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| Take-Two Interactive Software, Inc. Reports Third Quarter Fiscal 2005 Financial Results |
NEW YORK, Sep 07, 2005 (BUSINESS WIRE) -- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today announced financial results for its third quarter and nine months ended July 31, 2005. Net sales in the third quarter increased 6% to $169.9 million, compared to $160.9 million in the third quarter of fiscal 2004. Net loss for the quarter was $28.8 million, compared to a net loss of $14.4 million last year, with a net loss of $(0.41) per share compared to a net loss per share of $(0.21) last year. Net sales for the nine months ended July 31, 2005 increased 30% to $894.4 million, compared to $689.7 million for the same period a year ago. Net income for the first nine months increased to $18.3 million from net income of $2.7 million in the comparable period last year. Diluted earnings per share of $0.26 increased from $0.04 per diluted share in the prior year's first nine months. Take-Two attributed its increased third quarter sales to the launch of Grand Theft Auto: San Andreas for Xbox and PC and Midnight Club 3: DUB Edition for the PSP(TM), along with the release of Charlie and the Chocolate Factory on multiple platforms and Sid Meier's Pirates! for Xbox. The Company initiated its stock repurchase program during the third quarter and completed the entire $25 million program shortly after the end of the quarter. Approximately 925,000 shares were purchased at an average price of $26.96 per share. Guidance Take-Two is updating its fiscal 2005 guidance primarily to reflect the movement of Bully for PlayStation 2 and Xbox out of the current fiscal year to provide additional development time for the title, the movement of the Japanese launch of Grand Theft Auto: San Andreas for PlayStation 2 out of the current fiscal year, and the movement of Sid Meier's Civilization IV for PC from fiscal 2006 into fiscal 2005. The Company now expects $1.22 to $1.27 billion in net sales and $0.85 to $0.90 in diluted net income per share for the fiscal year ending October 31, 2005. Take-Two is issuing initial guidance for fiscal 2006, excluding the estimated impact from adoption of FASB 123(R): -- For the fiscal year ending October 31, 2006, $1.4 to $1.5 billion in net sales and $1.25 to $1.55 in diluted net income per share. -- For the first quarter ending January 31, 2006, $350 to $400 million in net sales and $0.14 to $0.20 in diluted net income per share. The Company's diluted earnings/(loss) per share for all periods above do not include the impact of adopting FASB 123(R), requiring the expensing of employee stock options. With the adoption of FASB 123(R) beginning on November 1, 2005, the Company's estimated diluted net income per share guidance will be $1.05 to $1.30 for the fiscal year ending October 31, 2006 and $0.10 to $0.15 for the first quarter ending January 31, 2006. Rockstar Games In the third quarter, Rockstar released Grand Theft Auto: San Andreas for Xbox and PC and Midnight Club 3: DUB Edition for the PSP system. Midnight Club 3: DUB Edition was the best selling PSP title in the United States in July, according to NPD Funworld(R) estimates. Also in the third quarter, Rockstar launched the PlayStation 2 Greatest Hits version of Red Dead Revolver, bringing Take-Two's catalog of Greatest Hits products for PlayStation 2 to eleven titles. Rockstar released Midnight Club 3: DUB Edition for the PSP in Europe last week in conjunction with the European launch of the PSP system. Later in the fourth quarter Rockstar is introducing an all new Grand Theft Auto title: Grand Theft Auto: Liberty City Stories, for the PSP in North America and Europe. Returning to Liberty City, the setting of Grand Theft Auto 3, the title has an entirely original storyline with all new missions and the freedom, production value and gameplay of all Grand Theft Auto titles. Also planned for fourth quarter release is The Warriors(TM) for PlayStation 2 and Xbox, a new Rockstar title based on the Paramount Pictures feature film. Developed by Rockstar Toronto, The Warriors expands the cinematic journey of the film, reinventing the street brawler to create an intense, stylized and unparalleled gameplay experience. Rockstar's fiscal 2006 pipeline includes the release of Bully on PlayStation 2 and Xbox in the second quarter and a sequel of a Rockstar brand in the third quarter. Grand Theft Auto: San Andreas for PlayStation 2 is expected to be released in Japan in the first quarter. A title based on a new brand for the Xbox 360(TM) is planned for the second quarter. Additional fiscal 2006 products include two new titles for the PSP system, as well as extensions of the Grand Theft Auto franchise. 