Take-Two Interactive Software, Inc. Announces Record First Quarter 2001 Financial Results
(EMAILWIRE.COM, February 27, 2001 ) Take-Two Interactive Software, Inc. (NASDAQ: TTWO) today announced record net sales and net income for its first quarter ended January 31, 2001.
Net sales for the quarter were $131 million, compared with $123 million for the same period a year ago. Net income was $7.8 million, or $0.24 per fully diluted share, compared with $4.8 million or $0.20
per fully diluted share, for the same period a year ago.
Mr. Paul Eibeler, President, commented, "The first quarter of our fiscal 2001 year was extremely successful. In addition to continued growth in net sales and net income, we established three new brands - Midnight Club, Smuggler's Run and Oni - which have positioned Take-Two as a leading publisher of next-generation software. We expect to see a significant increase in the installed base of next-generation hardware, which should further accelerate in the second half of the year. We believe that Take-Two is uniquely positioned to capitalize on this trend going forward."
Published Products:
During the quarter, the Company successfully launched Oni for the PC and PlayStation(R)2. Oni was immediately ranked the number two selling PS2 title, joining both Midnight Club: Street Racing and Smuggler's Run, which have all remained in the top selling PS2 games since their launch. Oni for the PC and PlayStation 2 will launch in Europe next week.
For the quarter, Take-Two achieved its highest sell-through ranking as a leading publisher in the Company's history, with its products continuing to rank in the PlayStation 2 top ten selling charts. The Company's global PC business also continues to thrive with Oni, Kingdom Under Fire, Age of Sail 2 and Jetfighter IV among the new titles shipped during the quarter. The Company looks forward to the release of Tropico in its second fiscal quarter (created by the Company's PopTop Software, developers of the best-selling Railroad Tycoon 2), along with Serious Sam. Titles expected to be shipped in the second half of the fiscal year include Max Payne, Myth 3, Hidden & Dangerous 2 and Duke Nukem Forever.
The Company also continued its success as a publisher of budget video games. Ford Racing and Darkstone were shipped during the quarter, and SpecOps remains a best selling product. The Company expects to continue to exploit its leadership position in this category going forward.
Looking ahead, the Company has an extremely strong schedule of 15 games in development for PlayStation 2, including the highly-anticipated Grand Theft Auto 3 (scheduled for release in the Company's fourth fiscal quarter), along with sequels to the Company's Midnight Club, Smuggler's Run, and Duke Nukem brands.
Additionally, the Company plans to have published product available for the launch of Microsoft's Xbox. Development has begun on Grand Theft Auto 3, the much-anticipated sequel based on the Grand Theft Auto franchise, and 4x4 EVO 2, an off-road driving adventure
game.
Distribution:
Distribution sales were strong for the quarter, although the business was impacted by the shortage of PS2 hardware. The Company looks forward to continued growth in this segment of its business, as availability of next-generation hardware and software is expected to expand dramatically in the next 12 months.
The Company also began the integration of VLM Entertainment into its Jack of All Games value-added distribution network. As a result of the consolidation of the domestic distribution market during the past two years, the Company believes its Jack of All Games subsidiary will
continue to gain market share.
Guidance:
The Company's 2001 financial guidance remains at $1.00 or better in fully diluted earnings per share, and $500 million in net sales. Despite general economic and retail weakness, the Company expects to benefit from Sony's recently announced production increases of the PlayStation 2, as well as the launch of Nintendo's GameBoy Advance and GameCube and Microsoft's Xbox later in fiscal 2001.
The Company believes that it continues to be extremely well positioned to capitalize on these industry specific positive growth trends, which it expects will further accelerate into Christmas of this year - the time period beginning in the Company's fourth fiscal quarter 2001 and continuing into the first fiscal quarter of 2002.
Earnings per share and net revenue guidance by quarter for the fiscal year ended October 2001 is as follows:
Q2 2001: $86 - $90 million in net sales and $0.10 - $0.13 in fully diluted EPS;
Q3 2001: $90 - $95 million in net sales and $0.04 - $0.06 in fully diluted EPS;
Q4 2001: $188 - $195 million in net sales and $0.58 - $0.62 in fully diluted EPS.
The Company has decided to delay the publication of its Austin
Powers game for the PlayStation 2 from its current fiscal year until 2002, in order to coincide with the expected release of New Line Cinema's next movie in the blockbuster series.
Selected Financial Highlights:
As expected, the Company operated on a cash flow positive basis during the quarter, generating approximately $20 million in cash from operating activities, as compared with negative $5 million in the same quarter a year ago. The Company expects to continue its aggressive focus on generating positive operating cash flow throughout the balance of fiscal 2001.
During the first quarter, the Company's total receivable reserves increased to 7.3% of total receivables from 6.3% at its fiscal year end. The Company expects receivable reserves as a percentage of gross receivables and net sales to increase in each of its next three quarters.
