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ADDING and REPLACING Take-Two Interactive Software, Inc. Reports Strong Results for Fiscal Year 2017
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GAAP Net revenue grew 26% to $1.780 billion

GAAP Net income increased to $0.72 per diluted share

Net cash provided by operating activities grew 27% to $331.4 million

Bookings grew 19% to $1.796 billion

NEW YORK--(BUSINESS WIRE)--May 23, 2017-- Two tables containing "Additional Data" have been added to the end of the release.

The corrected release reads:

TAKE-TWO INTERACTIVE SOFTWARE, INC. REPORTS STRONG RESULTS FOR FISCAL YEAR 2017

GAAP Net revenue grew 26% to $1.780 billion

GAAP Net income increased to $0.72 per diluted share

Net cash provided by operating activities grew 27% to $331.4 million

Bookings grew 19% to $1.796 billion

Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported strong results for its fourth quarter and fiscal year 2017, ended March 31, 2017, and provided its initial financial outlook for its first quarter and fiscal year 2018.

Fiscal Fourth Quarter 2017 GAAP Financial Highlights

Net revenue grew 52% to $571.6 million, as compared to $377.2 million in last year’s fiscal fourth quarter. The largest contributors to net revenue in fiscal fourth quarter 2017 were Mafia III, Grand Theft Auto V® and Grand Theft Auto Online, NBA® 2K17, WWE® 2K17, and Sid Meier’s Civilization® VI.

Digitally-delivered net revenue grew 43% to $278.7 million, as compared to $194.8 million in last year’s fiscal fourth quarter. Recurrent consumer spending (virtual currency, downloadable add-on content and microtransactions) accounted for 50% of digitally-delivered net revenue, or 24% of total net revenue. The largest contributors to digitally-delivered net revenue in fiscal fourth quarter 2017 were Grand Theft Auto V and Grand Theft Auto Online, NBA 2K17, Mafia III, Sid Meier’s Civilization VI, and XCOM® 2.

Net income increased to $99.3 million, or $0.89 per diluted share, as compared to $46.4 million, or $0.48 per diluted share, for the year-ago period.

The following data, together with a management reporting tax rate of 22%, are used internally by the Company’s management and Board of Directors to adjust the Company’s GAAP financial results in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

  Three Months Ended March 31, 2017
                   
Financial Data

Statement
of
Operations

   

Change in
deferred net
revenue and
related cost
of goods sold

   

Stock-based
compensation

   

Non-cash
amortization
of discount
on
Convertible
Notes

   

Acquisition-
related
expenses

   

Amortization
of intangible
assets

 
Net revenue $ 571,556 (164,429 )
Cost of goods sold   314,900       (118,285 )     (5,083 )                 (2,630 )
 
Gross profit 256,656 (46,144 ) 5,083 2,630
 
Total operating expenses   145,153             (21,375 )           (1,598 )     (2,564 )
 
Income from operations 111,503 (46,144 ) 26,458 1,598 5,194
Interest and other, net   (392 )                 3,351            
Income before income taxes 111,111 (46,144 ) 26,458 3,351 1,598 5,194
 
Earnings per share
Diluted 0.89
 

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 117.2 million and adds back to net income interest expense, net of tax, on the convertible notes of $0.5 million.

Fiscal Fourth Quarter Operational Metric – Bookings

Total Bookings grew 14% to $370.6 million, as compared to $324.4 million during last year’s fiscal fourth quarter. The largest contributors to Bookings were Grand Theft Auto V and Grand Theft Auto Online, NBA 2K17, WWE 2K17, and Sid Meier’s Civilization VI. Catalog accounted for $216.8 million of Bookings led by Grand Theft Auto. Digitally-delivered Bookings grew 28% to $267.4 million, as compared to $209.5 million in last year’s fiscal fourth quarter, led by Grand Theft Auto V and Grand Theft Auto Online, NBA 2K17, WWE SuperCard and WWE 2K17, and Sid Meier’s Civilization VI. Bookings from recurrent consumer spending grew 64% year-over-year and accounted for 70% of digitally-delivered Bookings, or 50% of total Bookings.

Fiscal Year 2017 GAAP Financial Highlights

Net revenue grew 26% to $1.780 billion, as compared to $1.414 billion in fiscal year 2016. The largest contributors to net revenue in fiscal year 2017 were Grand Theft Auto V and Grand Theft Auto Online, NBA 2K16 and NBA 2K17, Mafia III, WWE 2K17, and Sid Meier’s Civilization VI.

