Take-Two News Release
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Take-Two Interactive Software, Inc. Reports Record Third Quarter Fiscal 2008 Financial Results
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Non-GAAP EPS is $0.93, versus ($0.62) Non-GAAP Net Loss a Year Ago
Top and Bottom Line Results Exceed High End of Guidance
NEW YORK--(BUSINESS WIRE)--Sept. 4, 2008--Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today announced financial results for its third quarter ended July 31, 2008, which exceeded the Company's previously issued guidance. Net revenue for the third fiscal quarter was $433.8 million, compared to $206.4 million for the same quarter of fiscal 2007. Third quarter sales were led by the blockbuster Grand Theft Auto IV, as well as Top Spin 3 and Sid Meier's Civilization(R) Revolution(TM). Net income for the third quarter was $51.8 million or $0.67 per share, compared to a net loss of ($58.5) million or ($0.81) per share in the third quarter of fiscal 2007. The third quarter results include $12.6 million in stock-based compensation expense ($0.16 per share); $5.4 million in professional fees and legal expenses, primarily related to Electronic Arts' unsolicited tender offer ($0.07 per share); and $1.8 million in business reorganization costs ($0.02 per share). Results for the third quarter of 2007 included $10.8 million of business reorganization costs, legal expenses and other professional fees ($0.15 per share); as well as $2.8 million in stock-based compensation expense ($0.04 per share). Non-GAAP net income was $71.5 million or $0.93 per share in the third quarter, compared to a net loss of ($44.9) million or ($0.62) per share in the third 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.) For the nine months ended July 31, 2008, net revenues were $1,214.1 million, compared to $689.2 million for the same period a year ago. Net income for the first nine months of fiscal 2008 was $112.1 million or $1.48 per share, compared to a loss of ($131.3) million or ($1.83) for the 2007 period. Results for the first nine months of fiscal 2008 include $31.1 million in stock-based compensation expense ($0.41 per share); $10.7 million in professional fees and legal expenses, primarily related to Electronic Arts' unsolicited tender offer ($0.14 per share); and $2.9 million in business reorganization costs ($0.04 per share). Results for the first nine months of fiscal 2007 included $34.3 million of business reorganization costs, legal expenses and other professional fees ($0.48 per share); as well as $12.6 million in stock-based compensation expense ($0.18 per share). Non-GAAP net income was $156.6 million or $2.07 per share in the first nine months of 2008, compared to a net loss of ($84.4) million or ($1.18) per share in the comparable period of 2007. (Please refer to Non-GAAP Financial Measures and reconciliation information included later in this release.) Business Highlights Among the significant recent business developments, Take-Two noted the following:
-- Sales of Rockstar Games' blockbuster Grand Theft Auto IV
continued to exceed the Company's expectations. Over 10
million units have been sold through to consumers as of August
16, 2008.
-- Carnival Games(TM), a wholly owned and internally developed
title for the Wii(TM) home video game system from Nintendo and
Nintendo DS(TM), has shipped over 2 million units since its
debut in late August 2007. 2K Play will be expanding the
franchise with Carnival Games: Mini-Golf for the Wii in the
fourth quarter of fiscal 2008.
-- Gary Dale was named Chief Operating Officer of Take-Two,
responsible for Take-Two's publishing labels, sales
activities, international expansion and business development
initiatives. He had previously served as Executive Vice
President of Take-Two.
