Exhibit 99.1
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| | |
| | FOR IMMEDIATE RELEASE |
CONTACT: | | |
| | |
(Investor Relations) | | (Corporate Press) |
Henry A. Diamond | | Alan Lewis |
Senior Vice President | | Vice President |
Investor Relations & Corporate Communications | | Corporate Communications & Public Affairs |
Take-Two Interactive Software, Inc. | | Take-Two Interactive Software, Inc. |
(646) 536-3005 | | (646) 536-2983 |
Henry.Diamond@take2games.com | | Alan.Lewis@take2games.com |
Take-Two Interactive Software, Inc. Reports Financial Results for First Quarter Fiscal 2012
Net Revenue was $334.4 Million
Non-GAAP Net Income Per Share was $0.02
Company Reiterates Financial Outlook for Fiscal Year 2012
New York, NY — August 8, 2011 — Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported net revenue and Non-GAAP profits for the first quarter of its fiscal year 2012, ended June 30, 2011, which were in line with its most recent financial outlook. In addition, the Company reiterated its financial outlook for the fiscal year 2012, ending March 31, 2012, and provided its initial financial outlook for the second quarter ending September 30, 2011.
For the first quarter ended June 30, 2011, net revenue was $334.4 million, as compared to $375.4 million for the year-ago period. GAAP loss from continuing operations was $8.6 million, or $0.11 per share, as compared to GAAP income from continuing operations of $27.4 million, or $0.31 per diluted share, for the year-ago period. Non-GAAP net income was $2.0 million, or $0.02 per share, as compared to Non-GAAP net income of $40.9 million, or $0.43 per diluted share, for the year-ago period.
The strongest contributors to net revenue in the first quarter included new titles led by L.A. Noire, Duke Nukem Forever®, NBA® 2K11 and Carnival Games®: Monkey See, Monkey Do™, and catalog titles led by the Red Dead Redemption franchise, the Grand Theft Auto franchise and Borderlands™. Digitally delivered content accounted for $24.6 million of net revenue, up 49% year-over-year, driven by offerings for Red Dead Redemption, Borderlands, the Grand Theft Auto franchise, Duke Nukem Forever, the Sid Meier’s Civilization franchise, and L.A. Noire.
Management Comments
Strauss Zelnick, Chairman and CEO of Take-Two, commented, “During the first quarter, we delivered revenue and Non-GAAP profits that were in line with our expectations. Our results benefited from the launch of Rockstar’s groundbreaking and critically acclaimed title — L.A. Noire, the release of Duke Nukem Forever, continued strong sales of NBA 2K11 and Red Dead Redemption, and growth in digitally delivered content. Given our solid performance year-to-date and robust pipeline of upcoming new releases, we are well positioned to be profitable on a Non-GAAP basis in fiscal year 2012.
“Looking ahead to fiscal year 2013, we have already announced three exciting new releases: BioShock Infinite, Spec Ops: The Line, and Borderlands 2, and we have a very strong pipeline of yet-to-be announced titles in development. As a result, we continue to expect to achieve substantial revenue and earnings growth, including Non-GAAP net income in excess of $2.00 per share.
“We also continue to make significant investments in content for online and mobile gaming platforms. We recently released our ninth offering for Apple’s iOS mobile operating system — the Sid Meier’s Pirates! App for the iPad, launched our first social game — Sid Meier’s Civilization World, for Facebook, and we are hard at work with our partners in Asia on our three previously announced initiatives to develop online games. These initiatives are just the beginning of our ongoing efforts to drive growth through these emerging and exciting areas of gaming.”
Business and Product Highlights
Since April 1, 2011:
· 2K Play released the Company’s first offering for Kinect for Xbox 360®, Carnival Games: Monkey See, Monkey Do™, and supported the title with downloadable content packs. The title will be featured in worldwide promotions with Microsoft this holiday season.
· Rockstar Games released L.A. Noire on May 17, 2011 in North America and May 20, 2011 internationally. Major news outlets and video game critics across the world have applauded its ambition with great review scores stating that L.A. Noire is “a breakthrough for games as a whole” and a “stunning accomplishment” that “sets a new standard for storytelling”. The title has sold-in more than 4 million units worldwide since its launch and has been supported by several downloadable content packs. The PC version of the title is scheduled to be released this fall.
· 2K Play announced that it plans to release Nicktoons MLB on September 13, 2011. The game will feature characters from Nickelodeon’s popular Nicktoons series and all 30 Major League Baseball teams.
