Delaware
|
|
51-0350842
|
(State or Other Jurisdiction
of Incorporation or Organization) |
|
(I.R.S. Employer
Identification No.) |
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
2006 |
|
October 31,
2005 |
|
||
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
142,897
|
|
$
|
107,195
|
|
Accounts receivable, net of allowances of $91,170 and $69,904 at January 31, 2006 and October 31, 2005, respectively
|
|
|
84,282
|
|
|
198,068
|
|
Inventories
|
|
|
107,413
|
|
|
136,227
|
|
Software development costs
|
|
|
77,529
|
|
|
88,826
|
|
Licenses
|
|
|
6,717
|
|
|
7,651
|
|
Prepaid
taxes and taxes receivable
|
|
|
60,864
|
|
|
40,307
|
|
Prepaid expenses and other current assets
|
|
|
23,429
|
|
|
24,025
|
|
Deferred tax assets
|
|
|
10,875
|
|
|
10,943
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
514,006
|
|
|
613,242
|
|
|
|
|
|
|
|
|
|
Fixed assets, net
|
|
|
48,215
|
|
|
48,617
|
|
Software development costs, net of current portion
|
|
|
40,401
|
|
|
19,602
|
|
Licenses, net of current portion
|
|
|
4,417
|
|
|
2,330
|
|
Goodwill
|
|
|
190,851
|
|
|
179,893
|
|
Intangibles, net
|
|
|
60,481
|
|
|
58,666
|
|
Deferred tax assets
|
|
|
6,078
|
|
|
5,506
|
|
Other assets
|
|
|
4,204
|
|
|
5,020
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
868,653
|
|
$
|
932,876
|
|
|
|
|
|
|
|
|
|
LIABILITIES and STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
79,887
|
|
$
|
133,353
|
|
Accrued expenses and other current liabilities
|
|
|
93,694
|
|
|
90,702
|
|
Income taxes payable
|
|
|
6,701
|
|
|
10,220
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
180,282
|
|
|
234,275
|
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
1,070
|
|
|
2,467
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
181,352
|
|
|
236,742
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
|
|
|
|
|
Common stock, par value $.01 per share; 100,000,000 shares authorized; 71,470,746 and 70,667,421 shares issued and outstanding at January 31, 2006 and October 31, 2005, respectively
|
|
|
715
|
|
|
707
|
|
Additional paid-in capital
|
|
|
426,628
|
|
|
418,053
|
|
Deferred compensation
|
|
|
|
|
|
(11,189
|
)
|
Retained earnings
|
|
|
258,755
|
|
|
287,877
|
|
Accumulated other comprehensive income
|
|
|
1,203
|
|
|
686
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
687,301
|
|
|
696,134
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
868,653
|
|
$
|
932,876
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
264,981
|
|
$
|
502,474
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
|
|
|
|
|
Product costs
|
|
|
160,853
|
|
|
237,485
|
|
Royalties
|
|
|
32,867
|
|
|
80,209
|
|
Software development costs
|
|
|
15,594
|
|
|
4,205
|
|
|
|
|
|
|
|
|
|
Total cost of goods sold
|
|
|
209,314
|
|
|
321,899
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
55,667
|
|
|
180,575
|
|
Operating expenses
|
|
|
|
|
|
|
|
Selling and marketing
|
|
|
41,644
|
|
|
50,931
|
|
General and administrative
|
|
|
38,453
|
|
|
28,687
|
|
Research and development
|
|
|
17,709
|
|
|
23,417
|
|
Depreciation and amortization
|
|
|
6,651
|
|
|
4,786
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
104,457
|
|
|
107,821
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
(48,790
|
)
|
|
72,754
|
|
Interest income, net
|
|
|
253
|
|
|
540
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(48,537
|
)
|
|
73,294
|
|
Provision (benefit) for income taxes
|
|
|
(19,415
|
)
|
|
18,045
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(29,122
|
)
|
$
|
