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New York, NY – March 11, 2008 – Take-Two Interactive
Software, Inc. (NASDAQ:TTWO) today announced financial results for its
first quarter ended January 31, 2008.
Net revenue for the first quarter was $240.4 million, compared to
$277.3 million for the same quarter of fiscal 2007, which benefited
from more new game releases in last year's holiday season. First
quarter sales were led by BioShock, Carnival Games™, NBA 2K8, Grand
Theft Auto catalog titles, and the release of Grand Theft Auto: Vice
City Stories in Japan. Distribution revenue rose year over year,
fueled by the strength of next generation software and hardware sales,
including robust demand for Wii™ products.
Net loss for the first quarter was $38.0 million or $0.52 per
share, compared to a net loss of $21.5 million or $0.30 per share in
the first quarter of fiscal 2007.
The first quarter results include $6.1 million in stock-based
compensation expense ($0.08 per share); and $1.7 million in expenses
related to unusual legal matters and business reorganization costs
($0.02 per share). Results for the first quarter of 2007 included $4.0
million in stock-based compensation expense ($0.06 per share); and
$7.2 million in expenses related to unusual legal matters ($0.10 per
share).
Non-GAAP net loss was $30.3 million or $0.41 per share in the
first quarter, compared to a net loss of $10.3 million or $0.14 per
share in the first quarter of 2007. (Please refer to Non-GAAP
Financial Measures and reconciliation tables included later in this
release for additional information and details on non-GAAP items.)
Business Highlights
Among the significant recent business developments, Take-Two noted
the following:
-- Rockstar Games announced a worldwide release date of April 29,
2008 for the highly anticipated Grand Theft Auto IV.
-- 2K Games said today that BioShock 2, the sequel to the wholly
owned and internally developed title, is being developed by 2K
Marin and is planned for release in the fourth quarter of
fiscal 2009. The critically acclaimed BioShock title has sold
over 2 million units worldwide since its launch in August.
-- Carnival Games, a wholly owned and internally developed title
for the Wii™, shipped over 1 million units since its debut
in late August. 2K Play will be bringing this popular title to
the Nintendo DS™ this summer.
-- 2K Play announced today that Carnival Games: Mini-Golf™, a
brand extension of the Carnival Games franchise, is coming
exclusively to the Wii this fall.
-- 2K announced the acquisition of Illusion Softworks, the
creator and owner of several hit video game franchises,
including Mafia, Hidden & Dangerous and Vietcong. Renamed 2K
Czech, the Czech Republic based studio is currently developing
Mafia II for next generation consoles and Games for
Windows®.
Strauss Zelnick, Chairman of Take-Two, stated, "We are pleased
with Take-Two's stronger than expected top and bottom line results for
the first quarter. Our performance benefited from a diverse range of
hit titles in the first quarter, and we are eagerly awaiting the
release of Grand Theft Auto IV in the second quarter. We believe that
our extraordinary creative assets and improving operational efficiency
will be sources of significant value for shareholders as the
interactive entertainment industry moves further into the current
growth cycle."
Ben Feder, Chief Executive Officer of Take-Two, added, "We're
excited about our robust product lineup, most of which is based on
internally-owned and developed IP. With one of the strongest release
schedules in the industry, Take-Two is clearly well positioned for the
future. In addition to Grand Theft Auto IV, for the balance of fiscal
2008 our releases will include Midnight Club: Los Angeles, Sid Meier's
Civilization Revolution, Top Spin 3, Don King Presents: Prizefighter,
Carnival Games for DS, Carnival Games: Mini-Golf for Wii, NBA® 2K9,
NHL® 2K9, episodic content for Grand Theft Auto IV on Xbox 360, as
well as other titles. We also have significant visibility into fiscal
2009, which includes additional episodic content for Grand Theft Auto
IV, Mafia II, Borderlands™, BioShock 2, our complete sports lineup,
additional Nick Jr. titles under our agreement with Nickelodeon, and
several new brands."
Financial Guidance
The Company is providing guidance for the second quarter ending
April 30, 2008 and is raising its guidance for the fiscal year ending
October 31, 2008 as detailed below. Fiscal 2008 guidance reflects the
release of Borderlands for Xbox 360, PLAYSTATION 3 and Games for
Windows® in fiscal 2009 instead of fiscal 2008 in order to allow
additional development time for this highly anticipated game and
provide a better balance in the release of Take-Two's triple-A titles.