Digitally-delivered net revenue grew 32% to $921.7 million, as compared to $697.7 million in fiscal year 2016. Recurrent consumer spending accounted for 50% of digitally-delivered net revenue, or 26% of total net revenue. The largest contributors to digitally-delivered net revenue in fiscal year 2017 were Grand Theft Auto V and Grand Theft Auto Online, NBA 2K16 and NBA 2K17, Sid Meier’s Civilization VI, WWE SuperCard and WWE 2K17, and Mafia III.

Net income increased to $67.3 million, or $0.72 per diluted share, as compared to net loss of $8.3 million, or $0.10 per diluted share, in fiscal year 2016.

Net cash provided by operating activities grew 27% to $331.4 million. As of March 31, 2017, the Company had cash and short-term investments of $1.392 billion.

The following data, together with a management reporting tax rate of 22%, are used internally by the Company’s management and Board of Directors to adjust the Company’s GAAP financial results in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

  Twelve Months Ended March 31, 2017
           
Financial Data

Statement
of
Operations

 

Change in
deferred net
revenue and
related cost
of goods sold

 

Stock-based
compensation

 

Non-cash
amortization
of discount
on
Convertible
Notes

 

Acquisition-
related
expenses

 

Amortization
of intangible
assets

 

Gain on
long-term
investments

 
Net revenue $ 1,779,748 124,198
Cost of goods sold   1,022,959     3,994   (21,056 )           (2,630 )    
 
Gross profit 756,789 120,204 21,056 2,630
 
Total operating expenses   665,484         (60,823 )       (1,916 )   (2,564 )    
 
Income from operations 91,305 120,204 81,879 1,916 5,194
Interest and other, net (15,690 ) 21,254
Gain on long-term investments, net   1,350                         (1,350 )
Income before income taxes 76,965 120,204 81,879 21,254 1,916 5,194 (1,350 )
 
Earnings per share
Diluted $ 0.72
 

In order to calculate net income per diluted share for management reporting purposes, the Company uses its fully diluted share count of 115.9 million and adds back to net income interest expense, net of tax, on the convertible notes of $4.7 million.

Fiscal Year 2017 Operational Metric – Bookings

Total Bookings grew 19% to $1.796 billion, as compared to $1.507 billion in fiscal year 2016. The largest contributors to Bookings were Grand Theft Auto V and Grand Theft Auto Online, NBA 2K17 and NBA 2K16, Mafia III, WWE 2K17, and Sid Meier’s Civilization VI. Digitally-delivered Bookings grew 25% to $987.2 million, as compared to $790.1 million in fiscal year 2016, led by Grand Theft Auto V and Grand Theft Auto Online, NBA 2K17, Sid Meier’s Civilization VI, WWE SuperCard and WWE 2K17, and Mafia III. Bookings from recurrent consumer spending grew 52% year-over-year and accounted for 57% of digitally-delivered Bookings, or 32% of total Bookings.

New Operational Metric – Net Sales

Starting with its financial outlook for the first quarter ending June 30, 2017, Take-Two will replace Bookings with Net Sales as an operational metric. The Company is making this change in order to increase transparency and to be consistent with operational metrics provided by peers. Net Sales is defined as the net amount of products and services sold digitally or sold-in physically during the period. Unlike Bookings, Net Sales includes licensing fees, merchandise, in-game advertising, strategy guides and publisher incentives.

Management Comments

“Consumer demand for our entertainment offerings remained exceedingly strong in the fourth quarter, finishing-off another outstanding year for our organization,” said Strauss Zelnick, Chairman and CEO of Take-Two. “During fiscal 2017, we delivered Bookings and cash provided by operating activities that significantly exceeded our original expectations, along with revenue growth and margin expansion. These results were driven by the continued extraordinary performance of Grand Theft Auto V and Grand Theft Auto Online, a diverse array of exciting titles from 2K, and record digitally-delivered revenue and Bookings, including our highest-ever from recurrent consumer spending. We invested our capital to grow and diversify our business further, including by acquiring Social Point, a leading free-to-play mobile game developer.

“As announced yesterday, Rockstar Games has decided to move the release of Red Dead Redemption 2 to Spring 2018. As Rockstar stated, Red Dead Redemption 2 will be their first game created from the ground up for the latest generation of console hardware, and some extra time is necessary to ensure that they deliver the best experience possible. Such decisions are not made lightly, and are driven by our team’s unwavering commitment to unparalleled quality.

