What changed in this filing

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Item 1. Financial Statements

2022-02-08 compared with 2021-11-04 · 126 added, 97 removed, 498 unchanged (31% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

September 30, 2021 March 31, 2021

December 31, 2021 March 31, 2021

Current assets:

2 unchanged sentences

Restricted cash and cash equivalents 267,010 538,822

Accounts receivable, net of allowances of $ 350 and $ 350 at September 30, 2021 and March 31, 2021, respectively

Accounts receivable, net of allowances of $ 350 and $ 350 at December 31, 2021 and March 31, 2021, respectively

647,907 552,762

28 unchanged sentences

Preferred stock, $ 0.01 par value, 5,000 shares authorized;

no shares issued and outstanding at September 30, 2021 and March 31, 2021

no shares issued and outstanding at December 31, 2021 and March 31, 2021

Common stock, $ 0.01 par value, 200,000 shares authorized;

138,891 and 137,584 shares issued and 115,210 and 115,163 outstanding at September 30, 2021 and March 31, 2021, respectively

139,007 and 137,584 shares issued and 115,326 and 115,163 outstanding at December 31, 2021 and March 31, 2021, respectively

Additional paid-in capital 2,541,492 2,288,781

Treasury stock, at cost;

23,681 and 22,421 common shares at September 30, 2021 and March 31, 2021, respectively

23,681 and 22,421 common shares at December 31, 2021 and March 31, 2021, respectively

( 1,020,584 ) ( 820,572 )

7 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

10 unchanged sentences

Interest and other, net ( 5,629 ) 1,098 ( 7,228 ) 12,022

Gain (loss) on long-term investments, net 395 ( 655 ) 2,392 ( 655 )

Gain on long-term investments, net 3,662 39,291 6,054 38,636

Income before income taxes 152,139 216,446 343,557 424,225

6 unchanged sentences

TAKE-TWO INTERACTIVE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in thousands)

Three Months Ended

September 30, Six Months Ended September 30,

December 31, Nine Months Ended December 31,

2021 2020 2021 2020

9 unchanged sentences

Other comprehensive (loss) income ( 14,836 ) 29,240 ( 25,919 ) 52,792

Comprehensive (loss) income $ ( 6,680 ) $ 116,628 $ 151,470 $ 211,378

Comprehensive income $ 129,661 $ 211,488 $ 281,131 $ 422,866

See accompanying Notes.

2 unchanged sentences

(in thousands)

Six Months Ended September 30,

Nine Months Ended December 31,

Operating activities:

6 unchanged sentences

Stock-based compensation 142,540 139,835

Gain on long-term investments ( 6,054 ) ( 40,588 )

Other, net 12,200 ( 89 )

13 unchanged sentences

Purchases of fixed assets ( 133,392 ) ( 40,207 )

Proceeds from sale of long-term investment — 22,472

Purchases of long-term investments ( 8,650 ) ( 16,452 )

Business acquisitions ( 157,291 ) ( 79,525 )

Other 1,100 —

Net cash used in investing activities ( 479,765 ) ( 240,899 )

16 unchanged sentences

(in thousands)

Three Months Ended September 30, 2021

Take-Two Interactive Software, Inc.

Three Months Ended December 31, 2021

Common Stock Additional

2 unchanged sentences

Comprehensive

Income (Loss) Non-controlling interest

Income (Loss) Total Stockholder's Equity

Shares Amount Shares Amount

Balance, June 30, 2021 138,846 $ 1,389 $ 2,417,658 ( 22,421 ) $ ( 820,572 ) $ 2,023,227 $ ( 2,770 ) $ 12,375 $ 3,631,307

Balance, September 30, 2021 138,891 $ 1,390 $ 2,475,085 ( 23,681 ) $ ( 1,020,584 ) $ 2,033,524 $ ( 19,747 ) $ 3,469,668

Net income — — — — — 144,497 — 144,497

2 unchanged sentences

Stock-based compensation — — 61,741 — — — — 61,741

Repurchased common stock — — — ( 1,260 ) ( 200,012 ) — — — ( 200,012 )

Issuance of restricted stock, net of forfeitures and cancellations 76 1 ( 1 ) — — — — —

Net share settlement of restricted stock awards ( 32 ) ( 1 ) ( 5,760 ) — — — — ( 5,761 )

Call option related to Nordeus Acquisition — — — — — — — ( 12,375 ) ( 12,375 )

