[October 29, 2014] |
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Take-Two Interactive Software, Inc. Reports Better-Than-Expected Results for Fiscal Second Quarter 2015
NEW YORK --(Business Wire)--
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported
better-than-expected financial results for fiscal second quarter 2015,
ended September 30, 2014. In addition, the Company increased its
financial outlook for the fiscal year ending March 31, 2015, and
provided its initial financial outlook for fiscal third quarter 2015,
ending December 31, 2014.
GAAP Financial Results
For fiscal second quarter 2015, GAAP net revenue was $126.3 million, as
compared to $148.8 million for fiscal second quarter 2014. GAAP net loss
from continuing operations narrowed to $41.4 million, or $0.51 per
diluted share, as compared to a net loss of $124.1 million, or $1.40 per
diluted share, for the year-ago period. GAAP results for fiscal second
quarter 2014 excluded net revenue and cost of goods sold related to
sell-in of the Grand Theft Auto V® game during that quarter, as Grand
Theft Auto Online launched during fiscal third quarter 2014.
As of September 30, 2014, the Company had cash and short-term
investments of $803.8 million.
Non-GAAP Financial Results
For fiscal second quarter 2015, Non-GAAP net revenue was $135.4 million,
as compared to $1.27 billion for the year-ago period, which had
benefited from the record-breaking launch of Grand Theft Auto V.
Non-GAAP net loss was $35.4 million, or $0.44 per diluted share, as
compared to Non-GAAP net income of $325.6 million, or $2.49 per diluted
share, for the year-ago period.
The largest contributors to Non-GAAP net revenue in fiscal second
quarter 2015 were catalog sales, which accounted for $134.5 million of
Non-GAAP net revenue, led by Grand Theft Auto V, Grand Theft
Auto Online, NBA® 2K14, Borderlands® 2, and WWE 2K14.
Non-GAAP net revenue from digitally-delivered content was $89.8 million,
as compared to $105.5 million for the year-ago period, which had
benefited from the launch of Grand Theft Auto V. The largest
contributors were offerings for the Grand Theft Auto series, the NBA
2K franchise, Borderlands 2, and Sid Meier's Civilization V.
Revenue from recurrent consumer spending (virtual currency, downloadable
add-on content and online games) grew 45% year-over-year and accounted
for 58% of Non-GAAP net revenue from digitally-delivered content.
Management Comments
"Our second quarter results exceeded expectations, driven by strong
catalog sales and continued growth in digitally-delivered revenue from
recurrent consumer spending," said Strauss Zelnick, Chairman and CEO of
Take-Two. "With the successful launches of NBA 2K15, Borderlands:
The Pre-Sequel, Sid Meier's Civilization: Beyond Earth and WWE
2K15, our third quarter and holiday season is off to a great start,
and there is tremendous anticipation for our upcoming releases,
including Grand Theft Auto V for PlayStation 4, Xbox One and PC,
as well as Evolve - the only title in history to win Game of Show
honors at both E3 and Gamescom in the same year.
"As a result of our better-than-expected results, strong current
business trends and positive outlook, we are raising our revenue and
earnings expectations for the full-year. Fiscal 2015 is poised to be one
of our strongest years ever and we are well-positioned for continued
success."
Business and Product Highlights
Since July 1, 2014:
Rockstar Games:
-
Released updates for Grand Theft Auto Online, including The
San Andreas Flight School Update, which features ten new flight
challenges, four new vehicles and a range of player customizations,
and The Last Team Standing Update, which includes ten new jobs,
new weapons and vehicles, and the addition of Creator tools to the
Last Team Standing mode.
-
Announced that Grand Theft Auto V is planned for release on
PlayStation®4 and Xbox One on November 18, 2014, with the PC version
to follow on January 27, 2015. Current PlayStation 3 and Xbox 360
players will have the ability to transfer their Grand Theft Auto
Online characters and progression to their choice of PlayStation
4, Xbox One or PC. All new content and gameplay created for both Grand
Theft Auto V and Grand Theft Auto Online will also be
available for the PlayStation 4, Xbox One and PC with more to come.
2K:
-
Launched NBA 2K15, the latest installment of our top-selling
and top-rated NBA video game simulation franchise*, on the Xbox One,
Xbox 360, PlayStation 4, PlayStation 3 and PC, as well as on iOS and
Amazon devices. The title currently is the highest-rated sports game
released this year on PlayStation 4** and has enjoyed the strongest
launch in the history of the series, with both record first week
sell-in and sell-through across all platforms.