2K Games, 2K Sports and Global Star Products released in the third quarter included Sid Meier's Pirates! for Xbox and Charlie and the Chocolate Factory on multiple platforms. Fourth quarter titles from 2K Games will include Sid Meier's Civilization IV for PC; Shattered Union and Serious Sam II, both for Xbox and PC; Zathura for PlayStation 2 and Xbox; Call of Cthulhu: Dark Corners of the Earth(TM) for Xbox; and the North American release of Conflict: Global Terror on multiple platforms. 2K Sports' fourth quarter releases will include NBA 2K6 and NHL 2K6, both for PlayStation 2 and Xbox; Top Spin for PlayStation 2; and World Poker Tour on multiple platforms. Global Star's fourth quarter releases will include Ford vs Chevy for PlayStation 2 and Xbox and console titles for Codename: Kids Next Door and Dora the Explorer. Fiscal 2006 first quarter releases include The Elder Scrolls IV: Oblivion for PC and Xbox 360 from 2K Games; and NBA 2K6, NHL 2K6, College Hoops 2K6, Top Spin 2, and Amped 3, all for the Xbox 360 from 2K Sports. Additionally, 2K Sports will ship College Hoops 2K6 on PlayStation 2 and Xbox, and Top Spin 2 on the Game Boy(R) Advance and Nintendo DS(TM). Additional products planned for fiscal 2006 include Prey, Snow, and 24: The Game from 2K Games and various MLB, NBA and other sports titles from 2K Sports. Jack of All Games The Company's Jack of All Games distribution business realized reduced sales in the third quarter primarily attributable to a decrease in average selling prices of interactive entertainment products as the industry transitions to next-generation technology along with increased competition in the value software market. Jack of All Games is focused on improving fourth quarter and fiscal 2006 performance through increased sales of value added product bundles, multi-game compilations and exclusive product offerings. Management Comments Paul Eibeler, President and Chief Executive Officer, stated, "Take-Two is in an excellent competitive position as our industry enters its next cycle of growth. We have a high quality line-up that is the most diverse in our history--including the latest versions of established franchises, as well as newer titles that will become tomorrow's hits. Our Rockstar, 2K Games, 2K Sports and Global Star labels are building a product pipeline that will appeal to a broad range of consumers." Mr. Eibeler continued, "We are particularly excited about the capabilities of the next generation hardware, which play to our strength--the ability to produce creative and engaging games that generate enthusiastic responses from gamers and reviewers alike. And, we have the financial and operational resources to capitalize on the opportunities presented by the current installed base and the millions of next generation console and handheld units that will be added in the coming months and years." Conference Call Take-Two will host a conference call today at 4:30 pm Eastern Time to review its third quarter results and to discuss its outlook. A live webcast of the call is available by visiting http://ir.take2games.com and a replay will be available following the call at the same location. About Take-Two Interactive Software Headquartered in New York City, Take-Two Interactive Software, Inc. (NASDAQ: TTWO) is an integrated global developer, marketer, distributor and publisher of interactive entertainment software games and accessories for the PC, PlayStation(R) game console, PlayStation(R)2 computer entertainment system, PSP(TM) (PlayStation(R)Portable) system, the Xbox(R) video game and entertainment system from Microsoft, the Xbox 360(TM) video game and entertainment system from Microsoft, Nintendo GameCube(TM), Nintendo DS(TM) and Game Boy(R) Advance. The Company publishes and develops products through its wholly owned labels Rockstar Games, 2K Games, 2K Sports and Global Star Software; and distributes products in North America through its Jack of All Games subsidiary. Take-Two also manufactures and markets video game accessories in Europe, North America and the Asia Pacific region through its Joytech subsidiary. The Company maintains sales and marketing offices in Cincinnati, New York, Toronto, London, Paris, Munich, Madrid, Vienna, Milan, Sydney, Breda (Netherlands) and Auckland. Take-Two's common stock is publicly traded on NASDAQ under the symbol TTWO. For more corporate and product information please visit our website at www.take2games.com. All trademarks and copyrights contained herein are the property of their respective holders. Safe Harbor Statement under the Private Securities Reform Act of 1995: This press release contains forward-looking statements made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws. Such forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to them. The Company has no obligation to update such forward-looking statements. Actual results may vary significantly from these forward-looking statements based on a variety of factors. These important factors are described in the Company's Form 10-Q for the quarter ended April 30, 2005 in the section entitled "Risk Factors". TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the three and nine months ended July 31, 2005 and 2004
