SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-K/A
|X| Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended October 31, 1999
OR
|_| Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
0-29230
(Commission File No.)
TAKE-TWO INTERACTIVE SOFTWARE, INC.
(Exact name of Issuer as specified in its charter)
Delaware 51-0350842
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
575 Broadway, New York, New York 10012
(Address of principal executive offices including zip code)
Issuer's telephone number, including area code: (212) 334-6633
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Issuer was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days. Yes |X| No |_|
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K contained herein, and no disclosure will be contained, to the
best of the Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
The Issuer's revenues for the fiscal year ended October 31, 1999 were
$305,931,858.
The aggregate market value of the Issuer's common stock held by non-affiliates
as of January 10, 2000 was approximately $322,052,000. As of January 10, 2000,
there were 23,421,962 shares of the Issuer's common stock outstanding.
Documents Incorporated by Reference:
NONE
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Our directors and executive officers are:
Name Age Position
Ryan A. Brant 28 Chairman, Chief Executive Officer
and Director
Barry S. Rutcofsky 42 President
Kelly Sumner 37 Vice President of International
Operations and Director
Larry Muller 42 Chief Financial Officer
Anthony R. Williams 41 Co-Chairman and Director
Barbara A. Ras 36 Chief Accounting Officer and Secretary
Oliver R. Grace, Jr. 45 Director
Neil S. Hirsch 51 Director
Robert Flug 51 Director
Gary Dale 39 Director
Ryan A. Brant, our founder, has been Chief Executive Officer and a director
since our inception. Mr. Brant received a B.S. degree in Economics from the
University of Pennsylvania's Wharton School of Business.
Barry Rutcofsky has been our President since August 1999. Prior to joining
us, Mr. Rutcofsky was a partner in the corporate department at the law firm of
Tenzer Greenblatt LLP. He joined Tenzer Greenblatt LLP in April 1987. Mr.
Rutcofsky received his law degree from Hofstra University in 1983.
Kelly Sumner has been a director since December 1997. Mr. Sumner has been
President of Take-Two Interactive Software Europe Limited, our subsidiary, since
July 1997 and our Vice President of International Operations since February
1999. Prior thereto, from April 1993 to July 1997, Mr. Sumner was President and
Chief Operating Officer of Gametek, Inc. From June 1979 to April 1993, Mr.
Sumner was Managing Director of the UK subsidiary of Commodore Business
Machines.
Larry Muller has been our Chief Financial Officer since January 1999 and
Chief Financial Officer and Chief Operating Officer of Alliance Inventory
Management, Inc. since December 1997. Mr. Muller co- founded Alliance
Distributors in 1989 and served as its Chairman and Chief Financial Officer
until we acquired Alliance Distributors in December 1997. Mr. Muller received a
B.A. in Economics from Stonybrook University in 1979.
Anthony R. Williams has been a director since March 1998 and Co-Chairman
since August 1999. Mr. Williams was our Chief Operating Officer from February
1998 to January 1999. Prior to joining us, Mr. Williams was employed in various
positions at Acclaim Entertainment from April 1988 to February 1998, most
recently as Executive Vice President, Mergers and Acquisitions. Mr. Williams
also serves as a director of the Near East Foundation. Mr. Williams received a
B.A. in Economics from Cambridge University.
Barbara A. Ras, CPA, has served as our Chief Accounting Officer since
October 1998 and our Secretary since April 1997. From October 1994 to October
1998, Ms. Ras served as our Controller. Prior to joining us, Ms. Ras was
employed as a tax accountant from September 1992 to September 1994, and as
<PAGE>
an internal auditor with The New York Times Company from March 1988 to June
1991. Ms. Ras holds a B.S. degree in Accounting from St. John's University, and
a Masters degree in Taxation from the State University of New York at Albany.
Oliver R. Grace, Jr. has been a director since April 1997. Mr. Grace, a
private investor, has been the Chairman of the Board of Andersen Group, Inc., a
dental products and video broadcasting equipment manufacturing company, since
1990. Mr. Grace has also been a director of Republic Automotive Parts, Inc., a
distributor of replacement parts for the automotive aftermarket, since 1982. Mr.
Grace is a general partner of Anglo American Security Fund, L.P., a private
investment fund.
