2K Sports 2009 Annual Report Download - page 79

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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 business, which consists of our wholly-
owned labels Rockstar Games 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 Xbox 360Wii
PlayStation2DS
PSP(PlayStationPortable)
We also develop and publish software titles for the PC, and the iPhone and the iPod touch. Our
distribution business, which 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.
Principles of Consolidation
The consolidated financial statements include the financial statements of the Company and its wholly-
owned subsidiaries. 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, fair value estimates, the valuation of stock-based
compensation 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
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