Take-Two Interactive (TTWO) 10-K risk factor changes: FY2019 vs FY2018

Grand Theft Auto and certain of our other [removed: titles] [added: titles, such as Red Dead Redemption or NBA 2K,] are "hit" products and have historically accounted for a substantial portion of our revenue.

Grand Theft Auto products contributed [removed: 39.7%] [added: 25.7%] of [removed: the Company's] [added: our] net revenue for the fiscal year ended March 31, [removed: 2018] [added: 2019] and the five best-selling franchises (including Grand Theft Auto), which may change year over year, in the aggregate accounted for [removed: 90.6%] [added: 91.8%] of [removed: the Company's] [added: our] net revenue for the fiscal year ended March 31, [removed: 2018.][added: 2019.]

Widespread consumer adoption of these new platforms for games and other technological advances in [added: and/or new business or payment models in] online or mobile game offerings could negatively affect our sales of console and traditional PC products before we have an opportunity to develop profitable businesses in such markets.

[removed: Therefore] [added: Therefore,] our development costs can be substantial.

We derive most of our revenue from the sale of products made for video game platforms manufactured by third parties, such as Sony's PS4 and [removed: PS3,] Microsoft's Xbox [removed: One and Xbox 360, and the Nintendo Switch,] [added: One,] which comprised [removed: 81.6%] [added: 83.7%] of [removed: the Company's] [added: our] net revenue by product platform for the fiscal year ended March 31, [removed: 2018.][added: 2019.]

We are subject to certain privacy and data protection laws, including those in the United [removed: States.][added: States ("U.S.").]

[added: Certain activities related to processing the personal data of European Union ("E.U.") individuals are conducted by our United Kingdom ("U.K.")-based data controller or our local entities in the E.U.] The U.S. Children's Online Privacy Protection Act also regulates the collection, use, and disclosure of personal information from children under 13 years of age.

Failure to comply with privacy laws, [added: data protection]

[removed: data protection] laws, or age restrictions may increase our costs, subject us to expensive and distracting government investigations, and result in substantial fines.

[removed: GDPR will become] [added: For example, the E.U. General Data Protection Regulation ("GDPR") became] effective on May 25, 2018, [removed: and will replace the existing] [added: replacing] Data Protection Directive 95/46/EC.

Player use of our games is subject to our privacy policy, end user license [removed: agreements,] [added: agreements ("EULA"),] and terms of service.

If we fail to comply with our posted privacy policy, [removed: EULAs,] [added: EULA,] or terms of service, or if we fail to comply with existing privacy-related or data protection laws and regulations, it could result in proceedings or litigation against us by governmental authorities or others, which could result in fines or judgments against us, damage our reputation, affect our financial condition and harm our business.

It is possible that a number of laws and regulations may be adopted or construed to apply to us in the [removed: United States] [added: U.S.] and elsewhere that could restrict the interactive entertainment industry, including player privacy, advertising, taxation, content suitability, copyright, distribution and antitrust.

Changes in current laws or regulations or the imposition of new laws and regulations in the [removed: United States] [added: U.S.] or elsewhere regarding these activities may lessen the growth of the interactive entertainment industry and impair our business, financial condition, and operating results.

Changes in current laws or regulations or the imposition of new laws and regulations in the [removed: United States,] [added: U.S.,] Europe, or elsewhere regarding these activities may lessen the growth of casual game services and impair our business.

Any theft and/or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an event could adversely affect our competitive position, reputation, brand, and future sales of our [removed: products.]

All information technology systems and networks are potentially vulnerable to damage or interruption from a variety of sources, including but not limited to cyber-attacks, [added: computer viruses,] malicious software, security breach, energy blackouts, natural disasters, terrorism, war and telecommunication failures.

We have also grown our product offerings that are available through digital download, including virtual currency, through our existing franchises such as Grant Theft Auto and NBA 2K as well as through product offerings by [removed: newly acquired] Social Point and other mobile product offerings.

[removed: In addition, if one or more key employees were to join a competitor or form a competing] company, we may lose additional personnel, experience material interruptions in product development, delays in bringing products to market and difficulties in our relationships with licensors, suppliers and customers, which would significantly harm our business.

The Act [removed: makes] [added: made] broad and complex changes to the U.S. tax code that could materially affect us.

The Act [removed: reduces] [added: reduced] the U.S. federal corporate income tax rate from 35% to 21%, effective January 1, 2018 and [removed: requires] [added: required] companies to pay a one-time transition tax on the previously untaxed earnings of certain foreign subsidiaries.

[removed: These] [added: In addition, the Act made other] changes [removed: include] [added: that may affect us, including] but [removed: are] not limited to (1) a Base Erosion Anti-abuse Tax [removed: (BEAT),] [added: ("BEAT"),] which is a new minimum tax, (2) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries, (3) a new provision that taxes global intangible low-taxed income [removed: (GILTI),] [added: ("GILTI"),] (4) the repeal of the domestic production activity deduction, and (5) other base broadening provisions.

The new tax law is complex and additional [removed: interpretative] [added: interpretive] guidance may be issued that could affect [added: the] interpretations and assumptions we have made, as well as actions we may take as a result of the Act.

Further, our effective tax rate could be adversely affected by a variety of factors, including changes in the business, [removed: including] the mix of earnings in countries with differing statutory tax rates, changes in tax elections, and changes in applicable tax laws.

We earn a significant amount of our operating income and continue to hold a significant portion of our cash outside the U.S. [removed: We are reviewing whether the Act will affect our existing] [added: Our current] intention [added: is] to reinvest indefinitely earnings of our foreign [removed: subsidiaries.][added: subsidiaries, and therefore we have not recorded any tax liabilities associated with the repatriation of foreign earnings.]

We are also required to pay taxes other than income taxes, such as payroll, sales, use, value-added, net worth, [removed: property] [added: property,] and goods and services taxes, in both the U.S. and foreign jurisdictions.

If a key event or sports season to which our product release schedule is tied were to be delayed or [removed: cancelled,] [added: canceled,] our sales might also suffer disproportionately.

Sales to our five largest customers during the fiscal year ended March 31, [removed: 2018] [added: 2019] accounted for [removed: 70.7%] [added: 70.1%] of our net revenue, with [removed: Sony] [added: Sony, Microsoft,] and [removed: Microsoft] [added: Gamestop] each accounting for more than 10.0% of our net revenue during the fiscal year ended March 31, [removed: 2018.][added: 2019.]

[removed: Our sales are made primarily pursuant to] purchase orders without long-term agreements or other commitments, and our customers may terminate their relationship with us at any time.

If either occurs, we may be unable to effectively market and distribute our products, which could materially adversely affect our business, financial condition [removed: and operating results.]

Our business is partly dependent on our ability to enter into successful software development arrangements with [removed: third-parties.][added: third parties.]

We have entered into agreements with [removed: third-parties] [added: third parties] to acquire the rights to publish and distribute interactive entertainment software as well as to use licensed intellectual properties in our titles.

Future sales of our titles may not be sufficient to recover development payments and advances to software developers and licensors, and we may not have [added: adequate financial and other resources to satisfy our contractual commitments to such developers.]

[removed: The terms of] various open source licenses have not been interpreted by courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our use of the open source software.

[added: If we underestimate] the amount of server capacity our business requires or if our business were to grow more quickly than expected, our consumers may experience service problems, such as slow or interrupted gaming access.

In the [removed: United States,] [added: U.S.,] if the ESRB rates a game as "AO" (age 18 and older), platform licensors may not certify the game and retailers may refuse to sell it.

Additionally, although lawsuits seeking damages for injuries allegedly suffered by [removed: third-parties] [added: third parties] as a result of video games have generally been unsuccessful in the courts, claims of this kind have been asserted against us from time to time and may be asserted and be successful in the future.

[added: We may] be subject to lawsuits, governmental regulation or restrictions, and consumer backlash (including decreased sales and harmed reputation), as a result of consumers posting offensive content.

[added: For the fiscal year ended March 31, 2019, 46.5% of our net revenue was earned outside the U.S.] We are continuing to execute on our growth initiatives in Asia, where our strategy is to broaden the distribution of our existing products and expand our online gaming presence, especially in China and South Korea.

Trade legislation in either the [removed: United States] [added: U.S.] or other countries, such as a change in the current tariff structures, import/export compliance laws or other trade laws or policies, could adversely affect our ability to sell or to distribute in international markets.

GDPR applies to us because we receive and process the personal data of individuals in the E.U., and we maintain certain local entities in the E.U. responsible for processing personal data.

GDPR contains significant penalties for non-compliance.

Countries in the E.U. are still enacting national laws that correspond to certain portions of the GDPR.

In the U.S., the State of California enacted the California Consumer Privacy Act ("CCPA") on June 28, 2018.

The CCPA will become effective on January 1, 2020 and will apply to processing of personal data of California residents.

However, several proposed amendments to the CCPA are still being considered by the California legislature.

Also, existing laws or new laws regarding the marketing of in-game or in-app purchases, regulation of currency, banking institutions, unclaimed property, or money laundering may be interpreted to cover virtual currency or goods.

products.

Along with our partners, we have expended, and expect to continue to expend, financial and operational resources to implement certain systems, processes and technologies to guard against cyber risks and to help protect our data and systems.

However, the techniques used to exploit, disable, damage, disrupt or gain access to our networks, our products and services, supporting technological infrastructure, intellectual property and other assets change frequently, continue to evolve in sophistication and volume, and often are not detected for long periods of time.

Our systems, processes and technologies, and the systems, processes and technologies of our business partners or our third-party service providers, may not be adequate against all eventualities.

In addition, the costs to respond to, mitigate, and/or notify affected parties of cyber-attacks and other security vulnerabilities are significant.

Any failure to prevent or mitigate security breaches or cyber risks, or detect or respond adequately to a security breach or cyber risk, could result in a loss of anticipated revenue, interruptions to our products and services, cause us to incur significant remediation and notification costs, degrade the user experience, cause consumers to lose confidence in our products and services and significant legal and financial costs.

In addition, if one or more key employees were to join a competitor or form a competing

We have completed accounting for the income tax effects of the Act.

See Note 15 - Income Tax to our Consolidated Financial Statements for further information.

We are continuing to evaluate the impact of the Act on us.

In the current fiscal year, we released our valuation allowance on certain U.S. deferred tax assets as a result of a determination that it was more-likely-than-not that such deferred tax assets would be realized.

Our determination took into account the successful launch of Red Dead Redemption 2 during

the year along with our recent positive trend of earnings.

We will continue to evaluate our ability to realize our U.S. deferred tax assets.

If future evidence suggests that any changes are required to reflect the amount of our U.S. deferred tax asset that is more-likely-than-not to be realized, we will adjust our valuation allowance as needed in the appropriate period.

On June 21, 2018, the U.S. Supreme Court issued its decision in South Dakota v.

Wayfair, which overturned previous case law that precluded states from requiring retailers to collect and remit sales tax on sales made to in-state customers unless the retailer had a physical presence in the state.

Although this case is limited to sales tax collection obligations, we continue to monitor the potential impact of this decision on our state income tax footprint.

The ultimate amount of tax payable in a given financial statement period may be materially affected by sudden or unforeseen changes in tax laws, changes in the mix and level of earnings by taxing jurisdictions, or changes to existing accounting rules or regulations.

For example, on July 24, 2018, the Ninth Circuit Court of Appeals issued an opinion in Altera Corp. v.

Commissioner requiring related parties in an intercompany cost-sharing arrangement to share expenses related to stock compensation.

On August 7, 2018, the opinion was withdrawn to allow time for a reconstituted panel to confer.

We will continue to monitor ongoing developments and the final opinion could have a material impact on our Consolidated Financial Statements.

Our sales are made primarily pursuant to

and operating results.

The terms of

Further, in 2018, gaming disorder was listed in a version of the World Health Organization's International Classification of Diseases, and some countries have introduced legislation attempting to address this issue.

Moreover, the public dialogue concerning interactive entertainment may have an adverse impact on our reputation and our customer's willingness to purchase our products.

The current U.S. administration has voiced concerns about imports from countries potentially engaging in unfair trade practices, increased tariffs on certain goods imported into the U.S. from those countries, including China and other countries to which we sell products, and raised the possibility of imposing significant additional tariff increases.

The announcement of tariffs and proposed tariffs on imported products by the U.S. has triggered actions from certain foreign governments, including China, and may trigger additional actions by those and other foreign governments that could have a negative impact on our business.

Further, the enforcement of regulations relating to mobile and other games with an online element in China remains uncertain, and further changes, either in the regulation or their enforcement could have a negative impact on our business in China.

In order to operate in China, all games must have regulatory approval.

A decision by the Chinese government to revoke its approval for any of our games or to decline to approve any products we desire to sell in China in the future could have a negative impact on our business.

Certain activities related to E.U. customers are registered with our U.K. data controller.

For example, the Court of Justice of the European Union's decision to invalidate the E.U.-U.S. Safe Harbor regime that legitimized the transfer of certain personal data from the E.U. to the U.S. was a material change to laws on data privacy applicable to our business.

In addition, after four years of preparation and debate, the E.U. Parliament approved the general Data Protection Regulation ("GDPR") on April 14, 2016.

We may incur additional costs to remedy the damages caused by these disruptions or security breaches.