55,249
|
|
|
|
|
|
|
|
|
|
Per share data:
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
71,429
|
|
|
68,529
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share
|
|
$
|
(0.41
|
)
|
$
|
0.81
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
71,429
|
|
|
69,774
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share
|
|
$
|
(0.41
|
)
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(29,122
|
)
|
$
|
55,249
|
|
Adjustment to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
6,651
|
|
|
4,786
|
|
Loss on disposal of fixed assets
|
|
|
|
|
|
15
|
|
Amortization of intellectual property and other
|
|
|
2,077
|
|
|
3,365
|
|
Amortization of compensatory restricted stock
|
|
|
305
|
|
|
4,802
|
|
Stock-based compensation related to compensatory stock options
|
|
|
4,528
|
|
|
|
|
Amortization of software development costs and licenses
|
|
|
27,526
|
|
|
14,614
|
|
Write-off of software development costs and licenses
|
|
|
520
|
|
|
3,364
|
|
Provision for doubtful accounts, returns and sales allowances
|
|
|
58,416
|
|
|
50,630
|
|
Tax benefit from exercise of compensatory stock and stock options
|
|
|
|
|
|
3,750
|
|
Foreign currency transaction (gain) loss
|
|
|
(890
|
)
|
|
147
|
|
Changes in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
|
Decrease in accounts receivable
|
|
|
55,670
|
|
|
115,630
|
|
Decrease in inventories
|
|
|
29,094
|
|
|
20,363
|
|
Increase in software development costs
|
|
|
(35,048
|
)
|
|
(41,530
|
)
|
Increase in licenses
|
|
|
(6,096
|
)
|
|
(3,297
|
)
|
Increase
in prepaid taxes and taxes receivable
|
|
|
(20,557
|
)
|
|
(23,135
|
)
|
Decrease in
prepaid expenses and other current assets
|
|
|
2,726
|
|
27,654
|
|
|
Decrease (increase) in other non-current assets
|
|
|
759
|
|
|
(602
|
)
|
Decrease in accounts payable
|
|
|
(53,553
|
)
|
|
(78,421
|
)
|
(Decrease) increase in accrued expenses and other liabilities
|
|
|
(2,393
|
)
|
|
34,733
|
|
Decrease in income taxes payable
|
|
|
(1,154
|
)
|
|
(2,641
|
)
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
39,459
|
|
|
189,476
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Purchase of fixed assets
|
|
|
(6,456
|
)
|
|
(5,651
|
)
|
Acquisition of intangible assets
|
|
|
|
|
|
(20,000
|
)
|
Acquisitions, net of cash acquired
|
|
|
1,143
|
|
|
(23,244
|
)
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(5,313
|
)
|
|
(48,895
|
)
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options
|
|
|
1,071
|
|
|
7,365
|
|
Excess tax benefit from exercise of compensatory stock and stock options
|
|
|
24
|
|
|
|
|
Other financing
|
|
|
|
|
|
(27
|
)
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
1,095
|
|
|
7,338
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rates
|
|
|
461
|
|
|
56
|
|
|
|
|
|
|
|
|
|
Net increase in cash for the period
|
|
|
35,702
|
|
|
147,975
|
|
Cash and cash equivalents, beginning of the period
|
|
|
107,195
|
|
|
155,095
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of the period
|
|
$
|
142,897
|
|
$
|
303,070
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
|
|
Supplemental information on businesses acquired:
|
|
|
|
|
|
|
|
Fair value of assets acquired:
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
112
|
|
$
|
111
|
|
Non-current assets
|
|
|
421
|
|
|
1,196
|
|
Intangible assets
|
|
|
5,284
|
|
|
7,980
|
|
Goodwill
|
|
|
11,445
|
|
|
29,433
|
|
Less: liabilities assumed
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
(200
|
)
|
|
(3,275
|
)
|
Deferred income taxes
|
|
|
