Guidance

Highlights From Take-Two Interactive Softwares' (Nasdaq: TTWO) Forecast Teleconference:

• (Chairman) We now expect non-GAAP EPS for Q4 in the range of 0.05 to $0.10 on revenue of 325 million to $350 million. (Consensus is $0.33 and $370.98M, respectively)
  
• This negative change from our prior Q4 guidance was primarily driven by the performance of our Major League Baseball titles, and impairment of capitalized software based on sales estimates for our 2010 Major League Baseball releases; inventory write-downs in our distribution business; and lower than expected performance of several key holiday titles. In addition our performance reflects ongoing challenges in the retail environment, which didn't appear to improve materially for us during the Thanksgiving weekend.
  
• These factors were offset to some degree by our catalog business, the strong performance of Borderlands, which shows every sign of becoming an important long-term franchise, and the continued success of NBA 2K10, which once again is leading the basketball category.
  
• With respect to our initial outlook for fiscal 2010, we currently do not expect to reach our goal of operating profitably on an non-GAAP basis for the fiscal year.
  
• Additionally our results in the new year will be affected by prior changes to our release schedule as well as an additional title shift.
  
• (CEO) The vast majority of the shortfall in Q4 results came from the underperformance of Major League Baseball this year. In addition, we realized impairments of capitalized software related to our 2010 MLB titles based on our current sales estimates for next year.
  
• The terms of the MLB contracts and the lack of growth in the MLB category make this a very difficult business for us. Total reduction in earnings related to MLB in the fourth quarter was approximately $0.14 per
  share.
  
• We also experienced significantly reduced initial orders from our retail partners and softness specifically in the PFP and DF handheld businesses, especially disappointing because of the high quality of our handheld releases.
  
• We had a very successful launch of Borderlands...We're also pleased the NBA 2K10 is still the reigning champ in basketball and continues to grow its fan base.
  
• Our outlook for next year was not influenced by one single factor, but rather a confluence of factors that I'd like to discuss. Most significantly we decided to move one triple-A title that was originally part of our 2010 projections out of the 2010 fiscal year.
  
• We have a contractual commitment to the MLB business for a couple of more years and will remain a focus on improving our products and performance in this category. If we are able to deliver a title that's a hit with consumers and overall sector conditions improve we could possibly exceed our current expectations for the MLB business.
  
• BioShock 2 is on target for global release on February 9 and Mafia II is schedule to follow during the first half of Calendar 2010. And this week Rockstar Games released a fantastic new trailer for Red Dead Redemption and announced that the title will launch on April 27.
  
• While it's still early in the season, we remain cautious in our outlook for consumer spending. We believe the retail environment may remain challenging in 2010 and that our retail partners will continue to be conservative with their initial product orders. As a result, we have assumed lower unit sales for the majority of our titles in 2010.
  
• (Q&A) Just as we're looking to the MLB contract, going forward until the contract is done, should we assume that there is going to be losses every year in the 30 to 35 million range, and if that's so if in any non-new release GTA year, should we just assume you're not going to be able to make money? (A)We're only talking about 2010 right now, that's the information we have. Obviously, those results are affected by any number of factors, not the least of which what the titles are like, what the market's like, how the market grows. So we are not saying that and we're certainly not saying that we can't be profitable in a non-GTA release year. We remain committed to that goal. Naturally, we're disappointed that we're not projecting to achieve that goal in 2010. But frankly we think the goal is achievable. And we know what steps we need to take to achieve it and we are, although this may not be the moment to say it, we're quite proud of the progress we made in that direction. So this is a source of some concern, however no, that would not be the correct way to characterize it.
  
