2K Sports 2009 Annual Report Download

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Take-Two Interactive Software, Inc.
Annual Report 2009

Table of contents

  • Page 1
    Take-Two Interactive Software, Inc. Annual Report 2009

  • Page 2
    ... world-renowned Grand Theft Auto franchise with new offerings across multiple platforms, including downloadable content and titles for the DS, PSP and iPhone; • Released NBA 2K10 and increased our market share for the number one rated and number one selling basketball franchise with over 2 million...

  • Page 3
    ... for the foreseeable future. At the same time, we are increasingly offering our content through third-party digital distribution platforms. Our downloadable content is available now on Xbox LIVE, PlayStation Network and for the PC. We also offer our PC games through services such as Direct2Drive...

  • Page 4
    ...Broadway New York, New York (Address of principal executive offices) 51-0350842 (I.R.S. Employer Identification No.) 10012 (Zip Code) Registrant's Telephone Number, Including Area Code: (646) 536-2842 Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, $.01...

  • Page 5
    ... Selected Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...

  • Page 6
    ... systems; Sony's PSP (PlayStationPortable) (''PSP'') system; Microsoft's Xbox 360 (''Xbox 360'') video game and entertainment system; Nintendo's Wii (''Wii'') and DS (''DS'') systems; and for the PC and Games for Windows. We also selectively develop and publish titles for digital...

  • Page 7
    ... and efficient company in our industry. Our strategy is to capitalize on the interactive entertainment market, particularly the expanding demographics of video game players, and focus on creating premium quality games and successful franchises for which we can create sequels. We develop most of...

  • Page 8
    ... to develop new and successful franchises in the future. Our 2K Sports series, which includes Major League Baseball 2K, NBA 2K and NHL 2K, are generally published on an annual basis. 2K Play focuses on the market of casual and family-oriented games such as Carnival Games, an internally developed and...

  • Page 9
    ...same time, 2K Sports also announced a partnership with Tencent Holdings Limited, one of China's leading online game operators, to co-develop and publish NBA 2K Online in China. Our Publishing and Software Development Businesses Revenue in our publishing business primarily is derived from the sale of...

  • Page 10
    .... 2K. Our 2K label publishes its titles under 2K Games, 2K Sports and 2K Play: 2K Games. 2K Games has published a variety of popular entertainment properties across multiple genres and platforms and we expect 2K Games to continue to develop new and successful franchises in the future. 2K Games...

  • Page 11
    ... time, 2K Sports also announced a partnership with Tencent Holdings Limited, one of China's leading online game operators, to co-develop and distribute NBA 2K Online in China. 2K Play. 2K Play focuses on developing and publishing titles for the growing market of casual and familyfriendly games. 2K...

  • Page 12
    ... Entertainment, Inc. grants us the right and license to develop, market, publish and distribute software titles for the PS3, PS2 and PSP. We are required to submit products to Sony for approval and to make royalty payments to Sony based on the number of units manufactured or revenue from downloaded...

  • Page 13
    ... advertising, as well as attendance at trade shows. We employ separate sales forces for our publishing and distribution operations. As of October 31, 2009, we had a sales and marketing staff of 258 people. Our products generally sell at retail prices ranging from $19.99 to $59.99 in North America...

  • Page 14
    ... (for PS3, PS2 and PSP) and Microsoft's Platinum Hits (for Xbox 360) generally sell at prices ranging from $19.99 to $29.99 in North America. Product Procurement and Distribution We procure products from suppliers principally using standard purchase orders based on our assessment of market demand...

  • Page 15
    ...the new platforms, which may impact our sales and profitability. As a result, we believe it is important to focus our development efforts on a select number of titles, which is consistent with our strategy. International Operations. Sales in international markets, primarily in Europe, have accounted...

  • Page 16
    ...new interactive entertainment software within anticipated release schedules and cost projections. The development cycle for new titles generally ranges from 12 to more than 24 months, and our top-selling titles could take up to three years or longer to develop. Development times and costs of current...

  • Page 17
    ... pricing on current generation titles, our operating results may suffer. The interactive entertainment software and hardware industry is characterized by the introduction of new and enhanced generations of products and evolving industry standards. Current generation titles for the PS3, Xbox 360...