(1,620
|
)
|
|
(3,192
|
)
|
|
|
|
|
|
|
|
|
Net assets of businesses acquired, excluding cash acquired
|
|
$
|
15,442
|
|
$
|
32,253
|
|
|
|
|
|
|
|
|
|
Cash paid for businesses acquired
|
|
$
|
857
|
|
$
|
24,000
|
|
Less: cash acquired
|
|
|
(2,000
|
)
|
|
(756
|
)
|
|
|
|
|
|
|
|
|
Net cash paid (acquired) for businesses
|
|
|
(1,143
|
)
|
|
23,244
|
|
Additional consideration in connection with acquisitions
|
|
|
4,085
|
|
|
6,416
|
|
Contingent and deferred consideration
|
|
|
|
|
|
2,593
|
|
Issuance of unregistered common stock in connection with acquisitions
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consideration, net of cash acquired
|
|
$
|
15,442
|
|
$
|
32,253
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
Issuance of warrants to licensor
|
|
$
|
|
|
$
|
1,183
|
|
Cash paid for taxes
|
|
|
5,321
|
|
|
18,821
|
|
Cash paid for interest
|
|
|
163
|
|
|
50
|
|
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Deferred
Compensation |
|
Retained
Earnings |
|
Accumulated Other
Comprehensive Income (loss) |
|
Total
|
|
|||||||||
|
||||||||||||||||||||||
Shares
|
|
Amount
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 31, 2004
|
|
|
68,159
|
|
$
|
682
|
|
$
|
381,928
|
|
$
|
(3,896
|
)
|
$
|
250,402
|
|
$
|
6,354
|
|
$
|
635,470
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,668
|
)
|
|
(5,668
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,475
|
|
|
|
|
|
37,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of treasury shares, retired
|
|
|
(925
|
)
|
|
(9
|
)
|
|
(24,920
|
)
|
|
|
|
|
|
|
|
|
|
|
(24,929
|
)
|
Exchange of treasury shares, retired
|
|
|
(367
|
)
|
|
(4
|
)
|
|
(8,307
|
)
|
|
|
|
|
|
|
|
|
|
|
(8,311
|
)
|
Proceeds from exercise of stock options and warrants
|
|
|
2,753
|
|
|
27
|
|
|
31,196
|
|
|
|
|
|
|
|
|
|
|
|
31,223
|
|
Amortization of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
14,860
|
|
|
|
|
|
|
|
|
14,860
|
|
Issuance of common stock in connection with acquisition
|
|
|
82
|
|
|
1
|
|
|
1,999
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
|
Issuance of compensatory stock and stock options
|
|
|
965
|
|
|
10
|
|
|
22,688
|
|
|
(22,153
|
)
|
|
|
|
|
|
|
|
545
|
|
Tax benefit in connection with the exercise of compensatory stock and stock options
|
|
|
|
|
|
|
|
|
12,286
|
|
|
|
|
|
|
|
|
|
|
|
12,286
|
|
Issuance of warrants to licensor
|
|
|
|
|
|
|
|
|
1,183
|
|
|
|
|
|
|
|
|
|
|
|
1,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 31, 2005
|
|
|
70,667
|
|
$
|
707
|
|
$
|
418,053
|
|
$
|
(11,189
|
)
|
$
|
287,877
|
|
$
|
686
|
|
$
|
696,134
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
517
|
|
|
517
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29,122
|
)
|
|
|
|
|
(29,122
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28,605
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation
|
|
|
|
|
|
|
|
|
(11,189
|
)
|
|
11,189
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options and warrants
|
|
|
86
|
|
|
1
|
|
|
1,070
|
|
|
|
|
|
|
|
|
|
|
|
1,071
|
|
Stock based compensation expense related to compensatory stock options
|
|
|
|
|
|
|
|
|
5,811
|
|
|
|
|
|
|
|
|
|
|
|
5,811
|
|
Amortization of deferred compensation
|
|
|
|
|
|
|
|
|
305
|
|
|
|
|
|
|
|
|
|
|
|
305
|
|
Issuance of common stock in connection with acquisition
|
|
|
679
|
|
|
7
|
|
|
12,493
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
Issuance of compensatory restricted stock, net of forfeitures and cancellations
|
|
|
39
|
|
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