Neil S. Hirsch has been a director since May 1995. Mr. Hirsch has been the
President and Chief Executive Officer of Loanet, Inc., a worldwide
communications network managing securities lending transactions of banks and
brokerage firms since March 1994. From 1969 to January 1990, Mr. Hirsch was
Chairman, Chief Executive Officer and President of Telerate, Inc., a financial
information provider, which was acquired by Dow Jones & Co. Inc. Mr. Hirsch
served as a consultant to Telerate, Inc. until September 1993. Mr. Hirsch served
on the Board of Directors of Dow Jones & Co. Inc. from 1990 to May 1993. Mr.
Hirsch was elected to the Information Industry Hall of Fame in 1985.
Robert Flug has been a director since February 1998. Mr. Flug has been the
President and Chief Operating Officer of S.L. Danielle, a women's apparel
company, since September 1987. Mr. Flug received a B.S. in Business
Administration from New York University.
Gary Dale has been a director since January 2000. Mr. Dale has been Vice
President of International Marketing at BMG Entertainment, a division of
Bertelsmann AG, since 1988, and President of BMG's Interactive Software and
Video Division, from 1994 to 1998. Prior to joining BMG, Mr. Dale was Vice
President, Asia Pacific for Buena Vista Home Entertainment, a division of the
Walt Disney Corporation from 1990 to 1994.
Based solely on a review of Forms 3, 4 and 5 furnished to us with respect
to our most recent fiscal year, we believe that all reporting persons currently
required to file forms under the Securities Exchange Act of 1934 filed such
reports, although each of Messrs. Brant, Muller and Rutcofsky and Ms. Ras did
not file for one transaction on a timely basis.
<PAGE>
Item 11. Executive Compensation.
The following table sets forth the cash compensation paid by the Company during
the fiscal years ended October 31, 1997, 1998 and 1999 to its Chief Executive
Officer and its four most highly compensated executive officers other than its
Chief Executive Officer, each of whom was serving at the end of the fiscal year
ended October 31, 1999 (the "Named Executives"):
<TABLE>
<CAPTION>
Summary Compensation Table
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term
------------------- Compensation Award
------------------
Name and Principal Position Year Salary($) Bonus($) Other Securities
Ended Annual Underlying
10/31 Compensation(1) Options(#
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ryan A. Brant
Chief Executive Officer 1999 243,873 516,130(2) 200,000(3)
1998 158,667 218,785 -- --
1997 125,000 -- -- 50,000(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Larry Muller
Chief Financial Officer(4) 1999 215,077 200,808(5) 70,000(3)
1998 161,933 25,122 -- 20,000(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Anthony R. Williams
Co-Chairman(6) 1999 240,000 55,000 --
1998 164,039(7) -- 150,000(8)
- ------------------------------------------------------------------------------------------------------------------------------------
Barbara A. Ras
Chief Accounting Officer 1999 135,000 15,000 20,000(3)
and Secretary 1998 114,167 -- -- 30,000(3)
1997 100,000 10,000 -- 25,000(3)
Kelly Sumner
Vice President of 1999 230,892 120,269(5) 125,000(10)
International Operations(9) 1998 166,220 119,175 -- 125,000(11)
1997 43,447 51,106 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) The aggregate value of benefits to be reported under the "Other Annual
Compensation" column did not exceed the lesser of $50,000 or 10% of the
total of annual salary and bonus reported for the Named Executives.
(2) Includes a one-time bonus of $342,130 representing the exercise price of
options.
(3) Represents options granted under the 1997 Stock Option Plan.
(4) Mr. Muller joined the Company in December 1997.
(5) Includes $94,500 representing the value of a restricted stock award of
12,500 shares.
(6) Mr. Williams joined the Company in February 1998.
(7) Includes $15,200 paid as consulting fees prior to employment with the
Company.
(8) Represents options to purchase 120,000 shares under the 1997 Stock Option
Plan and non-plan options to purchase 30,000 shares.
(9) Mr. Sumner joined the Company in July 1997.
<PAGE>
(10) Represents non-plan options.
(11) Represents options to purchase 85,000 shares granted under the 1997 Stock
Option Plan and non-plan options to purchase 40,000 shares.