In addition, the Act makes other changes that may affect us, beginning April 1, 2018.

We are currently evaluating the potential impact of the Act on our tax provision.

We expect to provide a valuation allowance on future U.S. tax benefits until we can sustain a level of profitability or until other significant positive evidence arises that suggests that these benefits are more likely than not to be realized.

The Act imposes a one-time transition tax on the previously untaxed earnings of certain foreign subsidiaries and other significant changes that affect how U.S. companies are taxed on foreign earnings.

These changes may result in higher effective tax rates for us.

Unclaimed property audits by governmental authorities could adversely affect our operating results.

We are subject to unclaimed property (escheat) laws which require us to turn over to certain government authorities the property of others held by us that has been unclaimed for a specified period of time.

We are subject to audit by individual U.S. states with regard to our escheatment practices.

The legislation and regulations related to unclaimed property matters tend to be complex and subject to varying interpretations by both government authorities and taxpayers.

Although management believes that the positions

we have taken are reasonable, various taxing authorities may challenge certain of the positions we have taken, which may also potentially result in additional liabilities for unclaimed property and interest in excess of accrued liabilities.

Our positions are reviewed as events occur such as the availability of new information, the lapsing of applicable statutes of limitations, the measurement of additional estimated liability based on current calculations or the rendering of relevant court decisions.

An unfavorable resolution of assessments by a governmental authority could have a material adverse effect on our financial condition, results of operations and cash flows in future periods.

adequate financial and other resources to satisfy our contractual commitments to such developers.

If we underestimate

We may

For the fiscal year ended March 31, 2018, 41.3% of our net revenue was earned outside the United States.

In many foreign countries, particularly in those with developing economies, it may be common to engage in business practices that are prohibited by United States laws and regulations, such as the Foreign Corrupt Practices Act, and by local laws, such as laws prohibiting corrupt payments to government officials.

run could be discovered after their release.

For example, on December 14, 2017, the Federal Communications

Discontinuing repurchases could adversely affect the price of the Company's common stock.

Our products are currently designed for console gaming [removed: systems] [added: systems,] such as Sony's PS4 and [removed: PS3,] Microsoft's Xbox [removed: One and Xbox 360, the Nintendo Switch,] [added: One,] and PC, including smartphones and tablets.

We focus on building compelling entertainment franchises by publishing a select number of titles for which we can create sequels and incremental revenue opportunities through [added: virtual currency,] add-on content, [removed: microtransactions] and [removed: online play.][added: in-game purchases.]

We have created, acquired or licensed a group of highly recognizable brands to match the broad consumer demographics [added: that] we serve, ranging from adults to children and game enthusiasts to casual gamers.

Our revenue is primarily derived from the sale of internally developed software titles and software titles developed by [removed: third-parties.][added: third parties.]

Operating margins are dependent in part upon our ability to release new, commercially successful software products and to manage effectively their development [added: and marketing] costs.

We expect Rockstar Games, our wholly-owned publisher of the Grand Theft Auto, Max Payne, Midnight Club, Red Dead [added: Redemption,] and other popular franchises, to continue to be a leader in the action / adventure product category and to create groundbreaking entertainment by leveraging our existing titles as well as by developing new brands.

We believe that Rockstar [added: Games] has established a uniquely original, popular cultural phenomenon with its Grand Theft Auto series, which is the interactive entertainment industry's most iconic and critically acclaimed brand and has sold-in over [removed: 280] [added: 290] million units.

2K's internally owned and developed franchises include the critically acclaimed, multi-million unit selling BioShock, Mafia, Sid Meier's [removed: Civilization] [added: Civilization,] and XCOM series.

2K also publishes successful externally developed franchises, such as [removed: Borderlands and Evolve.][added: Borderlands.]

2K's realistic sports simulation titles include our flagship NBA 2K series, which continues to be the top-ranked NBA basketball video game, [removed: and] the WWE 2K professional wrestling [removed: series.][added: series, and the Golf Club.]

2K has [added: secured] a multi-year license from the NBA to develop an online version of the NBA simulation game in China, Taiwan, South [removed: Korea] [added: Korea,] and Southeast Asia.

[removed: In October 2012,] NBA 2K Online, our free-to-play NBA simulation game, which was co-developed by 2K and Tencent, [removed: launched commercially on] [added: is] the [removed: Tencent Games portal in China.][added: top online PC]

[removed: On December 14, 2017, we announced the formation of] [added: Our] Private [removed: Division, our new] [added: Division] label [removed: that] is dedicated to bringing titles from top independent developers to market.

In addition, Social Point has a robust development pipeline with a number of exciting games planned for launch [removed: over] [added: in] the [removed: next two] [added: coming] years.

Sales of Grand Theft Auto products generated [removed: 39.7%] [added: 25.7%] of our net revenue for the fiscal year ended March 31, [removed: 2018.][added: 2019.]

The timing of our Grand Theft Auto [added: or Red Dead Redemption] product releases may affect our financial performance on a quarterly and annual basis.

Our five largest customers accounted for [removed: 70.7%, 65.5%] [added: 70.1%, 70.7%] and [removed: 58.9%] [added: 65.5%] of net revenue during the fiscal years ended March 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016,] [added: 2017,] respectively.

As of March 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] five customers comprised [removed: 65.4%] [added: 66.6%] and [removed: 69.9%] [added: 65.4%] of our gross accounts receivable, respectively, with our significant customers (those that individually comprised more than 10% of our gross accounts receivable balance) accounting for [removed: 53.2%] [added: 55.8%] and [removed: 57.6%] [added: 53.2%] of such balance at March 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

We had two customers who accounted for [removed: 37.7%] [added: 40.1%] and [removed: 15.5%] [added: 15.7%] of our gross accounts receivable as of March 31, [removed: 2018] [added: 2019] and two customers who accounted for [removed: 40.2%] [added: 37.7%] and [removed: 17.4%] [added: 15.5%] of our gross accounts receivable as of March 31, [removed: 2017.][added: 2018.]

We did not have any additional customers that exceeded 10% of our gross accounts receivable as of March 31, [removed: 2018] [added: 2019] and [removed: 2017.][added: 2018.]

We derive most of our revenue from the sale of products made for video game consoles manufactured by [removed: third-parties,] [added: third parties,] such as Sony's PS4 and [removed: PS3,] Microsoft's Xbox [removed: One and Xbox 360, and the Nintendo Switch,] [added: One,] which comprised [removed: 81.6%] [added: 83.7%] of our net revenue by product platform for the fiscal year ended March 31, [removed: 2018.][added: 2019.]

The success of our business is dependent upon the consumer acceptance of these [removed: consoles] [added: platforms] and [added: the] continued growth in [removed: their] [added: the] installed [removed: base.][added: base of these platforms.]

[removed: Most] [added: Virtually all] of our titles that are available through retailers as packaged goods products are also available through direct digital download (from websites we own and others owned by [removed: third-parties).][added: third parties) as well as a larger selection of our catalog titles.]

In addition, we aim to drive ongoing engagement and incremental revenue from recurrent consumer spending on our titles [removed: after their initial purchase] through [removed: downloadable offerings, including] [added: virtual currency,] add-on content, [removed: microtransactions] and [removed: online play.][added: in-game purchases.]

We also publish an expanding variety of titles for tablets and smartphones, which are delivered to consumers through digital [removed: download via the Internet.][added: download.]

Our "Results of Operations," discloses that net revenue from digital online channels comprised [removed: 63.1%] [added: 63.0%] of our net revenue for the fiscal year ended March 31, [removed: 2018.][added: 2019.]

We released the following key titles in fiscal year [removed: 2018:][added: 2019:]

| NBA [removed: 2K18] [added: 2K19 Standard Edition] | | 2K | | Internal | | [removed: Xbox 360,] [added: PS4,] Xbox One, [removed: PS3, PS4, PC, Switch (digital)] [added: Nintendo Switch, PC] | | September [removed: 19, 2017] [added: 11, 2018] |

| WWE [removed: 2K18] [added: 2K19] | | 2K | | Internal/External | | [added: PS4,] Xbox One, [removed: PS4] [added: PC] | | October [removed: 13, 2017] [added: 9, 2018] |

| [removed: L.A. Noire] [added: Carnival Games] | | [removed: Rockstar Games] [added: 2K] | | Internal | | [added: PS4,] Xbox One, [removed: PS4,] [added: Nintendo] Switch | | November [removed: 14, 2017] [added: 6, 2018] |

| Grand Theft Auto [removed: V:] [added: V] Premium Online Edition | | Rockstar Games | | Internal | | PS4, Xbox One, PC | | April 20, 2018 |

| Red Dead Redemption 2 | | Rockstar Games | | Internal | | [added: PS4,] Xbox [removed: One, PS4] [added: One] | | October 26, 2018 |

| NBA [removed: 2K19] [added: 2K20] | | 2K | | Internal | | TBA | | [removed: Fall 2018] [added: TBA] |

Fiscal [removed: 2018] [added: 2019] Financial Summary

Our [removed: net] [added: Net] revenue for fiscal year ended March 31, [removed: 2018] [added: 2019] was led by titles from a variety of our top franchises, primarily [added: Red Dead Redemption 2,] Grand Theft Auto, NBA 2K, and WWE 2K.

Our [removed: net] [added: Net] revenue increased to [removed: $1,792.9] [added: $2,668.4] million, an increase of [removed: $13.1] [added: $875.5] million or [removed: 0.7%] [added: 48.8%] compared to the fiscal year ended March 31, [removed: 2017.][added: 2018.]

For the fiscal year ended March 31, [removed: 2018,] [added: 2019,] our [removed: net] [added: Net] income was [removed: $173.5] [added: $333.8] million, as compared to [removed: a net] [added: Net] income of [removed: $67.3] [added: $173.5] million in the prior year.

Diluted earnings per share for the fiscal year ended March 31, [removed: 2018] [added: 2019] was [removed: $1.54,] [added: $2.90,] as compared to [removed: diluted] [added: Diluted] income per share of [removed: $0.72] [added: $1.54] for the fiscal year ended March 31, [removed: 2017.][added: 2018.]

At March 31, [removed: 2018] [added: 2019,] we had [removed: $809.0] [added: $1,392.0] million of [removed: cash] [added: Cash] and [removed: cash equivalents,] [added: Cash equivalents and Restricted cash,] compared to [removed: $943.4] [added: 1,246.4] million at March 31, [removed: 2017.][added: 2018.]

The [removed: decrease] [added: increase] in [removed: cash] [added: Cash] and cash equivalents [added: and Restricted cash] from March 31, [removed: 2017] [added: 2018] was due primarily to [removed: cash used in financing and investing activities, partially offset by] [added: Net] cash provided by operating [removed: activities.][added: activities from sales, primarily of Red Dead Redemption 2, partially offset by investments in software development and licenses as well as royalty payments.]

The latest installment, Grand Theft Auto V, has sold-in over 105 million units worldwide and includes access to Grand Theft Auto Online.

On October 26, 2018, Rockstar Games launched Red Dead Redemption 2, which has been a critical and commercial success that set numerous entertainment industry records.

Private Division will publish three upcoming titles based on new IP from renowned industry creative talent, including The Outer Worlds and Ancestors: The Humankind Odyssey, both of which are planned for release in calendar 2019.

sports game in China with over 45 million registered users.

On August 2, 2018, 2K and Tencent commercially launched NBA 2K Online 2 in China.

The title is based on the console edition of NBA 2K and includes an array of new features.

In February 2017, we expanded our relationship with the NBA through the creation of the NBA 2K League.

Launched in May 2018, this groundbreaking competitive gaming league is jointly owned by us and the NBA and consists of teams operated by actual NBA franchises.

The NBA 2K League follows a professional sports league format: the inaugural season included head-to-head competition throughout a regular season, followed by a bracketed playoff system and a finals match-up that was held in August 2018.

The NBA 2K League began its second season on April 2, 2019.

In October 2018, we released Red Dead Redemption 2.

Sales of Red Dead Redemption products generated 32.1% of our net revenue for the fiscal year ended March 31, 2019.

| The Golf Club 2019 Featuring PGA TOUR (Digital) | | 2K | | External | | PS4, Xbox One, PC | | August 27, 2018 |

| NBA 2K Online 2 | | 2K | | External | | Tencent (China only) | | August 2, 2018 |

| NBA 2K19 20th Anniversary Edition | | 2K | | Internal | | PS4, Xbox One, Nintendo Switch, PC | | September 7, 2018 |

| WWE 2K19 Woooo! Deluxe Edition | | 2K | | Internal/External | | PS4, Xbox One, PC | | October 5, 2018 |

| NBA 2K Playgrounds 2 | | 2K | | External | | PS4, Xbox One, Nintendo Switch, PC | | October 16, 2018 |

| The Golf Club 2019 Featuring PGA TOUR (Physical) | | 2K | | External | | PS4, Xbox One, PC | | November 13, 2018 (North America) November 16, 2018 (International) |

| Sid Meier's Civilization VI | | 2K | | External | | Nintendo Switch | | November 16, 2018 |

| Red Dead Online Beta | | Rockstar Games | | Internal | | PS4, Xbox One | | November 27, 2018 |

| Sid Meier's Civilization VI: Gathering Storm | | 2K | | Internal | | PC | | February 14, 2019 |

| Borderlands: Game of the Year Edition | | 2K | | Internal/External | | PS4, Xbox One, PC | | April 3, 2019 |

| Borderlands 3 | | 2K/Gearbox Software | | Internal/External | | PS4, Xbox One, PC | | September 13, 2019 |

| WWE 2K20 | | 2K | | Internal | | TBA | | TBA |

| Ancestors: The Humankind Odyssey | | Private Division | | External | | PS4, Xbox One, PC (digital only) | | 2019 (fiscal 2020) |

| The Outer Worlds | | Private Division | | External | | PS4, Xbox One, PC | | 2019 (fiscal 2020) |

On April 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and related amendments (the “New Revenue Accounting Standard”) using the modified retrospective method.