61
|
|
Excess tax benefit in connection with the exercise of compensatory stock and stock options
|
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 31, 2006
|
|
|
71,471
|
|
$
|
715
|
|
$
|
426,628
|
|
$
|
|
|
$
|
258,755
|
|
$
|
1,203
|
|
$
|
687,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
(in thousands) |
|
Weighted Average
Exercise Price |
|
||
|
|
|
|
|
|
|
|
Options outstanding at October 31, 2005
|
|
|
7,495
|
|
$
|
20.47
|
|
Granted-exercise
price equal to fair value
|
|
|
65
|
|
|
18.13
|
|
Granted-exercise price less than fair value
|
|
|
|
|
|
|
|
Exercised
|
|
|
(86
|
)
|
|
12.87
|
|
Forfeited
|
|
|
(65
|
)
|
|
19.56
|
|
|
|
|
|
|
|
|
|
Options outstanding at January 31, 2006
|
|
|
7,409
|
|
$
|
20.55
|
|
|
|
|
|
|
|
|
|
Options exercisable at January 31, 2006
|
|
|
3,964
|
|
$
|
18.50
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
Risk free interest rate
|
|
|
4.5
|
%
|
|
3.6
|
%
|
Expected stock price volatility
|
|
|
55.0
|
%
|
|
67.6
|
%
|
Expected term until exercise (years)
|
|
|
4.1
|
|
|
4.6
|
|
Dividends
|
|
|
None
|
|
|
None
|
|
|
|
Shares
(in thousands) |
|
Weighted Average
Grant Date Fair Value |
|
||
|
|
|
|
|
|
|
|
Non-vested restricted stock at October 31, 2005
|
|
|
600
|
|
$
|
23.03
|
|
Granted
|
|
|
45
|
|
|
19.24
|
|
Vested
|
|
|
(52
|
)
|
|
22.35
|
|
Forfeited
|
|
|
(6
|
)
|
|
19.00
|
|
|
|
|
|
|
|
|
|
Non-vested
restricted stock at January 31, 2006
|
|
|
587
|
|
$
|
22.84
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
|
|
Stock options
|
|
$
|
4,528
|
|
$
|
|
|
Restricted stock
|
|
|
305
|
|
|
4,802
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation expense
|
|
$
|
4,833
|
|
$
|
4,802
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
$
|
|
|
$
|
|
|
Selling and marketing
|
|
|
707
|
|
|
1,133
|
|
General and administrative
|
|
|
3,193
|
|
|
943
|
|
Research and development
|
|
|
933
|
|
|
2,726
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation expense
|
|
$
|
4,833
|
|
$
|
4,802
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, 2005 |
|
|
|
|
|
|
|
Net income, as reported
|
|
$
|
55,249
|
|
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects
|
|
|
2,934
|
|
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects
|
|
|
(6,841
|
)
|
|
|
|
|
|
Pro forma net income
|
|
$
|
51,342
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
Basic as reported
|
|
$
|
0.81
|
|
|
|
|
|
|
Basic pro forma
|
|
$
|
0.75
|
|
|
|
|
|
|
Diluted as reported
|
|
$
|
0.79
|
|
|
|
|
|
|
Diluted pro forma
|
|
$
|
0.73
|
|
|
|
|
|
|
|
|
|
Net
Income (loss) |
|
|
Shares
(in thousands) |
|
|
Per Share
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended January 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
$
|
(29,122
|
)
|
|
71,429
|
|
$
|
(0.41
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended January 31, 2005:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
55,249
|
|
|
68,529
|
|
$
|
0.81
|
|
Effect of dilutive securities Stock options, restricted stock and warrants
|
|
|
|
|
|
1,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
55,249
|
|
|
69,774
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
2006 |
|
October 31,
2005 |
|
||
|
|
|
|
|
|
|
|
Finished products
|
|
$
|
98,102
|
|
$
|
128,753
|
|
Parts and supplies
|
|
|
9,311
|
|
|
7,474
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
107,413
|
|
$
|
136,227
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
|
|
Balance, November 1
|
|
$
|
108,428
|
|
$
|
64,322
|
|
