Take-Two Interactive Software, Inc. Announces Record First Quarter Fiscal 2002 Financial Results.Business Editors NEW YORK--(BUSINESS WIRE)--March 14, 2002 Company Raises Guidance For Fiscal 2002; Company's Publishing Market Share Continues To Expand Globally Take-Two Interactive “Take Two” redirects here. For other uses, see Take Two (disambiguation). Take-Two Interactive Software, Inc. (NASDAQ: TTWO) is an American publisher, developer, and distributor of video and computer games and video game peripherals. 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 record financial results for its first quarter ended January 31, 2002. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the quarter were $283 million, a 79% increase over net sales of $158 million (inclusive of inclusive of prep. Taking into consideration or account; including. $27 million in net sales attributable to the adoption of SAB SAB Spontaneous abortion. See Abortion. 101) for the same period a year ago. Net income was $34.8 million, or $0.92 per diluted share (inclusive of $0.02 per diluted share attributable to the early adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142), as compared to net income of $8.2 million, or $0.25 per diluted share, and income before cumulative effect of change in accounting principle, net of taxes, of $13.6 million, or $0.41 per diluted share, in the first quarter of 2001. During the first quarter of 2002 the Company recorded a $127,000 ($76,000 net of taxes) gain on sale of securities. The inclusion of this gain in net income did not result in an increase in diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of . Guidance The Company expects that during the remainder of fiscal 2002 it will continue to benefit from strong industry fundamentals and increased sales of its published products. The Company is increasing its financial guidance for fiscal 2002 to $683 million in net sales and $1.67 of diluted earnings per share, including the effect of the early adoption of SFAS 142 "Amortization of Goodwill and Other Intangibles," which no longer requires amortization of goodwill (approximately $0.09 per share for fiscal 2002). The Company is also increasing its guidance for the second quarter ending April 30, 2002 to $145 million in net sales and $0.25 of diluted earnings per share. Liquidity & Selected Balance Sheet Items The Company operated on a cash flow positive basis for the quarter, generating approximately $76 million in cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , compared to $21 million for the first quarter of fiscal 2001. DSO's at January 31, 2002 were 39 days, compared with 69 days at October 31, 2001. Working capital was $128 million at the end of the first quarter as compared with $68 million at the same time a year ago. The Company had $31 million in cash and no borrowings under its lines of credit as of January 31, 2002, as compared to $14 million in cash and outstanding borrowings of approximately $95 million at January 31, 2001. The Company's credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities 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 Europe allow for borrowings scaling up to $70 million based on accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and inventory levels. The Company recently extended its European line of credit for two years; the line now expires in March 2004. On a going forward basis, the Company expects to operate with substantially reduced borrowings as it continues to focus on improved capital efficiency, and it anticipates significant operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. for fiscal 2002. Karl Winters, Chief Financial Officer, commented, "Take-Two has worked diligently over the past year to improve its working capital and cash flow positions. The success of these efforts coupled with the ongoing strong performance of our published products, is clearly visible in our current balance sheet and financial condition. Looking ahead, we will continue to focus on enhancing Take-Two's liquidity and strengthening its balance sheet." Published Products The first quarter of fiscal 2002 represented a breakthrough period for the Company's published products, and in particular, the Company's 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. publishing label. Take-Two was the #2 publisher of PlayStation(R)2 software in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. during that period, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. NPDFunworld(SM) TRSTS Video Games See video game console. Monthly Service for the three months ended January 31, 2002, garnering a 16% dollar share of this market. During the period, Take-Two was also the #2 publisher across all console software platforms, with an 8.9% dollar share. The Company has experienced similar results in major European territories. Grand Theft Auto 3 for Sony's PlayStation(R)2 sustained its position as a global blockbuster during the first quarter of fiscal 2002. Grand