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Released Borderlands: The Pre-Sequel™ on the Xbox 360,
PlayStation 3 and PC. Co-developed by Gearbox Software and 2K
Australia, Borderlands: The Pre-Sequel is a new standalone game
set in between the award-winning Borderlands and Borderlands
2. The title is being supported with downloadable add-on content,
including a Season Pass.
-
Launched Sid Meier's Civilization: Beyond Earth™ for PC, Mac
and Linux. Developed by Firaxis Games, Sid Meier's Civilization:
Beyond Earth is a new science fiction-themed entry in the
award-winning Civilization franchise. The title won more than
18 awards globally at the 2014 Electronic Entertainment Expo,
including Best Strategy Game honors.
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Launched WWE 2K15 on the Xbox 360 and PlayStation 3. Developed
collaboratively by Yuke's and Visual Concepts, WWE 2K15 is
being supported with downloadable add-on content, including a Season
Pass, and also will be available for the Xbox One and PlayStation
4 on November 18, 2014.
-
Released four new offerings for tablets and smartphones, including Sid
Meier's Civilization Revolution 2, WWE SuperCard, BioShock
and NHL 2K. WWE SuperCard has been downloaded more than
3.5 million times and has quickly become 2K's most financially
successful free-to-play mobile offering.
-
Announced that Battleborn™, a new intellectual property for
Xbox One, PlayStation 4 and PC, is in development at Gearbox Software,
the creative team behind Borderlands, and is planned for
release during fiscal year 2016. The title, which was featured on the
August cover of Game Informer, is a blended-genre game that combines
first-person shooting, cooperative combat, and an expansive collection
of characters to deliver an all-new hero-shooter experience.
-
Announced that Evolve™ has won more than 60 editorial honors to
date and is the only game in history to earn both the official
Electronic Entertainment Expo and Gamescom "Game of Show" awards in
the same year. Planned for global launch on February 10, 2015, Evolve
is a new intellectual property developed for Xbox One, PlayStation 4
and PC by Turtle Rock Studios, the creators of the cooperative shooter
classic, Left 4 Dead. Evolve will be playable as part of
a closed alpha test exclusively on Xbox One for 24 hours beginning
tomorrow, October 30, through November 2, followed by limited access
on PlayStation 4 and PC from October 31 through November 2. For more
information, visit www.EvolveGame.com/news.
Take-Two Interactive:
-
Received approximately $22 million in cash in connection with its
investment in Twitch Interactive, Inc., the leading live video
platform for gamers, which was sold for approximately $970 million in
cash in September 2014.
-
Amended its senior secured revolving credit facility on improved
financial terms. As amended, the credit facility continues to provide
for borrowings of up to $100 million, plus an additional $40 million
accordion feature, for a period of five-years. The credit facility may
be used to fund working capital, letters of credit and for other
general corporate purposes.
* According to 2008 - 2014 Metacritic.com and The NPD Group estimates
of U.S. retail video game sales through September 2014.
** According to Metacritic.com.
Financial Outlook for Fiscal 2015
Take-Two is increasing its financial outlook for fiscal year 2015, which
reflects its better-than-expected fiscal second quarter results, strong
current business trends, and positive sales outlook for its upcoming
releases. In addition, the Company is providing its initial financial
outlook for its fiscal third quarter ending December 31, 2014 as follows:
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Third Quarter
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Fiscal Year
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Ending 12/31/2014
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Ending 3/31/2015
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Non-GAAP net revenue
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$745 to $760 Million
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$1.4 to $1.5 Billion
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Non-GAAP net income per diluted share (1)
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$1.35 to $1.45
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$1.05 to $1.30
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GAAP to Non-GAAP Reconciling Items (2):
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Net effect from deferral in net revenues and related cost of
goods sold
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$0.01
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$0.12
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Stock-based compensation expense (3)
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$0.10
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$0.33
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Non-cash amortization of discount on convertible notes
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$0.03
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$0.14
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Non-cash tax expense
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$0.00
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$0.02
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(Gain) on sale of long-term investment
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$0.00
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($0.10)
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1)
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For the fiscal third quarter ending December 31, 2014 and fiscal
year ending March 31, 2015, the Non-GAAP net income per diluted
share outlook is calculated using the "if-converted" method as a
result of the issuances of our 1.75% Convertible Notes in November
2011 and 1.00% Convertible Notes in June 2013, and Non-GAAP
diluted net income for the third quarter and fiscal year is
adjusted by adding-back $1.9 million and $7.4 million,
respectively, related to coupon interest and debt issuance costs,
net of tax. Shares used to calculate the Non-GAAP net income per
diluted share outlook are as follows:
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Weighted average basic shares
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80 Million
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80 Million
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Add: Weighted average participating shares
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8 Million
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8 Million
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Add: Potential Dilution from convertible notes
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26 Million
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26 Million
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Total weighted average diluted shares
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114 Million
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114 Million
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2)
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All GAAP to Non-GAAP reconciling items are net of tax and per share.
