Take-Two Interactive Software, Inc. Reports First Quarter Fiscal 2010 Financial Results.NEW YORK New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Take-Two Interactive Software, Inc. (NASDAQ NASDAQ
in full National Association of Securities Dealers Automated Quotations
U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :TTWO TTWO Take Two Interative Software, Inc. (stock symbol) ) today announced financial results for its first quarter ended January 31, 2010.
Net revenue for the first fiscal quarter was $163.2 million, compared to $149.4 million for the same quarter of fiscal 2009. First quarter fiscal 2010 sales were led by Borderlands[TM], NBA[R] 2K10, Grand Theft Auto IV This article or section contains information about an unreleased video game.
The content may change substantially as more information becomes available. , Grand Theft Auto: Episodes from Liberty City and Carnival Games([TM]).
Net loss from continuing operations continuing operations
Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the first quarter was $33.8 million or $0.43 per share, compared to a net loss from continuing operations of $53.8 million or $0.71 per share in the first quarter of fiscal 2009.
The first quarter 2010 results from continuing operations included $6.4 million in stock-based compensation expense ($0.08 per share); $1.7 million in non-cash interest expense on the Company's convertible notes ($0.02 per share); $0.7 million in professional fees and expenses related to unusual matters ($0.01 per share); and $0.6 million in non-cash tax expense ($0.01 per share). Results from continuing operations for the first quarter of 2009 included $6.2 million in stock-based compensation expense ($0.08 per share); and $4.9 million in professional fees and expenses related to unusual matters ($0.06 per share).
Non-GAAP net loss from continuing operations was $24.4 million or $0.31 per share in the first quarter of fiscal 2010, compared to non-GAAP net loss from continuing operations of $42.8 million or $0.56 per share in the first quarter of 2009. (Please refer to Non-GAAP Financial Measures and reconciliation tables included later in this release for additional information and details on non-GAAP items).
* Consistent with Take-Two's strategy to focus its resources on its core publishing business, the Company completed the previously announced sale of its Jack of All Games distribution business to SYNNEX Corporation SYNNEX Corporation (NYSE: SNX), a Fortune 500 company founded in 1980 and based in Fremont, California, is a global information technology supply chain services company offering a comprehensive range of services to original equipment manufacturers, software publishers and on February 26, 2010. The transaction was valued at approximately $44 million, including $37.5 million in cash at closing and up to an additional $6.75 million in deferred payments subject to the achievement of certain objectives after the close of the transaction. For the first quarter ended January 31, 2010, the results of the Company's distribution segment were excluded from continuing operations and have been reclassified to discontinued operations. Net loss from discontinued operations for the first quarter was $0.1 million or $0.00 per share.
* Take-Two is in the process of implementing a targeted restructuring of its corporate departments in order to align resources more closely with its current goals. The restructuring involves a 15% reduction in corporate headcount and other cost savings initiatives, and is expected to result in approximately $8 million in savings in fiscal 2010, and $15 million on an annualized annualized
Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis.
* 2K Games launched BioShock 2 globally on February 9. The title has been a commercial and critical success, and has shipped over 3 million units to date. The original BioShock title launched in August 2007 has now sold over 4 million units, bringing the total sales of the franchise to 7 million units.
* NBA 2K10 from 2K Sports has shipped over 2 million units. The title continues to be the #1 selling and #1 rated basketball game for the Xbox 360 and PlayStation 3 through January 2010, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. The NPD NPD New Product Development
NPD Nouveau Parti Démocratique (Canada)
NPD Narcissistic Personality Disorder
NPD Norwegian Petroleum Directorate
NPD Nationaldemokratische Partei Deutschlands Group's estimates of U.S. retail video game sales and Metacritic.com.
* Grand Theft Auto IV from Rockstar Games “R*” redirects here. For *R, see Hyperreal number.
Rockstar Games is a development division of video game publisher Take-Two Interactive, based in New York City, United States. The brand is most known for the Grand Theft Auto series. has sold over 15 million units globally.
* 2K Play's Carnival Games franchise has sold over 6 million units worldwide on the Wii and DS.
* Red Dead Redemption from Rockstar Games is now planned for release on May 18, 2010 in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and May 21, 2010 internationally.
* Rockstar Games announced Grand Theft Auto: Episodes from Liberty City for the PlayStation 3 and Games for Windows For the magazine, see .
Games for Windows is a gaming platform and marketing campaign by Microsoft that dates back at least to 2005, and was revised in 2006. Games for the platform must meet certification standards similar to those of modern popular videogame consoles. [R] - LIVE, both planned for release on March 30, 2010. The Lost and Damned and The Ballad of Gay Tony will be available at the same time for digital download The perspective and/or examples in this article do not represent a world-wide view. Please [ edit] this page to improve its geographical balance. .
* 2K Games announced the development of Sid Meier's Civilization[R] V, the newest entry from the strategy-based franchise, coming to PC this fall.