Therefore, no prior amounts have been restated in our tables and discussion below.

Refer to Note 1 to our Consolidated Financial Statements for our accounting policy disclosure for revenue recognition.

In general, the adoption of Topic 606 results in a more accelerated revenue pattern, due primarily to (i) the elimination of the requirement for vendor-specific objective evidence ("VSOE") of fair value when allocating between multiple performance obligations and (ii) the change of our estimated service period to a user life.

However, the impact on a given period may differ from this general trend.

In October 2018, we released Red Dead Redemption 2.

The acceleration of revenue for this title was material and is the primary component of the significant increases in certain of our operating results as a result of the adoption of Topic 606 throughout the discussion in our "Results of Operations" below.

See Notes 1 and 2 to our Consolidated Financial Statements for further information.

This increase included a $741.2 million increase

in Net revenue as a result of the adoption of Topic 606, as described above.

The remaining increase was driven by sales of the titles described above.

During the fiscal year ended March 31, 2019, we recognized a tax benefit of $107.1 million from a reduction in our valuation allowance on certain U.S. deferred tax assets as a result of a determination that it was more-likely-than-not that such deferred tax assets would be realized.

Our determination took into account the successful launch of Red Dead Redemption 2 during the current fiscal year along with our recent positive trend of earnings.

Our operating income for the fiscal year ended March 31, 2019 increased compared to the operating income for fiscal year ended March 31, 2018, due primarily to higher Gross profit due primarily to higher revenue as a result of the adoption of Topic 606 as described above and the successful launch Red Dead Redemption 2, partially offset by higher Operating expenses primarily due to higher Selling and marketing expense for titles released during the current fiscal year.

The latest installment, Grand Theft Auto V, was released on Sony's PS3 and Microsoft's Xbox 360 in September 2013, on Sony's PS4 and Microsoft's Xbox One in November 2014, and on PC in April 2015.

Grand Theft Auto V includes access to Grand Theft Auto Online, which initially launched in October 2013.

Private Division will publish several upcoming titles based on new IP from renowned industry creative talent, including the previously announced Ancestors: The Humankind Odyssey from Panache Digital Game, a studio led by the creator of the Assassin's Creed franchise Patrice Désilets; an unannounced role-playing game ("RPG") currently code-named Project Wight from The Outsiders, a studio formed by ex-DICE developers David Goldfarb and Ben Cousins; an unannounced RPG from Obsidian Entertainment led by Tim Cain and Leonard Boyarsky, co-creators of Fallout; and an

unannounced sci-fi first-person shooter from V1 Interactive, a studio founded by Halo co-creator Marcus Lehto.

| NBA 2K18 | | 2K | | Internal | | Switch (physical) | | October 17, 2017 |

| WWE 2K18 | | 2K | | Internal/External | | PC | | October 17, 2017 |

| WWE 2K18 | | 2K | | Internal/External | | Switch | | December 6, 2017 |

| L.A. Noire: The VR Case Files | | Rockstar Games | | Internal | | HTC Vive | | December 15, 2017 |

| Kerbal Space Program: Enhanced Edition | | Private Division | | External | | Xbox One, PS4 | | January 16, 2018 |

| XCOM 2 Collection | | 2K | | External | | PC | | February 1, 2018 |

| Sid Meier's Civilization VI: Rise and Fall (DLC) | | 2K | | Internal | | PC | | February 8, 2018 |

| XCOM 2 Collection | | 2K | | External | | PS4, Xbox One | | February 21, 2018 |

| L.A. Noire: The VR Case Files | | Rockstar Games | | Internal | | Oculus Rift | | March 29, 2018 |

| WWE 2K19 | | 2K | | Internal/External | | TBA | | Fall 2018 |

Our operating income for the fiscal year ended March 31, 2018 increased compared to the operating income for fiscal year ended March 31, 2017, due primarily to higher gross profit due primarily to lower Software development costs and royalties and Product costs due to having released more titles in the prior year period, partially offset by higher Research and development costs related to titles that have not reached technological feasibility.

Net cash used in investing activities was primarily related to net purchases of available for sale securities, purchases of fixed assets, and our asset acquisition of Kerbal Space Program.

| | |

| --- | --- |

| Net revenue | | $ | 1,779,748 | | | 100.0 | % | | $ | 1,413,698 | | | 100.0 | % | | $ | 366,050 | | | 25.9 | % |

| Software development costs and royalties(1) | | 335,675 | | | | 18.9 | % | | 223,512 | | | | 15.8 | % | | 112,163 | | | | 50.2 | % |

| Internal royalties | | 330,782 | | | | 18.6 | % | | 328,610 | | | | 23.2 | % | | 2,172 | | | | 0.7 | % |

| Product costs | | 255,914 | | | | 14.4 | % | | 200,206 | | | | 14.2 | % | | 55,708 | | | | 27.8 | % |

| Licenses | | 100,588 | | | | 5.6 | % | | 61,545 | | | | 4.4 | % | | 39,043 | | | | 63.4 | % |

| Cost of goods sold | | 1,022,959 | | | | 57.5 | % | | 813,873 | | | | 57.6 | % | | 209,086 | | | | 25.7 | % |

| Gross profit | | $ | 756,789 | | | 42.5 | % | | $ | 599,825 | | | 42.4 | % | | $ | 156,964 | | | 26.2 | % |

| (1) | Includes $21,056 and $15,323 of stock-based compensation expense in 2017 and 2016, respectively. |

This increase was due primarily to (1) an increase of $265.8 million in revenues from our NBA 2K franchise; (2) an increase of $161.2 million in net revenues from Mafia III, which released in October 2016; and (3) an increase of $63.8 million in net revenues from Civilization VI, which released in October 2016.

The increase in net revenue from PC and other was due primarily to higher net revenues from Civilization VI, which released on the PC in the current year and higher net revenues from Grand Theft Auto V and Grand Theft Auto Online.

The increase in recurrent consumer spending was due primarily to higher virtual currency net revenues from our NBA 2K franchise.

The increase in net revenue from physical retail and other channels was due primarily to higher net revenues from the current year release of Mafia III and the performance of our NBA 2K franchise, which was partially offset by lower net revenues from our Grand Theft Auto franchise.

| Selling and marketing | | $ | 285,453 | | | 16.0 | % | | $ | 198,309 | | | 14.0 | % | | $ | 87,144 | | | 43.9 | % |

| General and administrative | | 211,409 | | | | 11.9 | % | | 192,452 | | | | 13.6 | % | | 18,957 | | | | 9.9 | % |

| Research and development | | 137,915 | | | | 7.8 | % | | 119,807 | | | | 8.5 | % | | 18,108 | | | | 15.1 | % |

| Business reorganization | | — | | | | — | % | | 71,285 | | | | 5.1 | % | | (71,285 | | ) | | (100.0 | )% |

| Depreciation and amortization | | 30,707 | | | | 1.7 | % | | 28,800 | | | | 2.0 | % | | 1,907 | | | | 6.6 | % |

| Total operating expenses | | $ | 665,484 | | | 37.4 | % | | $ | 610,653 | | | 43.2 | % | | $ | 54,831 | | | 9.0 | % |

| | 2017 | | | | 2016 | | |

Advertising expenses were higher in the current year due primarily

to the fiscal 2017 releases of Mafia III, Battleborn, and Civilization VI, and BioShock: The Collection.

These were slightly offset by lower advertising expense for Grand Theft Auto V and Grand Theft Auto Online.

Our exposure to fluctuations in interest rates relates primarily to our short-term investment portfolio and variable rate debt under the [added: New] Credit Agreement.

Since short-term investments mature relatively quickly and can be reinvested at the then-current market rates, interest income on a portfolio consisting of short-term securities is more subject to market fluctuations than a portfolio of [removed: longer term] [added: longer-term] maturities.

However, the fair value of a short-term portfolio is less sensitive to market fluctuations than a portfolio of [removed: longer term] [added: longer-term] securities.

As of March 31, [removed: 2018,] [added: 2019,] we had [removed: $615.4] [added: $744.5] million of short-term investments, which included [removed: $398.7] [added: $356.8] million of available-for-sale securities.

We also had [removed: $809.0] [added: $826.5] million of cash and cash equivalents that are comprised primarily of money market funds and bank-time deposits.

We determined that, based on the composition of our investment portfolio, there was no material interest rate risk exposure to our Consolidated Financial Statements or liquidity as of March 31, [removed: 2018.][added: 2019.]

At March 31, [removed: 2018,] [added: 2019,] there were no outstanding borrowings under our [added: New] Credit Agreement.

For the fiscal years ended March 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] our foreign currency translation adjustment was a [removed: gain] [added: loss] of [removed: $43.4] [added: $28.8] million and a [removed: loss] [added: gain] of [removed: $9.1] [added: $43.4] million, respectively.

We recognized a foreign currency exchange transaction loss of [removed: $3.0] [added: $0.5] million, a [removed: gain] [added: loss] of [removed: $5.0] [added: $3.0] million, and a [removed: loss] [added: gain] of [removed: $1.4 million] [added: $5.0] million for the fiscal years ended March 31, [added: 2019,] 2018, [removed: 2017,] and [removed: 2016,] [added: 2017,] respectively, in Interest and other, net in our Consolidated Statements of Operations.

We use foreign currency forward contracts to mitigate foreign currency exchange rate risk associated with non-functional currency denominated cash balances and inter-company funding loans, non-functional currency denominated accounts receivable and [removed: non-][added: non-functional currency denominated accounts payable.]

At March 31, [removed: 2017,] [added: 2019,] we had [removed: $9.2] [added: $116.6] million of forward contracts outstanding to buy foreign currencies in exchange for U.S. dollars and [removed: $177.5] [added: $87.8] million of forward contracts outstanding to sell foreign currencies in exchange for U.S. dollars all of which have maturities of less than one year.

For the fiscal years ended March 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016,] [added: 2017,] we recorded a [added: gain of $16.8 million, a] loss of $19.5 [removed: million] [added: million,] and [removed: gains] [added: a gain] of $7.2 [removed: million and $0.1] million, respectively, related to foreign currency forward contracts in Interest and other, net on the Consolidated Statements of Operations.

As of March 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018,] the fair value of these outstanding forward contracts [removed: was a loss] [added: were losses] of [removed: $0.0] [added: $0.4] million and [removed: $0.4] [added: $0.0] million, respectively, and is included in accrued and other current liabilities.

[removed: Notwithstanding our efforts to mitigate some foreign] currency exchange rate risks, there can be no assurance that our hedging activities will adequately protect us against the risks associated with foreign currency fluctuations.

For the fiscal year ended March 31, [removed: 2018, 41.3%] [added: 2019, 46.5%] of our revenue was generated outside the United States.

Using sensitivity analysis, a hypothetical 10% increase in the value of the U.S. dollar against all currencies would decrease [removed: revenues] [added: revenue] by [removed: 4.1%,] [added: 4.7%,] while a hypothetical 10% decrease in the value of the U.S. dollar against all currencies would increase [removed: revenues] [added: revenue] by [removed: 4.1%.][added: 4.7%.]

Under our New Credit Agreement, loans will bear interest at a rate of (a) 0.250% to 0.750% above a certain base rate (5.50% at March 31, 2019) or (b) 1.125% to 1.750% above LIBOR (approximately 2.49% at March 31, 2019), which rates are determined by reference to our consolidated total net leverage ratio.

Notwithstanding our efforts to mitigate some foreign

Under our Credit Agreement, outstanding balances bear interest at our election of (a) 0.25% to 0.75% above a certain base rate (4.75% at March 31, 2018), or (b) 1.25% to 1.75% above the LIBOR rate (approximately 1.88% at March 31, 2018), with the margin rate subject to the achievement of certain average liquidity levels.

The 1.00% Convertible Notes pay interest semi-annually at a fixed rate of 1.00% per annum, and we expect that there will be no fluctuation related to the 1.00% Convertible Notes affecting our cash component of interest expense.

For additional details on our Convertible Notes see Note 11 to the Consolidated Financial Statements.

functional currency denominated accounts payable.

We develop and publish products principally through our two wholly-owned labels Rockstar Games and 2K, as well as our [removed: new] Private Division label and Social Point, a leading developer of mobile games.

Our products are currently designed for console gaming systems such as the Sony Computer Entertainment, Inc. ("Sony") PlayStation®4 [removed: ("PS4") and PlayStation®3 ("PS3"),] [added: ("PS4"),] Microsoft Corporation ("Microsoft") Xbox One® ("Xbox [removed: One") and Xbox 360® ("Xbox 360"),] [added: One"),] the Nintendo Switch, and personal computers ("PC"), including smartphones and tablets.

