Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT
COMPANY: CORPORATE PRESS RELATIONS:
Jim Ankner (Corporate Press/Investor Relations) Ed Nebb
TAKE-TWO INTERACTIVE SOFTWARE, INC. EURO RSCG MIDDLEBERG
(646) 536-3006; (646) 536-2926 fax (212) 699-2745; (212) 699-2599 fax
james.ankner@take2games.com ed.nebb@eurorscg.com
Take-Two Interactive Software, Inc. Reports
Record Third Quarter Fiscal 2003 Financial Results
COMPANY RAISES REVENUE AND EPS GUIDANCE FOR FISCAL 2003 AND
ISSUES INITIAL GUIDANCE FOR FISCAL 2004
COMPANY ANNOUNCES AGREEMENT TO ACQUIRE TDK MEDIACTIVE
New York, NY - September 3, 2003 - Take-Two Interactive Software, Inc.
(NASDAQ:TTWO) today announced record financial results for its third quarter and
nine months ended July 31, 2003.
Net sales for the third quarter ended July 31, 2003 were $155.6 million, a 27%
increase over $122.5 million for the same period a year ago. Net income of $7.7
million represented an increase of 60% compared to $4.8 million last year, with
diluted net income per share of $0.18, a 50% increase over $0.12 last year.
Net sales for the nine months ended July 31, 2003 were $758.6 million, a 32%
increase over $575.7 million for the same period a year ago. Net income of $73.4
million represented an increase of 49% compared to $49.2 million in the
comparable period last year, with diluted net income per share of $1.72,
compared to $1.26, an increase of 36%.
Acquisition of TDK Mediactive, Inc.
Take-Two is also announcing an agreement to purchase TDK Mediactive, Inc. (OTC
BB: TDKM), a California based publisher of a rapidly expanding portfolio of
video game franchises based on popular licensed properties, including Shrek,
Pirates of the Caribbean, The Haunted Mansion, The Land Before Time, Robotech,
The Muppets, Corvette and Masters of the Universe. For the fiscal year ended
March 31, 2003, TDK reported revenue of $42.2 million, with a net loss of $8.3
million, or $0.36 per share.
Under the terms of the agreement, Take-Two will purchase TDK Mediactive for
approximately $22.7 million, consisting of (1) $0.55 per share for each of the
23,005,885 shares outstanding (approximately $12.6 million); (2) purchase of
debt of approximately $9.9 million ($1.9 million in cash and $8 million in
restricted shares of common stock of Take-Two, or approximately 270,000 shares);
and (3) approximately $0.2 million to retire outstanding stock options. Take-Two
expects the acquisition of TDK Mediactive to close in the first week of
November, with the closing subject to customary terms and conditions.
Take-Two and TDK Mediactive have also entered into a separate agreement
providing Take-Two with the exclusive North American distribution rights for
certain TDK titles on various platforms, including The Haunted Mansion,
currently scheduled for launch in mid-October in anticipation of the
Thanksgiving release of the Disney feature film. Among other products, the
distribution agreement also includes Star Trek: Shattered Universe and Corvette,
both scheduled for launch in late October.
Commenting on the acquisition, Jeff Lapin, Chief Executive Officer, said, "In a
little over two years, TDK Mediactive has become a meaningful player in the
interactive entertainment industry by identifying, securing and building strong
video game franchises based on popular, well established licensed brands. The
addition of TDK's mass market and children's licensed properties will complement
our portfolio of proprietary brands, and will provide an excellent platform for
Take-Two to further expand and diversify its product offerings. In addition, we
believe our proven product development and marketing capabilities will enhance
TDK's product offerings and our distribution resources will offer additional
outlets for TDK's products."
Guidance
Take-Two is raising its financial guidance for the fiscal year ending October
31, 2003 to $1.015 billion in net sales and $2.30 of diluted net income per
share.
For the fiscal year ending October 31, 2004, the Company's initial guidance is
$1.18 billion in net sales and $2.68 of diluted net income per share. The
Company's guidance for the first quarter ending January 31, 2004 is $412 million
in net sales and $1.21 of diluted net income per share.
The Company's fiscal 2003 guidance gives effect to the distribution agreement
entered into between Take-Two and TDK Mediactive. Take-Two is currently
determining the full impact of the acquisition on its fiscal 2004 guidance; on a
preliminary basis, the Company's guidance assumes the acquisition will add
approximately $35 million in net sales, primarily weighted toward the back half
of the fiscal year, and have no material effect on its fiscal 2004 diluted net
income.
Liquidity and Selected Balance Sheet Items
Take-Two generated approximately $18 million in cash flow from operations during
the quarter, with operating cash flow for the nine months ended July 31, 2003 of
$123 million. Working capital was approximately $299 million at July 31, 2003,
as compared with $149 million at the same time a year ago. The Company had more
than $225 million in cash as of July 31, 2003, as compared to approximately $74
million in cash as of July 31, 2002.