The following table sets forth information concerning options granted in
the fiscal year ended October 31, 1999 to the Named Executives:
<TABLE>
<CAPTION>
Option Grants in Fiscal Year Ended October 31, 1999
Individual Grants
- ----------------------------------------------------------------------------------------------------------------------
Number of Percent of Total Potential Realizable
Securities Options Value at Assumed
Underlying Granted to Exercise Annual Rates of Stock
Options Employees in Price Expiration Price Appreciation for
Name Granted (#) Fiscal Year(%) ($/Sh) Date Option Term (1)
---- ----------- -------------- ------ ---- ---------------
- ----------------------------------------------------------------------------------------------------------------------
5%($) 10%($)
----- ------
<S> <C> <C> <C> <C> <C> <C>
Ryan A. Brant 100,000 12.6 6.25 12/6/03 172,626 381,569
100,000 6.75 7/30/04 186,490 412,094
- ----------------------------------------------------------------------------------------------------------------------
Larry Muller 40,000 8.00 5/25/04 88,410 195,363
20,000 8.00 8/24/04 44,205 94,682
10,000 4.4 5.875 12/6/03 16,232 35,867
- ----------------------------------------------------------------------------------------------------------------------
Anthony R. Williams -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Barbara A. Ras 5,000 1.3 5.875 12/6/03 8,116 17,934
15,000 8.125 10/18/04 33,672 74,406
- ----------------------------------------------------------------------------------------------------------------------
Kelly Sumner 50,000 7.9 7.75 5/13/04 107,059 236,573
75,000 7.75 6/7/04 160,589 354,859
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) The potential realizable value columns of the table illustrate values that
might be realized upon exercise of the options immediately prior to their
expiration, assuming the Company's Common Stock appreciates at the
compounded rates specified over the term of the options. These numbers do
not take into account provisions of certain options providing for
termination of the option following termination of employment or
nontransferability of the options and do not make any provision for taxes
associated with exercise. Because actual gains will depend upon, among
other things, future performance of the Common Stock, there can be no
assurance that the amounts reflected in this table will be achieved.
<PAGE>
The following table sets forth information concerning the value of options
exercised during the fiscal year ended October 31, 1999 and the value of
unexercised stock options held by the Named Executives as of October 31, 1999:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Aggregated Option Exercises and Year End Values
- --------------------------------------------------------------------------------------------------------------------
Name Shares Value Number of Securities Value of Unexercised
---- Acquired Realized Underlying In-the-Money Options
on ($) Unexercised Options at October 31, 1999 ($)*
Exercise --- at October 31, 1999 (#) ------------------------
(#) -----------------------
---
- --------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ryan A. Brant 423,480 3,391,824 128,400 20,000 479,650 97,500
- --------------------------------------------------------------------------------------------------------------------
Larry Muller 16,667 91,044 60,000 13,333 142,500 69,165
- --------------------------------------------------------------------------------------------------------------------
Anthony R. Williams -- -- 75,000 75,000 436,875 436,875
- --------------------------------------------------------------------------------------------------------------------
Barbara A. Ras 50,243 271,269 47,500 17,500 221,875 70,875
- --------------------------------------------------------------------------------------------------------------------
Kelly Sumner -- -- 62,500 187,500 327,969 656,094
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
*Year-end values for unexercised in-the-money options represent the positive
spread between the exercise price of such options and the fiscal year-end market
value of the Common Stock, which was $10.375 on October 31, 1999.
Director Compensation
Non-employee directors currently receive no cash compensation for serving
on the Board of Directors other than reimbursement of reasonable expenses
incurred in attending meetings. Non-employee directors are eligible to receive
options under the Company's 1997 Stock Option Plan.
Employment Agreements
We entered into an employment agreement with Ryan A. Brant for a five-year
term commencing August 1, 1998. Mr. Brant agreed to devote his full time to our
business as Chief Executive Officer. The employment agreement provides that Mr.
Brant is entitled to receive a base salary of $250,000 and a bonus equal to
$20,000 per fiscal quarter in the event we achieve certain earnings levels.
We entered into an employment agreement with Anthony R. Williams for a
three-year term commencing August 1, 1998. Mr. Williams agreed to devote his
full time to our business as Co-Chairman. The employment agreement provides that
Mr. Williams is entitled to receive a base salary of $233,000 and a bonus based
on our financial performance.
We entered into an employment agreement with Larry Muller for a three-year
term commencing January 29, 1998. Mr. Muller agreed to devote his full time to
our business as its
<PAGE>
Chief Financial Officer. The agreement provides that Mr. Muller is entitled to
receive a base salary of $233,000 and a bonus based on our financial
performance.
In July 1997, Take-Two Interactive Software Europe Limited, our subsidiary,
entered into an employment agreement with Kelly Sumner. Mr. Sumner agreed to
devote his full time as President and Managing Director for a three-year term.
The agreement provides that Mr. Sumner is entitled to an annual salary of
(pound)100,000 (approximately $168,000) and a bonus in the event Take-Two
Interactive Software Europe Limited achieves certain earnings levels.
