Take-Two News Release

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Take-Two Interactive Software, Inc. Reports Record Results for Fiscal Year 2014
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Non-GAAP Net Revenue Grew 97% to $2.414 Billion

Non-GAAP Net Income Increased to $4.26 Per Diluted Share

Company Provides Strong Financial Outlook for Fiscal Year 2015

NEW YORK--(BUSINESS WIRE)--May 13, 2014-- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported strong financial results for its fourth quarter and record results for its fiscal year 2014, ended March 31, 2014. In addition, the Company provided its initial financial outlook for its first quarter and fiscal year 2015.

Fiscal Fourth Quarter 2014

GAAP Financial Results

For fiscal fourth quarter 2014, GAAP net revenue was $195.2 million, as compared to $299.5 million for fiscal fourth quarter 2013, which had benefited from the release of BioShock® Infinite. GAAP net loss from continuing operations was $30.8 million, or $0.40 per diluted share, as compared to net income from continuing operations of $21.2 million, or $0.23 per diluted share, for the year-ago period. As of March 31, 2014, the Company had cash and cash equivalents of $935.4 million.

Non-GAAP Financial Results

For fiscal fourth quarter 2014, Non-GAAP net revenue was $233.2 million, as compared to $303.1 million for fiscal fourth quarter 2013. Non-GAAP net income was $21.5 million, or $0.21 per diluted share, as compared to $42.9 million, or $0.38 per diluted share, for the year-ago period.

The largest contributors to net revenue in fiscal fourth quarter 2014 were NBA® 2K14, Grand Theft Auto V®, Grand Theft Auto Online, Borderlands® 2 and BioShock Infinite. Non-GAAP net revenue from digitally-delivered content grew 51% year-over-year to $122.3 million, led by the Grand Theft Auto series, the NBA 2K franchise and offerings for Borderlands 2. Catalog sales accounted for $75.7 million of Non-GAAP net revenue led by offerings for Borderlands 2, BioShock Infinite, the Grand Theft Auto series and Sid Meier’s Civilization® V.

Fiscal Year 2014

GAAP Financial Results

For fiscal year 2014, GAAP net revenue grew 94% to a record $2.351 billion, as compared to $1.214 billion for fiscal year 2013. GAAP net income from continuing operations increased to a record $361.7 million, or $3.20 per diluted share, as compared to a net loss from continuing operations of $31.2 million, or $0.36 per diluted share, for the prior fiscal year.

Non-GAAP Financial Results

For fiscal year 2014, Non-GAAP net revenue grew 97% to a record $2.414 billion, as compared to $1.222 billion for fiscal year 2013. Non-GAAP net income increased to a record $510.7 million, or $4.26 per diluted share, as compared to $33.1 million, or $0.36 per diluted share, for the prior fiscal year.

The largest contributors to net revenue in fiscal year 2014 were Grand Theft Auto V, NBA 2K14, Borderlands 2, WWE® 2K14, Grand Theft Auto IV, Grand Theft Auto Online, BioShock Infinite and offerings for Sid Meier’s Civilization V. Non-GAAP net revenue from digitally-delivered content grew 65% year-over-year to a record $435.1 million, led by offerings for the Grand Theft Auto series, Borderlands 2, the NBA 2K franchise, Sid Meier’s Civilization V and BioShock Infinite.

Management Comments

“During fiscal 2014, Take-Two set new records for both our Company and the entertainment industry,” said Strauss Zelnick, Chairman and CEO of Take-Two. “Rockstar Games’ Grand Theft Auto V reached $1 billion in sales faster than any entertainment release in history, NBA 2K14 enjoyed the franchise’s strongest launch, Borderlands 2 became 2K’s top-selling title, and our digitally-delivered revenue grew to its highest level ever. As a result, we delivered record revenue, earnings and cash flow for our shareholders.