“That said, we still expect fiscal 2018 to be a year of strong earnings and cash provided by operating activities for Take-Two, despite an unusually light release slate, driven by new releases of NBA 2K and WWE 2K, our robust catalog led by Grand Theft Auto, and innovative offerings designed to drive engagement and recurrent consumer spending. Looking ahead to fiscal 2019, we expect to deliver both record Net Sales and record net cash provided by operating activities, in excess of $2.5 billion and $700 million, respectively, led by the launches of Rockstar Games’ Red Dead Redemption 2 and a highly anticipated new title from one of 2K’s biggest franchises.”

Business and Product Highlights

Since January 1, 2017:

Take-Two:

  • Expanded its relationship with the NBA through the creation of the NBA 2K eSports League, a new, professional competitive gaming league. Set to debut in 2018, this groundbreaking competitive gaming league is jointly owned by Take-Two and the NBA, and will consist of teams operated by actual NBA franchises. The NBA 2K eSports League will follow a professional sports league format: competing head-to-head throughout a regular season, participating in a bracketed playoff system, and concluding with a championship matchup.
  • Broadened the skills of its Board of Directors through the appointment of LaVerne Srinivasan to the Board and to its Corporate Governance Committee. Ms. Srinivasan is Vice President of the National Program and Program Director for Education at the Carnegie Corporation of New York. Prior to her current position, she worked at various educational technology, urban district change, and non-profit education reform companies. From 1993 through 2003, she served in various roles at BMG Entertainment, including Senior Vice President and General Counsel. Ms. Srinivasan holds an A.B. in sociology from Harvard College and a J.D. from Harvard Law School.
  • Acquired privately-held Social Point S.L. for $250 million, comprised of $175 million in cash and 1,480,168 unregistered shares of Take-Two common stock (calculated by dividing $75 million by the average closing price per share on the Nasdaq Global Select Market during the thirty trading day period ending on January 26, 2017), plus potential earn-out consideration of up to an aggregate of $25.9 million in cash and shares of Take-Two common stock. The cash portion was funded from Take-Two’s cash on hand. Founded in 2008 and headquartered in Barcelona, Spain, Social Point is a highly-successful free-to-play mobile game developer that focuses on delivering high-quality, deeply-engaging entertainment experiences. The transaction is expected to be accretive to net income per share, excluding transaction costs and amortization of intangible assets, in fiscal year 2018.

Rockstar Games:

  • Released new free content updates for Grand Theft Auto Online, including:
    • Cunning Stunts Special Vehicle Circuit Update, which features new vehicles and race types, as well as adding Props and psychedelic Stunt Tubes to the Stunt Race Creator;
    • Land Grab, which allows teams to battle across seven new maps to control territory in an unforgiving cyberspace;
    • Tiny Racers, an all-new retro-styled Adversary Mode, which pits players against each other on special tracks made for vehicular combat with a shifting bird’s eye perspective in the spirit of classic Grand Theft Auto titles.
  • Made Grand Theft Auto IV and Grand Theft Auto: Episodes from Liberty City available as part of Microsoft’s Xbox One Backwards Compatibility program, enabling owners of the Xbox 360 versions of Grand Theft Auto IV (including The Complete Edition), Grand Theft Auto: Episodes from Liberty City, Grand Theft Auto: The Lost and Damned and Grand Theft Auto: The Ballad of Gay Tony to play these games on Xbox One. In addition, Grand Theft Auto IV and Grand Theft Auto: Episodes from Liberty City are now available for purchase through digital download from the Games Store on Xbox One.
  • Announced that Red Dead Redemption 2® is now planned for release worldwide in Spring 2018 (fiscal year 2019) for PlayStation4 and Xbox One.

