Take-Two Interactive Software, Inc. Announces Third Quarter 2001 Financial Results
biz.yahoo.com
NEW YORK--(BUSINESS WIRE)--Aug. 29, 2001--Take-Two Interactive Software, Inc. (NASDAQ: TTWO):
EPS of $0.04 Excluding Extraordinary and Non-operating Items in Line With Consensus
Record Net Sales and Cash Flow for Third Quarter
Significant Balance Sheet Improvement
Company Reiterates Fiscal 2001 Financial Guidance
Take-Two Interactive Software, Inc. (NASDAQ: TTWO - news) today announced financial results for its third quarter ended July 31, 2001.
Net sales for the quarter were $84.5 million compared with $71.5 million for the same period a year ago, representing an 18% increase. Net income was $1.3 million, or $0.04 per fully diluted share, prior to giving effect to an extraordinary charge of $1.5 million, or $0.04 per fully diluted share, for the extinguishment of debt, and a gain on sale of a subsidiary of $651,000, or $0.02 per fully diluted share, from the sale of the Company's U.K. Jack of All Games fulfillment operations. This compares with net income of $3.4 million, or $0.12 per fully diluted share for the same period a year ago.
For the nine months ended July 31, 2001, the Company reported net sales of $309.0 million and net income of $12.9 million, or $0.38 per fully diluted share, excluding the extraordinary charge of $1.5 million, charges aggregating $15.8 million relating to impaired Internet assets and securities and the non-operating gain of $651,000. This compares to net sales of $264.4 million and net income of $11.6 million, or $0.43 per fully diluted share for the same period a year ago.
Paul Eibeler, President, stated, ``The third quarter of 2001 represents another important milestone for Take-Two, as we continue to execute on our business plan. As stated previously, we have continued to concentrate our efforts on strengthening our balance sheet and maximizing capital efficiency, coupled with building a world-class entertainment software publishing company and distribution infrastructure. We believe our continued success in enhancing our financial, operational and product position is well timed, and will lead to record performance in our fourth quarter and in fiscal 2002. We anticipate that the acceleration that we have begun to see in our business and industry will intensify this fiscal year and well into 2002 and beyond.''
Guidance:
The Company's 2001 financial guidance remains at $1.00 in fully diluted earnings per share, exclusive of all charges and non-operating gains, and $500 million in net sales.
Initial guidance for fiscal 2002, without giving effect to SFAS 142 (``Amortization of Goodwill and Other Intangibles''), the effects of which the Company is still examining, is $1.20 - 1.25 in fully diluted earnings per share and $590 - 610 million in net sales.
Publishing:
Publishing revenue represented approximately 59% of net sales for the quarter. The Company has continued to see significant year over year increases in revenue and market share for the Company's publishing business, both domestically and internationally.
During the quarter the Company's GodGames label released Max Payne, developed by Remedy Entertainment and produced by 3DRealms, for the PC. Max Payne's sell-through to date represents a record level for a Take-Two PC product, and the title has been generating significant reorders. The Company expects to release Max Payne for the PlayStation®2 and Xbox(TM), which are being developed by the Company's Rockstar Canada and Neo Software development studios, respectively, and published on its Rockstar Games label, in time for the holiday season.
As scheduled, the Company also released Rune: Viking Warlord and City Crisis, both for the PlayStation®2, and Motocross Mania for its value priced line of PlayStation titles.
Rockstar's introduction of Grand Theft Auto 3 for the PlayStation®2 in late September is expected to be the Company's largest PlayStation®2 product launch to date. Grand Theft Auto 3 has already received tremendous accolades from the global video game press, including its recent appearances on the cover of PSE2 (U.S.) and Official PlayStation 2 Magazine (U.K.). The Grand Theft Auto series has been one of the most significant franchises for the Company to date.
Looking forward, Rockstar expects to release Smuggler's Run 2, the sequel to its best-selling PlayStation®2 title, in late September. In fiscal 2002 the Company plans to release Rockstar's highly anticipated State of Emergency for PlayStation®2, as well as products based on the popular Midnight Club, Austin Powers, 4x4 Evo and Duke Nukem' brands.
The Company's GodGames PC publishing label expects to benefit from continued strong sales of Max Payne along with the release of Myth 3 and the highly anticipated Stronghold from Firefly Studios. Future releases from GodGames are expected to include Duke Nukem' Forever, Mafia, Hidden & Dangerous 2, and Railroad Tycoon 3.
The Company expects to have at least one title available for the launch of Microsoft's Xbox(TM) and has also begun development of products for Nintendo's GameCube(TM).
Distribution:
The Company's Jack of All Games distribution subsidiary continued to perform well in the third quarter. The business benefited from increased availability of PlayStation and PlayStation®2 hardware and the launch of Nintendo's Game Boy Advance. Distribution revenue is expected to remain strong with the launch of new next generation hardware and front-line software later this year, and the Company expects that Jack of All Games will continue to build market share going into fiscal 2002.
Selected Financial Highlights:
The Company has continued to focus on strengthening its balance sheet and improving its capital efficiency, through the reduction of DSO's and indebtedness. During the quarter, the Company achieved its most favorable debt (net of cash) to equity level in eleven quarters, reduced DSO's and attained a record level of working capital.
In July, the Company utilized the net proceeds of $20.8 million from a private placement to prepay $15 million in 12.5% interest bearing subordinated debt, which will significantly reduce future interest payments. An extraordinary loss of $1.5 million, or approximately $0.04 per fully diluted share, was recorded as a result of the debt prepayment.
The Company operated on a cash flow positive basis during the quarter, generating approximately $1 million in cash from operating activities, as compared with negative $8 million for the same period a year ago. For the first nine months of fiscal 2001, the Company has generated approximately $24 million in operating cash flow, an increase of about $51 million compared with the same period in fiscal 2000.
During the quarter the Company sold 100% of its interest in its U.K. Jack of All Games product fulfillment operation, resulting in a $651,000 non-operating gain, or approximately $0.02 per fully diluted share. U.K. Jack of All Games recorded approximately $5 million in net revenues in the past 12 months and generated an operating loss.
During the quarter the Company wrote off its receivable from Ames Department Stores, a distribution customer that recently filed for protection under Chapter 11 as debtor-in-possession. The Company had substantially curtailed its business with Ames prior to its bankruptcy filing, and based on the continued growth of its Jack of All Games domestic distribution division, the Company does not believe that it will experience any negative effects from the loss of this customer on a going forward basis.
Kelly Sumner, Chief Executive Officer, commented, ``Our efforts to strengthen Take-Two's financial condition and internal systems have begun to produce significant positive results. As we move into 2002, with our diversified business model, impressive product line up, and improved financial standing, we believe our leadership position in the interactive entertainment industry will continue.'' |