Karl Winters, Chief Financial Officer, commented, "Take-Two's continued strong
performance has resulted in another record quarter, with the further
strengthening of our financial position. Our significant cash flow generation
confirms the success of our business model, which is solidly anchored by our
publishing business and supported by our complementary distribution operations.
As we enter fiscal 2004, we believe we are well positioned for another period of
strong growth."
Distribution Highlights
Jack of All Games, the leading North American distributor of videogame software
and hardware, has increasingly capitalized on the growing installed base of
hardware and proliferation of software titles by emphasizing sales of both
exclusive and non-exclusive mid and budget-priced software to its expanding
customer base. During the third quarter, Jack of All Games continued to see the
direct benefits of this strategy in the form of increased market share and
improved profitability.
Publishing Highlights - Third Quarter
In its third quarter of fiscal 2003, Take-Two's Rockstar Games introduced
additional extensions to its blockbuster Grand Theft Auto franchise, which has
sold over 25 million units worldwide since the introduction of the brand.
Rockstar shipped Grand Theft Auto: Vice City for the PC and the PlayStation(R)2
Greatest Hits version of Grand Theft Auto 3. Rockstar also released the highly
anticipated Midnight Club 2 for the Xbox(TM) and PC, a sequel to the
multi-million unit selling franchise. Strong sales of Midnight Club 2 for
PlayStation(R)2, released late in the second quarter, continued into the third
quarter.
Gathering released the sequels Age of Wonders: Shadow Magic and Stronghold
Warchest, both for the PC. Gotham Games launched the new title The Great Escape
in North America on PlayStation(R)2, PC and Xbox(TM) and shipped Motocross Mania
2 and ATV Mania for the PlayStation(R).
Future Publishing Highlights
Rockstar Games' products planned for release in the fourth quarter include the
launch of Max Payne 2: The Fall of Max Payne, the sequel to the hit franchise
that has sold over 4 million units since its debut in 2001. The title will
launch on PC, and will be in stores in North America on October 15th, with
PlayStation(R)2 and Xbox(TM) versions planned for release in the first quarter.
As announced today, Rockstar is introducing a double pack of Grand Theft Auto 3
and Grand Theft Auto: Vice City for both the Xbox(TM) and PlayStation(R)2. The
Grand Theft Auto double pack will be in stores in North America on October 22nd
for PlayStation(R)2 and on November 4th for Xbox(TM). Rockstar also looks
forward to the late September release of Grand Theft Auto 3 for PlayStation(R)2
and PC in Japan, under a license agreement with Capcom Co., Ltd.
Gathering's lineup of titles for the fourth quarter includes Railroad Tycoon 3
and Hidden & Dangerous 2, sequels to the popular franchises which have each sold
over 1 million units, and Space Colony, a new title, all for the PC. Gotham
Games expects to ship Conflict: Desert Storm II and Starsky & Hutch, both in
North America only, for PlayStation(R)2, PC and Xbox(TM). Gotham is also
launching MTV's Celebrity Deathmatch for PlayStation(R)2, PC, Xbox(TM), GameCube
and PlayStation(R).
Rockstar's extensive first quarter lineup includes the North American release of
the Grand Theft Auto double pack for Xbox(TM) and the launch of the new title
Manhunt for PlayStation(R)2. Manhunt was developed internally by Rockstar North,
the creators of the global blockbuster Grand Theft Auto series and is scheduled
to be in stores in North America on November 19th. Rockstar will also ship the
PlayStation(R)2 and Xbox(TM) versions of Max Payne 2: The Fall of Max Payne in
the first quarter.
Also planned for a first quarter release is Gathering's Mafia for
PlayStation(R)2 and Xbox(TM), the sequel to the popular franchise introduced
last fall.
Additional products planned for fiscal 2004 from Rockstar Games include the next
installment in the Grand Theft Auto franchise, extensions of other proprietary
intellectual properties from Rockstar's internal studios, as well as the launch
of The Warriors(TM), a new title based on the Paramount Pictures feature film.
Gathering's lineup includes both sequels to the popular Hidden & Dangerous and
Vietcong franchises, and the introduction of other new properties.
The Company's success in distributing mid and value-priced software has
demonstrated the increasing demand for this type of product as the console cycle
progresses and the installed base of hardware and software expands. Take-Two
plans to capitalize on this trend by expanding its product offerings of
attractively priced mass-market titles in its publishing business. The Company's
product pipeline for fiscal 2004 includes a variety of mass-market and
children's licensed properties from TDK.
Management Comments
Jeff Lapin, Chief Executive Officer, commented, "As we approach the busy holiday
season and enter fiscal 2004, we believe we are in the strongest position in
Take-Two's history. Rockstar's portfolio of blockbuster franchises and highly
anticipated new brands, combined with Gathering's exciting lineup of proprietary
and licensed properties, and TDK's mass market and children's titles, represents
a compelling and diversified product pipeline. With Jack of All Games'
complementary distribution business providing incremental visibility and
predictability to our business model, we anticipate another robust year for
Take-Two."