Theft Auto 3 was the #1 selling video game across all platforms in the United States for the quarter, according to NPDFunworld, and the product held the same position in the United Kingdom, according to the ELSPA ELSPA European Leisure Software Publishers Association Ltd reports compiled by Chart-Track. Most significantly, Grand Theft Auto 3 has been the #1 selling PlayStation(R)2 title since the launch of this platform in October 2000. During its first fiscal quarter, the Company shipped 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. for the PlayStation(R)2 and Xbox in North America. Max Payne has also been a top-selling title on these next-generation platforms and on the PC. Additionally, the Company's line of PlayStation(R) value priced software products continues to perform well, with both Grand Theft Auto 2 and Motocross motocross Form of motorcycle racing in which cyclists compete on a closed course marked out over natural or simulated rough terrain. Courses vary widely but must be 1.5–5 km (1–3 mi) in length, with steep inclines, hairpin turns, and mud. Mania ranking in the top twenty best selling PlayStation(R) titles in the United States for the three months ended January 31, according to NPDFunworld. The Company was the #5 third-party publisher of PlayStation(R) software for the quarter, with a 6.4% unit share of the market. In its first quarter, published products accounted for approximately 68% of Take-Two's total sales, while Jack of All Games' distribution sales accounted for 32%, compared to 49% and 51% respectively, for the same period a year ago. Future Published Products In its second fiscal quarter, the Company released State of Emergency for the PlayStation(R)2 under its Rockstar Games publishing label. State of Emergency debuted in its launch week as the #1 selling video game on any platform in both the United States and the United Kingdom, according to NPDFunworld and the ELSPA reports compiled by Chart-Track, respectively. The Company's Gathering of Developers label also released new additions to its top-selling Serious Sam Serious Sam is the title of a series of first-person shooters created by the Croatian company Croteam. Originally released for the PC market only, Serious Sam and Tropico PC franchises. The Company also expects to ship The Italian Job for the PlayStation(R) in its second fiscal quarter. In addition, Max Payne for Xbox will be released in Europe concurrent with the Xbox launch in that region. In its third fiscal quarter, the Company expects to ship Grand Theft Auto 3, Age of Wonders Age of Wonders is a turn-based strategy PC-game often likened to Master of Magic. Originally entitled World of Wonders, the game incorporated several RPG elements that were dropped when simultaneous turns were implemented. 2, Mafia, Serious Sam Gold and Tropico Gold for the PC, Spec Ops: Airborne Assault See: assault phase, Part 2. and Austin Powers Pinball for the PlayStation(R), Smuggler's Run Smuggler's Run is a video game developed by Angel Studios (now Rockstar San Diego) and published by Rockstar Games for PlayStation 2 on October 26, 2000. In the game, you play a smuggler who has a number of different vehicles at his disposal including buggys, quad-bikes and 2 for the GameCube, and Duke Nukem' for the Game Boy Advance. The Company also plans to release Midnight Club and Smuggler's Run for Sony's recently announced PlayStation(R)2 Greatest Hits program. Fall/Winter product releases are expected to include new titles for the Company's Grand Theft Auto and Midnight Club brands, State of Emergency for the Xbox, Stronghold Crusader and Hidden & Dangerous 2 for the PC, several additional releases for the PlayStation(R)2 Greatest Hits program, Grand Theft Auto 3 for the Game Boy Advance, as well as the launch of MTV's Celebrity Deathmatch Celebrity Deathmatch is a claymation parody television show that pits celebrities against each other in a wrestling ring, almost always ending in the loser's gruesome death. on a variety of platforms. Looking forward, the Company plans to launch new brands, and continue to aggressively develop brand extensions for Max Payne, Duke Nukem', Smuggler's Run, Serious Sam, Railroad Tycoon, Tropico, Austin Powers and Oni, as well as additional extensions for Grand Theft Auto and Midnight Club. Kelly Sumner Kelly Sumner was the managing director of Commodore UK, the UK subsidiary of Commodore International, during the early 1990s, when it made heavy losses as a prelude to its bankruptcy in April 1994. , Chief Executive Officer, said, "We are very pleased with the significant market share gains our publishing labels experienced during the first quarter of fiscal 2002. We have clearly established Rockstar Games as a leading industry brand focused on delivering innovative gameplay