• Just trying to get a sense of the profitability in the rest of the business, obviously even adjusting for the impact of Major League Baseball, next year, you're still losing in a year where you've got four triple-A titles hitting, you've got your NBA franchise doing the best it's ever done. Can you help us understand, since you're capitalizing your software development costs, can you help us understand where the business is losing money, what segment besides Major League Baseball is eating the profitability of what should be relatively high margin internally developed, internally owned titles? (A)It's important we said that - I said it earlier, but I'll repeat it in case it was missed. There was no one single factor that led to our outlook in 2010. Obviously Major League Baseball is a big number, but we also - there is lower performance on a number of our holiday releases. Every time we delay a title and this goes to our execution and we recognize the execution issues, every time we delay the title, that results in a higher development cost, higher capitalized software which obviously gets, which goes on the balance sheet. And if title doesn't perform in the market place, often times we have to accelerate amortization. So higher development cost contributes to it, a challenging retail environment throughout the balance of this holiday season, as for next year is contributing to our view for next year. Baseball obviously, moving one triple-A title moving out of the year also contributed to the change in guidance. So as we went through it internally, we look for - the one or two areas that are really responsible for it. And the truth is there were many factors, and often times in a business, some factors go with you, and some factors go against you. It happens to be this time a bunch of factors simply went against us.
  
• And so is the answer here basically that outside of titles like BioShock and Max Payne and Grand Theft Auto obviously where you know you've got a - some degree of, a relatively high degree of profitability more or less assured, is the answer to be out of all these other businesses whether it's casual or distribution that continue to eat up the profitability of the franchises that you do have that are making money? (A)Quite to the contrary we actually have an excellent track record of delivering profitably contributing products. Quite
  an extraordinary track record, most recently we launched Borderlands which is essentially a de-novo franchise, already becoming a franchise. I think again to emphasize and repeat what Ben said, we need to do more and better and at the same time we need to do more and better a bit more efficiently. This is a work in progress. It's taking a little longer than we'd like. We do think the execution is improving. It needs to improve further. A big burden is the baseball business. There are other things that we need to do better on as well. However, the other businesses in which we are engaged are contributors and have opportunities for growth and further success. So as I said quite to the contrary I think we can do more. (A)Yes. If I may, Strauss, one other thing is the thrust of the question is, just focus on what you do well and yet out of businesses you don't do well. And there is a lot of talk in the industry about the casual business. We are not terribly exposed to the casual business to begin with, but the areas in which we are exposed are actually
  doing quite well. Carnival Games continues to rock on but most of our development and most of our business is in triple-A titles, that is where we are focusing on.
  
• Just a quick question, what are your thought at this stage with regards to additional cost cutting steps you can take so that a year in which you are able to produce a billion or 1.2 billion in revenue you are able to achieve profitability. (A)You know I think of costs essentially in two buckets. There is the cost of developing the game that's capitalized and then there is the overhead of the organization that is required to do all the things that we need to do to support the game and support the business. With respect to profitability in the titles themselves and cost in the title themselves, there's always a fine balance between commitments to quality and commitment to excellence, which are absolutely dedicated to on the one hand and making sure the titles come out on time and on budget, and in our case because we capitalize software on time is on budget. We do need to do better at that across the board. Some areas are better than others, but we do need to improve and I would point out that Take-Two is not the only company in the industry that's struggling with this. Games are more complex than they have ever been to develop. They require many more people to develop and with many more skill sets and the standards, the bar for excellence is much higher than it's ever been. And Take-Two is committed to participating and competing at the highest levels. At the same time, we do need to -- we see goodness and competitive advantage to getting better at that. That's the cost and the processes around developing games. In terms of the cost associated with operating the rest of the company, we always look at it. We continue to look at it daily. We are going to continue to focus on it. And that's something we have done from the day we have arrived and if you look at our results, you will see G&A as a percentage of sales going down over time and we expect that trend to continue and that's our goal.

Yum! Brands Inc. (NYSE: YUM), in advance of its annual investor update meeting, reaffirms its full year 2009 EPS growth forecast of 12%, excluding special items. Yum! also announces that it expects to deliver at least 10% EPS growth in 2010, excluding special items, which would mark the ninth straight year of meeting or exceeding this annual EPS growth target.

David C. Novak, Chairman and CEO, said, "2009 has been a year of solid performance led by our China and Yum! Restaurants International businesses, and we remain on track to deliver 12% EPS growth. This performance has been driven by our industry leading international new unit development, favorable commodity costs, productivity gains across our businesses and a lower effective tax rate. We are also pleased that we were able to deliver an increased dividend to our shareholders as well as improve on our industry leading Return on Invested Capital (ROIC). Our biggest challenge continues to be driving same-store-sales growth in the difficult consumer environment. All indications are that 2010 will be another challenging year, and we have built our plans accordingly. We plan to deliver at least 10% EPS growth in 2010 benefiting from international new unit development, disciplined cost management, modest same-store-sales growth and favorable foreign currency translation. We believe our track record of delivering double-digit EPS growth is driving long-term value for our shareholders."