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3)
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The Company's stock-based compensation expense for the periods above
includes the cost of approximately 1.8 million restricted shares
previously granted to ZelnickMedia that are subject to variable
accounting. Actual expense to be recorded in connection with these
shares is dependent upon several factors, including future changes
in Take-Two's stock price.
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Key assumptions and dependencies underlying the Company's financial
outlook include: the timely delivery of the titles included in this
financial outlook; continued consumer acceptance of the Xbox One and
PlayStation 4; the ability to develop and publish products that capture
market share for these next-generation systems while continuing to
leverage opportunities on the Xbox 360, PlayStation 3 and PC; and stable
foreign exchange rates. See also "Cautionary Note Regarding Forward
Looking Statements" below.
Product Releases
The following titles were released since July 1, 2014:
Label
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Title
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Platforms
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Release Date
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2K
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Sid Meier's Civilization Revolution 2
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iOS
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July 2, 2014
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2K
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WWE SuperCard
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iOS, Android
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August 14, 2014
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2K
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BioShock
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iOS
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August 28, 2014
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2K
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NBA 2K15
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Xbox 360, Xbox One, PS3, PS4, PC
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October 7, 2014*
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2K
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Borderlands: The Pre-Sequel
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Xbox 360, PS3, PC, Mac, Linux
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October 14, 2014*
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2K
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NBA 2K15
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iOS, Amazon Devices
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October 16, 2014
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2K
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NHL 2K
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iOS, Android
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October 23, 2014
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2K
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Sid Meier's Civilization: Beyond Earth
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PC
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October 24, 2014
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2K
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WWE 2K15
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PS3, Xbox 360
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October 28, 2014*
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2K
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MyNBA 2K15
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iOS, Android
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October 29, 2014
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*North American release date; international release date
followed three days after.
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Take-Two's lineup of future titles announced to date includes:
Label
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Title
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Platforms
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Release Date
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2K
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BioShock Infinite: The Complete Edition
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Xbox 360, PS3
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November 4, 2014
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Rockstar Games
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Grand Theft Auto V
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Xbox One, PS4
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November 18, 2014
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2K
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WWE 2K15
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Xbox One, PS4
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November 18, 2014*
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Rockstar Games
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Grand Theft Auto V
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PC
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January 27, 2015
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2K
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Evolve
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Xbox One, PS4, PC
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February 10, 2015
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2K
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Battleborn
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PS4, Xbox One, PC
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Fiscal Year 2016
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*North American release date; international release date
typically follows three days after.
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Conference Call
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 (GAAP), the Company uses
Non-GAAP measures of financial performance. 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 the
following Non-GAAP items, net of applicable taxes, as discussed below:
-
Net effect from deferral in net revenues and related cost of goods
sold - the Company defers revenue and related costs from the sale
of certain titles that have undelivered elements upon the sale of the
game and recognizes that revenue upon the delivery of the undelivered
elements. As there is no impact to the Company's operating cash flow,
management excludes the impact of deferred net revenue and related
costs from its Non-GAAP financial measures when evaluating the
Company's operating performance, when planning, forecasting and
analyzing future periods, and when assessing the performance of its
management team. In addition, we believe that these Non-GAAP financial
measures provide a more timely indication of trends in our business,
provide comparability with the way our business is measured by
analysts, and provide consistency with industry data sources.
-
Stock-based compensation - 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. As a result, the Company
has excluded such expenses from its Non-GAAP financial measures.
