2K Sports 2008 Annual Report Download - page 6

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revenue streams, such as downloadable
content, networked gameplay and micro-
transactions. We will seek to capitalize
on these opportunities to maximize the
value of our intellectual property.
We recognize the challenges that every
company faces today, and remain stead-
fast in our determination to deliver value
by being the most creative, the most inno-
vative and the most effi cient company in
the interactive entertainment industry. We
are commi ed to off ering the best home
for top creative talent, se ing new bench-
marks with triple-A products, making
strategic investments for growth, prudently
managing our business, and maintaining
our sound fi nancial position.
We would like to thank our colleagues
for making this a record year. We also thank
our shareholders for your continued sup-
port and look forward to reporting on our
progress in the year ahead.
Sincerely,
Strauss Zelnick, Chairman
Ben Feder, Chief Executive Offi cer
new cars and maps which added hours
of new racing experiences. While still an
emerging area, we believe that download-
able content
—
when done right
—
off ers
the potential to deepen brand loyalty
among consumers, extend the lifecycle of
our titles, diversify our revenue streams
and enhance profi tability.
Today’s consumers demand triple-A
gaming experiences and we continue to
deliver them. Our portfolio includes some
of the biggest and most popular brands in
our industry today. We have 15 internally
owned brands with sales over one million
units each and 30 individual products that
have each sold over one million units. These
successes refl ect the dedication and vision
of our creative teams to set new bench-
marks in interactive entertainment.
We currently have two of the three all-
time highest rated titles for Xbox 360 and
PLAYSTATION 3 with Grand The Auto IV
and BioShock. NBA 2K9 was once again the
top rated and top selling basketball game,
and Carnival Games was a smash hit on the
Nintendo Wii with over 3 million units sold.
The strength of our products is under-
scored by the vast critical acclaim that they
receive. We won Spike TV’s Video Game of
the Year Award for the second consecutive
year, with the 2008 honors going to Grand
The Auto IV and BioShock winning in 2007.
Effi ciency
Our team delivered on the Company’s
business plan, improved operational effi -
ciencies, reduced fi xed costs and built
a stronger foundation for the future.
We reported record results of $1.5 bil-
lion in revenue, with earnings per share of
$1.28, and ended the year with $210 million
in cash net of debt. In addition to gener-
ating record revenue and earnings, we
continued to implement and maximize cost
savings initiatives that are expected to
produce both short and long term benefi ts
for our Company.
We improved the operations of our distri-
bution business, and entered into an outsourc-
ing agreement for the pick, pack, ship and
warehousing functions previously handled by
our Jack of All Games subsidiary. This allows
Jack of All Games to focus on purchasing,
sales and service for their customers and
enhanced the Company’s profi tability.
We took steps to maintain our access
to the credit markets prior to the economic
downturn. Shortly a er our management
team joined Take-Two in 2007, we obtained
a credit facility to provide additional fl ex-
ibility for our business. Given the volatility
of current market conditions, we were
pleased to have this facility already estab-
lished and available for opportunities that
may arise. As a ma er of prudence, we
drew down $70 million on this facility as of
October 31, 2008.
Our strategy has been to release only a
select number of triple-A games that are
internally owned and developed, as well as
selectively publishing some licensed titles.
We believe this continues to be the right
strategy for our business.
Our team is prepared to manage
these challenging and uncertain times,
and has adopted a prudent outlook for
fiscal year 2009. In the year ahead, we
intend to explore and implement cost
savings initiatives that should benefit
our Company through more efficient and
productive operations, while continuing
to invest in a disciplined way in premium
interactive experiences. We believe that
we have the ability to run our business
efficiently without sacrificing our stan-
dards for excellence.
Leading industry analysts expect inter-
active entertainment to remain one of
the fastest growing segments within the
broader entertainment industry, due to
the deepening penetration of current hard-
ware, expanding consumer audiences, and
continued growth in international markets.
There are promising opportunities for new