Take-Two News Release

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Take-Two Interactive Software, Inc. Reports Stronger-Than-Expected Results for Fiscal Year 2016
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GAAP Net Revenue Grew 31% to $1.414 Billion

Non-GAAP Net Revenue was $1.561 Billion

GAAP Net Loss Narrowed to $0.10 Per Diluted Share

Non-GAAP Net Income Was $1.96 Per Diluted Share

NEW YORK--(BUSINESS WIRE)--May 18, 2016-- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported stronger-than-expected financial results for its fourth quarter and fiscal year 2016, ended March 31, 2016, and provided its initial financial outlook for its first quarter and fiscal year 2017.

Fiscal Fourth Quarter 2016

GAAP Financial Results

For fiscal fourth quarter 2016, GAAP net revenue grew to $377.2 million, as compared to $300.1 million for fiscal fourth quarter 2015. GAAP net income increased to $46.4 million, or $0.48 per diluted share, as compared to GAAP net loss of $242.8 million, or $2.99 per diluted share, for the year-ago period. GAAP net income for fiscal fourth quarter 2016 reflects $14.2 million in tax benefits related to video game development costs. GAAP net revenue from digitally-delivered content grew 35% year-over-year to $194.8 million.

During fiscal fourth quarter 2016, the Company’s cash and short-term investments balance increased to $1.270 billion as of March 31, 2016, up from $1.215 billion as of December 31, 2015.

Non-GAAP Financial Results

For fiscal fourth quarter 2016, Non-GAAP net revenue was $342.5 million, as compared to $427.7 million for fiscal fourth quarter 2015, which had benefited from the launch of Evolve™ and ongoing sales from the Company’s more extensive holiday 2014 release slate. Non-GAAP net income was $51.7 million, or $0.46 per diluted share, as compared to $54.3 million, or $0.49 per diluted share, for the year-ago period. Non-GAAP net income for fiscal fourth quarter 2016 reflects $5.4 million in tax benefits related to video game development costs.

The largest contributors to Non-GAAP net revenue in fiscal fourth quarter 2016 were Grand Theft Auto V® and Grand Theft Auto Online, NBA® 2K16, XCOM® 2 and WWE® 2K16. Non-GAAP net revenue from digitally-delivered content grew 12% year-over-year to $226.6 million, led by Grand Theft Auto, NBA 2K, XCOM 2, and WWE 2K. Revenue from recurrent consumer spending (virtual currency, downloadable add-on content and online games) grew 15% year-over-year and accounted for 55% of Non-GAAP net revenue from digitally-delivered content, or 37% of total Non-GAAP net revenue. Catalog sales accounted for $211.3 million of Non-GAAP net revenue led by the Grand Theft Auto and Borderlands series.

Fiscal Year 2016

GAAP Financial Results

For fiscal year 2016, GAAP net revenue increased to $1.414 billion, as compared to $1.083 billion for fiscal year 2015. GAAP net loss narrowed to $8.3 million, or $0.10 per diluted share, as compared to $279.5 million, or $3.48 per diluted share, for the prior fiscal year. GAAP net loss for fiscal year 2016 reflects business reorganization charges of $71.3 million, partially offset by $37.8 million in tax benefits related to video game development costs. GAAP net revenue from digitally-delivered content grew 53% year-over-year to a record $697.7 million

Non-GAAP Financial Results

For fiscal year 2016, Non-GAAP net revenue was $1.561 billion, as compared to $1.669 billion for fiscal year 2015, which had benefited from a more extensive release slate. Non-GAAP net income was $218.3 million, or $1.96 per diluted share, as compared to $219.2 million, or $1.98 per diluted share, for the prior fiscal year. Non-GAAP net income for fiscal year 2016 reflects $37.6 million in tax benefits related to video game development costs.