The Company is providing initial guidance for the second quarter ending April 30, 2010 and updating its guidance for the fiscal year ending October 31, 2010. The Company's fiscal year 2010 guidance provided below assumes the following factors:
* a non-GAAP net loss from the Company's Major League Baseball "MLB" and "Major Leagues" redirect here. For other uses, see MLB (disambiguation) and Major Leagues (disambiguation).
Major League Baseball (MLB) is the highest level of play in North American professional baseball. [R] business in the range of $30 to $35 million, or $0.38 to $0.44 per share;
* the launch of Red Dead Redemption in the third fiscal quarter; and
* L.A. Noire This article or section contains information about an unreleased video game.
The content may change substantially as more information becomes available. , Mafia II This article or section contains information about an unreleased video game.
The content may change substantially as more information becomes available. , Max Payne Max Payne is a third-person shooter video game developed by the Finnish company Remedy Entertainment, produced by 3D Realms and published by Gathering of Developers in July, 2001 for Windows. 3 and Sid Meier's Civilization V are all planned for release in the fourth fiscal quarter; however, the Company's fiscal year 2010 guidance reflects the potential movement of one of these titles into fiscal 2011.
Key assumptions and dependencies underlying the Company's guidance include continued consumer acceptance of the Xbox 360, PlayStation 3 and Wii; 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; as well as the timely delivery of the titles detailed in this release.
The following titles shipped to date during fiscal 2010:
Take-Two's lineup of key titles announced to date for the remainder of fiscal 2010 includes:
Strauss Zelnick, Chairman of Take-Two, stated, "We are pleased to begin this fiscal year with better than expected results that reflect our ability to produce compelling titles and to enhance the potential of our franchises through downloadable content and digital offerings. We've also taken important steps to improve the efficiency of our business and align our corporate cost structure more closely with our current goals. Our updated outlook for 2010 underscores a prudent approach toward what we still believe to be a challenging year ahead. We remain committed to creating long term value, and continuing to improve upon our execution and efficiency."
Ben Feder, Chief Executive Officer of Take-Two, commented, "Our first quarter performance was driven by the market dominance of NBA 2K10, successful launch of Borderlands, growth of our digital business and continued strength of our catalog titles. We are building upon this success with the global launch of BioShock 2, and have a strong line up of triple-A titles from our diverse portfolio of proven brands planned for release this fiscal year. Take-Two has been strengthened through our cost savings initiatives and the sale of Jack of All Games, which allows us to focus our resources solely on our core business. We will continue to evaluate our cost structure for additional savings, and work to maximize the value of our intellectual property by selectively engaging in strategic opportunities in emerging markets and new platforms."
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 The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records.
Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP
See: Generally Accepted Accounting Principles
See 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:
* Stock-based compensation;
* Business reorganization, restructuring and related expenses;
* Professional fees and expenses associated with unusual legal and other matters;
* Non-cash interest expense related to convertible debt; and
* Non-cash tax expense for the impact of deferred tax liabilities associated with tax deductible amortization of goodwill.
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:
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. The Company places greater emphasis on stockholder dilution than accounting charges when assessing the impact of stock-based equity awards.
Business reorganization, restructuring and related expenses
From time to time, the Company may engage in business reorganization and restructuring activities, which may result in costs related 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, restructuring and related expenses from its non-GAAP financial measures.
Professional fees and expenses associated with unusual legal and other matters
The Company has incurred significant legal and other professional fees associated with both the investigation of its historical stock option granting practices 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.
Non-cash interest expense related to convertible debt
The Company adopted a new accounting standard in the first quarter of fiscal 2010 that requires convertible debt to be bifurcated into debt and equity components. As a result of the new standard, the Company has begun to record non-cash interest expense on its convertible notes, in addition to the interest expense already recorded for coupon payments Coupon payments
A bond's interest 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
The Company records 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 (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become 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.
Certain prior year amounts have been reclassified to conform to current year presentation.
About Take-Two Interactive Software, Inc.
Headquartered in New York City New York City: see New York, city.
New York City
City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , Take-Two Interactive Software, Inc. is a global developer, marketer and publisher of interactive entertainment software games for the PC, PlayStation[R]3 and PlayStation[R]2 computer entertainment systems, PSP (PlayStation Portable) See PlayStation. [R] (PlayStation[R]Portable) system, Xbox 360[R] video game and entertainment system from Microsoft, Wii[TM], Nintendo DS[TM], iPhone[TM] and iPod[R] touch. 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 reliance on a primary distribution service provider for a significant portion of our products, our ability to raise capital if needed, risks associated with international operations, and the matters relating to the investigation by a special committee of our board of directors of the Company's stock option grants and the claims and proceedings relating thereto (including stockholder and derivative litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute.
When a person begins a civil lawsuit, the person enters into a process called litigation. and negative tax or other implications for the Company resulting from any accounting adjustments or other factors). Other important factors and information are contained in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2009, 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.
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