Balance, September 30, 2021 138,891 $ 1,390 $ 2,475,085 ( 23,681 ) $ ( 1,020,584 ) $ 2,033,524 $ ( 19,747 ) $ — $ 3,469,668

Three Months Ended September 30, 2020

Employee share purchase plan settlement 72 1 10,427 — — — — 10,428

Balance, December 31, 2021 139,007 $ 1,391 $ 2,541,492 ( 23,681 ) $ ( 1,020,584 ) $ 2,178,021 $ ( 34,583 ) $ 3,665,737

Three Months Ended December 31, 2020

Common Stock Additional

5 unchanged sentences

Shares Amount Shares Amount

Balance, June 30, 2020 136,689 $ 1,367 $ 2,151,774 ( 22,421 ) $ ( 820,572 ) $ 1,370,590 $ ( 52,131 ) $ 2,651,028

Balance, September 30, 2020 137,349 $ 1,373 $ 2,285,394 ( 22,421 ) $ ( 820,572 ) $ 1,469,911 $ ( 34,824 ) $ 2,901,282

Net income — — — — — 182,248 — 182,248

Change in cumulative foreign currency translation adjustment — — — — — — 30,135 30,135

Net unrealized gain on available-for-sale securities, net of taxes — — — — — — ( 1,554 ) ( 1,554 )

Changes in gains on cash flow hedge, net — — — — — — ( 600 ) ( 600 )

Net unrealized gain on available-for-sale securities, net of tax — — — — — — ( 295 ) ( 295 )

Stock-based compensation — — 47,192 — — — — 47,192

1 unchanged sentence

Net share settlement of restricted stock awards ( 60 ) ( 1 ) ( 12,383 ) — — — — ( 12,384 )

Issuance of shares related to Playdots, Inc.

acquisition 604 6 97,641 — — — — 97,647

Balance, September 30, 2020 137,349 $ 1,373 $ 2,285,394 ( 22,421 ) $ ( 820,572 ) $ 1,469,911 $ ( 34,824 ) $ 2,901,282

Employee share purchase plan settlement 74 1 7,711 — — — — 7,712

Balance, December 31, 2020 137,504 $ 1,375 $ 2,327,913 ( 22,421 ) $ ( 820,572 ) $ 1,652,159 $ ( 5,584 ) $ 3,155,291

See accompanying Notes.

Six Months Ended September 30, 2021

Nine Months Ended December 31, 2021

Common Stock Additional

15 unchanged sentences

Issuance of shares related to Nordeus acquisition 515 5 94,149 — — — — 94,154

Balance, September 30, 2021 138,891 $ 1,390 $ 2,475,085 ( 23,681 ) $ ( 1,020,584 ) $ 2,033,524 $ ( 19,747 ) $ 3,469,668

Six Months Ended September 30, 2020

Balance, December 31, 2021 139,007 $ 1,391 $ 2,541,492 ( 23,681 ) $ ( 1,020,584 ) $ 2,178,021 $ ( 34,583 ) $ 3,665,737

Nine Months Ended December 31, 2020

Common Stock Additional

16 unchanged sentences

acquisition 604 6 97,641 — — — — 97,647

Balance, September 30, 2020 137,349 $ 1,373 $ 2,285,394 ( 22,421 ) $ ( 820,572 ) $ 1,469,911 $ ( 34,824 ) $ 2,901,282

Balance, December 31, 2020 137,504 $ 1,375 $ 2,327,913 ( 22,421 ) $ ( 820,572 ) $ 1,652,159 $ ( 5,584 ) $ 3,155,291

See accompanying Notes.

26 unchanged sentences

We adopted this update effective April 1, 2021.

The adoption of this standard did not have a material impact on our Condensed Consolidated Financial Statements.

The adoption of this update did not have a material impact on our Condensed Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

Accounting for Government Assistance

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance , which requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on any entity's financial statements.

ASU 2021-10 is effective for fiscal years, and interim periods within those fiscal years, beginning December 15, 2021 (April 1, 2022 for the Company), with early adoption permitted.

We are currently evaluating the potential impact of adopting this guidance on our disclosures.

Accounting for Contract Assets and Contract Liabilities

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

Under this new standard, deferred revenue acquired in a business

combination is measured pursuant to ASC 606 , Revenue from Contracts with Customers , rather than its assumed acquisition date fair value under the current guidance.

ASU 2021-08 is effective for fiscal years, and interim periods within those fiscal years, beginning December 15, 2022 (April 1, 2023 for the Company), with early adoption permitted.