2K:

  • Launched WWE 2K17 for the PC, and released the title’s supporting Future Stars Pack and Hall of Fame Showcase downloadable add-on content. Developed collaboratively by Yuke's and Visual Concepts, WWE 2K17 has sold-in approximately 3 million units to date.
  • Announced that NBA 2K will feature Hall of Famer Shaquille O’Neal on the cover of the NBA 2K18 Legend Edition. This special edition will place a spotlight on “The Big Aristotle” with special Shaq-themed memorabilia and content, extending his legacy as the most dominant center in NBA history. NBA 2K18 will be available for PlayStation®4 system and PlayStation®3 computer entertainment system, Xbox One and Xbox 360, Nintendo Switch, and Windows PC platforms on September 19, 2017.
  • Released the Australia Civilization & Scenario Pack and the Persia & Macedon Civilization & Scenario Pack for Sid Meier’s Civilization VI. Developed by Firaxis Games, Sid Meier’s Civilization VI received stellar reviews and is the fastest-selling release in the history of the series, with sell-in of nearly 2 million units to date. The title will be supported with additional free and paid downloadable add-on content.
  • Released the Faster Baby! downloadable add-on pack for Mafia III. Developed by Hangar 13, Mafia III will also be supported with the Stones Unturned and Sign of the Times add-on packs that are planned for release during summer 2017.
  • Released WWE SuperCard - Season 3 Update #3 for iOS and Android devices. Developed by Cat Daddy Games, Update #3 is a free update to WWE SuperCard, the popular WWE collectible card-battling game, which has now been downloaded more than 14 million times.

Financial Outlook for Fiscal 2018

Take-Two is providing its initial financial outlook for its fiscal first quarter ending June 30, 2017 and its fiscal year ending March 31, 2018.

First Quarter Ending June 30, 2017

  • GAAP net revenue is expected to range from $390 to $440 million
  • GAAP net income is expected to range from $74 to $85 million
  • GAAP diluted net income per share is expected to range from $0.65 to $0.75
  • Share count used to calculate diluted net income per share is expected to be 119.0 million (1)
  • Net Sales (operational metric) are expected to range from $240 to $290 million

The Company is also providing selected data and its management reporting tax rate of 22% that are used internally by its management and Board of Directors to adjust the Company’s GAAP financial outlook in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

  Three Months Ended June 30, 2017
       
Financial Data
$ in millions

GAAP
Outlook (2)

 

Change in
deferred net
revenue and
related cost of
goods sold

 

Stock-based
compensation (3)

 

Non-cash
amortization
of discount
on
Convertible
Notes

 

Amortization
of Intangible
Assets

  Reorganization
     
Net revenue $390 to $440 ($150)
 
Cost of goods sold $147 to $175 ($45) ($3) ($4) ($3)
 
Operating Expenses $160 to $170 ($23) ($4) ($4)
 
Interest and other, net $3 ($3)
 
Income (loss) before income taxes $80 to $93 ($105) $26 $3 $8 $7
 

Fiscal Year Ending March 31, 2018

  • GAAP net revenue is expected to range from $1.95 to $2.05 billion
  • GAAP net income is expected to range from $504 to $540 million
  • GAAP diluted net income per share is expected to range from $4.35 to $4.65
  • Share count used to calculate diluted net income per share is expected to be 119.7 million (4)
  • Net cash provided by operating activities is expected to be approximately $150 million
  • Capital expenditures are expected to be approximately $60 million
  • Net Sales (operational metric) are expected to range from $1.42 to $1.52 billion

The Company is also providing selected data and its management reporting tax rate of 22% that are used internally by its management and Board of Directors to adjust the Company’s GAAP financial outlook in order to facilitate comparison of its operating performance between periods and to better understand its core business and future outlook:

  Twelve Months Ended March 31, 2018
       
Financial Data
$ in millions

GAAP
Outlook (2)

 

Change in
deferred net
revenue and
related cost of
goods sold

 

Stock-based
compensation (3)

 

Non-cash
amortization
of discount
on
Convertible
Notes

 

Amortization
of
Intangible
Assets

 

Reorganization

     
Net revenue $1,950 to $2,050 ($533)
 
Cost of goods sold $671 to $712 ($60) ($13) ($17) ($3)
 
Operating Expenses $720 to $740 ($70) ($15) ($4)
 
Interest and other, net $10 ($14)
 
Income (loss) before income taxes $549 to $588 ($473) $83 $14 $32 $7
 
1)   Includes 105.8 million basic shares, 1.2 million participating shares and 12.0 million shares representing the potential dilution from convertible notes. The interest expense, net of tax, on the convertible notes, which is added back to net income to calculate diluted net income per share for management reporting purposes is $0.6 million.
2) The individual components of the financial outlook may not foot to the totals as the Company does not expect actual results for every component to be at the low end or high end of the outlook range simultaneously.
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.
4) Includes 106.8 million basic shares, 0.9 million participating shares and 12.0 million shares representing the potential dilution from convertible notes. The interest expense, net of tax, on the convertible notes, which is added back to net income to calculate diluted net income per share for management reporting purposes is $2.2 million.
 