We deliver our products through physical retail, digital download, online [removed: platforms] [added: platforms,] and cloud streaming services.

We were incorporated under the laws of the State of Delaware in 1993 and are headquartered in New York, New York with approximately [removed: 4,492] [added: 4,894] employees globally.

Our [removed: telephone number is (646) 536-2842 and our] website address is www.take2games.com.

We focus on building compelling entertainment franchises by publishing a select number of titles for which we can create sequels and incremental revenue opportunities through [added: virtual currency,] add-on content, [removed: microtransactions] and [removed: online play.][added: in-game purchases.]

We have created, acquired or licensed a group of highly recognizable brands to match the broad consumer demographics [added: that] we serve, ranging from adults to children and game enthusiasts to casual gamers.

[added: Another cornerstone of our strategy is to support] the success of our products in the marketplace through innovative marketing programs and global distribution on platforms and through channels that are relevant to our target audience.

[removed: 2K is] [added: 2K's internally owned and developed franchises include] the [removed: publisher of a number of] critically acclaimed, multi-million unit selling [removed: franchises including] BioShock, [removed: Borderlands, Carnival Games, Evolve,] Mafia, [removed: NBA 2K,] Sid Meier's Civilization, [removed: WWE 2K] and [removed: XCOM.][added: XCOM series.]

We currently own the intellectual property rights to [removed: 25] [added: 26] proprietary brands.

Leverage Emerging Technologies, [removed: Platforms] [added: Platforms,] and Distribution Channels, Including Digitally Delivered Content.

We [removed: also] aim to drive ongoing engagement and incremental [removed: revenues] [added: revenue] from recurrent consumer spending on our titles through virtual currency, add-on content, and [removed: microtransactions.][added: in-game purchases.]

While we retain title to all intellectual property, under license agreements local publishers are responsible for localization of software content, [removed: distribution] [added: distribution,] and marketing of the products in their respective local markets.

Our revenue is primarily derived from the sale of internally developed software titles and software titles developed by [removed: third-parties.][added: third parties.]

We have internal development studios located in Australia, Canada, China, Czech Republic, [removed: India,] Hungary, [added: India,] Spain, the United [removed: Kingdom] [added: Kingdom,] and the United States.

As of March 31, [removed: 2018,] [added: 2019,] we had a research and development staff of [removed: 3,533] [added: 3,784] employees with the technical capabilities to develop software titles for all major consoles, [removed: handheld hardware platforms] [added: PCs,] and [removed: PCs] [added: mobile platforms] in multiple languages and territories.

Agreements with third-party developers generally give us exclusive publishing and marketing rights and require us to make development payments, pay royalties based on product [removed: sales] [added: sales,] and to satisfy other conditions.

We continue to engage in evolving business models such as online gaming, virtual [removed: currencies,] [added: currency,] add-on content, and [removed: microtransactions,] [added: in-game purchases,] and we expect to continue to generate incremental revenue opportunities from these opportunities.

We believe that Rockstar has established a uniquely original, popular cultural phenomenon with its Grand Theft Auto series, which is the interactive entertainment industry's most iconic and critically acclaimed brand and has sold-in over [removed: 280] [added: 290] million units.

Rockstar Games is also well known for developing brands in other genres, including the LA Noire, [removed: Bully] [added: Bully,] and Manhunt franchises.

Rockstar Games continues to expand on our established franchises by developing sequels, offering downloadable episodes, [removed: content] [added: content,] and virtual currency, and releasing titles for smartphones and tablets.

2K also publishes externally developed franchises such as [removed: Borderlands and Evolve.][added: Borderlands.]

2K's realistic sports simulation titles include our flagship NBA 2K series, which continues to be the top-ranked NBA basketball video game, [removed: and] the WWE 2K professional wrestling [removed: series.][added: series, and the Golf Club.]

[removed: On December 14, 2017, we announced the formation of] [added: Our] Private [removed: Division, our new] [added: Division] label [removed: that] is dedicated to bringing titles from top independent developers to market.

Additionally, Private Division is the publisher of Kerbal Space [removed: Program, which we acquired in May 2017.][added: Program.]

In addition, Social Point has a robust development pipeline with a number of exciting games planned for launch [removed: over] [added: in] the [removed: next two] [added: coming] years.

[removed: In October 2012,] NBA 2K Online, our free-to-play NBA simulation game, which was co-developed by 2K and Tencent, [removed: launched commercially on] [added: is] the [removed: Tencent Games portal] [added: top online PC sports game] in [removed: China.][added: China with over 45 million registered users.]

In [removed: February,] [added: February] 2017, we expanded our relationship with the NBA through the creation of the NBA 2K [removed: League, a new, professional competitive gaming league.][added: League.]

Launched in May 2018, this groundbreaking competitive gaming league is jointly owned by [removed: Take-Two] [added: us] and the NBA and consists of teams operated by actual NBA franchises.

The NBA 2K League follows a professional sports league format: [removed: competing] [added: the inaugural season included] head-to-head [added: competition] throughout a regular season, [removed: participating in] [added: followed by] a bracketed playoff [removed: system,] [added: system] and [removed: concluding with] a [removed: championship match-up.][added: finals match-up that was held in August 2018.]

The intellectual property rights we have created or acquired for our internally-owned portfolio of brands [removed: include:] [added: include] BioShock, Bully, Carnival Games, Dragon City, [removed: Evolve,] Grand Theft Auto, Kerbal Space Program, L.A. Noire, Mafia, Manhunt, Max Payne, Midnight Club, Monster Legends, Red Dead, Sid Meier's Civilization, [removed: Spec Ops] and XCOM.

We have entered into license agreements with Sony and Microsoft to develop and publish software in Asia, Australia, [removed: Europe and] [added: Europe,] North [removed: America.][added: America, and certain Latin American, Middle Eastern, and African countries.]

Effective March 23, 2017, we entered into a PlayStation Global Developer and Publisher Agreement with Sony Computer Entertainment, Inc. and certain of its affiliates, pursuant to which Sony granted us the right and license to develop, publish, have manufactured, market, advertise, distribute and sell PlayStation compatible products for all PlayStation systems, including the [removed: PS4, PS3 and PSP.][added: PS4.]

In addition, products for [removed: the PS4, PS3 and PSP] [added: PlayStation systems] are required to be manufactured by Sony approved manufacturers.

The term of the agreement expires on March 31, [removed: 2019,] [added: 2020,] with automatic one-year renewal terms thereafter.

[removed: After the initial term,] Sony may terminate the agreement for any or no reason upon thirty days’ notice.

The term of the Xbox One license agreement expires on March 31, [removed: 2019] [added: 2020] and the term of the Xbox 360 license agreement expires on March 31, [removed: 2019,] [added: 2020,] each agreement with automatic one-year renewal terms thereafter.

We sell software titles both physically and digitally in the United States, EMEA, Canada, Latin [removed: America] [added: America,] and Asia Pacific through direct relationships with large retail customers and third-party distributors.

We have sales operations in Australia, Canada, France, Germany, Japan, the Netherlands, New Zealand, Singapore, South Korea, Spain, Taiwan, the United [removed: Kingdom] [added: Kingdom,] and the United States.

Sales to our five largest customers during the fiscal year ended March 31, [removed: 2018] [added: 2019] accounted for [removed: 70.7%] [added: 70.1%] of our net revenue, with [removed: Sony] [added: Sony, Microsoft,] and [removed: Microsoft] [added: Gamestop] each accounting for more than 10.0% of our net revenue during the fiscal year ended March 31, [removed: 2018.][added: 2019.]

Support World-Class Creative Teams.

Creativity and innovation remain the core tenets of our organization, and are the lifeblood of our ongoing success.

We have 3,784 employees working in game development in studios around the world - including some of the most well-known names in the business.

The creative teams at our labels, Rockstar Games and 2K, are renowned for their consistent ability to deliver games that set new benchmarks for excellence.

In addition, our Social Point studio further enhances our development capabilities with a track record of producing multiple hits in the free-to-play mobile sector.

Whether expanding our portfolio of franchises, launching new intellectual property, or providing innovative ways for audiences

to remain captivated and engaged, we prioritize producing the highest quality entertainment experiences.

We support our teams by focusing on talent retention and acquisition, and our label structure enables us to target distinct market segments and opportunities.

The latest installment, Grand Theft Auto V, has sold-in over 105 million units worldwide and includes access to Grand Theft Auto Online.

On October 26, 2018, Rockstar Games launched Red Dead Redemption 2, which has been a critical and commercial success that set numerous entertainment industry records.

Private Division has announced that it will publish three upcoming titles based on new IP from renowned industry creative talent, including The Outer Worlds and Ancestors: The Humankind Odyssey, both of which are planned for release in calendar 2019.

On August 2, 2018, 2K and Tencent commercially launched NBA 2K Online 2 in China.

The title is based on the console edition of NBA 2K and includes an array of new features.

The NBA 2K League began its second season on April 2, 2019.

guidelines of the Entertainment Software Rating Board, or the ESRB, an independent self-regulatory body that assigns ratings and enforces advertising guidelines for the interactive software industry.

In October 2018, we released Red Dead Redemption 2.

Sales of Red Dead Redemption products generated 32.1% of our net revenue for the fiscal year ended March 31, 2019.

ended March 31, 2019, 2018 and 2017, respectively.

We continually monitor console hardware sales.

We manage our product delivery on each current and future platform in a manner we believe to be most effective to maximize our revenue opportunities and achieve the desired return on our investments in product development.

You may also obtain copies of our reports without charge by writing to:

Take-Two Interactive Software, Inc.

110 West 44th Street

New York, NY 10036

Attn: Investor Relations

You may read and copy any document we file with the SEC at the SEC's public reference room at 100 F Street, NE, Room 1580, Washington, DC 20549.

Please call the SEC at 1-800-SEC-0330 for information on the public reference room.

Another cornerstone of our strategy is to support

Support Label Structure to Target Distinct Market Segments.

Our business consists principally of our wholly-owned labels Rockstar Games and 2K, as well as our new Private Division label and Social Point, a leading developer of mobile games.

Rockstar Games is the developer and publisher of the interactive entertainment industry's most iconic and critically acclaimed brand, Grand Theft Auto, as well as other successful franchises, including L.A. Noire, Max Payne, Midnight Club, and Red Dead.

We expect Rockstar Games to continue to be a leader in the action / adventure product category and create groundbreaking entertainment by leveraging our existing franchises, as well as developing new brands.

2K publishes high-quality, owned and licensed titles across a range of genres including shooter, action, role-playing, strategy, sports and family/casual.

We expect 2K to continue to be a leader by building on its existing brands, as well as by developing new franchises in the future.

The latest installment, Grand Theft Auto V, was released on Sony's PS3 and Microsoft's Xbox 360 in September 2013, on Sony's PS4 and Microsoft's Xbox One in November 2014, and on PC in April 2015.

Grand Theft Auto V includes access to Grand Theft Auto Online, which initially launched in October 2013.

2K's internally owned and developed franchises include the critically acclaimed, multi-million unit selling BioShock, Mafia, Sid Meier's Civilization and XCOM series.

Private Division will publish several upcoming titles based on new IP from renowned industry creative talent, including the previously announced Ancestors: The Humankind Odyssey from Panache Digital Games, a studio led by the creator of the Assassin's Creed franchise Patrice Désilets; an unannounced role-playing game ("RPG") currently code-named Project Wight from The Outsiders, a studio formed by ex-DICE developers David Goldfarb and Ben Cousins; an unannounced RPG from Obsidian Entertainment led by Tim Cain and Leonard Boyarsky, co-creators of Fallout; and an unannounced sci-fi first-person shooter from V1 Interactive, a studio founded by Halo co-creator Marcus Lehto.

On February 7, 2019, all of the previously disclosed lawsuits, claims, and counterclaims that had been pending since April 2016 with Mr. Leslie Benzies, the former president of one of our subsidiaries, were resolved.

On April 11, 2016, we filed a declaratory judgment action in the United States District Court for the Southern District of New York seeking, among other things, a judicial declaration that Leslie Benzies, the former president of one of our subsidiaries with whom we had been in ongoing discussions regarding his separation of employment, is not entitled to any minimum allocation or financial parity with any other person under the applicable royalty plan.

We believe we will prevail in this matter, although there can be no assurance of the outcome.

On April 12, 2016, Mr. Benzies filed a complaint in the Supreme Court of the State of New York, New York County against us, and certain of our subsidiaries and employees.

We removed this case to the United States District Court for the Southern District of New York, but the case was subsequently remanded to state court.

The complaint claims damages of at least $150 million and contains allegations of breach of fiduciary duty; fraudulent inducement and fraudulent concealment; aiding and abetting breach of fiduciary duty; breach of various contracts; breach of implied duty of good faith and fair dealing; tortious interference with contract; unjust enrichment; reformation; constructive trust; declaration of rights; constructive discharge; defamation and fraud.

We have asserted counterclaims for breach of contract, theft of trade secrets, and misappropriation.

As a result of amended pleadings, motion practice and appeals to date, twelve of Mr. Benzies’ claims have been dismissed, leaving only six remaining claims: breach of various contracts, constructive discharge, breach of implied duty of good faith and fair dealing, and tortious interference with contract.

Our federal court action has been stayed pending the conclusion of the state court action.