Conference Call
Take-Two will host a conference call today at 8:30 am Eastern Time to review its
results for the third quarter and nine months ended July 31, 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, September 5, 2003.
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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(TM). 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 April 30, 2003.
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TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Consolidated Condensed Statements of Operations
For the three and nine months ended July 31, 2003 and 2002 (unaudited)
(In thousands, except per share data)
- --------------------------------------------------------------------------------
Three months ended July 31, Nine months ended July 31,
--------------------------- --------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Net sales $ 155,587 $ 122,461 $ 758,594 $ 575,717
Cost of sales
Product costs 81,642 62,567 384,984 303,880
Royalties 10,434 12,245 66,782 53,894
Software development costs 1,842 2,125 8,558 6,018
--------- --------- --------- ---------
Total cost of sales 93,918 76,937 460,324 363,792
--------- --------- --------- ---------
Gross profit 61,669 45,524 298,270 211,925
Operating expenses
Selling and marketing 20,013 15,912 76,928 58,429
General and administrative 19,372 17,390 67,701 55,311
Research and development 7,043 1,812 17,419 7,703
Depreciation and amortization 2,930 2,541 13,689 6,614
--------- --------- --------- ---------
Total operating expenses 49,358 37,655 175,737 128,057
Income from operations 12,311 7,869 122,533 83,868
Interest (income) expenses, net (625) (299) (1,713) 728
Gain on Internet investments -- -- (39) (159)
Class action settlement costs -- -- -- 1,468
--------- --------- --------- ---------
Total non-operating (income) expenses (625) (299) (1,752) 2,037
Income before income taxes 12,936 8,168 124,285 81,831
Provision for income taxes 5,287 3,402 50,935 32,599
--------- --------- --------- ---------
Net income $ 7,649 $ 4,766 $ 73,350 $ 49,232
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Per share data:
Diluted:
Weighted average common shares outstanding 43,548 40,231 42,701 38,947
========= ========= ========= =========
--------- --------- --------- ---------
Net income per share - Diluted $ 0.18 $ 0.12 $ 1.72 $ 1.26
========= ========= ========= =========
OTHER INFORMATION Three months ended July 31, Nine months ended July 31,
- ----------------- --------------------------- --------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Total revenue mix
- -----------------
Publishing 60% 70% 69% 72%
Distribution 40% 30% 31% 28%
Geographic revenue mix
- ----------------------
North America 75% 80% 72% 78%
International 25% 20% 28% 22%
Publishing platform revenue mix
- -------------------------------
Sony PlayStation 2 40% 51% 79% 75%
Sony PlayStation 4% 6% 4% 6%
Microsoft Xbox 15% 3% 4% 6%
PC 40% 37% 11% 11%
Accessories and other 1% 3% 2% 2%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Consolidated Condensed Balance Sheets
As of July 31, 2003 (unaudited) and October 31, 2002
(In thousands, except share data)
- --------------------------------------------------------------------------------
ASSETS July 31, 2003 October 31, 2002
------------- ----------------
Current assets
Cash and cash equivalents $ 225,859 $ 108,369
Accounts receivable, net of provision for doubtful accounts, returns and
sales allowances of $40,500 and $29,194 at July 31, 2003 and
October 31, 2002, respectively 65,996 107,188
Inventories, net 73,902 74,391
Prepaid royalties 15,576 13,723
Prepaid expenses and other current assets 30,055 19,569
Deferred tax asset 5,392 5,392
--------- ---------
Total current assets 416,780 328,632
Fixed assets, net 20,078 15,319
Prepaid royalties 8,182 12,203
Capitalized software development costs, net 13,986 10,385
Investments -- 97
Goodwill, net 101,095 61,529
Intangibles, net 39,888 55,293
Deferred tax asset 7,983 7,983
Other assets, net 565 266
--------- ---------
Total assets $ 608,557 $ 491,707
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LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 56,105 $ 79,660
Accrued expenses and other current liabilities 46,311 49,821
Income taxes payable 15,458 1,603
Current portion of capital lease obligation 101 95
--------- ---------
Total current liabilities 117,975 131,179
Capital lease obligation, net of current portion 99 201
Deferred tax liability 6,178 3,885
--------- ---------
Total liabilities 124,252 135,265
--------- ---------
Stockholders' equity
Common stock, par value $.01 per share; 50,000,000 shares authorized;
43,287,167 and 40,361,739 shares issued and outstanding 433 404
Additional paid-in capital 327,410 273,502
Deferred compensation (3,162) (227)
Retained earnings 161,154 87,804
Accumulated other comprehensive loss (1,530) (5,041)
--------- ---------
Total stockholders' equity 484,305 356,442
--------- ---------
Total liabilities and stockholders' equity $ 608,557 $ 491,707
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