The largest contributors to Non-GAAP net revenue in fiscal year 2016 were Grand Theft Auto V and Grand Theft Auto Online, NBA 2K16, WWE 2K16, NBA 2K15, and XCOM 2. Non-GAAP net revenue from digitally-delivered content grew 36% year-over-year to a record $835.2 million, led by Grand Theft Auto, NBA 2K, Borderlands, XCOM 2 and WWE 2K. Revenue from recurrent consumer spending grew 33% year-over-year and accounted for 48% of Non-GAAP net revenue from digitally-delivered content, or 26% of total Non-GAAP net revenue.

Management Comments

“Fiscal 2016 marked the third consecutive year of stronger-than-expected Non-GAAP revenues and profits for Take-Two,” said Strauss Zelnick, Chairman and CEO of Take-Two. “Our results were driven by the continued extraordinary performance of Grand Theft Auto V, ongoing momentum in our NBA 2K and WWE 2K series, the successful launch of XCOM 2, and our highest-ever revenue from recurrent consumer spending.

“Fiscal 2017 is poised to be another strong year for Take-Two, with anticipated Non-GAAP earnings in excess of $1.00 per share. Our diverse lineup includes the new intellectual property Battleborn, which we released earlier this month, and the eagerly anticipated upcoming launches of Mafia III, Sid Meier’s Civilization VI, NBA 2K17 and WWE 2K17. We plan to support these titles with innovative offerings designed to promote ongoing engagement and drive recurrent consumer spending. Looking ahead, we expect to grow Non-GAAP revenues and earnings in fiscal 2018, based on our robust development plan that extends well beyond the current fiscal year. Rockstar Games is of course hard at work on some exciting future projects that will be revealed soon.”

Business and Product Highlights

Since January 1, 2016:

Rockstar Games:

  • Released new free content updates for Grand Theft Auto Online, including:
    • A May 3, 2016 update featuring the new ‘In & Out’ Adversary Mode and more.
    • GTA Online Lowriders: Custom Classics, featuring two new upgradeable muscle cars plus an additional upgrade style for an existing lowrider, new weapons, clothing and tattoos, as well as the “Sumo” Adversary Mode.
    • Grand Theft Auto Online: Be My Valentine, featuring an updated Albany Roosevelt classic car, new clothes and accessories, the couples-based “Till Death Do Us Part” Adversary Mode, along with the return of all content from the previous Valentine's Day update.
    • A January 28, 2016 update featuring the new “Drop Zone” Adversary Mode, two new high-end vehicles and additional improvements to Grand Theft Auto Online.
  • Released Grand Theft Auto: Liberty City Stories for Android devices. Originally designed with mobile gameplay in mind, Grand Theft Auto: Liberty City Stories is also available for select iOS devices.
  • Rockstar Games also is hard at work on some exciting future projects that will be revealed soon.

2K:

  • Entered into a new multi-year partnership agreement with WWE granting 2K the exclusive worldwide rights to develop and publish WWE video game properties across all major platforms and distribution channels.
  • Launched Battleborn™, a groundbreaking new title from the creators of Borderlands at Gearbox Software, on PlayStation 4, Xbox One and PC. Battleborn is being supported with a rich array of both free and paid additional content, including a Season Pass, as well as the free-to-play Battleborn Tap companion App, which mirrors the game’s progression and loot system.
  • Launched the physical release of Tales from the Borderlands, the critically acclaimed and award-winning episodic adventure game from Telltale Games, on PlayStation 4, PlayStation 3, Xbox One, Xbox 360 and PC.
  • Released WWE 2K16 on Windows PC. Developed collaboratively by Yukes and Visual Concepts, WWE 2K16 is being supported with downloadable add-on content, including a Season Pass, and is also available on Xbox One, Xbox 360, PlayStation 4 and PlayStation 3.
  • Launched XCOM 2, the sequel to the Game of the Year award-winning strategy title XCOM: Enemy Unknown, for PC. Developed by Firaxis Games, XCOM 2 received outstanding review scores, with IGN awarding it a 9.3 out of 10 and saying, “XCOM 2 is an amazing game”, along with PC Gamer writing, “We’ll play this forever,” and awarding it a 94% out of 100%. Game Informer Magazine also wrote that XCOM 2 is “one of the deepest and most rewarding strategy games on the market” and awarded it a 9.5 out of 10. XCOM 2 is being supported with an array of downloadable add-on content, including the now available Anarchy’s Children and Alien Hunters packs, adding even more customization options and replayability.
  • Announced that Sid Meier’s Civilization VI, the next entry in the award-winning turn-based strategy franchise that has sold-in over 34 million units, is currently in development for PC at Firaxis Games and planned for launch on October 21, 2016. Sid Meier’s Civilization VI will offer players new ways to engage with their world, advance their culture, expand their empire across the map, and play amongst history’s greatest leaders to build a civilization that will stand the test of time.
  • Announced that Mafia® III, the next installment in 2K’s successful organized crime series that is currently in development at Hangar 13, is planned for launch on October 7, 2016 for Xbox One, PlayStation 4 and PC. Collector’s, deluxe and standard editions of Mafia III will be available for all three platforms, and those who pre-order any edition of Mafia III will receive the Family Kick-Back, which includes three exclusive vehicles and weapons available to players at launch.

