Take-Two Interactive Software, Inc. Reports Record Results for Fiscal Year 2014

  Take-Two Interactive Software, Inc. Reports Record Results for Fiscal Year   2014                 Non-GAAP Net Revenue Grew 97% to $2.414 Billion             Non-GAAP Net Income Increased to $4.26 Per Diluted Share          Company Provides Strong Financial Outlook for Fiscal Year 2015  Business Wire  NEW YORK -- May 13, 2014  Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today reported strong financial results for its fourth quarter and record results for its fiscal year 2014, ended March 31, 2014. In addition, the Company provided its initial financial outlook for its first quarter and fiscal year 2015.  Fiscal Fourth Quarter 2014  GAAP Financial Results  For fiscal fourth quarter 2014, GAAP net revenue was $195.2 million, as compared to $299.5 million for fiscal fourth quarter 2013, which had benefited from the release of BioShock® Infinite. GAAP net loss from continuing operations was $30.8 million, or $0.40 per diluted share, as compared to net income from continuing operations of $21.2 million, or $0.23 per diluted share, for the year-ago period. As of March 31, 2014, the Company had cash and cash equivalents of $935.4 million.  Non-GAAP Financial Results  For fiscal fourth quarter 2014, Non-GAAP net revenue was $233.2 million, as compared to $303.1 million for fiscal fourth quarter 2013. Non-GAAP net income was $21.5 million, or $0.21 per diluted share, as compared to $42.9 million, or $0.38 per diluted share, for the year-ago period.  The largest contributors to net revenue in fiscal fourth quarter 2014 were NBA® 2K14, Grand Theft Auto V®, Grand Theft Auto Online, Borderlands® 2 and BioShock Infinite. Non-GAAP net revenue from digitally-delivered content grew 51% year-over-year to $122.3 million, led by the Grand Theft Auto series, the NBA 2K franchise and offerings for Borderlands 2. Catalog sales accounted for $75.7 million of Non-GAAP net revenue led by offerings for Borderlands 2, BioShock Infinite, the Grand Theft Auto series and Sid Meier’s Civilization® V.  Fiscal Year 2014  GAAP Financial Results  For fiscal year 2014, GAAP net revenue grew 94% to a record $2.351 billion, as compared to $1.214 billion for fiscal year 2013. GAAP net income from continuing operations increased to a record $361.7 million, or $3.20 per diluted share, as compared to a net loss from continuing operations of $31.2 million, or $0.36 per diluted share, for the prior fiscal year.  Non-GAAP Financial Results  For fiscal year 2014, Non-GAAP net revenue grew 97% to a record $2.414 billion, as compared to $1.222 billion for fiscal year 2013. Non-GAAP net income increased to a record $510.7 million, or $4.26 per diluted share, as compared to $33.1 million, or $0.36 per diluted share, for the prior fiscal year.  The largest contributors to net revenue in fiscal year 2014 were Grand Theft Auto V, NBA 2K14, Borderlands 2, WWE® 2K14, Grand Theft Auto IV, Grand Theft Auto Online, BioShock Infinite and offerings for Sid Meier’s Civilization V. Non-GAAP net revenue from digitally-delivered content grew 65% year-over-year to a record $435.1 million, led by offerings for the Grand Theft Auto series, Borderlands 2, the NBA 2K franchise, Sid Meier’s Civilization V and BioShock Infinite.  Management Comments  “During fiscal 2014, Take-Two set new records for both our Company and the entertainment industry,” said Strauss Zelnick, Chairman and CEO of Take-Two. “Rockstar Games’ Grand Theft Auto V reached $1 billion in sales faster than any entertainment release in history, NBA 2K14 enjoyed the franchise’s strongest launch, Borderlands 2 became 2K’s top-selling title, and our digitally-delivered revenue grew to its highest level ever. As a result, we delivered record revenue, earnings and cash flow for our shareholders.  “Over the past several years, Take-Two has been transformed into a financially strong, global interactive entertainment company with numerous successful franchises across a variety of genres. We also have complemented the Company’s core business with growing profits from recurrent consumer spending, including add-on content, virtual currency and online gaming. The evolution of Take-Two is reflected in our strong profit outlook for fiscal 2015 and expectation for continued Non-GAAP profitability every year for the foreseeable future.”  Business and Product Highlights  Since January 1, 2014:    *Take-Two was the top console and handheld video game publisher of 2013 in     North America and Latin America.*  Rockstar Games:    *Grand Theft Auto V was the best-selling console video game of 2013 in     North America, Latin America and Europe combined.** To date, Grand Theft     Auto V has sold-in more than 33 million units.   *Released several updates for Grand Theft Auto Online, including The     Business Update, which provided a suite of new vehicles, weapons and     character customizations; The High Life Update, featuring high-end     properties, more new vehicles and an array of new Jobs; and The     Valentine’s Day Massacre Special, which offered limited-edition 1920’s     gangster-themed content.   *Released Grand Theft Auto: San Andreas for select Android, Kindle and     Windows Phone devices.  2K:    *Released XCOM®: Enemy Unknown – The Complete Edition for PC and Mac, which     includes the original 2012 Game of the Year award-winning title plus the     critically acclaimed expansion, XCOM: Enemy Within, along with all of the     released add-on content in one package.   *Released Sid Meier’s Civilization V: The Complete Edition for PC, which     includes the original 2010 Game of the Year award-winning strategy title     plus the two critically-acclaimed expansion packs, Gods & Kings and Brave     New World, and all of the released add-on content in one package.   *Announced that Oklahoma City Thunder superstar, four-time NBA scoring     champion, and recently crowned 2014 NBA Most Valuable Player, Kevin     Durant, will make his solo cover debut on NBA 2K15, the next installment     of the top-selling and top-rated NBA video game simulation franchise.***     NBA 2K15 is planned for launch on October 7, 2014 in North America and     October 10, 2014 internationally on the PS3, PS4, Xbox 360, Xbox One and     PC.   *Announced that Sid Meier’s Civilization: Beyond Earth™, a new science     fiction-themed entry in the award-winning Civilization franchise, is     currently in development by Firaxis Games and is planned for release this     fall for PC, Mac and Linux.   *Announced that Borderlands: The Pre-Sequel™, an all-new standalone     Borderlands game set in between the award-winning Borderlands and     Borderlands 2, is currently in co-development by Gearbox Software and 2K     Australia and is planned for launch this fall on the Xbox 360, PS3 and PC.   *Announced that Evolve™ is planned for launch on the Xbox One, PS4 and PC     in fall 2014. Developed by Turtle Rock Studios, the renowned creators of     Left 4 Dead, Evolve is an all-new shooter that blends cooperative and     competitive multiplayer experiences.  * Based on dollar-value of retail sales, according to data from The NPD Group’s Retail Tracking Service and International Development Group.  ** According to data from The NPD Group’s Retail Tracking Service, International Development Group, and GfK Chart-Track.  *** According to 2008 - 2014Metacritic.com and TheNPD Group estimates of U.S. retail video game sales through March 2014.  Financial Outlook for Fiscal 2015  Take-Two is providing its initial financial outlook for its fiscal first quarter ending June 30, 2014 and fiscal year ending March 31, 2015 as follows:                                         First Quarter      Fiscal Year                                          Ending 6/30/2014   Ending 3/31/2015                                                                Non-GAAP Net Revenue                     $120 to $135         $1.35 to $1.45                                          Million              Billion                                                                Non-GAAP net income (loss) per           ($0.35) to           $0.80 to $1.05 diluted share                            ($0.25)                                                                Net effect from deferral in net revenues and related cost of goods       $0.10                $0.00 sold                                                                Stock-based compensation expense per     $0.09                $0.29 share ^(1)                                                                Business reorganization,                 $0.01                $0.01 restructuring and related expenses                                                                Non-cash amortization of discount on     $0.05                $0.13 convertible notes per share                                                                Non-cash tax expense per share           $0.01                $0.02                                                                     The Company's stock-based compensation expense for the periods above      includes the cost of approximately 1.8 million restricted shares 1)  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.        Key assumptions and dependencies underlying the Company’s financial outlook include: the timely delivery of the titles included in this financial outlook, which includes both announced and unannounced releases; continued consumer acceptance of the Xbox One and PS4; 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, PS3 and PC; and stable foreign exchange rates. See also “Cautionary Note Regarding Forward Looking Statements” below.  Product Releases                                                            The following titles were released since January 1, 2014:                                                                    Label         Title                       Platforms        Release Date 2K               WWE 2K14: WWE Legends and     Xbox 360, PS3      January 7,                  Creations Pack (DLC)                             2014 Rockstar         Grand Theft Auto: San         Android,           January 7, Games            Andreas                       Kindle             2014 Rockstar         Grand Theft Auto: San         Windows Phone      January 27, Games            Andreas                                          2014 2K               Sid Meier’s Civilization      PC                 February 4,                  V: The Complete Edition                          2014 2K               Borderlands 2 &               Xbox 360, PS3      February 11,                  Dishonored™ Bundle                               2014                  The Elder Scrolls® V:                            February 11, 2K               Skyrim & BioShock             Xbox 360, PS3      2014                  Infinite Bundle                  Borderlands 2 Headhunter      Xbox 360, PS3,     February 11, 2K               4: Mad Moxxi Wedding Day      Windows PC,        2014                  Massacre (DLC)                Mac 2K               XCOM: Enemy Unknown: The      PC, Mac            March 4,                  Complete Edition                                 2014* 2K               BioShock Infinite: Burial     Xbox 360, PS3,     March 25,                  at Sea – Episode 2 (DLC)      PC                 2014                  Borderlands 2 Headhunter      Xbox 360, PS3, 2K               5: Sir Hamerlock Versus       Windows PC,        April 15,                  the Son of Crawmermax         Mac                2014                  (DLC) 2K               XCOM: Enemy Unknown           Android            April 24,                                                Devices            2014                                                                    *North American release date; international release date typically follows three days after.                                                                                                                                