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CONTACT
COMPANY: CORPORATE PRESS RELATIONS:
Dawn Berrie (Corporate Press/Investor Relations) Jason Schlossberg
TAKE-TWO INTERACTIVE SOFTWARE, INC. EURO RSCG MIDDLEBERG
(646) 536-3006; (212) 699-2564;
(646) 536-2926 fax (212) 699-2599 fax
dawn@take2games.com jason.schlossberg@eurorscg.com
Take-Two Interactive Software, Inc. Reports
Record Second Quarter Fiscal 2003 Financial Results
New York, NY - May 29, 2003 - Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
today announced record financial results for its second quarter and six months
ended April 30, 2003.
Net sales for the second quarter ended April 30, 2003 were $194.2 million, a 14%
increase over $170.3 million for the same period a year ago. Net income of $15.2
million represented an increase of 58% compared to $9.6 million last year, with
diluted net income per share of $0.36, a 44% increase over $0.25 last year.
Net sales for the six months ended April 30, 2003 were $603.0 million, a 33%
increase over $453.3 million for the same period a year ago. Net income of $65.7
million represented an increase of 48% compared to $44.5 million in the
comparable period last year, with diluted net income per share of $1.55,
compared to $1.16, an increase of 34%.
Guidance
Take-Two is raising its financial guidance for the fiscal year ending October
31, 2003 to $975 million in net sales and $2.28 of diluted net income per share.
The Company is reiterating its guidance for the second half of fiscal 2003 and
issuing guidance for the third quarter ending July 31, 2003 of $142 million in
net sales and $0.16 of diluted net income per share.
Liquidity and Selected Balance Sheet Items
Take-Two generated approximately $22 million in cash flow from operations during
the quarter. Working capital was approximately $264 million at April 30, 2003,
as compared with $146 million at the same time a year ago. The Company had more
than $188 million in cash as of April 30, 2003, as compared to approximately $70
million in cash as of April 30, 2002.
Jeffrey Lapin, Chief Executive Officer, commented, "Our second quarter results
reflect Take-Two's continued success as a leading independent publisher and
distributor in the interactive entertainment industry, and our ability to
capitalize on our strategically balanced business model in a challenging retail
environment. Top-selling products from our world-renowned Rockstar Games label
once again drove our publishing revenue. We also benefited from the significant
investments we have made over the past year in building Jack of All Games into
the leading North American distributor of interactive entertainment software,
hardware and accessories, as the business realized considerable revenue growth
during the quarter and showed significantly improved profitability."
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Karl Winters, Chief Financial Officer, commented, "The second half of 2003 will
mark the beginning of a significant growth phase for our Gathering label, which
has rapidly expanded its product pipeline. The continued release of
groundbreaking content from Rockstar Games and strong growth from our Jack of
All Games distribution business, should lead to a strong conclusion to a record
year. With Take-Two's highest ever level of cash, no debt, and earnings
projected to grow over 25% in fiscal 2003, we have the financial resources in
place to continue to invest in our business and generate meaningful growth in
the future."
Publishing Highlights
In its second quarter of fiscal 2003, the Company's Rockstar Games shipped the
highly anticipated Midnight Club 2 for the PlayStation(R)2, the sequel to the
1.5 million unit selling Greatest Hits PlayStation(R)2 launch title Midnight
Club. Rockstar also released PlayStation(R)2 Greatest Hits and Xbox(TM) versions
of its million unit selling State of Emergency title and an Xbox(TM) Platinum
Hits version of its multi-million unit selling franchise Max Payne.
Gathering released Vietcong and Tropico 2: Pirate Cove for the PC. Gotham Games
released Conflict: Desert Storm for the GameCube, Piglet's Big Game for the
PlayStation(R)2 and GameCube, and Patriotic Pinball and Big Strike Bowling for
the PlayStation(R).
In the third fiscal quarter, Take-Two's Rockstar Games has shipped Grand Theft
Auto: Vice City for the PC. Other third quarter product releases are expected to
include Rockstar's highly anticipated Midnight Club 2 for the PC and Xbox(TM);
Gotham Games' launch of the new title Great Escape in North America on
PlayStation(R)2, PC and Xbox(TM) and Motocross Mania 2 and ATV Mania for the
PlayStation(R); and from Gathering, the sequels Age of Wonders: Shadow Magic and
Stronghold Warchest, both for the PC.