“Over the past several years, Take-Two has been transformed into a financially strong, global interactive entertainment company with numerous successful franchises across a variety of genres. We also have complemented the Company’s core business with growing profits from recurrent consumer spending, including add-on content, virtual currency and online gaming. The evolution of Take-Two is reflected in our strong profit outlook for fiscal 2015 and expectation for continued Non-GAAP profitability every year for the foreseeable future.”

Business and Product Highlights

Since January 1, 2014:

  • Take-Two was the top console and handheld video game publisher of 2013 in North America and Latin America.*

Rockstar Games:

  • Grand Theft Auto V was the best-selling console video game of 2013 in North America, Latin America and Europe combined.** To date, Grand Theft Auto V has sold-in more than 33 million units.
  • Released several updates for Grand Theft Auto Online, including The Business Update, which provided a suite of new vehicles, weapons and character customizations; The High Life Update, featuring high-end properties, more new vehicles and an array of new Jobs; and The Valentine’s Day Massacre Special, which offered limited-edition 1920’s gangster-themed content.
  • Released Grand Theft Auto: San Andreas for select Android, Kindle and Windows Phone devices.

2K:

  • Released XCOM®: Enemy Unknown – The Complete Edition for PC and Mac, which includes the original 2012 Game of the Year award-winning title plus the critically acclaimed expansion, XCOM: Enemy Within, along with all of the released add-on content in one package.
  • Released Sid Meier’s Civilization V: The Complete Edition for PC, which includes the original 2010 Game of the Year award-winning strategy title plus the two critically-acclaimed expansion packs, Gods & Kings and Brave New World, and all of the released add-on content in one package.
  • Announced that Oklahoma City Thunder superstar, four-time NBA scoring champion, and recently crowned 2014 NBA Most Valuable Player, Kevin Durant, will make his solo cover debut on NBA 2K15, the next installment of the top-selling and top-rated NBA video game simulation franchise.*** NBA 2K15 is planned for launch on October 7, 2014 in North America and October 10, 2014 internationally on the PS3, PS4, Xbox 360, Xbox One and PC.
  • Announced that Sid Meier’s Civilization: Beyond Earth™, a new science fiction-themed entry in the award-winning Civilization franchise, is currently in development by Firaxis Games and is planned for release this fall for PC, Mac and Linux.
  • Announced that Borderlands: The Pre-Sequel™, an all-new standalone Borderlands game set in between the award-winning Borderlands and Borderlands 2, is currently in co-development by Gearbox Software and 2K Australia and is planned for launch this fall on the Xbox 360, PS3 and PC.
  • Announced that Evolve™ is planned for launch on the Xbox One, PS4 and PC in fall 2014. Developed by Turtle Rock Studios, the renowned creators of Left 4 Dead, Evolve is an all-new shooter that blends cooperative and competitive multiplayer experiences.

* Based on dollar-value of retail sales, according to data from The NPD Group’s Retail Tracking Service and International Development Group.

** According to data from The NPD Group’s Retail Tracking Service, International Development Group, and GfK Chart-Track.

*** According to 2008 - 2014 Metacritic.com and The NPD Group estimates of U.S. retail video game sales through March 2014.

Financial Outlook for Fiscal 2015

Take-Two is providing its initial financial outlook for its fiscal first quarter ending June 30, 2014 and fiscal year ending March 31, 2015 as follows:

   

First Quarter

   

Fiscal Year

Ending 6/30/2014

   

Ending 3/31/2015

 

Non-GAAP Net Revenue

$120 to $135 Million

$1.35 to $1.45 Billion

 

Non-GAAP net income (loss) per diluted share

($0.35) to ($0.25)

$0.80 to $1.05

 

Net effect from deferral in net revenues and related cost of goods sold

$0.10

$0.00

 

Stock-based compensation expense per share (1)

$0.09

$0.29

 

Business reorganization, restructuring and related expenses

$0.01

$0.01

 

Non-cash amortization of discount on convertible notes per share

$0.05

$0.13

 

Non-cash tax expense per share

$0.01

$0.02

 

 

1)

 

The Company's stock-based compensation expense for the periods above includes the cost of approximately 1.8 million restricted shares previously granted to ZelnickMedia that are subject to variable accounting. Actual expense to be recorded in connection with these shares is dependent upon several factors, including future changes in Take-Two's stock price.

