TTWO ( $16 gap $19) 12c vs 11c....
Announces Second Quarter 2001 Financial Results
NEW YORK--(BUSINESS WIRE)--May 24, 2001--Take-Two Interactive Software, Inc. (NASDAQ: TTWO - news)
EPS Of $0.12 Excluding Non-Recurring Charges Exceeds Expectations -
Affirms Fiscal Year 2001 Guidance -
Record Net Sales And Cash Flow -
Gameplay.Com Investment Eliminated From Balance Sheet -
Take-Two Interactive Software, Inc. (NASDAQ: TTWO - news) today announced record net sales and cash flow for its 2001 second quarter ended April 30, 2001.
Net sales for the quarter were $93.3 million compared with $70.0 million for the same period a year ago, representing a 33% increase. Net income was $3.9 million, or $0.12 per fully diluted share, excluding non-recurring, non-cash impairment charges of $24.9 million ($15.8 million net of taxes), relating to the Company's investments in Gameplay.com and eUniverse.com and certain related Internet assets, compared with $3.4 million, or $0.13 per fully diluted share for the same period a year ago.
For the six months ended April 30, 2001, the Company recorded net sales of $224.5 million and net income of $11.6 million, or $0.35 per fully diluted share, excluding the non-recurring, non-cash impairment charges. This compares to net sales of $192.9 million and net income of $8.1 million, or $0.32 per fully diluted share for the same period a year ago.
Net sales for the trailing twelve months ended April 30, 2001 were approximately $418.6 million.
Paul Eibeler, President, stated, ``From an operating standpoint, this was an excellent quarter for Take-Two. The continued and rapid maturation of our Company coincides with the beginning of what promises to be a period of record expansion for the interactive entertainment software industry. We have begun to see an acceleration in our business, as evidenced by our top line growth, and we anticipate the strongest publishing schedule in our company's history to lead us to record profitability levels this Christmas.''
Guidance:
The Company's 2001 financial guidance remains at $1.00 in fully diluted earnings per share, exclusive of the aforementioned non-recurring, non-cash impairment charges, and $500 million in net sales. The Company expects to benefit from Sony's increased shipments of the PlayStation 2, as well as the introduction of Nintendo's Game Boy Advance in fiscal 2001. Fiscal 2002 results will benefit from the launch of Microsoft's Xbox and Nintendo's GameCube this fall, and continuing into the holiday season.
Guidance for earnings per share, excluding the aforementioned non-recurring, non-cash impairment charges, and revenue for the remainder of the fiscal year ending October 31, 2001 follows:
Q3 2001: $85 - $90 million in net sales and $0.04 - $0.05 in fully
diluted EPS; Q4 2001: $188 - $195 million in net sales and $0.59 - 0.61 in fully
diluted EPS.
Publishing:
Publishing revenue represented approximately 55% of net sales for the quarter. The Company is proud to report it was the 7th largest entertainment software publisher year-to-date in North America, its highest ranking in history, according to NPD/TRST data. Publishing revenues in Europe also continued to be strong.
During the quarter the Company released two top-ten selling PC products in North America and Europe: Tropico, an award-winning strategy game from its wholly-owned development studio PopTop Software, and Serious Sam.
PlayStation 2 software titles continued to sell well both domestically and internationally. The Company's award-winning Midnight Club: Street Racing, a game released concurrently with the system's introduction in October 2000, maintained its ranking among the top-ten selling games for PlayStation 2 worldwide. 4x4 EVO, an off-road driving adventure game that shipped for the PlayStation 2 during the quarter, has provided additional momentum to the Company's expanding PlayStation 2 business.
The Company's value priced line of PlayStation titles, including Spec Ops, DarkStone, Action Bass, and Ford Racing, continued to rank among the top selling PlayStation games in North America. As part of this value priced program, during the second quarter the Company released Spec Ops: Ranger Elite, which debuted at #2 on the NPD/TRST charts. During the period the Company successfully launched a similar value priced program internationally, where Duke Nukem: Land of the Babes debuted at #1 in the major markets in Europe.