· 2K Sports extended its long-term partnership with the National Basketball Association to develop and publish the best-selling NBA 2K basketball franchise for an additional multi-year period. The latest iteration, NBA 2K11, has sold-in nearly 5.5 million units worldwide and received the highest scores in the history of the franchise (89 — Metacritic.com).
· 2K Sports announced a new partnership with Nexon Corporation to develop and publish an online baseball simulation game for the South Korean market.
· 2K Games announced a partnership with XLGAMES, Inc. to develop a massively multiplayer online game for the Asian market based on one of 2K’s top-selling franchises.
· 2K Games announced that it plans to release XCOM on March 6, 2012 in North America and March 9, 2012 internationally.
· 2K Play announced that it plans to release Let’s Cheer!, Nickelodeon Dance and a new slate of Nickelodeon titles throughout the fall and holiday season.
· 2K Games released Duke Nukem Forever on June 10, 2011 internationally and June 14, 2011 in North America. The title is being supported with downloadable content.
· 2K Games’ BioShock Infinite, developed by Irrational Games and planned for release in calendar year 2012, won 77 editorial awards, including 41 “Game of Show” awards, at E3 2011.
· 2K Games launched the Company’s first social game, Sid Meier’s Civilization World, for Facebook. The title was developed by Firaxis Games.
· 2K Sports announced that NBA 2K12 is planned for release on October 4, 2011, and will offer three separate covers for the Xbox 360 and PS3 versions featuring NBA legends Michael Jordan, Larry Bird and Magic Johnson, as well as historic teams and players that can be unlocked for in-game use.
· 2K Games released the Sid Meier’s Pirates! App for the iPad.
· 2K Games announced that Borderlands 2, the next installment in the franchise that has sold-in over 4.5 million units worldwide, is currently in development with Gearbox Software and expected to launch in fiscal year 2013.
· Rockstar Games’ Red Dead Redemption franchise has sold-in over 11 million units worldwide since launching in May 2010, including over 2 million units of the Red Dead Redemption: Undead Nightmare standalone disc.
Financial Outlook for Fiscal 2012
The Company is providing its initial financial outlook for the second quarter ending September 30, 2011, and reiterating its financial outlook for the fiscal year ending March 31, 2012 as follows:
| | Second Quarter
Ending 9/30/2011 | | Fiscal Year
Ending 3/31/2012 |
| | | | |
Revenue | | $70 to $85 Million | | $1.0 to $1.1 Billion |
| | | | |
Non-GAAP Net Income (Loss) per share | | ($0.65) to ($0.55) | | $0.10 to $0.35 |
Stock-based compensation expense per share (a) | | $0.05 | | $0.28 |
| | | | |
Non-cash interest expense related to convertible debt | | $0.02 | | $0.09 |
| | | | |
Non-cash tax expense | | $0.00 | | $0.02 |
(a) The Company’s stock-based compensation expense for the periods above includes the cost of approximately 0.9 million shares previously issued 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.
Key assumptions and dependencies underlying the Company’s guidance include continued consumer acceptance of the Xbox 360® video game and entertainment system from Microsoft, PlayStation®3 computer entertainment system, and Wii™ system; the ability to develop and publish products that capture market share for these current generation systems while continuing to leverage opportunities on certain prior generation platforms; the timely delivery of the titles detailed in this release; and stable foreign exchange rates. See also “Cautionary Note Regarding Forward Looking Statements” below.
Product Releases
The following titles were released since April 1, 2011:
Title | | Platforms | | Release Date |
Carnival Games: Monkey See, Monkey Do | | Kinect for Xbox 360 | | April 5, 2011 |
Sid Meier’s Civilization V: Denmark (DLC) | | PC | | May 3, 2011 |
Sid Meier’s Civilization V: The Explorers (DLC) | | PC | | May 3, 2011 |
L.A. Noire | | Xbox 360, PS3 | | May 17, 2011* |
L.A. Noire: The Naked City Case (DLC) | | Xbox 360, PS3 | | May 31, 2011 |
L.A. Noire: A Slip of the Tongue Case (DLC) | | Xbox 360, PS3 | | May 31, 2011 |
Duke Nukem Forever | | Xbox 360, PS3, PC | | June 10, 2011** |
Duke Nukem Forever: Multiplayer Map Pack (DLC) | | Xbox 360, PS3, PC | | June 14, 2011** |
L.A. Noire: Nicholson Electroplating Disaster Case (DLC) | | Xbox 360, PS3 | | June 21, 2011 |
Carnival Games®: Monkey See, Monkey Do: Monkey Dancin’ (DLC) | | Kinect for Xbox 360 | | June 24, 2011 |
Sid Meier’s Civilization World | | Facebook | | July 7, 2011 |
L.A. Noire: Refer Madness Case (DLC) | | Xbox 360, PS3 | | July 12, 2011 |
Carnival Games: Monkey See, Monkey Do: Coastermania (DLC) | | Kinect for Xbox 360 | | July 19, 2011 |
Sid Meier’s Pirates! App | | iPad | | July 21, 2011 |
*North American release date; international release followed three days after.