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, 2017:

Label

     

Title

   

Platforms

   

Release Date

2K

     

WWE 2K17: Future Stars Pack (DLC)

    PS4, PS3, Xbox One, Xbox 360     January 17, 2017

2K

WWE 2K17

PC February 7, 2017

2K

WWE 2K17: Hall of Fame Showcase (DLC)

PS4, PS3, Xbox One, Xbox 360 February 21, 2017

2K

Sid Meier’s Civilization VI: Australia Civilization & Scenario Pack (DLC)

PC February 23, 2017

2K

Sid Meier’s Civilization VI: Persia & Macedon Civilization & Scenario Pack (DLC)

PC March 23, 2017

2K

Mafia III: Faster Baby! (DLC)

PS4, Xbox One, PC March 28, 2017

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

Label

   

Title

   

Platforms

   

Release Date

2K    

Mafia III: Stones Unturned (DLC)

    PS4, Xbox One, PC     May 30, 2017
2K

Mafia III: Sign of the Times (DLC)

PS4, Xbox One, PC Summer 2017
2K

NBA 2K18

PS4, PS3, Xbox One, Xbox 360, Switch, PC September 19, 2017
2K

WWE 2K18

TBA Fall 2017
Rockstar Games

Red Dead Redemption 2

PS4, Xbox One Spring 2018
 

Conference Call

Take-Two will host a conference call today at 8:00 a.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.

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 period ended March 31, 2017.

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 principally 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," “should,” "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
(in thousands, except per share amounts)
       
Three months ended March 31, Twelve months ended March 31,
  2017     2016     2017     2016  
 
 
Net revenue $ 571,556   $ 377,206   $ 1,779,748   $ 1,413,698  
 
Cost of goods sold:
Internal royalties 90,071 72,552 330,782 328,610
Software development costs and royalties 116,922 71,352 335,675 223,512
Product costs 85,787 46,554 255,914 200,206
Licenses   22,120     18,999     100,588     61,545  
Total cost of goods sold   314,900     209,457     1,022,959     813,873  
 
Gross profit 256,656 167,749 756,789 599,825
 
Selling and marketing 38,312 38,020 285,453 198,309
General and administrative 62,042 44,395 211,409 192,452
Research and development 36,421 33,308 137,915 119,807
Business reorganization - 113 - 71,285
Depreciation and amortization   8,378     7,338     30,707     28,800  
Total operating expenses   145,153     123,174     665,484     610,653  
Income (loss) from operations 111,503 44,575 91,305 (10,828 )
Interest and other, net (392 ) (6,257 ) (15,690 ) (30,205 )
Gain on long-term investments, net   -     2,683     1,350     2,683  
Income (loss) before income taxes 111,111 41,001 76,965 (38,350 )
Provision for (benefit from) income taxes     11,831     (5,398 )   9,662     (30,048 )
Net income (loss) $ 99,280   $ 46,399   $ 67,303   $ (8,302 )
 
Earnings (loss) per share:        
Basic earnings (loss) per share $ 0.97   $ 0.54   $ 0.73   $ (0.10 )
 
Diluted earnings (loss) per share $ 0.89   $ 0.48     0.72   $ (0.10 )
 
Weighted average shares outstanding:        
Basic 100,490 86,375 90,180 83,417
Diluted   117,245     114,496     94,073     83,417  
 
Computation of Basic and Diluted EPS:
Net income (loss) $ 99,280 $ 46,399 $ 67,303 $ (8,302 )
Less: net income allocated to participating securities   (1,370 )   (1,447 )   (1,275 )   -  
Net loss for basic and diluted EPS calculation $ 97,910   $ 44,952   $ 66,028   $ (8,302 )
 
Weighted average shares outstanding - basic 101,896 86,375 $ 91,921 83,417
Less: weighted average participating shares outstanding   (1,406 )   (2,694 )   (1,741 )   -  
Weighted average common shares outstanding - basic   100,490     83,681     90,180     83,417  
       
Basic earnings (loss) per share $ 0.97   $ 0.54   $ 0.73   $ (0.10 )
 
