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About Rainier

PC gamer, WorthPlaying EIC, globe-trotting couch potato, patriot, '80s headbanger, movie watcher, music lover, foodie and man in black -- squirrel!

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Take-Two's Financials Reveals More Borderlands DLC, Red Dead And Mafia II Delay, Dates

by Rainier on March 3, 2010 @ 2:11 p.m. PST

Take-Two's Q1 2010 financial result reveals increased net revenue, driven by by Borderlands, NBA 2K10, GTA IV, GTA: Episodes from Liberty City and Carnival Games, while its net loss is down compared to last year. L.A. Noire, Mafia II, Max Payne 3 and Sid Meier’s Civilization V are all planned for release in the Q4, but one of those could get delayed, while Red Dead Redemption has been pushed (May 18/21, US/Europe), and Mafia II somewhere between Aug. 1 - Oct. 31, 2010.

Net revenue for the first fiscal quarter was $163.2 million, compared to $149.4 million for the same quarter of fiscal 2009. First quarter fiscal 2010 sales were led by Borderlands™, NBA® 2K10, Grand Theft Auto IV, Grand Theft Auto: Episodes from Liberty City and Carnival Games.

Net loss from continuing operations for the first quarter was $33.8 million or $0.43 per share, compared to a net loss from continuing operations of $53.8 million or $0.71 per share in the first quarter of fiscal 2009.

The first quarter 2010 results from continuing operations included $6.4 million in stock-based compensation expense ($0.08 per share); $1.7 million in non-cash interest expense on the Company’s convertible notes ($0.02 per share); $0.7 million in professional fees and expenses related to unusual matters ($0.01 per share); and $0.6 million in non-cash tax expense ($0.01 per share). Results from continuing operations for the first quarter of 2009 included $6.2 million in stock-based compensation expense ($0.08 per share); and $4.9 million in professional fees and expenses related to unusual matters ($0.06 per share).

Non-GAAP net loss from continuing operations was $24.4 million or $0.31 per share in the first quarter of fiscal 2010, compared to non-GAAP net loss from continuing operations of $42.8 million or $0.56 per share in the first quarter of 2009. (Please refer to Non-GAAP Financial Measures and reconciliation tables included later in this release for additional information and details on non-GAAP items).

Business Highlights

  • Consistent with Take-Two’s strategy to focus its resources on its core publishing business, the Company completed the previously announced sale of its Jack of All Games distribution business to SYNNEX Corporation on February 26, 2010. The transaction was valued at approximately $44 million, including $37.5 million in cash at closing and up to an additional $6.75 million in deferred payments subject to the achievement of certain objectives after the close of the transaction. For the first quarter ended January 31, 2010, the results of the Company’s distribution segment were excluded from continuing operations and have been reclassified to discontinued operations. Net loss from discontinued operations for the first quarter was $0.1 million or $0.00 per share.
  • Take-Two is in the process of implementing a targeted restructuring of its corporate departments in order to align resources more closely with its current goals. The restructuring involves a 15% reduction in corporate headcount and other cost savings initiatives, and is expected to result in approximately $8 million in savings in fiscal 2010, and $15 million on an annualized basis.

Product Milestones

  • 2K Games launched BioShock 2 globally on February 9. The title has been a commercial and critical success, and has shipped over 3 million units to date. The original BioShock title launched in August 2007 has now sold over 4 million units, bringing the total sales of the franchise to 7 million units.
  • NBA 2K10 from 2K Sports has shipped over 2 million units. The title continues to be the #1 selling and #1 rated basketball game for the Xbox 360 and PlayStation 3 through January 2010, according to The NPD Group's estimates of U.S. retail video game sales and Metacritic.com.
  • Grand Theft Auto IV from Rockstar Games has sold over 15 million units globally.
  • 2K Play’s Carnival Games franchise has sold over 6 million units worldwide on the Wii and DS.

Product Highlights

  • Red Dead Redemption from Rockstar Games is now planned for release on May 18, 2010 in North America and May 21, 2010 internationally.
  • Rockstar Games announced Grand Theft Auto: Episodes from Liberty City for the PlayStation 3 and Games for Windows® - LIVE, both planned for release on March 30, 2010. The Lost and Damned and The Ballad of Gay Tony will be available at the same time for digital download.
  • 2K Games announced the development of Sid Meier's Civilization® V, the newest entry from the strategy-based franchise, coming to PC this fall.

Financial Guidance

The Company is providing initial guidance for the second quarter ending April 30, 2010 and updating its guidance for the fiscal year ending October 31, 2010. The Company’s fiscal year 2010 guidance provided below assumes the following factors:

  • a non-GAAP net loss from the Company’s Major League Baseball business in the range of $30 to $35 million, or $0.38 to $0.44 per share;
  • the launch of Red Dead Redemption in the third fiscal quarter; and
  • L.A. Noire, Mafia II, Max Payne 3 and Sid Meier’s Civilization V are all planned for releasein the fourth fiscal quarter; however, the Company’s fiscal year 2010 guidance reflects the potential movement of one of these titles into fiscal 2011.

Strauss Zelnick, Chairman of Take-Two, stated, “We are pleased to begin this fiscal year with better than expected results that reflect our ability to produce compelling titles and to enhance the potential of our franchises through downloadable content and digital offerings. We’ve also taken important steps to improve the efficiency of our business and align our corporate cost structure more closely with our current goals. Our updated outlook for 2010 underscores a prudent approach toward what we still believe to be a challenging year ahead. We remain committed to creating long term value, and continuing to improve upon our execution and efficiency.”

Ben Feder, Chief Executive Officer of Take-Two, commented, “Our first quarter performance was driven by the market dominance of NBA 2K10, successful launch of Borderlands, growth of our digital business and continued strength of our catalog titles. We are building upon this success with the global launch of BioShock 2, and have a strong line up of triple-A titles from our diverse portfolio of proven brands planned for release this fiscal year. Take-Two has been strengthened through our cost savings initiatives and the sale of Jack of All Games, which allows us to focus our resources solely on our core business. We will continue to evaluate our cost structure for additional savings, and work to maximize the value of our intellectual property by selectively engaging in strategic opportunities in emerging markets and new platforms.”

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