However, adoption in an interim period other than the first fiscal quarter requires an entity to apply the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the new guidance is adopted.

We expect to early adopt this update for our fiscal year 2023 on April 1, 2022.

We are currently evaluating the potential impact of adopting this guidance on our Consolidated Financial Statements.

REVENUE FROM CONTRACTS WITH CUSTOMERS

4 unchanged sentences

Net revenue by timing of recognition was as follows:

Three Months Ended September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

6 unchanged sentences

Net revenue by content was as follows:

Three Months Ended September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

5 unchanged sentences

Net revenue by geographic region was as follows:

Three Months Ended September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

4 unchanged sentences

Net revenue by platform was as follows:

Three Months Ended September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

7 unchanged sentences

Net revenue by distribution channel was as follows:

Three Months Ended September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

5 unchanged sentences

We record deferred revenue when payments are due or received in advance of the fulfillment of our associated performance obligations.

Deferred revenue, including current and non-current balances as of September 30, 2021 and March 31, 2021 were $ 1,003,143 and $ 965,331 , respectively.

For the three months ended September 30, 2021, the additions to our deferred revenue balance were due primarily to cash payments received or due in advance of satisfying our performance obligations, while the reductions to our deferred revenue balance were due primarily to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business.

During the three months ended September 30, 2021 and 2020, $ 278,306 and $ 241,732 , respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period.

During the six months ended September 30, 2021 and 2020, $ 741,547 and $ 612,946 , respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period.

As of September 30, 2021, the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $ 1,152,076 , which includes our deferred revenue balances and amounts to be invoiced and recognized in future periods.

We expect to recognize approximately $ 1,035,546 of this balance as revenue over the next 12 months, and the remainder thereafter.

Deferred revenue, including current and non-current balances as of December 31, 2021 and March 31, 2021 were $ 979,117 and $ 965,331 , respectively.

For the three months ended December 31, 2021, the additions to our deferred revenue balance were due primarily to cash payments received or due in advance of satisfying our performance obligations, while the reductions to our deferred revenue balance were due primarily to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business.

During the three months ended December 31, 2021 and 2020, $ 121,324 and $ 109,713 , respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period.

During the nine months ended December 31, 2021 and 2020, $ 862,870 and $ 722,658 , respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the respective period.

As of December 31, 2021, the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $ 1,185,724 , which includes our deferred revenue balances and amounts to be invoiced and recognized in future periods.

We expect to recognize approximately $ 1,024,805 of this balance as

revenue over the next 12 months, and the remainder thereafter.

This balance does not include an estimate for variable consideration arising from sales-based royalty license revenue in excess of the contractual minimum guarantee.

As of September 30, 2021 and March 31, 2021, our contract asset balances were $ 107,865 and $ 105,554 , respectively, which are recorded within Prepaid expenses and other in our Condensed Consolidated Balance Sheets.

As of December 31, 2021 and March 31, 2021, our contract asset balances were $ 104,889 and $ 105,554 , respectively, which are recorded within Prepaid expenses and other in our Condensed Consolidated Balance Sheets.

MANAGEMENT AGREEMENT

3 unchanged sentences

The 2017 Management Agreement provides for an annual management fee of $ 3,100 over the term of the agreement and a maximum annual bonus opportunity of $ 7,440 over the term of the agreement, based on the Company achieving certain performance thresholds.

In consideration for ZelnickMedia's services, we recorded consulting expense (a component of General and administrative expenses) of $ 1,705 and $ 2,605 during the three months ended September 30, 2021 and 2020, respectively, and $ 3,410 and $ 5,270 during the six months ended September 30, 2021 and 2020, respectively.

We recorded stock-based compensation expense for restricted stock units granted to ZelnickMedia, which is included in General and administrative expenses, of $ 7,365 and $ 6,887 during the three months ended September 30, 2021 and 2020, respectively, and $ 14,583 and $ 13,657 during the six months ended September 30, 2021 and 2020, respectively.

In consideration for ZelnickMedia's services, we recorded consulting expense (a component of General and administrative expenses) of $ 3,446 and $ 2,655 during the three months ended December 31, 2021 and 2020, respectively, and $ 6,856 and $ 7,925 during the nine months ended December 31, 2021 and 2020, respectively.

We recorded stock-based compensation expense for restricted stock units granted to ZelnickMedia, which is included in General and administrative expenses, of $ 7,365 and $ 6,887 during the three months ended December 31, 2021 and 2020, respectively, and $ 21,948 and $ 20,544 during the nine months ended December 31, 2021 and 2020, respectively.