**International release date; North American release followed four days after.
Take-Two’s lineup of future titles announced to date includes:
Title | | Platforms | | Planned Release |
Sid Meier’s Civilization V: Korea (DLC) | | PC | | August 11, 2011 |
Sid Meier’s Civilization V: Wonders of the Ancient World (DLC) | | PC | | August 11, 2011 |
Nicktoons MLB | | Xbox 360 (Kinect), Wii, DS | | September 13, 2011 |
Duke Nukem Forever: Hail to the Icons Parody Pack (DLC) | | Xbox 360, PS3, PC | | Fall 2011 |
L.A. Noire | | PC | | Fall 2011 |
Red Dead Redemption: Myths and Mavericks (DLC) | | Xbox360, PS3 | | Fall 2011 |
NBA 2K12 | | Xbox 360, PS3, PS2, PSP, Wii, PC | | October 4, 2011 |
Let’s Cheer! | | Kinect for Xbox 360 | | Holiday Season ‘11 |
Nickelodeon Dance | | Kinect for Xbox 360, Wii | | November 2011 |
Dora and Kai-Lan’s Pet Shelter | | DS | | November 2011 |
Team UmiZoomi | | DS | | November 2011 |
The Darkness II | | Xbox 360, PS3, PC | | February 7, 2012* |
XCOM | | Xbox 360, PS3, PC | | March 6, 2012* |
BioShock Infinite | | Xbox 360, PS3, PC | | Calendar Year 2012 |
Spec Ops: The Line | | Xbox 360, PS3, PC | | First Half Fiscal ‘13 |
Borderlands 2 | | Xbox 360, PS3, PC | | Fiscal Year 2013 |
*North American release date; international release follows three days after.
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) 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 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:
· 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 its short- and long-term operating plans. As a result, the Company has excluded such expenses from its Non-GAAP financial measures.
· Income (loss) from discontinued operations — the Company does not engage in sales of subsidiaries on a regular basis and therefore believes it is appropriate to exclude such gains (losses) from its Non-GAAP financial measures. As the company is no longer active in its discontinued operations, it believes it is appropriate to exclude income (losses) thereon from its Non-GAAP financial measures.
· Professional fees and expenses associated with unusual legal and other matters — the Company has incurred 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.
·�� Non-cash interest expense related to convertible debt — The Company records non-cash interest expense on its convertible notes in addition to the interest expense already recorded for coupon payments. The Company excludes the non-cash portion of the interest expense from its Non-GAAP financial measures because these amounts are unrelated to its ongoing business operations.