Additions
|
|
|
32,268
|
|
|
39,510
|
|
Amortization
|
|
|
(22,583
|
)
|
|
(13,358
|
)
|
Write down
|
|
|
(520
|
)
|
|
(2,964
|
)
|
Foreign exchange
|
|
|
337
|
|
|
498
|
|
|
|
|
|
|
|
|
|
Balance, January 31
|
|
|
117,930
|
|
|
88,008
|
|
Less: current portion
|
|
|
77,529
|
|
|
64,091
|
|
|
|
|
|
|
|
|
|
Non-current portion
|
|
$
|
40,401
|
|
$
|
23,917
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
|
|
Balance, November 1
|
|
$
|
9,981
|
|
$
|
5,665
|
|
Additions
|
|
|
6,096
|
|
|
4,480
|
|
Amortization
|
|
|
(4,943
|
)
|
|
(1,256
|
)
|
Write down
|
|
|
|
|
|
(400
|
)
|
|
|
|
|
|
|
|
|
Balance, January 31
|
|
|
11,134
|
|
|
8,489
|
|
Less: current portion
|
|
|
6,717
|
|
|
6,689
|
|
|
|
|
|
|
|
|
|
Non-current portion
|
|
$
|
4,417
|
|
$
|
1,800
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
2006 |
|
October 31,
2005 |
|
||
|
|
|
|
|
|
|
|
Computer equipment
|
|
$
|
25,129
|
|
$
|
22,893
|
|
Office equipment
|
|
|
14,541
|
|
|
13,940
|
|
Computer software
|
|
|
28,774
|
|
|
26,411
|
|
Furniture and fixtures
|
|
|
6,319
|
|
|
6,338
|
|
Leasehold improvements
|
|
|
18,253
|
|
|
19,031
|
|
Capital leases
|
|
|
398
|
|
|
398
|
|
|
|
|
|
|
|
|
|
|
|
|
93,414
|
|
|
89,011
|
|
Less: accumulated depreciation and amortization
|
|
|
45,199
|
|
|
40,394
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
48,215
|
|
$
|
48,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31, 2006
|
|
October 31, 2005
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Range of
Useful Life (Years) |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
|
|
Gross
Carrying Amount |
|
Amortization Accumulated
|
|
Net
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
|
|
|
7-10 years
|
|
$
|
30,407
|
|
$
|
(15,176
|
)
|
$
|
15,231
|
|
$
|
29,365
|
|
$
|
(14,145
|
)
|
$
|
15,220
|
|
Customer lists and relationships
|
|
|
5-10 years
|
|
|
4,673
|
|
|
(3,351
|
)
|
|
1,322
|
|
|
4,673
|
|
|
(3,282
|
)
|
|
1,391
|
|
Intellectual property
|
|
|
2-6 years
|
|
|
70,618
|
|
|
(37,734
|
)
|
|
32,884
|
|
|
69,927
|
|
|
(36,371
|
)
|
|
33,556
|
|
Non-competition agreements
|
|
|
3-6 years
|
|
|
9,868
|
|
|
(4,932
|
)
|
|
4,936
|
|
|
8,738
|
|
|
(4,472
|
)
|
|
4,266
|
|
Technology
|
|
|
3 years
|
|
|
11,509
|
|
|
(5,401
|
)
|
|
6,108
|
|
|
9,032
|
|
|
(4,799
|
)
|
|
4,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
$
|
127,075
|
|
$
|
(66,594
|
)
|
$
|
60,481
|
|
$
|
121,735
|
|
$
|
(63,069
|
)
|
$
|
58,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
Included in:
|
|
|
|
|
|
|
|
Cost of goods sold product costs
|
|
$
|
2,077
|
|
$
|
2,671
|
|
Depreciation and amortization
|
|
|
1,474
|
|
|
1,337
|
|
|
|
|
|
|
|
|
|
Total amortization expense
|
|
$
|
3,551
|
|
$
|
4,008
|
|
|
|
|
|
|
|
|
|
Remainder of 2006
|
|
$
|
14,965
|
|
2007
|
|
|
14,897
|
|
2008
|
|
|
14,185
|
|
2009
|
|
|
7,375
|
|
2010
|
|
|
4,647
|
|
Thereafter
|
|
|
4,412
|
|
|
|
|
|
|
Total
|
|
$
|
60,481
|
|
|
|
|
|
|
|
|
January 31,
2006 |
|
October 31,
2005 |
|
||
|
|
|
|
|
|
|
|
Royalties
|
|
$
|
27,815
|
|
$
|
17,940
|
|
Compensation and benefits
|
|
|
14,303
|
|
|
23,729
|
|
Licenses
|
|
|
10,790
|
|
|
9,743
|
|
Deferred revenue
|
|
|
6,403
|
|
|
6,414
|
|
Rent and deferred rent obligations
|
|
|
6,503
|
|
|
6,484
|
|
Co-op advertising
|
|
|
5,284
|
|
|
3,802
|
|
Professional fees
|
|
|
5,509
|
|
|
7,219
|
|
Freight
|
|
|
1,569
|
|
|
2,321
|
|
Other
|
|
|
15,518
|
|
|
13,050
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
93,694
|
|
$
|
90,702
|
|
|
|
|
|
|
|
|
|
Fiscal Years Ending January 31,