  • Page 18
    ... demand for games during the holiday season. Demand for and sales of our sports titles are also seasonal in that they are typically released just prior to the start of the sport season which they depict. Our failure or inability to produce ''hit'' titles or introduce products on a timely basis to...

  • Page 19
    ... sell used video games, which are generally priced lower than new video games. If our customers continue to increase their sales of used video games, it could negatively affect our sales of new video games and have an adverse impact on our operating results. A limited number of customers account for...

  • Page 20
    ... publishing and distribution operations. We compete for both licenses to properties and the sale of interactive entertainment software with Sony, Microsoft and Nintendo, each of which is a large developer and marketer of software for its own platforms. We also compete with domestic game publishers...

  • Page 21
    ... to acquire the rights to publish and distribute interactive entertainment software as well as to use licensed intellectual properties in our titles. These agreements typically require us to make development payments, pay royalties and satisfy other conditions. Our development payments may not be...

  • Page 22
    ... purchased, and refraining from buying other games published by us. Many of our Rockstar titles and certain of our 2K Games titles have been rated ''M'' (age 17 and older) by the ESRB. If we are unable to obtain ''M'' ratings and instead receive ''AO'' ratings on future versions of those or similar...

  • Page 23
    ... be certain as to our ability to raise additional capital in the future or under what terms capital would be available, particularly in light of the current economic downturn which has, among other consequences, led to the depression of stock prices and the tightening of credit. If we need to raise...

  • Page 24
    ..., and may in the future experience, significant supply shortages from time to time due to the inability of certain manufacturers to supply products, such as the newest generation of platforms, on a timely basis. Further, manufacturers or publishers that currently distribute their products through us...

  • Page 25
    ..., which could be costly and may distract our developers from working on new products. If, despite testing, errors are found in new products or releases after shipments have been made, we could experience a loss of or delay in timely market acceptance, product returns, loss of revenue, increases in...

  • Page 26
    ... :IHIF9 57EI=G=H=CBG CF =BJ9GHA9BHG Our ability to acquire licenses to intellectual property, especially for sports titles, impacts our revenue and profitability. Competition for these licenses may make them more expensive and increase our costs. &5BMC:CIFDFC8I7HG5F965G98CBCF=B7CFDCF5H9...

  • Page 27
    ... of the time and attention of our management team. Even if resolved favorably, the remaining litigation could continue to be time consuming and result in additional costs of the kind described above, any of which could adversely affect our business, operating results and financial condition. We...

  • Page 28
    ...expansion of our operations or for other purposes. To the extent we issue additional equity securities, the percentage ownership of our existing stockholders would be reduced. Future sales or other issuances of our common stock could adversely affect its market price. The sale of substantial amounts...

  • Page 29
    ... making a tender offer for our common stock, which, under certain circumstances, could reduce the market price of our common stock and the value of any outstanding notes. Item 1B. None Item 2. Properties Unresolved Staff Comments Our principal executive offices are located at 622 Broadway, New York...

  • Page 30
    ...to comprehensively settle all claims asserted by them against us, our Rockstar Games subsidiary and all of the current and former officers and directors named in the actions. Under the terms of the proposed settlement, we will pay approximately $20.1 million into a settlement fund for the benefit of...

  • Page 31
    ... proxy statements in which we solicited approval to increase share availability under our 2002 Stock Option Plan. The plaintiff seeks the return of all...be assigned to us for disposition by our management and Board of Directors. On April 21, 2009, the Court granted the Special Litigation Committee's...

  • Page 32
    ...Entertainment America Inc., Sony Corporation of America, Wal-Mart, GameStop and Devin Moore, alleging under Alabama's manufacturers' liability and wrongful death statutes, that our video games... but there currently is no ...Company. Plaintiff Steve Strickland filed a Notice of Appeal on August 10, 2009...

  • Page 33
    ... trades on the NASDAQ Global Select Market under the symbol ''TTWO.'' The following table sets forth, for the periods indicated, the range of the high and low sale prices for our common stock as reported by NASDAQ. High Low Year Ended October 31, 2009 First Quarter . . Second Quarter Third Quarter...

  • Page 34
    ... not necessarily indicative of future stock price performance. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Take-Two Interactive Software, Inc., The NASDAQ Composite Index and a Peer Group Comparison of 5 Year Cumulative Total Return Assumes Initial Investment of $100 October 2009 180.00 160...