In August 1999, we entered into an employment agreement with Barry
Rutcofsky for a three-year term. Mr. Rutcofsky agreed to devote his full time to
our business as President. The agreement provides that Mr. Rutcofsky is entitled
to receive a base salary of $250,000, and a bonus based on our financial
performance. Mr. Rutcofsky also received options to purchase 250,000 shares of
Common Stock.
All of the employment agreements provide that if the employment agreement
is terminated under certain circumstances, including in the event of a change of
control, the executive will be entitled certain severance compensation. The
employment agreements also contain confidentiality and non-competition
provisions.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information as of the date of this
report, relating to the beneficial ownership of shares of Common Stock by (i)
each person or entity who is known by the Company to own beneficially 5% or more
of the outstanding Common Stock, (ii) each of the Company's directors, (iii)
each of the Named Executives and (iv) all directors and executive officers of
the Company as a group.
- --------------------------------------------------------------------------------
Name and Address of Beneficial Number of Percentage of
Owner(1) Shares Outstanding
of Common Common Stock
Stock Beneficially Owned
Beneficially
Owned(2)
- --------------------------------------------------------------------------------
Peter M. Brant(3) 3,048,749 11.7%
- --------------------------------------------------------------------------------
BMG Entertainment 1,350,000 5.2
- --------------------------------------------------------------------------------
Oliver R. Grace, Jr.(4) 781,338 3.0
- --------------------------------------------------------------------------------
Ryan A. Brant(5) 697,444 2.7
- --------------------------------------------------------------------------------
Neil S. Hirsch(6) 222,276 *
- --------------------------------------------------------------------------------
Larry Muller(7) 201,396 *
- --------------------------------------------------------------------------------
Robert Flug(8) 110,000 *
- --------------------------------------------------------------------------------
Anthony R. Williams(9) 175,000 *
- --------------------------------------------------------------------------------
Barbara A. Ras(10) 76,806 *
- --------------------------------------------------------------------------------
Kelly Sumner(11) 218,000 *
- --------------------------------------------------------------------------------
Gary Dale -- *
- --------------------------------------------------------------------------------
All directors and executive officers
as a group (eight persons)(12) 2,482,260 9.6%
- --------------------------------------------------------------------------------
- ----------
* Less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner is 575
Broadway, New York, New York 10012.
(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities which may be acquired by such person within
60 days from the date of this proxy statement upon the exercise of options,
warrants
<PAGE>
or convertible securities. Each beneficial owner's percentage ownership is
determined by assuming that options that are held by such person (but not
those held by any other person) and which are exercisable within 60 days of
the date of this proxy statement, have been exercised.
(3) Includes 1,941,930 shares of Common Stock held by Brant Allen Industries
Incentive Profit Sharing Plan.
(4) Includes: (i) 653,678 shares of Common Stock owned of record by Anglo
American Security Fund, L.P. ("Anglo American"), of which Mr. Grace is a
general partner, (ii) 17,960 shares of Common Stock issuable upon the
exercise of options owned by Anglo American, (iii) 88,913 shares of Common
Stock owned by an affiliated entity and (iv) 20,787 shares of Common Stock
issuable upon the exercise of options owned by Mr. Grace.
(5) Includes 188,400 shares of Common Stock issuable upon the exercise of
options granted under the 1997 Plan which are currently exercisable.
(6) Represents shares of Common Stock held by Bridgehampton Holdings, Inc., an
entity controlled by Mr. Hirsch.
(7) Includes 133,666 shares of Common Stock issuable upon the exercise of
options granted under the 1997 Plan which are currently exercisable.
(8) Includes 48,500 shares of Common Stock held by S.L. Danielle, Inc. and
10,000 shares of Common Stock issuable upon the exercise of options granted
under the 1997 Plan which are currently exercisable.
(9) Includes 120,000 shares of Common Stock issuable upon the exercise of
options granted under the 1997 Plan which are currently exercisable and
30,000 shares of Common Stock issuable upon the exercise of non-plan
options which are currently exercisable.
(10) Includes 8,934 shares of Common Stock issuable upon the exercise of options
granted under the 1997 Plan, which are currently exercisable.
(11) Represents 218,000 shares of Common Stock issuable upon the exercise of
options.
(12) Includes currently exercisable options to purchase an aggregate of 706,990
shares of Common Stock.
Item 13. Certain Relationships and Related Transactions.
We lease our office space in New York from 575 Broadway Corporation, a
corporation controlled by Peter M. Brant, a principal stockholder.