Products planned for release in the fourth fiscal quarter include the launch of
Rockstar Games' new title Manhunt for PlayStation(R)2 from Rockstar North, the
developers of the global blockbuster Grand Theft Auto series. Gathering's
extensive lineup includes Mafia for PlayStation(R)2, Hidden & Dangerous 2 and
Railroad Tycoon 3, sequels to the popular franchises which have individually
sold over 1 million units, and Space Colony, a new title, all for the PC. Gotham
Games expects to ship Conflict: Desert Storm II in North America for
PlayStation(R)2, PC and Xbox(TM), MTV's Celebrity Deathmatch for
PlayStation(R)2, PC, Xbox(TM), GameCube and PlayStation(R), and Starsky & Hutch
in North America for PlayStation(R)2, PC and Xbox(TM).
Also, at the recent Electronic Entertainment Expo (E3) industry trade show,
Take-Two announced several new products, including Rockstar's Max Payne 2: The
Fall of Max Payne, the sequel to the hit franchise that has sold over 3.5
million units since its debut in 2001. The title is expected to launch on the PC
this Fall, with console versions expected to be released shortly thereafter.
Take-Two is also pleased to announce that Rockstar's Grand Theft Auto: Vice City
for PlayStation(R)2 was named Game of the Year and Best Adventure Game by Sony
Computer Entertainment America at their E3 Publisher's Choice Awards.
Distribution Highlights
Jack of All Games has firmly established itself as the leading North American
distributor of videogame software and hardware. It offers a complete line of
products, emphasizing compelling mid-priced and budget-priced software, to over
20,000 retail storefronts, including mass merchandisers, drug store and
supermarket chains, and video and music retailers. Jack of All Games is uniquely
positioned to continue to benefit from the proliferation of software products
being introduced from publishers that do not have established distribution
relationships, those who have excess inventory, and those who cannot efficiently
publish their content at affordable price points. During the second quarter of
fiscal 2003, Jack of All Games began to see the direct benefits of this strategy
in the form of improved profitability and record distribution sales levels.
Page 2 of 3
Management
Take-Two announced that its President, Paul Eibeler, has decided not to return
to the Company following a medical leave of absence that began in early April.
Mr. Eibeler, who had been President since July 2000, will be available to
consult with management as needed in order to ensure an orderly transition of
his responsibilities. Commenting on Mr. Eibeler's decision, Chief Executive
Officer Jeffrey Lapin stated, "We are grateful for Paul's enormous contributions
to the success of Take-Two during the past three years, and we wish him well in
his future endeavors."
Conference Call
Take-Two will host a conference call today at 8:30 am Eastern Time to review its
results for the second quarter and six months ended April 30, 2003 and to
discuss its outlook. A live webcast of the call is available by visiting
www.take2games.com, and a replay of the call will be archived through the close
of business on Friday, June 6, 2003.
----------------
About Take-Two Interactive Software
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, Xbox(TM) video game
system from Microsoft(TM), Nintendo GameCube(TM) and Nintendo Game Boy Advance.
The Company publishes and develops products through its wholly owned subsidiary
labels: Rockstar Games, Gotham Games, Gathering, Joytech and Global Star. The
Company maintains sales and marketing offices in Cincinnati, New York, Toronto,
London, Paris, Munich, Vienna, Copenhagen, Milan, Sydney, Amsterdam and
Auckland. Take-Two's common stock is publicly traded on NASDAQ under the symbol
TTWO. For more corporate and product information please visit our website at
www.take2games.com.
All trademarks and copyrights contained herein are the property of their
respective holders.
Safe Harbor Statement under the Private Securities Reform Act of 1995: 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 Annual Report on
Form 10-K for the fiscal year ended October 31, 2002 and on Form 10-Q for the
quarter ended January 31, 2003.