-
Business reorganization, restructuring and related expenses -
although the Company has incurred business reorganization expenses in
the past, each charge relates to a discrete event based on a unique
set of business objectives. Management does not believe these charges
reflect the Company's primary business, ongoing operating results or
future outlook. As such, the Company believes it is appropriate to
exclude these expenses and related charges from its Non-GAAP financial
measures.
-
Non-cash amortization of discount on convertible notes - the
Company records non-cash amortization of discount on convertible notes
as interest expense in addition to the interest expense already
recorded for coupon 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.
-
Gain on convertible note hedge and warrants, net - the Company
entered into unwind agreements with respect to its convertible note
hedge and warrant transactions. As a result of the unwind agreements,
these transactions were accounted for as derivatives whereby gains and
losses resulting from changes in the fair value were reported as a
loss on convertible note hedge and warrants, net. The Company excludes
the impact of such transactions when evaluating the Company's
operating performance. Management does not believe these gains and
losses reflect the Company's primary business, ongoing operating
results or future outlook. As such, the Company believes it is
appropriate to exclude these gains and losses from its Non-GAAP
financial measures.
-
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.
-
Gain on sale of long-term investment - from time to time, the
Company makes strategic investments. The Company excludes the impact
of any gains and losses on such investments from its Non-GAAP
financial measures.
-
Discontinued operations - the Company does not engage in sales
of subsidiaries on a regular basis and therefore believes it is
appropriate to exclude such gains (losses) from its Non-GAAP financial
measures. As the Company is no longer active in its discontinued
operations, it believes it is appropriate to exclude income (losses)
thereon from its Non-GAAP financial measures.
These Non-GAAP financial measures 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.
About Take-Two Interactive Software
Headquartered in New York City, Take-Two Interactive Software, Inc. is a
leading developer, publisher and marketer of interactive entertainment
for consumers around the globe. The Company develops and publishes
products through its two wholly-owned labels Rockstar Games and 2K. Our
products are designed for console systems and personal computers,
including smartphones and tablets, and are delivered through physical
retail, digital download, online platforms and cloud streaming services.
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 http://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 and next-generation platforms, the timely
release and significant market acceptance of our games, the ability to
maintain acceptable pricing levels on our games, our ability to raise
capital if needed and risks associated with international operations.
Other important factors and information are contained in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 2014,
including the risks summarized in the section entitled "Risk Factors,"
the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2014, 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.
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
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(in thousands, except per share amounts)
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Three months ended September 30,
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Six months ended September 30,
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2014
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2013
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2014
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2013
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Net revenue
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$
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126,277
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$
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148,824
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$
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251,702
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$
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291,491
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Cost of goods sold:
|
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Product costs
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18,761
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33,142