"Take-Two's exceptionally robust third quarter results reflected our continuing efforts to build a diverse roster of outstanding entertainment software brands, supported by an increasingly productive and efficient business organization," said Strauss Zelnick, Chairman of Take-Two. "Thanks in particular to the creativity of our global development teams and their passion for producing great entertainment, we are benefiting from a portfolio that is the strongest in our Company's history, as well as one of the most valuable in our industry." Ben Feder, Chief Executive Officer of Take-Two, noted, "I'm extremely pleased with our strong position heading into the holiday season. Our world-class holiday portfolio includes Grand Theft Auto IV, Top Spin 3, Sid Meier's Civilization Revolution, and Carnival Games, as well as upcoming hits such as Midnight Club: Los Angeles, BioShock for PLAYSTATION(R)3, and a range of sports titles. Longer term, we're sharply focused on bringing our popular products to new regions and new markets, as we continue to seek opportunities for profitable growth and enhanced stockholder value." Financial Guidance Take-Two's guidance for the fourth quarter and fiscal year ending October 31, 2008 is detailed below. The Company has increased its guidance for fiscal year 2008, while reducing its guidance for the fourth quarter, primarily due to the significantly better than expected third quarter results and shifts in the timing of certain product releases, the most significant of which are Midnight Club: Los Angeles and Midnight Club: LA Remix, which will now be released on October 21st and October 24th in North America and Europe, respectively.
Revenue* Non-GAAP EPS (a)(b)
------------------ ---------------------
Fourth quarter ending $285 to $335 $0.01 to $0.05
10/31/2008
Fiscal year ending $1,500 to $1,550 $2.08 to $2.12
10/31/2008
* In millions (a) The Company's non-GAAP EPS estimates for the fourth quarter and fiscal year ending October 31, 2008 exclude approximately $0.18 and $0.59 per share, respectively, of stock-based compensation expense; and approximately $0.03 and $0.21 per share, respectively, of professional fees and legal expenses related to unusual matters, including the Electronic Arts tender offer and the Company's related review of strategic alternatives; as well as business reorganization costs. The Company's stock-based compensation expense for the fourth quarter and fiscal 2008 reflects the cost of approximately 2 million stock options and 1.5 million shares issued to ZelnickMedia that are subject to variable accounting. Actual expense to be recorded in connection with these options and shares is dependent upon several factors, including future changes in Take-Two's stock price. (b) EPS estimates reflect tax expense primarily for international operations. Key assumptions underlying the Company's guidance include continued consumer acceptance of the Xbox 360(R) video game and entertainment system from Microsoft, PLAYSTATION(R)3 computer entertainment system and Wii(TM) home video game system from Nintendo; the ability to develop and publish products that capture market share for these current generation systems while continuing to leverage opportunities on prior generation platforms; as well as the timely delivery of the titles detailed in this release. Product Pipeline The following titles shipped during the third quarter of fiscal 2008: Title Platform ---------------------------------------------------------------------- Carnival Games(TM) DS Don King Presents: Prizefighter Xbox 360 MLB(R) Power Pros 2008 Wii, PS2 Sid Meier's Civilization(R) Revolution(TM) Xbox 360, PS3, DS Top Spin 3 Xbox 360, PS3, Wii, DS The following titles are planned for release in the remainder of fiscal 2008: Title Platform ---------------------------------------------------------------------- BioShock(R) PS3 Carnival Games: Mini-Golf(TM) Wii Dora the Explorer: Dora Saves the Snow Princess Wii, PS2, DS Go, Diego, Go!: Great Dinosaur Rescue Wii, PS2, DS Grand Theft Auto IV (Japanese edition) Xbox 360, PS3 Midnight Club: Los Angeles Xbox 360, PS3 Midnight Club: LA Remix PSP NBA(R) 2K9 Multiple platforms NHL(R) 2K9 Multiple platforms Sid Meier's Civilization IV: Colonization(TM) Games for Windows(R) The Wonder Pets!: Save the Animals DS Take-Two's line up announced to date for fiscal 2009 includes the following titles:
Title Platform
----------------------------------------------------------------------
BioShock(R) 2 TBA
Borderlands(TM) Xbox 360, PS3, Games for
Windows(R)
Champions Online(TM) TBA (MMOG)
Grand Theft Auto: IV PC
Grand Theft Auto: Chinatown Wars DS
Grand Theft Auto IV episodic content Xbox 360
Mafia II Multiple platforms
Major League Baseball(R) 2K9 Multiple platforms
MLB(R) Superstars Wii
NBA(R) 2K10 Multiple platforms
NHL(R) 2K10 Multiple platforms