We believe that we have meritorious defenses to the remaining claims, and we intend to vigorously defend against them and to pursue our counterclaims.

| | For the fiscal year ended March 31, [removed: 2018] [added: 2019] |

| Title of each class | [added: Trading symbol] | Name of each exchange on which registered |

| Common Stock, $.01 par value | [added: TTWO] | NASDAQ Global Select Market |

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Website, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

| Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o [removed: (Do not check if a smaller reporting company)] | Smaller reporting company o | Emerging growth company o |

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant's most recently completed second fiscal quarter was approximately [removed: $11,405,142,125.][added: $15,537,179,720.]

As of May [removed: 4, 2018] [added: 2, 2019,] there were [removed: 114,379,624] [added: 112,541,501] shares of the Registrant's Common Stock outstanding, net of treasury stock.

Portions of the registrant's definitive proxy statement for the [removed: 2018] [added: 2019] Annual Meeting of Stockholders

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| [PART [removed: III](#s150C617721D551F8893ED8363807C17A)] [added: III](#sADF44B40434F5B40AF3AFA8119F58268)] | | |

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| [Item [removed: 16.](#sCCD2FDE814B05AC1AA194364F1B1006D)] [added: 16.](#s3F98E69B99A2560586AC34D23810CBB1)] | [Form 10-K [removed: Summary](#sCCD2FDE814B05AC1AA194364F1B1006D)] [added: Summary](#s3F98E69B99A2560586AC34D23810CBB1)] | [removed: [50](#sCCD2FDE814B05AC1AA194364F1B1006D)] [added: [52](#s3F98E69B99A2560586AC34D23810CBB1)] |

| | [Index to Financial [removed: Statements](#sE86E5A569B035B3DA9E73FC49BD00DC8)] [added: Statements](#s0DF4CCE37A9F5D2BB1C6F56F23629921)] | [removed: [51](#sE86E5A569B035B3DA9E73FC49BD00DC8)] [added: [53](#s0DF4CCE37A9F5D2BB1C6F56F23629921)] |

The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws and may be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "potential," "predicts," "projects," "seeks," "should," "will," or words of similar meaning and include, but are not limited to, statements regarding the outlook for the [removed: Company's] [added: Take-Two Interactive Software, Inc.'s ("Take-Two," the "Company," "we," "us," or similar pronouns)] future business and financial performance.

Such forward-looking statements are based on the current beliefs of our management as well as assumptions made by and information currently available to them, which are subject to inherent uncertainties, [removed: risks] [added: risks,] and changes in circumstances that are difficult to predict.

10-K 1 ttwo10k03312019.htm 10-K

| [PART I](#s3C79B4A654B15B2C833ABCA408D1FAB7) | | |

| [PART II](#sAC3EE044C0275CAD9DB2385F62A0CC7D) | | |

| [PART IV](#s236E648CC02F5E668B0FA45C95CC2E6B) | | |

| | [Signatures](#s3CB1EC1920025649ABE13768C2B8BECC) | [97](#s3CB1EC1920025649ABE13768C2B8BECC) |

10-K 1 ttwo10k03312018.htm 10-K

| [PART I](#s4DD1DBE18BAC5416825197A23D70692B) | | |

| [PART II](#s43F01405A92350F39890E5BEA7644CE9) | | |

| [PART IV](#s576A48EE40BC5601BEEAE436D8ED9DBD) | | |

| | [Signatures](#sC416EC9C3BEC514D8B796443ACB2B808) | [89](#sC416EC9C3BEC514D8B796443ACB2B808) |

Our principal executive offices are located at 110 West 44th Street (also known as 1133 Avenue of the Americas), New York, New York, in approximately [removed: 61,000] [added: 76,000] square feet of space under a lease expiring in December 2032.

In addition, our other subsidiaries lease office space in Sydney, Australia; Oakville, Canada; Chengdu and Shanghai, China; Brno, Czech Republic; Paris, France; Munich, Germany; Budapest, Hungary; Bangalore, India; Tokyo, Japan; Breda, Netherlands; Auckland, New Zealand; Singapore; Seoul, South Korea; Madrid and Barcelona, Spain; Lucerne, Switzerland; Taipei, Taiwan; Brighton, London, Lincoln, Leeds, and Oxford, United Kingdom; and, in the United States, [removed: Petaluma and] Carlsbad, [added: Petaluma, and Moorpark,] California; [added: Sparks, Maryland; Andover and Westwood, Massachusetts; Las Vegas, Nevada; Bethpage and New York, New York; and Kirkland, Washington.]

For information regarding our lease commitments, see Note [removed: 13] [added: 14] to the Consolidated Financial Statements.

Sparks, Maryland; Andover and Westwood, Massachusetts; Las Vegas, Nevada; Bethpage and New York, New York; and Kirkland, Washington.

[added: Our common stock trades on the NASDAQ Global Select Market under the symbol "TTWO."] The number of record holders of our common stock was [removed: 58] [added: 55] as of May [removed: 8, 2018.][added: 10, 2019.]

See "Liquidity and Capital Resources" under Item 7 for additional information on our [added: New] Credit Agreement.

The following line graph compares, from March 31, [removed: 2013] [added: 2014] through March 31, [removed: 2018,] [added: 2019,] the cumulative total stockholder return on our common stock with the cumulative total return on the stocks comprising the NASDAQ Composite Index and the stocks comprising a peer group index consisting of Activision Blizzard, Inc. and Electronic Arts Inc. The comparison assumes $100 was invested on March 31, [removed: 2013] [added: 2014] in our common stock and in each of the following indices and assumes reinvestment of all cash dividends, if any, paid on such securities.

[removed: ][added: ]

* $100 invested on March 31, [removed: 2013] [added: 2014] in stock or index - including reinvestment of dividends.

| | [removed: 2013 | | | |] 2014 | | | | 2015 | | | | 2016 | | | | 2017 | | | | 2018 | | | [added: | 2019 | | |]

Under this [removed: program] [added: program,] we may purchase shares from time to time through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws.

Repurchases are subject to the availability of stock, prevailing market conditions, the trading price of the stock, [removed: the Company's] [added: our] financial performance and other conditions.

During the fiscal years ended March 31, [added: 2019,] 2018, [removed: 2017,] and [removed: 2016] [added: 2017] we repurchased [added: 3,715,642,] 1,512,557, [removed: 0,] and [removed: 953,647] [added: 0] shares of our common stock in the open market, respectively, for [removed: $154.8] [added: $362.4] million, [removed: $0.0] [added: $154.8] million, and [removed: $26.6] [added: $0.0] million, respectively, including [removed: commissions] [added: commissions,] as part of the program.

As of March 31, [removed: 2018,] [added: 2019,] we had repurchased a total of [removed: 6,683,887] [added: 10,399,529] shares of our common stock under the program, and [removed: 7,533,796] [added: 3,818,154] shares of our common stock remained available for repurchase under the share repurchase program.

Summary Table—The table below details the share repurchases that were made by us during the three months ended March 31, [removed: 2018:][added: 2019:]

| Period | | Shares [removed: purchased*] [added: purchased] | | | Average price per share | | | | Total number of shares purchased as part of publicly announced plans or programs | | | Maximum number of shares that may yet be purchased under the repurchase program | |

Our New Credit Agreement requires us to meet certain incurrence tests prior to paying a dividend.

This performance graph shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Exchange Act or the Securities Act of 1933.

March 2019

| Take-Two Interactive Software, Inc. | $ | 100.00 | | | $ | 116.10 | | | $ | 171.77 | | | $ | 270.27 | | | $ | 445.87 | | | $ | 430.32 | |

| NASDAQ Composite Index | 100.00 | | | | 118.12 | | | | 118.77 | | | | 145.94 | | | | 176.24 | | | | 194.97 | | |

| Peer Group | 100.00 | | | | 146.81 | | | | 191.27 | | | | 272.47 | | | | 369.88 | | | | 276.19 | | |

| January 1 - 31, 2019 | | — | | | — | | | | — | | | 4,937 | |

| February 1 - 28, 2019 | | 1,119 | | | $ | 89.53 | | | 1,119 | | | 3,818 | |

| March 1 - 31, 2019 | | — | | | $ | — | | | — | | | 3,818 | |

Our common stock 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 | | |

| Fiscal Year Ended March 31, 2018 | | | | | | | |

| First Quarter ended June 30, 2017 | $ | 79.77 | | | $ | 57.53 | |

| Second Quarter ended September 30, 2017 | 102.96 | | | | 72.07 | | |

| Third Quarter ended December 31, 2017 | 119.02 | | | | 100.43 | | |

| Fourth Quarter ended March 31, 2018 | 126.67 | | | | 97.46 | | |

| Fiscal Year Ended March 31, 2017 | | | | | | | |

| First Quarter ended June 30, 2016 | $ | 40.17 | | | $ | 33.06 | |

| Second Quarter ended September 30, 2016 | 46.78 | | | | 37.64 | | |

| Third Quarter ended December 31, 2016 | 51.34 | | | | 41.70 | | |

| Fourth Quarter ended March 31, 2017 | 60.20 | | | | 48.58 | | |

Our Credit Agreement restricts the payment of dividends on our stock.

March 2018

| Take-Two Interactive Software, Inc. | $ | 100.00 | | | $ | 135.79 | | | $ | 157.65 | | | $ | 233.25 | | | $ | 367.00 | | | $ | 605.45 | |

| NASDAQ Composite Index | 100.00 | | | | 130.18 | | | | 153.76 | | | | 154.62 | | | | 189.99 | | | | 229.43 | | |

| Peer Group | 100.00 | | | | 147.14 | | | | 216.02 | | | | 281.44 | | | | 400.93 | | | | 544.26 | | |

Subsequent to March 31, 2018 and through the date of this filing, we repurchased an additional 1,597,216 shares of our common stock in the open market for $153.5 million, including commissions.

After these additional purchases, 5,936,580 shares of our common stock remain available for repurchase under the share repurchase program.

During the fiscal year ended March 31, 2018, we also repurchased 151,108 shares of our common stock for $13.5 million, in connection with our obligation to holders of restricted stock awards to withhold the number of shares required to satisfy the holders' tax liabilities in connection with the vesting of such shares.

These 151,108 shares were not part of the publicly announced share repurchase program.

| January 1 - 31, 2018 | | — | | | — | | | | — | | | 7,982,603 | |

| February 1 - 28, 2018 | | 63,195 | | | $ | 104.01 | | | 63,195 | | | 7,919,408 | |

| March 1 - 31, 2018 | | 498,942 | | | $ | 98.91 | | | 385,612 | | | 7,533,796 | |

| | |

| --- | --- |

| * | 113,330 of the shares repurchased during March 2018 were repurchased in connection with our obligation to holders of restricted stock units to withhold the number of shares required to satisfy the holders' tax liabilities in connection with the vesting of such shares and were not part of the publicly announced share repurchase program. |

| STATEMENT OF OPERATIONS DATA: | [removed: 2018] [added: 2019 (1)] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Net revenue | $ | [removed: 1,792,892] [added: 2,668,394] | | | $ | [removed: 1,779,748] [added: 1,792,892] | | | $ | [removed: 1,413,698] [added: 1,779,748] | | | $ | [removed: 1,082,938] [added: 1,413,698] | | | $ | [removed: 2,350,568] [added: 1,082,938] | |

| Gross profit | [removed: 894,581] [added: 1,144,750] | | | | [removed: 756,789] [added: 894,581] | | | | [removed: 599,825] [added: 756,789] | | | | [removed: 288,071] [added: 599,825] | | | | [removed: 936,241] [added: 288,071] | | |

| Net income (loss) | [removed: $173,533] [added: $] | [added: 333,837] | | | $ | [removed: 67,303] [added: 173,533] | | | $ | [removed: (8,302] [added: 67,303] | [removed: )] | | $ | [removed: (279,470] [added: (8,302] | ) | | $ | [removed: 361,605] [added: (279,470] | [added: )] |

| Earnings [removed: (loss)] per share: | | | | | | | | | | | | | | | | | | | |

| Earnings (loss) per share: | $ | [removed: 1.57] [added: 2.95] | | | $ | [removed: 0.73] [added: 1.57] | | | $ | [removed: (0.10] [added: 0.73] | [removed: )] | | $ | [removed: (3.48] [added: (0.10] | ) | | $ | [removed: 3.79] [added: (3.48] | [added: )] |

| Earnings (loss) per share: | $ | [removed: 1.54] [added: 2.90] | | | $ | [removed: 0.72] [added: 1.54] | | | $ | [removed: (0.10] [added: 0.72] | [removed: )] | | $ | [removed: (3.48] [added: (0.10] | ) | | $ | [removed: 3.20] [added: (3.48] | [added: )] |

| BALANCE SHEET DATA: | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015(1)] [added: 2016] | | | | [removed: 2014(1)] [added: 2015(2)] | | |

| Total assets | $ | [removed: 3,737,841] [added: 4,243,065] | | | $ | [removed: 3,149,154] [added: 3,737,841] | | | $ | [removed: 2,590,277] [added: 3,149,154] | | | $ | [removed: 2,228,073] [added: 2,590,277] | | | $ | [removed: 1,795,083] [added: 2,228,073] | |

| Long-term debt | [removed: 8,068] [added: —] | | | | [removed: 251,929] [added: 8,068] | | | | [removed: 497,935] [added: 251,929] | | | | [removed: 473,030] [added: 497,935] | | | | [removed: 449,484] [added: 473,030] | | |

[removed: | (1) |] [added: (2)] During fiscal 2016, we retrospectively adopted Accounting Standards Update 2015-03, "Simplifying the Presentation of Debt Issuance Costs," and as a result previously reported Total assets and Long-term debt have both decreased from previously reported amounts by $3,027 [removed: and $4,547] as of March 31, [removed: 2015 and 2014, respectively,] [added: 2015,] to reflect the deduction of debt issuance costs from the carrying amount of the related debt liability. [removed: |]

(1) During fiscal 2019, we adopted Accounting Standards Update 2014-09, "Revenue from Contracts with Customers (Topic 606)," using a modified retrospective method.