Gameplay includes all player experiences during the interaction with game systems, especially formal games. Proper use is coupled with reference to "what the player does". to consumers. We look forward to extending our existing brands and the development of new brands in the balance of 2002 and continuing into 2003." Management / Additional Comments As part of an ongoing effort to enhance its management team and Board of Directors, the Company recently announced the appointment of Mr. Don Leeds, former Director and Audit Committee Chairman, to the senior management position of Executive Vice President Special Projects. Take-Two also appointed a new independent director, Mr. Todd Emmel. Mr. Emmel will chair the Company's Audit Committee. Messrs. Leeds and Emmel bring extensive additional experience and talent to the Company, and are expected to play a critical role in the further advancement of Take-Two. Paul Eibeler Paul Eibeler (born ca. 1956) was the Chief Executive Officer, President, and a director of Take-Two Interactive, a publisher, developer, and distributor of video and computer games, well-known for the Grand Theft Auto series. , President, stated, "The first quarter of fiscal 2002 was a significant period for Take-Two. We established ourselves as a leading publisher and grew our overall business substantially from both a top and bottom line perspective, while meeting or exceeding all of our balance sheet, working capital and cash flow objectives. We look forward to the continued growth of our business in fiscal 2002 and beyond, the further strengthening of our management team and a consistent focus on maximizing shareholder value." About Take-Two Interactive Software 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 an integrated global developer, marketer, distributor, and publisher of interactive entertainment software games and accessories for the PC, PlayStation(R), PlayStation(R)2, Nintendo Game Boy Color The Game Boy Color (ゲームボーイカラー , Nintendo GameCube The Nintendo GameCube (GCN) is Nintendo's fourth home video game console, belonging to the sixth generation era. The system itself is the most compact and least expensive, next to the Dreamcast, of the sixth generation era consoles. , Nintendo Game Boy Advance and the Xbox(TM). The Company publishes and develops products through various wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. including: Rockstar Games, Gathering of Developers, TalonSoft, Joytech, DMA (1) (Digital Media Adapter) See digital media hub. (2) (Document Management Alliance) A specification that provides a common interface for accessing and searching document databases. Design, PopTop, Global Star and under the Take-Two brand name. The Company maintains sales and marketing offices in Cincinnati, 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 , Toronto, London, Paris, Munich, Vienna, Copenhagen, Milan, Sydney 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 Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement under the Private Securities Reform Act of 1995: The statements contained herein which are not historical facts are considered forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 words "expect," "anticipate," "believe," "may," "estimate," "intend" and similar expressions are intended to identify such forward-looking statements. Forward-looking statements involve risks, uncertainties and assumptions including, but not limited to: risks associated with our future growth and operating results; our ability to continue to successfully manage growth and integrate the operations of acquired businesses; the availability of adequate financing to fund periodic cash flow shortages; credit risks; seasonal factors; inventory obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. ; technological change; competitive factors; product returns; failure of retailers to sell-through our products; the timing of the introduction and availability of the Company's new software products and third-party hardware platforms Each hardware platform, or CPU family, has a unique machine language. All software presented to the computer for execution must be in the binary coded machine language of that CPU. Following is a list of the major hardware platforms in existence today. See platform. ; market and industry factors adversely affecting the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of our assets; unfavorable general economic conditions (including the current economic downturn); and acts of war Tom Clancy's Op-Center: Acts of War is a technothriller by Jeff Rovin Plot introduction The mobile Regional Operations Center (ROC) in Turkey investigates a dam blown up by Kurdish terrorists. and terrorism, any or all of which could have a material adverse effect on our business, operating results and financial condition. These important factors and other factors that could affect the Company are described in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , as amended, for the fiscal year ended October 31, 2001. Actual operating results may vary significantly from such forward-looking statements. The Company has no obligation to update such forward-looking statements.