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 that exclude certain non-recurring or non-cash items. Non-GAAP gross profit, income (loss) from operations, net income (loss) and earnings (loss) per share are measures that exclude certain non-recurring or non-cash items and should be considered in addition to results prepared in accordance with GAAP. They 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. The non-GAAP measures exclude the following items from the Company's statements of operations:
-- Business reorganization, restructuring and related expenses
-- Stock-based compensation
-- Professional fees and expenses associated with unusual legal
and other matters, including the Company's strategic review
process
-- Income tax effects of the items listed above
In addition, the Company may consider whether other significant non-recurring items that arise in the future should also be excluded from the non-GAAP financial measures it uses. 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 certain items as follows: Business reorganization, restructuring and related expenses In March 2007, the Company's stockholders elected a new slate of members to Take-Two's Board of Directors, who immediately removed the Company's former President and Chief Executive Officer. Subsequently, the Company's former Chief Financial Officer resigned. As a result of these actions and the implementation of a business reorganization plan, the Company incurred significant costs in the fiscal year ended October 31, 2007 to reduce headcount, relocate employees and consolidate sales and operational functions. The Company recorded additional business reorganization costs in the three and nine months ended July 31, 2008, and expects that additional business reorganization, restructuring and related costs will be recorded in the remainder of the 2008 fiscal year. Such costs are expected to relate to severance, asset write-offs and associated professional fees. The Company does not engage in reorganization activities on a regular basis and therefore believes it is appropriate to exclude business reorganization expenses from its non-GAAP financial measures. 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 their short and long-term operating plans. The Company places greater emphasis on stockholder dilution than accounting charges when assessing the impact of stock-based equity awards. Professional fees and expenses associated with unusual legal and other matters, including the Company's strategic review process The Company has incurred significant legal, consulting and investment banking expenses related to the tender offer by Electronic Arts Inc. to acquire all of the Company's outstanding shares, which was launched in March 2008 and expired in August 2008, and the Company's related strategic review process. The Company expects to continue to incur expenses for professional fees related to its strategic review process until that process is completed. Additionally, the Company has realized significant legal and other professional fees associated with both the investigation of its historical stock option granting process and the Company's responses to related governmental inquiries and civil lawsuits. One of management's primary objectives is to bring conclusion to its outstanding legal matters. The Company continues to incur expenses for professional fees and has accrued for legal settlements that are outside its ordinary course of business. As a result, the Company has excluded such expenses from its non-GAAP financial measures. EBITDA and Adjusted EBITDA Earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA") is a financial measure not calculated and presented in accordance with U.S. GAAP. Management uses EBITDA adjusted for business reorganization and related expenses ("Adjusted EBITDA"), among other measures, in evaluating the performance of the Company's business units. Adjusted EBITDA is also a significant component of the Company's incentive compensation plans. Adjusted EBITDA should not be considered in isolation from, or as a substitute for, net income/(loss) prepared in accordance with GAAP. Reclassifications Certain prior year amounts have been reclassified to conform to current year presentation. About Take-Two Interactive Software Headquartered in New York City, Take-Two Interactive Software, Inc., is a global developer, marketer, distributor and publisher of interactive entertainment software games for the PC, PLAYSTATION(R)3 and PlayStation(R)2 computer entertainment systems, PSP(R) (PlayStation(R)Portable) system, Xbox 360(R) and Xbox(R) video game and entertainment systems from Microsoft, Wii(TM), 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 2K Play, and distributes software, hardware and accessories in North America through its Jack of All Games subsidiary. 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. Microsoft, Windows, the Windows Vista Start button, Xbox, Xbox 360, Xbox LIVE, and the Xbox logos are trademarks of the Microsoft group of companies, and 'Games for Windows' and the Windows Vista Start button logo are used under license from Microsoft. "PlayStation", "PLAYSTATION", and "PS" Family logo are registered trademarks of Sony Computer Entertainment Inc.
Wii and Nintendo DS are trademarks of Nintendo. (C) 2006 Nintendo.
