01—Abstract
Summary
Summary of the 10-Q/A filed April 19, 2002. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. filed an amended 10-Q for the period ending April 30, 2001, reflecting restated financial statements due to accounting reviews and the adoption of SAB 101.
The company reported a net sales increase of 27.5% for the quarter and 29.9% for the six-month period, driven by growth in both publishing and distribution operations, particularly from PlayStation titles and the acquisition of VLM Entertainment Group. However, significant non-cash impairment charges on investments, totaling $20.75 milliona, led to a net loss of $11.47 million for the quarter and $3.24 million for the six-month period, despite excluding these charges, the company would have shown a net income. The company's balance sheet shows an increase in total assets to $335.47 million from $330.57 million, with a notable rise in intangible assets and cash.
Liabilities decreased slightly. The company's liquidity improved, with cash and cash equivalents increasing to $6.89 millionb from $5.25 million, supported by positive cash flow from operations in the current period, a significant improvement from the prior year's negative cash flow from operations. Management believes current resources, including credit facilities, are sufficient for future needs, though future expansion may require additional financing.
02—Key points
Key Highlights
- Net sales increased by 27.5% year-over-year for the three months ended April 30, 2001, reaching $88.6 million, and by 29.9% for the six months ended April 30, 2001, reaching $246.5 million.
- Significant non-cash impairment charges of $20.75 million related to investments in Gameplay, eUniverse, and Entertainment Brands were recorded in the quarter, contributing to a net loss of $11.47 million.
- Despite the net loss, excluding impairment charges, the company would have reported a net income of $4.37 million for the quarter and $12.6 million for the six-month period.
- Cash and cash equivalents increased to $6.89 million as of April 30, 2001, from $5.25 million as of October 31, 2000.
- Net cash provided by operating activities was $23.32 million for the six months ended April 30, 2001, a substantial improvement from $19.49 million used in the prior year's comparable period.
- Total assets grew to $335.47 million, with a significant increase in intangible assets to $90.3 million, driven by acquisitions.
- The company restated its financial statements for fiscal 2000 and parts of fiscal 2001 due to accounting reviews and the adoption of SAB 101, impacting revenue recognition and other accounting treatments.
03—Questions
Frequently Asked Questions
What is the primary reason for the restatement of the financial statements?
The company restated its financial statements due to an investigation into the accounting treatment of certain transactions in fiscal years 2000 and 2001, as well as the adoption of Staff Accounting Bulletin (SAB) No. 101 'Revenue Recognition.' This involved adjustments to net sales, cost of sales, and other items related to revenue recognition, returns, and other accounting policies.
What drove the increase in net sales?
The increase in net sales was driven by growth in both publishing and distribution operations. Publishing revenue saw an increase primarily due to higher sales of titles for Sony PlayStation and PlayStation 2. Distribution revenue growth was largely attributed to the acquisition of VLM Entertainment Group, Inc. in November 2000.
What is the impact of the impairment charges on the company's profitability?
The company recorded significant non-cash impairment charges of approximately $20.75 million related to investments in Gameplay, eUniverse, and Entertainment Brands. These charges resulted in a substantial net loss for the quarter and six-month period. However, excluding these impairment charges, the company would have reported net income for both periods.
How is the company's liquidity and financial position?
The company's liquidity has improved, with cash and cash equivalents increasing to $6.89 million. Net cash provided by operating activities for the six months ended April 30, 2001, was positive at $23.32 million, a significant turnaround from the prior year. Total assets have grown, and while liabilities remain substantial, the company believes its current resources and available credit lines are sufficient for its foreseeable future needs.
04—Continue