Financial Outlook for Fiscal 2017

Take-Two is providing its initial financial outlook for its fiscal first quarter ending June 30, 2016 and fiscal year ending March 31, 2017 as follows:

   

First Quarter

 

Fiscal Year

Ending 6/30/2016

 

Ending 3/31/2017

 

Non-GAAP net revenue

$225 to $260 Million

$1.5 to $1.6 Billion

 

Non-GAAP net income (loss) per diluted share (1)

($0.40) to ($0.30)

$1.00 to $1.25

 

GAAP to Non-GAAP Reconciling Items (2):

 

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

($1.39) ($3.64)
 

Stock-based compensation expense (3)

$0.14 $0.43
 

Non-cash amortization of discount on convertible notes

$0.05

$0.14

 

Non-cash tax expense

$0.01 $0.00
 

1)

For the fiscal year ending March 31, 2017, our Non-GAAP net income per diluted share outlook is calculated using the “if-converted” method as a result of the issuances of our 1.75% Convertible Notes in November 2011 and 1.00% Convertible Notes in June 2013, and Non-GAAP diluted net income for the fiscal year is adjusted by adding-back $4.4 million related to coupon interest and debt issuance costs, net of tax. Shares used to calculate our Non-GAAP net income per diluted share outlook are as follows:

 

Weighted average basic shares

86.5 Million

92.5 Million

Add: Weighted average participating shares

-

2.5 Million

Add: Potential Dilution from convertible notes

-

22.0 Million

Total weighted average diluted shares

86.5 Million

117.0 Million

 

2)

All GAAP to Non-GAAP reconciling items are net of tax and per share.

3)

The Company's stock-based compensation expense for the periods above includes the cost of approximately 0.9 million restricted stock units 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; continued consumer acceptance of the Xbox One and PlayStation 4; the ability to develop and publish products that capture market share for these new-generation systems while continuing to leverage opportunities on the Xbox 360, PlayStation 3 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, 2016:

Label

   

Title

   

Platforms

   

Release Date

2K    

WWE 2K16: Future Stars Pack (DLC)

    Xbox 360, Xbox One, PS3, PS4     January 26, 2016
2K

XCOM 2

PC, Mac, Linux February 5, 2016
Rockstar Games

Grand Theft Auto: Liberty City Stories

Android February 11, 2016
2K

WWE 2K16: 2015 Hall of Fame Showcase (DLC)

Xbox 360, Xbox One, PS3, PS4 February 23, 2016
2K

WWE 2K16

PC March 11, 2016
2K

XCOM 2: Anarchy’s Children (DLC)

PC, Mac, Linux March 17, 2016
2K

XCOM: Enemy Unknown Plus

PlayStation Vita March 22, 2016
2K

Civilization Revolution 2 Plus

PlayStation Vita March 29, 2016
2K

Tales from the Borderlands

Xbox 360, Xbox One, PS3, PS4, PC April 26, 2016
2K

Battleborn

Xbox One, PS4, PC

May 3, 2016

2K

Battleborn Tap

iOS, Android May 3, 2016
2K

XCOM 2: Alien Hunters (DLC)