Important Legal Information
This press release may contain 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 risks and uncertainties include the matters relating to the Special Committee's investigation of the Company's stock option grants and the restatement of our consolidated financial statements. The investigation and conclusions of the Special Committee may result in claims and proceedings relating to such matters, including previously disclosed shareholder and derivative litigation and actions by the Securities and Exchange Commission and/or other governmental agencies and negative tax or other implications for the Company resulting from any accounting adjustments or other factors. In addition, the Company has announced it is currently evaluating its strategic alternatives. Further risks and uncertainties associated with the Company's process to evaluate its strategic alternatives are as follows: the risk that key employees may pursue other employment opportunities due to concerns as to their employment security with the Company; the risk that the future trading price of our common stock is likely to be volatile and could be subject to wide price fluctuations; and the risk that stockholder litigation in connection with the Company's process to evaluate its strategic alternatives (including stockholder litigation relating to Electronic Arts Inc.'s tender offer to acquire the Company's outstanding shares that expired on August 18, 2008) or otherwise, may result in significant costs of defense, indemnification and liability. Other important factors are described in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2007, in the section entitled "Risk Factors," as updated in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2008, in the section entitled "Risk Factors." All forward-looking statements are qualified by these cautionary statements and are made only as of the date they are made. This communication does not constitute an offer to sell or invitation to purchase any securities or the solicitation of an offer to buy any securities, pursuant to the Company's process to evaluate its strategic alternatives or otherwise.
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Three months ended Nine months ended
July 31, July 31,
------------------- ----------------------
2008 2007 2008 2007
--------- --------- ----------- ----------
Net revenue $433,836 $206,415 $1,214,088 $ 689,191
--------------------------- --------- --------- ----------- ----------
Cost of goods sold:
Product costs 154,362 107,458 487,557 377,280
Software development
costs and royalties 45,721 40,600 126,123 93,790
Internal royalties 51,971 3,536 110,768 17,890
Licenses 7,602 16,685 39,475 43,126
--------------------------- --------- --------- ----------- ----------
Total cost of goods sold 259,656 168,279 763,923 532,086
--------------------------- --------- --------- ----------- ----------
Gross profit 174,180 38,136 450,165 157,105
Selling and marketing 42,856 35,223 122,534 98,406
General and
administrative 47,070 34,703 127,673 113,788
Research and development 17,239 11,210 47,877 37,296
Business reorganization
and related 1,771 7,100 2,877 16,062
Depreciation and
amortization 6,201 7,006 20,126 20,743
--------------------------- --------- --------- ----------- ----------
Total operating expenses 115,137 95,242 321,087 286,295
--------------------------- --------- --------- ----------- ----------
Income (loss) from
operations 59,043 (57,106) 129,078 (129,190)
Interest and other income
(expense), net 874 748 (108) 2,632
--------------------------- --------- --------- ----------- ----------
Income (loss) before income
taxes 59,917 (56,358) 128,970 (126,558)
Income taxes 8,091 2,188 16,919 4,785
--------------------------- --------- --------- ----------- ----------
Net income (loss) $ 51,826 $(58,546) $ 112,051 $(131,343)
=========================== ========= ========= =========== ==========
Earnings (loss) per share:
--------------------------- --------- --------- ----------- ----------
Basic $ 0.68 $ (0.81) $ 1.50 $ (1.83)
Diluted $ 0.67 $ (0.81) $ 1.48 $ (1.83)