  • Page 35
    ...financial data for the five years ended October 31, 2009 (in thousands, except per share data): 2009 2008 Years Ended October 31, 2007 2006(1) 2005(2) STATEMENT OF OPERATIONS DATA: Net revenue Cost of goods sold Gross profit Selling and marketing General and administrative Research and development...

  • Page 36
    ... systems; Sony's PSP (PlayStationPortable) (''PSP'') system; Microsoft's Xbox 360 (''Xbox 360'') video game and entertainment system; Nintendo's Wii (''Wii'') and DS (''DS'') systems; and for the PC and Games for Windows. We also selectively develop and publish titles for digital...

  • Page 37
    ... and released the externally developed title Borderlands in October 2009. Our 2K Sports series, which includes Major League Baseball 2K, NBA 2K and NHL 2K, provides annual revenue streams since they are generally published on a yearly basis. We develop most of our 2K Sports software titles through...

  • Page 38
    ...the new platforms, which may impact our sales and profitability. As a result, we believe it is important to focus our development efforts on a select number of titles, which is consistent with our strategy. International Operations. Sales in international markets, primarily in Europe, have accounted...

  • Page 39
    ... titles currently in development): Internal or External Development Expected/Actual Release Date Title Publishing Label Platform(s) Ringling Bros. and Barnum & Bailey BioShock 2 Red Dead Redemption Mafia II Major League Baseball 2K10 Max Payne 3 NBA 2K11 2K Play 2K Games Rockstar Games...

  • Page 40
    ...'s online entertainment and gaming network, and downloadable content for Midnight Club: Los Angeles on Xbox LIVE and PlayStationNetwork (''PSN''). We also released NBA 2K10: Draft Combine, a download-only experience on Xbox LIVE Arcade (''XBLA'') and PSN. We have also begun to develop and publish...

  • Page 41
    ...application of these and other accounting policies, see Note 1 to the Consolidated Financial Statements included in Item 8. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors. Revenue Recognition We recognize revenue...

  • Page 42
    ... feasibility. We enter into agreements with third party developers that require us to make payments for game development and production services. In exchange for these payments, we receive the exclusive publishing and distribution rights to the finished game title as well as, in some cases, the...

  • Page 43
    ... contain provisions that could require us to pay royalties to the license holder based on pre-agreed unit sales thresholds. Amortization of capitalized software development costs and licenses commences when a product is released and is recorded on a title-by-title basis in cost of goods sold. For...

  • Page 44
    ...our expectations related to the timing and the successful completion of development of an acquired in-process technology. Such estimates are inherently difficult and subjective and can have a material impact on our financial statements. We use either the income, cost or market approach to aid in our...

  • Page 45
    ... of which are based on the price of our common stock at such dates. As a result, fluctuations in the price of our common stock will change compensation expense recognized by us each reporting period. We have also granted time and market-based restricted stock awards to employees and non-employees...

  • Page 46
    ... or the related services are performed. The adoption did not have a material effect on our consolidated financial position, cash flows or results of operations. Business Combinations In December 2007, new guidance was issued providing greater consistency in the accounting and financial reporting of...

  • Page 47
    ... consolidated results of operations. Subsequent Events In May 2009, new guidance was issued which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular...

  • Page 48
    ... 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...

  • Page 49
    ..., 2009 2008 2007 Net revenue: Publishing Distribution Net revenue Cost of goods sold Gross profit Selling and marketing General and administrative Research and development Business reorganization and related Impairment of goodwill and long-lived assets Depreciation and amortization Total operating...

  • Page 50
    ... on current generation platforms accounted for approximately 67.5% of our total net publishing revenue for the year ended October 31, 2009 compared to 82.3% for the same period in 2008. The decrease is primarily due to the release of Grand Theft Auto IV in April 2008 for the PS3 and Xbox 360. PC...

  • Page 51
    ... our license agreements with Major League Baseball entities. As a result we accelerated the amortization of certain license costs related to the contract and impaired development costs related to future titles. Additionally, we offered greater price concessions in the 2009 period, primarily due to...

  • Page 52
    ...stock-based compensation expense, as follows: 2009 2008 $ 2,370 19,678 4,878 Selling and marketing General and administrative Research and development $ 2,551 14,119 3,169 Foreign currency exchange rates favorably impacted total operating... management fees related to the distribution services ...