PC May 12, 2016
 

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

 

Label

   

Title

   

Platforms

   

Release Date

2K

NBA 2K17

Xbox 360, Xbox One, PS3, PS4, PC

September 2016

2K

Mafia III

Xbox One, PS4, PC

October 7, 2016

2K

Sid Meier’s Civilization VI

PC

October 21, 2016

2K

WWE 2K17

TBA

October 2016

 

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 following Non-GAAP items, net of applicable taxes, as discussed below:

  • 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 when our post-contract customer support obligations are determined to be significant and we cannot establish fair value for that deliverable. The Company also defers revenue from the sale of virtual currency. These amounts are deferred over the estimated remaining life of the game to which they pertain. 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 – 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.
  • 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.
  • Gain on long-term investment, net – from time to time, the Company makes strategic investments. The Company excludes the impact of any gains and losses on such investments 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. In the future, Take-Two may also consider whether other items should also be excluded in calculating the Non-GAAP financial measures used by the Company. Management believes that the presentation of these Non-GAAP financial measures provides investors with additional useful information to measure Take-Two's financial and operating performance. In particular, the measures facilitate comparison of operating performance between periods and help investors to better understand the operating results of Take-Two by excluding certain items that may not be indicative of the Company's core business, operating results or future outlook. Internally, management may use these Non-GAAP financial measures in assessing the company's operating results and in planning and forecasting. In addition to the Non-GAAP financial measures provided in this press release, see the Company’s website for additional information regarding our non-GAAP results.

Final Results

The financial results discussed herein are presented on a preliminary basis; final data will be included in Take-Two’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016.

About Take-Two Interactive Software

Headquartered in New York City, Take-Two Interactive Software, Inc. is a leading developer, publisher and marketer 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 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, the timely release and significant market acceptance of our games, the ability to maintain acceptable pricing levels on our games, and risks associated with international operations. Other important factors and information are contained in the Company's most recent Annual Report on Form 10-K, including the risks summarized in the section entitled "Risk Factors," the Company’s most recent Quarterly Report on Form 10-Q, 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 (Unaudited)
(in thousands, except per share amounts)
       
Three months ended March 31, Twelve months ended March 31,
  2016     2015     2016     2015  
 
 
Net revenue $ 377,206   $ 300,089   $ 1,413,698   $ 1,082,938  
 
Cost of goods sold:
Internal royalties 72,552 271,907 328,610 306,717
Software development costs and royalties 71,352 86,752 223,512 231,615
Product costs 46,554 39,389 200,206 178,810
Licenses   18,999     12,634     61,545     77,725  
Total cost of goods sold   209,457     410,682     813,873     794,867  
 
Gross profit (loss) 167,749 (110,593 ) 599,825 288,071
 
Selling and marketing 38,020 52,467 198,309 235,341
General and administrative 44,395 38,202 192,452 175,093
Research and development 33,308 35,157 119,807 115,043
Business reorganization 113 - 71,285 -
Depreciation and amortization   7,338     5,934     28,800     21,057  
Total operating expenses   123,174     131,760     610,653     546,534  
Income (loss) from operations 44,575 (242,353 ) (10,828 ) (258,463 )
Interest and other, net (6,257 ) (7,204 ) (30,205 ) (31,893 )
Gain on long-term investments, net   2,683     -     2,683     17,476  
Income (loss) from operations before income taxes 41,001 (249,557 ) (38,350 ) (272,880 )
(Benefit from) provision for income taxes   (5,398 )   (6,766 )   (30,048 )   6,590  
Net income (loss) $ 46,399   $ (242,791 ) $ (8,302 ) $ (279,470 )
 
Earnings (loss) per share:
Basic earnings (loss) per share $ 0.54   $ (2.99 ) $ (0.10 ) $ (3.48 )
 
