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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) March 7, 2006
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TAKE-TWO INTERACTIVE SOFTWARE, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-29230 51-0350842
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
622 Broadway, New York, New York 10012
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (646) 536-2842
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On March 7, 2006 Take-Two Interactive Software, Inc. (the "Company") issued
a news release reporting the financial results of the Company for its fiscal
first quarter ended January 31, 2006. A copy of the news release is attached to
this Current Report as Exhibit 99.1.
The information in this Current Report on Form 8-K, including the exhibit
included herewith, is furnished pursuant to Item 2.02 and shall not be deemed to
be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liabilities of that section.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release dated March 7, 2006 relating to Take-Two Interactive
Software, Inc.'s financial results for its fiscal first quarter ended
January 31, 2006.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TAKE-TWO INTERACTIVE SOFTWARE, INC.
Date: March 7, 2006 By: /s/ Karl H. Winters
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Karl H. Winters
Chief Financial Officer
INDEX TO EXHIBITS
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Exhibit No. Description
99.1 Press Release dated March 7, 2006 relating to Take-Two
Interactive Software, Inc.'s financial results for its fiscal
first quarter ended January 31, 2006.
Exhibit 99.1
Take-Two Interactive Software,
Inc. Reports First Quarter Fiscal 2006 Financial Results
NEW YORK--(BUSINESS WIRE)--March 7, 2006--Take-Two Interactive
Software, Inc. (NASDAQ:TTWO) today announced financial results for its
first quarter ended January 31, 2006.
Net sales for the first quarter were $265.0 million compared to
$502.5 million for the first quarter of fiscal 2005 which included
holiday sales of the blockbuster Grand Theft Auto: San Andreas for the
PlayStation(R)2 computer entertainment system. Net loss for the
quarter was $29.1 million or $0.41 per share, compared to net income
of $55.2 million or $0.79 per diluted share in the prior year's first
quarter. The Company's loss per share for the first quarter ended
January 31, 2006 includes the impact of adopting SFAS 123(R),
requiring the expensing of employee stock options beginning on
November 1, 2005.
In addition to the challenging comparison to the strong sales of
Grand Theft Auto: San Andreas last year, Take-Two attributed the lower
first quarter results to continued retail weakness for video game
software and lower retail pricing during the holiday selling season in
both North America and Europe, as the industry began to transition to
new hardware platforms. The Company expects to return to profitability
in its fourth quarter of fiscal 2006.
Take-Two generated approximately $38 million in cash flow from
operations in the quarter, bringing the Company's cash position to
approximately $143 million as of January 31, 2006.
First Quarter Highlights
Rockstar Games' Grand Theft Auto: Liberty City Stories for the
PSP(TM) (PlayStation(R)Portable) system and Grand Theft Auto: San
Andreas for the PlayStation(R)2 were the largest contributors to
revenue during the quarter. Grand Theft Auto: Liberty City Stories was
the number one selling title for the PSP in the U.S. in each month
since its October 2005 launch, as estimated by NPD Funworld(R)*. Also
in the first quarter Rockstar introduced the PlayStation 2 Greatest
Hits and Xbox Platinum Hits versions of Grand Theft Auto: San Andreas.
2K's leading titles in the quarter were Sid Meier's Civilization
IV for PC and NBA 2K6 for the Xbox 360(TM) video game and
entertainment system from Microsoft. Other titles shipped during the
first quarter from 2K included NHL 2K6 and Amped 3, both for Xbox 360;
College Hoops 2K6 for PlayStation 2 and the Xbox(R) video game and
entertainment system from Microsoft; and Torino 2006(TM) for
PlayStation 2, Xbox and PC. Global Star Software's first quarter
releases included Ford vs Chevy for PlayStation 2 and Xbox and Dora
the Explorer: Journey to the Purple Planet for PlayStation 2 and
Nintendo GameCube(TM).