· Non-cash tax expense for the impact of deferred tax liabilities associated with tax deductible amortization of goodwill — due to the nature of the adjustment as well as the expectation that it will not have any cash impact in the foreseeable future, the Company believes it is appropriate to exclude this expense 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 and publisher of interactive entertainment software games for the PC, PlayStation®3 and PlayStation®2 computer entertainment systems, PSP® (PlayStation®Portable) system, Xbox 360® video game and entertainment system from Microsoft, Wii™, Nintendo DS™, iPhone®, iPod® touch and iPad®. The Company publishes and develops products through its wholly owned labels Rockstar Games and 2K, which publishes its titles under 2K Games, 2K Sports and 2K Play. 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 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,” “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 for current generation platforms, the timely release and significant market acceptance of our games, the ability to maintain acceptable pricing levels on our games, our ability to raise capital if needed and risks associated with international operations. Other important factors and information are contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2011, in the section entitled “Risk Factors,” 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
| | Three months ended June 30, | |
| | 2011 | | 2010 | |
| | | | | |
Net revenue | | $ | 334,380 | | $ | 375,390 | |
| | | | | |
Cost of goods sold: | | | | | |
Product costs | | 98,451 | | 101,077 | |
Software development costs and royalties | | 84,602 | | 64,038 | |
Internal royalties | | 16,512 | | 67,462 | |
Licenses | | 11,654 | | 11,469 | |
Total cost of goods sold | | 211,219 | | 244,046 | |
| | | | | |
Gross profit | | 123,161 | | 131,344 | |
| | | | | |
Selling and marketing | | 74,683 | | 49,805 | |
General and administrative | | 30,577 | | 26,202 | |
Research and development | | 16,519 | | 16,181 | |
Depreciation and amortization | | 3,245 | | 3,765 | |
Total operating expenses | | 125,024 | | 95,953 | |
Income (loss) from operations | | (1,863 | ) | 35,391 | |
Interest and other, net | | (3,680 | ) | (4,738 | ) |
Income (loss) from continuing operations before income taxes | | (5,543 | ) | 30,653 | |
Provision for income taxes | | 3,076 | | 3,291 | |
Income (loss) from continuing operations | | (8,619 | ) | 27,362 | |
Loss from discontinued operations, net of taxes | | (94 | ) | (1,048 | ) |
Net income (loss) | | $ | (8,713 | ) | $ | 26,314 | |
| | | | | |
Earnings (loss) per share: | | | | | |
Continuing operations | | $ | (0.11 | ) | $ | 0.32 | |
Discontinued operations | | — | | (0.01 | ) |
Basic earnings (loss) per share | | $ | (0.11 | ) | $ | 0.31 | |
| | | | | |
Continuing operations | | $ | (0.11 | ) | $ | 0.31 | |
Discontinued operations | | — | | (0.01 | ) |
Diluted earnings (loss) per share (1) | | $ | (0.11 | ) | $ | 0.30 | |
| | | | | |
Weighted average shares outstanding: (2) | | | | | |
Basic | | 82,505 | | 85,492 | |
Diluted | | 82,505 | | 98,433 | |
(1) For the three months ended June 30, 2010, diluted EPS has been calculated using the “if-converted” method as a result of the Convertible Senior Notes (“Convertible Notes”) issued in June 2009, for which diluted net income has been adjusted by $3,402, related to interest and debt issuance costs, net of tax. The shares used for computing includes 12,927 shares related to the potential dilution from the Convertible Notes. The “if-converted” method was not used for the other period presented as the assumed conversion would have been anti-dilutive.
(2) Basic and diluted include participating shares of 6,153 for the three months ended June 30, 2010.
| | Three months ended June 30, | |
OTHER INFORMATION | | 2011 | | 2010 | |
| | | | | |
Geographic revenue mix | | | | | |
North America | | 54 | % | 56 | % |
International | | 46 | % | 44 | % |
| | | | | |
Platform revenue mix | | | | | |
Microsoft Xbox 360 | | 49 | % | 45 | % |
Sony PlayStation 3 | | 41 | % | 46 | % |