In connection with the 2017 Management Agreement, we have granted restricted stock units to ZelnickMedia as follows:

Six Months Ended September 30,

Nine Months Ended December 31,

Time-based 51 79

12 unchanged sentences

The performance-based restricted stock units, of which 50 % are tied to "IP" and 50 % to "RCS" (as defined in the relevant grant agreement), are eligible to vest based on the Company's achievement of certain performance metrics (as defined in the relevant grant agreement) of either individual product releases of "IP" or "RCS" measured over a two-year period.

The target number of performance-based restricted stock units that may be earned pursuant to these grants is equal to 50 % of the grant amounts set forth in the above table (the numbers in the table represent the maximum number of performance-based restricted stock units that may be earned).

The target number of performance-based restricted stock units that may be earned pursuant to

these grants is equal to 50 % of the grant amounts set forth in the above table (the numbers in the table represent the maximum number of performance-based restricted stock units that may be earned).

At the end of each reporting period, we assess the probability of each performance metric and upon determination that certain thresholds are probable, we record expense for the unvested portion of the shares of performance-based restricted stock units.

The unvested portion of time-based, market-based and performance-based restricted stock units held by ZelnickMedia were 449 and 588 as of September 30, 2021 and March 31, 2021, respectively.

During the three and six months ended September 30, 2021, 315 restricted stock units previously granted to ZelnickMedia vested, and no restricted stock units were forfeited by ZelnickMedia.

The unvested portion of time-based, market-based and performance-based restricted stock units held by ZelnickMedia were 449 and 588 as of December 31, 2021 and March 31, 2021, respectively.

During the three and nine months ended December 31, 2021, 315 restricted stock units previously granted to ZelnickMedia vested, and no restricted stock units were forfeited by ZelnickMedia.

FAIR VALUE MEASUREMENTS

8 unchanged sentences

The table below segregates all assets and liabilities that are measured at fair value on a recurring basis (which is measured at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.

September 30, 2021 Quoted prices

December 31, 2021 Quoted prices

(level 1) Significant

4 unchanged sentences

Commercial paper 16,645 — 16,645 — Cash and cash equivalents

Corporate bonds 9,826 — 9,826 — Cash and cash equivalents

Corporate bonds 706,698 — 706,698 — Short-term investments

1 unchanged sentence

US Treasuries 35,711 35,711 — — Short-term investments

Asset-backed securities 14 — 14 — Short-term investments

Commercial paper 113,921 — 113,921 — Short-term investments

25 unchanged sentences

The fair value was estimated using a Monte-Carlo simulation model, which included significant unobservable Level 3 inputs, such as projected financial performance over the earn-out period along with estimates for market volatility and the discount rate applicable to potential cash payouts.

During the three months ended September 30, 2021, we recognized General and administrative expense of $ 20,000 within our Condensed Consolidated Statements of Operations for the increase in fair value of the contingent earn-out consideration liability associated with the Nordeus acquisition, which increased the fair value of the contingent consideration liability to $ 81,181 .

During the nine months ended December 31, 2021, we recognized General and administrative expense of $ 30,000 within our Condensed Consolidated Statements of Operations for the increase in fair value of the contingent earn-out consideration liability associated with the Nordeus acquisition, which increased the fair value of the contingent consideration liability to $ 90,638 .

The increase resulted from a higher probability of Nordeus achieving certain performance measures in the 12 - and 24 -month periods following the closing.

We did not have any transfers between Level 1 and Level 2 fair value measurements, nor did we have any transfers into or out of Level 3 during the six months ended September 30, 2021.

We did not have any transfers between Level 1 and Level 2 fair value measurements, nor did we have any transfers into or out of Level 3 during the nine months ended December 31, 2021.

Nonrecurring fair value measurements

3 unchanged sentences

Based on these considerations, we estimate that the carrying value of the acquired shares represents the fair value of the investment.

At September 30, 2021, we held $ 20,000 of such investments in Other assets within our Condensed Consolidated Balance Sheet.

At December 31, 2021, we held $ 20,000 of such investments in Other assets within our Condensed Consolidated Balance Sheet.