 

Key assumptions and dependencies underlying the Company’s financial outlook include: the timely delivery of the titles included in this financial outlook, which includes both announced and unannounced releases; continued consumer acceptance of the Xbox One and PS4; the ability to develop and publish products that capture market share for these next-generation systems while continuing to leverage opportunities on the Xbox 360, PS3 and PC; and stable foreign exchange rates. See also “Cautionary Note Regarding Forward Looking Statements” below.

Product Releases

             

The following titles were released since January 1, 2014:

 

Label

     

Title

   

Platforms

   

Release Date

2K

WWE 2K14: WWE Legends and Creations Pack (DLC)

Xbox 360, PS3

January 7, 2014

Rockstar Games

Grand Theft Auto: San Andreas

Android, Kindle

January 7, 2014

Rockstar Games

Grand Theft Auto: San Andreas

Windows Phone

January 27, 2014

2K

Sid Meier’s Civilization V: The Complete Edition

PC

February 4, 2014

2K

Borderlands 2 & Dishonored™ Bundle

Xbox 360, PS3

February 11, 2014

2K

The Elder Scrolls® V: Skyrim & BioShock Infinite Bundle

Xbox 360, PS3

February 11, 2014

2K

Borderlands 2 Headhunter 4: Mad Moxxi Wedding Day Massacre (DLC)

Xbox 360, PS3, Windows PC, Mac

February 11, 2014

2K

XCOM: Enemy Unknown: The Complete Edition

PC, Mac

March 4, 2014*

2K

BioShock Infinite: Burial at Sea – Episode 2 (DLC)

Xbox 360, PS3, PC

March 25, 2014

2K

Borderlands 2 Headhunter 5: Sir Hamerlock Versus the Son of Crawmermax (DLC)

Xbox 360, PS3, Windows PC, Mac

April 15, 2014

2K

XCOM: Enemy Unknown

Android Devices

April 24, 2014

 

*North American release date; international release date typically follows three days after.

 
             

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

 

Label

     

Title

   

Platforms

   

Release Date

2K

NBA 2K15

Xbox 360, Xbox One, PS3, PS4, PC

October 7, 2014*

2K

Borderlands: The Pre-Sequel

Xbox 360, PS3, Windows PC

Fall 2014

2K

Sid Meier’s Civilization: Beyond Earth

Windows PC, Mac, Linux

Fall 2014

2K

Evolve

Xbox One, PS4, PC

Fall 2014

2K

WWE 2K15

TBA

Fiscal 2015

 

*North American release date; international release date typically follows three days after.

 

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. 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 the impact of certain items as follows:

  • Net effect from deferral in net revenues and related cost of goods sold - the Company defers revenue and related costs from the sale of certain titles that have undelivered elements upon the sale of the game and recognizes that revenue upon the delivery of the undelivered elements. As there is no impact to the Company’s operating cash flow, management excludes the impact of deferred net revenue and related costs from its Non-GAAP financial measures when evaluating the Company's operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team. In addition, we believe that these Non-GAAP financial measures provide a more timely indication of trends in our business, provide comparability with the way our business is measured by analysts, and provide consistency with industry data sources.
  • 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. As a result, the Company has excluded such expenses from its Non-GAAP financial measures.
  • Business reorganization, restructuring and related expenses – although the Company has incurred business reorganization expenses in the past, each charge relates to a discrete event based on a unique set of business objectives. Management does not believe these charges reflect the Company's primary business, ongoing operating results or future outlook. As such, the Company believes it is appropriate to exclude these expenses and related charges from its Non-GAAP financial measures.
  • Non-cash amortization of discount on convertible notes – the Company records non-cash amortization of discount on convertible notes as interest expense 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.
  • Loss on extinguishment of debt – the Company recorded a loss on extinguishment of debt as a result of settling its 4.375% Convertible Notes in August 2013. The Company excludes the impact of such transactions when evaluating the Company’s operating performance. Management does not believe this loss reflects the Company's primary business, ongoing operating results or future outlook. As such, the Company believes it is appropriate to exclude this loss from its Non-GAAP financial measures.
  • Gain on convertible note hedge and warrants, net – the Company entered into unwind agreements with respect to its convertible note hedge and warrant transactions. As a result of the unwind agreements, these transactions were accounted for as derivatives whereby gains and losses resulting from changes in the fair value were reported in gain on convertible note hedge and warrants, net. The Company excludes the impact of such transactions when evaluating the Company’s operating performance. Management does not believe these gains and losses reflect the Company's primary business, ongoing operating results or future outlook. As such, the Company believes it is appropriate to exclude these gains and losses from its Non-GAAP financial measures.
  • Non-cash tax expense for the impact of deferred tax liabilities associated with tax deductible amortization of goodwill – 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.
  • 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.

These Non-GAAP financial measures 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.

About Take-Two Interactive Software

Headquartered in New York City, Take-Two Interactive Software, Inc. is a leading developer, marketer and publisher of interactive entertainment for consumers around the globe. The Company develops and publishes products through its two wholly-owned labels Rockstar Games and 2K. Our products are designed for console systems, handheld gaming systems and personal computers, including smartphones and tablets, and are delivered through physical retail, digital download, online platforms and cloud streaming services. 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 http://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 and next-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 March 31, 2013, in the section entitled "Risk Factors," the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2013, 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
   
Three months ended March 31, Twelve months ended March 31,
  2014     2013     2014     2013  
 
 
Net revenue $ 195,208   $ 299,487   $ 2,350,568   $ 1,214,483  
 
Cost of goods sold:
Internal royalties 28,233 15,463 538,604 24,724
Product costs 39,022 71,479 477,861 316,072
Software development costs and royalties 28,299 57,576 333,450 317,756
Licenses   12,734     9,802     64,412     57,285  
Total cost of goods sold   108,288     154,320     1,414,327     715,837  
 
Gross profit 86,920 145,167 936,241 498,646
 
Selling and marketing 27,577 51,747 240,996 257,329
General and administrative 50,773 40,369 161,374 147,260
Research and development 28,632 21,183 105,256 78,184
Depreciation and amortization   3,522     2,806     13,359     10,634  
Total operating expenses   110,504     116,105     520,985     493,407  
(Loss) income from operations (23,584 ) 29,062 415,256 5,239
Interest and other, net (7,535 ) (7,789 ) (33,553 ) (31,351 )
Loss on extinguishment of debt - - (9,014 ) -
Gain on convertible note hedge and warrants, net     -     -     3,461     -  
(Loss) income from continuing operations before income taxes (31,119 ) 21,273 376,150 (26,112 )
(Benefit) provision for income taxes   (345 )   103     14,459     5,050  
(Loss) income from continuing operations (30,774 ) 21,170 361,691 (31,162 )
(Loss) income from discontinued operations, net of taxes   (13 )   1,303     (86 )   1,671  
Net (loss) income $ (30,787 ) $ 22,473   $ 361,605   $ (29,491 )
 
Earnings (loss) per share:
Continuing operations $ (0.40 ) $ 0.23 $ 3.79 $ (0.36 )
Discontinued operations   -     0.01     -     0.02  
Basic earnings (loss) per share $ (0.40 ) $ 0.24   $ 3.79   $ (0.34 )
 
Continuing operations $ (0.40 ) $ 0.23 $ 3.20 $ (0.36 )
Discontinued operations   -     0.01     -     0.02  
Diluted earnings (loss) per share $ (0.40 ) $ 0.24   $ 3.20   $ (0.34 )
 