The Company recently exchanged approximately 4.2 million shares of Gameplay.com (GAM.L) common stock for 500,000 shares of Take-Two common stock held by certain shareholders. Under certain circumstances, the Company may exchange up to an additional 2.5 million shares of Gameplay.com common stock for 300,000 shares of Take-Two common stock. As a result, the Company has reduced its own outstanding shares as well as its investment in Gameplay.com.
"Due to the current volatility in Internet company equity markets, the Company's Board of Directors has sought to limit Take-Two's position in Gameplay.com common stock," stated Chip David, Chief Financial Officer.
Management:
Effective today, the Company has named Mr. Kelly Sumner, Director and formerly President of Take-Two Interactive Software Europe, Ltd., as Chief Executive Officer. Mr. Ryan Brant, the Company's founder, will remain in his current daily operating role, with the title of Chairman. Mr. Gary Lewis, formerly Chief Operating Officer of Take-Two Interactive Software Europe, has been named President of that
subsidiary.
Mr. Brant commented, "As with the addition of Paul Eibeler six months ago, the addition of Kelly Sumner to our lead management team is a tremendous positive for myself and Take-Two. As our Company expands, we continue to place tremendous emphasis on the establishment of a strong and experienced management team. Mr. Sumner has been a valuable member of the Take-Two team for the past four years and the leader of our consistently most profitable subsidiary. His leadership and operating strength will be invaluable to us on a going forward basis."
During the quarter, the Company also named Ms. Cindi Buckwalter and Ms. Dawn Berrie to the newly created positions of Vice President of Finance and Director of Investor Relations, respectively.
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, Sony PlayStation, Sony PlayStation 2, Nintendo Game Boy Color, and Microsoft's X-Box. The Company publishes and develops products through various wholly owned subsidiaries including: Rockstar Games, Gathering of Developers, TalonSoft, Joytech, DMA Design, PopTop, GlobalStar and under the Take-Two brand name. The Company's Jack of All Games value added distribution arm maintains sales and marketing offices in Cincinnati, New York, Las Vegas, Chicago, Toronto, London, Paris, Munich, Oslo, Vienna, Stockholm, Copenhagen, Milan and Sydney.
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 us. The words "expect," "anticipate," "believe," "may," "estimate," "guidance," "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; 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 (including our investments in Gameplay.com and eUniverse, Inc.); unfavorable general economic conditions (including the current economic downturn); and our failure to achieve our forecasted operating results, any or all of which could have a material adverse effect on our business, operating results and financial condition. Actual operating results for any period 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
Condensed Consolidated Statements of Operations
For the three months ended January 31, 2001 (unaudited)
and 2000 (unaudited)
(In thousands, except per share date)
----------------------------------------------------------------------
Three months ended January 31,
2001 2000
------------ ------------
(Unaudited)
Net sales $ 131,226 $ 122,890
Cost of sales 88,222 86,274
------------ ------------
Gross profit 43,004 36,616
------------ ------------
Operating expenses:
Selling and marketing 12,814 15,276
General and administrative 10,511 9,295
Research and development costs 1,400 1,625
Depreciation and amortization 3,014 1,403
------------ ------------
Total operating expenses 27,739 27,599
Income from operations 15,265 9,017
Interest expense 2,930 1,506
------------ ------------
Income before equity in loss of
affiliate and income taxes 12,335 7,511
Equity in loss of affiliate - 156
------------ ------------
Income before income taxes 12,335 7,355
Provision for income taxes 4,585 2,568
------------ ------------
Net income $ 7,750 $ 4,787
============ ============
Per share data:
Diluted:
Weighted average common
shares outstanding 32,958,908 24,477,933
============ ============
------------ ------------
Net income per share $ 0.24 $ 0.20
============ ============
OTHER INFORMATION
Three months ended January 31,
------------------------------
2001 2000
------------ ------------
Total revenue mix
Distribution 55% 49%
Publishing 45% 51%
Geographic revenue mix
North America 79% 66%
International 21% 34%
Publishing platform revenue mix
Video Game Consoles 55% 55%
Nintendo Color Gameboy 4% 7%
PC 34% 29%
Accessories 7% 9%
CONTACT: Take-Two Interactive Software, Inc.
Dawn Berrie (financial)
Jeff Castaneda (trade media)
Tel: 212/334-6633
Fax: 212/334-6644
- or -
Wolfe Axelrod Weinberger Assoc. LLC
Stephen D. Axelrod, CFA
Donald C. Weinberger
Denise Ford (media)
Tel: 212/370-4500
Fax: 212/370-4505
don@wolfeaxelrod.com
Net sales for the quarter were $131 million, compared with $123 million for the same period a year ago. Net income was $7.8 million, or $0.24 per fully diluted share, compared with $4.8 million or $0.20
per fully diluted share, for the same period a year ago.