(In thousands, except per share data)
Three months ended Nine months ended
July 31, July 31,
2005 2004 2005 2004
-------- -------- -------- --------
Net sales $169,899 $160,858 $894,441 $689,738
Cost of sales
Product costs 92,525 101,156 453,514 430,107
Royalties 25,608 14,600 127,755 47,614
Software development costs 4,046 2,242 13,031 7,797
-------- -------- -------- --------
Total cost of sales 122,179 117,998 594,300 485,518
-------- -------- -------- --------
Gross profit 47,720 42,860 300,141 204,220
Operating expenses
Selling and marketing 32,437 24,677 119,643 82,850
General and administrative 32,539 24,685 89,931 72,775
Research and development 19,736 10,529 56,938 32,186
Depreciation and
amortization 5,691 4,327 15,579 11,982
-------- -------- -------- --------
Total operating expenses 90,403 64,218 282,091 199,793
Income (loss) from
operations (42,683) (21,358) 18,050 4,427
Interest income, net 1,261 530 2,965 1,604
-------- -------- -------- --------
Income (loss) before
income taxes (41,422) (20,828) 21,015 6,031
Provision (benefit) for income
taxes (12,642) (6,393) 2,732 3,284
-------- -------- -------- --------
Net income (loss) $(28,780) $(14,435) $ 18,283 $ 2,747
======== ======== ======== ========
Per share data:
Basic:
Weighted average common
shares outstanding 70,556 67,260 69,768 66,923
======== ======== ======== ========
-------- -------- -------- --------
Net income (loss) per
share - Basic $ (0.41) $ (0.21) $ 0.26 $ 0.04
======== ======== ======== ========
Diluted:
Weighted average common
shares outstanding 70,556 67,260 70,974 68,331
======== ======== ======== ========
-------- -------- -------- --------
Net income (loss) per
share - Diluted $ (0.41) $ (0.21) $ 0.26 $ 0.04
======== ======== ======== ========
OTHER INFORMATION Three months ended Nine months ended
----------------- July 31, July 31,
2005 2004 2005 2004
-------- -------- ------- --------
Total revenue mix
-----------------
Publishing 75% 61% 70% 61%
Distribution 25% 39% 30% 39%
Geographic revenue mix
----------------------
North America 64% 75% 66% 76%
International 36% 25% 34% 24%
Publishing platform revenue mix
-------------------------------
Sony PlayStation 2 16% 61% 68% 55%
Microsoft Xbox 43% 26% 18% 34%
Nintendo GameCube 2% 1% - 1%
PC 25% 6% 9% 3%
Sony PSP 9% - - -
Other Platforms and
Accessories 5% 6% 5% 7%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of July 31, 2005, April 30, 2005 and October 31, 2004
(In thousands, except share data)
ASSETS July 31, April 30, October 31,
2005 2005 2004
--------- --------- -----------
Current assets
Cash and cash equivalents $195,355 $210,241 $155,095
Accounts receivable, net of allowances
of $81,720, $ 56,496, and $72,215 at
July 31, 2005, April 30, 2005 and
October 31, 2004, respectively 61,735 127,278 285,709
Inventories, net 104,414 116,568 154,345
Software development costs 51,423 50,802 33,980
Licenses 6,787 5,981 4,240
Prepaid expenses and other current
assets 94,645 73,871 60,018
Deferred tax asset 11,686 11,701 11,554
-------- -------- --------
Total current assets 526,045 596,442 704,941
Fixed assets, net 46,644 43,075 34,291
Software development costs, net of
current portion 61,365 47,423 30,342
Licenses, net of current portion 2,146 2,650 1,425
Goodwill, net 175,316 166,417 135,477
Intangibles, net 62,612 59,934 36,104
Deferred tax asset 6,219 6,219 6,219
Other assets, net 1,875 2,061 1,714
-------- -------- --------
Total assets $882,222 $924,221 $950,513
======== ======== ========
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 76,839 $ 90,524 $163,961
Accrued expenses and other current
liabilities 102,428 84,982 125,567
Income taxes payable 7,452 8,758 17,319
-------- -------- --------
Total current liabilities 186,719 184,264 306,847
Other long-term liabilities 2,933 2,741 2,963
Deferred tax liability 12,950 11,026 5,233
-------- -------- --------
Total liabilities 202,602 198,031 315,043
-------- -------- --------
Stockholders' equity
Common stock, par value $.01 per share;
100,000,000 shares authorized;
71,589,309, 71,193,228 and 68,159,477
shares issued and outstanding at
July 31, 2005, April 30, 2005 and
October 31, 2004, respectively 716 712 682
Additional paid-in capital 442,918 436,477 381,928
Deferred compensation (8,329) (13,095) (3,896)
Retained earnings 268,685 297,465 250,402
Treasury Stock, at cost (23,309) - -
Accumulated other comprehensive income
(loss) (1,061) 4,631 6,354
-------- -------- --------
Total stockholders' equity 679,620 726,190 635,470
-------- -------- --------
Total liabilities and
stockholders' equity $882,222 $924,221 $950,513
======== ======== ========
All share and per share data reflect a three-for-two stock split
distributed on April 11, 2005 to stockholders of record on March 28,
2005.
SOURCE: Take-Two Interactive Software, Inc. Take-Two Interactive Software, Inc. Corporate Press/Investor Relations: Jim Ankner, 646-536-3006 Fax: 646-536-2926 james.ankner@take2games.com |