SHORT-TERM INVESTMENTS

Our Short-term investments consisted of the following:

September 30, 2021

December 31, 2021

Amortized Cost Gains Losses Fair Value

4 unchanged sentences

US Treasuries 35,709 2 — 35,711

Asset-backed securities 14 — — 14

Commercial paper 113,921 — — 113,921

10 unchanged sentences

Total Short-term investments $ 1,307,895 $ 1,053 $ ( 256 ) $ 1,308,692

The following table summarizes the contracted maturities of our short-term investments at September 30, 2021:

September 30, 2021

The following table summarizes the contracted maturities of our short-term investments at December 31, 2021:

December 31, 2021

Short-term investments

3 unchanged sentences

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Our risk management strategy includes the use of derivative financial instruments to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates.

Our risk management strategy includes the use of derivative financial instruments to reduce the volatility associated with changes in foreign currency exchange rates on earnings, cash flows, and certain balance sheet amounts .

We do not enter into derivative financial contracts for speculative or trading purposes.

3 unchanged sentences

The following table shows the gross notional amounts of foreign currency forward contracts:

September 30, 2021 March 31, 2021

December 31, 2021 March 31, 2021

Forward contracts to sell foreign currencies $ 173,127 $ 140,510

Forward contracts to purchase foreign currencies 96,953 92,123

For the three months ended September 30, 2021 and 2020, we recorded a gain of $ 602 and a loss of $ 1,029 , respectively, and for the six months ended September 30, 2021 and 2020 we recorded a loss of $ 1,226 and a loss of $ 3,685 , respectively, related to foreign currency forward contracts in Interest and other, net in our Condensed Consolidated Statements of Operations.

Our foreign currency exchange forward contracts are not designated as hedging instruments under hedge accounting and are used to reduce the impact of foreign currency on certain balance sheet exposures and certain revenue and expense.

For the three months ended December 31, 2021 and 2020, we recorded a gain of $ 4,107 and a loss of $ 5,832 , respectively, and for the nine months ended December 31, 2021 and 2020 we recorded a gain of $ 2,881 and a loss of $ 9,518 , respectively, related to foreign currency forward contracts in Interest and other, net in our Condensed Consolidated Statements of Operations.

Our foreign currency exchange forward contracts are not designated as hedging instruments under hedge accounting.

These instruments are generally short-term in nature, with typical maturities of less than one year, and are subject to fluctuations in foreign exchange rates.

Inventory balances by category were as follows:

September 30, 2021 March 31, 2021

December 31, 2021 March 31, 2021

Finished products $ 10,141 $ 16,941

1 unchanged sentence

Inventory $ 11,678 $ 17,742

Estimated product returns included in Inventory at September 30, 2021 and March 31, 2021 were $ 123 and $ 186 , respectively.

Estimated product returns included in Inventory at December 31, 2021 and March 31, 2021 were $ 96 and $ 186 , respectively.

SOFTWARE DEVELOPMENT COSTS AND LICENSES

Details of our capitalized software development costs and licenses were as follows:

September 30, 2021 March 31, 2021

December 31, 2021 March 31, 2021

Current Non-current Current Non-current

3 unchanged sentences

Software development costs and licenses $ 47,576 $ 737,935 $ 43,443 $ 490,892

During the three months ended September 30, 2021 and 2020, we recorded $ 55,278 and $ 0 , respectively, of software development impairment charges (a component of Cost of goods sold).

The impairment charge recorded during the three months ended September 30, 2021, related to (i) a decision not to proceed with further development of certain interactive entertainment software and (ii) recognizing unamortized capitalized costs for the development of a title, which were anticipated to exceed the net realizable value of the asset at the time they were impaired.

During the six months ended September 30, 2021 and 2020, we recorded $ 65,049 and $ 19,695 , respectively, of software development impairment charges (a component of Cost of goods sold).

The impairment charge recorded during the six months ended September 30, 2021 related to (i) a decision not to proceed with further development of certain interactive entertainment software and (ii) recognizing unamortized capitalized costs for the development of a title, which were anticipated to exceed the net realizable value of the asset at the time they were impaired.

The impairment charges recorded during the six months ended September 30, 2020 related to unamortized capitalized costs for the development of a title, which were anticipated to exceed the net realizable value of the asset at the time they were impaired.

During the three months ended December 31, 2021 and 2020, we recorded $ 640 and $ 5,532 , respectively, of software development impairment charges (a component of Cost of goods sold).

The impairment charges recorded during the three months ended December 31, 2021 and 2020 related to decisions not to proceed with further development of certain interactive entertainment software.

During the nine months ended December 31, 2021 and 2020, we recorded $ 65,689 and $ 25,227 , respectively, of software development impairment charges (a component of Cost of goods sold).