  • Page 53
    ... as expansion initiatives in Asia-Pacific markets. Impairment of goodwill and long-lived assets During our annual goodwill impairment test we determined that goodwill attributed to our distribution reporting unit was impaired due to a decline in the retail environment in 2009 and its impact on our...

  • Page 54
    ... Includes $13,461 and $3,216 of stock-based compensation expense, respectively, included in software development costs and royalties. The increase in net revenue primarily reflects higher sales of titles from our Grand Theft Auto franchise predominantly due to our release of Grand Theft Auto IV in...

  • Page 55
    ... of Grand Theft Auto IV. Wii software sales accounted for $112.0 million of our net publishing revenue in 2008, reflecting higher sales of Carnival Games and an increase in the number of titles we released on the Wii such as Major League Baseball 2K8 and Top Spin 3. Sales on the prior generation...

  • Page 56
    ...Net revenue associated with software for current generation platforms increased $29.5 million and hardware sales increased $16.8 million, reflecting increased availability of current generation platforms, especially the Wii. In addition, PC software sales increased $6.8 million. Offsetting the 2008...

  • Page 57
    ... related and relocation costs to move our 2K headquarters to California, and $4.4 million in professional fees and other costs related to the replacement of prior management and the election of five new directors to our Board of Directors at our annual stockholders' meeting. In 2008 we substantially...

  • Page 58
    ... 1,496,647 shares of restricted stock in connection with our acquisition of 2K Czech, formerly known as Illusion Softworks. Liquidity and Capital Resources Our primary cash requirements have been to fund (i) the development, manufacturing and marketing of our published products, (ii) working capital...

  • Page 59
    ... our election, in cash, shares of our common stock, or a combination of cash and shares of the Company's common stock. At any time on or after June 5, 2012, the Company may redeem all of the outstanding Convertible Notes for cash, but only if the last reported sale of our common stock for 20 or more...

  • Page 60
    ...=;

  • Page 61
    ...@@5FG Licensing Convertible and Software Operating Distribution Notes Convertible Marketing Development Leases Services Interest Notes Fiscal year ending October... 5G:C@@CKG (thousands of dollars) Year Ended October 31, 2009 2008 2007 5G

  • Page 62
    ... We have experienced fluctuations in quarterly 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...

  • Page 63
    ... Notes pay interest semi-annually at a fixed rate of 4.375% per annum and we expect that there will be no fluctuation related to the Convertible Notes impacting our current year interest expense. In addition, we amortize debt issuance costs to interest expense. Upon adoption of the new accounting...

  • Page 64
    ... of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection...

  • Page 65
    ... on this evaluation, management has concluded that our internal control over financial reporting was effective as of October 31, 2009. Our independent registered public accounting firm, E&Y, has issued an attestation report on our internal control over financial reporting. The report on the audit of...

  • Page 66
    ...(i.e. on or before February 28, 2010). The Company's Code of Business Conduct and Ethics applicable to its directors and all employees, including senior financial officers, is available on the Company's website at www.take2games.com. If the Company makes any amendment to its Code of Business Conduct...

  • Page 67
    ... Stock of the Company Indenture, dated as of June 3, 2009, between the Company and The Bank of New York Mellon, as Trustee Supplemental Indenture, dated as of June 3, 2009, between the Company and The Bank of New York Mellon, as Trustee, to Indenture, dated as of June 3, 2009, between the Company...

  • Page 68
    ... 10.15 3/6/2007 10.1 6/5/2009 10.2 6/5/2009 10.3 4/4/2007 99.1 7/17/2007 10.1 Employment Agreement dated February 28, 2007 between the Company and Seth Krauss.+ Form of Employee Restricted Stock Agreement + Form of Non-Employee Director Restricted Stock Agreement+ Management Agreement between the...

  • Page 69
    ... of the grantors listed on the signature pages thereof and Wells Fargo Foothill, Inc. in its capacity as administrative agent for the Lender Group and the Bank Product Providers Lease Agreement between the Company and Moklam Enterprises, Inc. dated July 1, 2002 Xbox 360 Publisher License Agreement...