Diluted earnings (loss) per share $ 0.48   $ (2.99 )   (0.10 ) $ (3.48 )
 
Weighted average shares outstanding:        
Basic 86,375 81,085 83,417 80,367
Diluted   114,496     81,085     83,417     80,367  
 
Computation of Basic EPS:
Net income (loss) $ 46,399 $ (242,791 ) $ (8,302 ) $ (279,470 )
Less: net income allocated to participating securities   (1,447 )   -     -     -  
Net income (loss) for basic EPS calculation $ 44,952   $ (242,791 ) $ (8,302 ) $ (279,470 )
 
Weighted average shares outstanding - basic 86,375 81,085 $ 83,417 80,367
Less: weighted average participating shares outstanding   (2,694 )   -     -     -  
Weighted average common shares outstanding - basic   83,681     81,085   $ 83,417     80,367  
       
Basic EPS $ 0.54   $ (2.99 ) $ (0.10 ) $ (3.48 )
 
Computation of Diluted EPS:
Net income (loss) $ 46,399 $ (242,791 ) $ (8,302 ) $ (279,470 )
Less: net income allocated to participating securities (1,092 ) - - -
Add: interest expense, net of tax, on Convertible Notes   8,172     -     -     -  
Net income (loss) for diluted EPS calculation $ 53,479   $ (242,791 ) $ (8,302 ) $ (279,470 )
 
Weighted average common shares outstanding - basic 83,681 81,085 83,417 80,367
Add: dilutive effect of common stock equivalents   28,121     -     -     -  
Weighted average common shares outstanding - diluted   111,802     81,085     83,417     80,367  
       
Diluted EPS $ 0.48   $ (2.99 ) $ (0.10 ) $ (3.48 )
 
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
   
March 31, March 31,
  2016     2015  
 
ASSETS
Current assets:
Cash and cash equivalents $ 798,742 $ 911,120
Short-term investments 470,820 186,929
Restricted cash 261,169 169,678
Accounts receivable, net of allowances of $45,552 and $70,471 at March 31, 2016 and
2015, respectively 168,527 217,860
Inventory 15,888 20,051
Software development costs and licenses 178,387 163,385
Deferred cost of goods sold 98,474 56,779
Prepaid expenses and other   53,269     54,057  
Total current assets   2,045,276     1,779,859  
 
Fixed assets, net 77,127 69,792
Software development costs and licenses, net of current portion 214,831 124,329
Deferred cost of goods sold, net of current portion 17,915 19,869
Goodwill 217,080 217,288
Other intangibles, net 4,609 4,769
Other assets   13,439     12,167  
Total assets $ 2,590,277   $ 2,228,073  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,448 $ 38,789
Accrued expenses and other current liabilities 607,479 444,738
Deferred revenue   582,484     482,733  
Total current liabilities   1,220,411     966,260  
 
Long-term debt 497,935 473,030
Non-current deferred revenue 216,319 164,618
Other long-term liabilities   74,227     61,077  
Total liabilities   2,008,892     1,664,985  
Commitments and contingencies
 
Stockholders' equity:
Preferred stock, $.01 par value, 5,000 shares authorized - -
Common stock, $.01 par value, 200,000 shares authorized; 103,765 and 104,594 shares
issued and 86,573 and 88,356 outstanding at March 31, 2016 and 2015, respectively 1,038 1,046
Additional paid-in capital 1,088,628 1,028,197
Treasury stock, at cost; 17,192 and 16,238 common shares at March 31, 2016 and 2015, respectively (303,388 ) (276,836 )
Accumulated deficit (166,997 ) (158,695 )
Accumulated other comprehensive loss   (37,896 )   (30,624 )
Total stockholders' equity   581,385     563,088  
Total liabilities and stockholders' equity $ 2,590,277   $ 2,228,073  
 
 

TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

  Twelve months ended March 31,
  2016       2015  
 

Operating activities:

Net loss $ (8,302 ) $ (279,470 )
 