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37,353
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64,129
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Software development costs and royalties
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16,343
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51,090
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36,649
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|
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104,818
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Internal royalties
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12,413
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5,262
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20,711
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8,202
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Licenses
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4,499
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2,969
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11,459
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9,156
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Total cost of goods sold
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52,016
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92,463
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106,172
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186,305
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Gross profit
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74,261
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|
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|
56,361
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|
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145,530
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|
|
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105,186
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|
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Selling and marketing
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49,136
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101,342
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85,982
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142,943
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General and administrative
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43,975
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43,023
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83,327
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75,883
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Research and development
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24,533
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26,520
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48,665
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47,391
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Depreciation and amortization
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5,130
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3,367
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9,278
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6,424
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Total operating expenses
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122,774
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174,252
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227,252
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272,641
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Loss from operations
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(48,513
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)
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(117,891
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)
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(81,722
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)
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(167,455
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)
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Interest and other, net
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(7,512
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)
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(10,747
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)
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(15,231
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)
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(20,069
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)
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Gain on sale of long-term investment
|
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18,976
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-
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18,976
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-
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Loss on extinguishment of debt
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-
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(9,014
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)
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-
|
|
|
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(9,014
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)
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Gain on convertible note hedge and warrants, net
|
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-
|
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5,372
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-
|
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3,461
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Loss before income taxes
|
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(37,049
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)
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(132,280
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)
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(77,977
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)
|
|
|
(193,077
|
)
|
Provision (benefit) for income taxes
|
|
|
4,320
|
|
|
|
(8,185
|
)
|
|
|
(1,205
|
)
|
|
|
(7,098
|
)
|
Loss from continuing operations
|
|
|
(41,369
|
)
|
|
|
(124,095
|
)
|
|
|
(76,772
|
)
|
|
|
(185,979
|
)
|
Loss from discontinued operations, net of taxes
|
|
|
-
|
|
|
|
(25
|
)
|
|
|
-
|
|
|
|
(55
|
)
|
Net loss
|
|
$
|
(41,369
|
)
|
|
$
|
(124,120
|
)
|
|
$
|
(76,772
|
)
|
|
$
|
(186,034
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(0.51
|
)
|
|
$
|
(1.40
|
)
|
|
$
|
(0.96
|
)
|
|
$
|
(2.12
|
)
|
Discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Basic and diluted
|
|
$
|
(0.51
|
)
|
|
$
|
(1.40
|
)
|
|
$
|
(0.96
|
)
|
|
$
|
(2.12
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
80,355
|
|
|
|
88,822
|
|
|
|
79,862
|
|
|
|
87,907
|
|
|
|
|
|
|
|
|
|
|
Computation of Basic and Diluted EPS:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(41,369
|
)
|
|
$
|
(124,120
|
)
|
|
$
|
(76,772
|
)
|
|
$
|
(186,034
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic and diluted
|
|
|
80,355
|
|
|
|
88,822
|
|
|
$
|
79,862
|
|
|
|
87,907
|
|
Basic and diluted EPS
|
|
$
|
(0.51
|
)
|
|
$
|
(1.40
|
)
|
|
$
|
(0.96
|
)
|
|
$
|
(2.12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Six months ended September 30,
|
OTHER INFORMATION
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Geographic revenue mix
|
|
|
|
|
|
|
|
|
International
|
|
|
53
|
%
|
|
|
48
|
%
|
|
|
51
|
%
|
|
|
44
|
%
|
United States
|
|
|
47
|
%
|
|
|
52
|
%
|
|
|
49
|
%
|
|
|
56
|
%
|
|
|
|
|
|
|
|
|
|
Platform revenue mix
|
|
|
|
|
|
|
|
|
Console
|
|
|
74
|
%
|
|
|
59
|
%
|
|
|
71
|
%
|
|
|
66
|
%
|
PC and other
|
|
|
26
|
%
|
|
|
41
|
%
|
|
|
29
|
%
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue by distribution channel:
|
|
|
|
|
|
|
|
|
Digital online
|
|
|
64
|
%
|
|
|
60
|
%
|
|
|
64
|
%
|
|
|
56
|
%
|
Physical retail and other
|
|
|
36
|
%
|
|
|
40
|
%
|
|
|
36
|
%
|
|
|
44
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONSOLIDATED BALANCE SHEETS
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
September 30,
|
|
March 31,
|
|
|
|
2014
|
|
|
|
2014
|
|
|
|
|
|
|
ASSETS
|
|
(Unaudited)
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
754,410
|
|
|
$
|
935,400
|
|
Short-term investments
|
|
|
49,367
|
|
|
|
-
|
|
Restricted cash
|
|
|
77,563
|
|
|
|
193,839
|
|
Accounts receivable, net of allowances of $39,501 and $75,518 at
September 30, 2014 and
|
|
|
|
|
March 31, 2014, respectively
|
|
|
25,427
|
|
|
|
53,143
|
|
Inventory
|
|
|
55,948
|
|
|
|
29,780
|
|
Software development costs and licenses
|
|
|
225,275
|
|
|
|
116,203
|
|
Prepaid expenses and other
|
|
|
78,787
|
|
|
|
71,075
|
|
Total current assets
|
|
|
1,266,777
|
|
|
|
1,399,440
|
|
|
|
|
|
|
Fixed assets, net
|
|
|
56,214
|
|
|
|
42,572
|
|
Software development costs and licenses, net of current portion
|
|
|
101,773
|
|
|
|
109,506
|
|
Goodwill
|
|
|
223,968
|
|
|
|
226,705
|
|
Other intangibles, net
|
|
|
4,854
|
|
|
|
5,113
|
|
Other assets
|
|
|
11,626
|
|
|
|
16,294
|
|
Total assets
|
|
$
|
1,665,212
|
|
|
$
|
1,799,630
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
85,116
|
|
|
$
|
16,452
|
|
Accrued expenses and other current liabilities
|
|
|
186,066
|
|
|
|
397,173
|
|
Deferred revenue
|
|
|
107,960
|
|
|
|
61,195
|
|
Total current liabilities
|
|
|
379,142
|
|
|
|
474,820
|
|
|
|
|
|
|
Long-term debt
|
|
|
464,871
|
|
|
|
454,031
