2K Sports 2008 Annual Report Download - page 77

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TAKE-TWO INTERACTIVE SOFTWARE, INC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Take-Two Interactive Software, Inc. (the ‘‘Company,’’ ‘‘we,’’ ‘‘us,’’ or similar pronouns) was incorporated in
the state of Delaware in 1993. We are a leading global publisher, developer and distributor of interactive
entertainment software, hardware and accessories. Our publishing segment, which consists of Rockstar
Games, 2K Games, 2K Sports and 2K Play, develops, markets and publishes software titles for the
following leading gaming and entertainment hardware platforms:
Sony Microsoft Nintendo
PLAYSTATION↦ 3 Xbox 360↦WiiTM
PlayStation↦ 2DS↩
PSP↦ (PlayStation↦ Portable)
We also develop and publish software titles for the PC. Our distribution segment, which primarily consists
of our Jack of All Games subsidiary, distributes our products as well as third party software, hardware and
accessories to retail outlets primarily in North America.
The consolidated financial statements include the financial statements of the Company and its wholly-
owned subsidiaries and of entities for which the Company is deemed to be the primary beneficiary as
defined in FASB Interpretation No. 46(R) (‘‘FIN 46’’), ‘‘Consolidation of Variable Interest Entities.’’ All
material inter-company balances and transactions have been eliminated in consolidation.
Reclassifications
Certain amounts in the financial statements of the prior years have been reclassified to conform to the
current year presentation for comparative purposes.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates
of the financial statements and the reported amounts of net revenue and expenses during the reporting
periods. The most significant estimates and assumptions relate to the recoverability of software
development costs, licenses and intangibles, valuation of inventories, realization of deferred income taxes,
the adequacy of allowances for sales returns, price concessions and doubtful accounts, accrued liabilities,
the service period for deferred net revenue, the valuation of stock-based transactions and assumptions
used in our goodwill impairment test. These estimates generally involve complex issues and require us to
make judgments, involve analysis of historical and prediction of future trends, and are subject to change
from period to period. Actual amounts could differ significantly from these estimates.
Financial Instruments
The carrying amounts of our financial instruments, including cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities, approximate fair value because of their short
maturities. We consider all highly liquid instruments purchased with original maturities of three months or
less to be cash equivalents. At October 31, 2008 and 2007 we had $3,199 and $3,538, respectively, of cash
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