2K Sports 2003 Annual Report Download - page 28

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this individual for our strategic and operating decisions. The loss of
the services of this individual could have a material adverse effect on
our business and prospects. Additionally, pursuant to the terms of his
amended employment contract, our Chief Executive Officer has the
right to elect to voluntarily terminate his agreement and resign at any
time after March 30, 2004 and receive his full salary and bonus during
the eighteen-month period following such resignation. Furthermore,
we are dependent upon the expertise and skills of certain of our
Rockstar employees responsible for content creation and product
development and marketing. Although we have employment agree-
ments with each of these creative, development and marketing per-
sonnel, and we have granted them incentives in the form of an inter-
nal royalty program based on sales of Rockstar published products,
there can be no assurance that we will be able to continue to retain
these personnel at current compensation levels, or at all. Failure to
continue to attract and retain qualified management, creative, devel-
opment, financial, marketing, sales and technical personnel could
materially adversely affect our business and prospects.
Quantitative and Qualitative Disclosures About Market Risk
We are subject to market risks in the ordinary course of our busi-
ness, primarily risks associated with interest rate and foreign currency
fluctuations.
Historically, fluctuations in interest rates have not had a significant
impact on our operating results. At October 31, 2003, we had no
outstanding variable rate indebtedness.
We transact business in foreign currencies and are exposed to
risks resulting from fluctuations in foreign currency exchange rates.
Accounts relating to foreign operations are translated into United
States dollars using prevailing exchange rates at the relevant fiscal
quarter or year-end. Translation adjustments are included as a sepa-
rate component of stockholders’ equity. For the year ended October
31, 2003, our foreign currency translation adjustment gain was
$4,119. Foreign exchange transaction gain for the year ended Octo-
ber 31, 2003 was $2,015. A hypothetical 10% change in applicable
currency exchange rates at October 31, 2003 would result in a materi-
al translation adjustment.
TAKE-TWO INTERACTIVE SOFTWARE, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial
Condition and Results of Operations (concluded)
(Dollars in thousands, except per share amounts)
26