=========================== ========= ========= =========== ==========
Weighted average shares
outstanding:
--------------------------- --------- --------- ----------- ----------
Basic 75,866 72,075 74,701 71,714
Diluted 76,975 72,075 75,640 71,714
=========================== ========= ========= =========== ==========
Three months ended Nine months ended
July 31, July 31,
------------------- ----------------------
OTHER INFORMATION 2008 2007 2008 2007
--------------------------- --------- --------- ----------- ----------
Total revenue mix
Publishing 88% 76% 81% 69%
Distribution 12% 24% 19% 31%
Geographic revenue mix
North America 54% 78% 65% 76%
International 46% 22% 35% 24%
Publishing revenue
platform mix
Microsoft Xbox 360 44% 34% 43% 23%
Sony PLAYSTATION 3 37% 20% 33% 12%
Nintendo Wii 7% 6% 8% 2%
Sony PlayStation 2 5% 18% 8% 31%
Sony PSP 3% 7% 4% 13%
PC 2% 8% 3% 11%
Nintendo Handhelds 2% 3% 1% 2%
Other 0% 4% 0% 6%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
----------- -----------
July 31, October 31,
2008 2007
----------- -----------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 338,701 $ 77,757
Accounts receivable, net of allowances of
$58,210 and $63,324 at July 31, 2008 and
October 31, 2007, respectively 106,354 104,937
Inventory 71,574 99,331
Software development costs and licenses 127,810 141,441
Prepaid taxes and taxes receivable 24,656 40,316
Prepaid expenses and other 46,047 34,741
---------------------------------------------- ----------- -----------
Total current assets 715,142 498,523
---------------------------------------------- ----------- -----------
Fixed assets, net 38,247 44,986
Software development costs and licenses, net
of current portion 57,891 34,465
Goodwill 240,855 204,845
Other intangibles, net 27,636 31,264
Other assets 12,791 17,060
---------------------------------------------- ----------- -----------
Total assets $1,092,562 $831,143
============================================== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 149,526 $128,782
Accrued expenses and other current
liabilities 184,468 146,835
Deferred revenue 58,332 36,544
---------------------------------------------- ----------- -----------
Total current liabilities 392,326 312,161
---------------------------------------------- ----------- -----------
Deferred revenue - 25,000
Line of credit - 18,000
Income taxes payable 27,436 -
Other long-term liabilities 7,219 4,828
---------------------------------------------- ----------- -----------
Total liabilities 426,981 359,989
---------------------------------------------- ----------- -----------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 100,000 shares
authorized; 77,586 and 74,273 shares issued
and outstanding at July 31, 2008 and October
31, 2007, respectively 776 743
Additional paid-in capital 594,589 513,297
Retained earnings (accumulated deficit) 33,229 (77,747)
Accumulated other comprehensive income 36,987 34,861
---------------------------------------------- ----------- -----------
Total stockholders' equity 665,581 471,154
---------------------------------------------- ----------- -----------
---------------------------------------------- ----------- -----------
Total liabilities and stockholders'
equity $1,092,562 $831,143
============================================== =========== ===========
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
Nine months ended
July 31,
---------------------
2008 2007
---------- ----------
Operating activities:
Net income (loss) $ 112,051 $(131,343)
----------------------------------------------- ---------- ----------
Adjustments to reconcile net income (loss) to
net cash provided by (used for) operating
activities:
Amortization and impairment of software
development costs and licenses (1) 104,565 79,320
Depreciation and amortization of long-lived
assets 20,126 20,743
Amortization and impairment of intellectual
property 1,632 7,278
Stock-based compensation (2) 31,062 12,554
Provision (benefit) for deferred income
taxes 99 (159)
Foreign currency transaction loss (gain) and
other 1,203 (805)
Changes in assets and liabilities, net of
effect from purchases of businesses:
Accounts receivable (1,417) 48,273
Inventory 27,757 19,730
Software development costs and licenses (115,913) (117,447)
Prepaid expenses, other current and other
non-current assets 9,474 16,652
Accounts payable, accrued expenses, deferred
revenue, income taxes payable and other
liabilities 77,209 (27,551)
-------------------------------------------- ---------- ----------
---------- ----------
Total adjustments 155,797 58,588
----------------------------------------------- ---------- ----------
Net cash provided by (used for) operating
activities 267,848 (72,755)
----------------------------------------------- ---------- ----------
Investing activities:
Purchase of fixed assets (9,026) (16,629)
Purchases of businesses, net of cash acquired (4,037) (982)
----------------------------------------------- ---------- ----------
Net cash used for investing activities (13,063) (17,611)
----------------------------------------------- ---------- ----------
Financing activities:
Proceeds from exercise of employee stock
options 25,363 5,501
Payments on line of credit (83,000) -
Borrowings on line of credit 65,000 11,000
Payment of debt issuance costs (962) (1,764)
----------------------------------------------- ---------- ----------
Net cash provided by financing activities 6,401 14,737
----------------------------------------------- ---------- ----------
Effects of exchange rates on cash and cash
equivalents (242) 4,774
----------------------------------------------- ---------- ----------
Net increase (decrease) in cash and cash
equivalents 260,944 (70,855)
Cash and cash equivalents, beginning of year 77,757 132,480
----------------------------------------------- ---------- ----------
Cash and cash equivalents, end of period $ 338,701 $ 61,625
=============================================== ========== ==========
(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
July and legal compen- July
31, 2008 related matters sation 31, 2008
---------- --------- -------- -------- ----------
Net revenue $ 433,836 $ - $ - $ - $ 433,836
-------------------- ---------- --------- -------- -------- ----------
Cost of goods sold:
Product costs 154,362 - - - 154,362
Software
development costs
and royalties 45,721 - - (3,404) 42,317
Internal royalties 51,971 - - - 51,971
Licenses 7,602 - - - 7,602
-------------------- ---------- --------- -------- -------- ----------
Total cost of goods
sold 259,656 - - (3,404) 256,252
-------------------- ---------- --------- -------- -------- ----------
Gross profit 174,180 - - 3,404 177,584
Selling and
marketing 42,856 - - (545) 42,311
General and
administrative 47,070 - (5,379) (6,922) 34,769
Research and
development 17,239 - - (1,687) 15,552
Business
reorganization
and related 1,771 (1,771) - - -
Depreciation and
amortization 6,201 - - - 6,201
-------------------- ---------- --------- -------- -------- ----------
Total operating
expenses 115,137 (1,771) (5,379) (9,154) 98,833
-------------------- ---------- --------- -------- -------- ----------
Income from
operations 59,043 1,771 5,379 12,558 78,751
Interest and other
income, net 874 - - - 874
-------------------- ---------- --------- -------- -------- ----------
Income before income
taxes 59,917 1,771 5,379 12,558 79,625
Income taxes 8,091 - - - 8,091
-------------------- ---------- --------- -------- -------- ----------
Net income $ 51,826 $ 1,771 $ 5,379 $12,558 $ 71,534
==================== ========== ========= ======== ======== ==========
Earnings per share:*
-------------------- ---------- --------- -------- -------- ----------
Basic $ 0.68 $ 0.02 $ 0.07 $ 0.17 $ 0.94
Diluted $ 0.67 $ 0.02 $ 0.07 $ 0.16 $ 0.93
==================== ========== ========= ======== ======== ==========
Weighted average
shares outstanding
------------------------------- --------- -------- -------- ----------
Basic 75,866 75,866 75,866 75,866 75,866
Diluted 76,975 76,975 76,975 76,975 76,975
==================== ========== ========= ======== ======== ==========
EBITDA:
Income before income
taxes $ 59,917 $ 79,625
Interest (689) (689)
Depreciation and
amortization 6,201 6,201
---------- ----------
EBITDA $ 65,429 $ 85,137
Add: Business