Mr. Paul Eibeler, President, commented, "The first quarter of our fiscal 2001 year was extremely successful. In addition to continued growth in net sales and net income, we established three new brands - Midnight Club, Smuggler's Run and Oni - which have positioned Take-Two as a leading publisher of next-generation software. We expect to see a significant increase in the installed base of next-generation hardware, which should further accelerate in the second half of the year. We believe that Take-Two is uniquely positioned to capitalize on this trend going forward."
Published Products:
During the quarter, the Company successfully launched Oni for the PC and PlayStation(R)2. Oni was immediately ranked the number two selling PS2 title, joining both Midnight Club: Street Racing and Smuggler's Run, which have all remained in the top selling PS2 games since their launch. Oni for the PC and PlayStation 2 will launch in Europe next week.
For the quarter, Take-Two achieved its highest sell-through ranking as a leading publisher in the Company's history, with its products continuing to rank in the PlayStation 2 top ten selling charts. The Company's global PC business also continues to thrive with Oni, Kingdom Under Fire, Age of Sail 2 and Jetfighter IV among the new titles shipped during the quarter. The Company looks forward to the release of Tropico in its second fiscal quarter (created by the Company's PopTop Software, developers of the best-selling Railroad Tycoon 2), along with Serious Sam. Titles expected to be shipped in the second half of the fiscal year include Max Payne, Myth 3, Hidden & Dangerous 2 and Duke Nukem Forever.
The Company also continued its success as a publisher of budget video games. Ford Racing and Darkstone were shipped during the quarter, and SpecOps remains a best selling product. The Company expects to continue to exploit its leadership position in this category going forward.
Looking ahead, the Company has an extremely strong schedule of 15 games in development for PlayStation 2, including the highly-anticipated Grand Theft Auto 3 (scheduled for release in the Company's fourth fiscal quarter), along with sequels to the Company's Midnight Club, Smuggler's Run, and Duke Nukem brands.
Additionally, the Company plans to have published product available for the launch of Microsoft's Xbox. Development has begun on Grand Theft Auto 3, the much-anticipated sequel based on the Grand Theft Auto franchise, and 4x4 EVO 2, an off-road driving adventure
game.
Distribution:
Distribution sales were strong for the quarter, although the business was impacted by the shortage of PS2 hardware. The Company looks forward to continued growth in this segment of its business, as availability of next-generation hardware and software is expected to expand dramatically in the next 12 months.
The Company also began the integration of VLM Entertainment into its Jack of All Games value-added distribution network. As a result of the consolidation of the domestic distribution market during the past two years, the Company believes its Jack of All Games subsidiary will
continue to gain market share.
Guidance:
The Company's 2001 financial guidance remains at $1.00 or better in fully diluted earnings per share, and $500 million in net sales. Despite general economic and retail weakness, the Company expects to benefit from Sony's recently announced production increases of the PlayStation 2, as well as the launch of Nintendo's GameBoy Advance and GameCube and Microsoft's Xbox later in fiscal 2001.
The Company believes that it continues to be extremely well positioned to capitalize on these industry specific positive growth trends, which it expects will further accelerate into Christmas of this year - the time period beginning in the Company's fourth fiscal quarter 2001 and continuing into the first fiscal quarter of 2002.
Earnings per share and net revenue guidance by quarter for the fiscal year ended October 2001 is as follows:
Q2 2001: $86 - $90 million in net sales and $0.10 - $0.13 in fully diluted EPS;
Q3 2001: $90 - $95 million in net sales and $0.04 - $0.06 in fully diluted EPS;
Q4 2001: $188 - $195 million in net sales and $0.58 - $0.62 in fully diluted EPS.
The Company has decided to delay the publication of its Austin
Powers game for the PlayStation 2 from its current fiscal year until 2002, in order to coincide with the expected release of New Line Cinema's next movie in the blockbuster series.
Selected Financial Highlights:
As expected, the Company operated on a cash flow positive basis during the quarter, generating approximately $20 million in cash from operating activities, as compared with negative $5 million in the same quarter a year ago. The Company expects to continue its aggressive focus on generating positive operating cash flow throughout the balance of fiscal 2001.
During the first quarter, the Company's total receivable reserves increased to 7.3% of total receivables from 6.3% at its fiscal year end. The Company expects receivable reserves as a percentage of gross receivables and net sales to increase in each of its next three quarters.
The Company recently exchanged approximately 4.2 million shares of Gameplay.com (GAM.L) common stock for 500,000 shares of Take-Two common stock held by certain shareholders. Under certain circumstances, the Company may exchange up to an additional 2.5 million shares of Gameplay.com common stock for 300,000 shares of Take-Two common stock. As a result, the Company has reduced its own outstanding shares as well as its investment in Gameplay.com.