|
|
Licensing and
Marketing Agreements |
|
Software
Development Agreements |
|
Leases
|
|
Distribution
Agreements |
|
Total
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remainder of 2006
|
|
$
|
52,752
|
|
$
|
37,922
|
|
$
|
13,015
|
|
$
|
4,235
|
|
$
|
107,924
|
|
2007
|
|
|
53,248
|
|
|
17,365
|
|
|
14,239
|
|
|
|
|
|
84,852
|
|
2008
|
|
|
48,226
|
|
|
10,883
|
|
|
12,995
|
|
|
|
|
|
72,104
|
|
2009
|
|
|
49,034
|
|
|
39
|
|
|
12,956
|
|
|
|
|
|
62,029
|
|
2010
|
|
|
49,017
|
|
|
|
|
|
11,232
|
|
|
|
|
|
60,249
|
|
Thereafter
|
|
|
90,480
|
|
|
|
|
|
30,408
|
|
|
|
|
|
120,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
342,757
|
|
$
|
66,209
|
|
$
|
94,845
|
|
$
|
4,235
|
|
$
|
508,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
2006 |
|
October 31,
2005 |
|
||
|
|
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
|
|
|
United States
|
|
$
|
238,094
|
|
$
|
208,947
|
|
Canada
|
|
|
15,186
|
|
|
13,353
|
|
International:
|
|
|
|
|
|
|
|
United Kingdom
|
|
|
33,576
|
|
|
28,013
|
|
Switzerland
|
|
|
25,640
|
|
|
29,410
|
|
All other Europe
|
|
|
31,678
|
|
|
29,749
|
|
Other
|
|
|
10,473
|
|
|
10,162
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
354,647
|
|
$
|
319,634
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
|
|
Net Revenues:
|
|
|
|
|
|
|
|
United States
|
|
$
|
156,926
|
|
$
|
296,168
|
|
Canada
|
|
|
32,673
|
|
|
34,176
|
|
International
|
|
|
|
|
|
|
|
United Kingdom
|
|
|
20,188
|
|
|
64,976
|
|
All other Europe
|
|
|
47,642
|
|
|
94,349
|
|
Asia Pacific
|
|
|
6,012
|
|
|
11,537
|
|
Other
|
|
|
1,540
|
|
|
1,268
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
264,981
|
|
$
|
502,474
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
71.6
|
%
|
|
65.7
|
%
|
International
|
|
|
28.4
|
%
|
|
34.3
|
%
|
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
|
|
Product Category:
|
|
|
|
|
|
|
|
Publishing
|
|
$
|
158,288
|
|
$
|
355,384
|
|
Distribution
|
|
|
106,693
|
|
|
147,090
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
264,981
|
|
$
|
502,474
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
|
|
Platforms:
|
|
|
|
|
|
|
|
Sony PlayStation 2
|
|
$
|
64,203
|
|
$
|
350,791
|
|
Sony PSP
|
|
|
53,913
|
|
|
|
|
Microsoft Xbox
|
|
|
18,240
|
|
|
41,661
|
|
Microsoft Xbox 360
|
|
|
18,113
|
|
|
|
|
PC
|
|
|
32,048
|
|
|
27,631
|
|
Sony PlayStation
|
|
|
573
|
|
|
2,954
|
|
Nintendo Game Boy Color, Game Boy Advance, DS and N64
|
|
|
27,488
|
|
|
25,113
|
|
Nintendo GameCube
|
|
|
6,165
|
|
|
12,736
|
|
Hardware
|
|
|
29,540
|
|
|
24,519
|
|
Accessories and other
|
|
|
14,698
|
|
|
17,069
|
|
|
|
|
|
||||
Total
|
|
$
|
264,981
|
|
$
|
502,474
|
|
|
|
|
|
|
|
|
|
17. Subsequent Event
In February 2006, in connection with the Companys Rockstar compensation plan, the Board of Directors approved the issuance of shares of restricted common stock under the Companys Incentive Stock Plan having an aggregate value of $25.0 million. Shares of restricted stock having a value of approximately $14.8 million (950,000 shares) were immediately granted principally to certain Rockstar employees responsible for product development, and the balance of the shares with a value of $10.2 million will be issued to certain Rockstar employees when the stockholders of the Company approve an amendment to the Companys Incentive Stock Plan to increase the number of shares available for grant thereunder. Such shares will vest as to one-third of such shares in each of February 2007, February 2008 and February 2009.