PC | | 7 | % | 4 | % |
Sony PSP | | 1 | % | 1 | % |
Sony PlayStation 2 | | 1 | % | 1 | % |
Nintendo DS | | 1 | % | 1 | % |
Nintendo Wii | | 0 | % | 2 | % |
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
| | June 30, | | March 31, | |
| | 2011 | | 2011 | |
| | (Unaudited) | | | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 248,759 | | $ | 280,359 | |
Accounts receivable, net of allowances of $79,954 and $42,900 at June 30, 2011 and March 31, 2011, respectively | | 146,694 | | 84,217 | |
Inventory | | 25,941 | | 24,578 | |
Software development costs and licenses | | 151,123 | | 131,676 | |
Prepaid taxes and taxes receivable | | 9,049 | | 8,280 | |
Prepaid expenses and other | | 63,082 | | 37,493 | |
Total current assets | | 644,648 | | 566,603 | |
| | | | | |
Fixed assets, net | | 19,009 | | 19,632 | |
Software development costs and licenses, net of current portion | | 92,218 | | 138,320 | |
Goodwill | | 226,868 | | 225,170 | |
Other intangibles, net | | 17,339 | | 17,833 | |
Other assets | | 3,495 | | 4,101 | |
Total assets | | $ | 1,003,577 | | $ | 971,659 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 72,480 | | $ | 56,153 | |
Accrued expenses and other current liabilities | | 170,934 | | 158,459 | |
Deferred revenue | | 15,314 | | 13,434 | |
Liabilities of discontinued operations | | 1,391 | | 2,842 | |
Total current liabilities | | 260,119 | | 230,888 | |
| | | | | |
Long-term debt | | 109,236 | | 107,239 | |
Income taxes payable | | 12,930 | | 12,037 | |
Other long-term liabilities | | 3,120 | | 2,961 | |
Liabilities of discontinued operations, net of current portion | | 2,905 | | 3,255 | |
Total liabilities | | 388,310 | | 356,380 | |
Commitments and contingencies | | | | | |
| | | | | |
Stockholders’ equity: | | | | | |
Preferred stock, $.01 par value, 5,000 shares authorized | | — | | — | |
Common stock, $.01 par value, 150,000 shares authorized; 86,360 and 86,119 shares issued and outstanding at June 30, 2011 and March 31, 2011, respectively | | 864 | | 861 | |
Additional paid-in capital | | 714,912 | | 706,482 | |
Accumulated deficit | | (111,236 | ) | (102,523 | ) |
Accumulated other comprehensive income (loss) | | 10,727 | | 10,459 | |
Total stockholders’ equity | | 615,267 | | 615,279 | |
Total liabilities and stockholders’ equity | | $ | 1,003,577 | | $ | 971,659 | |
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
| | Three months ended June 30, | |
| | 2011 | | 2010 | |
| | | | | |
Operating activities: | | | | | |
Net income (loss) | | $ | (8,713 | ) | $ | 26,314 | |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | | | | | |
Amortization and impairment of software development costs and licenses | | 72,466 | | 53,642 | |
Depreciation and amortization | | 3,245 | | 3,765 | |
Loss from discontinued operations | | 94 | | 1,048 | |
Amortization and impairment of intellectual property | | 305 | | 39 | |
Stock-based compensation | | 8,048 | | 11,221 | |
Amortization of discount on Convertible Notes | | 1,997 | | 1,755 | |
Amortization of debt issuance costs | | 313 | | 313 | |
Other, net | | (250 | ) | 1,127 | |
Changes in assets and liabilities, net of effect from purchases of businesses: | | | | | |
Accounts receivable | | (62,477 | ) | (103,171 | ) |
Inventory | | (1,363 | ) | 50 | |
Software development costs and licenses | | (45,630 | ) | (43,318 | ) |
Prepaid expenses, other current and other non-current assets | | (26,063 | ) | 10,998 | |
Deferred revenue | | 1,880 | | (1,706 | ) |
Accounts payable, accrued expenses, income taxes payable and other liabilities | | 28,162 | | 82,722 | |
Net cash used in discontinued operations | | (420 | ) | (7,666 | ) |
Net cash (used in) provided by operating activities | | (28,406 | ) | 37,133 | |
| | | | | |
Investing activities: | | | | | |
Purchase of fixed assets | | (2,400 | ) | (2,179 | ) |
Net cash used in discontinued operations | | (1,475 | ) | — | |
Cash received from sale of business | | — | | 760 | |
Payments in connection with business combinations, net of cash acquired | | — | | (500 | ) |