Looking forward to the balance of fiscal 2001, the Company expects to benefit from PC and PlayStation 2 releases of the highly anticipated Max Payne from 3D Realms/ Remedy; Duke Nukem Forever, Mafia, Stronghold, and Myth 3, all for the PC; Motocross Mania and Hidden & Dangerous for the PlayStation; and Rune: Viking Warlord for the PlayStation 2. The Company will also release Smuggler's Run 2 and the next release of its largest franchise Grand Theft Auto 3, both for PlayStation 2.
Additionally the Company expects to release several Nintendo Game Boy Advance titles during fiscal 2001 and have at least one game available for the launch of Microsoft's Xbox. The Company has also begun development of a product featuring Duke Nukem for Nintendo's soon to be released GameCube.
Distribution:
The Company's Jack of All Games distribution subsidiary continued to perform well in the second quarter. Jack of All Games expanded its market share and capitalized on the increased availability of PlayStation 2 hardware and the resulting growth in PlayStation 2 software sales, as well as sustained demand for PlayStation products. Distribution revenue is expected to benefit from the launch of next generation hardware and software later this calendar year.
Selected Financial Highlights:
The Company operated on a cash flow positive basis during the quarter, generating approximately $2 million in cash from operating activities, as compared to negative cash flow of approximately $14 million for the same period a year ago. For the first six months of fiscal 2001 the Company generated approximately $23 million in operating cash flow, an increase of approximately $43 million compared with the same period a year ago. The Company will continue its efforts to generate positive operating cash flow throughout the balance of fiscal 2001.
As expected, the Company's balance sheet has been strengthened by the elimination of its investment in Gameplay.com. Also included in the impairment charges was a reduction in the value of Internet assets attributed to the Company's Neo Software development studio, which in addition to its other development activities for the Company, was expecting to deliver certain online products for distribution by Gameplay.com. The Company also wrote down its investment in eUniverse.com.
Kelly Sumner, Chief Executive Officer said, ``Take-Two continues to focus on strengthening its balance sheet and solidifying its financial position in preparation for what promises to be a period of unprecedented growth for the interactive entertainment software industry.''
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, Nintendo GAMECUBE, Nintendo Game Boy Advance, PlayStation®2 and the Xbox(TM). The Company publishes and develops products through various wholly-owned subsidiaries including: Rockstar Games, GodGames, TalonSoft, Joytech, DMA Design, PopTop, Global Star and under the Take-Two brand name. The Company maintains sales and marketing offices in Cincinnati, New York, 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 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 words ``expect,'' ``anticipate,'' ``believe,'' ``may,'' ``estimate,'' ``intend,'' ``guidance,'' 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; technological change; competitive factors; product returns; failure of retailers to sell-through our products; the timing of the introduction and availability of new hardware platforms; market and industry factors adversely affecting the carrying value of our assets; and unfavorable general economic conditions, any or all of which could have a material adverse effect on our business, operating results and financial condition. 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 April 30, 2001 and 2000 (unaudited)
and the six months ended April 30, 2001 and 2000 (unaudited)
(In thousands, except per share data)
Three months ended April 30, Six months ended April 30,
2001 2000 2001 2000
------------------------------ ---------------------------
(Unaudited) (Unaudited)
Net sales $ 93,320 $ 70,036 $ 224,546 $ 192,926
Cost of sales 58,372 41,781 146,594 128,055
--------- --------- --------- ---------
Gross profit 34,948 28,255 77,952 64,871
--------- --------- --------- ---------
Operating
expenses:
Selling and
marketing 11,614 9,912 24,428 25,188
General and
administrative 9,107 7,325 19,618 16,620