Therefore, prior periods were not restated.

| | |

| --- | --- |

We provide details of our valuation and qualifying accounts in [removed: "Note 21—Supplementary] [added: Note 21 - Supplementary] Financial [removed: Information"] [added: Information] to the Consolidated Financial Statements.

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures at March 31, [removed: 2018,] [added: 2019,] the end of the period covered by this report.

Based on this evaluation, the principal executive officer and principal financial officer concluded that, at March 31, [removed: 2018,] [added: 2019,] our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported on a timely basis, and [added: (ii) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.]

Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of March 31, [removed: 2018.][added: 2019.]

There were no changes in our internal control over financial reporting during the fiscal quarter ended March 31, [removed: 2018,] [added: 2019,] which were identified in connection with management's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

(ii) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

The information required by this Item is incorporated herein by reference to the sections entitled "Proposal 1—Election of Directors" and "Executive Compensation—Section 16(a) Beneficial Ownership Reporting Compliance" in our definitive Proxy Statement (the "Proxy Statement") for the Annual Meeting of Stockholders to be held in [removed: 2018.][added: 2019.]

We intend to file the Proxy Statement within 120 days after the end of the fiscal year (i.e. on or before July 29, [removed: 2018).][added: 2019).]

| (i) | Financial Statements. See Index to Financial Statements on page [removed: 51] [added: 53] of this Report. |

| 10.13 | | [Take-Two Interactive Software, Inc. 2017 [added: Second Amended and Restated] Global Employee Stock Purchase Plan, effective as of [removed: September 15, 2017](http://www.sec.gov/Archives/edgar/data/946581/000119312517238644/d330685ddef14a.htm#tx330685_38)+] [added: March 28, 2019](https://www.sec.gov/Archives/edgar/data/946581/000162828019006691/ex-10132ndamendedandrestat.htm)+] | | [removed: 14A] | | [removed: 7/27/2017] | | [removed: Annex D] | | [added: X] |

| [removed: 10.21] [added: 10.22] | | [Employment Agreement, dated February 14, 2008, by and between the Company and Karl Slatoff](http://www.sec.gov/Archives/edgar/data/946581/000114420408009931/v103944_ex10-3.htm)+ | | 8-K | | 2/15/2008 | | 10.3 | | |

| [removed: 10.22] [added: 10.23] | | [Employment Agreement dated January 28, 2015 between the Company and Daniel Emerson](http://www.sec.gov/Archives/edgar/data/946581/000104746915000639/a2222916zex-10_1.htm)+ | | 10-Q | | 2/6/2015 | | 10.1 | | |

| [removed: 10.23] [added: 10.24] | | [Management Agreement, dated as of March 10, 2014, by and between the Company and ZelnickMedia Corporation](http://www.sec.gov/Archives/edgar/data/946581/000110465914018060/a14-7799_1ex10d1.htm)+ | | 8-K | | 3/10/2014 | | 10.1 | | |

| [removed: 10.24] [added: 10.25] | | [Restricted Unit Agreement, dated as of May 20, 2015, by and between the Company and ZelnickMedia Corporation](http://www.sec.gov/Archives/edgar/data/946581/000110465915039690/a15-12266_2ex10d2.htm)+ | | S-3 ASR | | 5/20/2015 | | 10.2 | | |

| [removed: 10.25] [added: 10.26] | | [Amended and Restated Restricted Unit Agreement Pursuant to the Take-Two Interactive Software, Inc. 2009 Incentive Stock Plan, dated as of June 30, 2015](http://www.sec.gov/Archives/edgar/data/946581/000104746915006749/a2225573zex-10_1.htm)+ | | 10-Q | | 8/10/2015 | | 10.1 | | |

| [removed: 10.26] [added: 10.27] | | [Amendment to the Restricted Stock Unit Agreement, dated as of March 31, 2016, by and between Take-Two Interactive Software, Inc. and ZelnickMedia Corporation](http://www.sec.gov/Archives/edgar/data/946581/000104746916013278/a2228643zex-10_50.htm)+ | | 10-K | | 5/19/2016 | | 10.50 | | |

| [removed: 10.27] [added: 10.28] | | [Restricted Unit Agreement, dated as of May 20, 2016, by and between Take-Two Interactive Software, Inc. and ZelnickMedia Corporation](http://www.sec.gov/Archives/edgar/data/946581/000110465916122193/a16-11783_2ex10d2.htm)+ | | S-3 ASR | | 5/20/2016 | | 10.2 | | |

| [removed: 10.28] [added: 10.29] | | [Amendment to Amended and Restated Restricted Unit Agreement Pursuant to the Take Two Interactive Software, Inc. 2009 Incentive Stock Plan, dated as of February 7, 2017](http://www.sec.gov/Archives/edgar/data/946581/000104746917000578/a2230843zex-10_3.htm)+ | | 10-Q | | 2/8/2017 | | 10.3 | | |

| [removed: 10.29] [added: 10.30] | | [Restricted Unit Agreement, dated as of May 25, 2017, by and between Take-Two Interactive Software, Inc. and ZelnickMedia Corporation](http://www.sec.gov/Archives/edgar/data/946581/000110465917035222/a17-14155_1ex10d2.htm)+ | | S-3 ASR | | 5/25/2017 | | 10.2 | | |

| [removed: 10.30] [added: 10.31] | | [Amendment to Amended and Restated Restricted Unit Agreement Pursuant to the Take-Two Interactive Software, Inc. 2009 Incentive Stock Plan, dated as of December 15, 2017](http://www.sec.gov/Archives/edgar/data/946581/000162828018001226/ttwoex-10x4.htm)+ | | 10-Q | | 2/8/2018 | | 10.4 | | |

| [removed: 10.31] [added: 10.32] | | [Management Agreement, dated as of November 17, 2017, by and between the Company and ZelnickMedia Corporation](http://www.sec.gov/Archives/edgar/data/946581/000110465917069999/a17-27361_1ex10d1.htm)+ | | 8-K | | 11/22/2017 | | 10.1 | | |

| [removed: 10.32] [added: 10.33] | | [Restricted Unit Agreement, dated as of April 13, 2018, by and between Take-Two Interactive Software, Inc. and ZelnickMedia Corporation](http://www.sec.gov/Archives/edgar/data/946581/000110465918023988/a18-9988_1ex10d2.htm)+ | | S-3 ASR | | 4/13/2018 | | 10.2 | | |

| [removed: 10.39] [added: 10.45] | | [removed: [Fourth Amendment] [added: [Amendment] to [removed: Second Amended and Restated Credit] [added: the Xbox One Publisher License] Agreement, [removed: May 21, 2015](http://www.sec.gov/Archives/edgar/data/946581/000104746916013278/a2228643zex-10_45.htm)] [added: dated January 30, 2015, between Microsoft Corporation and the Company](http://www.sec.gov/Archives/edgar/data/946581/000104746916013278/a2228643zex-10_48.htm)*] | | 10-K | | 5/19/2016 | | [removed: 10.45] [added: 10.48] | | |

| 10.42 | | [removed: [Seventh Amendment] [added: [Amendment] to [removed: Second Amended and Restated Credit] [added: the Xbox 360 Publisher License] Agreement, [removed: dated] [added: signed on] December [removed: 22, 2017](http://www.sec.gov/Archives/edgar/data/946581/000162828018001226/ttwoex-10x3.htm)] [added: 21, 2017, between Microsoft Corporation and the Company](http://www.sec.gov/Archives/edgar/data/946581/000162828018001226/ttwoex-10x2.htm)*] | | 10-Q | | 2/8/2018 | | [removed: 10.3] [added: 10.2] | | |

| [removed: 10.43] [added: 10.36] | | [Xbox 360 Publisher License Agreement dated November 17, 2005, between Microsoft Licensing, GP and the Company](http://www.sec.gov/Archives/edgar/data/946581/000104746911009224/a2206110zex-10_3.htm)* | | 10-Q | | 11/8/2011 | | 10.3 | | |

| [removed: 10.44] [added: 10.37] | | [Amendment to Xbox 360 Publisher License Agreement, dated December 4, 2008, between Microsoft Licensing, GP and the Company](http://www.sec.gov/Archives/edgar/data/946581/000104746909006187/a2193344zex-10_1.htm)* | | 10-Q | | 6/5/2009 | | 10.1 | | |

| [removed: 10.45] [added: 10.38] | | [Amendment to the Xbox 360 Publisher License Agreement, dated November 22, 2011, between the Company and Microsoft Licensing, GP](http://www.sec.gov/Archives/edgar/data/946581/000104746912000587/a2207032zex-10_1.htm)* | | 10-Q | | 2/3/2012 | | 10.1 | | |

| [removed: 10.46] [added: 10.39] | | [Amendment to the Xbox 360 Publisher License Agreement, dated December 11, 2012, between the Company and Microsoft Licensing, GP](http://www.sec.gov/Archives/edgar/data/946581/000104746913000681/a2212680zex-10_2.htm)* | | 10-Q | | 2/6/2013 | | 10.2 | | |

| [removed: 10.47] [added: 10.40] | | [Amendment to the Xbox 360 Publisher License Agreement, dated November 13, 2013, between the Company and Microsoft Licensing, GP](http://www.sec.gov/Archives/edgar/data/946581/000104746914000555/a2218068zex-10_2.htm)* | | 10-Q | | 2/4/2014 | | 10.2 | | |

| [removed: 10.48] [added: 10.41] | | [Amendment to the Xbox 360 Publisher License Agreement, dated September 30, 2014, between Microsoft Corporation and the Company](http://www.sec.gov/Archives/edgar/data/946581/000104746914008670/a2221879zex-10_1.htm)* | | 10-Q | | 10/30/2014 | | 10.1 | | |

| [removed: 10.49] [added: 10.48] | | [Amendment [added: No. 5] to the Xbox [removed: 360] [added: One] Publisher License Agreement, signed on [removed: December 21, 2017,] [added: January 10, 2018,] between Microsoft Corporation and the [removed: Company](http://www.sec.gov/Archives/edgar/data/946581/000162828018001226/ttwoex-10x2.htm)*] [added: Company](http://www.sec.gov/Archives/edgar/data/946581/000162828018006877/ex-1055033118.htm)*] | | [removed: 10-Q] [added: 10-K] | | [removed: 2/8/2018] [added: 5/17/2018] | | [removed: 10.2] [added: 10.55] | | |

| [removed: 10.50] [added: 10.43] | | [Xbox One Publisher License Agreement dated October 31, 2013, between Microsoft Licensing, GP and the Company](http://www.sec.gov/Archives/edgar/data/946581/000104746914000555/a2218068zex-10_1.htm)* | | 10-Q | | 2/4/2014 | | 10.1 | | |

| [removed: 10.51] [added: 10.44] | | [Amendment to the Xbox One Publisher License Agreement, dated May 7, 2014, between Microsoft Licensing, GP and the Company](http://www.sec.gov/Archives/edgar/data/946581/000104746914006667/a2220828zex-10_1.htm)* | | 10-Q | | 8/6/2014 | | 10.1 | | |

| [removed: 10.52] [added: 10.46] | | [Amendment [added: No. 3] to the Xbox One Publisher License Agreement, dated [removed: January 30,] [added: August 13,] 2015, between Microsoft Corporation and the [removed: Company](http://www.sec.gov/Archives/edgar/data/946581/000104746916013278/a2228643zex-10_48.htm)*] [added: Company](http://www.sec.gov/Archives/edgar/data/946581/000104746916013278/a2228643zex-10_49.htm)*] | | 10-K | | 5/19/2016 | | [removed: 10.48] [added: 10.49] | | |

| [removed: 10.53] [added: 10.47] | | [Amendment No. [removed: 3] [added: 4] to the Xbox One Publisher License Agreement, dated [removed: August 13, 2015,] [added: December 15, 2016,] between Microsoft Corporation and the [removed: Company](http://www.sec.gov/Archives/edgar/data/946581/000104746916013278/a2228643zex-10_49.htm)*] [added: Company](http://www.sec.gov/Archives/edgar/data/946581/000110465917034645/a17-14046_1ex10d2.htm)*] | | [removed: 10-K] [added: 10-Q/A] | | [removed: 5/19/2016] [added: 5/23/2017] | | [removed: 10.49] [added: 10.2] | | |

| [removed: 10.56] [added: 10.49] | | [PlayStation Global Developer and Publisher Agreement, dated as of March 23, 2017, between the Company and certain of its affiliates and Sony Interactive Entertainment, Inc., Sony Interactive Entertainment America LLC, and Sony Interactive Entertainment Europe Ltd.](http://www.sec.gov/Archives/edgar/data/946581/000162828017005833/ex10-48.htm) | | 10-K | | 5/24/2017 | | 10.48 | | |