Net cash used in investing activities | | (3,875 | ) | (1,919 | ) |
| | | | | |
Financing activities: | | | | | |
Proceeds from exercise of employee stock options | | 162 | | 87 | |
Net cash provided by financing activities | | 162 | | 87 | |
| | | | | |
Effects of exchange rates on cash and cash equivalents | | 519 | | 1,404 | |
| | | | | |
Net increase (decrease) in cash and cash equivalents | | (31,600 | ) | 36,705 | |
Cash and cash equivalents, beginning of year | | 280,359 | | 145,838 | |
Cash and cash equivalents, end of period | | $ | 248,759 | | $ | 182,543 | |
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Non-GAAP CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
| | | | Non-GAAP Reconciling Items | | | |
| | Three months | | | | Professional | | | | | | | | Non-GAAP three | |
| | ended June 30, | | Discontinued | | fees and | | Stock-based | | Non-cash | | Non-cash | | months ended June 30, | |
| | 2011 | | operations | | legal matters | | compensation | | interest expense | | tax expense | | 2011 | |
| | | | | | | | | | | | | | | |
Net revenue | | $ | 334,380 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 334,380 | |
| | | | | | | | | | | | | | | |
Cost of goods sold: | | | | | | | | | | | | | | | |
Product costs | | 98,451 | | — | | — | | — | | — | | — | | 98,451 | |
Software development costs and royalties | | 84,602 | | — | | — | | (3,204 | ) | — | | — | | 81,398 | |
Internal royalties | | 16,512 | | — | | — | | — | | — | | — | | 16,512 | |
Licenses | | 11,654 | | — | | — | | — | | — | | — | | 11,654 | |
Total cost of goods sold | | 211,219 | | — | | — | | (3,204 | ) | — | | — | | 208,015 | |
| | | | | | | | | | | | | | | |
Gross profit | | 123,161 | | — | | — | | 3,204 | | — | | — | | 126,365 | |
| | | | | | | | | | | | | | | |
Selling and marketing | | 74,683 | | — | | — | | (1,399 | ) | — | | — | | 73,284 | |
General and administrative | | 30,577 | | — | | (176 | ) | (2,370 | ) | — | | — | | 28,031 | |
Research and development | | 16,519 | | — | | — | | (1,075 | ) | — | | — | | 15,444 | |
Depreciation and amortization | | 3,245 | | — | | — | | — | | — | | — | | 3,245 | |
Total operating expenses | | 125,024 | | — | | (176 | ) | (4,844 | ) | — | | — | | 120,004 | |
Income (loss) from operations | | (1,863 | ) | — | | 176 | | 8,048 | | — | | — | | 6,361 | |
Interest and other, net | | (3,680 | ) | — | | — | | — | | 1,997 | | — | | (1,683 | ) |
Income (loss) from continuing operations before income taxes | | (5,543 | ) | — | | 176 | | 8,048 | | 1,997 | | — | | 4,678 | |
Provision for income taxes | | 3,076 | | — | | — | | — | | — | | (355 | ) | 2,721 | |
Income (loss) from continuing operations | | (8,619 | ) | — | | 176 | | 8,048 | | 1,997 | | 355 | | 1,957 | |
Loss from discontinued operations, net of taxes | | (94 | ) | 94 | | — | | — | | — | | — | | — | |
Net income (loss) | | $ | (8,713 | ) | $ | 94 | | $ | 176 | | $ | 8,048 | | $ | 1,997 | | $ | 355 | | $ | 1,957 | |
| | | | | | | | | | | | | | | |
Earnings (loss) per share:* | | | | | | | | | | | | | | | |
Basic earnings (loss) per share | | $ | (0.11 | ) | $ | 0.00 | | $ | 0.00 | | $ | 0.09 | | $ | 0.02 | | $ | 0.00 | | $ | 0.02 | |
| | | | | | | | | | | | | | | |
Diluted earnings (loss) per share | | $ | (0.11 | ) | $ | 0.00 | | $ | 0.00 | | $ | 0.09 | | $ | 0.02 | | $ | 0.00 | | $ | 0.02 | |
| | | | | | | | | | | | | | | |
Weighted average shares outstanding (1) | | | | | | | | | | | | | | | |
Basic | | 82,505 | | 87,831 | | 87,831 | | 87,831 | | 87,831 | | 87,831 | | 87,831 | |
Diluted | | 82,505 | | 88,778 | | 88,778 | | 88,778 | | 88,778 | | 88,778 | | 88,778 | |
| | | | | | | | | | | | | | | |
EBITDA: | | | | | | | | | | | | | | | |
Income (loss) from continuing operations before income taxes | | $ | (5,543 | ) | | | | | | | | | | | $ | 4,678 | |
Interest | | 3,953 | | | | | | | | | | | | 1,956 | |
Depreciation and amortization | | 3,245 | | | | | | | | | | | | 3,245 | |
EBITDA | | $ | 1,655 | | | | | | | | | | | | $ | 9,879 | |
*Earnings (loss) per share (“EPS”) may not add due to rounding
(1) Non-GAAP basic and diluted include participating shares of 5,326.