Computation of Diluted EPS:
Net income (loss) $ 99,280 $ 46,399 $ 67,303 $ (8,302 )
Less: net income allocated to participating securities (1,191 ) (1,092 ) (1,246 ) -
Add: interest expense, net of tax, on Convertible Notes   4,980     8,172     -     -  
Net income (loss) for diluted EPS calculation $ 103,069   $ 53,479   $ 66,057   $ (8,302 )
 
Weighted average common shares outstanding - basic 101,896 86,375 91,921 83,417
Add: dilutive effect of common stock equivalents   15,349     28,121     2,152     -  
Total weighted average shares outstanding - diluted 117,245 114,496 94,073 83,417
Less: weighted average participating shares outstanding   (1,406 )   (2,694 )   (1,741 )   -  
Weighted average common shares outstanding - diluted   115,839     111,802     92,332     83,417  
       
Diluted earnings (loss) per share $ 0.89   $ 0.48   $ 0.72   $ (0.10 )
 
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
   
March 31, March 31,
  2017     2016  
 
ASSETS
Current assets:
Cash and cash equivalents $ 943,396 $ 798,742
Short-term investments 448,932 470,820
Restricted cash 337,818 261,169

Accounts receivable, net of allowances of $66,483 and $45,552 at March 31, 2017 and 2016, respectively

219,558 168,527
Inventory 16,323 15,888
Software development costs and licenses 41,721 178,387
Deferred cost of goods sold 127,901 98,474
Prepaid expenses and other   59,593     53,269  
Total current assets   2,195,242     2,045,276  
 
Fixed assets, net 67,300 77,127
Software development costs and licenses, net of current portion 381,910 214,831
Deferred cost of goods sold, net of current portion - 17,915
Goodwill 359,115 217,080
Other intangibles, net 110,262 4,609
Other assets   35,325     13,439  
Total assets $ 3,149,154   $ 2,590,277  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 31,892 $ 30,448
Accrued expenses and other current liabilities 750,875 607,479
Deferred revenue   903,125     582,484  
Total current liabilities   1,685,892     1,220,411  
 
Long-term debt 251,929 497,935
Non-current deferred revenue 10,406 216,319
Other long-term liabilities   197,199     74,227  
Total liabilities   2,145,426     2,008,892  
 
 
Stockholders' equity:
Preferred stock, $.01 par value, 5,000 shares authorized - -
Common stock, $.01 par value, 200,000 shares authorized; 119,813 and 103,765 shares
issued and 102,621 and 86,573 outstanding at March 31, 2017 and 2016, respectively 1,198 1,038
Additional paid-in capital 1,452,754 1,088,628
Treasury stock, at cost; 17,192 common shares at March 31, 2017 and 2016, respectively (303,388 ) (303,388 )
Accumulated deficit (99,694 ) (166,997 )
Accumulated other comprehensive loss   (47,142 )   (37,896 )
Total stockholders' equity   1,003,728     581,385  
Total liabilities and stockholders' equity $ 3,149,154   $ 2,590,277  
 
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
    Twelve months ended March 31,
  2017       2016  
 
Operating activities:
Net income (loss) $ 67,303 $ (8,302 )
 
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization and impairment of software development costs and licenses 221,911 134,472
Depreciation and amortization 30,707 28,800
Amortization and impairment of intellectual property 6,738 160
Stock-based compensation 81,879 69,996
Deferred income taxes 3,020 (270 )
Amortization of discount on Convertible Notes 21,222 23,457
Amortization of debt issuance costs 1,227 1,567
Gain on of long-term investments, net (1,350 ) (2,683 )
Other, net (3,410 ) 2,588
Changes in assets and liabilities:
Restricted cash (76,474 ) (91,491 )
Accounts receivable (41,956 ) 49,348
Inventory (4,942 ) 3,809
Software development costs and licenses (252,951 ) (219,217 )
Prepaid expenses, other current and other non-current assets (22,155 ) (12,272 )
Deferred revenue 126,285 152,325
Deferred cost of goods sold (14,969 ) (41,144 )
Accounts payable, accrued expenses and other liabilities   189,344     170,162  
Net cash provided by operating activities   331,429     261,305  
 
Investing activities:
Change in bank time deposits 89,076 (182,383 )
Proceeds from available-for-sale securities 155,936 43,314
Purchases of available-for-sale securities (195,733 ) (150,501 )
Purchases of commercial paper (25,938 ) -
Business acquisitions, net of cash acquired (130,669 ) -
Purchases of fixed assets (21,167 ) (37,280 )
Proceeds from sale of long-term investments 1,350 2,683
Purchase of long-term investments (1,885 ) -
Other   -     (349 )
Net cash used in investing activities   (129,030 )   (324,516 )
 