Sees FY09 EPS growth of 12%, excluding special items, led by full year new unit development of 1,400+ new units in China and YRI combined.

Sees FY09 estimated system sales growth, excluding foreign currency translation, of 9% in mainland China and 5% in YRI, and same-store-sales decline of 4% in the U.S. Fourth quarter estimated same-store-sales performance of -3% in mainland China, -1% in YRI and -8% in the U.S.

Sees FY09 negative foreign currency translation impact of about $45MM.

KIT digital, Inc. (NASDAQ: KITD) reports on 2009 expectations and recent operational milestones, and sets out strategic objectives for 2010.

As part of the integration of Nunet and The FeedRoom, KIT digital will officially retire both brands next week, with all marketing activity now fully integrated under the KIT digital name. The complementary features of the acquired IP video software platforms are being systematically added to KIT VX, the company's end-to-end software platform that enables enterprise clients to acquire, manage and distribute video assets. These enhanced features will be progressively rolled out to new and existing clients during the first and second quarter of 2010 as a significantly enhanced platform known as "VX2" is introduced, with a superset of functionality. The company intends to fully deploy VX2 across its global client set by the third quarter of 2010.

The integration of Nunet and The FeedRoom was conducted in support of KIT digital's head office and global operations hub in Prague, Czech Republic. Human resources, payroll, finance, internal communications, IT support, technical operations and R&D functions are now consolidated and reporting into the relevant executive in Prague. The company's new and existing regional sales offices have also been better integrated, including the company's two New York City locations, which have been consolidated into The FeedRoom's original location at 205 Hudson Street under the leadership of Dan Rosen, head of the Americas group for KIT digital. Nunet's original location in Cologne, Germany will continue to be an important regional sales office and technical development center under the leadership of Markus Schloesser, vice president of business development and head of KIT digital Germany. Former Nunet CEO Arnd Froehlich has joined the executive team of KIT digital as global head of mobile services and innovation, and will divide his time between the company's Cologne and Prague offices.

KIT digital expects 2009 revenue of approximately $46 million with an operating EBITDA margin in excess of 10% for 2009. On a stand-alone basis, management believes the company will have clearly achieved original 2009 guidance of more than $40 million in revenue and rising operating cash-flow margins averaging at least 10% for the year. Management expects to achieve operating EBITDA margins in excess of 15% in Q4 2010.

Sonoco (NYSE: SON) raises its Q4 EPS guidance from $0.42-$0.47 to $0.49-$0.52. The Street is currently looking for Q4 EPS of $0.47.

For FY09, Sonoco moves its EPS guidance from $1.62-$1.67 to $1.69-$1.72, which compares to the consensus estimate of $1.66.

FY10 adj-EPS guidance to $1.95-$2.05, which compares to the Street estimate of $2.00.

Big Lots Inc. (NYSE: BIG) reported better-than-expected quarterly profit, along with raising its guidance for the fourth quarter, as gross margins for the company are bolstered by initial markups and lower freight costs.

Shares for the closeout retailer are up 13 percent before the close.

The company reported third-quarter adjusted earnings of 27 cents per share, 9 cents ahead of the 18 cents per share the market estimated. Revenue was up 1.3 percent from the year-ago quarter at $1.04 billion, slightly beating the analyst consensus of $1.02 billion.

Gross margin for the company jumped 60 basis points in the quarter, while net profit rose to $30.3 million from $12.4 million in the same quarter last year.

Big Lots, which specializes in selling merchandise that other retailer are unable to, raised its fourth-quarter earnings guidance to $1.09 to $1.14, ahead of the consensus of $1.04. The company's new full year earnings projection is at $2.15 to $2.20, surpassing the consensus of $2.01.

The Board of Directors for Big Lots also authorized a $150 million share repurchase program.

Shares for the company are up to 12% to $26.55 before the market opens today.