At the Company's Jack of All Games distribution business, sales in
the first quarter decreased year over year due primarily to reduced
sales of current generation hardware and software products and a
decrease in average selling prices of interactive entertainment
products as the industry transitions to next-generation platforms.
Additionally, the limited availability of Xbox 360 hardware resulted
in lower than expected hardware and software sales for this system.
Jack of All Games is continuing to focus on improving fiscal 2006
performance by strategically offering retail partners value-priced
exclusive titles, hardware and software bundles, and multi-game
compilations.
Upcoming Products
Fiscal 2006 second quarter products that have already shipped
include the North American release of 24: The Game exclusively for
PlayStation 2 from 2K Games; College Hoops 2K6 for Xbox 360 from 2K
Sports; and Sudoku Fever(TM) for Game Boy(R) Advance from Global Star.
Titles planned for the second quarter from Rockstar Games include
Midnight Club 3: DUB Edition REMIX for both the PlayStation 2 Greatest
Hits program and the Xbox Platinum Hits collection, shipping next
week, and Grand Theft Auto: Liberty City Stories for PlayStation 2,
planned for release in late April. Second quarter products from 2K
include The Elder Scrolls(R) IV: Oblivion(TM) for PC and Xbox 360; Top
Spin 2 for Xbox 360, Nintendo DS(TM) and Game Boy Advance; Major
League Baseball(R) 2K6 for PlayStation 2, Xbox, Xbox 360, PSP, and
Nintendo GameCube; and World Poker Tour for PSP; and from Global Star,
Hummer Badlands for PlayStation 2 and Xbox.
Additional products expected for 2006 from Rockstar Games include
Table Tennis for Xbox 360, Bully for PlayStation 2 and Xbox; two new
PSP titles, including an all-new Grand Theft Auto title; and a sequel
of a Rockstar brand for a current generation console system. 2K Games'
lineup includes The Da Vinci Code for current generation console
systems and PC, to be released in conjunction with the Columbia
Pictures feature film in May, and Prey on PC and Xbox 360, planned for
release this summer. Fall/winter releases include Family Guy for
current generation console systems, based on the hit Twentieth Century
Fox television series; The Darkness for next generation systems based
on the popular Top Cow Productions' comic book franchise; and
Stronghold Legends for PC. 2K Sports has various sports titles planned
including NBA 2K7, NHL 2K7, College Hoops 2K7, and additional products
based on the Major League Baseball license, as well as several
proprietary sports brands. Global Star is planning Family Feud for
multiple platforms, among other titles.
For 2007, the Company anticipates a strong next generation lineup
from Rockstar Games including sequels to several of Rockstar's most
successful franchises. 2K Games' 2007 pipeline includes the next
generation console title BioShock from 2K's Irrational Games
development studio, among other titles in development. For 2007 and
2008, 2K Sports anticipates a solid lineup of sports titles based on
licenses with Major League Baseball, the National Basketball
Association, the National Hockey League and the National Collegiate
Athletic Association; as well as proprietary unlicensed sports brands
utilizing the development teams responsible for the award winning and
critically acclaimed tennis, snowboarding and boxing games.
Management Comments
Paul Eibeler, President and Chief Executive Officer, stated, "We
are working to manage through the console transition, while
positioning Take-Two for future opportunities. We're taking a hard
look at every aspect of our business and are balancing the need to
manage expenses while investing in creative resources and the
infrastructure needed to support our diversification efforts. Most
importantly, we will continue to focus our development resources on
creating great content and further leveraging our proprietary brands.
Our commitment to quality products for current and next generation
systems is critical to further strengthen Take-Two for the
opportunities we see in 2007 and 2008."
Conference Call
Take-Two will host a conference call today at 4:30 pm Eastern Time
to review fiscal 2006 first quarter results. The call can be accessed
by dialing (877) 407-0984 or (201) 689-8577. A live listen-only
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.
*According to NPD Funworld estimates of U.S. retail video game
sales
About Take-Two Interactive Software, Inc.