| [removed: 10.57] [added: 10.50] | | [Lease Agreement between the Company and Moklam Enterprises, Inc. dated July 1, 2002](http://www.sec.gov/Archives/edgar/data/946581/000112528202002712/b320194ex_10-2.txt) | | 10-Q | | 9/16/2002 | | 10.2 | | |

| [removed: 10.58] [added: 10.51] | | [Sixth Lease Modification Agreement, dated January 18, 2012, between the Company and Moklam Enterprises, Inc.](http://www.sec.gov/Archives/edgar/data/946581/000104746912006226/a2209413zex-10_45.htm) | | 10-K | | 5/23/2012 | | 10.45 | | |

| [removed: 10.59] [added: 10.52] | | [Seventh Lease Modification Agreement, dated April 8, 2014, between the Company and Moklam Enterprises, Inc.](http://www.sec.gov/Archives/edgar/data/946581/000104746914004898/a2220044zex-10_39.htm) | | 10-K | | 5/14/2014 | | 10.39 | | |

| [removed: 10.60] [added: 10.53] | | [Eighth Lease Modification Agreement, dated as of January 6, 2015, by and between Take-Two Interactive Software, Inc. and Moklam Enterprises, Inc.](http://www.sec.gov/Archives/edgar/data/946581/000104746916013278/a2228643zex-10_47.htm) | | 10-K | | 5/19/2016 | | 10.47 | | |

| [removed: 10.61] [added: 10.54] | | [Ninth Lease Modification Agreement, dated as of December 15, 2015, by and between Take-Two Interactive Software, Inc. and Moklam Enterprises, Inc.](http://www.sec.gov/Archives/edgar/data/946581/000104746916010014/a2227207zex-10_1.htm) | | 10-Q | | 2/4/2016 | | 10.1 | | |

| [removed: 10.62] [added: 10.55] | | [Lease Agreement, dated as of December 12, 2016, by and between Take-Two Interactive Software, Inc. and DOLP 1133 Properties II LLC for a premises with entrances at 1133 Avenue of the Americas and 110 West 44th Street, New York, New York 10036](http://www.sec.gov/Archives/edgar/data/946581/000104746917000578/a2230843zex-10_1.htm) | | 10-Q | | 2/8/2017 | | 10.1 | | |

| [removed: 10.63] [added: 10.57] | | [Registration Rights Agreement, dated January 31, 2017, by and among Take-Two Interactive Software, Inc, Andres Bou Ortiz, Horacio Martos Borja, Marc Canaleta Caupena, Voladuras Hinojo, S.L., Nauta Tech Invest III, S.C.R., S.A., Bilbao Vizcaya Holding, S.A., La Banque Postale Innovation 11 FCPI, Capital Croissance 4, Objectif Innovation Patrimoine 4 FCPI, Strategie PME 2011 FCPI, Idinvest Patrimoine FCPI, Allianz Eco Innovation 3 FCPI, Objectif Innovation 5 FCPI, Idinvest Crossance FCPI, SG Innovation 2011 FCPI, Allianz Eco Innovation 2 FCPI, Objectif Innovation 4 FCPI, Idinvest Flexible 2016 FCPI, Capital Croissance 5 FCPI, Objectif Innovation Patrimoine 5 FCPI, Idinvest Patrimoine 2 FCPI, Objectif Innovation Patrimoine 6 FCPI, Idinvest Patrimoine 3 FCPI, Greylock Israel Investment Vehicle in Social Point, LTD, and HCPESP, S.a.r.l.](http://www.sec.gov/Archives/edgar/data/946581/000110465917006472/a17-3563_1ex10d1.htm) | | 8-K | | 2/3/2017 | | 10.1 | | |

| 21.1 | | [Subsidiaries of the [removed: Company](https://www.sec.gov/Archives/edgar/data/946581/000162828018006877/ex-211033118.htm)] [added: Company](https://www.sec.gov/Archives/edgar/data/946581/000162828019006691/ex-211033119.htm)] | | | | | | | | X |

| 23.1 | | [Consent of Ernst & Young [removed: LLP](https://www.sec.gov/Archives/edgar/data/946581/000162828018006877/ex-231033118.htm)] [added: LLP](https://www.sec.gov/Archives/edgar/data/946581/000162828019006691/ex-231033119.htm)] | | | | | | | | X |

| 31.1 | | [Chief Executive Officer Certification Pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/946581/000162828018006877/ex-311033118.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/946581/000162828019006691/ex-311033119.htm)] | | | | | | | | X |

| 31.2 | | [Chief Financial Officer Certification Pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/946581/000162828018006877/ex-312033118.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/946581/000162828019006691/ex-312033119.htm)] | | | | | | | | X |

| 32.1 | | [Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/946581/000162828018006877/ex-321033118.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/946581/000162828019006691/ex-321033119.htm)] | | | | | | | | X |

| 10.21 | | [Third Amendment to Employment Agreement dated May 7, 2018, between the Company and Lainie Goldstein](http://www.sec.gov/Archives/edgar/data/946581/000162828018010376/a063018ttwoex-10x2.htm)+ | | 10-Q | | 8/3/2018 | | 10.2 | | |

| 10.34 | | [Restricted Unit Agreement, dated as of April 15, 2019, by and between Take-Two Interactive Software, Inc. and ZelnickMedia Corporation](http://www.sec.gov/Archives/edgar/data/946581/000110465919021367/a19-8263_1ex10d2.htm) + | | S-3 ASR | | 4/15/2019 | | 10.2 | | |

| 10.35 | | [Credit Agreement, dated as of February 8, 2019, by and among Take-Two Interactive Software, Inc., the lender parties thereto, Wells Fargo Bank, National Association, as administrative agent for the Lenders, Wells Fargo Securities, LLC and JP Morgan Chase Bank, N.A., as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A. as syndication agent](https://www.sec.gov/Archives/edgar/data/946581/000162828019006691/ex-1035taketwocreditagreem.htm) | | | | | | | | X |

| 10.56 | | [First Amendment to Lease, dated as of July 25, 2018 by and between Take-Two Interactive Software, Inc. and DOLP 1133 Properties II LLC](http://www.sec.gov/Archives/edgar/data/946581/000162828018013920/a093018ttwoex-10x1.htm) | | 10-Q | | 11/8/2018 | | 10.1 | | |

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | Incorporated by Reference | | | | | | |

| Exhibit Number | | Exhibit Description | | Form | | Filing Date | | Exhibit | | Filed Herewith |

| 4.1 | | [Indenture, dated as of June 18, 2013, by and between the Company and The Bank of New York Mellon, as Trustee, relating to 1.00% Convertible Notes](http://www.sec.gov/Archives/edgar/data/946581/000119312513262865/d555895dex41.htm) | | 8-K | | 6/18/2013 | | 4.1 | | |

| 4.2 | | [Supplemental Indenture, dated as of June 18, 2013, between the Company and The Bank of New York Mellon, as Trustee, to Indenture, dated as of June 18, 2013, between the Company and The Bank of New York Mellon, as Trustee](http://www.sec.gov/Archives/edgar/data/946581/000119312513262865/d555895dex42.htm) | | 8-K | | 6/18/2013 | | 4.2 | | |

| 4.3 | | [Form of 1.00% Convertible Note (included in Exhibit 4.2)](http://www.sec.gov/Archives/edgar/data/946581/000119312513262865/d555895dex42.htm) | | 8-K | | 6/18/2013 | | 4.2 | | |

| 10.33 | | [Security Agreement dated as of July 3, 2007, made by each 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](http://www.sec.gov/Archives/edgar/data/946581/000114420407035755/v080358_ex2.htm) | | 8-K | | 7/9/2007 | | 10.2 | | |

| 10.34 | | [Supplement to Security Agreement dated as of November 16, 2007, made by each 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](http://www.sec.gov/Archives/edgar/data/946581/000114420407063550/v095104_ex99-2.htm) | | 8-K | | 11/20/2007 | | 99.2 | | |

| 10.35 | | [Second Amended and Restated Credit Agreement, dated as of October 17, 2011, by and among the Company, each of its Subsidiaries identified on the signature pages thereto as Borrowers, each of its Subsidiaries identified on the signature pages thereto as Guarantors, the lender parties thereto, and Wells Fargo Capital Finance, Inc., as administrative agent](http://www.sec.gov/Archives/edgar/data/946581/000119312511272912/d244224dex101.htm) | | 8-K | | 10/17/2011 | | 10.1 | | |

| 10.36 | | [First Amendment to Second Amended and Restated Credit Agreement, dated June 12, 2013](http://www.sec.gov/Archives/edgar/data/946581/000104746914004898/a2220044zex-10_27.htm) | | 10-K | | 5/14/2014 | | 10.27 | | |

| 10.37 | | [Second Amendment to Second Amended and Restated Credit Agreement, dated April 28, 2014](http://www.sec.gov/Archives/edgar/data/946581/000104746914004898/a2220044zex-10_28.htm) | | 10-K | | 5/14/2014 | | 10.28 | | |

| 10.38 | | [Third Amendment to Second Amended and Restated Credit Agreement, dated August 18, 2014](http://www.sec.gov/Archives/edgar/data/946581/000110465914062519/a14-19276_1ex10d1.htm) | | 8-K | | 8/21/2014 | | 10.1 | | |

| 10.40 | | [Fifth Amendment to Second Amended and Restated Credit Agreement, dated February 11, 2016](http://www.sec.gov/Archives/edgar/data/946581/000110465916096628/a16-4199_1ex10d1.htm) | | 8-K | | 2/12/2016 | | 10.1 | | |

| 10.41 | | [Sixth Amendment to Second Amended and Restated Credit Agreement, dated April 8, 2016](http://www.sec.gov/Archives/edgar/data/946581/000104746916014693/a2229342zex-10_1.htm) | | 10-Q | | 8/5/2016 | | 10.1 | | |

| 10.54 | | [Amendment No. 4 to the Xbox One Publisher License Agreement, dated December 15, 2016, between Microsoft Corporation and the Company](http://www.sec.gov/Archives/edgar/data/946581/000110465917034645/a17-14046_1ex10d2.htm)* | | 10-Q/A | | 5/23/2017 | | 10.2 | | |

| 10.55 | | [Amendment No. 5 to the Xbox One Publisher License Agreement, signed on January 10, 2018, between Microsoft Corporation and the Company](https://www.sec.gov/Archives/edgar/data/946581/000162828018006877/ex-1055033118.htm) | | | | | | | | X |

[removed: FISCAL YEAR ENDED MARCH] [added: | | | Fiscal Year Ended March] 31, [removed: 2018][added: | |]

| [Reports of Independent Registered Public Accounting [removed: Firm](#s6632AC0954A859828D5AB671B610017D)] [added: Firm](#sF41E48D74B715938800134D8A3447854)] | [removed: [52](#s6632AC0954A859828D5AB671B610017D)] [added: [54](#sF41E48D74B715938800134D8A3447854)] |

| [Consolidated Balance [removed: Sheets](#sA037D6B03BF55B7BAAC67702D7C1073D)—At] [added: Sheets](#s58DB0B0641E65A11AEA09FF7A3F25EAA)—At] March 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] | [removed: [54](#sA037D6B03BF55B7BAAC67702D7C1073D)] [added: [56](#s58DB0B0641E65A11AEA09FF7A3F25EAA)] |

| [Consolidated Statements of [removed: Operations](#s892B5D6881F452F5BAF0CF37BB9144C9)—For] [added: Operations](#s313286A0EEF55DFC9C1EFB763626C50B)—For] the fiscal years ended March 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] | [removed: [55](#s892B5D6881F452F5BAF0CF37BB9144C9)] [added: [57](#s313286A0EEF55DFC9C1EFB763626C50B)] |

| [Consolidated Statements of Comprehensive [removed: Income (Loss)](#s5ED9EE7ACEB7536E8AC0D1D35E71E38C)—For] [added: Income](#s6B993337A5C25B3E9D66E973C629CE0E)—For] the fiscal years ended March 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] | [removed: [56](#s5ED9EE7ACEB7536E8AC0D1D35E71E38C)] [added: [58](#s6B993337A5C25B3E9D66E973C629CE0E)] |

| [Consolidated Statements of Cash [removed: Flows](#s578DAEB80A015579ACD61FB7C1463A51)—For] [added: Flows](#s1E33D89E9DCB5E28887D411DF5F4FC73)—For] the fiscal years ended March 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] | [removed: [57](#s578DAEB80A015579ACD61FB7C1463A51)] [added: [59](#s1E33D89E9DCB5E28887D411DF5F4FC73)] |

| [Consolidated Statements of Stockholders' [removed: Equity](#s3B212E85F1BD53BAB85ABF5D38092B78)—For] [added: Equity](#s0C3FAA82E25C5569884B72418B935CC5)—For] the fiscal years ended March 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] | [removed: [58](#s3B212E85F1BD53BAB85ABF5D38092B78)] [added: [60](#s0C3FAA82E25C5569884B72418B935CC5)] |

| [Notes to the Consolidated Financial [removed: Statements](#s7A0FB659DD7E5AC3B5DA0C96ADB6EB1A)] [added: Statements](#sEACE0473CD05508CAEBD2E7A94D784C5)] | [removed: [59](#s7A0FB659DD7E5AC3B5DA0C96ADB6EB1A)] [added: [61](#sEACE0473CD05508CAEBD2E7A94D784C5)] |

We have audited the accompanying consolidated balance sheets of Take-Two Interactive Software, Inc. (the Company) as of March 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related consolidated statements of operations, comprehensive [removed: income (loss),] [added: income,] cash flows and stockholders’ equity for each of the three years in the period ended March 31, [removed: 2018,] [added: 2019,] and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended March 31, [removed: 2018,] [added: 2019,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, [removed: 2018,] [added: 2019,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May [removed: 16, 2018] [added: 13, 2019] expressed an unqualified opinion thereon.