Financing activities:
Excess tax benefit from stock-based compensation 1,990 1,421
Tax payment related to net share settlements on restricted stock awards (51,762 ) (22,916 )
Repurchase of common stock   -     (26,552 )
Net cash used in financing activities   (49,772 )   (48,047 )
 
Effects of foreign exchange rates on cash and cash equivalents   (7,973 )   (1,120 )
 
Net increase (decrease) in cash and cash equivalents 144,654 (112,378 )
Cash and cash equivalents, beginning of year   798,742     911,120  
Cash and cash equivalents, end of period $ 943,396   $ 798,742  
 
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue by Geographic Region, Distribution Channel, and Platform Mix
(in thousands)
           
Three Months Ended

March 31, 2017

Three Months Ended

March 31, 2016

Amount % of Total Amount % of Total
 
Net Revenues by Geographic Region
United States $ 296,040 52 % $ 196,037 52 %
International   275,516   48 %   181,169   48 %
Total net revenues   571,556   100 %   377,206   100 %
 
Change in Deferred Net Revenues
United States $ (56,680 ) $ (4,159 )
International   (107,749 )   (30,535 )
Total changes in deferred net revenues   (164,429 )   (34,694 )
 
Three Months Ended

March 31, 2017

Three Months Ended

March 31, 2016

Amount % of Total Amount % of Total
 
Net Revenues by Distribution Channel
Digital online $ 278,683 49 % $ 194,798 52 %
Physical retail and other   292,873   51 %   182,408   48 %
Total net revenues   571,556   100 %   377,206   100 %
 
Change in Deferred Net Revenues
Digital online $ 19,802 $ 31,829
Physical retail and other   (184,231 )   (66,523 )
Total changes in deferred net revenues   (164,429 )   (34,694 )
 
Three Months Ended

March 31, 2017

Three Months Ended

March 31, 2016

Amount % of Total Amount % of Total
Net Revenues by Platform Mix
Console $ 479,958 84 % $ 288,785 77 %
PC and other   91,598   16 %   88,421   23 %
Total net revenues   571,556   100 %   377,206   100 %
 
Change in Deferred Net Revenues
Console $ (161,310 ) $ (30,253 )
PC and other   (3,119 )   (4,441 )
Total changes in deferred net revenues   (164,429 )   (34,694 )
 
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Net Revenue by Geographic Region, Distribution Channel, and Platform Mix
(in thousands)
         
Twelve Months Ended

March 31, 2017

Twelve Months Ended

March 31, 2016

Amount % of Total Amount % of Total
 
Net Revenues by Geographic Region
United States $ 999,128 56 % $ 742,963 53 %
International   780,620   44 %   670,735 47 %
Total net revenues   1,779,748   100 %   1,413,698 100 %
 
Change in Deferred Net Revenues
United States $ 78,356 $ 97,770
International   45,842     49,158
Total changes in deferred net revenues   124,198     146,928
 
Twelve Months Ended

March 31, 2017

  Twelve Months Ended

March 31, 2016

Amount % of Total Amount % of Total
 
Net Revenues by Distribution Channel
Digital online $ 921,734 52 % $ 697,658 49 %
Physical retail and other   858,014   48 %   716,040 51 %
Total net revenues   1,779,748   100 %   1,413,698 100 %
 
Change in Deferred Net Revenues
Digital online $ 159,528 $ 137,563
Physical retail and other   (35,330 )   9,365
Total changes in deferred net revenues   124,198     146,928
 
Twelve Months Ended

March 31, 2017

  Twelve Months Ended

March 31, 2016

Amount % of Total Amount % of Total
Net Revenues by Platform Mix
Console $ 1,440,724 81 % $ 1,167,623 83 %
PC and other   339,024   19 %   246,075 17 %
Total net revenues   1,779,748   100 %   1,413,698 100 %
 
Change in Deferred Net Revenues
Console $ 113,595 $ 12,687
PC and other   10,603     134,241
Total changes in deferred net revenues   124,198     146,928
                       
