Business Transaction: GT Interactive Software
GT Interactive Software
16 East 40th Street
New York, New York 100016
(212)726-6500
On December 14, 1995, the stock of GT Interactive Software (GTIS) had its initial public offering. GTIS is a publisher, merchandiser and distributor of consumer software whose operational format is similar to that of a movie studio. Just as movie studios work with independent producers such as Steven Spielberg to create a movie, GTIS works with independent software designers to create a computer program or game, such as Mortal Kombat 3 or Doom. After the motion picture has been created, the movie studio will create a marketing campaign and distribute the movie to theaters and, ultimately the public. In the same manner, after a new computer software program or game is created, GTIS will package and distribute the product to retailers such as Wal-Mart and Kmart. In addition to publishing and marketing new software, GTIS also merchandises and distributes value-priced software (such as older computer games that can no longer command their original premium prices), and third party software (programs published by another firm).
Commencing operations in February 1993, GTIS has experienced rapid growth over its short history. On June 22, 1995 GTIS acquired Slash Corporation, a privately-held company which specialized in merchandising close-out CD ROMS and had $49,428,184 in sales for 1994. GTIS has a significant dependence upon one customer, Wal-Mart. On a pro forma basis, giving effect to the acquisition of Slash Corporation, sales to Wal-Mart accounted for 47% of the Company's net sales for 1994, and were approximately 58% of the Company's net sales during the nine months ending September 30, 1995. GTIS announced on February 13, 1996 that it had signed an agreement to serve as the primary supplier of personal computer software to Dayton Hudson's Target Stores.
Over 1,200 product titles have been distributed by GTIS. Doom, by far the most successful title, has accounted for approximately 23% of the Company's net sales in 1994 and 12% for the first nine months of 1995. GTIS anticipates that Doom products will account for a declining percentage of its net sales in the future. As is the case with movie studios, the fortunes of GTIS will vary with the Company's ability to find or create products which capture the public's imagination.
Presented on the next page are GTIS's financial results for 1993 and 1994, as well as the pro forma result for 1995 which reflects the company's acquisition of Slash as if the same had been consummated on January 1, 1995.
GT Interactive Software Selected Financial Data
Date of Initial Public Offering: December 14, 1995
Number of Shares Offered: 10,000,000
Per Share Price: $14.00
Shares Sold by Company: 5,500,000
Shares Sold by Stockholders: 4,500,000
Total Shares Outstanding after offering: 59,296,424
% of Total Shares Outstanding Represented by Initial Offering: 16.86%
Estimated Market Value of Company at $14 per share: $830,149,936
Exchange: NASDAQ
Ticker Listing: GTIS
Price to 1994 Sales (pro forma including Slash results for 1994): 6.29
Price to 1994 Earnings (pro forma including Slash results): 49.92
Price to Sept. 1995 adjusted book value per share: 8.00
Comments: After the public offering the company was still controlled by members of the Cayre family, who collectively held approximately 62% of the outstanding shares. The company will use approximately $15.3 million of the proceeds from its initial public offering to pay off debt owed to an affiliate of existing stockholders in the company, and the remainder of the proceeds will be used for general corporate purposes.
As of February 22, 1996, GTISÆ stock has traded in a range from $8.875 to $16.50 per share since its initial offering and its recent price is in the area of $14. The company does not anticipate paying any cash dividends on its Common Stock in the foreseeable future.
Back To Top