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
|
|
Operating data:
|
|
|
|
|
|
|
|
Net revenues
|
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
|
|
|
|
|
|
|
Product costs
|
|
|
60.7
|
|
|
47.3
|
|
Royalties
|
|
|
12.4
|
|
|
16.0
|
|
Software development costs
|
|
|
5.9
|
|
|
0.8
|
|
Total cost of goods sold
|
|
|
79.0
|
|
|
64.1
|
|
Selling and marketing
|
|
|
15.7
|
|
|
10.1
|
|
General and administrative
|
|
|
14.5
|
|
|
5.7
|
|
Research and development
|
|
|
6.7
|
|
|
4.7
|
|
Depreciation and amortization
|
|
|
2.5
|
|
|
1.0
|
|
Interest income, net
|
|
|
0.1
|
|
|
0.1
|
|
Provision (benefit) for income taxes
|
|
|
(7.3
|
)
|
|
3.6
|
|
Net income (loss)
|
|
|
(11.0
|
)
|
|
11.0
|
|
Net Revenues by Territory:
|
|
|
|
|
|
|
|
North America
|
|
|
71.6
|
%
|
|
65.7
|
%
|
International
|
|
|
28.4
|
|
|
34.3
|
|
Net Sales Mix:
|
|
|
|
|
|
|
|
Publishing
|
|
|
59.7
|
%
|
|
70.7
|
%
|
Distribution
|
|
|
40.3
|
|
|
29.3
|
|
Platform Mix (publishing):
|
|
|
|
|
|
|
|
Console
|
|
|
47.6
|
%
|
|
95.8
|
%
|
PC
|
|
|
12.1
|
|
|
1.8
|
|
Handheld
|
|
|
34.9
|
|
|
1.0
|
|
Accessories
|
|
|
5.4
|
|
|
1.4
|
|
Top Ten Titles Three months ended January 31, 2006
|
|
Platform
|
|
Release Date
|
|
% of
Net Revenues |
|
|||
|
|
|
|
|
|
|
|
|
|
|
Grand Theft Auto: Liberty City Stories
|
|
|
PSP
|
|
|
October 2005
|
|
|
19.5
|
%
|
Grand Theft Auto: San Andreas
|
|
|
PS2
|
|
|
October 2004
|
|
|
5.5
|
|
Sid Meiers Civilization IV
|
|
|
PC
|
|
|
October 2005
|
|
|
4.6
|
|
NBA 2K6
|
|
|
Xbox 360
|
|
|
November 2005
|
|
|
2.4
|
|
Torino 2006
|
|
|
PS2
|
|
|
January 2006
|
|
|
2.1
|
|
Amped 3
|
|
|
Xbox 360
|
|
|
November 2005
|
|
|
2.0
|
|
Midnight Club 3: DUB Edition
|
|
|
PSP
|
|
|
June 2005
|
|
|
1.6
|
|
NHL 2K6
|
|
|
Xbox 360
|
|
|
November 2005
|
|
|
1.4
|
|
Grand Theft Auto: San Andreas
|
|
|
Xbox
|
|
|
June 2005
|
|
|
1.3
|
|
Midnight Club 3: Dub Edition
|
|
|
PS2
|
|
|
April 2005
|
|
|
1.3
|
|
Top Ten Titles Three months ended January 31, 2005
|
|
Platform
|
|
Release Date
|
|
% of
Net Revenues |
|
|||
|
|
|
|
|
|
|
|
|
|
|
Grand Theft Auto: San Andreas
|
|
|
PS2
|
|
|
October 2004
|
|
|
57.1
|
%
|
Grand Theft Auto: Vice City
|
|
|
PS2
|
|
|
October 2002
|
|
|
1.3
|
|
ESPN NBA 2K5
|
|
|
PS2
|
|
|
September 2004
|
|
|
1.3
|
|
ESPN NFL 2K5
|
|
|
PS2
|
|
|
July 2004
|
|
|
1.1
|
|
ESPN College Hoops 2K5
|
|
|
PS2
|
|
|
November 2004
|
|
|
0.9
|
|
Grand Theft Auto Double Pack
|
|
|
Xbox
|
|
|
November 2003
|
|
|
0.7
|
|
ESPN College Hoops 2K5
|
|
|
Xbox
|
|
|
November 2004
|
|
|
0.7
|
|
ESPN NBA 2K5
|
|
|
Xbox
|
|
|
September 2004
|
|
|
0.6
|
|
ESPN NFL 2K5
|
|
|
Xbox
|
|
|
July 2004
|
|
|
0.6
|
|
Outlaw Golf 2
|
|
|
PS2
|
|
|
November 2004
|
|
|
0.5
|
|
|
|
Three months ended January 31,
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
|
|
2006
|
|
%
|
|
2005
|
|
%
|
|
$
(Decrease) |
|
%
(Decr) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Publishing
|
|
$
|
158,288
|
|
|
59.7
|
|
$
|
355,384
|
|
|
70.7
|
|
$
|
(197,096
|
)
|
|
(55.5
|
)
|
Distribution
|
|
|
106,693
|
|
|
40.3
|
|
|
147,090
|
|
|
29.3
|
|
|
(40,397
|
)
|
|
(27.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
$
|
264,981
|
|
|
100.0
|
|
$
|
502,474
|
|
|
100.0
|
|
$
|
(237,493
|
)
|
|
(47.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended January 31,
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
|
|
2006
|
|
% of
Net Revenues |
|
2005
|
|
% of
Net Revenues |
|
$ Increase
(Decrease) |
|
% Incr
(Decr) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product costs
|
|
$
|
160,853
|
|
|
60.7
|
|
$
|
237,485
|
|
|
47.3
|
|
$
|
(76,632
|
)
|
|
(32.3
|
)
|
Royalties
|
|
|
32,867
|
|
|
12.4
|
|
|
80,209
|
|
|
16.0
|
|
|
(47,342
|
)
|
|
(59.0
|
)
|
Software development costs
|
|
|
15,594
|
|
|
5.9
|
|
|
4,205
|
|
|
0.8
|
|
|
11,389
|
|
|
270.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of goods sold
|
|
$
|
209,314
|
|
|
79.0
|
|
$
|
321,899
|
|
|
64.1
|
|
$
|
(112,585
|
)
|
|
(35.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended January 31
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|||||||||||||
|
|
2006
|
|
% of
Net Revenues |
|
2005
|
|
% of
Net Revenues |
|
Increase
(Decrease) |
|
%
Incr (Decr) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing
|
|
$
|
41,644
|
|
|
15.7
|
|
$
|
50,931
|
|
|
10.1
|
|
$
|
(9,287
|
)
|
|
(18.2
|
)
|
General and administrative
|
|
|
38,453
|
|
|
14.5
|
|
|
28,687
|
|
|
5.7
|
|
|
9,766
|
|
|
34.0
|
|
Research and development
|
|
|
17,709
|
|
|
6.7
|
|
|
23,417
|
|
|
4.7
|
|
|
(5,708
|
)
|
|
(24.4
|
)
|
Depreciation and amortization
|
|
|
6,651
|
|
|
2.5
|
|
|
4,786
|
|
|
1.0
|
|
|
1,865
|
|
|
39.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
$
|
104,457
|
|
|
39.4
|
|
$
|
107,821
|
|
|
21.5
|
|
$
|
(3,364
|
)
|
|
(3.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, |
|
||||
|
|
|
|
||||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
|
|
Cash provided by operating activities
|
|
$
|
39,459
|
|
$
|
189,476
|
|
Cash used in investing activities
|
|
|
(5,313
|
)
|
|
(48,895
|
)
|
Cash provided by financing activities
|
|
|
1,095
|
|
|
7,338
|
|
Effect of foreign exchange rates on cash and cash equivalents
|
|
|
461
|
|
|
56
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
$
|
35,702
|
|
$
|
147,975
|
|
|
|
|
|
|
|
|
|
Fiscal Years Ending January 31,
|
|
Licensing and
Marketing Agreements |
|
Software
Development Agreements |
|
Leases
|
|
Distribution
Agreements |
|
Total
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remainder of 2006
|
|
$
|
52,752
|
|
$
|
37,922
|
|
$
|
13,015
|
|
$
|
4,235
|
|
$
|
107,924
|
|
2007
|
|
|
53,248
|
|
|
17,365
|
|
|
14,239
|
|
|
|
|
|
84,852
|
|
2008
|
|
|
48,226
|
|
|
10,883
|
|
|
12,995
|
|
|
|
|
|
72,104
|
|
2009
|
|
|
49,034
|
|
|
39
|
|
|
12,956
|
|
|
|
|
|
62,029
|
|
2010
|
|
|
49,017
|
|
|
|
|
|
11,232
|
|
|
|
|
|
60,249
|
|
Thereafter
|
|
|
90,480
|
|
|
|
|
|
30,408
|
|
|
|
|
|
120,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
342,757
|
|
$
|
66,209
|
|
$
|
94,845
|
|
$
|
4,235
|
|
$
|
508,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The company is in the process of developing reports to assist in the analysis of accounts payable related to inventory purchases to ensure there is adequate and timely reconciliation of these accounts.
|
|
|
|
|
|
The company has added an additional level of review of the amortization of capitalized software development costs to ensure the accuracy of the information used in this calculation. The company has also redesigned the reconciliation schedules in this area to make it easier to review. Further, the company has initiated a feasibility study to determine ways to automate the inputs and/or calculation of these amounts to reduce or eliminate the data entry involved in the current process. Although management believes that this control is in place, it has not been tested for a sufficient period to conclude that the control is effective.
|
|
Exhibits:
|
|
|
|
|
|
31.1
|
Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
31.2
|
Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.1
|
Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.2
|
Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
TAKE-TWO INTERACTIVE SOFTWARE, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
Date: March 13, 2006
|
By:
|
/s/ Paul Eibeler
|
|
|
|
|
|
Paul Eibeler
Chief Executive Officer and President (Principal Executive Officer) |
|
|
|
|
|
|
Date: March 13, 2006
|
By:
|
/s/ Karl H. Winters
|
|
|
|
|
|
Karl H. Winters
Chief Financial Officer (Principal Financial Officer) |