Revenue* Non-GAAP EPS (a)(b)
------------------ ------------------------
Second quarter ending $450 to $500 $1.00 to $1.10
4/30/2008
Fiscal year ending $1,250 to $1,400 $1.35 to $1.55
10/31/2008
* In millions
(a) The Company's non-GAAP EPS estimates for the second quarter ending
April 30, 2008 and fiscal year ending October 31, 2008 exclude
approximately $0.16 and $0.49 per share, respectively, of stock-based
compensation expense; and approximately $0.04 and $0.08 per share,
respectively, of business reorganization charges and expenses related
to unusual legal matters. The Company's stock-based compensation
expense for the second quarter and fiscal 2008 reflects the cost of
approximately two million stock options issued to ZelnickMedia that
are subject to variable accounting. Actual expense to be recorded in
connection with these options is dependent upon several factors,
including future changes in Take-Two's stock price.
(b) EPS estimates reflect tax expense on international operations
only.
Product Pipeline
The following titles shipped during the first and second quarters
of 2008:
Title Platform
---------------------------------------------- ----------------------
Bully: Scholarship Edition Xbox 360, Wii
College Hoops 2K8 Xbox 360, PS3, PS2
Deal or No Deal(TM): Secret Vault Games PC
Dora the Explorer: Dora Saves the Mermaids(TM) PS2, DS
Go, Diego, Go!: Safari Rescue(TM) Wii, PS2, DS
Grand Theft Auto: Vice City Stories (Japan) PS2, PSP
Major League Baseball(R) 2K8 Xbox 360, PS3, Wii,
PSP, PS2
Take-Two's lineup announced to date for the remainder of fiscal
2008 includes the following titles:
Title Platform
---------------------------------------------- ----------------------
Carnival Games(TM) DS
Carnival Games: Mini-Golf(TM) Wii
Don King Presents: Prizefighter Xbox 360, Wii, DS
Grand Theft Auto IV Xbox 360, PS3
Grand Theft Auto IV episodic content Xbox 360
Major League Baseball(R) 2K8 Fantasy All-Stars DS
Midnight Club: Los Angeles Xbox 360, PS3
NBA(R) 2K9 Multiple platforms
NHL(R) 2K9 Multiple platforms
Sid Meier's Civilization(R) Revolution(TM) Xbox 360, PS3, DS
Top Spin 3 Xbox 360, PS3, Wii, DS
Conference Call
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Three months ended January 31,
------------------------------
2008 2007
-------------- --------------
Net revenue $ 240,442 $ 277,340
--------------------------------------- -------------- --------------
Cost of goods sold:
Product costs 148,152 164,143
Software development costs and
royalties 22,713 22,879
Internal royalties 6,145 9,478
Licenses 8,998 7,725
--------------------------------------- -------------- --------------
Total cost of goods sold 186,008 204,225
--------------------------------------- -------------- --------------
Gross profit 54,434 73,115
Selling and marketing 33,729 35,024
General and administrative 31,402 38,614
Research and development 15,810 14,150
Business reorganization and related 162 -
Depreciation and amortization 6,409 6,661
--------------------------------------- -------------- --------------
Total operating expenses 87,512 94,449
--------------------------------------- -------------- --------------
Loss from operations (33,078) (21,334)
Interest and other, net (152) 862
--------------------------------------- -------------- --------------
Loss before income taxes (33,230) (20,472)
Income taxes 4,767 1,076
--------------------------------------- -------------- --------------
Net loss $ (37,997) $ (21,548)
======================================= ============== ==============
Basic and diluted loss per share $ (0.52) $ (0.30)
======================================= ============== ==============
Basic and diluted weighted average
shares outstanding 73,148 71,360
======================================= ============== ==============
Three months ended January 31,
------------------------------
OTHER INFORMATION 2008 2007
--------------------------------------- -------------- --------------
Total revenue mix
Publishing 51% 58%
Distribution 49% 42%
Geographic revenue mix
North America 84% 77%
International 16% 23%
Publishing revenue platform mix
Sony PlayStation 2 25% 36%
Microsoft Xbox 360 21% 15%
Nintendo Wii 19% 0%
Sony PSP 13% 20%
PC 10% 12%
Sony PLAYSTATION 3 8% 6%
Nintendo Handhelds 3% 1%
Microsoft Xbox 1% 4%
Accessories and other 0% 6%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
------------ -----------
January 31, October 31,
2008 2007
------------ -----------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 54,388 $ 77,757
Accounts receivable, net of allowances of
$52,778 and $63,324 at January 31, 2008 and
October 31, 2007, respectively 63,337 104,937
Inventory 82,487 99,331
Software development costs and licenses 157,153 141,441
Prepaid taxes and taxes receivable 23,479 40,316