Take-Two's lineup of future titles announced to date includes:                                                                    Label     Title                      Platforms             Release Date 2K           NBA 2K15                     Xbox 360, Xbox One,     October 7,                                           PS3, PS4, PC            2014* 2K           Borderlands: The             Xbox 360, PS3,          Fall 2014              Pre-Sequel                   Windows PC              Sid Meier’s                  Windows PC, Mac, 2K           Civilization: Beyond         Linux                   Fall 2014              Earth 2K           Evolve                       Xbox One, PS4, PC       Fall 2014 2K           WWE 2K15                     TBA                     Fiscal 2015                                                                    *North American release date; international release date typically follows three days after.                                                                     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 impact of certain items as follows:    *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.   *Loss on extinguishment of debt – the Company recorded a loss on     extinguishment of debt as a result of settling its 4.375% Convertible     Notes in August 2013. The Company excludes the impact of such transactions     when evaluating the Company’s operating performance. Management does not     believe this loss reflects the Company's primary business, ongoing     operating results or future outlook. As such, the Company believes it is     appropriate to exclude this loss from its Non-GAAP financial measures.   *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 in gain 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.   *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, marketer and publisher 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, handheld gaming 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, 2013, in the section entitled "Risk Factors," the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2013, 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 (in thousands, except per share amounts)                                                     Three months ended March        Twelve months ended March 31,                    31,                     2014          2013          2014            2013                                                                                                                                                   Net revenue        $ 195,208      $ 299,487      $ 2,350,568      $ 1,214,483                                                                        Cost of goods sold: Internal             28,233          15,463          538,604           24,724 royalties Product costs        39,022          71,479          477,861           316,072 Software development          28,299          57,576          333,450           317,756 costs and royalties Licenses            12,734        9,802         64,412          57,285     Total cost of       108,288       154,320       1,414,327       715,837    goods sold                                                                       Gross profit         86,920          145,167         936,241           498,646                                                                       Selling and          27,577          51,747          240,996           257,329 marketing General and          50,773          40,369          161,374           147,260 administrative Research and         28,632          21,183          105,256           78,184 development Depreciation and                 3,522         2,806         13,359          10,634     amortization Total operating           110,504       116,105       520,985         493,407    expenses (Loss) income from                 (23,584 )       29,062          415,256           5,239 operations Interest and         (7,535  )       (7,789  )       (33,553   )       (31,351   ) other, net Loss on extinguishment       -               -               (9,014    )       - of debt Gain on convertible        -             -             3,461           -          note hedge and warrants, net (Loss) income from continuing           (31,119 )       21,273          376,150           (26,112   ) operations before income taxes (Benefit) provision for       (345    )      103           14,459          5,050      income taxes (Loss) income from                 (30,774 )       21,170          361,691           (31,162   ) continuing operations (Loss) income from discontinued        (13     )      1,303         (86       )      1,671      operations, net of taxes Net (loss)         $ (30,787 )     $ 22,473       $ 361,605        $ (29,491   ) income                                                                       Earnings (loss) per share: Continuing         $ (0.40   )     $ 0.23          $ 3.79            $ (0.36     ) operations Discontinued        -             0.01          -               0.02       operations Basic earnings (loss) per         $ (0.40   )     $ 0.24         $ 3.79           $ (0.34     ) share                                                                       Continuing         $ (0.40   )     $ 0.23          $ 3.20            $ (0.36     ) operations Discontinued        -             0.01          -               0.02       operations Diluted earnings           $ (0.40   )     $ 0.24         $ 3.20           $ (0.34     ) (loss) per share                                                                       Weighted average shares                                                     outstanding: Basic                77,000          93,698          95,347            85,581 Diluted             77,000        