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization and impairment of software development costs and licenses 134,472 133,453
Depreciation and amortization 28,800 21,057
Amortization and impairment of intellectual property 160 344
Stock-based compensation 69,996 65,246
Deferred income taxes (270 ) 2,279
Amortization of discount on Convertible Notes 23,457 22,026
Amortization of debt issuance costs 1,567 1,663
Gain on of long-term investments, net (2,683 ) (17,476 )
Other, net 2,588 2,068
Changes in assets and liabilities:
Restricted cash (91,491 ) 24,161
Accounts receivable 49,348 (164,717 )
Inventory 3,809 9,729
Software development costs and licenses (219,217 ) (188,772 )
Prepaid expenses, other current and other non-current assets (12,272 ) 5,398
Deferred revenue 152,325 568,028
Deferred cost of goods sold (41,144 ) (70,788 )
Accounts payable, accrued expenses and other liabilities   170,162     78,585  
Net cash provided by operating activities   261,305     212,814  
 

Investing activities:

Change in bank time deposits (182,383 ) (87,500 )
Purchase of fixed assets (37,280 ) (49,501 )
Sale and maturities of available for sale securities 43,314 -
Purchase of available for sale securities (150,501 ) (100,116 )
Cash received from the sale of long-term investment 2,683 21,976
Purchase of long-term investment - (5,000 )
Other   (349 )   -  
Net cash used in investing activities   (324,516 )   (220,141 )
 

Financing activities:

Excess tax benefit from stock-based compensation 1,421 928
Tax payment related to net share settlements on restricted stock awards (22,916 ) -
Repurchase of common stock   (26,552 )   -  
Net cash (used in) provided by financing activities   (48,047 )   928  
 
Effects of foreign exchange rates on cash and cash equivalents   (1,120 )   (17,881 )
 
Net decrease in cash and cash equivalents (112,378 ) (24,280 )
Cash and cash equivalents, beginning of year   911,120     935,400  
Cash and cash equivalents, end of period $ 798,742   $ 911,120  
 
 
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,
  2016     2015     2016     2015  
Net Revenues
GAAP Net Revenues $ 377,206 $ 300,089 $ 1,413,698 $ 1,082,938
Net effect from deferral in net revenues   (34,694 )   127,647     146,928     585,827  
Non-GAAP Net Revenues $ 342,512   $ 427,736     1,560,626   $ 1,668,765  
 
Digital Online Revenues (included in Net Revenues above)
GAAP Digital Online Revenues $ 194,798 $ 144,612 $ 697,658 $ 455,299
Net effect from deferral in digital online revenues   31,829     57,920     137,563     160,675  
Non-GAAP Digital Online Revenues $ 226,627   $ 202,532   $ 835,221   $ 615,974  
 
Gross Profit
GAAP Gross Profit $ 167,749 $ (110,593 ) $ 599,825 $ 288,071
Net effect from deferral in net revenues and related cost of goods sold (11,043 ) 309,026 106,531 502,565
Stock-based compensation   2,388     6,059     15,323     17,121  
Non-GAAP Gross Profit   159,094   $ 204,492   $ 721,679   $ 807,757  
 
Income (Loss) from Operations
GAAP Income (Loss) from Operations $ 44,575 $ (242,353 ) $ (10,828 ) $ (258,463 )
Net effect from deferral in net revenues and related cost of goods sold (11,043 ) 309,026 106,531 502,565
Stock-based compensation 15,852 12,772 69,996 65,246
Impact of business reorganization   113     -     72,513     195  
Non-GAAP Income from Operations $ 49,497   $ 79,445   $ 238,212   $ 309,543  
 