|
|
Other long-term liabilities
|
|
|
66,190
|
|
|
|
68,973
|
|
Total liabilities
|
|
|
910,203
|
|
|
|
997,824
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred stock, $.01 par value, 5,000 shares authorized
|
|
|
-
|
|
|
|
-
|
|
Common stock, $.01 par value, 200,000 shares authorized; 104,680 and
105,156 shares
|
|
|
|
issued and 88,422 and 88,918 outstanding at September 30, 2014 and
March 31, 2014, respectively
|
|
|
1,047
|
|
|
|
1,052
|
|
Additional paid-in capital
|
|
|
992,212
|
|
|
|
954,699
|
|
Treasury stock, at cost (16,238 common shares at September 30, 2014
and March 31, 2014)
|
|
|
(276,836
|
)
|
|
|
(276,836
|
)
|
Retained earnings
|
|
|
44,003
|
|
|
|
120,775
|
|
Accumulated other comprehensive (loss) income
|
|
|
(5,417
|
)
|
|
|
2,116
|
|
Total stockholders' equity
|
|
|
755,009
|
|
|
|
801,806
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,665,212
|
|
|
$
|
1,799,630
|
|
|
|
|
|
|
|
|
|
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
(in thousands)
|
|
|
Six months ended September 30,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
Operating activities:
|
|
|
|
|
Net loss
|
|
$
|
(76,772
|
)
|
|
$
|
(186,034
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
|
|
|
|
|
Amortization and impairment of software development costs and
licenses
|
|
|
10,136
|
|
|
|
84,161
|
|
Depreciation and amortization
|
|
|
9,278
|
|
|
|
6,424
|
|
Loss from discontinued operations
|
|
|
-
|
|
|
|
55
|
|
Amortization and impairment of intellectual property
|
|
|
259
|
|
|
|
3,042
|
|
Stock-based compensation
|
|
|
23,846
|
|
|
|
21,266
|
|
Deferred income taxes
|
|
|
599
|
|
|
|
(6,105
|
)
|
Amortization of discount on Convertible Notes
|
|
|
10,840
|
|
|
|
12,296
|
|
Amortization of debt issuance costs
|
|
|
853
|
|
|
|
1,070
|
|
Gain on sale of long-term investment
|
|
|
(18,976
|
)
|
|
|
-
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
9,014
|
|
Gain on convertible note hedge and warrants, net
|
|
|
-
|
|
|
|
(3,461
|
)
|
Other, net
|
|
|
181
|
|
|
|
1,165
|
|
Changes in assets and liabilities, net of effect from purchases of
businesses:
|
|
|
|
|
Restricted cash
|
|
|
116,296
|
|
|
|
18,898
|
|
Accounts receivable
|
|
|
27,716
|
|
|
|
(821,795
|
)
|
Inventory
|
|
|
(26,168
|
)
|
|
|
(53,815
|
)
|
Software development costs and licenses
|
|
|
(104,492
|
)
|
|
|
(7,866
|
)
|
Prepaid expenses, other current and other non-current assets
|
|
|
(5,847
|
)
|
|
|
(54,733
|
)
|
Deferred revenue
|
|
|
46,765
|
|
|
|
1,127,500
|
|
Deferred cost of goods sold
|
|
|
(1,644
|
)
|
|
|
(298,559
|
)
|
Accounts payable, accrued expenses and other liabilities
|
|
|
(144,692
|
)
|
|
|
283,318
|
|
Net cash used in discontinued operations
|
|
|
-
|
|
|
|
(720
|
)
|
Net cash (used in) provided by operating activities
|
|
|
(131,822
|
)
|
|
|
135,121
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
Purchase of fixed assets
|
|
|
(23,054
|
)
|
|
|
(15,452
|
)
|
Purchases of short-term investments
|
|
|
(49,591
|
)
|
|
|
-
|
|
Cash received from sale of long-term investment
|
|
|
21,976
|
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(50,669
|
)
|
|
|
(15,452
|
)
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
Excess tax benefit from stock-based compensation
|
|
|
4,843
|
|
|
|
-
|
|
Proceeds from issuance of 1.00% Convertible Notes
|
|
|
-
|
|
|
|
283,188
|
|
Payment for extinguishment of 4.375% Convertible Notes
|
|
|
-
|
|
|
|
(165,999
|
)
|
Proceeds from termination of convertible note hedge transactions
|
|
|
-
|
|
|
|
84,429
|
|
Payment for termination of convertible note warrant transactions
|
|
|
-
|
|
|
|
(55,651
|
)
|
Payment of debt issuance costs for the issuance of 1.00% Convertible
Notes
|
|
|
-
|
|
|
|
(2,815
|
)
|
Net cash provided by financing activities
|
|
|
4,843
|
|
|
|
143,152
|
|
|
|
|
|
|
Effects of foreign exchange rates on cash and cash equivalents
|
|
|
(3,342
|
)
|
|
|
(3,400
|
)
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(180,990
|
)
|
|
|
259,421
|
|
Cash and cash equivalents, beginning of year
|
|
|
935,400
|
|
|
|
402,502
|
|
Cash and cash equivalents, end of period
|
|
$
|
754,410
|
|
|
$
|
661,923
|
|
|
|
|
|
|
|
|
|
|
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES
|
RECONCILIATION OF GAAP TO Non-GAAP MEASURES (Unaudited)
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Six months ended September 30,
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
Net Revenues
|
|
|
|
|
|
|
|
|
GAAP Net Revenues
|
|
$
|
126,277
|
|
|
$
|
148,824
|
|
|
$
|
251,702
|
|
|
$
|
291,491
|
|
Net effect from deferral in net revenues
|
|
|
9,165
|
|
|
|
1,119,782
|
|
|
|
35,351
|
|
|
|
1,121,418
|
|
Non-GAAP Net Revenues
|
|
$
|
135,442
|
|
|
$
|
1,268,606
|
|
|
$
|
287,053
|
|
|
$
|