Research and
development
costs 1,601 1,364 3,001 2,989
Depreciation and
amortization 4,208 2,173 7,222 3,576
Non-recurring
impairment
charge on
internet
assets 4,187 - 4,187 -
--------- --------- --------- ---------
Total
operating
expenses 30,717 20,774 58,456 48,373
Income from
operations 4,231 7,481 19,496 16,498
Interest expense 2,355 1,375 5,285 2,881
Loss on impairment
of
available-for-sale
internet
securities 20,754 - 20,754 -
--------- --------- --------- ---------
Total interest
expense and
loss on
impairment 23,109 1,375 26,039 2,881
(Loss) income
before equity
in loss of
affiliate
and income
taxes (18,878) 6,106 (6,543) 13,617
Equity in loss
of affiliate - 607 - 763
--------- --------- --------- ---------
(Loss) income
before
income
taxes (18,878) 5,499 (6,543) 12,854
(Benefit)
provision for
income taxes (6,954) 2,145 (2,369) 4,713
--------- --------- --------- ---------
Net (loss)
income $ (11,924) $ 3,354 $ (4,174) $ 8,141
========= ========= ========= =========
Per share data:
Diluted:
Weighted
average
common
shares
outstanding 33,613,280 26,819,177 33,324,231 25,631,363
========== ========== ========== ==========
Net (loss)
income
per share $ (0.35) $ 0.13 $ (0.13) $ 0.32
========= ======== ======= =======
Supplemental Data:
Net income
excluding
non-recurring
non-cash
impairment
charges,
net of taxes $ 3,872 $ 3,354 $ 11,622 $ 8,141
======= ======= ======== =======
Fully diluted
per share
data
excluding
non-recurring
non-cash
impairment
charges, net
of taxes $ 0.12 $ 0.13 $ 0.35 $ 0.32
======= ======= ======= =======
OTHER INFORMATION
Three months ended April 30, Six months ended April 30,
2001 2000 2001 2000
------------------------------ ---------------------------
Total revenue mix
Distribution 45% 48% 51% 49%
Publishing 55% 52% 49% 51%
Geographic
revenue mix
North America 77% 64% 78% 65%
International 23% 36% 22% 35%
Publishing platform
revenue mix
Video Game
Consoles 62% 34% 59% 47%
Nintendo Game
Boy Color 0% 9% 2% 8%
PC 34% 50% 34% 37%
Accessories 4% 7% 5% 8%
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of April 30, 2001 (unaudited) and October 31, 2000
(In thousands, except share data)
ASSETS:
April 30, 2001 October 31,2000
(Unaudited)
Current assets:
Cash and cash equivalents $ 6,886 $ 5,245
Accounts receivable, net of
allowances of $15,200
and $9,102 104,219 134,877
Inventories, net 48,454 44,922
Prepaid royalties 25,479 19,721
Prepaid expenses and other
current assets 14,460 6,551
Investments 1,714 2,926
Deferred tax asset 8,345 666
---------- -------------
Total current assets 209,557 214,908
Fixed assets, net 8,606 5,260
Prepaid royalties 3,828 1,303
Capitalized software development
costs, net 9,753 9,613
Investments 3,338 28,487
Intangibles, net 114,729 90,505
Other assets, net 1,840 1,565
---------- -------------
Total assets $ 351,651 $ 351,641
========== =============
LIABILITIES and STOCKHOLDERS'
EQUITY:
Current liabilities:
Accounts payable $ 43,860 $ 47,972
Accrued expenses 19,751 19,357
Lines of credit, current
portion 77,630 84,605
Current portion of capital
lease obligation 93 89
---------- -------------
Total current liabilities 141,334 152,023
Loan payable, net of discount 12,561 12,268
Notes payable 691 -
Capital lease obligation, net of
current portion 308 348
----------- -------------
Total liabilities 154,894 164,639
----------- -------------
Commitments and contingencies
Stockholders' equity
Common stock, par value $.01
per share; 50,000,000 shares
authorized; 32,805,959 and
31,172,866 shares issued
and outstanding 328 312
Additional paid-in capital 168,235 157,738
Deferred compensation - (5)
Retained earnings 39,191 43,365
Accumulated other
comprehensive loss (10,997) (14,408)
----------- -------------
Total stockholders' equity 196,757 187,002
Total liabilities and ----------- -------------
stockholders' equity $ 351,651 $ 351,641
=========== =============
--------------------------------------------------------------------------------
Contact:
TAKE-TWO INTERACTIVE SOFTWARE, INC.
Dawn Berrie (Corporate Press/Investor Relations)
Jeff Castaneda (Trade media)
212-334-6633; 212-334-6644 fax
E-mail: dawn@take2games.com
jeff@rockstargames.com
or
WOLFE AXELROD WEINBERGER ASSOC. LLC
Stephen D. Axelrod, CFA
Donald C. Weinberger
Denise Ford (media)
212-370-4500; 212-370-4505 fax
E-mail: don@wolfeaxelrod.com
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