Net Income (Loss)
GAAP Net Income (Loss) $ 46,399 $ (242,791 ) $ (8,302 ) $ (279,470 )
Net effect from deferral in net revenues and related cost of goods sold (9,529 ) 279,554 92,370 451,749
Stock-based compensation 13,109 11,450 48,061 36,206
Gain on long-term investments, net (2,683 ) - (2,683 ) (9,999 )
Impact of business reorganization 113 - 72,513 156
Non-cash amortization of discount on Convertible Notes 4,061 5,806 15,043 18,933
Non-cash tax expense   245     265     1,296     1,669  
Non-GAAP Net Income $ 51,715   $ 54,284   $ 218,298   $ 219,244  
 
Diluted Earnings (Loss) Per Share
GAAP earnings (loss) per share $ 0.48 $ (2.99 ) $ (0.10 ) $ (3.48 )
Non-GAAP earnings per share $ 0.46 $ 0.49 $ 1.96 $ 1.98
 
Number of diluted shares used in computation
GAAP 114,496 81,085 83,417 80,367
Non-GAAP 114,496 114,034 114,161 113,951
 
 
Computation of Diluted GAAP EPS:
Net income (loss) $ 46,399 $ (242,791 ) $ (8,302 ) $ (279,470 )
Less: net income allocated to participating securities (1,092 ) - - -
Add: interest expense, net of tax, on Convertible Notes   8,172     -     -     -  
Net income (loss) for diluted EPS calculation $ 53,479   $ (242,791 ) $ (8,302 ) $ (279,470 )
 
Weighted average shares outstanding - basic 86,375 81,085 83,417 80,367
Add: dilutive effect of common stock equivalents   28,121     -     -     -  
Total weighted average shares outstanding - diluted 114,496 81,085 83,417 80,367
Less: weighted average participating shares outstanding   (2,694 )   -     -     -  
Weighted average common shares outstanding - diluted 111,802 81,085 83,417 80,367
       
Diluted earnings (loss) per share $ 0.48   $ (2.99 ) $ (0.10 ) $ (3.48 )
 
 
Computation of Diluted Non-GAAP EPS:
Non-GAAP net income $ 51,715 $ 54,284 $ 218,298 $ 219,244
Less: net income allocated to participating securities (1,217 ) (3,091 ) (7,146 ) (13,716 )
Add: interest expense, net of tax, on Convertible Notes   1,390     1,375     5,579     5,515  
Net income for diluted earnings per share calculation $ 51,888   $ 52,568   $ 216,731   $ 211,043  
 
Weighted average shares outstanding - basic 86,375 87,579 87,154 87,496
Add: dilutive effect of common stock equivalents   28,121     26,455     27,007     26,455  
Total weighted average shares outstanding - diluted 114,496 114,034 114,161 113,951
Less: weighted average participating shares outstanding   (2,694 )   (6,494 )   (3,737 )   (7,129 )
Weighted average common shares outstanding - diluted 111,802 107,540 110,424 106,822
       
Diluted earnings per share $ 0.46   $ 0.49   $ 1.96   $ 1.98  
 
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue by Geographic Region, Distribution Channel, and Platform Mix
(in thousands)
           
Three Months Ended

March 31, 2016

Three Months Ended

March 31, 2015

Amount % of Total Amount % of Total
 
GAAP Net Revenues by Geographic Region
United States $ 196,037 52 % $ 164,657 55 %
International   181,169   48 %   135,432 45 %
Total GAAP net revenues   377,206   100 %   300,089 100 %
 
Change in Deferred Net Revenues
United States $ (4,159 ) $ 61,941
International   (30,535 )   65,706
Total changes in deferred net revenues   (34,694 )   127,647
 
Non-GAAP Net Revenues by Geographic Region
United States $ 191,878 56 % $ 226,598 53 %
International   150,634   44 %   201,138 47 %
Total non-GAAP net revenues $ 342,512   100 % $ 427,736 100 %
 
 
Three Months Ended

March 31, 2016

Three Months Ended

March 31, 2015

Amount % of Total Amount % of Total
 
GAAP Net Revenues by Distribution Channel
Physical retail and other $ 182,408 48 % $ 155,477 52 %
Digital online   194,798   52 %   144,612 48 %
Total GAAP net revenues   377,206   100 %   300,089 100 %
 