"Due to the current volatility in Internet company equity markets, the Company's Board of Directors has sought to limit Take-Two's position in Gameplay.com common stock," stated Chip David, Chief Financial Officer.
Management:
Effective today, the Company has named Mr. Kelly Sumner, Director and formerly President of Take-Two Interactive Software Europe, Ltd., as Chief Executive Officer. Mr. Ryan Brant, the Company's founder, will remain in his current daily operating role, with the title of Chairman. Mr. Gary Lewis, formerly Chief Operating Officer of Take-Two Interactive Software Europe, has been named President of that
subsidiary.
Mr. Brant commented, "As with the addition of Paul Eibeler six months ago, the addition of Kelly Sumner to our lead management team is a tremendous positive for myself and Take-Two. As our Company expands, we continue to place tremendous emphasis on the establishment of a strong and experienced management team. Mr. Sumner has been a valuable member of the Take-Two team for the past four years and the leader of our consistently most profitable subsidiary. His leadership and operating strength will be invaluable to us on a going forward basis."
During the quarter, the Company also named Ms. Cindi Buckwalter and Ms. Dawn Berrie to the newly created positions of Vice President of Finance and Director of Investor Relations, respectively.
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, Sony PlayStation, Sony PlayStation 2, Nintendo Game Boy Color, and Microsoft's X-Box. The Company publishes and develops products through various wholly owned subsidiaries including: Rockstar Games, Gathering of Developers, TalonSoft, Joytech, DMA Design, PopTop, GlobalStar and under the Take-Two brand name. The Company's Jack of All Games value added distribution arm maintains sales and marketing offices in Cincinnati, New York, Las Vegas, Chicago, Toronto, London, Paris, Munich, Oslo, Vienna, Stockholm, Copenhagen, Milan and Sydney.
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 us. The words "expect," "anticipate," "believe," "may," "estimate," "guidance," "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; 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 (including our investments in Gameplay.com and eUniverse, Inc.); unfavorable general economic conditions (including the current economic downturn); and our failure to achieve our forecasted operating results, any or all of which could have a material adverse effect on our business, operating results and financial condition. Actual operating results for any period 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
Condensed Consolidated Statements of Operations
For the three months ended January 31, 2001 (unaudited)
and 2000 (unaudited)
(In thousands, except per share date)
----------------------------------------------------------------------
Three months ended January 31,
2001 2000
------------ ------------
(Unaudited)
Net sales $ 131,226 $ 122,890
Cost of sales 88,222 86,274
------------ ------------
Gross profit 43,004 36,616
------------ ------------
Operating expenses:
Selling and marketing 12,814 15,276
General and administrative 10,511 9,295
Research and development costs 1,400 1,625
Depreciation and amortization 3,014 1,403
------------ ------------
Total operating expenses 27,739 27,599
Income from operations 15,265 9,017
Interest expense 2,930 1,506
------------ ------------
Income before equity in loss of
affiliate and income taxes 12,335 7,511
Equity in loss of affiliate - 156
------------ ------------
Income before income taxes 12,335 7,355
Provision for income taxes 4,585 2,568
------------ ------------
Net income $ 7,750 $ 4,787
============ ============
Per share data:
Diluted:
Weighted average common
shares outstanding 32,958,908 24,477,933
============ ============
------------ ------------
Net income per share $ 0.24 $ 0.20
============ ============
OTHER INFORMATION
Three months ended January 31,
------------------------------
2001 2000
------------ ------------
Total revenue mix
Distribution 55% 49%
Publishing 45% 51%
Geographic revenue mix
North America 79% 66%
International 21% 34%
Publishing platform revenue mix
Video Game Consoles 55% 55%
Nintendo Color Gameboy 4% 7%
PC 34% 29%
Accessories 7% 9%
CONTACT: Take-Two Interactive Software, Inc.
Dawn Berrie (financial)
Jeff Castaneda (trade media)
Tel: 212/334-6633
Fax: 212/334-6644
- or -
Wolfe Axelrod Weinberger Assoc. LLC
Stephen D. Axelrod, CFA
Donald C. Weinberger
Denise Ford (media)
Tel: 212/370-4500
Fax: 212/370-4505
don@wolfeaxelrod.com
Contact Information:
Take-Two Interactive Software, Inc.
Joseph Nchor
Tel:
Email us
This is a press release. Press release distribution and press release services by EmailWire.Com: http://www.emailwire.com/us-press-release-distribution.php.
Take-Two Interactive Software, Inc.
Joseph Nchor
Tel:
Email us
This is a press release. Press release distribution and press release services by EmailWire.Com: http://www.emailwire.com/us-press-release-distribution.php.
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