Weighted average shares outstanding:        
Basic 77,000 93,698 95,347 85,581
Diluted   77,000     93,698     124,710     85,581  
 
Computation of Basic EPS:
Net (loss) income $ (30,787 ) $ 22,473   $ 361,605   $ (29,491 )
Less: net income allocated to participating securities   -     (1,804 )   (41,065 )   -  
Net (loss) income for basic EPS calculation $ (30,787 ) $ 20,669   $ 320,540   $ (29,491 )
 
Total weighted average shares outstanding - basic 77,000 93,698 95,347 85,581
Less: weighted average participating shares outstanding   -     (7,521 )   (10,828 )   -  
Weighted average common shares outstanding - basic   77,000     86,177     84,519     85,581  
       
Basic EPS $ (0.40 ) $ 0.24   $ 3.79   $ (0.34 )
 
Computation of Diluted EPS:
Net (loss) income $ (30,787 ) $ 22,473 $ 361,605 $ (29,491 )
Less: net income allocated to participating securities - (1,804 ) (31,397 ) -
Add: interest expense, net of tax, on Convertible Notes   -     -     33,718     -  
Net (loss) income for diluted EPS calculation $ (30,787 ) $ 20,669   $ 363,926   $ (29,491 )
 
Weighted average shares outstanding - basic 77,000 86,177 84,519 85,581
Add: dilutive effect of common stock equivalents   -     -     29,363     -  
Weighted average common shares outstanding - diluted   77,000     86,177     113,882     85,581  
       
Diluted EPS $ (0.40 ) $ 0.24   $ 3.20   $ (0.34 )
 
 
 
Three months ended March 31, Twelve months ended March 31,

OTHER INFORMATION

  2014     2013     2014     2013  
 
Geographic revenue mix
United States 57 % 60 % 47 % 59 %
International 43 % 40 % 53 % 41 %
 
Platform revenue mix
Console 79 % 80 % 92 % 80 %
PC and other 21 % 19 % 8 % 18 %
Handheld 0 % 1 % 0 % 2 %
 
Net revenue by distribution channel:
Physical retail and other 57 % 74 % 84 % 79 %
Digital online 43 % 26 % 16 % 21 %
 

   
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
   
March 31, March 31,
  2014     2013  
 
ASSETS
Current assets:
Cash and cash equivalents $ 935,400 $ 402,502
Restricted cash 193,839 7,489

Accounts receivable, net of allowances of $75,518 and $64,081 at March 31, 2014 and 2013, respectively

53,143 189,596
Inventory 29,780 30,218
Software development costs and licenses 116,203 198,955
Prepaid expenses and other   71,075     37,392  
Total current assets   1,399,440     866,152  
 
Fixed assets, net 42,572 25,362
Software development costs and licenses, net of current portion 109,506 95,241
Goodwill 226,705 225,992
Other intangibles, net 5,113 8,827
Other assets   16,294     56,265  
Total assets $ 1,799,630   $ 1,277,839  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,452 $ 79,932
Accrued expenses and other current liabilities 396,617 228,916
Deferred revenue 61,195 26,919
Liabilities of discontinued operations   556     1,232  
Total current liabilities   474,820     336,999  
 
Long-term debt 454,031 335,202
Other long-term liabilities 68,973 17,087
Liabilities of discontinued operations, net of current portion   -     556  
Total liabilities   997,824     689,844  
Commitments and contingencies
 
Stockholders' equity:
Preferred stock, $.01 par value, 5,000 shares authorized - -
Common stock, $.01 par value, 200,000 shares authorized; 105,156 and 93,743 shares
issued and 88,918 and 93,743 outstanding at March 31, 2014 and March 31, 2013, respectively 1,052 937
Additional paid-in capital 954,699 832,460
Treasury stock, at cost (16,238 common shares at March 31, 2014) (276,836 ) -
Retained earnings (accumulated deficit) 120,775 (240,830 )
Accumulated other comprehensive income (loss)   2,116     (4,572 )
Total stockholders' equity   801,806     587,995  
Total liabilities and stockholders' equity $ 1,799,630   $ 1,277,839  
 