reorganization and
related 1,771 -
---------- ----------
Adjusted EBITDA $ 67,200 $ 85,137
========== ==========
*Basic and diluted earnings 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
July and legal compen- July
31, 2007 related matters sation 31, 2007
----------- --------- -------- -------- ----------
Net revenue $ 206,415 $ - $ - $ - $ 206,415
------------------- ----------- --------- -------- -------- ----------
Cost of goods sold:
Product costs 107,458 - - - 107,458
Software
development
costs and
royalties 40,600 - - (1,175) 39,425
Internal
royalties 3,536 - - - 3,536
Licenses 16,685 - - - 16,685
------------------- ----------- --------- -------- -------- ----------
Total cost of goods
sold 168,279 - - (1,175) 167,104
------------------- ----------- --------- -------- -------- ----------
Gross profit 38,136 - - 1,175 39,311
Selling and
marketing 35,223 - - (260) 34,963
General and
administrative 34,703 - (4,013) (344) 30,346
Research and
development 11,210 - - (722) 10,488
Business
reorganization
and related 7,100 (6,835) - (265) -
Depreciation and
amortization 7,006 - - - 7,006
------------------- ----------- --------- -------- -------- ----------
Total operating
expenses 95,242 (6,835) (4,013) (1,591) 82,803
------------------- ----------- --------- -------- -------- ----------
Loss from
operations (57,106) 6,835 4,013 2,766 (43,492)
Interest and other
income, net 748 - - - 748
------------------- ----------- --------- -------- -------- ----------
Loss before income
taxes (56,358) 6,835 4,013 2,766 (42,744)
Income taxes 2,188 - - - 2,188
------------------- ----------- --------- -------- -------- ----------
Net loss $ (58,546) $ 6,835 $ 4,013 $ 2,766 $ (44,932)
=================== =========== ========= ======== ======== ==========
Loss per share:*
------------------- ----------- --------- -------- -------- ----------
Basic $ (0.81) $ 0.09 $ 0.06 $ 0.04 $ (0.62)
Diluted $ (0.81) $ 0.09 $ 0.06 $ 0.04 $ (0.62)
=================== =========== ========= ======== ======== ==========
Weighted average
shares outstanding
------------------------------- --------- -------- -------- ----------
Basic 72,075 72,075 72,075 72,075 72,075
Diluted 72,075 72,075 72,075 72,075 72,075
=================== =========== ========= ======== ======== ==========
EBITDA:
Loss before income
taxes $ (56,358) $ (42,744)
Interest (447) (447)
Depreciation and
amortization 7,006 7,006
----------- ----------
EBITDA $ (49,799) $ (36,185)
Add: Business
reorganization and
related 7,100 -
----------- ----------
Adjusted EBITDA $ (42,699) $ (36,185)
=========== ==========
*Basic and diluted loss per share may not add due to rounding
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
-----------------------------
Non-GAAP
Nine Business Profess- nine
months reorgani- ional Stock- months
ended zation fees and based ended
July and legal compen- July
31, 2008 related matters sation 31, 2008
----------- --------- --------- --------- -----------
Net revenue $1,214,088 $ - $ - $ - $1,214,088
---------------- ----------- --------- --------- --------- -----------
Cost of goods
sold:
Product costs 487,557 - - - 487,557
Software
development
costs and
royalties 126,123 - - (10,598) 115,525
Internal
royalties 110,768 - - - 110,768
Licenses 39,475 - - - 39,475
---------------- ----------- --------- --------- --------- -----------
Total cost of
goods sold 763,923 - - (10,598) 753,325
---------------- ----------- --------- --------- --------- -----------
Gross profit 450,165 - - 10,598 460,763
Selling and
marketing 122,534 - - (1,926) 120,608
General and
administrative 127,673 - (10,654) (14,874) 102,145
Research and
development 47,877 - - (3,664) 44,213
Business
reorganization
and related 2,877 (2,877) - - -
Depreciation
and
amortization 20,126 - - - 20,126
---------------- ----------- --------- --------- --------- -----------
Total operating
expenses 321,087 (2,877) (10,654) (20,464) 287,092
---------------- ----------- --------- --------- --------- -----------
Income from
operations 129,078 2,877 10,654 31,062 173,671
Interest and
other expense,
net (108) - - - (108)
---------------- ----------- --------- --------- --------- -----------