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for stock-based compensation [removed: in 2018] [added: effective April 1, 2017] due to the adoption of ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting.

/s/ Ernst & [removed: Young,] [added: Young] LLP

New York, [removed: NY][added: New York]

We have audited Take-Two Interactive Software, Inc.'s (the Company) internal control over financial reporting as of March 31, [removed: 2018,] [added: 2019,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, [removed: 2018,] [added: 2019,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related consolidated statements of operations, comprehensive [removed: income (loss),] [added: income,] cash flows and stockholders’ equity for each of the three years in the period ended March 31, [removed: 2018,] [added: 2019,] and the related notes and our report dated May [removed: 16, 2018] [added: 13, 2019] expressed an unqualified opinion thereon.

| | | [added: 2019 | | | |] 2018 | | | | 2017 | | |

| Cash and cash equivalents | | $ | [removed: 808,973] [added: 826,525] | | | $ | [removed: 943,396] [added: 808,973] | |

| Short-term investments | | [removed: 615,406] [added: 744,485] | | | | [removed: 448,932] [added: 615,406] | | |

| Restricted cash | | [removed: 437,398] [added: 565,461] | | | | [removed: 337,818] [added: 437,398] | | |

| Accounts receivable, net of allowances of [removed: $54,290] [added: $995] and [removed: $66,483] [added: $54,290] at March 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively | | [removed: 247,649] [added: 395,729] | | | | [removed: 219,558] [added: 247,649] | | |

| Inventory | | [removed: 15,162] [added: 28,200] | | | | [removed: 16,323] [added: 15,162] | | |

| Software development costs and licenses | | [removed: 33,284] [added: 28,880] | | | | [removed: 41,721] [added: 33,284] | | |

| Deferred cost of goods sold | | [removed: 117,851] [added: 51,867] | | | | [removed: 127,901] [added: 117,851] | | |

| Prepaid expenses and other | | [removed: 133,454] [added: 186,688] | | | | [removed: 59,593] [added: 133,454] | | |

| Total current assets | | [removed: 2,409,177] [added: 2,827,835] | | | | [removed: 2,195,242] [added: 2,409,177] | | |

| Fixed assets, net | | [removed: 102,478] [added: 127,882] | | | | [removed: 67,300] [added: 102,478] | | |

| Software development costs and licenses, net of current portion | | [removed: 639,369] [added: 603,436] | | | | [removed: 381,910] [added: 639,369] | | |

| Deferred cost of goods sold, net of current portion | | [removed: 26,719] [added: 1,028] | | | | [removed: —] [added: 26,719] | | |

| Goodwill | | [removed: 399,530] [added: 381,717] | | | | [removed: 359,115] [added: 399,530] | | |

| Other intangibles, net | | [removed: 103,681] [added: 73,115] | | | | [removed: 110,262] [added: 103,681] | | |

| Total assets | | $ | [removed: 3,737,841] [added: 4,243,065] | | | $ | [removed: 3,149,154] [added: 3,737,841] | |

| Accounts payable | | $ | [removed: 35,029] [added: 72,797] | | | $ | [removed: 31,892] [added: 35,029] | |

| Accrued expenses and other current liabilities | | [removed: 914,748] [added: 1,035,695] | | | | [removed: 750,875] [added: 914,748] | | |

| Deferred revenue | | [removed: 777,152] [added: 843,302] | | | | [removed: 903,125] [added: 777,152] | | |

| Total current liabilities | | [removed: 1,726,929] [added: 1,951,794] | | | | [removed: 1,685,892] [added: 1,726,929] | | |

| Long-term debt | | [removed: 8,068] [added: —] | | | | [removed: 251,929] [added: 8,068] | | |

| Non-current deferred revenue | | [removed: 355,589] [added: 21,058] | | | | [removed: 10,406] [added: 355,589] | | |

| Other long-term liabilities | | [removed: 158,285] [added: 229,633] | | | | [removed: 197,199] [added: 158,285] | | |

Adoption of ASU No. 2014-09

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for revenue recognition effective April 1, 2018 due to the adoption of Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), and the related amendments.

May 13, 2019

/s/ Ernst & Young LLP

New York, New York

May 13, 2019

| | | 2019 | | | | 2018 | | |

| Deferred tax assets | | 134,732 | | | | 4,930 | | |

| Other assets | | 93,320 | | | | 51,957 | | |

| Retained earnings | | 877,626 | | | | 73,516 | | |

| | | 2019 | | | | 2018 (as Adjusted) (1) | | | | 2017 (as Adjusted) (1) | | |

| Net income | | $ | 333,837 | | | $ | 173,533 | | | $ | 67,303 | |

| Net cash provided by operating activities | | 843,515 | | | | 493,527 | | | | 407,903 | | |

| Net change in cash, cash equivalents, and restricted cash | | 145,615 | | | | (34,843 | | ) | | 221,303 | | |

| Cash, cash equivalents, and restricted cash, beginning of year | | 1,246,371 | | | | 1,281,214 | | | | 1,059,911 | | |

| Cash, cash equivalents, and restricted cash, end of year | | $ | 1,391,986 | | | $ | 1,246,371 | | | $ | 1,281,214 | |

(1) Prior period amounts have been adjusted retrospectively to reflect the adoption of ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted

Cash.

Refer to Note 1 for further discussion.

| Net income | | — | | | — | | | | — | | | | — | | | — | | | | 333,837 | | | | — | | | | 333,837 | | |

| Repurchased common stock | | | | | | | | | | | | | (3,716 | ) | | (362,392 | | ) | | | | | | | | | | (362,392 | | ) |

| Conversion of 1.00% Convertible Notes Due 2018 | | 377 | | | 4 | | | | 8,108 | | | | | | | | | | | | | | | | | | | 8,112 | | |

| Impact from adoption of New Revenue Accounting Standard (Note 2) | | | | | | | | | | | | | | | | | | | | 470,273 | | | | 4,653 | | | | 474,926 | | |

| Employee share purchase plan settlement | | 57 | | | 1 | | | | 5,069 | | | | | | | | | | | | | | | | | | | 5,070 | | |

| Balance, March 31, 2019 | | 134,602 | | | $ | 1,346 | | | $ | 2,019,369 | | | (22,421 | ) | | $ | (820,572 | ) | | $ | 877,626 | | | $ | (37,189 | ) | | $ | 2,040,580 | |

Segments

We have one operating and reportable segment.

Our operations involve similar products and customers worldwide.

Our Chief Executive Officer, who is our Chief Operating Decision Maker ("CODM"), manages our operations on a consolidated basis--supplemented by sales information by product category, major product title, and platform--for the purpose of evaluating performance and allocating resources.

Financial information about our one segment and geographic areas is included in Note 2 - Revenue from Contracts with Customers and Note 9 - Fixed Assets, Net.

as of March 31, 2019 and 2018.

Subsequent to establishing technological feasibility of a product, we capitalize all development

Amortization periods for our software products generally range from 12 to 36 months.

Amounts earned and not yet paid are reflected within the software development royalties component of Accrued expenses and other current liabilities on our Consolidated Balance Sheets.

If the carrying value exceeds the fair value, an impairment charge is recognized equal to the difference between the carrying value of the reporting unit and its fair value, considering the related income tax effect of any goodwill deductible for tax purposes.

Consistent with prior years, we performed our annual impairment assessment process for goodwill in August 2018 and did not record any goodwill impairments.

During the fiscal quarter ended March 31, 2019, we changed the measurement date for performing our annual goodwill impairment test from the beginning of August to the beginning of March.

As a result, we performed an additional impairment test for our goodwill as of March 1, 2019 which did not result in any impairment of our goodwill.

This voluntary change in accounting principle, applied prospectively, is preferable as it aligns the annual goodwill impairment test date more closely with our internal budgeting process and did not delay, accelerate, or avoid an impairment of our goodwill.

Retrospective application to prior periods is impracticable as we are unable to objectively determine, without the use of hindsight, the assumptions that would be used in those earlier periods.

May 16, 2018

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | March 31, | | | | | | |

| Other assets | | 56,887 | | | | 35,325 | | |

| Retained earnings (accumulated deficit) | | 73,516 | | | | (99,694 | | ) |

| Restricted cash | | (99,580 | | ) | | (76,474 | | ) | | (91,491 | | ) |

| Net cash provided by operating activities | | 393,947 | | | | 331,429 | | | | 261,305 | | |

| Other | | — | | | | — | | | | (349 | | ) |

| Net change in cash and cash equivalents | | (134,423 | | ) | | 144,654 | | | | (112,378 | | ) |

| Cash and cash equivalents, beginning of year | | 943,396 | | | | 798,742 | | | | 911,120 | | |

| Cash and cash equivalents, end of year | | $ | 808,973 | | | $ | 943,396 | | | $ | 798,742 | |

| Balance, March 31, 2015 | | 104,594 | | | $ | 1,046 | | | $ | 1,028,197 | | | (16,238 | ) | | $ | (276,836 | ) | | $ | (158,695 | ) | | $ | (30,624 | ) | | $ | 563,088 | |

| Net loss | | — | | | — | | | | — | | | | — | | | — | | | | (8,302 | | ) | | — | | | | (8,302 | | ) |

| Tax benefit associated with stock awards | | — | | | — | | | | 1,421 | | | | — | | | — | | | | — | | | | — | | | | 1,421 | | |

| Repurchased common stock | | — | | | — | | | | — | | | | (954 | ) | | (26,552 | | ) | | — | | | | — | | | | (26,552 | | ) |

If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed.

If the carrying value exceeds the fair value, there is a potential impairment, and step two must be performed.

In performing the quantitative assessment in step one, we

Step two compares the carrying value of the reporting unit's goodwill to its implied fair value (i.e., fair value of reporting unit less the fair value of the unit's assets and liabilities, including identifiable intangible assets).

If the implied fair value of goodwill is less than the carrying amount of goodwill, an impairment is recognized.

On December 22, 2017, the U.S. enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (herein referred to as the "Act”).

Given

the complexity of the GILTI provisions, the Company is still evaluating the effects of the GILTI provisions and has not yet determined its accounting policy.

At March 31, 2018, because the Company is still evaluating the GILTI provisions and analysis of future taxable income that is subject to GILTI, it is unable to make a reasonable estimate and has not reflected any adjustments related to GILTI in its Consolidated Financial Statements.

We recognize revenue on the sales of software products upon the transfer of title and risk of loss to our customers.

Accordingly, we recognize revenue for software titles when there is (1) persuasive evidence that an arrangement with the customer exists, (2) the product is delivered, (3) the selling price is fixed or determinable and (4) collection of the customer receivable is deemed probable.

For these products, we recognize revenue on the later of the street date or the sale date.

Advances received for licensing and exclusivity arrangements are reported on our Consolidated Balance Sheets as deferred revenue until we meet our performance obligations, at which point we recognize the revenue.

For some of our software products, we enter into multiple element revenue arrangements in which we may provide a combination of full game software, online multi-player functionality, and related post-contract customer support ("PCS") which generally includes additional free unspecified add-on content updates, maintenance, and online support services.

For these arrangements, we evaluate the significance of the PCS at the time each game is released based on the guidance in Accounting Standards Codification 985-605, "Software—Revenue Recognition" ("ASC 985-605") to determine if the PCS rises to the level of a separate deliverable.

We monitor our initial assessments on an ongoing basis and consider any changes that may arise.

In conjunction with our evaluation, we consider such factors as the significance of the development effort, the nature of online features, the extent of anticipated marketing focus on online features, the significance of the online features to the consumers' anticipated overall gameplay experience, and the significance and length of time of our post sale obligations to consumers.

Determining whether PCS is significant for a particular game is subjective and requires management's judgment.

When a software arrangement includes multiple elements, the arrangement consideration is allocated to each revenue element based on the relative fair value of vendor specific objective evidence ("VSOE") for each element.

When VSOE of fair value does not exist for all of the elements in the arrangement, ASC 985-605 requires either the use of the residual method or the deferral of revenue until the earlier point at which VSOE of fair value exists for any undelivered element or until only one undelivered element remains.

For arrangements that require the deferral of revenue, the related cost of goods sold is deferred and recognized as the related net revenue is recognized.

Deferred cost of goods sold includes product costs and licenses.

We do not have VSOE for our PCS obligations and in those arrangements where PCS obligations have been determined to be significant we recognize revenue from the sale of software products and the related cost of goods sold ratably over the period we expect to offer the PCS to the consumer ("estimated service period"), assuming all other recognition criteria are met.

We also do not have VSOE for our online multi-player functionality; however, it is generally delivered at the same time with the full game software.