2K Sports 2008 Annual Report Download - page 49

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non-refundable advance payments made for research and development activities until the related goods
are delivered or the related services are performed. EITF 07-03 is effective for interim or annual reporting
periods in fiscal years beginning after December 15, 2007 (November 1, 2008 for the Company), and
requires prospective application for new contracts entered into after the effective date. We do not expect
that the adoption of EITF 07-03 will have a material effect on our consolidated financial position, cash
flows or results of operations.
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (‘‘SFAS 141(R)’’). This
Statement provides greater consistency in the accounting and financial reporting of business combinations.
It requires the acquiring entity in a business combination to recognize all assets acquired and liabilities
assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all
assets acquired and liabilities assumed, and requires the acquirer to disclose the nature and financial effect
of the business combination. SFAS 141(R) is effective for all fiscal years beginning after December 15,
2008 (November 1, 2009 for the Company) and interim periods within those years, with earlier adoption
prohibited. We are evaluating the impact that the adoption of SFAS 141(R) will have on our consolidated
financial position, cash flows or results of operations.
In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets (‘‘FSP
FAS 142-3’’). FSP FAS 142-3 amends the factors an entity should consider in developing renewal or
extension assumptions used in determining the useful life of recognized intangible assets under SFAS
No. 142, Goodwill and Other Intangible Assets. This guidance for determining the useful life of a recognized
intangible asset applies prospectively to intangible assets acquired individually or with a group of other
assets in either an asset acquisition or business combination. FSP FAS 142-3 is effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15, 2008 (November 1, 2009 for the
Company), and early adoption is prohibited. We do not expect that the adoption of FSP FAS 142-3 will
have a material effect on our consolidated financial position, cash flows or results of operations.
In June 2008, the FASB issued Staff Position EITF 03-6-1, Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities (‘‘FSP EITF 03-6-1’’), which is effective for
financial statements issued for fiscal years beginning after December 15, 2008. FSP EITF 03-6-1 clarifies
that share-based payment awards that entitle holders to receive nonforfeitable dividends before they vest
will be considered participating securities and included in the basic earnings per share calculation. The
Company is assessing the impact of adoption of FSP EITF 03-6-1 on its results of operations.
Fluctuations in Operating Results and Seasonality
We have experienced fluctuations in quarterly and annual operating results as a result of: the timing of the
introduction of new titles; variations in sales of titles developed for particular platforms; market
acceptance of our titles; development and promotional expenses relating to the introduction of new titles,
sequels or enhancements of existing titles; projected and actual changes in platforms; the timing and
success of title introductions by our competitors; product returns; changes in pricing policies by us and our
competitors; the size and timing of acquisitions; the timing of orders from major customers; order
cancellations; and delays in product shipment. Sales of our products are also seasonal, with peak shipments
typically occurring in the fourth calendar quarter (our fourth and first fiscal quarters) as a result of
increased demand for titles during the holiday season. Quarterly and annual comparisons of operating
results are not necessarily indicative of future operating results.
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