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA
(in thousands)
Cost of Goods Sold-
Software Cost of Goods
Cost of Goods Sold- Development Costs Sold- Product Cost of Goods Selling and
Three Months Ended March 31, 2017     Net Revenues     Internal Royalties     and Royalties     Costs     Sold- Licenses     Marketing
 
As reported $ 571,556 $ 90,071 $ 116,922 $ 85,787 $ 22,120 $ 38,312
Net effect from deferral and related cost of goods sold (164,429 ) (67,678 ) (47,535 ) (3,072 )
Stock-based compensation (5,083 ) (2,694 )
Amortization of intangibles (2,630 ) (1,497 )
 
 
General and Research and Depreciation and Interest and Gain on long-term
Three Months Ended March 31, 2017     Administrative     Development     Amortization     Other, net     investments
 
As reported $ 62,042 $ 36,421 $ 8,378 $ (392 ) $ -
Stock-based compensation (16,047 ) (2,634 )
Non-cash amortization of discount on Convertible Notes 3,351
Acquisition related expenses (1,598 )
Amortization of intangibles (989 ) (78 )
Proceeds from sale of long-term investments
 
 
Cost of Goods Sold-
Software Cost of Goods
Cost of Goods Sold- Development Costs Sold- Product Cost of Goods Selling and
Three Months Ended March 31, 2016     Net Revenues     Internal Royalties     and Royalties     Costs     Sold- Licenses     Marketing
 
As reported $ 377,206 $ 72,552 $ 71,352 $ 46,554 $ 18,999 $ 38,020
Net effect from deferral and related cost of goods sold (34,694 ) (9,601 ) (10,682 ) (3,370 ) (2,566 )
Stock-based compensation (2,388 )
 
Gain on long-
General and Research and Business Depreciation and Interest and term
Three Months Ended March 31, 2016     Administrative     Development     Reorganization     Amortization     Other,net     investments
 
As reported $ 44,395 $ 33,308 $ 113 $ 7,338 $ (6,257 ) $ 2,683
Stock-based compensation (8,998 ) (1,900 )
Non-cash amortization of discount on Convertible Notes 6,003
Impact of business reorganization (113 )
Proceeds from sale of long-term investments (2,683 )
 
 
 
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
ADDITIONAL DATA
(in thousands)
Cost of Goods Sold-
Software Cost of Goods
Cost of Goods Sold- Development Costs Sold- Product Cost of Goods Selling and
Twelve Months Ended March 31, 2017     Net Revenues     Internal Royalties     and Royalties     Costs     Sold- Licenses     Marketing
 
As reported $ 1,779,748 $ 330,782 $ 335,675 $ 255,914 $ 100,588 $ 285,453
Net effect from deferral and related cost of goods sold 124,198 - (6,709 ) 2,536 8,167
Stock-based compensation (21,056 ) (9,963 )
Amortization of intangibles (2,630 ) (1,497 )
 
 
General and Research and Depreciation and Interest and Gain on long-term

Twelve Months Ended March 31, 2017

    Administrative     Development     Amortization     Other, net     investments
 
As reported $ 211,409 $ 137,915 $ 30,707 $ (15,690 ) $ 1,350
Stock-based compensation (42,908 ) (7,952 )
Non-cash amortization of discount on Convertible Notes 21,254
Acquisition related expenses (1,916 )
Amortization of intangibles (989 ) (78 )
Proceeds from sale of long-term investments (1,350 )
 
 
Cost of Goods Sold-
Software Cost of Goods
Cost of Goods Sold- Development Costs Sold- Product Cost of Goods Selling and
Twelve Months Ended March 31, 2016     Net Revenues     Internal Royalties     and Royalties     Costs     Sold- Licenses     Marketing
 
As reported $ 1,413,698 $ 328,610 $ 223,512 $ 200,206 $ 61,545 $ 198,309
Net effect from deferral and related cost of goods sold 146,928 (1,237 ) 11,622 30,012 (9,425 )
Stock-based compensation (15,323 )
 
 
Gain on long-
General and Research and Business Depreciation and Interest and term
Twelve Months Ended March 31, 2016     Administrative     Development     Reorganization     Amortization     Other, net     investments
 
As reported $ 192,452 $ 119,807 $ 71,285 $ 28,800 $ (30,205 ) $ 2,683
Stock-based compensation (40,323 ) (4,926 )
Non-cash amortization of discount on Convertible Notes 23,457
Impact of business reorganization (1,228 ) (71,285 )
Proceeds from sale of long-term investments (2,683 )

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