SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 8, 1999
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GT INTERACTIVE SOFTWARE CORP.
(Exact name of registrant as specified in its charter)
Delaware 0-27338 13-3689915
(State or other jurisdiction of (Commission file number) (I.R.S. employer
incorporation or organization) identification no.)
417 Fifth Avenue, New York, NY 10016
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 726-6500
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Item 5. Other Events
On April 8, 1999, the Registrant issued the press release attached
hereto as Exhibit 99.1.
Item 7. Exhibits
99.1 Press Release dated April 8, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GT INTERACTIVE SOFTWARE CORP.
Date: April 9, 1999 By: /s/ DAVID CHEMEROW
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Name: David Chemerow
Title: President and Chief
Operating Officer
Exhibit 99.1
GT Interactive Expects to Announce Fourth Quarter Operating Loss
NEW YORK--April 8, 1999
Product Delays and One-Time Charges Related to Corporate Reorganization
Expects Expense Reduction of $6 to $8 million On Full Year Basis
GT Interactive Software Corp. (Nasdaq: GTIS), a leading entertainment
software publisher, today announced that it expects to report an operating loss
for its fourth fiscal quarter of 1999. This loss is primarily a result of a
delay in the shipment of five front-line titles combined with one-time charges
of $25-$30 million related to a corporate reorganization and relocation, which
is part of a new business plan that is scheduled to be announced at the end of
April.
Failure to deliver these five titles will result in substantially lower
revenues than previously expected. Revenues are not expected to be between $92
million and $97 million, while the net loss for the fourth quarter is expected
to fall between $50 and $55 million after one-time charges. Net loss per fully
diluted share for the fourth quarter of fiscal 1999 is expected to be between
$(0.70) and $(0.75) per share, resulting in a net loss for the fiscal year which
is expected to be between $(0.45) and $(0.50) per share.
Popular titles which failed to ship during the fourth quarter include
Duke Nukem: Zero Hour, for N64; Total Annihilation: Kingdoms and Unreal
Tournament for PC; and Driver, for both PC and Sony Playstation. The Company now
expects to release these titles during the first half of fiscal 2000. While the
company was disappointed with its overall performance as a result of these
product delays, other divisions including Humongous Entertainment, WizardWorks,
and third party distribution, posted strong operating performance.
One-time charges of approximately $25-$30 million during the fourth
fiscal quarter were related to a reorganization and change in location of GT's
front-line publishing business and corporate headquarters to Los Angeles. These
charges also relate to the company's outsourcing of its distribution function,
as well as certain write-downs primarily associated with inventory obsolescence.
The outsourcing of the distribution functions and reorganization of offices this
fall will result in a staff reduction of about 650 employees, or 35% of the
company's total employees. This will reduce GT's expenses by approximately $6 to
$8 million on a full year basis, greatly improving operating efficiencies and
service to the company's customers.
Mr. Thomas A. Heymann, GT's recently appointed Chairman and Chief
Executive Officer, said, "This reorganization and move to Los Angeles will
significantly improve our cost structure going forward. Moreover, it puts GT
Interactive in the interactive and entertainment capital of the world, enhancing
our ability to attract and retain the best executives in this industry. The
first illustration of this was our recent hiring of John Baker, formerly one of
the top executives at Activision, as our president and chief operating officer."
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In addition, the company announced that it expects Wal-Mart to begin
buying directly from Activision and Microsoft during the next four months. This
move is part of an ongoing trend whereby Wal-Mart increasingly purchases titles
directly from select publishers. These two companies are expected to have
represented approximately $50 million of GT's net revenue for fiscal 1999.
"As I stated upon joining the company, I am committed to delivering a
realistic business plan to our shareholders. GT Interactive possesses a strong
set of core assets and a solid foundation upon which to build. Our banks have
demonstrated their support and confidence by amending our existing $125 million
credit facility, to take into account these expected losses. With our financial
backing and strong operating divisions in place, we look forward to re-inventing
and growing GT Interactive," concluded Mr. Heymann.
Headquartered in New York, with 1997 revenues of $531 million, GT
Interactive Software Corp. (Nasdaq: GTIS) is a leading global interactive
entertainment software company that develops, markets and distributes consumer
software. The company has eight internal development studios: Humongous
Entertainment, Cavedog Entertainment, SingleTrac, WizardWorks, Oddworld,
Bootprint Entertainment, Legend Entertainment and Reflections. The company also
has four software labels: GT Interactive, CompuWorks, MacSoft and Slash. GT
Interactive's ecommerce system provides secure online transactions through each
of the studios' Web sites and www.gtstore.com. GT Interactive also owns the
subsidiary OneZero Media that operates a specialized entertainment portal,
getwild.com, which acts as the Entertainment Zone on AltaVista; and produces the
nationally syndicated television program, "Wild Wild Web." GT Interactive can be
found on the Internet at www.gtinteractive.com.
Certain statements contained in this press release may be deemed
forward-looking statements that involve a number of risks and uncertainties. The
company's actual results may differ materially from the expectations expressed
in such forward-looking statements. Among the factors that could cause actual
results to differ materially are worldwide business and industry conditions,
including consumer buying and retailer ordering patterns, product delays,
changes in research and development spending, company customer relations, in
particular, levels of sales to Wal-Mart and other mass merchants, retail
acceptance of the company's published and third-party titles, competitive
conditions and other risks detailed , from time to time, in the company's SEC
filings, including, but not limited to, the company's form 10-K for the period
ended March 31, 1998.
CONTACT: Media Contact
Robert Zeitlinger
Makovsky & Co.
212/508-9617
or
Investor Contact
Dawn Berrie
GT Interactive
212/726-4235