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TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Consolidated Condensed Statements of Operations
For the three and six months ended April 30, 2003 and 2002 (unaudited)
(In thousands, except per share data)
Three months ended April 30, Six months ended April 30,
2003 2002 2003 2002
---------------------------- ------------------------------
(Unaudited) (Unaudited)
Net sales $ 194,213 $ 170,330 $ 603,007 $ 453,256
Cost of sales
Product costs 98,914 84,614 303,342 241,313
Royalties 19,460 21,481 56,348 41,649
Software development costs 3,365 938 6,716 3,893
--------- --------- --------- ---------
Total cost of sales 121,739 107,033 366,406 286,855
--------- --------- --------- ---------
Gross profit 72,474 63,297 236,601 166,401
Operating expenses
Selling and marketing 22,461 20,522 56,915 42,517
General and administrative 16,970 18,924 48,329 37,921
Research and development 4,761 3,937 10,376 5,891
Depreciation and amortization 3,197 2,159 10,759 4,073
--------- --------- --------- ---------
Total operating expenses 47,389 45,542 126,379 90,402
Income from operations 25,085 17,755 110,222 75,999
Interest (income) expenses, net (743) 53 (1,088) 1,027
Gain on sale of marketable securities - (32) (39) (159)
Class action settlement costs - 1,468 - 1,468
--------- --------- --------- ---------
Total non-operating (income) expenses (743) 1,489 (1,127) 2,336
Income before income taxes 25,828 16,266 111,349 73,663
Provision for income taxes 10,589 6,629 45,648 29,197
--------- --------- --------- ---------
Net income $ 15,239 $ 9,637 $ 65,701 $ 44,466
========= ========= ========= =========
Per share data:
Diluted:
Weighted average common shares outstanding 42,281 38,768 42,279 38,280
========= ========= ========= =========
--------- --------- --------- ---------
Net income per share - Diluted $ 0.36 $ 0.25 $ 1.55 $ 1.16
========= ========= ========= =========
Three months ended April 30, Six months ended April 30,
OTHER INFORMATION 2003 2002 2003 2002
---------------------------- ------------------------------
Total revenue mix
Publishing 65% 79% 72% 72%
Distribution 35% 21% 28% 28%
Geographic revenue mix
North America 72% 76% 72% 78%
International 28% 24% 28% 22%
Publishing platform revenue mix
Sony PlayStation 2 72% 82% 88% 82%
Sony PlayStation 6% 6% 4% 6%
Microsoft Xbox 4% 6% 2% 6%
PC 14% 5% 5% 4%
Accessories and other 4% 1% 1% 2%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Consolidated Condensed Balance Sheets
As of April 30, 2003 (unaudited) and October 31, 2002
(In thousands, except share data)
ASSETS April 30, 2003 October 31, 2002
-------------- ----------------
Current assets
Cash and cash equivalents $ 188,350 $ 108,369
Accounts receivable, net of provision for doubtful accounts and
sales allowances of $42,831 and $29,194 at April 30, 2003 and
October 31, 2002, respectively 100,213 107,188
Inventories, net 71,342 74,391
Prepaid royalties 12,566 13,723
Prepaid expenses and other current assets 15,614 19,569
Deferred tax asset 5,392 5,392
--------- ---------
Total current assets 393,477 328,632
Fixed assets, net 18,432 15,319
Prepaid royalties 7,183 12,203
Capitalized software development costs, net 11,780 10,385
Investments - 97
Goodwill, net 99,831 61,529
Intangibles, net 42,102 55,293
Deferred tax asset 7,983 7,983
Other assets, net 190 266
--------- ---------
Total assets $ 580,978 $ 491,707
========= =========
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 63,902 $ 79,660
Accrued expenses and other current liabilities 49,527 49,821
Income taxes payable 16,124 1,603
Current portion of capital lease obligation 100 95
--------- ---------
Total current liabilities 129,653 131,179
Capital lease obligation, net of current portion 125 201
Deferred tax liability 6,178 3,885
--------- ---------
Total liabilities 135,956 135,265
--------- ---------
Stockholders' equity
Common stock, par value $.01 per share; 50,000,000 shares authorized;
41,526,787 and 40,361,739 shares issued and outstanding 415 404
Additional paid-in capital 295,245 273,502
Deferred compensation (1,908) (227)
Retained earnings 153,505 87,804
Accumulated other comprehensive loss (2,235) (5,041)
--------- ---------
Total stockholders' equity 445,022 356,442
--------- ---------
Total liabilities and stockholders' equity $ 580,978 $ 491,707
========= =========