  • Page 70
    ...Number Exhibit Description Incorporated by Reference Filed Form Filing Date Exhibit Herewith 10.35 Convertible Note Hedge Transaction Confirmation, dated May 29, 2009, between the Company...of the Sarbanes-Oxley Act of 2002 Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350,...

  • Page 71
    TAKE-TWO INTERACTIVE SOFTWARE, INC. YEAR ENDED OCTOBER 31, 2009 INDEX TO FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets-At October 31, 2009 and 2008 Consolidated Statements of Operations-For the years ended October 31, 2009, 2008 and ...

  • Page 72
    ... with the standards of the Public Company Accounting Oversight Board (United States), Take-Two Interactive Software, Inc.'s internal control over financial reporting as of October 31, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring...

  • Page 73
    ... PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders of Take-Two Interactive Software, Inc. We have audited Take-Two Interactive Software, Inc.'s internal control over financial reporting as of October 31, 2009, based on criteria established in Internal Control-Integrated Framework issued...

  • Page 74
    ...SHEETS (in thousands, except per share amounts) October 31, 2009 October 31, 2008 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net of allowances of $47,265 and $68,448 at October 31, 2009 and 2008, respectively Inventory Software development costs and licenses Prepaid taxes...

  • Page 75
    TAKE-TWO INTERACTIVE SOFTWARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) For the Years Ended October 31, 2009 2008 2007 Net revenue Cost of goods sold Gross profit Selling and marketing General and administrative Research and development Business ...

  • Page 76
    ... non-current assets Deferred revenue Accounts payable, accrued expenses, income taxes payable and other liabilities Total adjustments Net cash provided by (used for) operating activities Investing activities: Purchase of fixed assets Cash received from sale of business Payments in connection with...

  • Page 77
    ..., liabilities assumed Current liabilities Deferred income taxes Net assets of businesses acquired, excluding cash Net cash paid for businesses acquired Additional consideration in connection with acquisitions Deferred contingent consideration Issuance of common stock in connection with acquisitions...

  • Page 78
    TAKE-TWO INTERACTIVE SOFTWARE, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands) Accumulated Retained Other Additional Earnings Comprehensive Total Common Stock Paid-in (Accumulated Income Stockholders' Shares Amount Capital Deficit) (Loss) Equity Balance, October 31, 2006 Net loss...

  • Page 79
    ... and 2K which publishes its titles under 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 PlayStation 2 PSP (PlayStation Portable) Xbox 360 Wii DS...

  • Page 80
    ... insurable amounts. If the financial condition and operations of our customers deteriorate, our risk of collection could increase substantially. A majority of our trade receivables are derived from sales to major retailers and distributors. Our five largest customers accounted for 48.0%, 40.2% and...

  • Page 81
    We enter into agreements with third party developers that require us to make payments for game development and production services. In exchange for our payments, we receive the exclusive publishing and distribution rights to the finished game title as well as, in some cases, the underlying ...

  • Page 82
    ... uses market capitalization and comparable companies' data, and the income approach, which uses discounted cash flows. Each step requires us to make judgments and involves the use of significant estimates and assumptions. These estimates and assumptions include long-term growth rates and operating...

  • Page 83
    ..., accounting for interim periods, and disclosures. The Company adopted the new guidance in November 2007. See Note 13 for a detailed discussion of the Company's uncertain tax positions. Revenue Recognition We earn our revenue from the sale of internally developed interactive software titles and...

  • Page 84
    ... and returns, when demand for specific titles falls below expectations. We make estimates of future product returns and price concessions related to current period product revenue. We estimate the amount of future returns and price concessions for published titles based upon, among other factors...

  • Page 85
    ... 31, 2009 and 2007; therefore, the basic and diluted weighted average shares outstanding exclude the impact of all common stock equivalents because their impact would be antidilutive. The Company defines common stock equivalents as unexercised stock options, unvested time-based and market-based...

  • Page 86
    ...will be achieved. We apply variable accounting to our non-employee market-based awards. We have issued market-based awards that vest based on a variety of conditions: (1) the correlation of the return of our common stock price relative to companies in the NASDAQ Industrial Index and (2) appreciation...

  • Page 87
    ... or the related services are performed. The adoption did not have a material effect on our consolidated financial position, cash flows or results of operations. Business Combinations In December 2007, new guidance was issued providing greater consistency in the accounting and financial reporting of...

