2K Sports 2004 Annual Report Download - page 6

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The trend in net income partially reflected the
product mix in our publishing business, which
included a greater percentage of higher cost con-
sole products, and increased royalty expenses
related to sales volumes. Additionally, our prof-
itability was affected by investment decisions
intended to drive future growth and product diver-
sification, such as the value-pricing of our sports
titles to establish a presence in the attractive
sports video game business; increased selling and
marketing expenses to support our new titles, par-
ticularly in the sports category; and higher R&D
costs related to our acquisitions of development
studios.
We continue to maintain solid financial resources
to support future growth initiatives. At October 31,
2004, Take-Two had $155 million in cash and work-
ing capital of approximately $395 million.
Looking Forward. Take-Two entered fiscal 2005 in
a strong position. We have enjoyed tremendous
success with
Grand Theft Auto: San Andreas
, and
are maximizing our opportunities to extend the
reach of this blockbuster title to new platforms and
to the Asian market. At the same time, we have
made significant progress in diversifying our busi-
ness, especially in the attractive sports and
licensed product categories. We believe we have
the strongest product pipeline in our history. Just
as important, we are confident that we have the
internal resources — remarkable development tal-
ent, an unparalleled sales and distribution network,
and a solid financial position — to take advantage
of the opportunities as our industry grows and
leverages new hardware platforms.
I am proud of the accomplishments of the entire
Take-Two team, and I look forward to building on
our strengths to deliver growth and increasing
shareholder value in the future.
Sincerely,
Paul Eibeler
President and Chief Executive Officer
4