The impairment charge recorded during the nine months ended December 31, 2021 related to (i) a decision not to proceed with further development of certain interactive entertainment software and (ii) recognizing unamortized capitalized costs for the development of a title, which were anticipated to exceed the net realizable value of the asset at the time they were impaired.

The impairment charges recorded during the nine months ended December 31, 2020 related to unamortized capitalized costs for the development of a title, which were anticipated to exceed the net realizable value of the asset at the time they were impaired.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following:

September 30, 2021 March 31, 2021

December 31, 2021 March 31, 2021

Software development royalties $ 471,986 $ 814,998

10 unchanged sentences

In addition, the Credit Agreement contains uncommitted incremental capacity permitting the incurrence of up to an additional $ 200,000 in term loans or revolving credit facilities.

Loans under the Credit Agreement will bear interest at a rate of (a) 0.250 % to 0.750 % above a certain base rate ( 3.25 % at September 30, 2021) or (b) 1.125 % to 1.750 % above LIBOR (approximately 0.09 % at September 30, 2021), which rates are determined by reference to our consolidated total net leverage ratio.

We had no outstanding borrowings at September 30, 2021.

Loans under the Credit Agreement will bear interest at a rate of (a) 0.250 % to 0.750 % above a certain base rate ( 3.25 % at December 31, 2021) or (b) 1.125 % to 1.750 % above LIBOR (approximately 0.10 % at December 31, 2021), which rates are determined by reference to our consolidated total net leverage ratio.

We had no outstanding borrowings at December 31, 2021.

Information related to availability on our Credit Agreement was as follows:

September 30, 2021 March 31, 2021

December 31, 2021 March 31, 2021

Available borrowings $ 247,682 $ 197,874

Outstanding letters of credit 2,318 2,126

We recorded interest expense and fees related to the Credit Agreement of $ 113 and $ 82 for the three months ended September 30, 2021 and 2020, respectively, and $ 257 and $ 164 for the six months ended September 30, 2021 and 2020, respectively.

We recorded interest expense and fees related to the Credit Agreement of $ 97 and $ 141 for the three months ended December 31, 2021 and 2020, respectively, and $ 354 and $ 305 for the nine months ended December 31, 2021 and 2020, respectively.

The Credit Agreement also includes, among other terms and conditions, maximum leverage ratio, minimum cash reserves and, in certain circumstances, minimum interest coverage ratio financial covenants, as well as limitations on us and each of our subsidiaries’ ability to create, incur, assume or be liable for indebtedness;

7 unchanged sentences

The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

9 unchanged sentences

Diluted earnings per share $ 1.24 $ 1.57 $ 2.63 $ 3.20

During the six months ended September 30, 2021, 1,020 restricted stock awards vested, we granted 896 unvested restricted stock awards, and 36 unvested restricted stock awards were forfeited.

During the nine months ended December 31, 2021, 1,096 restricted stock awards vested, we granted 931 unvested restricted stock awards, and 66 unvested restricted stock awards were forfeited.

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table provides the components of accumulated other comprehensive loss:

Six Months Ended September 30, 2021

Nine Months Ended December 31, 2021

adjustments Unrealized

3 unchanged sentences

Balance at March 31, 2021 $ ( 9,282 ) $ 618 $ ( 8,664 )

Other comprehensive income (loss) before reclassifications ( 10,599 ) ( 484 ) ( 11,083 )

Balance at September 30, 2021 $ ( 19,881 ) $ 134 $ ( 19,747 )

Six Months Ended September 30, 2020

Other comprehensive loss before reclassifications ( 24,096 ) ( 1,823 ) ( 25,919 )

Balance at December 31, 2021 $ ( 33,378 ) $ ( 1,205 ) $ ( 34,583 )

Nine Months Ended December 31, 2020

adjustments Unrealized

9 unchanged sentences

Amounts reclassified from accumulated other comprehensive loss — ( 600 ) ( 1,333 ) — ( 1,933 )

Balance at September 30, 2020 $ ( 36,973 ) $ 600 $ — $ 1,549 $ ( 34,824 )

Balance at December 31, 2020 $ ( 6,838 ) $ — $ — $ 1,254 $ ( 5,584 )

COMMITMENTS AND CONTINGENCIES

5 unchanged sentences

While it is reasonably possible that a loss may be incurred in excess of the amounts accrued in our financial statements, we believe that such losses, unless otherwise disclosed, would not be material.