  • Page 88
    ... consolidated results of operations. Subsequent Events In May 2009, new guidance was issued which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular...

  • Page 89
    ...operations. Measuring Liabilities at Fair Value In August 2009, new guidance was issued related to the fair value measurement of liabilities. This update provides clarification that in circumstances in which quoted prices in an active market for the identical liability are not available, a reporting...

  • Page 90
    ...=89F5H=CB C:      5B8  :CFCIFDF=CFM95F57EI=G=H=CBG Cash and Goodwill Development Value of Recorded on Identified Advances Stock Acquisition Intangible Paid Issued Date Assets           Acquired Business &58C7 ,C:HK5F9%% "@@IG=CB,C:HKCF?G Acquisition...

  • Page 91
    ... based on sales of specific titles. The goodwill recorded in connection with this acquisition is deductible for tax purposes. In December 2007, we acquired all of the outstanding capital stock of 2K Czech, formerly known as Illusion Softworks, a.s. (''2K Czech''), the Czech Republic developer of the...

  • Page 92
    ...segments that constitute businesses for which both (1) discrete financial information is available and (2) segment management regularly reviews the operating results of these components which are deemed reporting units. We use a combination of the market approach, and the income approach, which uses...

  • Page 93
    ... the Company impaired the remaining $292 of net intangible assets related to our distribution reporting unit. The following table sets forth the components of the intangible assets subject to amortization: October 31, 2009 October 31, 2008 Estimated Useful Gross Gross Lives Carrying Accumulated Net...

  • Page 94
    ...or entity; create, incur or allow any lien on any of their respective properties; make investments; or pay dividends or make distributions (each... domestic operations falls below $30,000 (including available borrowings under the credit facility), based on a 30-day average. As of October 31, 2009, we...

  • Page 95
    ... our election, in cash, shares of our common stock, or a combination of cash and shares of the Company's common stock. At any time on or after June 5, 2012, the Company may redeem all of the outstanding Convertible Notes for cash, but only if the last reported sale of our common stock for 20 or more...

  • Page 96
    ...was charged to additional paid-in capital. Separately, the Company entered into a warrant transaction with a strike price of $14.945 per share. The warrants will be net share settled and will cover approximately 12,927,000 shares of the Company's common stock and expire on August 30, 2014, for total...

  • Page 97
    ... to comprehensively settle all claims asserted by them against us, our Rockstar Games subsidiary and all of the current and former officers and directors named in the actions. Under the terms of the proposed settlement, we will pay $20,040 into a settlement fund for the benefit of class members...

  • Page 98
    ... increase share availability under our 2002 Stock Option...management and Board of Directors. On April 21, 2009...Entertainment America Inc., Sony Corporation of America, Wal-Mart, GameStop and Devin Moore, alleging under Alabama's manufacturers' liability and wrongful death statutes, that our video games...

  • Page 99
    ... reflect our agreements with major sports leagues and players' associations. Certain of our licensing and marketing agreements also contain provisions that would impose penalties if we fail to meet agreed upon software release dates. Software Development Agreements: We make payments to third party...

  • Page 100
    ... may make voluntary contributions. We began matching a portion of the contributions in July 2002. The matching contribution expense incurred by us during the years ended October 31, 2009, 2008 and 2007 was $2,748, $2,251 and $1,869, respectively. Income Taxes: At October 31, 2009, the Company had...

  • Page 101
    ... as follows: October 31, 2009 2008 Current deferred tax assets and (liabilities): Sales returns and allowances (including bad... to limitation by the Internal Revenue Service. These net operating losses will begin to expire in fiscal 2026. We also had foreign net operating losses of $47,463, of ...

  • Page 102
    ... are subject to variable accounting, to ZelnickMedia in connection with their contract to provide executive management services to us. We began replacing stock option awards with restricted stock awards in 2007. We issue shares to employees on the date the restricted stock is granted and therefore...

  • Page 103
    ... issuance under the 2009 Plan. In April 2008, our stockholders approved an increase to the number of shares available for grant under the Incentive Stock Plan from 4,500,000 to 6,500,000. The Incentive Stock Plan is administered by the Compensation Committee of the Board of Directors and allows for...