Income before
income taxes 128,970 2,877 10,654 31,062 173,563
Income taxes 16,919 - - - 16,919
---------------- ----------- --------- --------- --------- -----------
Net income $ 112,051 $ 2,877 $ 10,654 $ 31,062 $ 156,644
================ =========== ========= ========= ========= ===========
Earnings per
share:*
---------------- ----------- --------- --------- --------- -----------
Basic $ 1.50 $ 0.04 $ 0.14 $ 0.42 $ 2.10
Diluted $ 1.48 $ 0.04 $ 0.14 $ 0.41 $ 2.07
================ =========== ========= ========= ========= ===========
Weighted average
shares
outstanding
---------------- ----------- --------- --------- --------- -----------
Basic 74,701 74,701 74,701 74,701 74,701
Diluted 75,640 75,640 75,640 75,640 75,640
================ =========== ========= ========= ========= ===========
EBITDA:
Income before
income taxes $ 128,970 $ 173,563
Interest 464 464
Depreciation and
amortization 20,126 20,126
----------- -----------
EBITDA 149,560 194,153
Add: Business
reorganization
and related 2,877 -
----------- -----------
Adjusted EBITDA $ 152,437 $ 194,153
=========== ===========
*Basic and diluted earnings per share may not add due to rounding
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
Non-GAAP Reconciling Items
-----------------------------
Non-GAAP
Nine Business Profess- nine
months reorgani- ional Stock- months
ended zation fees and based ended
July and legal compen- July
31, 2007 related matters sation 31, 2007
---------- --------- --------- --------- ----------
Net revenue $ 689,191 $ - $ - $ - $ 689,191
------------------ ---------- --------- --------- --------- ----------
Cost of goods
sold:
Product costs 377,280 (5,164) - - 372,116
Software
development
costs and
royalties 93,790 - - (2,208) 91,582
Internal
royalties 17,890 - - - 17,890
Licenses 43,126 - - - 43,126
------------------ ---------- --------- --------- --------- ----------
Total cost of
goods sold 532,086 (5,164) - (2,208) 524,714
------------------ ---------- --------- --------- --------- ----------
Gross profit 157,105 5,164 - 2,208 164,477
Selling and
marketing 98,406 - - (879) 97,527
General and
administrative 113,788 - (15,180) (4,424) 94,184
Research and
development 37,296 - - (2,978) 34,318
Business
reorganization
and related 16,062 (13,997) - (2,065) -
Depreciation and
amortization 20,743 - - - 20,743
------------------ ---------- --------- --------- --------- ----------
Total operating
expenses 286,295 (13,997) (15,180) (10,346) 246,772
------------------ ---------- --------- --------- --------- ----------
Loss from
operations (129,190) 19,161 15,180 12,554 (82,295)
Interest and other
income, net 2,632 - - - 2,632
------------------ ---------- --------- --------- --------- ----------
Loss before income
taxes (126,558) 19,161 15,180 12,554 (79,663)
Income taxes 4,785 - - - 4,785
------------------ ---------- --------- --------- --------- ----------
Net loss $(131,343) $ 19,161 $ 15,180 $ 12,554 $ (84,448)
================== ========== ========= ========= ========= ==========
Loss per share:*
------------------ ---------- --------- --------- --------- ----------
Basic $ (1.83) $ 0.27 $ 0.21 $ 0.18 $ (1.18)
Diluted $ (1.83) $ 0.27 $ 0.21 $ 0.18 $ (1.18)
================== ========== ========= ========= ========= ==========
Weighted average
shares
outstanding
------------------ ---------- --------- --------- --------- ----------
Basic 71,714 71,714 71,714 71,714 71,714
Diluted 71,714 71,714 71,714 71,714 71,714
================== ========== ========= ========= ========= ==========
EBITDA:
Loss before income
taxes $(126,558) $ (79,663)
Interest (2,570) (2,570)
Depreciation and
amortization 20,743 20,743
---------- ----------
EBITDA (108,385) (61,490)
Add: Business
reorganization
and related 21,226 -
---------- ----------
Adjusted EBITDA $ (87,159) $ (61,490)
========== ==========
*Basic and diluted loss per share may not add due to rounding
CONTACT: Take-Two Interactive Software, Inc.
Meg Maise, 646-536-2932
Corporate Press/Investor Relations
meg.maise@take2games.com
SOURCE: Take-Two Interactive Software, Inc.
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