Prepaid expenses and other 34,805 34,741
--------------------------------------------- ------------ -----------
Total current assets 415,649 498,523
--------------------------------------------- ------------ -----------
Fixed assets, net 41,515 44,986
Software development costs and licenses, net
of current portion 35,199 34,465
Goodwill 233,008 204,845
Other intangibles, net 30,170 31,264
Other assets 17,544 17,060
--------------------------------------------- ------------ -----------
Total assets $ 773,085 $831,143
============================================= ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 68,096 $128,782
Accrued expenses and other current
liabilities 115,647 146,835
Deferred revenue 32,527 36,544
--------------------------------------------- ------------ -----------
Total current liabilities 216,270 312,161
--------------------------------------------- ------------ -----------
Deferred revenue 25,000 25,000
Line of credit 36,000 18,000
Income taxes payable 28,414 -
Other long-term liabilities 5,285 4,828
--------------------------------------------- ------------ -----------
Total liabilities 310,969 359,989
--------------------------------------------- ------------ -----------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 100,000 shares 761 743
authorized; 76,126 and 74,273 shares issued
and outstanding at January 31, 2008 and
October 31, 2007, respectively
Additional paid-in capital 549,562 513,297
Accumulated deficit (116,819) (77,747)
Accumulated other comprehensive income 28,612 34,861
--------------------------------------------- ------------ -----------
Total stockholders' equity 462,116 471,154
--------------------------------------------- ------------ -----------
--------------------------------------------- ------------ -----------
Total liabilities and stockholders'
equity $ 773,085 $831,143
============================================= ============ ===========
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
Three months ended January 31,
------------------------------
2008 2007
--------------- --------------
Operating activities:
Net loss $ (37,997) $ (21,548)
-------------------------------------- --------------- --------------
Adjustments to reconcile net loss to
net cash provided by (used for)
operating activities:
Amortization and impairment of
software development costs and
licenses (1) 18,581 18,835
Depreciation and amortization of
long-lived assets 6,409 6,661
Amortization and impairment of
intellectual property 351 925
Stock-based compensation (2) 6,073 3,992
Benefit for deferred income taxes (107) (80)
Foreign currency transaction gain and
other (1,387) (604)
Changes in assets and liabilities, net
of effect from purchases of
businesses:
Accounts receivable 42,420 63,891
Inventory 16,844 13,326
Software development costs and
licenses (34,023) (38,315)
Prepaid expenses, other current and
other non-current assets 17,551 25,431
Accounts payable, accrued expenses,
deferred revenue, income taxes
payable and (74,080) (60,391)
other liabilities
-------------------------------------- --------------- --------------
Total adjustments (1,368) 33,671
-------------------------------------- --------------- --------------
Net cash (used for) provided by
operating activities (39,365) 12,123
-------------------------------------- --------------- --------------
Investing activities:
Purchase of fixed assets (1,370) (7,742)
Payments for purchases of businesses,
net of cash acquired (151) -
-------------------------------------- --------------- --------------
Net cash used for investing activities (1,521) (7,742)
-------------------------------------- --------------- --------------
Financing activities:
Proceeds from exercise of options 937 -
Net borrowings on line of credit 18,000 -
Payment of debt issuance costs (979) -
Repurchase of common stock - (12)
-------------------------------------- --------------- --------------
Net cash provided by (used for)
financing activities 17,958 (12)
-------------------------------------- --------------- --------------
Effects of exchange rates on cash and
cash equivalents (441) 1,302
-------------------------------------- --------------- --------------
Net (decrease) increase in cash and
cash equivalents (23,369) 5,671
Cash and cash equivalents, beginning
of year 77,757 132,480
-------------------------------------- --------------- --------------
Cash and cash equivalents, end of
period $ 54,388 $ 138,151
====================================== =============== ==============
(1) Excludes stock-based compensation
(2) Includes the net effects of capitalization and amortization of
stock-based compensation
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
----------------------------