Change in Deferred Net Revenues
Physical retail and other $ (66,523 ) $ 69,727
Digital online   31,829     57,920
Total changes in deferred net revenues   (34,694 )   127,647
 
Non-GAAP Net Revenues by Distribution Channel
Physical retail and other $ 115,885 34 % $ 225,204 53 %
Digital online   226,627   66 %   202,532 47 %
Total non-GAAP net revenues $ 342,512   100 % $ 427,736 100 %
 
 
Three Months Ended

March 31, 2016

Three Months Ended

March 31, 2015

Amount % of Total Amount % of Total
GAAP Net Revenues by Platform Mix
Console $ 288,785 77 % $ 260,969 87 %
PC and other   88,421   23 %   39,120 13 %
Total GAAP net revenues   377,206   100 %   300,089 100 %
 
Change in Deferred Net Revenues
Console $ (30,253 ) $ 114,171
PC and other   (4,441 )   13,476
Total changes in deferred net revenues   (34,694 )   127,647
 
Non-GAAP Net Revenues by Platform Mix
Console $ 258,532 75 % $ 375,140 88 %
PC and other   83,980   25 %   52,596 12 %
Total non-GAAP net revenues $ 342,512   100 % $ 427,736 100 %
 
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue by Geographic Region, Distribution Channel, and Platform Mix
(in thousands)
           
Twelve Months Ended

March 31, 2016

Twelve Months Ended

March 31, 2015

Amount % of Total Amount % of Total
 
GAAP Net Revenues by Geographic Region
United States $ 742,963 53 % $ 623,080 58 %
International   670,735 47 %   459,858 42 %
Total GAAP net revenues   1,413,698 100 %   1,082,938 100 %
 
Change in Deferred Net Revenues
United States $ 97,770 $ 269,349
International   49,158   316,478
Total changes in deferred net revenues   146,928   585,827
 
Non-GAAP Net Revenues by Geographic Region
United States $ 840,733 54 % $ 892,429 53 %
International   719,893 46 %   776,336 47 %
Total non-GAAP net revenues $ 1,560,626 100 % $ 1,668,765 100 %
 
 
Twelve Months Ended

March 31, 2016

Twelve Months Ended

March 31, 2015

Amount % of Total Amount % of Total
 
GAAP Net Revenues by Distribution Channel
Physical retail and other $ 716,040 51 % $ 627,639 58 %
Digital online   697,658 49 %   455,299 42 %
Total GAAP net revenues   1,413,698 100 %   1,082,938 100 %
 
Change in Deferred Net Revenues
Physical retail and other $ 9,365 $ 425,152
Digital online   137,563   160,675
Total changes in deferred net revenues   146,928   585,827
 
Non-GAAP Net Revenues by Distribution Channel
Physical retail and other $ 725,405 46 % $ 1,052,791 63 %
Digital online   835,221 54 %   615,974 37 %
Total non-GAAP net revenues $ 1,560,626 100 % $ 1,668,765 100 %
 
 
Twelve Months Ended

March 31, 2016

Twelve Months Ended

March 31, 2015

Amount % of Total Amount % of Total
GAAP Net Revenues by Platform Mix
Console $ 1,167,623 83 % $ 881,516 81 %
PC and other   246,075 17 %   201,422 19 %
Total GAAP net revenues   1,413,698 100 %   1,082,938 100 %
 
Change in Deferred Net Revenues
Console $ 12,687 $ 564,794
PC and other   134,241   21,033
Total changes in deferred net revenues   146,928   585,827
 
Non-GAAP Net Revenues by Platform Mix
Console $ 1,180,310 76 % $ 1,446,310 87 %
PC and other   380,316 24 %   222,455 13 %
Total non-GAAP net revenues $ 1,560,626 100 % $ 1,668,765 100 %

Source: Take-Two Interactive

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
Corporate Press:
Alan Lewis, 646-536-2983
Vice President
Corporate Communications & Public Affairs
Alan.Lewis@take2games.com