1,412,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital Online Revenues (included in Net Revenues above)
|
|
|
|
|
|
|
|
|
GAAP Digital Online Revenues
|
|
$
|
80,646
|
|
|
$
|
89,454
|
|
|
$
|
160,847
|
|
|
$
|
162,309
|
|
Net effect from deferral in digital online revenues
|
|
|
9,165
|
|
|
|
16,015
|
|
|
|
35,351
|
|
|
|
17,652
|
|
Non-GAAP Digital Online Revenues
|
|
$
|
89,811
|
|
|
$
|
105,469
|
|
|
$
|
196,198
|
|
|
$
|
179,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
|
|
|
|
|
GAAP Gross Profit
|
|
$
|
74,261
|
|
|
$
|
56,361
|
|
|
$
|
145,530
|
|
|
$
|
105,186
|
|
Net effect from deferral in net revenues and related cost of goods
sold
|
|
|
3,831
|
|
|
|
439,722
|
|
|
|
19,149
|
|
|
|
440,865
|
|
Stock-based compensation
|
|
|
1,268
|
|
|
|
858
|
|
|
|
2,739
|
|
|
|
1,956
|
|
|
Non-GAAP Gross Profit
|
|
$
|
79,360
|
|
|
$
|
496,941
|
|
|
$
|
167,418
|
|
|
$
|
548,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
|
|
|
|
|
|
GAAP Loss from Operations
|
|
$
|
(48,513
|
)
|
|
$
|
(117,891
|
)
|
|
$
|
(81,722
|
)
|
|
$
|
(167,455
|
)
|
Net effect from deferral in net revenues and related cost of goods
sold
|
|
|
3,831
|
|
|
|
439,722
|
|
|
|
19,149
|
|
|
|
440,865
|
|
Stock-based compensation
|
|
|
13,867
|
|
|
|
15,319
|
|
|
|
23,846
|
|
|
|
21,266
|
|
Business reorganization, restructuring and related
|
|
|
-
|
|
|
|
212
|
|
|
|
195
|
|
|
|
212
|
|
Non-GAAP Loss from Operations
|
|
$
|
(30,815
|
)
|
|
$
|
337,362
|
|
|
$
|
(38,532
|
)
|
|
$
|
294,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
|
|
|
|
GAAP Net Loss
|
|
$
|
(41,369
|
)
|
|
$
|
(124,120
|
)
|
|
$
|
(76,772
|
)
|
|
$
|
(186,034
|
)
|
Net effect from deferral in net revenues and related cost of goods
sold
|
|
|
2,408
|
|
|
|
423,065
|
|
|
|
14,165
|
|
|
|
424,207
|
|
Stock-based compensation
|
|
|
10,082
|
|
|
|
15,319
|
|
|
|
17,741
|
|
|
|
21,266
|
|
Business reorganization, restructuring and related
|
|
|
-
|
|
|
|
212
|
|
|
|
156
|
|
|
|
212
|
|
Non-cash amortization of discount on Convertible Notes
|
|
|
3,938
|
|
|
|
6,950
|
|
|
|
8,065
|
|
|
|
12,296
|
|
Gain on sale of long-term investment
|
|
|
(10,940
|
)
|
|
|
-
|
|
|
|
(10,940
|
)
|
|
|
-
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
9,014
|
|
|
|
-
|
|
|
|
9,014
|
|
Gain on convertible note hedge and warrants, net
|
|
|
-
|
|
|
|
(5,372
|
)
|
|
|
-
|
|
|
|
(3,461
|
)
|
Non-cash tax expense
|
|
|
472
|
|
|
|
480
|
|
|
|
945
|
|
|
|
962
|
|
Discontinued operations
|
|
|
-
|
|
|
|
25
|
|
|
|
-
|
|
|
|
55
|
|
Non-GAAP Net Loss
|
|
$
|
(35,409
|
)
|
|
$
|
325,573
|
|
|
$
|
(46,640
|
)
|
|
$
|
278,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings (Loss) Per Share
|
|
|
|
|
|
|
|
|
GAAP earnings (loss) per share
|
|
$
|
(0.51
|
)
|
|
$
|
(1.40
|
)
|
|
$
|
(0.96
|
)
|
|
$
|
(2.12
|
)
|
Non-GAAP earnings (loss) per share
|
|
$
|
(0.44
|
)
|
|
$
|
2.49
|
|
|
$
|
(0.58
|
)
|
|
$
|
2.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of diluted shares used in computation
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
80,355
|
|
|
|
88,822
|
|
|
|
79,862
|
|
|
|
87,907
|
|
Non-GAAP
|
|
|
80,355
|
|
|
|
128,845
|
|
|
|
79,862
|
|
|
|
124,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computation of Diluted GAAP EPS:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(41,369
|
)
|
|
$
|
(124,120
|
)
|
|
$
|
(76,772
|
)
|
|
$
|
(186,034
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - diluted
|
|
|
80,355
|
|
|
|
88,822
|
|
|
|
79,862
|
|
|
|
87,907
|
|
Diluted EPS
|
|
$
|
(0.51
|
)
|
|
$
|
(1.40
|
)
|
|
$
|
(0.96
|
)
|
|
$
|
(2.12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computation of Diluted Non-GAAP EPS:
|
|
|
|
|
|
|
|
|
Non-GAAP net earnings (loss)
|
|
$
|
(35,409
|
)
|
|
$
|
325,573
|
|
|
$
|
(46,640
|
)
|
|
$
|
278,517
|
|
Less: net income allocated to participating securities
|
|
|
-
|
|
|
|
(35,317
|
)
|
|
|
-
|
|
|
|
(25,582
|
)
|
Add: interest expense, net of tax, on Convertible Notes
|
|
|
-
|
|
|
|
3,349
|
|
|
|
-
|
|
|
|
6,507
|
|
Net income for diluted EPS calculation
|
|
$
|
(35,409
|
)
|
|
$
|
293,605
|
|
|
$
|
(46,640
|
)
|
|
$
|
259,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic
|
|
|
80,355
|
|
|
|
88,822
|
|
|
|
79,862
|
|
|
|
87,907
|
|
Add: dilutive effect of common stock equivalents
|
|
|
-
|
|
|
|
40,023
|
|
|
|
-
|
|
|
|
36,892
|
|
Total weighted average shares outstanding - diluted
|
|
|
80,355
|
|
|
|
128,845
|
|
|
|
79,862
|
|
|
|
124,799
|
|
Less: weighted average participating shares outstanding
|
|
|
-
|
|
|
|
(11,107
|
)
|
|
|
-
|
|
|
|
(9,083
|
)
|
Weighted average common shares outstanding - diluted
|
|
|
80,355
|
|
|
|
117,738
|
|
|
|
79,862
|
|
|
|
115,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
(0.44
|
)
|
|
$
|
2.49
|
|
|
$
|
(0.58
|
)
|
|
$
|
2.24
|
|
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