Non-GAAP
Three Business Profess- three
months reorgani- ional Stock- months
ended zation fees and based ended
January and legal compen- January
31, 2008 related matters sation 31, 2008
--------- --------- -------- --------- ---------
Net revenue $240,442 $ - $ - $ - $240,442
--------------------- --------- --------- -------- --------- ---------
Cost of goods sold:
Product costs 148,152 - - - 148,152
Software development
costs and royalties 22,713 - - (746) 21,967
Internal royalties 6,145 - - - 6,145
Licenses 8,998 - - - 8,998
--------------------- --------- --------- -------- --------- ---------
Total cost of goods
sold 186,008 - - (746) 185,262
--------------------- --------- --------- -------- --------- ---------
Gross profit 54,434 - - 746 55,180
Selling and marketing 33,729 - - (867) 32,862
General and
administrative 31,402 - (1,494) (3,372) 26,536
Research and
development 15,810 - - (1,088) 14,722
Business
reorganization and
related 162 (162) - - -
Depreciation and
amortization 6,409 - - - 6,409
--------------------- --------- --------- -------- --------- ---------
Total operating
expenses 87,512 (162) (1,494) (5,327) 80,529
--------------------- --------- --------- -------- --------- ---------
Loss from operations (33,078) 162 1,494 6,073 (25,349)
Interest and other,
net (152) - - - (152)
--------------------- --------- --------- -------- --------- ---------
Loss before income
taxes (33,230) 162 1,494 6,073 (25,501)
Income taxes 4,767 - - - 4,767
--------------------- --------- --------- -------- --------- ---------
Net loss $(37,997) $ 162 $ 1,494 $ 6,073 $(30,268)
===================== ========= ========= ======== ========= =========
Basic and diluted
loss per share* $ (0.52) $ - $ 0.02 $ 0.08 $ (0.41)
===================== ========= ========= ======== ========= =========
Basic and diluted
weighted average
shares outstanding 73,148 73,148
===================== ========= =========
EBITDA:
Loss before income
taxes $(33,230) $(25,501)
Interest and other,
net 152 152
Depreciation and
amortization 6,409 6,409
--------- ---------
EBITDA $(26,669) $(18,940)
Add: Business
reorganization and
related 162 -
--------- ---------
Adjusted EBITDA $(26,507) $(18,940)
========= =========
*Basic and diluted loss per share may not add due to rounding
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
---------------------------
Non-GAAP
Three Business Profess- three
months reorgani- ional Stock- months
ended zation fees and based ended
January and legal compen- January
31, 2007 related matters sation 31, 2007
--------- --------- -------- -------- ----------
Net revenue $277,340 $ - $ - $ - $ 277,340
--------------------- --------- --------- -------- -------- ----------
Cost of goods sold:
Product costs 164,143 - - - 164,143
Software development
costs and royalties 22,879 - - (545) 22,334
Internal royalties 9,478 - - - 9,478
Licenses 7,725 - - - 7,725
--------------------- --------- --------- -------- -------- ----------
Total cost of goods
sold 204,225 - - (545) 203,680
--------------------- --------- --------- -------- -------- ----------
Gross profit 73,115 - - 545 73,660
Selling and marketing 35,024 - - (307) 34,717
General and
administrative 38,614 - (7,225) (1,954) 29,435
Research and
development 14,150 - - (1,186) 12,964
Business
reorganization and
related - - - - -
Depreciation and
amortization 6,661 - - - 6,661
--------------------- --------- --------- -------- -------- ----------
Total operating
expenses 94,449 - (7,225) (3,447) 83,777
--------------------- --------- --------- -------- -------- ----------
Loss from operations (21,334) - 7,225 3,992 (10,117)
Interest and other,
net 862 - - - 862
--------------------- --------- --------- -------- -------- ----------
Loss before income
taxes (20,472) - 7,225 3,992 (9,255)
Income taxes 1,076 - - - 1,076
--------------------- --------- --------- -------- -------- ----------
Net loss $(21,548) $ - $ 7,225 $ 3,992 $ (10,331)
===================== ========= ========= ======== ======== ==========
Basic and diluted
loss per share* $ (0.30) $ - $ 0.10 $ 0.06 $ (0.14)
===================== ========= ========= ======== ======== ==========
Basic and diluted
weighted average
shares outstanding 71,360 71,360
===================== ========= ==========
EBITDA:
Loss before income
taxes $(20,472) $ (9,255)
Interest and other,
net (862) (862)
Depreciation and
amortization 6,661 6,661
--------- ----------
EBITDA $(14,673) $ (3,456)
Add: Business
reorganization and
related - -
--------- ----------
Adjusted EBITDA $(14,673) $ (3,456)
========= ==========
*Basic and diluted loss per share may not add due to rounding
CONTACT: Take-Two Interactive Software, Inc.
Corporate Press/Investor Relations:
Meg Maise, 646-536-2932
meg.maise@take2games.com