  • Page 104
    ... that vest annually over a three year period and 900,000 shares of market-based restricted stock that vest over a four year period through 2012, provided that the price of our common stock outperforms 75% of the companies in the NASDAQ Industrial Index. For the years ended October 31, 2009 and 2008...

  • Page 105
    ... from 2009 to 2017. Options granted generally vest over a period of three to four years and expire within a period of five to ten years. Pursuant to the Management Agreement, in August 2007, we issued stock options to ZelnickMedia to acquire 2,009,075 shares of our common stock at an exercise price...

  • Page 106
    ... and distributor of interactive software games designed for personal computers, video game consoles and handheld platforms. Revenue earned by our publishing business segment is primarily derived from the sale of internally developed software titles and software titles developed on our behalf...

  • Page 107
    operating segments. Our accounting policies for segment reporting are the same as for the Company as a whole. Information about our reportable segments was as follows: Net revenue: For the Years Ended October 31, 2009 2008 2007 Publishing Distribution Total net revenue $700,734 267,754 $968,488 ...

  • Page 108
    ... by product platform for our reportable segments is as follows: Net revenue by product platform: For the Years Ended October 31, 2009 2008 2007 Publishing: Microsoft Xbox 360 Sony PlayStation 3 PC Nintendo Wii Sony PSP Sony PlayStation 2 Nintendo DS Other Total publishing Distribution: Hardware and...

  • Page 109
    ...'s future profits or losses. 17. SUPPLEMENTARY FINANCIAL INFORMATION The following table provides details of our valuation and qualifying accounts: ...2009 Valuation allowance for deferred income taxes Sales returns, price protection and other allowances Allowance for doubtful accounts Total accounts...

  • Page 110
    ...marketing General and administrative Research and development Impairment of goodwill and long-lived assets Depreciation and amortization Total operating expenses Income (loss) from operations Net income (loss) Per share... In the fourth quarter of 2009, the Company recorded non-cash income tax expense...

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    ... Financial and Accounting Officer) December 18, 2009 December 18, 2009 Chairman of the Board of Directors December 18, 2009 Director December 18, 2009 Lead Independent Director December 18, 2009 Director December 18, 2009 Director December 18, 2009 Director December 18, 2009 Director...

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    ... amendment (''Second Amendment''), dated as of December 16, 2009 (''Effective Date''), is entered into by and between Lainie Goldstein (''Employee'') and Take-Two Interactive Software, Inc. (the ''Company''). WHEREAS Employee and the Company entered into an Employment Agreement dated July 16, 2007...

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    ... Company Name North America Subsidiaries: 2K Boston, LLC 2K Games, Inc. 2K Marin, Inc. 2K Play, Inc. 2K Sports, Inc. Cat Daddy Games, L.L.C. Firaxis Games, Inc. Gathering of Developers, Inc. Jack of All Games, Inc. Jack of All Games (Canada), Inc. Kush Games, Inc. Rockstar Games, Inc. Rockstar New...

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    ..., Inc. included in its Annual Report (Form 10-K) for the year ended October 31, 2009 and the effectiveness of internal control over financial reporting of Take-Two Interactive Software, Inc., filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG LLP New York, New York December 18...

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    ... have reviewed this Annual Report on Form 10-K of Take-Two Interactive Software, Inc. (the ''registrant''); 2. Based on my knowledge, this report does not contain ...control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons...

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    ... I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses...

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    ... THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Take-Two Interactive Software, Inc. (the ''Company'') on Form 10-K for the period ended October 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the ''Report''), I, Ben Feder, as Chief Executive...

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    ... OF 2002 In connection with the Annual Report of Take-Two Interactive Software, Inc. (the ''Company'') on Form 10-K for the period ended October 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the ''Report''), I, Lainie Goldstein, as Chief Financial Officer of the...

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    ...com INDEPENDENT AUDITORS Ernst & Young LLP 5 Times Square New York, NY 10036 TRANSFER AGENT American Stock Transfer & Trust Company 59 Maiden Lane New York, NY 10038 COMMON STOCK INFORMATION The Company's common stock is listed on the NASDAQ Global Select Market under the symbol TTWO. www.take2games...

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    Take-Two Interactive Software, Inc. 622 Broadway New York, NY 10012 (646) 536-2842 www.take2games.com