93,698        124,710         85,581                                                                           Computation of Basic EPS: Net (loss)         $ (30,787 )     $ 22,473       $ 361,605        $ (29,491   ) income Less: net income allocated to        -             (1,804  )      (41,065   )      -          participating securities Net (loss) income for         $ (30,787 )     $ 20,669       $ 320,540        $ (29,491   ) basic EPS calculation                                                                       Total weighted average shares       77,000          93,698          95,347            85,581 outstanding - basic Less: weighted average participating       -             (7,521  )      (10,828   )      -          shares outstanding Weighted average common shares              77,000        86,177        84,519          85,581     outstanding - basic                                                                    Basic EPS          $ (0.40   )     $ 0.24         $ 3.79           $ (0.34     )                                                                       Computation of Diluted EPS: Net (loss)         $ (30,787 )     $ 22,473        $ 361,605         $ (29,491   ) income Less: net income allocated to         -               (1,804  )       (31,397   )       - participating securities Add: interest expense, net of tax, on          -             -             33,718          -          Convertible Notes Net (loss) income for         $ (30,787 )     $ 20,669       $ 363,926        $ (29,491   ) diluted EPS calculation                                                                       Weighted average shares       77,000          86,177          84,519            85,581 outstanding - basic Add: dilutive effect of           -             -             29,363          -          common stock equivalents Weighted average common shares              77,000        86,177        113,882         85,581     outstanding - diluted                                                                    Diluted EPS        $ (0.40   )     $ 0.24         $ 3.20           $ (0.34     )                                                                                                                                                                                                                                      Three months ended March        Twelve months ended March 31,                    31, OTHER               2014          2013          2014            2013       INFORMATION                                                                       Geographic revenue mix United States        57      %       60      %       47        %       59        % International        43      %       40      %       53        %       41        %                                                                       Platform revenue mix Console              79      %       80      %       92        %       80        % PC and other         21      %       19      %       8         %       18        % Handheld             0       %       1       %       0         %       2         %                                                                       Net revenue by distribution channel: Physical retail and           57      %       74      %       84        %       79        % other Digital online       43      %       26      %       16        %       21        %                                                                                                                                 TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts)                                                                                                               March 31,         March 31,                                                 2014            2013                                                                         ASSETS Current assets: Cash and cash equivalents                      $ 935,400         $ 402,502 Restricted cash                                  193,839           7,489 Accounts receivable, net of allowances of $75,518 and $64,081 at March 31, 2014 and        53,143            189,596 2013, respectively Inventory                                        29,780            30,218 Software development costs and licenses          116,203           198,955 Prepaid expenses and other                      71,075          37,392     Total current assets                            1,399,440       866,152                                                                      Fixed assets, net                                42,572            25,362 Software development costs and licenses,         109,506           95,241 net of current portion Goodwill                                         226,705           225,992 Other intangibles, net                           5,113             8,827 Other assets                                    16,294          56,265     Total assets                                   $ 1,799,630      $ 1,277,839                                                                    LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable                               $ 16,452          $ 79,932 Accrued expenses and other current               396,617           228,916 liabilities Deferred revenue                                 61,195            26,919 Liabilities of discontinued operations          556             1,232      Total current liabilities                       474,820         336,999                                                                      Long-term debt                                   454,031           335,202 Other long-term liabilities                      68,973            17,087 Liabilities of discontinued operations,         -               556        net of current portion Total liabilities                               997,824         689,844    Commitments and contingencies                                                                   