   
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)
 
Twelve months ended March 31,
  2014         2013  
 
Operating activities:
Net income (loss) $ 361,605 $ (29,491 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization and impairment of software development costs and licenses 265,533 230,748
Depreciation and amortization 13,359 10,634
Loss (income) from discontinued operations 86 (1,671 )
Amortization and impairment of intellectual property 3,558 7,000
Stock-based compensation 78,118 35,765
Deferred income taxes (19,036 ) (841 )
Amortization of discount on Convertible Notes 22,801 18,862
Amortization of debt issuance costs 1,947 2,021
Loss on extinguishment of debt 9,014 -
Gain on convertible note hedge and warrants, net (3,461 ) -
Other, net (208 ) 778
Changes in assets and liabilities, net of effect from purchases of businesses:
Restricted cash (186,350 ) 8,975
Accounts receivable 136,453 (144,561 )
Inventory 438 (7,741 )
Software development costs and licenses (192,357 ) (216,893 )
Prepaid expenses, other current and other non-current assets (18,424 ) (14,669 )
Deferred revenue 34,276 13,055
Accounts payable, accrued expenses and other liabilities 194,228 83,734
Net cash used in discontinued operations   (1,318 )   (272 )
Net cash provided by (used in) operating activities   700,262     (4,567 )
 
Investing activities:
Purchase of fixed assets (29,813 ) (16,820 )
Payments in connection with business combinations, net of cash acquired   (1,000 )   -  
Net cash used in investing activities   (30,813 )   (16,820 )
 
Financing activities:
Repurchase of common stock (276,836 ) -
Proceeds from issuance of 1.00% Convertible Notes 283,188 -
Payment for extinguishment of 4.375% Convertible Notes (165,999 ) -
Proceeds from termination of convertible note hedge transactions 84,429 -
Payment for termination of convertible note warrant transactions (55,651 ) -
Payment of debt issuance costs   (2,815 )   -  
Net cash used in financing activities   (133,684 )   -  
 
Effects of foreign exchange rates on cash and cash equivalents   (2,867 )   3,610  
 
Net increase (decrease) in cash and cash equivalents 532,898 (17,777 )
Cash and cash equivalents, beginning of period   402,502     420,279  
Cash and cash equivalents, end of period $ 935,400   $ 402,502  
 
           
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
RECONCILIATION OF GAAP TO Non-GAAP MEASURES (Unaudited)
(in thousands, except per share amounts)
     
 
Three months ended March 31, Twelve months ended March 31,
  2014     2013     2014     2013  
Net Revenues
GAAP Net Revenues $ 195,208 $ 299,487 $ 2,350,568 $ 1,214,483
Net effect from deferral in net revenues   37,947     3,641     63,152     7,824  
Non-GAAP Net Revenues $ 233,155   $ 303,128   $ 2,413,720   $ 1,222,307  
 
Digital Online Revenues (included in Net Revenues above)
GAAP Digital Online Revenues $ 84,391 $ 77,138 $ 371,970 $ 256,128
Net effect from deferral in digital online revenues   37,947     3,641     63,152     7,824  
Non-GAAP Digital Online Revenues $ 122,338   $ 80,779   $ 435,122   $ 263,952  
 
Gross Profit
GAAP Gross Profit $ 86,920 $ 145,167 $ 936,241 $ 498,646
Net effect from deferral in net revenues and related cost of goods sold 23,442 3,109 36,179 6,720
Stock-based compensation   948     2,026     30,124     10,060  
Non-GAAP Gross Profit $ 111,310   $ 150,302   $ 1,002,544   $ 515,426  
 