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Consolidated Condensed Statements of Operations
For the three months ended January 31, 2002 and 2001 (unaudited)
(In thousands, except per share data)
Three months ended January 31,
2002 2001
-------- -----------
Net sales $ 282,926 $ 157,591
Cost of sales 179,465 104,260
------- -------
Gross profit 103,461 53,331
------- -------
Operating expenses
Selling and marketing 21,995 12,552
General and administrative 18,997 10,511
Research and development costs 1,954 1,400
Depreciation and amortization 2,271 2,422
------- -------
Total operating expenses 45,217 26,885
Income from operations 58,244 26,446
Interest expense 974 2,930
Gain from sales of
marketable securities (127) -
------- -------
Total non-operating expenses 847 2,930
Income before income taxes 57,397 23,516
Provision for income taxes 22,568 9,947
------- -------
Income before cumulative
effect of change in
accounting principle 34,829 13,569
Cumulative effect of change in
accounting principle, net
of taxes of $3,558 - 5,337
-------- -------
Net income $ 34,829 $ 8,232
======== =======
Per share data:
Diluted:
Weighted average common
shares outstanding 37,896 32,959
======== =======
Income before cumulative effect
of change in accounting
principle per share $ 0.92 $ 0.41
Cumulative effect of change
in accounting principle per share - (0.16)
------ ------
Net income - Diluted $ 0.92 $ 0.25
====== ======
OTHER INFORMATION
-----------------
January 31 January 31
2002 2001
------------------- -------------------
Total revenue mix
-----------------
Publishing 68% 49%
Distribution 32% 51%
Geographic revenue mix
----------------------
North America 79% 82%
International 21% 18%
Publishing platform revenue mix
-------------------------------
Video Game Consoles 95% 56%
PC 3% 34%
Accessories 2% 6%
Nintendo Game Boy Color &
Game Boy Advance - 4%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Consolidated Condensed Balance Sheets
As of January 31, 2002 and October 31, 2001 (unaudited)
(In thousands, except share data)
ASSETS January 31, 2002 October 31, 2001
---------------------- ---------------------
Current assets
Cash and cash equivalents $ 30,972 $ 6,056
Accounts receivable, net of
provision for doubtful accounts
and sales allowances of $35,778
and $26,106 at January 31, 2002
and October 31, 2001,
respectively 122,701 94,950
Inventories, net 51,804 61,937
Prepaid royalties 19,259 21,892
Prepaid expenses and
other current assets 18,816 17,925
Investments 769 6,241
Deferred tax asset 13,873 13,873
--------- ---------
Total current assets 258,194 222,874
Fixed assets, net 12,992 11,033
Prepaid royalties 10,562 11,097
Capitalized software
development costs, net 8,930 11,934
Investments 55 75
Intangibles, net 86,703 88,175
Deferred tax asset 7,892 7,892
Other assets, net 381 1,917
--------- ---------
Total assets $ 385,709 $ 354,997
========= =========
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 73,220 60,223
Accrued expenses and
other current liabilities 35,140 20,250
Income taxes payable 21,341 -
Lines of credit, current portion - 54,073
Current portion of
capital lease obligation 92 99
--------- ---------
Total current liabilities 129,793 134,645
Capital lease obligation,
net of current portion 275 291
--------- ---------
Total liabilities $ 130,068 $ 134,936
--------- ---------
Stockholders' equity
Common stock, par value $.01
per share; 50,000,000 shares
authorized; 36,821,257 and
36,640,972 shares
issued and outstanding 368 366
Additional paid-in capital 216,080 213,908
Retained earnings 51,068 16,239
Accumulated other
comprehensive loss (11,875) (10,452)
--------- ---------
Total stockholders' equity 255,641 220,061
--------- ---------
Total liabilities and
stockholders' equity $ 385,709 $ 354,997
========= =========
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