Headquartered in New York City, Take-Two Interactive Software,
Inc. 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, Xbox(R)
video game and entertainment system from Microsoft, 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), Auckland, Shanghai and Tokyo. 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 Litigation
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-K for the fiscal year ended October
31, 2005 in the section entitled "Risk Factors".
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Consolidated Condensed Statements of Operations
For the three months ended January 31, 2006 and 2005
(In thousands, except per share data)
Three months ended
January 31,
2006 2005
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Net revenues $ 264,981 $ 502,474
Cost of goods sold
Product costs 160,853 237,485
Royalties 32,867 80,209
Software development costs 15,594 4,205
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Total cost of goods sold 209,314 321,899
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Gross profit 55,667 180,575
Operating expenses
Selling and marketing 41,644 50,931
General and administrative 38,453 28,687
Research and development 17,709 23,417
Depreciation and amortization 6,651 4,786
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Total operating expenses 104,457 107,821
Income (loss) from operations (48,790) 72,754
Interest income, net 253 540
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Income (loss) before income taxes (48,537) 73,294
Provision (benefit) for income taxes (19,415) 18,045
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Net income (loss) $ (29,122) $ 55,249
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Per share data:
Basic:
Weighted average common shares
outstanding 71,429 68,529
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Net income (loss) per share - Basic $ (0.41) $ 0.81
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Diluted:
Weighted average common shares
outstanding 71,429 69,774
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Net income (loss) per share - Diluted $ (0.41) $ 0.79
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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.
OTHER INFORMATION Three months ended
- ----------------- January 31,
2006 2005
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Total revenue mix
Publishing 60% 71%
Distribution 40% 29%
Geographic revenue mix
North America 72% 66%
International 28% 34%
Publishing platform revenue mix
Sony PSP 33% 0%
Sony PlayStation 2 30% 90%
PC 12% 2%
Microsoft Xbox 360 10% 0%
Microsoft Xbox 7% 5%
Nintendo Game Boy Advance 2% 1%
Nintendo GameCube 1% 0%
Other Platforms and Accessories 5% 2%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Consolidated Condensed Balance Sheets
As of January 31, 2006 and October 31, 2005
(In thousands, except share data)
ASSETS January 31, October 31,
2006 2005
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Current assets
Cash and cash equivalents $ 142,897 $ 107,195
Accounts receivable, net of allowances of
$91,170 and $69,904 at January 31, 2006
and October 31, 2005, respectively 84,282 198,068
Inventories 107,413 136,227
Software development costs 77,529 88,826
Licenses 6,717 7,651
Prepaid expenses and other current assets 84,293 64,332
Deferred tax assets 10,875 10,943
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Total current assets 514,006 613,242
Fixed assets, net 48,215 48,617
Software development costs, net of current
portion 40,401 19,602
Licenses, net of current portion 4,417 2,330
Goodwill 190,851 179,893
Intangibles, net 60,481 58,666
Deferred tax assets 6,078 5,506
Other assets 4,204 5,020
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Total assets $ 868,653 $ 932,876
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LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 79,887 $ 133,353
Accrued expenses and other current
liabilities 93,694 90,702
Income taxes payable 6,701 10,220
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Total current liabilities 180,282 234,275
Other long-term liabilities 1,070 2,467
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Total liabilities 181,352 236,742
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Stockholders' equity
Common stock, par value $.01 per share;
100,000,000 shares authorized;
71,470,746 and 70,667,421 shares issued
and outstanding at January 31, 2006 and
October 31, 2005, respectively 715 707
Additional paid-in capital 438,204 418,053
Deferred compensation (11,576) (11,189)
Retained earnings 258,755 287,877
Accumulated other comprehensive income 1,203 686
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Total stockholders' equity 687,301 696,134
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Total liabilities and stockholders'
equity $ 868,653 $ 932,876
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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.
CONTACT: Take-Two Interactive Software, Inc.
Jim Ankner, 646-536-3006
james.ankner@take2games.com