Stockholders' equity: Preferred stock, $.01 par value, 5,000           -                 - shares authorized Common stock, $.01 par value, 200,000 shares authorized; 105,156 and 93,743 shares issued and 88,918 and 93,743 outstanding at March 31, 2014 and March 31, 2013,            1,052             937 respectively Additional paid-in capital                       954,699           832,460 Treasury stock, at cost (16,238 common           (276,836  )       - shares at March 31, 2014) Retained earnings (accumulated deficit)          120,775           (240,830  ) Accumulated other comprehensive income          2,116           (4,572    ) (loss) Total stockholders' equity                      801,806         587,995    Total liabilities and stockholders' equity     $ 1,799,630      $ 1,277,839                                                                                                                                TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)                                                                                                    Twelve months ended March 31,                                                   2014         2013                                                                         Operating activities: Net income (loss)                                $ 361,605        $ (29,491  ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Amortization and impairment of software            265,533          230,748 development costs and licenses Depreciation and amortization                      13,359           10,634 Loss (income) from discontinued operations         86               (1,671   ) Amortization and impairment of intellectual        3,558            7,000 property Stock-based compensation                           78,118           35,765 Deferred income taxes                              (19,036  )       (841     ) Amortization of discount on Convertible            22,801           18,862 Notes Amortization of debt issuance costs                1,947            2,021 Loss on extinguishment of debt                     9,014            - Gain on convertible note hedge and warrants,       (3,461   )       - net Other, net                                         (208     )       778 Changes in assets and liabilities, net of effect from purchases of businesses: Restricted cash                                    (186,350 )       8,975 Accounts receivable                                136,453          (144,561 ) Inventory                                          438              (7,741   ) Software development costs and licenses            (192,357 )       (216,893 ) Prepaid expenses, other current and other          (18,424  )       (14,669  ) non-current assets Deferred revenue                                   34,276           13,055 Accounts payable, accrued expenses and other       194,228          83,734 liabilities Net cash used in discontinued operations          (1,318   )      (272     ) Net cash provided by (used in) operating          700,262        (4,567   ) activities                                                                    Investing activities: Purchase of fixed assets                           (29,813  )       (16,820  ) Payments in connection with business              (1,000   )      -         combinations, net of cash acquired Net cash used in investing activities             (30,813  )      (16,820  )                                                                    Financing activities: Repurchase of common stock                         (276,836 )       - Proceeds from issuance of 1.00% Convertible        283,188          - Notes Payment for extinguishment of 4.375%               (165,999 )       - Convertible Notes Proceeds from termination of convertible           84,429           - note hedge transactions Payment for termination of convertible note        (55,651  )       - warrant transactions Payment of debt issuance costs                    (2,815   )      -         Net cash used in financing activities             (133,684 )      -                                                                            Effects of foreign exchange rates on cash         (2,867   )      3,610     and cash equivalents                                                                    Net increase (decrease) in cash and cash           532,898          (17,777  ) equivalents Cash and cash equivalents, beginning of           402,502        420,279   period Cash and cash equivalents, end of period         $ 935,400       $ 402,502                                                                                                                                                  TAKE-TWO INTERACTIVE SOFTWARE, INC. and SUBSIDIARIES RECONCILIATION OF GAAP TO Non-GAAP MEASURES (Unaudited) (in thousands, except per share amounts)                                                                                                             Three months ended March        Twelve months ended March 31,                     31,                      2014          2013          2014            2013       Net Revenues GAAP Net            $ 195,208       $ 299,487       $ 2,350,568       $ 1,214,483 Revenues Net effect from deferral in net      37,947        3,641         63,152          7,824      revenues Non-GAAP Net        $ 233,155      $ 303,128      $ 2,413,720      $ 1,222,307  Revenues                                                                        Digital Online Revenues (included in Net Revenues above) GAAP Digital        $ 84,391        $ 77,138        $ 371,970         $ 256,128 Online Revenues Net effect from deferral in          37,947        3,641         63,152          7,824      digital online revenues Non-GAAP Digital Online      $ 122,338      $ 80,779       $ 435,122        $ 263,952    Revenues                                                                        Gross Profit GAAP Gross          $ 86,920        $ 145,167       $ 936,241         $ 498,646 Profit Net effect from deferral in net revenues and          23,442          3,109           36,179            6,720 related cost of goods sold Stock-based          948           2,026         30,124          10,060     compensation Non-GAAP Gross      $ 111,310      $ 150,302      $ 1,002,544      $ 515,426    Profit                                                                        Income from Operations GAAP (Loss) Income from         $ (23,584 )     $ 29,062        $ 415,256         $ 5,239 Operations Net effect from deferral in net revenues and          23,442          3,109           36,179            6,720 related cost of goods sold Stock-based           20,524          12,987          78,118            35,765 compensation Business reorganization,      2,560         116           4,490           874        restructuring and related Non-GAAP Income     $ 22,942       $ 45,274       $ 534,043        $ 48,598     from Operations                                                                        Net Income (Loss) GAAP Net (Loss)     $ (30,787 )     $ 22,473        $ 361,605         $ (29,491   ) Income Net effect from deferral in net revenues and          23,442          3,109           36,179            6,720 related cost of goods sold Stock-based           20,524          12,987          78,118            35,765 compensation Business reorganization,       2,560           116             4,490             874 restructuring and related Non-cash amortization of discount on           5,294           4,891           22,801            18,862 Convertible Notes Loss on extinguishment        -               -               9,014             - of debt Gain on convertible           -               -               (3,461    )       - note hedge and warrants, net Non-cash tax          447             582             1,890             2,020 expense Discontinued         13            (1,303  )      86              (1,671    ) operations Non-GAAP Net        $ 21,493       $ 42,855       $ 510,722        $ 33,079     Income                                                                        Diluted Earnings (Loss) Per Share GAAP earnings (loss) per          $ (0.40   )     $ 0.24          $ 3.20            $ (0.34     ) share Non-GAAP earnings per        $ 0.21          $ 0.38          $ 4.26            $ 0.36 share                                                                        Number of diluted shares used in computation GAAP                  77,000          93,698          124,710           85,581 Non-GAAP              115,627         119,719         122,608           92,292                                                                                                                                               Computation of Diluted GAAP EPS: Net (loss)          $ (30,787 )     $ 22,473        $ 361,605         $ (29,491   ) income Less: net income allocated to          -               (1,804  )       (31,397   )       - participating securities Add: interest expense, net of tax, on              -             -             33,718          -          Convertible Notes Net (loss) income for          $ (30,787 )     $ 20,669       $ 363,926        $ (29,491   ) diluted EPS calculation                                                                        Total weighted average shares        77,000          93,698          95,347            85,581 outstanding - basic Add: dilutive effect of            -             -             29,363          -          common stock equivalents Total weighted average shares        77,000          93,698          124,710           85,581 outstanding - diluted Less: weighted average participating        -             (7,521  )      (10,828   )      -          shares outstanding Weighted average common shares                77,000          86,177          113,882           85,581 outstanding - diluted                                                                     Diluted EPS         $ (0.40   )     $ 0.24         $ 3.20           $ (0.34     )                                                                                                                                               Computation of Diluted Non-GAAP EPS: Net income          $ 21,493        $ 42,855        $ 510,722         $ 33,079 Less: net income allocated to          (2,224  )       (3,440  )       (45,104   )       (2,405    ) participating securities Add: interest expense, net of tax, on              2,204         3,058         10,917          -          Convertible Notes Net income for diluted EPS         $ 21,473       $ 42,473       $ 476,535        $ 30,674     calculation                                                                        Total weighted average shares        88,964          93,698          96,043            92,292 outstanding - basic Add: dilutive effect of            26,663        26,021        26,565          -          common stock equivalents Total weighted average shares        115,627         119,719         122,608           92,292 outstanding - diluted Less: weighted average participating        (11,964 )      (7,521  )      (10,828   )      (6,711    ) shares outstanding Weighted average common shares                103,663         112,198         111,780           85,581 outstanding - diluted                                                                     Diluted EPS         $ 0.21         $ 0.38         $ 4.26           $ 0.36        Contact:  Take-Two Interactive Software, Inc. Investor Relations: Henry A. Diamond, 646-536-3005 Senior Vice President Investor Relations & Corporate Communications Henry.Diamond@take2games.com or Corporate Press: Alan Lewis, 646-536-2983 Vice President Corporate Communications & Public Affairs Alan.Lewis@take2games.com  
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