2K Sports 2009 Annual Report Download - page 28

enabled in the future, and we could be required to recognize the related revenue over an extended period
of time rather than at the time of sale. As we enhance, expand and diversify our business and product
offerings, the application of existing or future financial accounting standards, particularly those relating to
the way we account for revenue, could have a significant adverse effect on our reported results although
not necessarily on our cash flows.
Risks relating to our common stock
For purposes of this section ‘‘—Risks relating to our common stock,’’ references to ‘‘the Company,’’ ‘‘we,’’
‘‘our,’’ and ‘‘us’’ refer only to Take-Two Interactive Software, Inc. and not to its subsidiaries.
Additional issuances of equity securities by us would dilute the ownership of our existing stockholders.
We may issue equity or equity-based securities (such as our convertible senior notes) in the future in
connection with acquisitions or strategic transactions, to adjust our ratio of debt to equity, including
through repayment of outstanding debt, to fund 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 of our common stock could adversely impact its price. As of December 15,
2009, we had outstanding approximately 83,187,000 million shares of our common stock, options to
purchase approximately 3,760,000 million shares of our common stock (of which approximately
3,161,000 million were exercisable as of that date) and warrants to purchase approximately 12,927,000
shares of our common stock. The sale or the availability for sale of a large number of shares of our
common stock in the public market could cause the price of our common stock to decline. The issuance of
shares of our common stock upon conversion of our convertible senior notes could also adversely affect the
price of our common stock.
Our stock price has been volatile and may continue to fluctuate significantly.
The market price of our common stock historically has been, and we expect will continue to be, subject to
significant fluctuations. These fluctuations may be due to factors specific to us including those discussed in
the risk factors in this section as well as others not currently known to us or that we currently do not
believe are material, to changes in securities analysts’ earnings estimates or ratings, to our results or future
financial guidance falling below our expectations and analysts’ and investors’ expectations, to factors
affecting the computer, software, entertainment, media or electronics industries, or to national or
international economic conditions.
Stock markets, in general, have experienced over the years, and continue to experience, significant price
and volume fluctuations that have affected market prices for companies such as ours and that may be
unrelated or disproportionate to the operating performance of the affected companies. These broad
market and industry fluctuations may adversely affect the price of our stock, regardless of our operating
performance.
The convertible senior note hedge and warrant transactions entered into in connection with the offering of our
convertible senior notes may affect the value of the notes and our common stock.
In connection with the offering of our convertible senior notes, we entered into convertible senior note
hedge transactions which are expected to reduce the potential dilution upon conversion of the notes.
However, we also entered into warrant transactions which could separately have a dilutive effect on our
earnings per share to the extent that the market price per share of our common stock exceeds the
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