2K Sports 2004 Annual Report Download - page 9

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PART I
Item 1. Business
Safe Harbor Statement under the Securities Litigation Reform Act of 1995: We make forward-looking
statements in this report that are based on the beliefs of management and assumptions made by and
information currently available to them. The words “expect,” “anticipate,” “believe,” “may,” “estimate,”
“intend” and similar expressions are intended to identify such forward-looking statements. Forward-looking
statements involve risks, uncertainties and assumptions described in “Management’s Discussion and Analysis
of Financial Condition and Result of Operations — Risk Factors,” which could cause our actual results to be
materially different from results expressed or implied by such forward-looking statements.
Overview
We are a leading global publisher of interactive software games designed for personal computers, and video
game consoles and handheld platforms manufactured by Sony, Microsoft and Nintendo. Through our Rockstar
Gamestsubsidiary, we have pursued a growth strategy by capitalizing on the widespread market acceptance
of video game consoles, as well as the growing popularity of innovative action games that appeal to mature
audiences. We are also seeking to diversify our product offerings through our Globalstar™ subsidiary by
capitalizing on perceived growth opportunities in the market for sports and other licensed action and
strategy titles.
Our Rockstar publishing subsidiary continues to successfully create new, proprietary brands and sequels to
existing brands with broad consumer appeal. Rockstar recently released Grand Theft Auto: San Andreas, the
highly anticipated next installment to the blockbuster Grand Theft Autotfranchise, for the PlayStationt2.
Grand Theft Auto: San Andreas was the top selling video game for the PlayStation 2 in the United States for
the one-month period ended November 27, 2004, with approximately 3.6 million units sold according to
NPDFunworld
SM
. Rockstar plans to release Grand Theft Auto: San Andreas for the Xboxtand PC in fiscal
2005. Rockstar also expects to release Midnight Club 3: DUB Edition for the PlayStation 2 and Xbox, and
The Warriors, a new title based on the Paramount Pictures’ classic 1979 gang drama, for the PlayStation 2.
Our Globalstar subsidiary has recently focused on publishing sports games under an agreement with SEGA
Corporation. Following the July 2004 launch of ESPN NFL 2K5 (professional football) for the PlayStation 2
and Xbox at a $19.99 suggested retail price, we released ESPN NHL 2K5 (professional hockey), ESPN
NBA 2K5 (professional basketball) and ESPN College Hoops 2K5 (college basketball) for the PlayStation 2
and Xbox. As of November 27, 2004, we sold 3.4 million units of these four sports titles according to
NPDFunworld. Globalstar is also concentrating on publishing titles incorporating popular licensed properties,
including a title based on Charlie and The Chocolate Factory.
We also distribute our products as well as third-party software, hardware and accessories to retail outlets in
North America through our Jack of All Games subsidiary. Our customers in North America include Best Buy,
Blockbuster, Circuit City, Electronics Boutique, GameStop, Target, Toys “R” Us, Wal-Mart, and other leading
national and regional drug store, supermarket and discount store chains and specialty retailers. We also have
sales, marketing and publishing operations in Australia, Austria, Canada, France, Germany, Holland, Italy,
New Zealand, Spain and the United Kingdom.
We were incorporated under the laws of the State of Delaware in 1993. Our Internet address is
www.take2games.com. We make available free of charge on our website our periodic reports filed with the
SEC under applicable law as soon as reasonably practicable after we file such material. The information on
our website is not part of this report.
New Developments
Effective May 2004, we entered into a three-year agreement with SEGA Corporation, whereby we co-publish
and exclusively distribute SEGA’s sports titles. Pursuant to an option agreement with SEGA, we have the right
to acquire Visual Concepts Entertainment, Inc. (“Visual Concepts”) and its subsidiary Kush Games (“Kush”),
California-based developers of SEGA’s sports titles, and the intellectual property rights associated with the
realistic sports simulation games developed and/or produced by Visual Concepts and Kush. We recently
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