Income from Operations
GAAP (Loss) Income from Operations $ (23,584 ) $ 29,062 $ 415,256 $ 5,239
Net effect from deferral in net revenues and related cost of goods sold 23,442 3,109 36,179 6,720
Stock-based compensation 20,524 12,987 78,118 35,765
Business reorganization, restructuring and related   2,560     116     4,490     874  
Non-GAAP Income from Operations $ 22,942   $ 45,274   $ 534,043   $ 48,598  
 
Net Income (Loss)
GAAP Net (Loss) Income $ (30,787 ) $ 22,473 $ 361,605 $ (29,491 )
Net effect from deferral in net revenues and related cost of goods sold 23,442 3,109 36,179 6,720
Stock-based compensation 20,524 12,987 78,118 35,765
Business reorganization, restructuring and related 2,560 116 4,490 874
Non-cash amortization of discount on Convertible Notes 5,294 4,891 22,801 18,862
Loss on extinguishment of debt - - 9,014 -
Gain on convertible note hedge and warrants, net - - (3,461 ) -
Non-cash tax expense 447 582 1,890 2,020
Discontinued operations   13     (1,303 )   86     (1,671 )
Non-GAAP Net Income $ 21,493   $ 42,855   $ 510,722   $ 33,079  
 
Diluted Earnings (Loss) Per Share
GAAP earnings (loss) per share $ (0.40 ) $ 0.24 $ 3.20 $ (0.34 )
Non-GAAP earnings per share $ 0.21 $ 0.38 $ 4.26 $ 0.36
 
Number of diluted shares used in computation
GAAP 77,000 93,698 124,710 85,581
Non-GAAP 115,627 119,719 122,608 92,292
 
 
Computation of Diluted GAAP EPS:
Net (loss) income $ (30,787 ) $ 22,473 $ 361,605 $ (29,491 )
Less: net income allocated to participating securities - (1,804 ) (31,397 ) -
Add: interest expense, net of tax, on Convertible Notes   -     -     33,718     -  
Net (loss) income for diluted EPS calculation $ (30,787 ) $ 20,669   $ 363,926   $ (29,491 )
 
Total weighted average shares outstanding - basic 77,000 93,698 95,347 85,581
Add: dilutive effect of common stock equivalents   -     -     29,363     -  
Total weighted average shares outstanding - diluted 77,000 93,698 124,710 85,581
Less: weighted average participating shares outstanding   -     (7,521 )   (10,828 )   -  
Weighted average common shares outstanding - diluted 77,000 86,177 113,882 85,581
       
Diluted EPS $ (0.40 ) $ 0.24   $ 3.20   $ (0.34 )
 
 
Computation of Diluted Non-GAAP EPS:
Net income $ 21,493 $ 42,855 $ 510,722 $ 33,079
Less: net income allocated to participating securities (2,224 ) (3,440 ) (45,104 ) (2,405 )
Add: interest expense, net of tax, on Convertible Notes   2,204     3,058     10,917     -  
Net income for diluted EPS calculation $ 21,473   $ 42,473   $ 476,535   $ 30,674  
 
Total weighted average shares outstanding - basic 88,964 93,698 96,043 92,292
Add: dilutive effect of common stock equivalents   26,663     26,021     26,565     -  
Total weighted average shares outstanding - diluted 115,627 119,719 122,608 92,292
Less: weighted average participating shares outstanding   (11,964 )   (7,521 )   (10,828 )   (6,711 )
Weighted average common shares outstanding - diluted 103,663 112,198 111,780 85,581
       
Diluted EPS $ 0.21   $ 0.38   $ 4.26   $ 0.36  

Source: Take-Two Interactive

Take-Two Interactive Software, Inc.
Investor Relations:
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Senior Vice President
Investor Relations & Corporate Communications
Henry.Diamond@take2games.com
or
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Alan.Lewis@take2games.com