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Non-GAAP CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(in thousands, except per share amounts)
| | | | Non-GAAP Reconciling Items | | | |
| | Three months | | | | Professional | | | | | | | | Non-GAAP three | |
| | ended June 30, | | Discontinued | | fees and | | Stock-based | | Non-cash | | Non-cash | | months ended June 30, | |
| | 2010 | | operations | | legal matters | | compensation | | interest expense | | tax expense | | 2010 | |
| | | | | | | | | | | | | | | |
Net revenue | | $ | 375,390 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 375,390 | |
| | | | | | | | | | | | | | | |
Cost of goods sold: | | | | | | | | | | | | | | | |
Product costs | | 101,077 | | — | | — | | — | | — | | — | | 101,077 | |
Software development costs and royalties | | 64,038 | | — | | — | | (6,220 | ) | — | | — | | 57,818 | |
Internal royalties | | 67,462 | | — | | — | | — | | — | | — | | 67,462 | |
Licenses | | 11,469 | | — | | — | | — | | — | | — | | 11,469 | |
Total cost of goods sold | | 244,046 | | — | | — | | (6,220 | ) | — | | — | | 237,826 | |
| | | | | | | | | | | | | | | |
Gross profit | | 131,344 | | — | | — | | 6,220 | | — | | — | | 137,564 | |
| | | | | | | | | | | | | | | |
Selling and marketing | | 49,805 | | — | | — | | (1,228 | ) | — | | — | | 48,577 | |
General and administrative | | 26,202 | | — | | (61 | ) | (2,932 | ) | — | | — | | 23,209 | |
Research and development | | 16,181 | | — | | — | | (841 | ) | — | | — | | 15,340 | |
Depreciation and amortization | | 3,765 | | — | | — | | — | | — | | — | | 3,765 | |
Total operating expenses | | 95,953 | | — | | (61 | ) | (5,001 | ) | — | | — | | 90,891 | |
Income (loss) from operations | | 35,391 | | — | | 61 | | 11,221 | | — | | — | | 46,673 | |
Interest and other, net | | (4,738 | ) | — | | — | | — | | 1,755 | | — | | (2,983 | ) |
Income (loss) from continuing operations before income taxes | | 30,653 | | — | | 61 | | 11,221 | | 1,755 | | — | | 43,690 | |
Provision for income taxes | | 3,291 | | — | | — | | — | | — | | (454 | ) | 2,837 | |
Income (loss) from continuing operations | | 27,362 | | — | | 61 | | 11,221 | | 1,755 | | 454 | | 40,853 | |
Loss from discontinued operations, net of taxes | | (1,048 | ) | 1,048 | | — | | — | | — | | — | | — | |
Net income (loss) | | $ | 26,314 | | $ | 1,048 | | $ | 61 | | $ | 11,221 | | $ | 1,755 | | $ | 454 | | $ | 40,853 | |
| | | | | | | | | | | | | | | |
Earnings (loss) per share:* | | | | | | | | | | | | | | | |
Basic earnings (loss) per share | | $ | 0.31 | | $ | 0.01 | | $ | 0.00 | | $ | 0.13 | | $ | 0.02 | | $ | 0.01 | | $ | 0.48 | |
| | | | | | | | | | | | | | | |
Diluted earnings (loss) per share (1) | | $ | 0.30 | | $ | 0.01 | | $ | 0.00 | | $ | 0.11 | | $ | 0.02 | | $ | 0.00 | | $ | 0.43 | |
| | | | | | | | | | | | | | | |
Weighted average shares outstanding (2) | | | | | | | | | | | | | | | |
Basic | | 85,492 | | 85,492 | | 85,492 | | 85,492 | | 85,492 | | 85,492 | | 85,492 | |
Diluted | | 98,433 | | 98,433 | | 98,433 | | 98,433 | | 98,433 | | 98,433 | | 98,433 | |
| | | | | | | | | | | | | | | |
EBITDA: | | | | | | | | | | | | | | | |
Income (loss) from continuing operations before income taxes | | $ | 30,653 | | | | | | | | | | | | $ | 43,690 | |
Interest | | 3,656 | | | | | | | | | | | | 1,901 | |
Depreciation and amortization | | 3,765 | | | | | | | | | | | | 3,765 | |
EBITDA | | $ | 38,074 | | | | | | | | | | | | $ | 49,356 | |
*Earnings (loss) per share may not add due to rounding
(1) For the three months ended June 30, 2010, diluted EPS has been calculated using the “if-converted” method as a result of the Convertible Senior Notes (“Convertible Notes”) issued in June 2009.
Non-GAAP net income used for computing non-GAAP diluted EPS has been adjusted by $1,647 and GAAP net income used for computing GAAP diluted EPS has been adjusted by $3,402 related
to interest and debt issuance costs, net of tax. The shares used for computing includes 12,927 shares related to the potential dilution from the Convertible Notes.
(2) Basic and diluted include participating shares of 6,153.
