 14,965
Net cash provided by (used in) operating activities 116,169 (210,204 )
Investing activities:
Purchase of fixed assets (10,158 ) (11,176 )
Cash received from sale of subsidiary 5,587 -
Net cash provided by sale of discontinued operations 37,250 -
Payments in connection with business combinations (1,991 ) (5,813 )
Net cash provided by (used in) investing activities 30,688 (16,989 )
Financing activities:
Proceeds from exercise of employee stock options 53 22
Net payments on line of credit - (70,000 )
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 - (4,984 )
Net cash provided by financing activities 53 45,788
Effects of exchange rates on cash and cash equivalents 2,187 3,211
Net increase (decrease) in cash and cash equivalents 149,097 (178,194 )
Cash and cash equivalents, beginning of year 102,083 280,277
Cash and cash equivalents, end of period $ 251,180 $ 102,083
(1) As adjusted to reflect the following items:

- the sale of Jack of All Games which was completed in February 2010

- the retroactive adoption of new convertible debt accounting guidance; and

- the reclassification of certain prior year amounts to conform to current year presentation for comparative purposes.
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Non-GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
Three months Professional Business Non-GAAP three
ended October 31, Discontinued fees and Stock-based Non-cash Non-cash reorganization months ended October 31,
2010 operations legal matters compensation interest expense tax expense and related 2010
Net revenue $ 373,701 $ - $ - $ - $ - $ - $ - $ 373,701
Cost of goods sold:
Product costs 106,082 - - - - - - 106,082
Software development costs and royalties 63,205 - - (2,456 ) - - - 60,749
Internal royalties 13,564 - - - - - - 13,564
Licenses 23,200 - - - - - - 23,200
Total cost of goods sold 206,051 - - (2,456 ) - - - 203,595
Gross profit 167,650 - - 2,456 - - - 170,106
Selling and marketing 60,071 - - (1,076 ) - - - 58,995
General and administrative 27,672 - (138 ) (2,227 ) - - - 25,307
Research and development 16,669 - - (1,000 ) - - (474 ) 15,195
Depreciation and amortization 3,794 - - - - - - 3,794
Total operating expenses 108,206 - (138 ) (4,303 ) - - (474 ) 103,291
Income (loss) from operations 59,444 - 138 6,759 - - 474 66,815
Interest and other, net (848 ) - - - 1,833 - - 985
Income (loss) from continuing operations before income taxes 58,596 - 138 6,759 1,833 - 474 67,800
Provision for income taxes 4,388 - - - - (561 ) 3,827
Income (loss) from continuing operations 54,208 - 138 6,759 1,833 561 474 63,973
Loss from discontinued operations, net of taxes (419 ) 419 - - - - - -
Net income (loss) $ 53,789 $ 419 $ 138 $ 6,759 $ 1,833 $ 561 $ 474 $ 63,973
Earnings (loss) per share:*
Basic earnings (loss) per share $ 0.63 $ 0.00 $ 0.00 $ 0.08 $ 0.02 $ 0.01 $ 0.01 $ 0.75
Diluted earnings (loss) per share (1) $ 0.58 $ 0.00 $ 0.00 $ 0.07 $ 0.02 $ 0.01 $ 0.00 $ 0.67
Weighted average shares outstanding (2)
Basic 85,534 85,534 85,534 85,534 85,534 85,534 85,534 85,534
Diluted 98,461 98,461 98,461 98,461 98,461 98,461 98,461 98,461
EBITDA:
Income (loss) from continuing operations before income taxes $ 58,596 $ 67,800
Interest 4,121 2,288
Depreciation and amortization 3,794 3,794
EBITDA $ 66,511 $ 73,882
Add: Business reorganization and related 474 -
Adjusted EBITDA $ 66,985 $ 73,882
*Earnings (loss) per share ("EPS") may not add due to rounding
(1) For the three months ended October 31, 2010, diluted EPS has been calculated using the "if-converted" method as a result of the Convertible Senior Notes ("Convertible Notes") issued in June 2009.Non-GAAP net income used for computing non-GAAP diluted EPS has been adjusted by $1,680 and GAAP net income used for computing GAAP diluted EPS has been adjusted by $3,512 related to interest and debtissuance costs, net of tax. The shares used for computing includes 12,927 shares related to the potential dilution from the Convertible Notes.
(2) Basic and diluted include participating shares of 5,737.
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Non-GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
Three months Professional Non-GAAP three
ended October 31, Discontinued fees and Stock-based Non-cash Non-cash months ended October 31,
2009 operations legal matters compensation interest expense tax expense 2009
Net revenue $ 282,527 $ - $ - $ - $ - $ - $ 282,527
Cost of goods sold:
Product costs 84,900 - - - - - 84,900
Software development costs and royalties 47,490 - - (2,415 ) - - 45,075
Internal royalties 27,725 - - - - - 27,725
Licenses 17,928 - - - - - 17,928
Total cost of goods sold 178,043 - - (2,415 ) - - 175,628
Gross profit 104,484 - - 2,415 - - 106,899
Selling and marketing 50,033 - - (1,135 ) - - 48,898
General and administrative 33,230 - (98 ) (5,118 ) - - 28,014
Research and development 14,160 - - (1,151 ) - - 13,009
Depreciation and amortization 4,077 - - - - - 4,077
Total operating expenses 101,500 - (98 ) (7,404 ) - - 93,998
Income (loss) from operations 2,984 - 98 9,819 - - 12,901
Interest and other, net (2,486 ) - - - 1,532 - (954 )
Income (loss) from continuing operations before income taxes 498 - 98 9,819 1,532 - 11,947
Provision for income taxes 8,359 - - - - (4,319 ) 4,040
Income (loss) from continuing operations (7,861 ) - 98 9,819 1,532 4,319 7,907
Loss from discontinued operations, net of taxes (15,660 ) 15,660 - - - - -
Net income (loss) $ (23,521 ) $ 15,660 $ 98 $ 9,819 $ 1,532 $ 4,319 $ 7,907
Earnings (loss) per share:*
Basic earnings (loss) per share $ (0.30 ) $ 0.19 $ 0.00 $ 0.12 $ 0.02 $ 0.05 $ 0.10
Diluted earnings (loss) per share $ (0.30 ) $ 0.19 $ 0.00 $ 0.12 $ 0.02 $ 0.05 $ 0.10
Weighted average shares outstanding (1)
Basic 77,569 82,269 82,269 82,269 82,269 82,269 82,269
Diluted 77,569 82,269 82,269 82,269 82,269 82,269 82,269
EBITDA:
Income (loss) from continuing operations before income taxes $ 498 $ 11,947
Interest 3,720 2,188
Depreciation and amortization 4,077 4,077
EBITDA $ 8,295 $ 18,212
*Earnings (loss) per share may not add due to rounding
(1) Basic and diluted include participating shares of 4,700.
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Non-GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
Twelve months Sale of subsidiary Professional Business Non-GAAP twelve months
ended October 31, and discontinued fees and Stock-based Non-cash Non-cash reorganization ended October 31,
2010 operations legal matters compensation interest expense tax expense and related 2010
Net revenue $ 1,159,017 $ - $ - $ - $ - $ - $ - $ 1,159,017
Cost of goods sold:
Product costs 333,372 - - - - - - 333,372
Software development costs and royalties 202,440 - - (10,929 ) - - - 191,511
Internal royalties 99,826 - - - - - - 99,826
Licenses 67,809 - - - - - - 67,809
Total cost of goods sold 703,447 - - (10,929 ) - - - 692,518
Gross profit 455,570 - - 10,929 - - - 466,499
Selling and marketing 191,347 - - (4,158 ) - - (173 ) 187,016
General and administrative 105,722 - 960 (11,113 ) - - (1,048 ) 94,521
Research and development 62,614 - - (4,176 ) - - (1,580 ) 56,858
Depreciation and amortization 15,643 - - - - - - 15,643
Total operating expenses 375,326 - 960 (19,447 ) - - (2,801 ) 354,038
Income (loss) from operations 80,244 - (960 ) 30,376 - - 2,801 112,461
Interest and other, net (17,883 ) 3,831 - - 6,987 - - (7,065 )
Income (loss) from continuing operations before income taxes 62,361 3,831 (960 ) 30,376 6,987 - 2,801 105,396
Provision for income taxes 12,680 - - - - (4,823 ) - 7,857
Income (loss) from continuing operations 49,681 3,831 (960 ) 30,376 6,987 4,823 2,801 97,539
Loss from discontinued operations, net of taxes (7,088 ) 7,088 - - - - - -
Net income (loss) $ 42,593 $ 10,919 $ (960 ) $ 30,376 $ 6,987 $ 4,823 $ 2,801 $ 97,539
Earnings (loss) per share:*
Basic earnings (loss) per share $ 0.50 $ 0.13 $ (0.01 ) $ 0.36 $ 0.08 $ 0.06 $ 0.03 $ 1.15
Diluted earnings (loss) per share (1) $ 0.50 $ 0.11 $ (0.01 ) $ 0.31 $ 0.07 $ 0.05 $ 0.03 $ 1.06
Weighted average shares outstanding (2)
Basic 84,975 84,975 84,975 84,975 84,975 84,975 84,975 84,975
Diluted 84,975 97,902 97,902 97,902 97,902 97,902 97,902 97,902
EBITDA:
Income (loss) from continuing operations before income taxes $ 62,361 $ 105,396
Interest 15,459 8,472
Depreciation and amortization 15,643 15,643
EBITDA $ 93,463 $ 129,511
Add: Business reorganization and related 2,801 -
Adjusted EBITDA $ 96,264 $ 129,511
*Earnings (loss) per share ("EPS") may not add due to rounding
(1) For the twelve months ended October 31, 2010, non-GAAP EPS -- diluted EPS has been calculated using the "if-converted" method as a result of the Convertible Senior Notes ("Convertible Notes")issued in June 2009. Non-GAAP net income used for computing non-GAAP diluted EPS has been adjusted by $6,687 related to interest and debt issuance costs, net of tax. The shares used for computingincludes 12,927 shares related to the potential dilution from the Convertible Notes. The "if-converted" method was not used for GAAP EPS presented as the assumed conversion would have been anti-dilutive.
(2) Basic and diluted include participating shares of 5,978.
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Non-GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
Twelve months Professional Non-GAAP twelve months
ended October 31, Discontinued fees and Stock-based Non-cash Non-cash ended October 31,
2009 operations legal matters compensation interest expense tax expense 2009
Net revenue $ 701,057 $ - $ - $ - $ - $ - $ 701,057
Cost of goods sold:
Product costs 236,512 - - - - - 236,512
Software development costs and royalties 115,960 - - (6,094 ) - - 109,866
Internal royalties 58,224 - - - - - 58,224
Licenses 56,880 - - - - - 56,880
Total cost of goods sold 467,576 - - (6,094 ) - - 461,482
Gross profit 233,481 - - 6,094 - - 239,575
Selling and marketing 141,962 - - (2,551 ) - - 139,411
General and administrative 130,376 - (7,225 ) (14,119 ) - - 109,032
Research and development 63,748 - - (3,169 ) - - 60,579
Depreciation and amortization 17,574 - - - - - 17,574
Total operating expenses 353,660 - (7,225 ) (19,839 ) - - 326,596
Income (loss) from operations (120,179 ) - 7,225 25,933 - - (87,021 )
Interest and other, net (5,771 ) - - - 2,524 - (3,247 )
Income (loss) from continuing operations before income taxes (125,950 ) - 7,225 25,933 2,524 - (90,268 )
Provision for income taxes 4,487 - - - - (4,319 ) 168
Income (loss) from continuing operations (130,437 ) - 7,225 25,933 2,524 4,319 (90,436 )
Loss from discontinued operations, net of taxes (10,017 ) 10,017 - - - - -
Net income (loss) $ (140,454 ) $ 10,017 $ 7,225 $ 25,933 $ 2,524 $ 4,319 $ (90,436 )
Earnings (loss) per share:*
Basic earnings (loss) per share $ (1.83 ) $ 0.13 $ 0.09 $ 0.34 $ 0.03 $ 0.06 $ (1.18 )
Diluted earnings (loss) per share (1) $ (1.83 ) $ 0.13 $ 0.09 $ 0.34 $ 0.03 $ 0.06 $ (1.18 )
Weighted average shares outstanding
Basic 76,815 76,815 76,815 76,815 76,815 76,815 76,815
Diluted 76,815 76,815 76,815 76,815 76,815 76,815 76,815
EBITDA:
Income (loss) from continuing operations before income taxes $ (125,950 ) $ (90,268 )
Interest 9,611 7,087
Depreciation and amortization 17,574 17,574
EBITDA $ (98,765 ) $ (65,607 )
*Earnings (loss) per share may not add due to rounding

SOURCE: Take-Two Interactive Software, Inc.

Take-Two Interactive Software, Inc.
Investor Relations:
Henry A. Diamond, 646-536-3005
Senior Vice President
Investor Relations & Corporate Communications
Henry.Diamond@take2games.com
or
Take-Two Interactive Software, Inc.
Corporate Press:
Alan Lewis, 646-536-2983
Vice President
Corporate Communications & Public Affairs
Alan.Lewis@take2games.com