Business Context and Reporting Period
Company: Take-Two Interactive Software, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: June 12, 2013
Reporting Period: Specific event date of June 12, 2013.
Key Financial Metrics
This filing does not report standard operating metrics such as revenue, profit, cash flow, or margins. The financial focus is on debt restructuring and derivative settlements:
- Debt Instrument: 4.375% Senior Convertible Notes Due 2014.
- Total Principal Amount: $138,000,000 (comprising $120,000,000 Underwritten Notes and $18,000,000 Option Notes).
- Redemption Date: Scheduled for August 29, 2013.
- Derivative Settlements: Cash payments for the early termination of Convertible Note Hedge Transactions and Warrant Transactions will be calculated based on current fair market value. Specific settlement amounts are not disclosed in this text.
Material Changes
The filing reports the termination of material definitive agreements entered into in May 2009:
- Termination of Hedge and Warrant Transactions: On June 12, 2013, the Company entered into "Unwind Agreements" with JPMorgan Chase Bank and Barclays Bank PLC to terminate the Convertible Note Hedge Transactions and Warrant Transactions associated with the 2014 Notes.
- Notice of Redemption: The Company distributed a notice of redemption to holders of the 4.375% Convertible Senior Notes due 2014, initiating the process to retire the debt.
Outlook, Risks, and Management Commentary
Management Action: The Company is actively retiring its 2014 convertible debt ahead of maturity. The unwind of the associated hedge and warrant transactions is a direct consequence of the redemption notice.
Financial Impact: The Company will receive a cash payment from Hedge Counterparties for the termination of the Convertible Note Hedge Transactions and will owe a cash payment for the termination of the Warrant Transactions. The net financial impact depends on the fair market value calculations at the time of termination, which are not specified in this filing.
Risks/Contingencies: The primary contingency is the successful execution of the redemption on August 29, 2013, and the finalization of the fair market value calculations for the derivative unwind.
Investor Verification Checklist
- Verify the final cash settlement amounts for the Convertible Note Hedge and Warrant Transactions in subsequent financial statements.
- Confirm the successful redemption of the $138,000,000 principal amount on August 29, 2013.
- Review the impact of the derivative unwind on the Company's current quarter earnings and cash flow.
- Check for any changes in the Company's overall debt profile following the retirement of the 2014 Notes.