The provision for income taxes for the three months ended September 30, 2021 is based on our projected annual effective tax rate for fiscal year 2022, adjusted for specific items that are required to be recognized in the period in which they are incurred.

The provision for income taxes was $ 9,677 for the three months ended September 30, 2021, as compared to $ 18,097 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of 48.4 % for the three months ended September 30, 2021 was due primarily to a tax expense of $ 5,440 from a shortfall on employee stock-based compensation, tax expense of $ 2,389 related to a nondeductible increase in fair value of the contingent consideration liability associated with the acquisition of Nordeus, offset by $ 2,647 related to the geographic mix of earnings.

The provision for income taxes for the six months ended September 30, 2021 is based on our projected annual effective tax rate for fiscal year 2022, adjusted for specific items that are required to be recognized in the period in which they are incurred.

The provision for income taxes was $ 28,865 for the six months ended September 30, 2020 as compared to $ 19,953 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of 15.1 % for the six months ended September 30, 2021 was due primarily to a tax benefit of $ 11,420 due to tax credits and excess tax benefits of $ 4,007 from employee stock-based compensation offset by tax expense of $ 2,389 related to a nondeductible increase in fair value of the contingent consideration liability associated with the acquisition of Nordeus and by the geographic mix of earnings.

The provision for income taxes for the three months ended December 31, 2021 is based on our projected annual effective tax rate for fiscal year 2022, adjusted for specific items that are required to be recognized in the period in which they are incurred.

The provision for income taxes was $ 7,642 for the three months ended December 31, 2021, as compared to $ 34,198 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of 5.0 % for the three months ended December 31, 2021 was due primarily to excess tax benefits of $ 9,882 from employee stock-based compensation, tax benefits of $ 9,651 from tax credits, and a tax benefit of $ 7,205 related to the geographic mix of earnings.

The provision for income taxes for the nine months ended December 31, 2021 is based on our projected annual effective tax rate for fiscal year 2022, adjusted for specific items that are required to be recognized in the period in which they are incurred.

The provision for income taxes was $ 36,507 for the nine months ended December 31, 2021 as compared to $ 54,151 for the prior year period.

When compared to the statutory rate of 21%, the effective tax rate of 10.6 % for the nine months ended December 31, 2021 was due primarily to a tax benefit of $ 21,071 due to tax credits and excess tax benefits of $ 13,890 from employee stock-

based compensation, offset by tax expense of $ 5,042 related to a nondeductible increase in fair value of the contingent consideration liability associated with the acquisition of Nordeus and by the geographic mix of earnings.

We are regularly examined by domestic and foreign taxing authorities.

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(Refer to Note 4 - Fair Value Measurements .)

During the three months ended September 30, 2021, we recognized an increase in fair value of the contingent consideration liability associated with the acquisition of Nordeus.

We reported $ 44,167 within Accrued expenses and $ 37,014 within Other long-term liabilities in our Condensed Consolidated Balance Sheet as of September 30, 2021.

During the three and nine months ended December 31, 2021 we recognized General and administrative expense of $ 10,000 and $ 30,000 , respectively, within our Condensed Consolidated Statements of Operations for the increase in fair value of the contingent consideration liability associated with the acquisition of Nordeus.

We reported $ 57,941 within Accrued expenses and $ 32,697 within Other long-term liabilities in our Condensed Consolidated Balance Sheet as of December 31, 2021.

We used the acquisition method of accounting and recognized assets and liabilities at their fair value as of the date of acquisition, with the excess recorded to goodwill.

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The amounts of revenue and earnings of Nordeus included in our Condensed Consolidated Statement of Operations from the acquisition date are as follows:

Three Months Ended September 30, 2021 Six Months Ended September 30, 2021

Three Months Ended December 31, 2021 Nine Months Ended December 31, 2021

Net revenue $ 16,777 $ 29,003

Net loss $ 10,676 $ 30,411

The following table summarizes the pro-forma consolidated results of operations (unaudited) for the three and six months ended September 30, 2021 and 2020, as though the acquisition had occurred on April 1, 2020, the beginning of fiscal year 2021, and Nordeus had been included in our consolidated results for the entire periods subsequent to that date.

Three Months Ended September 30, Six Months Ended September 30,

The following table summarizes the pro-forma consolidated results of operations (unaudited) for the three and nine months ended December 31, 2021 and 2020, as though the acquisition had occurred on April 1, 2020, the beginning of fiscal year 2021, and Nordeus had been included in our consolidated results for the entire periods subsequent to that date.

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

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The pro-forma consolidated results of operations also include the business combination accounting effects resulting from the acquisition, including amortization expense related to finite-lived intangible assets acquired and the related tax effects assuming that the business combination occurred on April 1, 2020.

Transaction costs of $ 2,949 and $ 4,952 for the three and six months ended September 30, 2021, which have been recorded within General and administrative expense in our Condensed Consolidated Statements of Operations, have been excluded from the above pro-forma consolidated results of operations due to their non-recurring nature.

Transaction costs of $ 34 and $ 4,986 for the three and nine months ended December 31, 2021, respectively, which have been recorded within General and administrative expense in our Condensed Consolidated Statements of Operations, have been excluded from the above pro-forma consolidated results of operations due to their non-recurring nature.

Asset Acquisition

1 unchanged sentence

The transaction was treated as an asset acquisition, in which the cash consideration and direct transaction costs were allocated on a relative fair value basis to identified assets.

The following table summarizes the acquisition date fair value of tangible assets, which are included within Fixed asset on our Condensed Consolidated Balance Sheets, and intangible assets, which are included within Intangible assets, net on our Condensed Consolidated Balance Sheets, acquired:

The following table summarizes the acquisition date fair value of tangible assets, which are included within Fixed assets, net on our Condensed Consolidated

Balance Sheets, and intangible assets, which are included within Intangible assets, net on our Condensed Consolidated Balance Sheets, acquired:

Fair Value Weighted average useful life

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SHARE REPURCHASE

Our Board of Directors has authorized the repurchase of up to 14,218 shares of our common stock.

Our Board of Directors has authorized the repurchase of up to 21,660 shares of our common stock, including an increase of 7,442 shares in November 2021.

Under this 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.

1 unchanged sentence

The program does not require us to repurchase shares and may be suspended or discontinued at any time for any reason.

During the three months ended September 30, 2021, we repurchased 1,260 shares of our common stock in the open market for $ 200,012 , including commissions of $ 13 , as part of the program.

We have repurchased a total of 11,660 shares of our common stock under the program, and, as of September 30, 2021, 2,558 shares of our common stock remained available for repurchase under the share repurchase program.

In November 2021, our Board of Directors authorized an increase of 7,442 shares to the number of shares available for repurchase, resulting in an aggregate of 21,660 total shares being authorized for repurchase under the program and 10,000 shares remaining available for repurchase as of the date of the additional authorization.

During the three months ended December 31, 2021, we did not repurchase shares of our common stock in the open market.

During the nine months ended December 31, 2021, we repurchased 1,260 shares of our common stock in the open market for $ 200,012 , including commissions of $ 13 , as part of the program.

We have repurchased a total of 11,660 shares of our common stock under the program, and, as of December 31, 2021, 10,000 shares of our common stock remained available for repurchase under the share repurchase program.

All of the repurchased shares are classified as Treasury stock in our Condensed Consolidated Balance Sheets.

SUBSEQUENT EVENTS

On January 9, 2022, we entered into a definitive merger agreement to acquire Zynga Inc.

("Zynga"), a leading developer of mobile games.

Under the terms and subject to the conditions of the merger agreement, Zynga stockholders will receive $ 3.50 in cash and a number of shares of our common stock equal to the exchange ratio (ranging from 0.0350 to 0.0406 , as further described below) for each share of Zynga common stock outstanding at the closing.

The transaction is valued at $ 9.86 per share of Zynga common stock based on the market closing as of January 7, 2022, implying an enterprise value of $ 12.7 billion.

The transaction includes a collar mechanism on the equity consideration, so that if our 20 -day volume weighted average price ("VWAP") ending on the third trading day prior to closing is in a range from $ 156.50 to $ 181.88 , the exchange ratio would be adjusted to deliver total consideration of $ 9.86 per Zynga share.

If the VWAP exceeds the higher end of that range the exchange ratio would be 0.0350 per share and if the VWAP falls below the lower end of that range, the exchange ratio would be 0.0406 per share.

As part of the transaction, we have received aggregate committed financing of $ 2.7 billion from J.P.

Morgan and certain other lenders, and we intend to fund the cash component of the transaction through a combination of cash from our balance sheet as well as proceeds of new debt issuance.

The transaction, which is expected to close during our first quarter of fiscal year 2023 ending June 30, 2022, is subject to approval by Take-Two and Zynga stockholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements